Project Profile

of:
MILKCO DAIRY AND POULTRY FEEDS
LIMITED
A initiative to implement a Modern and Scientifically
managed Dairy Farm
MILKCO DAIRY AND POULTRY FEEDS LIMITED

PREFACE
The proposal envisages setting up of a Modern and scientifically
managed Dairy farm Project in the name of Milkco Dairy and
Poultry Feeds Limited. The Dairy industry in Bangladesh is
moving forward with great potential as 70% of the country’s total
demand for Milk & Meat is being met by domestic institutions. In
addition to meeting the domestic demand, the companies also
export Meat to several countries of the world. So, considering
huge potential the sponsors of this project took initiative to
implement finally. The project will be situated at its own premises
at Stand, Vill.- Sanora, P.O.- Sanora, P.S.- Dhamrai, Dist.-
Dhaka. Milkco Dairy and Poultry Feeds Limited will be an
innovation and vision driven Entity that will offers best-in-class
dairy products to meet the unmet industry needs and to improve
the lives. A detail project feasibility report has been prepared
covering detail analysis of management aspect, technical aspects,
market aspects, economic aspects and financial aspects in order
to evaluate the suitability and viability of the project from the
view point of all probable aspects. It is expected that the
management enriched with adequate working experience
supported by all types of physical, social, economic and
environmental facilities, infrastructure and opportunities, may be
capable to implement, operate, supervise and monitor the project
more successfully and profitably. The project will Generate total
22 Persons employee opportunity in the first Year and it will
increase every year by 20% and Contribute BDT. 367.09, 418.95,
484.77 and 517.39 Lac to GDP in first 1 to 4th years respectively.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

CONTENTS

EXECUTIVE SUMMARY 4-10

BACKGROUND AND MANAGEMENT

SECTION - 1 : INFORMATION OF MILKCO DAIRY 11-15
AND POULTRY FEEDS LIMITED

SECTION - 2 : TECHNICAL ASPECT 16-21

SECTION - 3 : MARKET ASPECT 22-28

SECTION - 4 : FINANCIAL ASPECT 29-35

SECTION - 5 : SOCIO ECONOMIC ASPECT 36-38

SECTION - 6 : ANNEXURE 39-57

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Executive Summary:
01. Name of the Project : Milkco Dairy and Poultry Feeds Limited
Stand, Vill.- Sanora, P.O.- Sanora, P.S.- Dhamrai, Dist.-
02. Project Address :
Dhaka-1350.
03 Key Person : Mirza Mominul Haque, Proprietor
The project is covered under Agricultural sub-sector as per
04. Nature of Business :
Industrial Policy
Product Description
05 Beef fattening, cow farm, dairy and rearing, Import, Dairy
Product :
Poultry Feed Agro Food Processing.
Project Cost:

Fixed Cost : BDT 1922.78 Lac

06. IDCP BDT 64.62 Lac
Net Working Capital : BDT 405.03 Lac
Total : BDT 2392.43 Lac

Fixed Cost Financing Plan

Bank Debt : BDT 718.00 Lac

07.
Sponsor’s Equity : BDT 1204.78 Lac
Total Amount : BDT 1922.78 Lac
Working Capital Financing Plan
Funded Loan OD/CC (Hypo) BDT 300.00 Lac
08.
Credit Finance BDT13.51 Lac

Sponsors Equity BDT 91.52 Lac

On Project Fixed Cost: 37:63
09. Debt to Equity Ratio : On Working Capital: 77:33
Overall Project: 43:57

Registered Mortgage of 42 decimal of Project Land &

Building) located at Stand, Vill.- Sanora, P.O.- Sanora, P.S.-
Proposed Collateral
10. : Dhamrai, Dist.- Dhaka. Hypothecation of all Fixed & Floating
Security
Assets of the Entity Charge Creation at RJSC
Personal Guarantee

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

11. Project Cost :

The total cost of the project has been estimated at Tk.2392.43Lac of which 1922.78 are
Total Fixed cost of the Project. Cost of the Project and its Financing Pattern is as under:
(000)

Cost of the Project & Cost Financing Pattern

Existing Additional
Particulars Total
Investment Investment
Land 37,800 1,500 39,300
Building 26,050 21,924 47,974
Machinery & Equipments 1,300 1,000 2,300
Biological Asset(Cows) 28,980 67,000 95,980
Furniture & Equipment 324 500 824
Vehicles 1,500 1,800 3,300
Utility cost 1,000 100 1,100
Pre-Operating Expense 500 1,000 1,500
Total Fixed Cost of The Project 97,454 94,824 192,278
IDCP - 6,462 6,462
Working Capital - 40,503 40,503
Total Cost of Project 97,454 141,789 239,243

12. Cost Financing Pattern:

(000)

Cost Financing Pattern

Loan Equity
Particulars % % Total
Amount Amount
Land 0% - 100% 39,300 39,300
Building 42% 20,000 58% 27,974 47,974
Machinery & Equipments 0% - 100% 2,300 2,300
Biological Asset(Cows) 52% 50,000 48% 45,980 95,980
Furniture & Equipment 0% - 100% 824 824
Vehicles 55% 1,800 45% 1,500 3,300
Utility cost 0% - 100% 1,100 1,100
Pre-Operating Expense 0% - 100% 1,500 1,500
Total Fixed Cost of Proiject 37% 71,800 63% 120,478 192,278
IDCP 0% - 100% 6,462 6,462
Working Capital 77% 31,351 23% 9,152 40,503
Total Cost of Project 43% 103,151 57% 136,092 239,243
Debt:Equity Ratio (Based on Fixed of Project) 37% 63% 100%
Debt:Equity Ratio (Including IDCP & Working Capital) 43% 57% 100%
Fixed Asset Coverage Ratio: 2.66

