Pre-FeasibilityStudy

DairyFarm(100Cows)

EnvironmentallyControlledHousing(ECH)System

u&me organic
krishi
farm
Head office:- Bardibas-14
Mo:- 9801776832,9819677305
Pre-FeasibilityStudy (DairyFarm-100 cows)

TableofContents
1 DISCLAIMER ....................................................................................................................................3
2 EXECUTIVESUMMARY .................................................................................................................. 4
3 INTRODUCTIONTOSMEDA ..........................................................................................................5
4 PURPOSEOFTHEDOCUMENT ......................................................................................................5
5 BRIEFDESCRIPTIONOFPROJECT&PRODUCT..........................................................................6
5.1 DAIRYFARMPRODUCTIONPROCESS .............................................................................................6
5.2 INSTALLEDANDOPERATIONALCAPACITIES ............................................................................... 10
6 CRITICALFACTORS ......................................................................................................................11
7 GEOGRAPHICALPOTENTIALFORINVESTMENT ....................................................................12
8 POTENTIALTARGETCUSTOMERS/MARKETS .......................................................................12
9 PROJECTCOSTSUMMARY ...........................................................................................................13
9.1 PROJECTECONOMICS.................................................................................................................... 13
9.2 PROJECTFINANCING ...................................................................................................................... 13
9.3 PROJECTCOST ................................................................................................................................ 14
9.4 SPACEREQUIREMENT................................................................................................................... . 14
9.5 MACHINERY&EQUIPMENTREQUIREMENT ................................................................................ 16
9.6 OFFICEVEHICLE .............................................................................................................................. 16
9.7 FURNITURE&FIXTURESREQUIREMENT ..................................................................................... 17
9.8 OFFICEEQUIPMENTREQUIREMENT ............................................................................................ 17
9.9 HUMANRESOURCEREQUIREMENT ............................................................................................. 18
9.10 RAWMATERIALREQUIREMENT ..................................................................................................... 18
9.11 UTILITIESANDOTHERCOSTS ......................................................................................................... 20
9.12 REVENUEGENERATION ................................................................................................................. 21
10 CONTACTDETAILS .......................................................................................................................21
10.1 M ACHINERYSUPPLIERS ................................................................................................................ 21
10.2 RAW M ATERIALSUPPLIERS ........................................................................................................... 22
10.3 TECHNICAL EXPERTS/CONSULTANTS ....................................................................................... 23
11 USEFULWEBLINKS.......................................................................................................................24
12 ANNEXURES...................................................................................................................................26
12.1 INCOMESTATEMENT..................................................................................................................... .. 26
12.2 BALANCESHEET .............................................................................................................................. 27
12.3 CASHFLOW STATEMENT................................................................................................................ 28
13 KEYASSUMPTIONS ......................................................................................................................29
13.1 OPERATINGCOSTASSUMPTIONS ................................................................................................ 29
13.2 PRODUCTIONCOSTASSUMPTIONS ............................................................................................. 29
13.3 REVENUEASSUMPTIONS ............................................................................................................... 30
13.4 FINANCIAL ASSUMPTIONS ............................................................................................................ 30

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Pre-FeasibilityStudy (DairyFarm-100 cows)

1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide
ageneral idea and information on the said matter. Although, the material included
inthisdocumentisbasedondata/informationgatheredfromvariousreliablesources;
however, it is based upon certain assumptions, which may differ fromcase to case.
The information has been provided on as is where is basis withoutany warranties
or assertions as to the correctness or soundness thereof. Although,due care and
diligence has been taken to compile this document, the containedinformation may
vary due to any change in any of the concerned factors, and theactual results may
differ substantially from the presented information. SMEDA, itsemployees or
agents do not assume any liability for any financial or other lossresulting from this
memorandum in consequence of undertaking this activity.
Thecontainedinformationdoesnotprecludeanyfurtherprofessionaladvice.Theprospe
ctiveuserofthismemorandumisencouragedtocarryoutadditionaldiligence and gather
any information which is necessary for making an informeddecision, including
taking professional advice from a qualified consultant/technicalexpertbefore taking
any decision to actupon the information.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

2 EXECUTIVESUMMARY
This pre-feasibility study is based upon the business analysis of setting up a
dairyfarmwherecowswithprovenpedigreeandhighgeneticwortharekeptprimarilyfor
milk production in an Environmentally Controlled Housing (ECH) system.
Theanimals are fed Total Mixed Ration (TMR), which is a high energy and protein
richnutritionally balanced formulated feed. The cows are bred by proven
pedigreedgenetics through the Artificial Insemination method to attain maximum
geneticpotential(‘NetMerit’ in terms ofprofits).
Dairyproductionisanall-inclusiveactivity,relatedtodairyanimalcare,reproduction,
feeding and management. It encompasses all aspects and activitiesrelated to
raising dairy animals during various phases of life to get maximumproductivityin
terms ofhygienicmilk.
A dairy farm with 100 cows needs a total investment of approximately Rs.
70.55million out of which, capital cost of the project is Rs. 68.55 million with
workingcapitalofRs.1.99million.Theprojectisassumedtobeworkingona70:30debt
andequityratio.Itisassumedthatstartingfrom100animalsinyear1,theherdof
animals will increase to approximately 446 animals, out of which, 236 would
belactatingcowsin10thyearoftheproject.Thecullingrateisassumedtobe15%per
annum.
TheInternalRateofReturn(IRR),PaybackPeriodandNetPresentValue(NPV)oftheproj
ect,baseduponstatedassumptions,are35%,4.55yearsandRs.
108.90 million respectively. The farm will provide employment opportunity to
9individuals initially which will increase to 20 at year 10, with the increase in size
ofthefarm.The legal status oftheprojectis proposedto beasoleproprietorship.
Theprojectisproposedtobelocatedinperi-
urbanareasaroundmetropolitanlikebardibas,bijalpura,kisannagar,pasupatinagar,ram
nagar,gausala,sindhuli,dhalkebar,janakpur,lahan,lalbandietc.whicharemajormarkets
ofmilk.Theruralandperi-urbanareasaroundthemajorcities withabundantwaterand
availabilityoffoddermakeabetterchoiceforfarming; provided access
tolivestockmarketsandveterinaryservicesisensured.Themilk may be sold
atthefarmgate ordirectly sold in the urban market.
Most critical considerations or factors for success of the project are
backgroundknowledgeandrelatedexperienceforapplicationofGoodAnimalHusbandr
yPractices (GAHP), market / demand of milk, understanding of ECH dairy
system,importanceoffeedingregimesforgettingoptimumresultsfromgoodgenetics,far
m andlabourmanagement etc.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

3 INTRODUCTIONTOSMEDA

With a mission "to assist in employment generation and value addition to

thenational income, through development of the SME sector, by helping increase
thenumber, scale and competitiveness of SMEs", SMEDA has carried out
‘sectoralresearch’ to identify policy, access to finance, business development
services,strategicinitiatives and institutional collaboration and networking
initiatives.
Preparation and dissemination of prefeasibility studies in key areas of
investmenthasbeen a successful hallmarkofSME facilitation by SMEDA.
Concurrenttotheprefeasibilitystudies,abroadspectrumofbusinessdevelopment
services is also offered to the SMEs by SMEDA. These
servicesincludeidentificationofexpertsandconsultantsanddeliveryofneedbasedcapa
city building programs of different types in addition to business guidancethrough
help desk services.

