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Pre-Feasibility Study (Layer Farm)

Small and Medium Enterprises Development Authority

Ministry of Industries & Production Government of Pakistan

www.smeda.org.pk

HEAD OFFICE 4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,

Lahore Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

[email protected]

REGIONAL OFFICE Punjab

REGIONAL OFFICE Sindh

REGIONAL OFFICE Khyber Pakhtunkhwa

REGIONAL OFFICE Balochistan

3rd Floor, Building No. 3, Aiwan-e-Iqbal Complex,

Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042) 36304926-7

[email protected]

5th Floor, Bahria Complex II, M.T. Khan Road,

Karachi. Tel: (021) 111-111-456 Fax: (021) 35610572

[email protected]

Ground Floor State Life Building

The Mall, Peshawar. Tel: (091) 111-111-456

Fax: (091) 5286908 [email protected]

Bungalow No. 15-A Chaman Housing Scheme

Airport Road, Quetta. Tel: (081) 2831623, 2831702

Fax: (081) 2831922 [email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013

mailto:[email protected]

mailto:[email protected]

Table of Contents 1. DISCLAIMER ....................................................................................................................................... 2 2. PURPOSE OF THE DOCUMENT ...................................................................................................... 3 3. INTRODUCTION TO SMEDA ........................................................................................................... 3 4. INTRODUCTION TO SCHEME ........................................................................................................ 4 5. EXECUTIVE SUMMARY ................................................................................................................... 4 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ..................................................................... 5 7. CRITICAL FACTORS ......................................................................................................................... 5 8. INSTALLED & OPERATIONAL CAPACITIES .............................................................................. 5 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................................................. 6 10. POTENTIAL TARGET MARKETS ................................................................................................ 6 11. LAYER PRODUCTION PROCESS ................................................................................................. 6

11.1 SELECTION OF DAY OLD CHICKS ................................................................................................. 6 11.2 PRE-BROODING MANAGEMENT ................................................................................................... 6 11.3 BROODING, REARING AND LAYING MANAGEMENT ..................................................................... 7 11.4 FEEDING ....................................................................................................................................... 7 11.5 DISEASE PREVENTION AND CONTROL .......................................................................................... 8 11.6 HOUSE TEMPERATURE AND VENTILATION ................................................................................... 9 11.7 CULLING OF UNPRODUCTIVE LAYERS .......................................................................................... 9

12. PROJECT COST SUMMARY .......................................................................................................... 9

12.1. PROJECT ECONOMICS ................................................................................................................... 9 12.2. PROJECT FINANCING .................................................................................................................. 10 12.3. PROJECT COST ........................................................................................................................... 10 12.4. SPACE REQUIREMENT ................................................................................................................ 11 12.5. MACHINERY & EQUIPMENT ....................................................................................................... 11 12.6. FURNITURE AND FIXTURE .......................................................................................................... 11 12.7. RAW MATERIAL REQUIREMENTS ............................................................................................... 11 12.8. HUMAN RESOURCE REQUIREMENT ............................................................................................ 12 12.9. REVENUE GENERATION .............................................................................................................. 12 12.10. OTHER COSTS ............................................................................................................................ 12

13. CONTACT DETAILS OF SUPPLIERS AND CONSULTANTS ................................................ 13 14. ANNEXURE ...................................................................................................................................... 14

14.1. INCOME STATEMENT .................................................................................................................. 14 14.2. CASH FLOW STATEMENT ........................................................................................................... 15 14.3. BALANCE SHEET ........................................................................................................................ 16 14.4. USEFUL PROJECT MANAGEMENT TIPS ....................................................................................... 17 14.5. USEFUL LINKS ............................................................................................................................ 18

15. KEY ASSUMPTIONS ...................................................................................................................... 19

Pre-Feasibility Study Layer Farm

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2

1. DISCLAIMER

This information memorandum is to introduce the subject matter and provide a general idea and information on the said subject. Although, the material included in this document is based on data / information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on ‘as is where is’ basis without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant / technical expert before taking any decision to act upon the information.

For more information on services offered by SMEDA, please contact our website: www.smeda.org.pk



2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document / study covers various aspects of project concept development, start-up, production, marketing, finance and business management.

