veterinary clinic
DESCRIPTION
Feasibility for a veterinary clinicTRANSCRIPT
Pre-Feasibility Study
Prime Minister’s Small Business Loan Scheme
(Veterinary Clinic)
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, Egerton Road,
Lahore
Tel 92 42 111 111 456, Fax 92 42 36304926-7 [email protected]
REGIONAL OFFICE
PUNJAB REGIONAL OFFICE
SINDH REGIONAL OFFICE
KPK REGIONAL OFFICE
BALOCHISTAN
3rd Floor, Building No. 3, Aiwan e Iqbal, Egerton Road
Lahore,
Tel: (042) 111-111-456
Fax: (042)6304926-7
5TH Floor, Bahria
Complex II, M.T. Khan Road,
Karachi. Tel: (021) 111-111-456
Fax: (021) 5610572
Ground Floor
State Life Building
The Mall, Peshawar. Tel: (091) 9213046-47
Fax: (091) 286908
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta. Tel: (081) 831623, 831702
Fax: (081) 831922
September 2013
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Table of Contents
1. DISCLAIMER .......................................................................................................................................... 3 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 4 3. INTRODUCTION TO SMEDA............................................................................................................... 4 4. INTRODUCTION TO SCHEME ............................................................................................................ 4 5. EXECUTIVE SUMMARY....................................................................................................................... 5 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ......................................................................... 5 7. CRITICAL FACTORS ............................................................................................................................ 6 8. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ...................................................................... 6 10. PROJECT COST SUMMARY .............................................................................................................. 6
10.1. PROJECT ECONOMICS ........................................................................................................................ 7 10.2. PROJECT FINANCING ......................................................................................................................... 7 10.3. PROJECT COST ................................................................................................................................... 7 10.4. SPACE REQUIREMENT ........................................................................................................................ 8 10.5. MACHINERY AND EQUIPMENT ........................................................................................................... 9 10.6. OFFICE EQUIPMENT ......................................................................................................................... 10 10.7. RAW MATERIAL REQUIREMENTS .................................................................................................... 10 10.8. HUMAN RESOURCE REQUIREMENT ................................................................................................. 10 10.9. REVENUE GENERATION ................................................................................................................... 11 10.10. OTHER COSTS .................................................................................................................................. 11
11. CONTACTS OF SUPPLIERS AND EXPERTS ................................................................................ 12 12 . ANNEXURE ......................................................................................................................................... 14
12.1. INCOME STATEMENT ....................................................................................................................... 14 12.2. STATEMENT OF CASH FLOW ............................................................................................................ 15 12.3. BALANCE SHEET ............................................................................................................................. 16 12.4. USEFUL PROJECT MANAGEMENT TIPS ............................................................................................ 17 12.5. USEFUL LINKS ................................................................................................................................. 18
13 . KEY ASSUMPTIONS .......................................................................................................................... 21
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1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said matter. 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
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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, and production, marketing, finance and business management.
The purpose of this document is to facilitate potential investors in Veterinary Clinic by providing them with a general understanding of the business with the 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 successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the 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 ‘Small Business Loans 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
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(100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).
Small business loans with tenure upto 7 years, 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).
SMEDA has been tasked with an advisory role in the implementation of PM’s scheme by providing fifty (50) updated pre-feasibilities for referencing by SME beneficiaries and participating banks to optimally utilize their financial resources.
5. EXECUTIVE SUMMARY
This specific Pre-feasibility is for setting up “Veterinary Clinic. Veterinary medicine is the branch of science that deals with the prevention, diagnosis and treatment of disease, disorder and injury in animals. The infectious diseases in animals pose a major threat to animal health and productivity thereby leading to overall economic loss. The most common diseases are foot and mouth disease (FMD), diarrhea, fever, respiratory inspections like pneumonia etc. However, these diseases can be cured through an early diagnosis and proper treatment.
The population of animals is increasing day by day while clinical facilities for these animals currently lack in Pakistan. This creates an opportunity for setting up Veterinary Clinic. The project will provide medical facilities such as health check, vaccination, major and minor surgeries to livestock. The Clinic shall have its own laboratory and pharmacy run by a licensed veterinary compounder.
The total project cost for Veterinary Clinic is estimated at Rs. 1.84 million out which capital cost is Rs. 1.44 million and working capital Rs. 0.39 million. The project is proposed to be financed through 90% debt and 10% equity. The project NPV is calculated to be around Rs. 1.84 million, with IRR 28% and payback period of 3.64 years.