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

12. Working Capital Requirement:

(000)
Working Capital Requirement
Tied up
Particulars 1st year 2nd year 3rd year 4th year 5th year
Period (Days)
Current Asset:
Feed & Madicine 120 13,510 14,241 14,971 15,701 16,432
Packing Material 30 61 66 71 76 81
Receivables 30 15,439 16,880 17,947 19,005 20,062
Stores & Spares 30 1 1 1 1 1
Other Expenses 30 11,492 9,594 9,706 8,827 7,959
Total Working Capital Requirement 40,503 40,782 42,696 43,610 44,535
Current Liability:
OD/CC 30,000 30,000 30,000 30,000 30,000
Accounts Payables/ Creditors 1,351 1,424 1,497 1,570 1,643
Equity Investment:
Sponsor's Equity 9,152 9,358 11,199 12,040 12,892

13. Profitability:
(000)

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Earning Forecast
Particulars 1st year 2nd year 3rd year 4th year 5th year
Sales Revenue 77,197 84,401 89,733 95,023 100,309
Cost of Goods Sold 41,607 45,086 47,589 50,115 52,698
Gross Profit 35,590 39,315 42,144 44,908 47,611
Administrative & Marketing Expenses 12,590 13,056 13,568 14,128 14,744
Operating Profit 23,000 26,259 28,576 30,780 32,867
Financial Expenses 9,162 8,767 7,657 6,444 5,118
Net operating profit 13,838 17,492 20,919 24,336 27,750
Income Tax (35.00%) 4,843 6,122 7,322 8,518 9,712
Net profit after tax 8,995 11,370 13,597 15,818 18,038
Retained earnings 8,995 11,370 13,597 15,818 18,038
Cummulative retained earnings 8,995 20,365 33,962 49,780 67,818
Ratios Analysis :
Gross Profit to sales 46.10% 46.58% 46.97% 47.26% 47.46%
Net Operating profit to sales 17.93% 20.73% 23.31% 25.61% 27.66%
Net Profit to sales 11.65% 13.47% 15.15% 16.65% 17.98%
Return on Equity 6.49% 7.57% 8.08% 8.68% 8.97%
Debt-Service Coverage Ratio 2.51 1.21 1.26 1.31 1.35
Return on Investment 3.74% 4.74% 5.55% 6.46% 7.27%

14. Projected Balance Sheet:

The projected balance sheet of the Entity has been prepared. The Entity is expected to
maintain a healthy financial position during the operational life. The projected Balance sheet
are given below:
Amount in (000)

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Balance Sheet
Construction
Particulars 1st year 2nd year 3rd year 4th year 5th year
Year
Properties & Assets:
Current Assets :
Cash & Bank Balance - 9,958 11,645 17,038 18,262 16,476
Feed & Medicine - 13,510 14,241 14,971 15,701 16,432
Packing Material - 61 66 71 76 81
Receivables - 15,439 16,880 17,947 19,005 20,062
Stores & Spares - 1 1 1 1 1
Other Expenses (wc) - 11,492 9,594 9,706 8,827 14,451
Total Current Asset - 50,461 52,428 59,734 61,871 67,502
Fixed Asset:
Land 39,300 39,300 39,300 39,300 39,300 39,300
Building 47,974 47,015 46,056 45,097 44,138 43,179
Machinery 2,300 2,070 1,840 1,610 1,380 1,150
Biological Asset(Cows) 95,980 95,980 95,980 95,980 95,980 95,980
Furniture & equipment 824 659 494 329 164 -
Vehicles 3,300 2,640 1,980 1,320 660 -
Utilities 1,100 1,100 1,100 1,100 1,100 1,100
Pre-Operating Expense 1,500 1,200 900 600 300 -
Total Fxed Asset 192,278 189,964 187,650 185,336 183,022 180,709
Total asset 192,278 240,425 240,078 245,070 244,893 248,211

Liability & Equity:

Liabilities:
Accounts Pables 1,351 1,424 1,497 1,570 1,643
Cash Credit 30,000 30,000 30,000 30,000 30,000
Bank's Term Loan 71,800 71,800 59,876 46,843 32,596 17,023
Total Liability 71,800 101,800 89,876 76,843 62,596 47,023
Owner's Equity :
Paid up Capital 120,478 129,630 129,836 131,677 132,518 133,370
Retained earnings - 8,995 20,365 36,551 49,780 67,818
Total Equity 120,478 138,625 150,201 168,227 182,298 201,187
Total Capital & Liabilities 192,278 240,425 240,078 245,070 244,893 248,211

15. Cash Flow Statement:

The projected cash flow statement indicates that the project will have comfortable fund
generation at the end of each year. The project will be able to meet all its operational
expenses, repay its debt obligations, provide substantial returns to the sponsors, and build
a reasonable reserve. The projected cash flow is given below:

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Amount in (000)
Projected Statement of Cash Flows
Construction
Particulars 1st year 2nd year 3rd year 4th year 5th year
Year
A. Cash Flows from Operating Activities :
Net profit during the year - 8,995 11,370 13,597 15,818 18,038
Depreciation - 4,818 4,818 4,818 4,818 4,818
Increase/Decrease in Current Asset Except Cash - (58,363) (24,745) (16,881) (21,041) (24,824)
Tax Paid - 4,843 6,122 7,322 8,518 9,712
Interest Paid - 9,162 8,767 7,657 6,444 5,118
Increase/Decrease in Current Liabilities - 1,351 73 73 73 73
Net cash flows from operating activities - (29,195) 6,406 16,586 14,630 12,935