4 PURPOSEOFTHEDOCUMENT
Theobjectiveofthepre-
feasibilitystudyisprimarilytofacilitatepotentialentrepreneursinprojectidentificationfori
nvestment.Theprojectpre-feasibilitymay form the basis of an important investment
decision and in order to serve
thisobjective,thedocument/studycoversvariousaspectsofprojectconceptdevelopme
nt,start-up,andproduction,marketing,financeandbusinessmanagement.
The purpose of this document is to facilitate potential investors in setting up
DairyFarm with Environmentally Controlled Housing (ECH) system on commercial
basisby providing them a general understanding of the business with the intention
ofsupportingpotential investorsin crucial investmentdecisions.
The need to come up with pre-feasibility reports for undocumented or
minimallydocumentedsectorsattainsgreaterimminenceastheresearchthatprecedess
uchreportsrevealcertainthumbrules;bestpracticesdevelopedbyexistingenterprises
by trial and error, and certain industrial norms that become a
guidingsourceregardingvariousaspectsofbusinessset-
upandit’ssuccessfulmanagement.
Apartfromcarefullystudyingthewholedocumentonemustconsidercriticalaspectsprovi
ded lateron,which form basis ofany InvestmentDecision.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

1BRIEFDESCRIPTIONOF PROJECT&PRODUCT
Theproposeddairyfarmwillbeestablishedonrentwith10yearsagreementlandw
ith purpose built shed
constructedonEnvironmentallyControlledHousing(ECH)system.Thefarmwillb
eginoperationswith100
cowstoachievemilkproductionof838,040litresinfirstyearoftheproject.Theinitialca
pacityutilizationofmilkproductionforsales revenue is
80%increasinguptoamaximumof95%.Femalecalveswillberaisedonmilkreplacerf
orfirstthreemonthsofage.Uponweaningat4thmonthofage,calveswillbeofferedTota
lMixedRation(TMR)fortherestoftheirproductivelife.Breedingofanimalswillbeplan
nedthrough‘ArtificialInsemination’method.Femalecalveswillbegivenspecialattent
ionandraisedas‘Heifers’whereasmale
calvesaretobesoldinthemarketaroundtheageofonemonth.Themilkwillbe
primarilysoldtobulkbuyersattherateofRs.60with10%annualgrowthratein selling
price.
Thesubjectbusinesscanbeset-upatanyappropriatelocationthatensureseasy
availability of feed, water and other related services. The development of urban
orperi-urban commercial dairy farms is a relatively new concept in dairy
production.Metropolitan cities like Lahore, Karachi, Multan, Rawalpindi and
Faisalabad etc.are major markets of milk as dairy farms established around these
cities fulfil theirdaily milk demand. There is a year-round market of milk, however,
the demandincreasesin summer(April to November).

1. DairyFarmProductionProcess

 SelectionofdairycattlebreedsuchasHolst
einFriesianwithprovenpedigreeand high
genetic worth from
elite/superiorandrenownedsires.Holstei
ncowsarerecognizedbytheirdistinctiveco
lormarkingsandoutstandingmilkproducti
on,havinglargebodystaturewithtypicalcol
orpatternsofblack&whiteorred&white.Ho
lsteinheiferscanbebredataround15mont
hsofageastheygain65%oftheiradult Figure1:AtypicalHolsteinCow
bodyweight(approx.550kgslivebodyweight).Gestationperiodoftheanimalisnine
monthswith normal productive lifeof 4-5 years.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

 The pedigree and genetic worth of cows must

beconsidered on top priority, i.e. proper
pedigreepaperanddocumentationcontainingallide
ntifications and registrations of dairy cows
byHolstein Aassociation from USA or
EU.Pedigreeis a document showing an animal’s
lineage,
arecordoftheirancestry;atypicalHolsteinpedigree
shows three generations - the animalitself, its sire
and dam, along with their sires
anddams.Mayalsolistgeneticandperformancereco
Figure2:AtypicalPedigree
rds foreach animal,when applicable.

The pedigree is very important as it can be useful to farmers and breeders

inproviding information about the cow’s ancestors and thereby helping to
predicthow well that animal may perform later in life e.g. how much milk might
beproduced or how they will look in their body stature and conformation
etc.,based on the performance of their ancestors. Aside from providing owners
andbreederswithdetailedinformationabouttheiranimals,OfficialHolsteinPedigree
s also serve as a verified source of ancestry, performance and
geneticinformationwhensellinganimals,givingthebuyertrusteddocumentationens
uring thatinformation presented on the animal is accurate.
 Selection of animals with excellent body condition and udder health:
averagedaily milk production of 35 litres or above for cows in first lactation,
essentiallywithno disease history.
 Housing: Good housing leads to good management practices and
ultimatelyoptimumproduction.Generally,housing should be;
I. Pre-engineeredbuilding
II. Tunnel-type, ventilated, comfortable and dry with
hygienicenvironment
III. Designed with the probability of future expansion when

requiredThe housing should facilitate;

 Easydrainage and removal ofdung,urine and waste material

 Apparent(orfeelslike)temperaturenotexceeding27 °C
 Minimum sun exposure:axis oflength to be eastto west
 Availability offeed and waterround the clock

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Pre-FeasibilityStudy (DairyFarm-100 cows)

 The Environmental Controlled

Housing(ECH)DairyFarmisanewandre
markablerevolutionin
dairy sector by creating a self-
sufficienttemperature in dairy house.
Followingare some of the features of
this
systemwhicharequitedifferentfromtraditi
onaldairy housing;
Figure3:AtypicalventilationsysteminECHsystem

 Concrete structure is preferred

oversteel withlow roofheightforeasy maintenanceandaccess.
 Proper insulation to prevent heat from all sides. Optimum temperature
of26°C should be maintained inside the shed area. Temperature may
bereducedup to20°C atcertain places ifrequired.
 ProperHeating,Ventilation&AirConditioningControl(HVAC)designedand
planned as per engineering principles as such type of structure isdesigned
to utilize minimum possible electricity. Electricity cost is much lessthan
traditional fans barns as only 4 fans of 1.5 HP are used.Negativepressure
fans utilize18~20 fans ofsame capacity in the same size.
 No gases, odor or smell inside the barn due to proper ventilation
system,hence, animals are comfortable in cool breeze passing through
them fromall sides. In this way, the production efficiency of pedigreed
Holstein cowsdoes not suffer in hot weather resulting in optimum
productivity utilization insummers.
 Self-sufficientto produce coal free electricityfrom manure ofcows.
 Thestructureofthefarmisdesignedinawaytoallownaturalflowofwaterresultingin
minimum human efforts forcleanliness.
 There is limited need for extra lighting sources at the farm house in day
lightdueto semi closednature ofthehousing system.
 Electricitycostismarkedly lessthan traditional fanbarns.
 Theanimalsshouldbedehorned,astheyareeasiertohandleinbarns,causingless
accidentalinjuriestootheranimals andattendants.

