Environmentally Controlled Poultry House 1b2q6u

Pre-Feasibility Study Environmentally Controlled Poultry House (30,000 Birds)

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Table of Contents EXECUTIVE SUMMARY ........................................................................................................................................................................................ 3 1.

OVERVIEW OF THE POULTRY SECTOR ................................................................................................................................................ 4 1.1. Industry Dynamics................................................................................................................................................................................. 4 1.1.1.

1.2. 1.3.

Segmentation ........................................................................................................................................................................................................... 5

Marketing Analysis ................................................................................................................................................................................ 5 Problems with Poultry in Pakistan ...................................................................................................................................................... 6

2.

PRE-FEASIBILITY STUDY FOR ENVIRONMENTALLY CONTROLLED POULTRY HOUSE ....................................................... 8 2.1. Comparative Efficiency of ECH and COH ......................................................................................................................................... 8 2.2. Existing Marketing Practice & Pricing................................................................................................................................................. 9 2.3. Farm Management ............................................................................................................................................................................... 10

3.

THE PROJECT .............................................................................................................................................................................................. 13 3.1. Project Brief ........................................................................................................................................................................................... 13 3.2. Proposed Capacity ............................................................................................................................................................................... 13 3.3. The Product ........................................................................................................................................................................................... 13 3.4. Product Assumptions .......................................................................................................................................................................... 14 3.5. Manpower Requirements .................................................................................................................................................................... 15 3.6. Farm Equipment................................................................................................................................................................................... 16 3.7. Land and Building ............................................................................................................................................................................... 17 3.7.1.

Mode for Acquiring Land........................................................................................................................................................................................ 17

3.7.2.

Preferred Locations – Sindh ................................................................................................................................................................................... 18

3.7.3.

Infrastructure Requirement ................................................................................................................................................................................... 18

3.8. 4.

Working Capital ................................................................................................................................................................................... 18

THE FINANCIAL ANALYSIS ..................................................................................................................................................................... 19 4.1. Project Economics................................................................................................................................................................................. 19 4.2. Financing Option .................................................................................................................................................................................. 20 4.3. Projected Income Statement ................................................................................................................................................................ 21 4.4. Projected Cash Flow Statement .......................................................................................................................................................... 22 5.5. Projected Balance Sheet ....................................................................................................................................................................... 23

KEY ASSUMPTIONS.............................................................................................................................................................................................. 24 ANNEX A .................................................................................................................................................................................................................. 27 ANNEX B .................................................................................................................................................................................................................. 28 ANNEX C .................................................................................................................................................................................................................. 29 IMPORTANT S .................................................................................................................................................................................... 30

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Executive Summary This Pre-feasibility study is conducted for establishment of Environmentally Controlled Poultry Farm in Sindh. All the calculations have been based on a flock size of 30,000 birds, with raising 8 flocks per year. The controlled poultry farm is a project of Livestock Sector, in which, the day old chicks (also known as DOCs) are raised on high protein feed for a period of six weeks with a lag time of 10 – 15 days for the cleaning and fumigation of the sheds and the farm. The purpose of the controlled poultry farm is to provide all the facilities ranging from automatic operations of temperature control, feeding and nipple drinking system for the broiler birds, monitored by the concerned & technical staff, all in-house. Broiler farming in controlled environment is a profitable venture due to continuous increasing demand of the white meat in the market. Poultry is an important sub – sector of agriculture and has contributed enormously to food production by playing a vital role in the domestic economy. Poultry meat contributes 19% of the total meat production in the country. There is a tremendous opportunity for Environmental Control Poultry Houses in Pakistan. Currently there are 2,500 houses working in Pakistan, out of which 75% (1,875) are in Punjab and remaining 25% (625) are in other provinces1. The initial cost of the project is Rs. 29,596,720, including of an initial working capital of Rs. 5,774,720. 1. Projected Revenues for the project for year 1, year 2, year 3, year 4 and year 5 is Rs. 53,194,080, Rs. 58,513,488, Rs. 64,364,837, Rs. 70,801,320 and Rs. 77,881,453, respectively.