B. Cash flow from Investing Activities:

Acquisition of Property, Plant & Equipment (192,278) - - - - -
Net cash used in Investing Activities (192,278) - - - - -

C. Cash flow from Financing Activities:

Increase in Sponsor Equity 120,478 9,152 206 1,840 841 852
Received of Long term loan 71,800 - - - - -
Received of Short term loan 30,000 - - -
Payment of long term loan - - (11,924) (13,034) (14,247) (15,573)
Payment of Short term loan - - - - - -
Dividend paid - - 7,000 - - -
Net cash flows from financing activities 192,278 39,152 (4,718) (11,193) (13,406) (14,721)

D. Change in Cash and Cash Equivalents (A+B+C)- 9,958 1,688 5,392 1,224 (1,786)
E. Opening Cash and Cash Equivalents - - 9,958 11,645 17,038 18,262
F. Ending Cash and Cash Equivalents (D+E) - 9,958 11,645 17,038 18,262 16,476

16. Sensitivity Analysis:

The critical variables to which the financial viability of the project is sensitive have been
identified to be cost of production and price of output. Necessary sensitivity have been
made and the project withstands the tests. Findings of tests are as under:

Based on 5% decrease in Sales

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

(000)

Sensitivity Analysis
Particular 1st year 2nd year 3rd year 4th year 5th year
Sales revenue 73,337 80,181 85,246 90,272 95,294
Cost of Goods Sold 41,607 45,086 47,589 50,115 52,698
Gross Profit 31,730 35,095 37,657 40,157 42,596
Administrative & Marketing Expenses 12,590 13,056 13,568 14,128 14,744
Operating profit 19,140 22,039 24,089 26,029 27,852
Financial Expenses 9,162 8,767 7,657 6,444 5,118
Net operating profit 9,978 13,272 16,432 19,585 22,735
Income Tax (35.00%) 3,492 4,645 5,751 6,855 7,957
Net profit 6,486 8,627 10,681 12,730 14,778
Ratios Analysis :
Gross Profit to sales 43.27% 43.77% 44.17% 44.48% 44.70%
Net Operating profit to sales 13.61% 16.55% 19.28% 21.70% 23.86%
Net Profit to sales 8.84% 10.76% 12.53% 14.10% 15.51%
Return on Equity 4.68% 5.74% 6.35% 6.98% 7.35%
Debt-Service Coverage Ratio 2.23 1.07 1.12 1.16 1.19
Return on Investment 2.70% 3.59% 4.36% 5.20% 5.95%

Based on 5% increase in Production Cost

(000)
Sensitivity Analysis
Particular 1st year 2nd year 3rd year 4th year 5th year
Sales revenue 77,197 84,401 89,733 95,023 100,309
Cost of Goods Sold 43,688 47,340 49,968 52,621 55,332
Gross Profit 33,509 37,061 39,765 42,402 44,977
Administrative & Marketing Expenses 12,590 13,056 13,568 14,128 14,744
Operating profit 20,919 24,005 26,197 28,274 30,233
Financial Expenses 9,162 8,767 7,657 6,444 5,118
Net operating profit 11,757 15,238 18,540 21,830 25,115
Income Tax (35.00%) 4,115 5,333 6,489 7,641 8,790
Net profit 7,642 9,905 12,051 14,189 16,325
Ratios Analysis :
Gross Profit to sales 43.41% 43.91% 44.31% 44.62% 44.84%
Net Operating profit to sales 15.23% 18.05% 20.66% 22.97% 25.04%
Net Profit to sales 9.90% 11.74% 13.43% 14.93% 16.27%
Return on Equity 5.51% 6.59% 7.16% 7.78% 8.11%
Debt-Service Coverage Ratio 2.36 1.14 1.19 1.23 1.27
Return on Investment 3.18% 4.13% 4.92% 5.79% 6.58%

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

17 Break-Even : Considering the volume of Turnover and Return, the Breakeven

. Point point sales and cash are very satisfactory. Only35% of the rated
capacity and 48% of the proposed capacity utilization required
to be at breakeven and breakeven point sales volume of Tk.
370.83 lac where the PV ratio is 36.00%
18 Financial Rate of : Normal IRR is 15%and if sales fall 5% then IRR will be 11%
. Return again, if production cost became higher by 5% then IRR will be
12%. So, it could easily be said that the investment is very
much risk free.
19 Net Present Very satisfactory BDT 273.60 lac
. Value (NPV)
20 Payback period : Around 7 Years7Month Only
.
21 Socio Economic The project will Generate total22 Persons employee opportunity
. Impact in the first Year and it will increase every year by 20% and
Contribute BDT. 367.09, 418.95, 484.77 and 517.39 Lac to GDP
in first 1 to 4th years respectively.
22 Conclusion : The project proposal is found technically feasible, socially and
. economically desirable, financially rewarding and commercially
viable. The project proposal may, therefore, be considered
suitable for investment.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SECTION – 1

Background
of
Milkco Dairy and Poultry Feeds Limited

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

ENTITY PROFILE

Milkco Dairy and Poultry Feeds Limited (SDF) is a professionally managed

Dairy Farm incorporating the state-of-art skills and facilities at its own plots located
in Stand, Vill.- Sanora, P.O.- Sanora, P.S.- Dhamrai, Dist.- Dhaka..

The principal policy of Milkco Dairy and Poultry Feeds Limited is to keep on contem-
plating the development trend of Dairy sector in Bangladesh through practicing the
specialized modern technology and maintaining quality standard.