CP)and
 Feeding:ThelactatingHolsteincowsare
fed 1 kgof DryMatter (DM)
feedper1.75litresofmilkproduced.Therati
on allows nutritionally balanced feedin
24 hours. It includes dry matter
with60% concentrate and 40%
roughagescontaining16%CrudeProtein(
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 Pre-FeasibilityStudy (DairyFarm-100 cows)

Figure4:ATypicalTMR wagon

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Pre-FeasibilityStudy (DairyFarm-100 cows)

energy to increase animal productivity. It is better to use Total Mixed

Ration(TMR)wagon forfeeding the cows.
 Watering: Supply of clean drinking water in clean troughs i.e. 50 to 80 litres
ofwater consumption per adult animal per day, round the clock, maintains
milkproductioncapacity ofthe animal.
 Breeding: Efficient and timely Artificial Insemination (AI) of good genetic
worthisa key to success in good breeding programs ofherd.
 Calving: Pregnant animals should be given special attention in third trimester
ofpregnancy and should be separated in pregnancy pens. Veterinary
assistanceshould be sought out in case of emergency. Calf care and heifer
managementis very important in maintaining dairy farm production. The
proposed farmer willraise female calves as future breeding heifers which will
replace culled dairyanimals. The first generation (F1) will be capable of
breeding at age of 14months;hence producing milk atabout23-24 months
ofage.
 Lactation Period: lactation period is the period during which animals yield
milkafter calving. The animals producing milk are called ‘Wet Animals’.
Generallystandard lactation period is taken as 305+5 days. This pre-feasibility
study hastaken 50-65% of the total number of animals as wet cows. The
calving interval(interval between two calving) in Holstein cows is 12-14 months.
The averagedailymilk yield ofa cow is35 litres.
 Udder health: Hygienic and clean milking three times a day
(morning/afternoon/evening)lowerschancesofmastitisasudderhealthandhygiene
ismostimportantin dairy animals.
 Properstorage ofmilk shouldbe done preferably attemperatureof40c.
 Diseasemanagement:Vaccination&medicineisrequiredtopreventanydisease
outbreak in the dairy herd. Each animal will be vaccinated beforeentering the
farm. Procurement of vvaccines from reliable sources should
besought.Following is a tentative vaccination schedule;
Table1:TentativeVaccinationSchedule
Dose/
Disease Vaccine Timeforvaccination
Administration
Foot&Mouth FMD February/March& 5mlsubcut.
Disease September/October
BlackQuarter BQ March/April 5mlsubcut.
Haemorrhagic HS May/June& 5ml/300kgbodywt.
Septicemia November/December subcut.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

Anthrax Anthrax August 1mlsubcut.

BrucellaAbortus BA Onceinlifeforheifers 1mlsubcut.
(4-12monthsofage)

 Record keeping: The animals should be ear-tagged with information of

animalsuch as breed, age, date of birth/ purchase, number of lactations,
vaccinationetc.Therecordsfordailymilkyields,weight,ArtificialInseminations(AI),c
alving,vaccination and medication etc.are also important.
 Culling:Goodproductiveanimalsshouldbeselectedanduneconomicalanimals
should be culled. Low yielding culled animals may be sold in theregular
livestock market. On an average, cows are productive for 7 to 8 years.The
culling rate of 15% per annum in the total herd is desirable for a
successfuldairy farm.

 Regular technical assistance from dairy and livestock professionals,

expertsandtechnical consultantsis advised.
Returns on the proposed business and its profitability are highly dependent on
theefficiency of above mentioned factors.In case a dairy farm is not able to attain
itstargetmilkproductionorimplementeffectivehusbandrypractices,itwillnotbeable to
cover the potential market and recover payments; hence, cost of operatingthe
business will increase.

5.2 InstalledandOperationalCapacities
Intheproposedstudy,initially,100cowsarerecommendedtoobtainoptimummilk
production in first year of project. It is assumed that on average, 60-65 % oftotal
animals present at farm would be in lactation on farm. The female calves bornat
farm will be added to the milking herd through heifer management; hence
totalnumber of animals to be 446, among which, 236 animals will be in lactation in
10thyearofproject.Themalecalveswillbesoldinopenmarket.Averagemilkproduction of
cows during one lactation period is estimated to be 12,000 litres.
Thedairyfarmwillhavethecapacitytogeneraterevenuesat80%capacityutilizationoftota
l milk produced atfarm i.e.834,040 litres inits firstyearofoperation.

The annual mortality rate is assumed to be 7% for newborn calves, 3% for

heifersand 2% for adult cows. The project will operate at 100% of its installed
capacityfromthefirstyearofoperations.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

6 CRITICALFACTORS
Themostcritical considerations orfactorsforsuccess ofthe projectare:
 Back ground knowledge and related experience of the entrepreneur indairy
farm operations.
 Application of good husbandry practice suchas timely feeding,watering and
vaccination to ensure animal’s health and disease-free environment.
 Awareness about supply and demandofmilkinthemarketasdemandofmilk is
relatively higherin summeras compared to winterseason.
 Efficientmarketing ofthe projectandbulk supply to wholesalers.
Commercialdairyfarmersdependonland,laborandanimalsasthemajorresources.
Modern dairy farming practices emphasize increased use of capital
andmanagement.Successfuldairyfarmingharnessesallavailableresourcesforproduct
iveandprofitableunit.Dairyfarmingishighlycomplexasitincludesbreeding,
management, feeding, housing, disease control and hygienic
productionofmilkonfarm.Thejudicialuseofmeansandresourcestoachieveclearlydefin
ed goals is the key success factor in modern dairy farming i.e. the art
ofmaximizationandoptimalutilizationofresourcesandmeansformaximizingproductivit
yand profits.
Low yield animals are uneconomical to keep; hence they should be culled as
earlyand efficiently as possible. Overall genetic improvement of all dairy animals
isnecessaryforimprovedmilkproduction.Itinvolvesmilkingrecordsatequalintervals,
selection of semen from progeny-tested bulls from high producing
dams(mothers)andthenmakingitsextensiveuseinwell-
organizedArtificialInsemination(AI)program.
Feeding dairy animals on nutritious and high yielding hybrid varieties of
foragescan be adopted.Surplus forage should be preserved as silage orhay.
Other farm management practices include feeding for growth, lactation,
pregnancyormaintenance,hygienicmilkproduction,comfortableandventilatedbarns,s
praying of animals in summer, timely detection of heat and AI service. If
animalsarebredwithinthe60-90daysofcalvingprovided,overallperformanceofherdcan
be improved.
TimelyvaccinationagainstmentioneddiseasessuchasRinderpest,BlackQuarter, Foot
and Mouth Disease, Brucellosis along with the prevention of mastitisandparasitic
control will also improve overall performance ofthedairy herd.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

1 GEOGRAPHICALPOTENTIALFORINVESTMENT
Commercialdairyfarmingisaviablebusinesspropositionforperi-
urbanareasofPakistan.Thereishigherdemandformilkinperiurbanareasaroundthemaj
orcitiessuchaskathmandu,bardibas,bijalpura,kisannagar,pasupatinagar,ramnagar,gau
sala,sindhuli,dhalkebar, janakpur,lahan,lalbandi
biratnagar,DDCetc.acrossthecountry;hence,thesaidproject
offersgoodinvestmentopportunitiesforpotential
investmentinallprovincesofcountry.Theperi-urbanareasaround
majorcitieswithabundantwaterand
availabilityoffoddermakeabetterchoiceforfarming;providedthereisreadyaccessto
livestockrelatedmarketingandveterinary services.