The purpose of this document is to facilitate potential investors in layer farming by providing them a general understanding of the business with intention of supporting potential investors in crucial investment decisions.

The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and it’s successful management.

Apart from carefully studying the whole document, one must consider critical aspects provided later on, which form basis of any investment decision.

3. INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs).

With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral research’ to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives.

Preparation and dissemination of prefeasibility studies in key areas of investment has been a hallmark of SME facilitation by SMEDA.

Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services.



4. INTRODUCTION TO SCHEME

‘Prime Minister’s Youth Business Loan’ scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially by the National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).

Small business loans up to 2 million with tenure up to 8 years, inclusive of 01 year grace period and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5. EXECUTIVE SUMMARY

Commercial layer farms contribute about 70% towards total egg production in Pakistan, whereas the remaining 30% comes from rural poultry. The Day Old Chicks (DOCs) of layer are procured from hatcheries and breeder companies. These are brooded and reared for a period of 6 months after which, they start laying eggs for a period of next 12 months. On an average, one hen lays about 300-350 eggs. The price of egg varies with demand and supply and is generally higher in winter. As these birds stop laying or feed-efficiency drops, the layers are culled and sold in market. The selling price of these birds is determined on live body weight basis.

Layer farm management in line with best husbandry practices is vital for the success of this business. All farm operations would be done with strict compliance to recommended husbandry practices including standard hygiene, proper temperature, humidity, vaccination, medication, feeding and lighting management.

A conventional farm of 5,000 layers is suggested in this pre-feasibility study, which may be started in a rented, purpose built building / shed requiring a total estimated investment of Rs 2.22 million. This includes a capital investment of Rs. 0.20 million and working capital of Rs. 2.02 millions. The Net Present Value (NPV) of the project is around Rs. 24.17 million with an Internal Rate of Return (IRR) of 84% and a payback period of 2.12 years. The project will generate direct employment for 02 persons. Higher return on investment and a steady growth of business is expected with the entrepreneur having some prior experience in the related field of business.



6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

In the proposed layer farm, the Day Old Chicks (DOCs) of commercial layer strain (e.g. Hy-Line W-36) are brooded and reared on specially formulated feed for a period of six months. After that, layers start laying eggs with changed feeding regime for next 12 months. Purpose built conventional farm having shed space of 8,750 sq. ft. will be acquired on rental basis. On an average, one bird lays about 300-350 eggs, after which, the layers are culled and sold in the market on live body weight basis to traders and wholesalers.

One flock is housed for 1.5 years at the same farm. In this pre-feasibility, a layer farm of 5,000 layers is recommended. The layer is ready to lay eggs in October / November. The demand for eggs increases during winter season, hence fetching higher prices.

Eggs are packed in paper or plastic trays, sold in bulk in wholesale markets. Losses in eggs business can be minimized by following careful transportation methods as eggs are prone to damage during transportation. In this study, estimated average price of eggs is taken as Rs. 100 per dozen.

7. CRITICAL FACTORS

Background knowledge and related experience of the entrepreneur in commercial layer farm operations.

Application of good poultry husbandry practices such as timely feeding, watering, lighting, vaccination, medication, temperature / humidity control and culling of uneconomical layers to ensure flock’s best performance and higher efficiency in disease-free environment.

Awareness of supply and demand of eggs in the market. The farm gate price of eggs is usually higher in winter as compared to summer.

Efficient marketing of the project and bulk supply to wholesalers.

8. INSTALLED & OPERATIONAL CAPACITY

In the proposed study, all calculations have been based on revolving flock size of 5,000 layers, kept for 1.5 years. There will be a lag time of one month for cleaning and disinfection and necessary arrangements for preparation of next flock. The flock will produce 10,287 dozen eggs per month.



9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Rural and peri-urban and rural areas around big cities e.g. Rawalpindi, Lahore, Multan, Karachi, Hyderabad, Sukkur, Quetta, Ziarat, Peshawar, Charsadda, Abbotabad and Swat are recommended for starting a layer farm. Setting up a farm at an isolated place will minimize the risk of diseases. Proximity of farms to cities enables the farmer to develop easy links with the market for the purchase of farm inputs and for selling eggs and culled birds.