The site is located at Stand, Vill.- Sanora, P.O.- Sanora, P.S.- Dhamrai, Dist.-
Dhaka.. about 10 km away from Dhaka city on the way to Dhaka-Mowa Highway.

The entity rears cows for fattening and milk processing. The Entity has been oper-
ating under the dynamic leadership of Md. Shamim Ahmed, Proprietor of the Entity.

MISSION

Mission is to satisfy the clients with excellent, competitive, high-quality& valuable

products, as well as betterment team’s passion and commitment and to strengthen
the acceptability of brands with clients. To continuously improve business processes
leading to prompt and efficient sales and after sales services.

VISION

To develop skills, knowledge and experience to meet the growing demand and di-
verse needs of customers. Sustaining reputation as a reliable, customer-oriented,
dynamic player in the market. Achieving profitable growth, operational and organi-
zational excellence without compromising from Entity values.

GENERAL INFORMATION OF ENTITY

Name Milkco Dairy and Poultry Feeds Limited

Factory address Stand, Vill.- Sanora, P.O.- Sanora, P.S.-
Dhamrai, Dist.- Dhaka.
Head office address Stand, Vill.- Sanora, P.O.- Sanora, P.S.-
Dhamrai, Dist.- Dhaka.
Industry Dairy
Year of Establishment 2002
Tin
Trade license no 001896

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

MANAGEMENT TEAM OF BUSINESS

The operation of the entity will be look after by a Group of experienced team
headed by the Proprietor. The owner will actively monitor the production and mar-
keting. All financial and administrative authorities is vested by both partners. The
operational activities is divided into different departments. Total workers capacity of
the project is around 12 out of total HR strength of around 22 persons.

INFRASTRUCTURE AND PRODUCTION FACILITIES

The Farm facilities of Milkco Dairy and Poultry Feeds Limited are located at Stand,
Vill.- Sanora, P.O.- Sanora, P.S.- Dhamrai, Dist.- Dhaka., on a total area of 42 deci-
mal land. The site is benefited from physical infrastructural facilities such as excel-
lent transport communications, power, water, etc. The farm will be covered by total
7 Shed (2 for fattening cows, 1 for milking cows, 1 for calves, 1 for Isolation of
pregnant & sick cows, 1 for Insemination and another 1 for milk processing) among
planned shed there already have 1 milking cow shed covering 9500 sft, 2 fattening
cow shed covering 5200 and 2200 sft. The management decided to setup another
9500 sft shed for fattening cows and remaining sheds will be 750 sft each. Besides
Cow shed there will be warehouse, Admin & office room etc. The Entity will covered
by fire risk insurance to protect Biological asset& machineries, stock etc.

Summary of Infrastructure facility as well as Civil Construction are given below:

Building & Other Civil Works

Covered Total Cost
Item of Construction Specification
Area in Sft Tk. In (000)
01. Shed o1: For Milking Cows 9500 3500
02. Shed o2: For Fatening Cows 5200 7000
03. Shed o3: For Calves 2200 2100
04. Shed o4: For Fatening Cows 9500 21924
05. Isoletion Shed: For Isolating Pregnant & Sick Cows 750 1312.5
06. Insemination Shed: For Insemination 750 1312.5
07. Warehouse : For Storing Feed, Straw, Grass & Others 2500 3500
08. Milk Processing Shed : For Packing & Storing Milk 750 1125
09. Admin & Office Room: For Official & Administrative Purposes 800 1200
10. Water Supply & Sanitaion System For Watering cows and Sanitaion LS 2000
10. Boundary wall, Gate & Others Civil Works Misscellinious Purposes LS 3000
Total 47974

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

OWNERSHIP PATTERN

Being a proprietorship Entity, the ownership is vested by Mr. Md. Shamim Ahmed
the Proprietor of the Entity. The owner will be directly involved in the core operation
of the business units. The Entity will be managed under an experienced manage-
ment team, which will be guided and supervised by the owner. The keen attach-
ment of the sponsors with businesses being commensurate with their long exposure
will make them able to take strategic decision necessary for business growth.

Brief Description Of The Proprietor :

Mr. Shamim Ahmed is the owner of Sunny Dairy Firm. He has 20 Years of Experi-
ence in the field of Similar and diversified business areas. In all cases he achieved
tremendous success only by virtue of his sincerity and devotion to business affairs.
With his long business experience and technical expertise, he could able to imple-
ment and operate the project successfully. Under his leadership the company will
manage to produce quality product as per the specifications of the buyer. With his
long business experience and technical expertise, he could able to implement and
operate the project successfully. He is well conversant of diary business of
Bangladesh from 25 years and by dint of his merit and activity has attained good
position as dairy products in Bangladesh.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SECTION – 2

TECHNICAL ASPECT

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Product Mix

Milk, Fattening Cows, Calves, Bio Gas etc.

Production Capacity (Annual sales)

After successfully extension the entity expects to sell around 1400 Litter of Milk per day. The
entity rear fattening cows targeting Eid-Ul-Adha and expects to sell around 220 Fattened cows
per year. Besides Milk and Fattening cows the entity will also sell Calves and AS THE By
product of Dairy Farm Bio Gas.