It is assumed that the clinic shall handle 4,514 cases. The total staff requirement for the project will be 7. The proposed location for project depends upon sizeable population of livestock such as Sahiwal, Pakpattan, Okara, DI Khan, Lasbela, Sukur etc.
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT
This particular project is for establishing a Veterinary Clinic as large number
animals die due to infectious ailments annually causing economic loss to the
farmers and national output. However, it is pertinent to mention that most of these
diseases are curable through appropriate diagnosis and treatment.
The project can be started in rented premises. It will provide veterinary health care services such as, health check, vaccination, treatment and minor and major surgeries for livestock. The services will be extended not only to the farmers bringing in their animals to the clinic, but field visits will also be carried out to provide onsite diagnosis and medication.
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The clinic will be established in rented premises having a covered area of around 3,000 sqft.
Since, an early diagnosis usually leads to accurate and successful treatment of the diseased animal, clinic’s diagnostic laboratory will be established to render necessary tests. The Project shall have a fully equipped surgical suite and well-trained staff to perform surgeries. A fully equipped pharmacy will also be run by a licensed Veterinary Compounder.
The project will employ 7 individuals including the owner manager for providing standardized animal healthcare and support services.
7. CRITICAL FACTORS
Background knowledge, experience and technical qualification of the
entrepreneur.
Appropriate project location with catchment area having sizeable livestock
population.
Hiring of qualified and responsive staff to meet client’s requirements.
Retention of staff through incentives to ensure smooth and regular services.
Coverage of maximum area of operation and capturing the market through field
visits and quality of service.
Competition with non-qualified vet through competitive fee structure and
standardized services.
8. INSTALLED & OPERATIONAL CAPACITIES
Since this is a service based venture, there are no installed capacities, however, based on 300 operational days per year, the clinic a year with capacity to manage 4,514 cases per annum. The project will handle around 3,610 cases by operating at 80 % of capacity utilization in first year.
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Selection of district or particular city of the project has an imperial effect on the project itself. The proposed location should be near the area where population of animals is greater in numbers. The proposed project location for the veterinary clinic is suggested to be at Sahiwal or comparable districts across Pakistan. Such as Sargodha, Sheikhupura, Faislabad, Jhang, Sialkot, Sahiwal, Peshawar, DI Khan, Sukur, Lasbela, Qilla Saifullah and other similar cities/areas.
10. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of ‘Veterinary Clinic’ project under the Prime Minister’s Small Business Loan Scheme. 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
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10.1. Project Economics
All the figures in this financial model have been calculated for rendering services to the live stock & poultry farmers. The following table shows internal rates of return and payback period.
Table 1: Project Economics
Description Details
Internal Rate of Return (IRR) 28%
Payback Period (yrs) 3.64
Net Present Value (NPV) 1,844,609
Returns on the scheme and its profitability are highly dependent on the availability of efficiency of qualified Vet doctors and trained staff, provision of accurate and quality service on time and ability to handle emergency cases by accurate diagnosis and successful treatment.
In case Veterinary Clinic Project is not very efficient, it will not be able to cover the potential market. Hence, cost of operating the business will increase.
10.2. Project Financing
Following table provides details of the equity required and variables related to bank loan;
Table 2: Project Financing Description Details
Total Equity (10%) Rs. 184,636
Bank Loan (90 %) Rs. 1,661,720
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 7
10.3. Project Cost
Following requirements have been identified for operations of the proposed business.
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Table 3: Capital Investment
Capital Investment (Rs.)
Machinery & equipment 695,000
Furniture & fixtures 258,500
Office vehicles 20,000
Office equipment 73,600
Pre-operating costs 251,965
Training costs 50,000
Total Capital Costs 1,449,065
Raw material inventory 64,119
Upfront building rent 180,000
Upfront insurance payment 6,000
Cash 147,172
Total Working Capital 397,290
Total Project Cost 1,846,355
10.4. Space Requirement
The area has been calculated on the basis of space requirement for management office, pharmacy, animal shed, operation theatre, laboratory, Veterinary Doctor’s office, Vet. Assistant’s room, kitchen, washrooms, waiting area and some open area. Following table shows calculations for project space requirement.
Table 4: Space Requirement
Building and Civil Work Space Required (Sq. ft)
Animal Sheds/ Animal Holding Area 500
Operation Theater 500
Management Office 400
Pharmacy 120
Vet. Doctors Office 240
Veterinary Assistants' Room 100
Laboratory 350
Kitchen 80
Wash Rooms 108
Waiting Room/Reception 100
Open area 500
Total Space Required 2,998
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The veterinary clinic is assumed to be established at rented property. The monthly rent is estimated to be Rs. 30,000 per month.