10. POTENTIAL TARGET MARKETS

Layer farming is a profitable venture. Sale is channelized through dealer contracts on farm gate basis or supplied in bulk to the wholesalers or bulk buyers. There are bakeries and confectioneries that need daily supply of eggs for their production. The wholesale and retail price of eggs and poultry meat is determined daily on demand and supply dynamics.

11. LAYER PRODUCTION PROCESS

Layer farming must begin with a clean and sanitized shed. The layout of open conventional shed should be north-south to ensure clean, dry and well-ventilated shed, as this provides fresh air and carries off humidity. The shed should remain empty at least two weeks after disinfection and fumigation to control disease outbreaks through removal of debris and exposure of surfaces to fumigants.

11.1 Selection of Day Old Chicks

For the proposed project, strain of White Leghorn breed i.e. Hy-Line W-36 is recommended as it is considered the most efficient layer with excellent livability and good egg production capacity. It lays dozens of good quality and strong shelled eggs at minimum feed intake. The DOCs procured from reliable hatcheries should be of uniform size, active, alert and bright eyed. The skin of shanks of healthy chicks should be bright and shiny.

11.2 Pre-Brooding Management

Cleaning and disinfection of equipment, building interior and attached areas is advised. Disinfectants can be prepared with Phenol, Potassium Permanganate, Carbolic Acid and Formalin. A solution of Sodium Hydroxide/Caustic Soda with warm water can also be used for cleaning. The equipment requires regular cleaning with water.



Farm is sanitized by fumigation with Formaldehyde gas, produced by putting Formalin on Potassium Permanganate. The rooms should be vacant and sealed for 30 minutes after fumigation so that the gas infiltrates in every corner.

Litter is spread on the floor to prevent direct contact with the floor. Rice-husk and sawdust are generally used for making the litter. It should be dry and free of moulds. Caked or moldy material should be removed and refilled with fresh materials. Extensively wet and dusty litter should also not be used. Using new litter for each flock is good for raising disease-free layer.

Ensure proper ventilation and temperature. Remove all leftover feed from bins, hoppers and troughs. Place rodenticide out of the reach of DOCs. Check regularly the availability of water and feed for chicks.

11.3 Brooding, Rearing and Laying Management

The DOCs should arrive at the farm early in the morning so that the management has a full day to observe them for any issues.

Flushing should be done by offering 250 gm glucose per gallon of water as readily available source of energy and to clear the digestive tract.

The brooder is an essential part of layer farming, also known as, ‘Artificial Mother’ as it provides necessary heat to DOCs shortly after arrival till 7 days of age. The temperature for brooders should be 99 oF, encircled by chick guard sheets.

Keep light at high intensity 20–22 hours per day for the first week. Closely regulate temperature of shed.

Starter feed should be offered as a source of energy to chicks as it is easily digestible and a good source of energy.

During the first six weeks, offer feed twice a day. After six weeks, feed consumption and body weights should be monitored against the given charts provided by DOCs suppliers.

Follow the recommended vaccination schedule. Remove dead birds immediately and dispose them properly. Send the dead

birds to lab for postmortem examination if there is excessive mortality. At laying stage, properly placed nests are required so that layers could

produce eggs without any hindrance.

11.4 Feeding

Feeding requirement during laying period depends on the rate of egg production and the body weight of layers. The birds require more feed in winter and less



feed in summer. During summer months, the flock is under severe stress and therefore, it is suggested to temporarily change the feed to a higher level of protein content. The actual feed consumption may be influenced by several factors as follows;

Health, physical condition and body weight of the bird. Rate of egg production. Weather condition. Feed quality such as protein and energy contents of feed.

The layers are fed following types of feed;

Chick Starter (Mash or crumb form): fed for one month Grower (Mash or crumb form): fed from second to sixth month Layer (Mash/ crumbs/ pallet): fed during laying period

Feeding three or four times daily will stimulate feed intake and prevents wastage. There are many feed mills that prepare above mentioned formulated feed.