1 POTENTIALTARGETCUSTOMERS/MARKETS
This pre-feasibility study suggests that milk will be sold at the farm gate directly
tothe consumers or milk contractors. It can also be sold directly to milk centers in
theurban market or may be pasteurized at farm by the farmer and delivered to
thenearest city, however it involves extra investment which is not included in
thisprefeasibility study. Milk contractors collect milk from farmers and deliver it to
theconsumer’s doorstep. Milk collection networks of different processing
companiesalsocollectmilk directly from thefarm and transportitto theprocessing
facilities.

• Domesticconsumers
• Milkcontractorsand suppliers
• Milkcollection and processing companies
• Dairyproducts manufacturingcompanies
• On-
farmProcessingbyfarmer(however,itrequiresminimumviablecapacityof40,00
0 litersofmilk daily)

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Pre-FeasibilityStudy (DairyFarm-100 cows)

Milk processing companies use milk as a raw material to formulate different

typesof milk i.e. pasteurized milk, UHT treated milk, condensed milk, skim milk &
milkpowder, etc. Different value added products like ghee, khoya, yogurt, ice
cream,butter and cheese are also prepared from raw milk. Processed milk market
hasincreased its share in quality conscious consumers. Processed milk has
achieved4%sharemilkmarketduringthelasttwodecades.Milksupplyis
increasingattherateof4%annually,howeverdemandisincreasingat15%annually.

1 PROJECTCOSTSUMMARY

1. ProjectEconomics
Thefinancialmodelforthispre-feasibilitystudyindicatesestimatedrevenueofRs.
52.97millioninfirstyearoftheproject.Thecapacityutilizationduringyearoneis100%,whichwi
ll remain the samethroughoutthe life ofthe project.
ThefollowingtableshowsInternalRateofReturn,paybackperiodandNetPresentValue
ofthe proposed venture.
Table1:ProjectEconomics
Description Details

InternalRate ofReturn (IRR) 35%

PaybackPeriod (yrs.) 4.55

NetPresentValue(Million Rs.) 108.90

9.2 ProjectFinancing
Followingtableprovidesdetailsofequityrequiredandvariablesrelatedtobankloan;
Table2:ProjectFinancing
Description Details

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Pre-FeasibilityStudy (DairyFarm-100 cows)

TotalEquity(30%) Rs.21.16M
BankLoan(70%) Rs49.38M
Markup to the Borrower(%age /annum) 12%
TenureoftheProject(Years) 10

9.3 ProjectCost
Followingfixedandworkingcapitalrequirementshavebeenidentifiedforoperations ofthe
proposed business.

Table3:ProjectCost
Description Cost(Rs.)
CapitalCost
Land 6,878,992
Buildingandinfrastructure 17,230,938
Machinery and Equipment 3,523,900
Cows 40,000,000
Furniture & Fixture 228,900
Office Equipment 63,000
Office Vehicles 63,000
Pre-operating Cost 559,000
TotalCapitalCost 68,547,730
WorkingCapital
Raw Material Inventory 1,099,321
UpfrontInsurance Payment 179,345
Cash 721,166
TotalWorkingCapital 1,999,832
TotalProjectCost 70,547,562

Theproposedpre-feasibilityisbasedontheassumptionof70%debtand30
%equity,howeverthiscompositioncanbechangedasperrequirementsoftheinvestor.

9.4 SpaceRequirement
Spacerequirementfortheproposeddairyfarmiscalculatedconsideringrequirements
for management office, sheds for cows, calves and dry animals, milkchiller rooms,
storage, open paddocks etc. Details of space requirement and costrelatedto land
& buildingare givenbelow;

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Pre-FeasibilityStudy (DairyFarm-100 cows)

Table4:SpaceRequirment
Estimated UnitCost TotalCost
Description
Area(Sq.ft) (Rs.) (Rs.)
Shed forWetCows 8,000 1,000 8,000,000
OpenPaddockforWetCows 16,000 10 160,000
Shed forDry Cows 8,000 500 4,000,000
Open Paddock forDry Cows 16,000 10 160,000
Shed forCalves 4,000 500 2,000,000
Open Paddock forCalves 8,000 10 80,000
Stores
400 700 280,000
(fodder,concentrate & machines)
Room(chillers,utensils &milk
144 1,000 144,000
storage)
Silage Bunker(sq.ft.) 3,422 500 1,710,938
Residence(Manager) 120 1,500 180,000
Admin /Accounts Room 120 1,000 120,000
Washroom (Executives) 24 2,000 48,000
Rooms (Workers) 300 1,000 300,000
Washrooms (Workers) 48 1,000 48,000
TotalInfrastructure 64,578 17,230,938

Total investment in building and infrastructure is approximately Rs. 17.23 million

inyear 1. Shed space has been increased with the increase in number of animals
intheherd;hence an expansion is suggested in year4.

The housing of labor & management staff and room for chiller utensils and
milkstoragewouldbe constructed onthefirstfloor.

Land is to be purchased as per maximum space requirements of the farm for

10years.Totallandrequirementisapproximately3acresatanaveragepriceofRs.2
million peracre.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

9.5 Machinery& EquipmentRequirement

Followingfarm machinery and equipmentare needed torun daily farm operations;

Table5:Machinery &Equipment
Quantity UnitCost TotalCost
Description
(Nos) (Rs) (Rs.)
CalfFeeder(Newborncalves) 12 1,200 14,400
CalfCages 17 12,000 204,000
CoolingSystem 1 750,000 750,000
Water Turbine 1 350,000 350,000
MilkingLine 6 150,000 900,000
Generator(50 KVA) 1 300,000 300,000
MilkChiller(5,000litres) 1 800,000 800,000
MilkTesting Machines 1 20,000 20,000
VelocityMeter 1 1,500 1,500
SurgeryKit 1 10,000 10,000
AIEquipment 1 50,000 50,000
DystociaKit 1 20,000 20,000
EnergySavers-Farm 10 400 4,000
Miscellaneous 1 100,000 100,000
TotalMachinery & Equipment 3,523,900
Itisassumedthatelectricityinfrastructureandinstallationsalongwithatransformerarealr
eady available,hencecalculations do notincludethesecosts.