10.5. Machinery and Equipment
Following table provides list of machinery and equipment required for an average foundry unit working for electrical fan sector. Following laboratory equipments and installations are required.
Table 5: Machinery & Equipment
Items No. of Items Unit cost (Rs.) Total (Rs.)
Surgical Kit 1 15,000 15,000
Dystocia Kit 2 10,000 20,000
Refrigerator 1 30,000 30,000
Lab Equipment
- Micro Scope (Binocular) 1 60,000 60,000
- Blood Analyzer 1 450,000 450,000
- Centrifugal Machine 1 50,000 50,000
- Autoclave Machine 1 20,000 20,000
Other Lab equipments 1 50,000 50,000
Total 695,000
Following office furniture and equipments are required for vet hospital.
Table 6: Furniture & Fixture
Items No. of Items
Cost (Rs.) Total (Rs.)
Doctors' Room Tables 1 15,000 15,000
Doctors' Room Chairs 1 3,500 3,500
Visitors' Chairs 3 2,500 7,500
Veterinary Assistants' Room Tables 1 10,000 10,000
Veterinary Assistants' Room Chairs 1 2,000 2,000
Visitors' Chairs 2 2,500 5,000
Pharmacy Table 1 10,000 10,000
Pharmacy Chair 1 2,000 2,000
Laboratory Table 1 10,000 10,000
Laboratory Chairs 2 2,000 4,000
Operation Theatre - Steel Table 2 20,000 40,000
Computer Tables 1 10,000 10,000
Computer Chairs 1 2,000 2,000
Reception Table 1 7,500 7,500
Bench for visitors 4 5,000 20,000
Total 178,500
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10.6. Office Equipment
These costs are based on the assumption that a setup will be required to carry on the activities at veterinary clinic. Following office equipment is required.
Table 7: Office Equipment
Description No. of Items Unit Cost (Rs.) Total (Rs.)
Computers 1 45,000 45,000
Printer 1 15,000 15,000
Fax Machine 1 10,000 10,000
Telephone Sets 3 1,200 3,600
Air Conditioners 1 55,000 55,000
Electric Installations 25,000
Total 153,600 Office Vehicles required for the project are as follows:
Table 8: Office Vehicle
Number Cost Amount (Rs.)
Motor Cycles (100 cc) 2 60,000 120,000
Total 120,000
The proposed project will be using Two Motor cycles costing Rs. 60,000/- each to cover the outdoor cases.
10.7. Raw Material Requirements
It is assumed that 25% of the revenues would be spent on the purchase of stock of veterinary medicines and the sales margin on medicines is 15%.
10.8. Human Resource Requirement
Table 9: Human Resource Rquirement
Description No. of Employees
Monthly Salary (Rs.)
Annual Salary (Rs.)
Admin. & Accounts Officer 1 15,000 180,000
Veterinary Doctors 1 30,000 360,000
Veterinary Assistants 1 10,000 120,000
AI Technicians 1 10,000 120,000
Receptionist / Operator 1 9,000 108,000
Security Guard, Gate Keepers 1 9,000 108,000
Office Boy cum sweeper 1 9,000 108,000
Total 7 1,104,000
The table above provides details of human resource required for the project. Salaries of all employees are estimated to increase at 10% annually.
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10.9. Revenue Generation
The table below shows revenue generation.
Table 10: Revenue Generation
Particulars Expected No. of patients/ year
Fee in Rs.
Revenue in Year 1
Large Ruminants (cattle, buffaloes, camels, horses etc.)
Soft Tissue Surgery Minor 110 300 33,000
Soft Tissue Surgery Major 55 5,000 275,000
Out Door animals 700 300 210,000
Artificial Insemination 400 500 200,000
Castration 100 200 20,000
Parturition Cases 300 5,000 1,500,000
Small Ruminants (goats and sheep etc.)