11.5 Disease Prevention and Control

Use effective medicines to prevent coccidiosis. Keep feed free from aflatoxins. Follow bio-security plans by not allowing visitors or attendants to enter

sheds without disinfected boots and clothes. Start daily farm operations from youngest group of birds. Mortality losses should be kept below 5% by timely prophylactic measures

(vaccination, medication, disinfection etc.). The New Castle Disease, Egg Drop Syndrome and Avian Influenza are extremely dangerous diseases and can eradicate the entire flock. Following is a typical vaccination schedule for layers1;

Table 1: Vaccination Schedule for Layers

1 As per recommendions of Poultry Research Institute (PRI), Rawalpindi

Age in Days Disease Vaccination Procedure 0 Maerk’s Disease Sub Cut (At hatchery)

1 to 2 IB (H 120) Eye drop/ aerial spray 5 to 7 New Castle Disease Eye drop/ aerial spray

9 Infectious Bursal Disease (IBD) Gumboro

Eye drop/ aerial spray

16 Infectious Bursal Disease (IBD) Eye drop/ aerial spray



11.6 House Temperature and Ventilation

The temperature in shed after brooding stage should be maintained at 75 o F. Proper ventilation is necessary to maintain temperature, relative humidity, Oxygen, CO2 and Ammonia at recommended levels. The air movement requirements are best determined by observing bird comfort, litter condition and odor build up. If necessary, exhaust fan may be installed.

11.7 Culling of Unproductive layers

Layers with poor efficiency and performance should be culled to minimize the cost of production. The birds that have laid well for short period but have stopped laying for some reason should be culled. The sale price of culled birds in this study is taken as Rs. 160/ bird according to market sources. 12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of layer farming. Various cost and revenue related assumptions along with results of the analysis are outlined in this section.

The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendix.

12.1. Project Economics

All the figures in this financial model have been calculated for a flock of 5,000 layer birds kept for 1.5 years at rented premises. It is assumed that one layer would be able to produce 315 eggs per laying period of one year, with an

Gumboro 18 Hydro Pericardium Sub Cut 22 ND+IB Eye drop 28 IB Eye drop 42 Fowl Pox Sub Cut (Wing web) 55 ILT Eye drop 60 Avian Influenza Sub Cut 65 ND+IB Sub Cut 90 Avian Influenza Sub Cut/IM

105 Avian Influenza Sub Cut/IM 110 ND+IB Drinking Water

118 to 120 EDS+IB Sub-cut/ Drinking Water Sub cut: Sub Cutaneous (under skin), IM: Intra Muscular



estimated 1% loss through breakage, resulting in availability of 312 eggs per bird per year.

The following table shows Internal Rate of Return, payback period and Net Present Value;

Table 2: Project Economics Description Details

Internal Rate of Return (IRR) 84% Payback Period (Yrs) 2.12 Net Present Value (NPV) 24,170,783

Return on investment and its profitability are highly dependent on the entrepreneur having some practical knowledge about layer farming.

12.2. Project Financing

Following table provides details of the equity required and variables related to bank loan;

Table 3: Project Financing Description Details

Total Equity (10%) Rs.222, 170Bank Loan (90%) Rs. 1,999,528Markup to the Borrower (%age/annum) 8%Tenure of the Loan (Years) 8Grace Period (Year) 1

12.3. Project Cost

Following requirements have been identified for operations of the proposed business.

Table 4: Capital Investment for the Project Capital Investment Amount (Rs.) Machinery & equipment 182,500Furniture & fixtures 20,000Total Capital Costs 202,500Raw material inventory (incl. cost of DOCs) 1,861,198Upfront building rent 90,000Cash 68,000Initial Working Capital 2,019,198Total Project Cost 2,221,698



12.4. Space Requirement

Following table shows calculations for project space requirements;

Table 5: Farm Space Requirements Description Area (Sq. ft)

Shed space 8,750Feed store 64Room for workers 144Pavement/ Boundary walls 510Total Area 9,468

Monthly rent for the premises is Rs. 15,000. 12.5. Machinery & Equipment

Following table provides list of machinery and equipment for layer farm;

Table 6: Farm Machinery Details

Description Capacity Birds/unit Quantity Cost

Rs./unit Total Cost

Rs. Brooders 500 10 3,500 35,000Water drinkers 100 100 300 30,000Feeders 30-35 150 250 37,500Nests 20-25 200 200 40,000Water tank (500 Liters) 1 8,000 8,000Water pump 1 20,000 20,000Plastic egg trays 240 50 12,000Total Machinery & Equipment 182,500

12.6. Furniture and Fixture

Following furniture will be required at the farm; Table 7: Furniture Costs

Description Unit Total Cost (Rs) Furniture (Tables, chairs etc.) Lump sum 20,000Total Furniture & Fixtures 20,000

12.7. Raw Material Requirements

Following table shows raw material requirements for proposed project.