2. Gross profit / (loss) for year 1, year 2, year 3, year 4 and year 5 is Rs. 9,880,800, Rs. 11,556,336, Rs. 13,435,454, Rs. 15,540,431 & Rs. 17,895,872, respectively. 3. Payback period of the project is approximately 3.5 years. 4. The IRR of the project is 21.52%.

1

Source: Environmental Controlled Poultry Farm, SMEDA, April 2010

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

1. Overview of the Poultry Sector Poultry is an important sub – sector of agriculture and has contributed enormously to food production by playing a vital role in the domestic economy. It has great potential and can play a significant role in the national economy by contributing towards food security of the country, reducing pressure on demand for mutton and beef and earning of foreign exchange. Poultry industry can broadly be divided into three groups, viz. hatchery, poultry farming and feed sectors. This sector generates employment and income for about 1.5 million people in Pakistan. Its contribution in agriculture growth is 4.81% and in Livestock growth is 9.84%, whereas, the total poultry meat contributes to 23.8% of the total meat production in the country. Pakistan, with a population of 170 Million people, has gone through a sizeable growth in the production of poultry meat and eggs. Per capita availability went up from 23 in 1991 to 46 eggs in 2009 and poultry meat availability increased from 1.48kg to 2.88 kg during the same period2. In our Country per capita consumption of meat is only 7 KG and 60-65 eggs annually. Whereas developed world is consuming 41 KG meat and over 300 Eggs per capita per year. According to Industry sources there is capacity of 5,000 Environmental Control Houses in Pakistan and currently only 2,500 houses are working.

1.1. Industry Dynamics The generation line of broiler comes from pure line (Strains) that make the Great Grand Parents (GGP), which are imported. These great grandparents produce grandparents which are available in Pakistan. These grandparents produce parent stocks (Breeders) and parent stock end up in producing the final product which is broiler. Pakistan’s poultry industry is importing 100,000 Grandparents (GP) chicks annually from Australia, Holland, and USA with the cost of US$100 per day-old female chick. The farmers get day old broiler from hatcheries. These hatcheries maintain their breeder farms, or in some cases, purchase their hatching eggs from breeder farms. These breeder farms depend on producers of parent stock. Poultry feed mills are the major player in the poultry industry, which produce a specific formula feed mix. Poultry feed consists of rich protein elements like soya bean meal, canola meal, rapeseed meal, sunflower meal, feather meal and rich energy elements like grains, gluten, etc. When feed efficiency matters most you can gain the right weight of your bird. The major component of cost of production of chicken meat s for feed cost.

2

FAOSTAT (2009)

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

1.1.1. Segmentation3

Total Investment No. of Hatcheries No of Feed Mills Grand Parents Parents Broiler Poultry Meat

Rs. 200 Billion 400 150 200,000 6 Million 600 Million 621,000 Metric Ton

1.2. Marketing Analysis

PKR Million

The total Poultry population in Pakistan is approximately 610 Million. The chart below illustrates the increase in the number of poultry population over the years4.

Figure 1: Increase in the number of Poultry population in Pakistan (2000 - 2010)

Similarly, there has been a substantial increase in the Livestock products pertaining to Poultry i.e. Poultry meat and and Eggs3.

3

Source: Environmental Controlled Poultry Farm, SMEDA, April 2010

4

Source: Economic Survey of Pakistan 2010 – 2011

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Figure 2: Increase in the number of Poultry Eggs & Meat in Pakistan (2000 - 2010)

According to FAO, to produce chicken meat in 2008, 517 million birds were slaughtered and 601 million tonne meat was acquired. In the same year world total chicken meat production was 52,887 million ton. There are around 25,000 poultry farms are in the country5. The poultry production is concentrated around the large urban centres in the provinces of Sindh especially in Karachi. In the provinces of Sindh, there are farms in Mirpurkhas, Sukkar, Nawabshah as well as in small cities. Many big companies have established their poultry farms in different parts of the country. To name a few such key players are K&N, Sabir, Hitech, SB and Jadeed.