9.6 OfficeVehicle
Followingoffice vehicleis needed forthefarm;

Table6:OfficeVehicle
Description No. Cost/Unit(Rs.) TotalCost(Rs.)
MotorCycle 1 60,000 60,000
Registrationfee* 3,000
Totalcost 63,000
t

ItisassumedthatRs.5,000permonthwillberequiredtocovertravellingexpenses in
order to carry out essential operations of the farm, translating to
anexpenseofRs.60,000 perannum.

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Pre-FeasibilityStudy (DairyFarm-100 cows)

9.7 Furniture& FixturesRequirement

Detailsoffurniture and fixtures required forthe projectare given below;

Table7:Furniture&Fixture
Description Quantity UnitCost TotalCost
(Rs.) (Rs.)
Tables 2 10,000 20,000
Chairs 4 3,000 12,000
Fans (75 W) 4 4,000 16,000
Energy Savers 6 150 900
MiscellaneousFurniture for 1 100,000 100,000
Workers
AirConditioner(2tonsplit) 1 80,000 80,000
TotalFurniture &Fixtures 228,900

9.8 OfficeEquipmentRequirement
Followingoffice equipmentwill be required forthe dairy farm;

Table8:OfficeEquipment

Description Quantity Unit Total

Cost(R Cost(R
s.) s.)
Computer 1 60,000 60,000
Cell Phone 1 3,000 3,000
Total 63,000

18
Pre-FeasibilityStudy (DairyFarm-100 cows)

9.9 HumanResourceRequirement
Inordertorunoperationsofthefarmsmoothly,followinghumanresourcesalongwithnum
berofemployees and monthlysalary are recommended;

Table9:HumanResourceRequirment

No. Monthly Total

Description
ofEmployees Salary(Rs.) SalaryYear1
(Rs)
Owner/Farm Manager 1 50,000 600,000
Farm Supervisor 1 25,000 300,000
FarmLabour 6 13,000 936,000
Security Guard 1 15,000 180,000
Total 9 2,016,000
ItisrecommendedthatthefarmsupervisorbecategorizedasCertificateLevel-3ORLevel-
4’havingcomprehensivepracticalandtheoreticalknowledge within
dairyfarmingwiththeresponsibilityforsupervisionofvariouscriticalactivitiesatfarmrela
tedtoimprovementoffarmproductivity.Heshouldalsoprovideinputstoreviewanddevelo
ptargetsforsub-ordinatefarmworkers.

9.10 RawmaterialRequirement
Following tables show raw material requirement to run the proposed dairy farm
infirstyear ofproduction;

Table10:DailyFeedingRequirementsforoneCow*inYear1
Total Cost
Daily RateRs. Daily
Description inYear1
FeedAllowance(K /Kg. FeedCost(
(Rs./Cow)
gs) Rs.)
TotalMixed 24.5
30 735 268,275
Ration(TMR) (@3.5 %ofLive BW)
*Average adult Live Body Weight (BW) of cow is assumed to be 700 kg with 35 liters of daily
milkproduction for one lactation. For the calculation purpose, the total milk production of 12,000 litres
inonelactationperiodisdistributedin365days.OnelactationperiodofHolsteinFriesiancowis
estimatedtobe305+_5days.

19
Pre-FeasibilityStudy (DairyFarm-100 cows)

Table 11: Daily Feeding Requirements of One Female Calf** (from birth
tilloneyear ofage) in year1
Daily Daily Total
Rate
Description FeedAllowanc FeedCost( CostinYe
Rs./Kg
e(Kgs) Rs.) ar1
(Rs./Calf)
MilkReplacer(First 3 6 litres 40 240 21,600
monthsofagepercalf)
TMR (from 4thto 8.3 30 248 68,062.5
12thmonths ofage) (@3 % ofliveBW)

Total 89,662.5
**Average birth weight of the new born calf is 35-40 kgs. At the time of weaning at three months
ofage,it is150 kgswhichincreases upto400kgsattheageofoneyear.
Table 12: Daily Feeding Requirements of One Heifer (Older than 1
year)***inyear2

Daily Daily Total Cost

Rate
Description FeedAllowanc FeedCost inyear 1
(Rs./K
e(Kgs) (Rs.) (Rs./Heifer)
g)
TMR 16.5 30 495 180,675
(@3% ofLive BW)

***AverageLivebodyweight(BW)ofheifer,olderthanoneyearisassumedtobe550kgs.
Table13: TotalCostofFeedinginYear 1and2
TotalCost(Rs.)****
Description No.of No.of Year2
Year1
Animals Animals
LactatingCows 82 21,998,550 68 20,084,676
FemaleCalves(younger 4,258,969 36 4,384,302
44
thanoneyear)
Heifers(Female calves 33 8,779,450
-
olderthanoneyear)
Total 126 26,257,519 137 33,248,428
****Prices are rounded off to near decimal point for 365 days of feeding. The number of animals
arecalculated after mortality count which is 7% in new born, 3 % in female calves older than one
yearand2%inadultcows.

20
Pre-FeasibilityStudy (DairyFarm-100 cows)

Table14:TotalCostof Vaccination,MedicationandAIin Year1

Description Rs./animal TotalCostinyear 1 (Rs.)
VaccinationandMedication 1,000 126,175
ArtificialInsemination(AI) 5,000 410,000
Total 6,000 536,175

9.11 Utilitiesandothercosts
Anessentialcosttobebornebytheprojectisthecostofelectricity.Directelectricityexpens
esofthedairyfarmareestimatedtobeapproximatelyRs.115,179permonthi.e.Rs.1,382,
147annually.Thetypeofelectricityconnectionis Industrial B-1 Category and one time
connection charges are Rs. 35,000. It isfurther assumed that within the cooling
system, the cone exhaust fans with watermotor will operate for 12 hours per day.
The milk chiller and energy savers willoperate for 12 hours per day (average)
throughout the year. The water turbine willoperate for 2 hours daily (average). The
milking line will operate for 7 hours daily(average)to carry outthree milkingsessions
dailyfora herd of100 cows.
Theindirectorregularelectricityexpenseformanagementbuildingandstaffresidence is
assumed to be approximately Rs. 5,000 per month or Rs. 60,000 inyearone ofthe
project.
The fuel cost (diesel) for running generator set in case of absence of electricity
isassumed at an average 4 hours daily; for a monthly expense of Rs. 42,600 or
Rs.511,200annually in firstyearofoperations.
Machinery maintenance expense is assumed to be Rs. 10,000 per month or
Rs120,000 in yearone.
Monthly expenses related to travelling, communication and office vehicle
runningareRs. 5,000, 3000and2,000 respectively.
Similarly, monthly expenses related to business promotion and office routine
tasksare Rs. 8,830 and Rs. 1,950 respectively. Professional fees related to any
legal,auditortechnicalconsultation is assumed to be Rs.4,415 permonth.
Insurance of equipment, machinery and office vehicle is assumed to be 5% of
totalcost,whichis Rs. 14,946 permonth infirstyearofoperations.