Table 8: Cost of Material Description Unit Quantity Rate Cost



(Rs./ Unit) (Rs.) year-1

Day Old Chicks Per DOC 5,000 70 350,000Total feed cost Bags 2,182.5 2,100 4,583,250 Vaccination, medication and disinfection

Per Bird 5,000 20 100,000

Litter (saw dust or rice husk) Per Flock 1 25,000 25,000Spray cost Per Flock 1 20,000 20,000Brooding cost Per Flock 1 75,000 75,000Direct labour per annum Per month 22,000 264,000Electricity* Per bird 2.00 114,000Total 5,531,250* Electricity cost is estimated at Rs. 2.0 per bird per month for 4,750 birds (after 5% mortality)

12.8. Human Resource Requirement

Two semi-skilled workers are needed to look after the general poultry husbandry operations. Salaries are increased at 15% annually.

Table 9: Farm Staff Requirements

12.9. Revenue Generation

The revenue in first year would be generated at 6th month when birds start to lay. Table 10: Revenues Generation

Description Unit Sale Price Rs./Dozen

of eggs

First Year Production (Dozens)

Revenue in Year 1 (Rs.)

Eggs Dozen 100 61,720 6,172,031Total Revenue 6,172,031

12.10. Other Costs

An essential cost to be borne by the farmer is electricity expense which is estimated to be Rs. 2.0 per bird. Fixed electricity cost for the rest of the area is estimated to be Rs. 1,000 per month.

Description No. Monthly Salary(Rs)

Total Annual Salary (Rs)

Farm Manager/Owner 1 12,000 1,44,000Farm Labour 1 10,000 1,20,000Total Staff 2 2,64,000



13. CONTACT DETAILS OF SUPPLIERS AND CONSULTANTS

Table 11: Contacts of Suppliers and Consultants Machinery & Equipment Suppliers

Biovet (Pvt.) Ltd. 97-A, Jail Road Lahore Ph: 042-37534508

Eastern Veterinary Services 4- C Chuburji Center, Near Venus Cinema, Multan Road, Lahore. Ph: 042-37417649-50

DOC Suppliers C & K Poultry Equipments, Kamboh Brothers Poultry, Grain Market, Samundari. Ph: 041-3420581

SB Chicks 48-C, Satellite Town, Near Chandni Chowk, Rawalpindi Ph: 051-4457 551-60

Poultry Feed Suppliers Consultants Supreme Feeds (Pvt.) Ltd. Head Office: 176-Shadman 1, Lahore. Ph: 042-37522104-7

Prof. Dr. M. Akram Department of Poultry Production, Uni. Of Veterinary and Animal Sciences (UVAS), Lahore Ph: 042-99211461

Ghazi Brothers Ghazi House, D-35, KDA Scheme, No. 1, Miran Muhammad Shah Road, Karachi Ph: 021-111250365

Dr. Abdul Rehman Director, Poultry Research Institute, Shamsabad, Murree Road, Rawalpindi Ph: 051-9290163-5

Asia Feed (Pvt.) Ltd. 359 Shamsabad Colony, Humayun Road Multan. Ph: 061-6224414

Dr. Fawwad Ahmad Faculty of Animal Husbandry, University of Agriculture, Faisalabad Ph: 041-9920161-70



14. ANNEXURE

14.1. Income Statement

Statement Summaries SMEDAIncome Statement

Rs. in actualsYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 6,172,031 7,831,075 14,194,026 8,378,091 14,239,367 16,315,842 11,770,614 24,553,417 17,828,676 16,536,865 Cost of goods sold 5,531,250 5,756,775 6,976,581 6,836,414 8,136,819 8,949,535 9,208,424 11,477,406 11,482,246 12,422,427