1.3. Problems with Poultry in Pakistan A balanced diet is essential for good health, vigour and productive capacity of the people. Proteins play an important role in the formation of balanced human diet. There are mainly two sources of proteins i.e. animals and plants. The human diet in Pakistan is deficient in animal proteins, as approximately 66% Pakistanis are deficient in proteins. The requirement of proteins is 102.7 g per person per day, while only 69.61 g per person per day is being used in the country. The main sources of animal proteins in Pakistan are beef, mutton, milk, poultry meat and eggs. To overcome the gap between supply and demand of proteins, poultry meat is contributing a dominant share which can be enhanced by improving the profitability of producers and by decreasing prices at the retail level. The profitability can be increased through better management practices and establishment of fully equipped controlled poultry houses. 5

Source: Pakistan Poultry Association (www.ppapaknorthern.com)

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Pakistan, being a tropical country, experience various temperatures throughout the year of which summer is the most common. During this period the temperature reaches over 40°C in different parts of Pakistan. This affects the efficiency of the poultry farms and the chickens. Hot and humid weather conditions coupled with manual and poor management practices increases the mortality in flocks, depresses their growth and makes poultry production an unmanageable and uneconomical pursuit. Chickens can tolerate high temperatures but react negatively if they are too warm. The body temperature of an adult chicken is 105-107°F (40.6 to 41.7°C). The thermo-neutral zone is 65-75°F (18-24°C), which allows chickens to maintain their body temperature. If the temperature is above this zone, heat must be lost in some way. Chickens have no sweat glands. Since eating increases body temperature, chickens reduce their feed intake during hot weather, and therefore gains will be less. Chickens begin panting at 85°F (29.4°C) to help dissipate heat, and drink more to avoid dehydration. A combination of high temperature and high humidity is a problem, because panting does not cool them under these conditions. During this period owner has to either continue his flock compromising with poor performance in feed intake, growth rate, weight gain, FCR (Feed Conversion Ratio) in broilers along with mortality or he has to totally close his business to avoid all these risks. This situation creates severe shortage of poultry meat which is the cheapest and easily available source of animal protein. The poultry industry also faces problems like the incidence of diseases, substandard and costly feed and inefficient marketing system. In all stages of development, there is a need for improving the efficiency and lowering the cost of distribution. Losses occur in case of death of birds due to diseases and poor handling. Grading is largely ignored in egg trade because of extra cost required for grading. Inadequate health facilities are one of the major constraints in poultry production. It is due to viral, bacterial infection and parasitic infestation. Environment controlled houses can overcome such critical situations, which counteracts the adverse effects of heat stress providing tunnel ventilation and enhancing the wind chill effect. These houses when equipped with highly mechanized system of automatic chain feeding and nipple drinking makes the environment quite conducive for poultry production and reduces the risk of bacteria during different seasons.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

2. Pre-Feasibility Study for Environmentally Controlled Poultry House 2.1. Comparative Efficiency of ECH and COH The modern trend of environment control houses (ECH) in poultry production has brought a great revolution in poultry industry of Pakistan in the recent years. This has solved a great hurdle of heat stress in the way economical commercial poultry production. The ECH with evaporative cooling system, providing tunnel ventilation, giving the wind chill effect has markedly improved the broiler production system. The technology of ECH is rapidly becoming popular among broiler producers. A comparison is given below of ECH and a traditional house which highlights significant advantages of an ECH are given below:

No

Specification

Control House

Traditional House

1

Feed Conversion Ratio

1.9 – 2.3

2. 5

2

Feed wastage

Nil

10 %

3

Feed distribution

Automatic

Laborious

4

Body Wt / bird 42 days

1.9 Kg

1.65 Kg

5

Humidity of shed

Controlled

High

6

Brooding

Energy saving

Energy wastage

7

Carbon mono oxide poisoning

Nil

Very high

8

Ammonia poisoning

Nil

Very high

9

Mortality

5–8%

10 – 30 %

10

Electricity

Required

No required

11

Rodent Control

Successful

Failed

12

Wild protection

No risks

High risky

13

Bio-security measure

Very easy

Very difficult

14

Noise stress

Nil

Very high

15

Environmental Stress

Nil

Very high

16

Mortality due to heat stress

Nil

20-100 %

17

Over head / bird

Rs.10.00

Rs.8.00

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS 18

Dosage of vaccine & medicine

Accurate

Wastage

19

Medication & vaccination application

Appropriate

Difficult

20

Litter humidity

Under control

Not control able

21

Flock Sizing

One size

Multiple size

22

Shed temperature

Automatic

Big variation

23

Expenditure of maintenance energy

Accurate

Wastage

24

Poultry environment (neighboring)