21
Pre-FeasibilityStudy (DairyFarm-100 cows)

9.12 RevenueGeneration
Based on capacity utilization of 80% for revenues from milk production from
100cows, sales revenue during the first year of operations are shown in the
followingtable. However, capacity has been increased at 5% for a maximum
utilization of95%.

Table15:Revenue Generation– Year1

Description Unit AnnualP Price(R Total Revenue

roduction s./Unit) inYear 1 (Rs.)
Sale ofMilk No. 838,040 60* 50,282,400
ofLite
rs
Sale ofmale calves No. 44 10,000 441,750
Sale ofculled cows No. 15 150,000 2,250,000
Total 52,974,150
Theannualcullingrateis15%applicabletoallanimalsintheherd.

22
Pre-FeasibilityStudy (DairyFarm-100 cows)

10.2 RawMaterialSuppliers
FeedSuppliers

AI/SemenSuppliers
GhaziBrothers
B-35KDASchemeNo1,
MianMuhammadShahRoadP
h:021-4543579
WorldWireSiresbyMaximInternationalPvt.Ltd.
69-A,Sector-XX,Khayaban-e-Iqbal,DHA,
Ph:042-35693993
Altaf&Co.,
Altaf&CoPlaza,16/1,OutFallRoad,Ph:0
42-35763411-4

MilkContractors/Processors

23
Pre-FeasibilityStudy (DairyFarm-100 cows)

HolsteinCowSuppliers
ThepedigreedHolsteinbreedcowswithaveragedailymilkproductioncapacityof35litersofEUand
USAorigin may befound fromfollowingsources;

1. HolsteinAssociationUSA(www.holsteinusa.com)
2. UnitedStatesLivestockExportersAssociation(USLEA)
(www.livestockexportersusadotcom.wordpress.com)
1. VeeproNetherland(www.veepro.nl)
2. Mr.Berg,BergExports,Netherlands(info@bergexport.nl)
3. Mrs.Karin,UgerupCattleExportsSweden(Karin@ugerup.mu)
4. Mr.Johan,HunlandExportsfromHolland(www.hunland.com)
5. Mrs.Renee,StricklandGlobal,USA(www.stricklandglobal.com)

10.3 TechnicalExperts/Consultants
Dr.SamiUllah.F
arm Manger
InfiniteDairyFarm,Sargodha.
Cell:0323-4360006
Dr.RamiHamadF
armManager,
NishatDairyFarm,Sukheki,
Cell:0302-8556301
Dr.NasirJaved
Consultant
LeadFoundation,WestwoodColony,Lahore
Cell:0300-8432595
Dr.ZafarUllahKhanM
anager,
LivestockAltechPvt.
Ltd.
Cell:0302-8543005

24
 Pre-FeasibilityStudy (DairyFarm-100 cows)

11USEFULWEBLINKS
Links of Federal & Provincial Government, Semi Government and other (sector
&Cluster based) Development organizations are given under to get benefit from
theservices offered.
Table16:UsefulWebLinks
www.smeda.org.pk

S www.pakistan.gov.pk
www.moip.gov.pk
www.mnfsr.gov.pk
www.punjab.gov.pk
www.sindh.gov.pk
www.khyberpakhtunkhwa.gov.pk
www.balochistan.gov.pk
www.gilgitbaltistan.gov.pk
www.ajk.gov.pk
www.tdap.gov.pk
www.secp.gov.pk
www.fpcci.com.pk

www.sbp.org.pk
www.psic.gop.pk
www.ssic.gos.pk
www.pbit.gop.pk
www.sbi.gos.pk
www.parc.gov.pk
www.parc.gov.pk
www.parc.gov.pk
www.parc.gov.pk
www.plddb.pk
www.uaf.edu.pk
www.luawms.edu.pk

www.sau.edu.pk
www.gu.edu.pk

www.aup.edu.pk
www.uaar.edu.pk

25
Pre-FeasibilityStudy (DairyFarm-100 cows)

www.iub.edu.pk

www.uvas.edu.pk

www.bzu.edu.pk

www.asf.org.pk
www.livestockpunjab.gov.pk

www.sindh.gov.pk
www.khyberpakhtunkhwa.gov.pk
www.balochistan.gov.pk

25
Pre-FeasibilityStudy (DairyFarm-100 cows)

1 ANNEXURES

1. Income Statement

StatementSummaries SMEDA
IncomeStatement
Rs.inactuals
Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10

Revenue 52,974,150 52,256,417 76,489,928 95,027,614 125,191,153 159,591,549 205,656,178 264,477,793 323,504,058 422,438,238
Cost ofgoodssold 30,043,041 37,543,371 45,285,672 55,232,376 69,834,472 88,159,732 110,971,684 136,690,106 173,443,958 221,043,367
GrossProfit 22,931,109 14,713,046 31,204,256 39,795,238 55,356,681 71,431,817 94,684,493 127,787,687 150,060,101 201,394,871

Generaladministration&sellingexpenses
Administrationexpense 780,000 855,942 939,278 1,030,727 1,131,080 1,241,204 1,362,049 1,494,660 1,640,182 1,799,873
Rentalexpense - - - - - - - - - -
Utilitiesexpense 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477
Travelling&Comm.expense(phone,fax,etc.) 96,000 105,600 116,160 127,776 140,554 154,609 170,070 187,077 205,785 226,363
Officevehicles runningexpense 24,000 26,400 29,040 31,944 35,138 38,652 42,517 46,769 51,446 56,591
Officeexpenses(stationary,etc.) 23,400 25,678 28,178 30,922 33,932 37,236 40,861 44,840 49,205 53,996
Promotionalexpense 105,948 104,513 152,980 190,055 250,382 319,183 411,312 528,956 647,008 844,876
Insuranceexpense 179,345 161,411 143,476 125,542 107,607 89,673 71,738 53,804 35,869 17,935
Professionalfees(legal,audit,etc.) 52,974 52,256 76,490 95,028 125,191 159,592 205,656 264,478 323,504 422,438
Depreciationexpense 1,249,427 1,249,427 1,249,427 1,249,427 2,207,747 2,207,747 2,207,747 2,207,747 2,207,747 2,207,747
Amortizationexpense 111,800 111,800 111,800 111,800 111,800 - - - - -
Propertytaxexpense - - - - - - - - - -
Miscellaneousexpense - - - - - - - - - -
Subtotal 2,682,894 2,759,027 2,919,429 3,073,080 4,231,278 4,344,526 4,618,245 4,945,253 5,289,362 5,771,295
OperatingIncome 20,248,215 11,954,020 28,284,827 36,722,158 51,125,403 67,087,291 90,066,249 122,842,434 144,770,739 195,623,576