Gross Profit 640,781 2,074,300 7,217,445 1,541,677 6,102,548 7,366,307 2,562,190 13,076,011 6,346,430 4,114,438

General administration & selling expensespRental expense 180,000 198,000 217,800 239,580 263,538 289,892 318,881 350,769 385,846 424,431 Utilities expense 24,000 27,600 31,740 36,501 41,976 48,273 55,513 63,840 73,417 84,429 g p (p , , )Depreciation expense 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 Amortization expense - - - - - - - - - -

Subtotal 224,250 245,850 269,790 296,331 325,764 358,414 394,644 434,860 479,513 529,110 Operating Income 416,531 1,828,450 6,947,655 1,245,346 5,776,784 7,007,892 2,167,545 12,641,151 5,866,917 3,585,328

Earnings Before Interest & Taxes 416,531 1,828,450 6,947,655 1,245,346 5,776,784 7,007,892 2,167,545 12,641,151 5,866,917 3,585,328

Interest expense 165,960 151,938 133,508 113,549 91,934 68,524 43,171 15,714 - - Earnings Before Tax 250,571 1,676,512 6,814,146 1,131,796 5,684,850 6,939,369 2,124,374 12,625,437 5,866,917 3,585,328

Tax - - - - - - - - - - NET PROFIT/(LOSS) AFTER TAX 250,571 1,676,512 6,814,146 1,131,796 5,684,850 6,939,369 2,124,374 12,625,437 5,866,917 3,585,328

Balance brought forward 250,571 1,927,084 8,741,230 9,873,026 15,557,876 22,497,245 24,621,619 37,247,056 43,113,974 Total profit available for appropriation 250,571 1,927,084 8,741,230 9,873,026 15,557,876 22,497,245 24,621,619 37,247,056 43,113,974 46,699,302 Dividend - - - - - - - - - - Balance carried forward 250,571 1,927,084 8,741,230 9,873,026 15,557,876 22,497,245 24,621,619 37,247,056 43,113,974 46,699,302



14.2. Cash Flow Statement

Statement Summaries SMEDACash Flow Statement

Rs. in actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activitiesNet profit - 250,571 1,676,512 6,814,146 1,131,796 5,684,850 6,939,369 2,124,374 12,625,437 5,866,917 3,585,328 Add: depreciation expense - 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 20,250 amortization expense - - - - - - - - - - - Raw material inventory (1,365,948) (175,680) (744,099) 97,803 (710,565) (948,260) (29,291) (1,555,371) (1,024,502) (410,730) 6,866,643 Pre-paid building rent (15,000) (1,500) (1,650) (1,815) (1,997) (2,196) (2,416) (2,657) (2,923) (3,215) 35,369 Pre-paid lease interest - - - - - - - - - - - Accounts payable - 17,054 2,372 4,312 (357) 5,753 3,920 2,377 8,436 3,235 (19,748) Other liabilities - - - - - - - - - - -

Cash provided by operations (1,380,948) 110,696 953,386 6,934,696 439,128 4,760,397 6,931,832 588,973 11,626,698 5,476,457 10,487,842

Financing activitiesChange in long term debt 1,999,528 - (222,043) (240,472) (260,432) (282,047) (305,457) (330,810) (358,267) - - Change in short term debt - - - - - - - - - - - Issuance of shares 222,170 - - - - - - - - - - Purchase of (treasury) shares - - - - - - - - - - -

Cash provided by / (used for) financing act 2,221,698 - (222,043) (240,472) (260,432) (282,047) (305,457) (330,810) (358,267) - -

Investing activitiesCapital expenditure (202,500) - - - - - - - - - - Acquisitions - - - - - - - - - - -

Cash (used for) / provided by investing acti (202,500) - - - - - - - - - -

NET CASH 638,250 110,696 731,343 6,694,224 178,696 4,478,349 6,626,375 258,163 11,268,431 5,476,457 10,487,842

Cash balance brought forward 638,250 748,946 1,480,288 8,174,512 8,353,208 12,831,558 19,457,933 19,716,096 30,984,527 36,460,984 Cash available for appropriation 638,250 748,946 1,480,288 8,174,512 8,353,208 12,831,558 19,457,933 19,716,096 30,984,527 36,460,984 46,948,826 Dividend - - - - - - - - - - - Cash carried forward 638,250 748,946 1,480,288 8,174,512 8,353,208 12,831,558 19,457,933 19,716,096 30,984,527 36,460,984 46,948,826