The yearly sales estimation are given below:

Unit Ca pa c ity Ca pa c ity Unit pric e Tota l Tota l Tk

Prod uc ts
Per Day Ye a rly pe r SFT in Tk. in '000'

Milk Ltr 1,386 505,890 80 40,471,200 40,471

Fattening Cows Pc s - 220 250,000 54,900,000 54,900
Calves Pc s - 75 120,000 9,000,000 9,000
Bio Gas LTR 150 54,750 25 1,368,750 1,369
Total Sale s at 100% Capac ity 105,740

Land and location of the Project:

Certain pre-requisites in the form of infrastructural facilities are required for the im-
plementation of this type of project as enumerated below:
 Professionals
 Pool of skilled and semi-skilled workers
 Electric power
 Water
 Transport network
 Telecommunication facilities
 Proximity to source of raw materials
 Proximity to market for finished goods
 Availability of banking and financial services
 Socio-economic facilities for the large pool of staff (educational institutions,
hospitals/health facilities, recreational/entertainment facilities, etc.)
Considering the above pre- requisites, the project will be located at Stand, Vill.-
Sanora, P.O.- Sanora, P.S.- Dhamrai, Dist.- Dhaka.. The area of the land is 42 deci-
mal and as per prevailing market rate the value of land is 393.00 lac which is under
the ownership of the Proprietor.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Building and Other Civil Works:

As stated earlier the Farm are already in in operation. Hence already there have
some civil construction and some are to be extension. The farm will be covred by
total 7 Shed (2 for fattening cows, 1 for milking cows, 1 for calves, 1 for Isolation of
pregnant & sick cows, 1 for Insemination and another 1 for milk processing) among
planned shed there already have 1 milking cow shed covering 9500 sft, 2 fattening
cow shed covering 5200 and 2200 sft. The management decided to setup another
9500 sft shed for fattening cows and remaining sheds will be 750 sft each. Besides
Cow shed there will be warehouse, Admin & office room etc. The detail plan and
costs are outlined below:

Building & Other Civil Works

Covered Total Cost
Item of Construction Specification
Area in Sft Tk. In (000)
01. Shed o1: For Milking Cows 9500 3500
02. Shed o2: For Fatening Cows 5200 7000
03. Shed o3: For Calves 2200 2100
04. Shed o4: For Fatening Cows 9500 21924
05. Isoletion Shed: For Isolating Pregnant & Sick Cows 750 1312.5
06. Insemination Shed: For Insemination 750 1312.5
07. Warehouse : For Storing Feed, Straw, Grass & Others 2500 3500
08. Milk Processing Shed : For Packing & Storing Milk 750 1125
09. Admin & Office Room: For Official & Administrative Purposes 800 1200
10. Water Supply & Sanitaion System For Watering cows and Sanitaion LS 2000
10. Boundary wall, Gate & Others Civil Works Misscellinious Purposes LS 3000
Total 47974

Biological Asset:
As a dairy Farm the major asset of the entity are Biological Asset or Different types of cows like
Fatteneing Cows, Milking Cows, Calves etc. Currently the entity have 110 different types of
cows and plans to buy 300 cows more. Total value of Biological Asset after sucessful expansion
will be around 959.80 lac.

Bio lo g ic a l Asse t (Co ws)

(000)
Existing Ne w Co ws
Typ e Existing Ne w To ta l Purc ha se To ta l Va lue
Co ws Va lue Va lue
Milking C o w s 54 100 154 400 21,600 40,000 61,600
Fa tte ning C o w s 44 200 244 135 5,940 27,000 32,940
C a lv e s 12 - 12 120 1,440 - 1,440
To ta l 110 300 410 655 28,980 67,000 95,980

Utility& Maintenance Machineries:

As it’s a DAIRY Farm the entity didn’t require any heavy machineries. Rather, the
project will require some utility and maintenance machineries. The value of that
shores of machineries are estimated to be BDT 34.00 lac.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Office and Factory Furniture, Fixture &Equipment:

The project already procured most of the office &factory furniture, fixture, and other
assets. The cost of office furniture, fixture and other assets has been estimated at Tk.
8.24 lac.

Vehcheles:
The project will buy 2 nos of Pickup Van (5 Ton) for carrying Milk and feed. The cost
of said Pickup van will be around 33.00 lac

Technical Services and quality control :

Milkco Dairy and Poultry Feeds Limited. Ltd. takes care of water, air and soil. Fire-
fighting systems are professionally installed. Farming activities at the above site is
supported by a team of highly qualified & experienced personnel available at Milkco
Dairy and Poultry Feeds Limited. in the areas of Technology, Formulation Develop-
ment, Quality Control & Quality Assurance. The team is fully competent to satisfy the
customer need and make the Entity a profitable venture. For ensuring quality, the
promoters will adopt the following measures:
 Use of Hygiene and quality Feed
 Mixer of Feed in appropriate manner.
 Employment of skilled, qualified and experienced technical personnel and ad-
ministrative personnel.
 Handling of appropriate and suitable testing equipment to ensure quality of
products at every stage of processing; and
 Storing and packing of products by skilled personnel very carefully to keep the
products from any loss/ damage.

Feed & Medicine :

The project is based on mostly local Feed 7 Medicine. The entity will buy that Feed
and medicine from repeated supplier. The entity will also feed their cows green grass
which will be cultivated at their premises.

Safety Provision :
The project has adequate safety provision to fight against fire hazards and first aid.
The cost of firefighting system has been estimated under machinery & equipment.

Utilities :
Water :
The project will require water for farm and domestic use. The required water will be
available from deep tube well installed by the sponsors of the project.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Power :
Electricity from REB source will be used for this project. The electricity requirement
for the project has been estimated at 50 KV. One Diesel generator of 50 KV have to
install for supply of power during power failure.
Electrical work both internal and external has to be done.

Fuel &Lubricant :
The project requires fuel and lubricant for operation and maintenance of machinery &
equipment, generator and vehicles.

Stores and Spares :

The project will require stores & spares for the machinery and equipment @0.5%,
1.00%, 1.50% and 2.00% of its cost for 1st, 2nd, 3rd, 4th and onwards operation
respectively.