Health

Contaminated

25

Fly control

Successful

Not possible

26

Feed and water intake

Recordable

No recordable

27

Light intensity

Controlled

Not control able

28

Feed storage environment

Appropriate

Humid

29

Flock monitoring

Computerized

Error

2010

All these significant features in ECH have reduced the cost of production of broiler to Rs. 7 to 8 Per Bird as compared to COH.

2.2. Existing Marketing Practice & Pricing The Broilers are distributed in the market through Middleman and Whole seller. Broilers are transported to the urban market and are sold on live-weight basis. The current pricing of the broilers and other poultry products are mentioned below6: Product Chicken Meat per KG Chicken (Live) Eggs per Dozen Day Old Chick Broiler Day Old Chick Layer

PKR Rs. 170 120 55 50 60

– – – – –

200 145 75 65 70

6

Source: Pakistan Poultry Association (www.ppapaknorthern.com). There is an increase of 25% from what is mentioned on the PPA Website as those rates are pertaining to the Punjab Province whereas in Sindh the rates are high.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

During the years 2008-09 and 2009-10 sharp fluctuations occurred in the prices of day old chicks. The data made available by Poultry Research Institute shows price of day old broiler and layer chick was Rs 11 and Rs 35.5 respectively in January 2008. The lowest price during the period for broiler and layer day old chick was Rs. 6 and Rs. 28 respectively and the highest price was Rs 71.9 and Rs 39 in October 2009. On the basis of information provided by Poultry Research Institute and by leading companies of poultry industry to the C the cost of production of day old broiler chick was around Rs 18 per chick. The chick was being sold below cost during almost all months of the year 2008 and since January 2009 the prices rapidly increased and touched the figure of Rs 71.9, leading towards proportional increase in the prices of poultry meat, since the price of day old broiler chick are directly related to price of poultry meat. The current price of DOC’s range from Rs. 50 – Rs. 65 whereas DOC layer costs Rs. 60 – Rs. 70.

The prices of poultry feed also showed a consistent increase during the years of 2008 to 2010. The average price of a bag of 50 kg poultry feed had been Rs. 955 during year 2008, which rose to Rs. 1,450 in 2010. One of the factors of increase in the prices of day old chicks and poultry meat is the increase in prices of feed that is one of the basic inputs in poultry industry.

2.3. Farm Management Farm input required for a broiler farm includes farm equipment (Automatic feeding system, water nipple system, exhaust fans, cooling pads, diesel heaters, control s and other consumable items (feed, vaccines, medicines, rice husk, water, electricity etc.). The figure below illustrates what the farm will look like once constructed and ready for flock raising.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Below are features of the Environmentally Controlled Poultry House: Day Old Chicks The Chicks should be uniform size, alert and bright eyed. The shank or leg covering (skin) of health chicks appears bright and shiny. Brooding Proper brooding temperature is required to keep the chicks in comfort. Diesel heaters supply heat at the stage of brooding in the Poultry Farm. In the first week 32 ‘C is quite comfortable. As chicks grow, the temperature may be reduced at the rate of 2 ’C per week until 24 ‘C reached in last week. Feeding Broilers re usually feed with following two types of broiler starter. It is feed to the broiler up to 5 weeks of age. Secondly, is the Broiler Finisher which is feed to the Broiler of more than 5 weeks and continued till the age of marketing. Housing The Broiler control house size 400 feet long and 50 feet side is enough for 30,000 birds. Feeders The pan feeders of automatic feeding system are for 65-70 birds. Therefore, 465 feeders in a house are enough for 30,000. Lighting The control house broiler grows on artificial light (not the sunlight). One house 20,000 sq feet requires 100 energy saver of 9 watts each i.e. 900 watts. Automatic feeding system The nipple is enough for 12-15 birds. In 30,000 broilers house total nipples required are 2500 there are automatic water system, whenever bird touches the nipple water flows out and when bird will away no water is there. Litter Litter is spread on the floor. Rice husk is usually for the making the litter. It should be dry and free of mould. Caked or mould material should be removed and refilled with fresh materials. Extensively wet and dusty litter should be also not be used. Using new litter for each flock is good for raising disease free broiler.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Vaccination Vaccination can be provided through spray and drinking water. Disinfection It is essential to check all equipment and walls of the broiler house carefully that they are clean and washed with detergents, disinfectants. The house should be fumigated before the birds.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