14.3. Balance Sheet

Statement Summaries SMEDABalance Sheet

Rs. in actualsYear 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

AssetsCurrent assets

Cash & Bank 638,250 748,946 1,480,288 8,174,512 8,353,208 12,831,558 19,457,933 19,716,096 30,984,527 36,460,984 46,948,826 Accounts receivable - - - - - - - - - - - Raw material inventory 1,365,948 1,541,628 2,285,727 2,187,924 2,898,489 3,846,750 3,876,041 5,431,412 6,455,913 6,866,643 - Pre-paid annual land lease - - - - - - - - - - - Pre-paid building rent 15,000 16,500 18,150 19,965 21,962 24,158 26,573 29,231 32,154 35,369 - Pre-paid lease interest - - - - - - - - - - -

Total Current Assets 2,019,198 2,307,074 3,784,165 10,382,401 11,273,659 16,702,465 23,360,547 25,176,738 37,472,594 43,362,996 46,948,826

Fixed assets

Building/Infrastructure - - - - - - - - - - - Machinery & equipment 182,500 164,250 146,000 127,750 109,500 91,250 73,000 54,750 36,500 18,250 - Furniture & fixtures 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Office vehicles - - - - - - - - - - - Office equipment - - - - - - - - - - -

Total Fixed Assets 202,500 182,250 162,000 141,750 121,500 101,250 81,000 60,750 40,500 20,250 -

Intangible assetsPre-operation costs - - - - - - - - - - -

Total Intangible Assets - - - - - - - - - - - TOTAL ASSETS 2,221,698 2,489,324 3,946,165 10,524,151 11,395,159 16,803,715 23,441,547 25,237,488 37,513,094 43,383,246 46,948,826

Liabilities & Shareholders' EquityCurrent liabilities

Accounts payable - 17,054 19,427 23,739 23,382 29,135 33,056 35,433 43,868 47,103 27,355 Export re-finance facility - - - - - - - - - - - Short term debt - - - - - - - - - - - Other liabilities - - - - - - - - - - -

Total Current Liabilities - 17,054 19,427 23,739 23,382 29,135 33,056 35,433 43,868 47,103 27,355

Other liabilitiesp yLong term debt 1,999,528 1,999,528 1,777,485 1,537,013 1,276,581 994,534 689,077 358,267 - - -

Total Long Term Liabilities 1,999,528 1,999,528 1,777,485 1,537,013 1,276,581 994,534 689,077 358,267 - - -

Shareholders' equityPaid-up capital 222,170 222,170 222,170 222,170 222,170 222,170 222,170 222,170 222,170 222,170 222,170 Retained earnings - 250,571 1,927,084 8,741,230 9,873,026 15,557,876 22,497,245 24,621,619 37,247,056 43,113,974 46,699,302

Total Equity 222,170 472,741 2,149,253 8,963,400 10,095,196 15,780,046 22,719,415 24,843,789 37,469,226 43,336,143 46,921,472 TOTAL CAPITAL AND LIABILITIES 2,221,698 2,489,324 3,946,165 10,524,151 11,395,159 16,803,715 23,441,547 25,237,488 37,513,094 43,383,246 46,948,826

Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0



14.4. Useful Project Management Tips

Technology

List of Machinery & Equipment: (As per Section 12.5)

DOCs Selection: Selection of disease free birds with strain characteristics, body conditions and health.

Feed, Vaccination and Medication: Should be procured from reputed and reliable sources.

Energy Requirement: Should not be overestimated or installed in excess and alternate source of energy for critical operations be arranged in advance

Machinery Suppliers: Should be asked for after sales services under the contract with the machinery suppliers

Quality Assurance & Standards: Quality standards need to be defined on the ear tags and a system of record keeping to check them to improve credibility

Marketing

Product Development & Packaging: Experts’ help may be engaged for packaging

Advertisements & Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product brochures should be developed from good quality service providers.