Soft Tissue Surgery Minor 160 200 32,000
Soft Tissue Surgery Major 110 300 33,000
Out Door Fee per animal 1,000 100 100,000
Indoort patients - Admission 175 200 35,000
Castration 500 100 50,000
Sub Total 3,610 2,488,000
Income from Farm visits 280,000
Sale of Medicine 309,693
Total Revenue 3,077,693
10.10. Other Costs
An essential cost to be borne by the company is the fuel cost incurred by staff during their outdoor visits to deliver the services. It is estimated that each motorcycle would be used for travelling of 100 kms per day for 280 working days annually. Cost of fuel is taken to be Rs. 5.0 per km which will increase at the rate of 10% (rate of inflation) per year. In year one therefore, fuel cost amounts to Rs. 94,769 for two motor cycles. Similarly, electricity expense is estimated to be about 12,000 per month. The gas expense is estimated to be Rs. 2,000 per month. The communication during field visits is very necessary to keep the staff informed about the cases. The communication charges are estimated to be Rs. 3,000 per month. The other office expenses related to stationery, entertainment and janitorial services are expected to be Rs. 36,000 per annum.
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It is estimated that marketing would be done to promote the services of veterinary clinic through local media resources such as newspapers and cable networks. These promotional expenses are expected to be Rs. 40,000 per annum.
11. CONTACTS OF SUPPLIERS AND EXPERTS
Pakistan Veterinary Medical Council (PVMC) Government of Pakistan House# 850, St.No. 26, G-9/1, Islamabad Ph: +92-51-9262108,Fax: +92-51-9262106
ICI Pakistan Ltd. 63 Mozang Road, Lahore Ph: 042-36302685, Web. www.akzonobel.com/pk
A&K Pharmaceuticals 94-A,Punjab Small Industrial Estate, Sargodha Road, Faisalabad Ph: 041-8869076 Web. www.aandkpharma.com
Agriprom Pakistan (Pvt) Ltd 80-A Judicial Colony, Thokar Niaz Baig, Lahore Ph: 042-35310854, 35063332 Web www.agriprom.pk
Attabak Pharmaceuticals Plot 5-C, Sector I-10/3, Service Road, Industrial Area, Islamabad Ph: 051-4434125 Web. www.attabak.com
Ghazi Brothers Ghazi House, D-35, K.D.A Scheme No. 1, Miran Muhammad Shah Road, Karachi 212- Defence Road, Lahore Ph: 021-111250365, 042-35341260-61
Pfizer Laboratories Ltd. 12-Dockyard Road, West Wharf, Karachi Ph: 021-2310051, 2310053 Web. www.pfizer.com.pk
Naseem Traders International 12, Satellite Plaza, 6th Road, Rawalpindi Ph: 051-4421339 Web. www.naseemtraders.com
Prix Pharmaceutical 26-Abbot Road, Lahore Ph: 042-36312582, 36316499 Web. www.prixpharma.com
Orient Animal Health Suiete No. M-16, Falak Niaz Tower, Opp. Jinnah Airport, Shahrah-e-Faisal, Karachi Ph: 021-34494555, Web. www.oah.com.pk
Saadat International 117 - Habitat Apartment, Shadman II, Jail Road, Lahore Ph: 042-37550143-5, 37522528 - 30 Web. www.saadatinternational.com
Selmore Pharmaceuticals (Pvt.) Ltd. 36 Km, Multan Road, Lahore Ph: 042-35380381 Web. www.selmorepharma.com
UM Enterprises 786 - Sharjah Centre, 3rd Floor, 62
Star Laboratories (Pvt) Ltd. 23, K.M. Multan Road, Lahore
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Shadman Market, Lahore Ph: 042-37566937-8
Ph: 042-7511331 Web. www.starlabs.com.pk
Delta Chemical & Machinery Corporation 28/2 Taj Arcade, 73-Jail Road, Lahore Tel. 042-7568704 Web. www.deltachemcorp.com
Symans Pharmaceuticals (Pvt.) Ltd. 1st Floor Symans Tower 25-Lower Mall, Lahore Tel: 042-37248226 Web. www.symans.org
Selmore Pharmaceuticals (Pvt.) Ltd. 36 Km, Multan Road, Lahore Ph: 042-35380381 Web. www.selmorepharma.com
Bio- Labs Plot # 145, Kahuta Industrial Triangle. Kahuta Road. Islamabad Ph: 051 4491742 & 3 Web. www.bio-labs.net
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12. ANNEXURE
12.1. Income Statement
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 3,077,693 3,589,132 4,117,503 4,405,728 4,714,129 5,044,118 5,397,206 5,775,011 6,179,261 6,611,810
Cost of sales
Purchase of medicines for use and sale 769,423 897,283 1,029,376 1,101,432 1,178,532 1,261,029 1,349,302 1,443,753 1,544,815 1,652,952