Repair and Maintenance :

The annual requirement of repair and maintenance for the machinery has been
estimated at @ 0.50%, 1.00%, 1.50%, 2.00% of its cost for the 2nd, 3 rd, 4th and
onwards and that of building @ 0.5% every year respectively.

Technical, Administrative Personnel &Workers :

Manufacturing activities at the above site is supported by a team of highly qualified &
experienced personnel available at Milkco Dairy and Poultry Feeds Limited. in the
areas of Technology, Formulation Development, Quality Control & Quality Assurance.
The team is fully competent to satisfy the customer need and make the Entity a
profitable venture. The project will require 12 technical personnel and around 10
Administrative & Marketing Personnel for various sections.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SECTION -3

MARKETINGASPECTS

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

MARKETING ASPECTS
Introduction:

The product is one of the basic food items of modern civilization. Dairy items are
major nutritional item of human body. The proposed project has been designed to
set up a modern dairy farm which will supply thus goods which are required
regularly and demand of those products are increased every day. So, there should
not required much more hectic market plan rather have to ensure the quality only
and that’s the prime motto of the sponsor of the entity

Marketing Strategy:
The sponsor of these project are well experienced on this sector and they have
already a very good command regarding markets. the sponsor will adopt appropriate
marketing strategies with regard to product quality, pricing, promotion, and
distribution. It may be mentioned here that marketing strategies would be changed
in future keeping track with the changed circumstances. The sponsors will keep
constant watch on the export market both at home and abroad and adopt
appropriate marketing strategies. They have gathered lot of experiences in operating
these types of units and hopefully this will help them to run the project with good
managerial efficiency. They will help moreover build-up good network with the
export market. This will help them obtaining sufficient orders from export market, to
ensure successful operation of the project.

Product marketing:
The sponsors have ready market as they have huge experience and several years of
business with various distributors. Sponsors will maintain close contact with the
buyer, seller, real estate firms, distributing agencies and with foreign buyers. Target
Market of NNDC is Local Markets.

Conclusion:

On the basis of' the above analysis it is assumed that the marketing of proposed
product will not face any adverse competition.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SECTION -5

FINANCIALASPECTS

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Financial Aspects
The total cost of the project has been estimated at Tk.10936.67 Lac of which
8350.00 are Total Fixed cost of the Project. Cost of the Project and its Financing
Pattern is as under:
(000)
Cost of the Project & Cost Financing Pattern
Existing Additional
Particulars Total
Investment Investment
Land 37,800 1,500 39,300
Building 26,050 21,924 47,974
Machinery & Equipments 1,300 1,000 2,300
Biological Asset(Cows) 28,980 67,000 95,980
Furniture & Equipment 324 500 824
Vehicles 1,500 1,800 3,300
Utility cost 1,000 100 1,100
Pre-Operating Expense 500 1,000 1,500
Total Fixed Cost of The Project 97,454 94,824 192,278
IDCP - 6,462 6,462
Working Capital - 40,503 40,503
Total Cost of Project 97,454 141,789 239,243

12. Cost Financing Pattern :

Tk. in ‘000’

Cost Financing Pattern

Loan Equity
Particulars % % Total
Amount Amount
Land 0% - 100% 39,300 39,300
Building 42% 20,000 58% 27,974 47,974
Machinery & Equipments 0% - 100% 2,300 2,300
Biological Asset(Cows) 52% 50,000 48% 45,980 95,980
Furniture & Equipment 0% - 100% 824 824
Vehicles 55% 1,800 45% 1,500 3,300
Utility cost 0% - 100% 1,100 1,100
Pre-Operating Expense 0% - 100% 1,500 1,500
Total Fixed Cost of Proiject 37% 71,800 63% 120,478 192,278
IDCP 0% - 100% 6,462 6,462
Working Capital 77% 31,351 23% 9,152 40,503
Total Cost of Project 43% 103,151 57% 136,092 239,243
Debt:Equity Ratio (Based on Fixed of Project) 37% 63% 100%
Debt:Equity Ratio (Including IDCP & Working Capital) 43% 57% 100%
Fixed Asset Coverage Ratio: 2.66

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Financial Evaluation :

Profitability potential of the project has been estimated for five years of operation to
assess the financial viability of the project. The assumptions underlying the earning
forecast are as follows:

a) The project will operate for 24 hours per day and 300 working days in a year;
b) The capacity build-up has been assumed to be achieved gradually at the rate of
60%, 65%, 70%, 75% and 80% in the 1st, 2nd, 3rd, 4th and 5th years and
remaining years of operation ;
c) Price of raw materials and finished goods have been assumed to remain con-
stant throughout the projected years of operation with the assumption that any
increase in the price of raw materials will be offset by the corresponding in-
crease in the price of finished goods ;
d) Sales prices of the proposed products have been assumed on the basis of
market price of such product;
e) Stock of work-in-process has been considered for 1 day;
f) Stock of finished goods has been estimated for 7 days ;
g) Annual increment of 10% has been considered for calculation of wages and
salaries and bonus of two months basic pay also been provided;
h) Depreciation has been charged on straight line methods at the following rates:
- Building - 5%
- Machinery - 10%
- Other Assets - 20%

i) Economic life of the project has been assumed to be 10 (ten) years without any
major replacement.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Profitability:
Based on the above assumptions, the profitability forecast reveals the following and
found that the project is financially viable.
(000)