Sales & Distribution Network: Experts’ advice and distribution agreements should be sought for developing the sales and distribution network.

Price / Bulk Discounts, Cost Plus Introductory Discounts: Pricing decisions should never compromise quality of the products. Price during introductory phase may be kept lower and used as promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices need to be displayed, as required.

Human Resources

List of Human Resource: (As per Section 12.8)

Adequacy & Competencies: Skilled and experienced staff should be considered an as assets of the business and investments should be made in developing and motivating them through various means and incentives.



Performance Based Remuneration: Efforts to manage human resource cost should be focused through performance measurement and performance based compensation.Training & Skill Development: Encouraging training and skills development of self & employees through experts and exposure of best practices helps in continuous improvements in the business. Least cost options for Training and Skill Development should be developed and linked with compensation benefits and awards.

14.5. Useful Links

Prime Minister’s Office, www.pmo.gov.pk Government of Pakistan, www.pakistan.gov.pk Ministry of Industries & Production, www.moip.gov.pk Ministry of National Food Security & Research, www.mnfsr.gov.pk Ministry of Education, Training & Standards in Higher Education,

www.moptt.gov.pk Government of Punjab, www.punjab.gov.pk Government of Sindh, www.sindh.gov.pk Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk Government of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk Government of Azad Jamu Kashmir, www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk Punjab Board of Investment & Trade (PBIT), 23-Aikman Road, GOR-I, Lahore

Tel. 042-99205201, www.pbit.gop.pk Sindh Board of Investment (SBI), 1st Floor, Tower B, Finance & Trade Center,

Shahra-e-Faisal, Karachi, Tel. 021-99207512-4, www.sbi.gos.pk State Bank of Pakistan (SBP), www.sbp.org.pk National Bank of Pakistan (NBP), www.nbp.com.pk First Women Bank Limited (FWBL), www.fwbl.com.pk Pakistan Poultry Association (PPA), Islamabad, www.ppacentral.pk Pakistan Agricultural Research Council (PARC), Park Road, Islamabad Tel. 051-

9203966, www.parc.gov.pk National Agricultural Research Centre (NARC), Islamabad, Tel. 051-9255061,

www.parc.gov.pk National Veterinary Laboratory, NARC, Islamabad Tel. 051-9255108 University of Agriculture, Faisalabad, www.uaf.edu.pk Lasbela University of Agriculture, Water & Marine Sciences, Lasbela,

www.luawms.edu.pk Sindh Agriculture University, Tondojam, www.sau.edu.pk



Gomal College of Veterinary Sciences, Dera Ismail Khan, www.gu.edu.pk KPK Agricultural University, Peshawar, www.aup.edu.pk Pir Mehr Ali Shah Arid Agricultural University, Rawalpindi, www.uaar.edu.pk University College of Veterinary & Animal Sciences, Islamia University Bahawalpur

(IUB), www.iub.edu.pk University of Veterinary & Animal Sciences (UVAS), Out Fall Road, Lahore,

www.uvas.edu.pk Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-

99220140 Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk Poultry Research Institute (PRI), Rawalpindi, Tel: 051-9290162, 9290173,

www.poultry.punjab.gov.pk Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk Agriculture & Livestock Department, Government of KPK,

www.khyberpakhtunkhwa.gov.pk Livestock & Dairy Development, Government of Balochistan,

www.balochistan.gov.pk 15. KEY ASSUMPTIONS

Table A: Revenue Assumptions

No. of birds per flock 5,000No. of eggs laid/layer/year 315Egg Loss (%) 1No. of eggs per bird per year (Sale) 312No. of eggs per bird per month 26Selling price (Rs. Per dozen) 100Culled birds sale price (Rs) 160

Table B: Expense Assumptions DoC price (Rs.) 70Vaccination cost per bird (Rs) 20Feed cost/bag of 50 kgs. (Rs.) 2,100Feed/bird/month (Laying period) Kgs. 3

Download - Pre-Feasibility Study - Content.PK · Pre-Feasibility Study (Layer Farm) Small and Medium Enterprises Development Authority Ministry of Industries & Production Government of Pakistan

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