Direct labor 600,000 658,417 722,521 792,867 870,062 954,772 1,047,730 1,149,738 1,261,679 1,384,517
Office vehicles running expense 94,769 104,246 114,671 126,138 138,752 152,627 167,889 184,678 203,146 223,461
Vehicle maintenance 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 18,616
Operating costs 3 (direct electricity) 144,000 158,400 174,240 191,664 210,830 231,913 255,105 280,615 308,677 339,544
Operating costs 5 (direct gas) 24,000 26,400 29,040 31,944 35,138 38,652 42,517 46,769 51,446 56,591
Total cost of sales 1,644,192 1,857,346 2,083,078 2,257,936 2,447,900 2,654,309 2,878,624 3,122,439 3,387,493 3,675,682
Gross Profit 1,433,500 1,731,786 2,034,425 2,147,792 2,266,229 2,389,809 2,518,582 2,652,571 2,791,769 2,936,128
General administration & selling expenses
Administrative Salaries expense 504,000 553,070 606,918 666,008 730,852 802,008 880,093 965,780 1,059,810 1,162,995
Building rental expense 360,000 396,000 435,600 479,160 527,076 579,784 637,762 701,538 771,692 848,861
Travelling expense 25,200 27,654 30,346 33,300 36,543 40,100 44,005 48,289 52,991 58,150
Communications expense (phone, fax, mail, internet, etc.) 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656 53,188 55,848
Office expenses (stationary, entertainment, janitorial services, etc.) 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656 53,188 55,848
Promotional expense 40,000 41,200 42,436 43,709 45,020 46,371 47,762 49,195 50,671 52,191
Insurance expense 6,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1,200 600
Professional fees (legal, audit, consultants, etc.) 15,388 17,946 20,588 22,029 23,571 25,221 26,986 28,875 30,896 33,059
Depreciation expense 131,638 131,638 131,638 108,086 107,350 107,350 107,350 107,350 107,350 107,350
Amortization of pre-operating costs 50,393 50,393 50,393 50,393 50,393 - - - - -
Amortization of legal, licensing, and training costs 10,000 10,000 10,000 10,000 10,000 - - - - -
Subtotal 1,214,619 1,308,900 1,412,098 1,500,234 1,621,921 1,695,726 1,842,845 2,004,139 2,180,986 2,374,901
Operating Income 218,881 422,886 622,327 647,557 644,308 694,082 675,737 648,433 610,782 561,227
Other income (interest on cash) 17,923 24,895 47,474 73,381 100,435 126,952 152,088 187,948 234,764 292,129
Earnings Before Interest & Taxes 236,804 447,781 669,800 720,939 744,743 821,035 827,825 836,381 845,546 853,356
Interest expense on long term debt (Project Loan) 100,052 88,093 75,149 61,137 45,970 29,553 11,783 - - -
Interest expense on long term debt (Working Capital Loan) 27,170 23,874 20,305 16,440 12,254 7,720 2,810 - - -
Subtotal 127,222 111,968 95,454 77,577 58,224 37,273 14,593 - - -
Earnings Before Tax 109,582 335,813 574,347 643,362 686,519 783,762 813,233 836,381 845,546 853,356
Tax 548 25,186 71,793 96,504 102,978 117,564 142,316 146,367 147,971 149,337
NET PROFIT/(LOSS) AFTER TAX 109,034 310,627 502,553 546,858 583,541 666,197 670,917 690,014 697,576 704,019
Balance brought forward 109,034 419,662 922,215 1,469,073 2,052,614 2,718,811 3,389,728 4,079,742 4,777,318
Total profit available for appropriation 109,034 419,662 922,215 1,469,073 2,052,614 2,718,811 3,389,728 4,079,742 4,777,318 5,481,337
Balance carried forward 109,034 419,662 922,215 1,469,073 2,052,614 2,718,811 3,389,728 4,079,742 4,777,318 5,481,337
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12.2. Statement of Cash Flow
Cash Flow Statement
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit 109,034 310,627 502,553 546,858 583,541 666,197 670,917 690,014 697,576 704,019
Add: depreciation expense 131,638 131,638 131,638 108,086 107,350 107,350 107,350 107,350 107,350 107,350
amortization of pre-operating costs 50,393 50,393 50,393 50,393 50,393 - - - - -
amortization of training costs 10,000 10,000 10,000 10,000 10,000 - - - - -
Deferred income tax 548 6,712 (68,793) (61,336) (65,652) (98,751) (81,367) (83,104) (83,791) (84,377)
Accounts receivable (252,961) (21,018) (42,732) (33,559) (24,519) (26,235) (28,072) (30,037) (32,139) (34,389)
Raw material inventory (64,119) (14,394) (16,062) (11,680) (13,122) (14,743) (16,564) (18,609) (20,908) (23,490) 213,689