Otherincome - - - - - - - - - -
Gain/(loss)onsaleofassets - - - - - - - - - -
EarningsBeforeInterest&Taxes 20,248,215 11,954,020 28,284,827 36,722,158 51,125,403 67,087,291 90,066,249 122,842,434 144,770,739 195,623,576

Interestexpense 4,082,978 3,771,529 3,501,489 3,197,201 3,272,469 2,861,121 2,397,605 1,875,303 1,286,760 623,575
EarningsBeforeTax 16,165,237 8,182,490 24,783,338 33,524,957 47,852,934 64,226,170 87,668,644 120,967,132 143,483,979 195,000,001

Tax 4,877,332 2,083,371 7,893,668 10,953,234 15,968,026 21,698,659 29,903,525 41,557,995 49,438,892 67,469,500
NETPROFIT/(LOSS)AFTERTAX 11,287,905 6,099,119 16,889,671 22,571,723 31,884,908 42,527,511 57,765,119 79,409,136 94,045,087 127,530,502

Balancebroughtforward 5,643,952 11,743,072 14,316,371 36,888,094 68,773,002 111,300,513 169,065,632 248,474,769 342,519,856
Totalprofitavailableforappropriation 11,287,905 11,743,072 28,632,742 36,888,094 68,773,002 111,300,513 169,065,632 248,474,769 342,519,856 470,050,357
Dividend 5,643,952 - 14,316,371 - - - - - - -
Balancecarriedforward 5,643,952 11,743,072 14,316,371 36,888,094 68,773,002 111,300,513 169,065,632 248,474,769 342,519,856 470,050,357

26
Pre-FeasibilityStudy (DairyFarm-100 cows)

12.2 BalanceSheet

State me ntS umma r ie s SMEDA

BalanceSheet
Rs.inactuals
Ye a r 0 Ye a r 1 Ye a r 2 Ye a r 3 Ye a r 4 Ye a r 5 Ye a r 6 Ye a r 7 Ye a r 8 Ye a r 9 Ye a r 1 0

Asse t s
Cu rren t a sset s
Cash &Ban k 721,166 5,617,151 11,059,12 7 12,020,60 2 20,552,43 1 50,536,46 2 90,282,57 2 144,339,3 1 1 218,127,4 4 2 305,081,2 1 1 450,984,0 5 8
Acco u n tsr eceiv ab le - 964,320 935,451 1,385,603 1,745,349 2,299,729 2,931,706 3,782,047 4,858,453 5,942,920 7,760,118
Fin ish edgoodsinventor y - - - - - - - - - - -
Eq u ip men tsp ar ep ar tin v en to r y - - - - - - - - - - -
Raw mater ialin v en to r y 1,099,321 1,530,778 2,041,312 2,762,452 3,859,494 5,400,193 7,527,604 10,253,01 8 14,367,55 1 20,199,00 0 -
Pr e- p aidan nuallandlease - - - - - - - - - - -
Pr e- p aidb uildingren t - - - - - - - - - - -
Pr e- p aid leasein ter est - - - - - - - - - - -
Pr e- p aidin sur ance 179,345 161,411 143,476 125,542 107,607 89,673 71,738 53,804 35,869 17,935 -
To talCu r r en tAssets 1,999,832 8,273,659 14,179,36 5 16,294,19 9 26,264,88 0 58,326,05 6 100,813,6 2 0 158,428,1 7 9 237,389,3 1 5 331,241,0 6 6 458,744,1 7 5

Fixed a sset s
La n d 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992 6,878,992
Bu ild in g/I n f r astr u ctu r e 17,230,93 8 16,369,39 1 15,507,84 4 14,646,29 7 32,951,15 0 31,131,28 3 29,311,41 6 27,491,54 9 25,671,68 3 23,851,81 6 22,031,94 9
An im als 40,000,00 0 37,217,50 0 43,473,01 8 55,123,38 8 69,955,70 8 90,311,30 6 115,978,2 6 1 146,965,4 3 9 185,870,7 9 5 236,862,2 8 1 305,342,1 7 9
Mach in er y&eq u ip m en t 3,523,900 3,171,510 2,819,120 2,466,730 2,114,340 1,761,950 1,409,560 1,057,170 704,780 352,390 -
Fu r n itu r e&f ixtu r es 228,900 206,010 183,120 160,230 137,340 114,450 91,560 68,670 45,780 22,890 -
O f f icev eh icles 63,000 56,700 50,400 44,100 37,800 31,500 25,200 18,900 12,600 6,300 -
O fficeeq u ip men t 63,000 56,700 50,400 44,100 37,800 31,500 25,200 18,900 12,600 6,300 -
To talFixed Assets 67,988,73 0 63,956,80 3 68,962,89 4 79,363,83 7 112,113,1 3 1 130,260,9 8 1 153,720,1 9 0 182,499,6 2 0 219,197,2 3 0 267,980,9 6 9 334,253,1 2 0

I n t a n g ib l ea ssets
Pr e- o per ationcosts 559,000 447,200 335,400 223,600 111,800 - - - - - -
Legal,licen sin g,&trainingco sts - - - - - - - - - - -
To talI n tan gib leAssets 559,000 447,200 335,400 223,600 111,800 - - - - - -
TOTALASSETS 70,547,56 1 72,677,66 2 83,477,65 9 95,881,63 7 138,489,8 1 1 188,587,0 3 7 254,533,8 1 0 340,927,7 9 9 456,586,5 4 5 599,222,0 3 5 792,997,2 9 6

Lia bilit ie s&Sha re ho lde rs 'Equ it y

Cu rren t l iabil ities
Acco u n tsp ayab le - 2,158,152 2,732,747 3,312,331 4,074,228 5,174,374 6,581,452 8,341,433 10,326,27 7 13,154,32 7 16,811,50 7
Exp o r tr e- - - - - - - - - - - -
f in an cef acilitySh o r tter m - - - - - - - - - - -
d eb t - - - - - - - - - - -
Otherliabilities
To talCu r r en tLiab ilities - 2,158,152 2,732,747 3,312,331 4,074,228 5,174,374 6,581,452 8,341,433 10,326,27 7 13,154,32 7 16,811,50 7

O t h erl ia b il it ies Lease

p ayab leDef e r r ed ta - - - - - - - - - - -
x Longtermdebt - - - - - - - - - - -
35,273,78 1 32,384,27 7 30,255,04 1 27,855,76 6 28,725,10 1 25,481,67 6 21,826,90 4 17,708,61 6 13,068,02 5 7,838,891 1,946,572
To talLo n gTermLiabilities 35,273,78 1 32,384,27 7 30,255,04 1 27,855,76 6 28,725,10 1 25,481,67 6 21,826,90 4 17,708,61 6 13,068,02 5 7,838,891 1,946,572