Earning Forecast
Particulars 1st year 2nd year 3rd year 4th year 5th year
Sales Revenue 77,197 84,401 89,733 95,023 100,309
Cost of Goods Sold 41,607 45,086 47,589 50,115 52,698
Gross Profit 35,590 39,315 42,144 44,908 47,611
Administrative & Marketing Expenses 12,590 13,056 13,568 14,128 14,744
Operating Profit 23,000 26,259 28,576 30,780 32,867
Financial Expenses 9,162 8,767 7,657 6,444 5,118
Net operating profit 13,838 17,492 20,919 24,336 27,750
Income Tax (35.00%) 4,843 6,122 7,322 8,518 9,712
Net profit after tax 8,995 11,370 13,597 15,818 18,038
Retained earnings 8,995 11,370 13,597 15,818 18,038
Cummulative retained earnings 8,995 20,365 33,962 49,780 67,818
Ratios Analysis :
Gross Profit to sales 46.10% 46.58% 46.97% 47.26% 47.46%
Net Operating profit to sales 17.93% 20.73% 23.31% 25.61% 27.66%
Net Profit to sales 11.65% 13.47% 15.15% 16.65% 17.98%
Return on Equity 6.49% 7.57% 8.08% 8.68% 8.97%
Debt-Service Coverage Ratio 2.51 1.21 1.26 1.31 1.35
Return on Investment 3.74% 4.74% 5.55% 6.46% 7.27%

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Projected Balance Sheet:

The projected balance sheet of the Entity has been prepared. The Entity is expected
to maintain a healthy financial position during the operational life. The projected
Balance sheet are given below:

Amount in (000)
Balance Sheet
Construction
Particulars 1st year 2nd year 3rd year 4th year 5th year
Year
Properties & Assets:
Current Assets :
Cash & Bank Balance - 9,958 11,645 17,038 18,262 16,476
Feed & Medicine - 13,510 14,241 14,971 15,701 16,432
Packing Material - 61 66 71 76 81
Receivables - 15,439 16,880 17,947 19,005 20,062
Stores & Spares - 1 1 1 1 1
Other Expenses (wc) - 11,492 9,594 9,706 8,827 14,451
Total Current Asset - 50,461 52,428 59,734 61,871 67,502
Fixed Asset:
Land 39,300 39,300 39,300 39,300 39,300 39,300
Building 47,974 47,015 46,056 45,097 44,138 43,179
Machinery 2,300 2,070 1,840 1,610 1,380 1,150
Biological Asset(Cows) 95,980 95,980 95,980 95,980 95,980 95,980
Furniture & equipment 824 659 494 329 164 -
Vehicles 3,300 2,640 1,980 1,320 660 -
Utilities 1,100 1,100 1,100 1,100 1,100 1,100
Pre-Operating Expense 1,500 1,200 900 600 300 -
Total Fxed Asset 192,278 189,964 187,650 185,336 183,022 180,709
Total asset 192,278 240,425 240,078 245,070 244,893 248,211

Liability & Equity:

Liabilities:
Accounts Pables 1,351 1,424 1,497 1,570 1,643
Cash Credit 30,000 30,000 30,000 30,000 30,000
Bank's Term Loan 71,800 71,800 59,876 46,843 32,596 17,023
Total Liability 71,800 101,800 89,876 76,843 62,596 47,023
Owner's Equity :
Paid up Capital 120,478 129,630 129,836 131,677 132,518 133,370
Retained earnings - 8,995 20,365 36,551 49,780 67,818
Total Equity 120,478 138,625 150,201 168,227 182,298 201,187
Total Capital & Liabilities 192,278 240,425 240,078 245,070 244,893 248,211

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Cash Flow Statement:

The projected cash flow statement indicates that the project will have comfortable
fund generation at the end of each year. The project will be able to meet all its op-
erational expenses, repay its debt obligations, provide substantial returns to the
sponsors and build a reasonable reserve. The projected cash flow is given below:
Amount in (000)

Projected Statement of Cash Flows

Construction
Particulars 1st year 2nd year 3rd year 4th year 5th year
Year
A. Cash Flows from Operating Activities :
Net profit during the year - 8,995 11,370 13,597 15,818 18,038
Depreciation - 4,818 4,818 4,818 4,818 4,818
Increase/Decrease in Current Asset Except Cash - (58,363) (24,745) (16,881) (21,041) (24,824)
Tax Paid - 4,843 6,122 7,322 8,518 9,712
Interest Paid - 9,162 8,767 7,657 6,444 5,118
Increase/Decrease in Current Liabilities - 1,351 73 73 73 73
Net cash flows from operating activities - (29,195) 6,406 16,586 14,630 12,935

B. Cash flow from Investing Activities:

Acquisition of Property, Plant & Equipment (192,278) - - - - -
Net cash used in Investing Activities (192,278) - - - - -

C. Cash flow from Financing Activities:

Increase in Sponsor Equity 120,478 9,152 206 1,840 841 852
Received of Long term loan 71,800 - - - - -
Received of Short term loan 30,000 - - -
Payment of long term loan - - (11,924) (13,034) (14,247) (15,573)
Payment of Short term loan - - - - - -
Dividend paid - - 7,000 - - -
Net cash flows from financing activities 192,278 39,152 (4,718) (11,193) (13,406) (14,721)

D. Change in Cash and Cash Equivalents (A+B+C)- 9,958 1,688 5,392 1,224 (1,786)
E. Opening Cash and Cash Equivalents - - 9,958 11,645 17,038 18,262
F. Ending Cash and Cash Equivalents (D+E) - 9,958 11,645 17,038 18,262 16,476

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Sensitivity Analysis :
The critical variables to which the financial viability of the project is sensitive have
been identified to be cost of production and price of output. Necessary sensitivity have
been made and the project withstands the tests. Findings of tests are as under:

Based on 5% decrease in Sales

(000)
Sensitivity Analysis
Particular 1st year 2nd year 3rd year 4th year 5th year
Sales revenue 73,337 80,181 85,246 90,272 95,294
Cost of Goods Sold 41,607 45,086 47,589 50,115 52,698
Gross Profit 31,730 35,095 37,657 40,157 42,596
Administrative & Marketing Expenses 12,590 13,056 13,568 14,128 14,744
Operating profit 19,140 22,039 24,089 26,029 27,852
Financial Expenses 9,162 8,767 7,657 6,444 5,118
Net operating profit 9,978 13,272 16,432 19,585 22,735
Income Tax (35.00%) 3,492 4,645 5,751 6,855 7,957
Net profit 6,486 8,627 10,681 12,730 14,778
Ratios Analysis :
Gross Profit to sales 43.27% 43.77% 44.17% 44.48% 44.70%
Net Operating profit to sales 13.61% 16.55% 19.28% 21.70% 23.86%
Net Profit to sales 8.84% 10.76% 12.53% 14.10% 15.51%
Return on Equity 4.68% 5.74% 6.35% 6.98% 7.35%
Debt-Service Coverage Ratio 2.23 1.07 1.12 1.16 1.19
Return on Investment 2.70% 3.59% 4.36% 5.20% 5.95%

Based on 5% increase in Production Cost

(000)
Sensitivity Analysis
Particular 1st year 2nd year 3rd year 4th year 5th year
Sales revenue 77,197 84,401 89,733 95,023 100,309
Cost of Goods Sold 43,688 47,340 49,968 52,621 55,332
Gross Profit 33,509 37,061 39,765 42,402 44,977
Administrative & Marketing Expenses 12,590 13,056 13,568 14,128 14,744
Operating profit 20,919 24,005 26,197 28,274 30,233
Financial Expenses 9,162 8,767 7,657 6,444 5,118
Net operating profit 11,757 15,238 18,540 21,830 25,115
Income Tax (35.00%) 4,115 5,333 6,489 7,641 8,790
Net profit 7,642 9,905 12,051 14,189 16,325
Ratios Analysis :
Gross Profit to sales 43.41% 43.91% 44.31% 44.62% 44.84%
Net Operating profit to sales 15.23% 18.05% 20.66% 22.97% 25.04%
Net Profit to sales 9.90% 11.74% 13.43% 14.93% 16.27%
Return on Equity 5.51% 6.59% 7.16% 7.78% 8.11%
Debt-Service Coverage Ratio 2.36 1.14 1.19 1.23 1.27
Return on Investment 3.18% 4.13% 4.92% 5.79% 6.58%

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Debt-Service Coverage Ratio (DSCR):

The debt service coverage ratio may be found of the proposed project 2.51, 1.21,
1.26, 1.31 and 1.35times at 1st, 2nd, 3rd 4th& 5th year respectively.

Break-even Analysis:
Considering the volume of Turnover and Return, the Breakeven point sales
and cash are very satisfactory. Only 35% of the rated capacity and 48% of
the proposed capacity utilization required to be at breakeven and breakeven
point sales volume of Tk. 370.83 lac where the PV ratio is 36.00%

Internal Rate of Return (IRR):

Normal IRR is 15%and if sales fall 5% then IRR will be 11% again, if production
cost became higher by 5% then IRR will be 12%. So, it could easily be said that
the investment is very much risk free.

Conclusion:

The financial aspect reveals that the financial indicators such as financial ratios,
break even analysis, cash flow statement, balance sheet, internal rate of return,
etc. are considerable, appreciable and acceptable. There exists a comfortable
marketing facility of the finished product.

Thus, it can be concluded that the project is technically feasible, commercially vi-
able, financially rewarding and socially desirable.

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SECTION - 6

Social Aspect

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SOCIO-ECONOMIC ASPECT

01. EMPLOYMENT GENERATION:

On completion of the proposed project there will be employment opportunity

for around22persons and it will increase by 20% every year. Besides, from
the very beginning of the work, there will be a number of temporary
employments up to the implementation of the farm.

02. LINKAGE EFFECT:

The viability of these project will encourage other new entrepreneurs to go

ahead for such or similar projects which will definitely strengthen the base of
our Healthcare &Industrial sector and at the same time will help to increase
our domestic National income simultaneously will help to earn our hard
earning foreign currency.

03. Contribution to GDP:

The Entity will contribute BDT. 367.09 Lac in first year to GDP and that’s will
increase simultaneously every consecutive year. Contribution on GDP of first
four years are given below:

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

Contribution to GDP
Particulars Amount Amount Amount Amount

A. Sales: 77,197 84,401 95,023 100,309

B. Inter firm Transactions:

Raw Material 34,383 36,260 40,012 41,889
Stores & Spares 12 12 12 12
Repair and maintenance 252 252 252 252
Water, Power & Fuel 1,481 1,592 1,815 1,927
Insurance 961 961 961 961
Postage, telephone, fax, e-mail 240 252 278 292
Stationery & Printing 360 378 417 438
Travelling & Conveyance 600 600 600 600
Entertainment 300 300 300 300
Renewal of license 200 200 200 200
Gift/subscription 300 300 300 300
Audit fee 100 100 100 100
Foreign tour 500 500 500 500
Excursion/ picnic 500 500 500 500
Meeting 300 300 300 300
Total 40,488 42,506 46,546 48,570

Contribution to GDP (A-B) 36,709 41,895 48,477 51,739

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MILKCO DAIRY AND POULTRY FEEDS LIMITED

SECTION - 8

Annexure

34