Advance insurance premium (6,000) 600 600 600 600 600 600 600 600 600 600
Accounts payable 70,680 11,878 11,869 7,055 7,606 8,202 8,848 9,548 10,307 (8,603)
Cash provided by operations (100,119) 102,538 481,469 580,218 610,982 650,184 635,968 654,352 667,618 669,982 969,028
Financing activities
Project Loan - principal repayment (145,076) (157,035) (169,979) (183,991) (199,158) (215,575) (233,345) - - -
Working Capital Loan - principal repayment (39,706) (43,002) (46,571) (50,436) (54,623) (59,156) (64,066) - - -
Additions to Project Loan 1,304,158 - - - - - - - - - -
Additions to Working Capital Loan 357,561 - - - - - - - - - -
Issuance of shares 184,636 - - - - - - - - - -
Purchase of (treasury) shares
Cash provided by / (used for) financing activities 1,846,355 (184,782) (200,037) (216,550) (234,428) (253,781) (274,731) (297,411) - - -
Investing activities
Capital expenditure (1,449,065) - - - - - - - - - -
Cash (used for) / provided by investing activities (1,449,065) - - - - - - - - - -
NET CASH 297,172 (82,244) 281,433 363,667 376,554 396,403 361,236 356,940 667,618 669,982 969,028
Cash balance brought forward 297,172 214,928 496,361 860,028 1,236,582 1,632,986 1,994,222 2,351,162 3,018,780 3,688,762
Cash available for appropriation 297,172 214,928 496,361 860,028 1,236,582 1,632,986 1,994,222 2,351,162 3,018,780 3,688,762 4,657,790
Cash balance 297,172 214,928 496,361 860,028 1,236,582 1,632,986 1,994,222 2,351,162 3,018,780 3,688,762 4,657,790
Cash carried forward 297,172 214,928 496,361 860,028 1,236,582 1,632,986 1,994,222 2,351,162 3,018,780 3,688,762 4,657,790
September 2013
16
12.3. Balance Sheet
Balance Sheet
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Current assets
Cash & Bank 297,172 214,928 496,361 860,028 1,236,582 1,632,986 1,994,222 2,351,162 3,018,780 3,688,762 4,657,790
Accounts receivable 252,961 273,979 316,711 350,270 374,789 401,024 429,096 459,132 491,271 525,660
Raw material inventory 64,119 78,512 94,574 106,254 119,376 134,119 150,683 169,292 190,200 213,689 -
Pre-paid insurance 6,000 5,400 4,800 4,200 3,600 3,000 2,400 1,800 1,200 600 -
Total Current Assets 397,290 584,801 906,014 1,327,123 1,753,751 2,193,209 2,601,476 3,009,811 3,733,620 4,465,061 5,183,450
Fixed assets
Machinery & equipment 695,000 625,500 556,000 486,500 417,000 347,500 278,000 208,500 139,000 69,500 -
Furniture & fixtures 258,500 232,650 206,800 180,950 155,100 129,250 103,400 77,550 51,700 25,850 -
Office vehicles 120,000 108,000 96,000 84,000 72,000 60,000 48,000 36,000 24,000 12,000 -
Office equipment 73,600 49,312 25,024 736 - - - - - - -
Total Fixed Assets 1,147,100 1,015,462 883,824 752,186 644,100 536,750 429,400 322,050 214,700 107,350 -
Intangible assets
Pre-operation costs 251,965 201,572 151,179 100,786 50,393 - - - - - -
Legal, licensing, & training costs 50,000 40,000 30,000 20,000 10,000 - - - - - -
Total Intangible Assets 301,965 241,572 181,179 120,786 60,393 - - - - - -
TOTAL ASSETS 1,846,355 1,841,835 1,971,016 2,200,095 2,458,244 2,729,959 3,030,876 3,331,861 3,948,320 4,572,411 5,183,450
Current liabilities
Accounts payable 70,680 82,558 94,427 101,482 109,088 117,290 126,138 135,685 145,992 137,389
Total Current Liabilities - 70,680 82,558 94,427 101,482 109,088 117,290 126,138 135,685 145,992 137,389
Other liabilities
Deferred tax 548 7,260 (61,533) (122,870) (188,521) (287,273) (368,640) (451,744) (535,535) (619,911)
Long term debt (Project Loan) 1,304,158 1,159,083 1,002,048 832,069 648,078 448,920 233,345 - - - -
Long term debt (Working Capital Loan) 357,561 317,855 274,853 228,282 177,845 123,223 64,066 - - - -
Total Long Term Liabilities 1,661,720 1,477,485 1,284,161 998,817 703,054 383,621 10,139 (368,640) (451,744) (535,535) (619,911)
Shareholders' equity
Paid-up capital 184,636 184,636 184,636 184,636 184,636 184,636 184,636 184,636 184,636 184,636 184,636
Retained earnings 109,034 419,662 922,215 1,469,073 2,052,614 2,718,811 3,389,728 4,079,742 4,777,318 5,481,337