S h a reholders' equity
Paid - u pcapital 35,273,78 1 35,273,78 1 35,273,78 1 35,273,78 1 38,846,68 0 38,846,68 0 38,846,68 0 38,846,68 0 38,846,68 0 38,846,68 0 38,846,68 0
Gain /Lo sso n Netv alu eo f An imalsReta - ( 2,782,500 ) 3,473,018 15,123,38 8 29,955,70 8 50,311,30 6 75,978,26 1 106,965,4 3 9 145,870,7 9 5 196,862,2 8 1 265,342,1 7 9
in ed ear n in gs - 5,643,952 11,743,07 2 14,316,37 1 36,888,09 4 68,773,00 2 111,300,5 1 3 169,065,6 3 2 248,474,7 6 9 342,519,8 5 6 470,050,3 5 7
To talEq u ity 35,273,78 1 38,135,23 3 50,489,87 0 64,713,54 0 105,690,4 8 2 157,930,9 8 7 226,125,4 5 4 314,877,7 5 0 433,192,2 4 3 578,228,8 1 7 774,239,2 1 6
TOTALC AP ITALAN D LI AB ILITI ES 70,547,56 1 72,677,66 2 83,477,65 9 95,881,63 7 138,489,8 1 1 188,587,0 3 7 254,533,8 1 0 340,927,7 9 9 456,586,5 4 5 599,222,0 3 5 792,997,2 9 6

No t e: To t a l asset sva lu ewil l d ifferfro m p ro ject co st d uet o firstin st all m en tofl ea sesp a id att hest a rtofyea r0
- - - - - - - - - - -

27
Pre-FeasibilityStudy (DairyFarm-100 cows)

12.3 CashFlowStatement

- - - - - - - - - - -

StatementSummaries SMEDA
CashFlowStatement
Rs.inactuals
Year0 Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10

Operatingactivities
Net profit - 11,287,905 6,099,119 16,889,671 22,571,723 31,884,908 42,527,511 57,765,119 79,409,136 94,045,087 127,530,502
Add: depreciationexpense - 1,249,427 1,249,427 1,249,427 1,249,427 2,207,747 2,207,747 2,207,747 2,207,747 2,207,747 2,207,747
amortizationexpense - 111,800 111,800 111,800 111,800 111,800 - - - - -
Deferredincometax - - - - - - - - - - -
Accountsreceivable - (964,320) 28,869 (450,153) (359,745) (554,380) (631,977) (850,341) (1,076,406) (1,084,468) (1,817,197)
Finishedgoodinventory - - - - - - - - - - -
Equipmentinventory - - - - - - - - - - -
Rawmaterialinventory (1,099,321) (431,457) (510,534) (721,141) (1,097,042) (1,540,699) (2,127,412) (2,725,413) (4,114,534) (5,831,449) 20,199,000
Pre-paidbuildingrent - - - - - - - - - - -
Pre-paidleaseinterest - - - - - - - - - - -
Advanceinsurancepremium (179,345) 17,935 17,935 17,935 17,935 17,935 17,935 17,935 17,935 17,935 17,935
Accountspayable - 2,158,152 574,595 579,583 761,898 1,100,145 1,407,078 1,759,981 1,984,844 2,828,050 3,657,180
Otherliabilities - - - - - - - - - - -
Cashprovidedbyoperations (1,278,666) 13,429,441 7,571,212 17,677,122 23,255,994 33,227,456 43,400,882 58,175,028 78,428,722 92,182,902 151,795,165

Financingactivities
Changeinlongtermdebt 35,273,781 (2,889,504) (2,129,235) (2,399,276) 869,335 (3,243,425) (3,654,772) (4,118,289) (4,640,591) (5,229,134) (5,892,319)
Changeinshorttermdebt - - - - - - - - - - -
Change inexportre-finance facility - - - - - - - - - - -
Add:landleaseexpense - - - - - - - - - - -
Landleasepayment - - - - - - - - - - -
Changeinleasefinancing - - - - - - - - - - -
Issuanceofshares 35,273,781 - - - 3,572,899 - - - - - -
Purchaseof(treasury)shares - - - - - - - - - - -
Cashprovidedby/(usedfor)financingact 70,547,561 (2,889,504) (2,129,235) (2,399,276) 4,442,234 (3,243,425) (3,654,772) (4,118,289) (4,640,591) (5,229,134) (5,892,319)

Investingactivities
Capitalexpenditure (68,547,730) - - - (19,166,400) - - - - - -
Acquisitions - - - - - - - - - - -
Cash(usedfor) / providedbyinvestingact (68,547,730) - - - (19,166,400) - - - - - -

NETCASH 721,166 10,539,937 5,441,976 15,277,846 8,531,828 29,984,031 39,746,110 54,056,739 73,788,131 86,953,769 145,902,847

Cashbalancebroughtforward 721,166 5,617,151 11,059,127 12,020,602 20,552,431 50,536,462 90,282,572 144,339,311 218,127,442 305,081,211
Cashavailableforappropriation 721,166 11,261,103 11,059,127 26,336,973 20,552,431 50,536,462 90,282,572 144,339,311 218,127,442 305,081,211 450,984,058
Dividend - 5,643,952 - 14,316,371 - - - - - - -
Cashcarriedforward 721,166 5,617,151 11,059,127 12,020,602 20,552,431 50,536,462 90,282,572 144,339,311 218,127,442 305,081,211 450,984,058

28
Pre-FeasibilityStudy (DairyFarm-100 cows)

1 KEYASSUMPTIONS

1. OperatingCostAssumptions

Description Unit Details

Machinery Maintenance Rs./Month 10,000
DirectElectricity Rs./Month 5,000
Office vehicle running expenses Rs./Month 2,000
OfficeExpenses (entertainment, Rs./Month 1,950
janitorial,stationeryetc.)
Communication Expenses Rs./Month 3,000
PromotionalExpenses Rs./Month 8,830

13.2 ProductionCostAssumptions

Description Unit Details

Annualinstalled capacity No.ofcows 100
Capacity utilization %. 100
Milkproductionstartingcapacity % 80
Utilization
Maximumproductioncapacity utilization % 95
Totalmilkproduction Litres/cow/lactationcycle 12,000
Numberoffemale calves in year1 No. 44
Averagenumberofdays in Lactation No.ofdays 305+_5
Purchase priceofpregnantcow Rs. percow 400,000
Costof ArtificialInsemination(AI) Rs/animal/year 5,000
Costofvaccination and medication Rs./animal/year 1,000
Mortalityin new born calves %oftotalanimals/year 7
Mortalityin adultcows %oftotalanimals/year 2
Mortalityin heifers(femalescalves older %oftotalanimals/year 3
thanoneyear)
Shedspace percow Sq.Ft.peranimal 80
Openpaddockspace percow Sq.Ft.peranimal 160

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Pre-FeasibilityStudy (DairyFarm-100 cows)

13.3 RevenueAssumptions

Description Unit Details

TotalMilk Production No.ofLiters/year 838,040
SalePriceofMilk Rs./Litre 60
SalePriceGrowthRate % perannum 10
Capacity Utilization % 80
Maximum Capacity % 95

13.4FinancialAssumptions

Description Unit Details

Debt:Equity Ratio Ratio 70:30
InterestRate % perannum 12
DebtTenure Years 10

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