Total Equity 184,636 293,670 604,297 1,106,851 1,653,708 2,237,250 2,903,447 3,574,364 4,264,378 4,961,954 5,665,972
TOTAL CAPITAL AND LIABILITIES 1,846,355 1,841,835 1,971,016 2,200,095 2,458,244 2,729,959 3,030,876 3,331,861 3,948,320 4,572,411 5,183,450
Liabilities & Shareholders' Equity
Assets
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12.4. Useful Project Management Tips
Technology
List of Machinery & Equipment
Required spare parts & consumables: Suppliers credit agreements and
availability as per schedule of maintenance be ensured before start of
operations
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 training and after sales services
under the contract with the machinery suppliers
Quality Assurance Equipment & Standards: Whatever means required
products quality standards need to be defined on the packaging and a system
to check them instituted, this improves credibility
Marketing
Product Development & Packaging: Expert's help may be engaged for
product/service and packaging design & development
Ads & P.O.S. Promotion: Business promotion and dissemination through
banners and launch events is highly recommended. Product broachers from
good quality service providers
Sales & Distribution Network: Expert's advise and distribution
agreements are required with.
Price - Bulk Discounts, Cost plus Introductory Discounts: Price should
never be allowed to compromise quality. Price during introductory phase may
be lower and used as promotional tool. Product cost estimates should be
carefully documented before price setting. Government controlled prices shall
be displayed.
Human Resources
List of Human Resource
Adequacy & Competencies: Skilled and experienced staff should be
considered an investment even to the extent of offering share in business
profit.
Performance Based Remuneration: Attempt to manage human
resource cost should be focused through performance measurement and
performance based compensation.
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Training & Skill Development: Encouraging training and skill of self &
employees through experts and exposure of best practices is route to success.
Least cost options for Training and Skill Development (T&SD) may be linked
with compensation benefits and awards.
12.5. 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 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
Security 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 Veterinary Medical Council (PVMC), Islamabad,
www.pvmcregistration.net
National Vocational and Technical Training Commission (NAVTTC) Head Quarter,
Islamabad, www.navttc.org
Pakistan Agricultural Research Council (PARC), 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, Park Road, Islamabad Tel. 051-9255108
Balochistan Agricultural Research Centre (BARC), Quetta, Tel: 081-9213286-7,
www.parc.gov.pk
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Southern-zone Agricultural Research Centre (SARC), Karachi, Tel: 021-99261661,
99261561, www.parc.gov.pk
Arid Zone Research Institute (AZRI), Bahawalpur, Tel: 0622-876833,
www.parc.gov.pk
Punjab Livestock & Dairy Development Board (PLDDB), 11- Shami Road, Lahore
Cantt. Tel. 042-36676821, www.plddb.pk
Faculty of Animal Husbandry, University of Agriculture, Faisalabad,
www.uaf.edu.pk
Faculty of Veterinary Sciences, University of Agriculture, Faisalabad,
www.uaf.edu.pk
Faculty of Veterinary and Animal Sciences, Lasbela University of Agriculture,
Water & Marine Sciences, Lasbela, www.luawms.edu.pk
Faculty of Veterinary Sciences and Animal Husbandry, 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
College of Veterinary & Animal Sciences, Jhang,
www.uvas.edu.pk/other_campuses
Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk
Nestle Sarsabz Training Institute, Renala Khurd, Okara c/o Nestle Lahore, Tel:
0423-111-637-853
Animal Husbandry In-Service Training Institute (AHITI), Peshawar, Tel. 091-
2960109, 9210309
Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-
99220140
Al - Haiwan Sires Training Institute, Jogi Chowk, Sahiwal, Tel. 040-4227196,
4221486, 061-6775708, Cell. 0321-8695054, 0300-9695054
Altaf & Co Livestock Training Institute, Altaf & Co Plaza,16/1,Out Fall Road,
Lahore, Tel: 042-35763411-4, www.altafandco.com
Solve Agri Dairy Institute, F-6/2, Main Link Road, Model Town, Lahore,
www.solveagripak.com
Dairy & Rural Development Foundation (DRDF), Lahore, www.dairyproject.org.pk
Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
Directorate of Animal Health, L&DD, Punjab, Tel: 042-99201115
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Directorate of Animal Disease Reporting and Surveillance, L&DD, Punjab, Tel:
042-99201116
Foot and Mouth Disease (FMD) Research Centre, L&DD, Lahore, Tel: 042-
99201115
Directorate of Livestock Farms, L&DD, Lahore, Tel: 042-99201126-7
Directorate of Small Holder Dairy Development, Gujranwala Tel: 055-9200410-11,
9200194
Buffalo Research Institute Bhunikey, District Pattoki, Tel: 049-4421887, 4420072
Directorate of Small Ruminants, Multan, L&DD, Punjab, Tel: 061-9201311
Research Centre for Conversation Sahiwal Cattle (RCCSC), Jhang, Tel: 047-
9200329, 9200371, www.rccsc.com.pk
Directorate of Livestock Training Centre (LSTC), Bahadurnagar, Okara, Tel: 044-
2661393
Livestock Training Centre (LSTC), Sheikhupura, Tel: 056-9200056
Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk
Agriculture & Livestock Department, Government of KPK,
www.khyberpakhtunkhwa.gov.pk
Cattle Breeding & Dairy Farm, Harichand, District Charsadda, KPK, Tel: 091-
6640187
Buffalo Breeding & Dairy Farm, D.I.Khan, KPK, Tel: 0966-923150
Livestock & Dairy Development, Government of Balochistan,
www.balochistan.gov.pk
Directorate of Animal Health and Production Extension, L&DD, Quetta, Tel 081-
9202564
Para Veterinary Training Institute, L&DD, Quetta, Tel: 081-9202564
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13. KEY ASSUMPTIONS
Table A: Project Assumptions
Projected Life of The Project in Years 10
Sponsors' Equity 10%
Debt Financing 90%
Annual Mark Up Rate (Short Term & Long Term) 8%
Debt Tenure in Years 7
General Inflation Rate 10%
Operating Assumptions
Total No. of Days in One Year 365
Total No. of Months in One Year 12
No of Working Days in One Year 300
Table B: Depreciation Rate Assumptions
Tools & Equipment 10% of the Written Down Value
Fittings & Installations 10% of the Written Down Value
Office Equipments 33% of the Written Down Value
Furniture & Fixtures 10% of the Written Down Value
Vehicles 20% of the Written Down Value
Table C: Working Capital Assumptions
Stock of medicines 30 Days medicines Consumption
Stores and Spares 30 Days Stores & Spares Consumption
Accounts Payable
Bills 30 Days of Total Annual Purchases
Expenses 30 Days of Total Annual Expenditure
Table D: Expenditures
Salaries, Wages & other benefits
Inflation Rate for Salaries & Wages 10%
Medicines & Supplies consumed 15% of total revenue
Repair & Maintenance
Vehicle Repair & Maintenance 10% of the Cost.
Repair & Maintenance 3% of the Cost.
Traveling & Conveyance 3% of Total income
Telephone Fax and Postage 1% of Total income
Vehicles insurance rate 5% of Written down value
Table E: Expense Assumptions
Description Cost / Rate Rationale
Medicines Consumed and kept 25% % of revenue
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for Sale
Cost of goods sold growth rate 5.0%
Vehicle maintenance 10% % of vehicle cost
Operating costs 3 (direct electricity)
144,000
Per annum (Rs. 12,000 per month)
Operating costs 5 (direct gas) 24,000 Per annum (Rs. 2,000 per month)
Operating costs growth rate 5.0%
Administration benefits expense 0.0% % of administration expense
Travelling expense 5.0% % of administration expense
Table F: Vehicle Running Expenses
No. Class Consumption of petrol
Rate/Ltr Traveling/Day (km)
Annual Tours
Total cost
2 Motor cycles
65 Km per litre
Petrol
110 100 280 94,769
Total 94,769
Table G: Promotional Expenses
Description Quantity Rs. Per unit
News Paper Ad 2 5,000
Cable Ad 10 3,000 Table H: Communication Expense
Description Per annum
Office vehicles running expense 3.0% of vehicles cost
Office expenses (stationary, entertainment, janitorial services, etc.)
Rs. 36,000 Per annum