3. The Project 3.1. Project Brief The Broiler Control House is a project of Livestock sector, in which day old chicks (DCO’s) are raised on high protein feed for a period of six weeks. This pre-feasibility highlights the capacity and efficiency of Broiler Control House which covers all the required facilities for the fast growing broilers. Annually eight flocks of birds will be raised on the same premises of the farm.

3.2. Proposed Capacity A Broiler farm of about 30,000 birds is considered to be economically viable size, which will justify the fixed and operational costs. In this pre-feasibility study, all calculations have been based on a flock size of 30,000 birds with raising seven flocks per year. An additional lag time of 10 days will be included for the cleaning and disinfection of the farm/house.

3.3. The Product The proposed project should generate revenues from sale of chicken after they have been raised for 6-7 weeks in the Environmentally Controlled Poultry Shed. Assumptions used for the product mix are as follows: Product Chicken

Average Weight 1.90 Kg

Price 228

Hence, the cost of Price per Kg is 228/1.9 = Rs. 120. 7

7

This price is taken as the current average market rate (2010). Source: Pakistan Poultry Association (www.ppapaknorthern.com)

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

3.4. Product Assumptions8 Number of Flocks per year

8

Number of Birds per Flock

30,600

Time required per Flock (Days)

35

Lag time required per Flock (Days)

10

Total Annual Production Capacity

244,800

Shed Space Required per Bird (Sq.ft) Mortality Rate Average Rate per bird Broiler Sale price per Kg (Live)

5% 1.9 Kg Rs. 120

Sale price growth rate

10%

Cost of 50 Kg Feed bag

Rs. 1,600

Cost of Feed per Kg bag

8

0.65

Rs. 32

Analysis attached in Annexure A

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

3.5. Manpower Requirements Skilled and Semi skilled workers are needed to manage the operation of a broiler farm of 30,000 birds. These workers will look after the feeding, vaccination and cleaning operations at the farm. The personal needed for the farm is as under: Description

Required Personal

Salary Per Month

Salary for the Year

Supervisor

1

24,000

288,000

Doctor

1

12,000

144,000

Housemen

3

6,500

234,000

Electrician

1

10,000

120,000

Watchmen

2

7,500

180,000

Cleaner

3

6,000

216,000

Total

11

98,500

1,182,000

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

3.6. Farm Equipment In order to make sure the birds are being fed properly and in a timely manner the following farm equipments and technology have been identified. This technology for feeding, drinking and handling of birds is most suitable for a high tech. Controlled poultry house. A full illustration is provided in Annexure C Description

Amount PKR

Flux Pan feeding, Tope screw nipple drinking

2,300,000

system with BD sile (one house)9

Exhaust fan with 1 NP Motor type EOS50 1.06 Alu

780,000

(13 required at Rs. 60,000 each) Evaporative cooling pads (91 required at Rs. 6,000

546,000

each) Heater type combi term 140E (1 required)

420,000

Minimum ventilation system (1 required)

680,000

Electrical control (1 required)

250,000

Generator 50 – KVA (Perkins 1104A-44TG1)

950,000

Cost of Uniforms, shoes, bio-security equipments

750,000

& other miscellaneous expenses10

9

Installation cost

250,000

Total

6,926,000

Rates have been taken from Cumberland Poultry Services: http://www.cumberlandpoultry.com/

10

Equipments (Drinkers & Feeders for chicks) and trays, heaters, fire extinguishers etc.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

3.7. Land and Building Description

Area (Sq.ft.)

Cost

Total

Land

1 Acre

1,000,000

1,000,000

Description

Area (Sq.ft.)

Cost (Rs. / Sq.ft.)

Total

Shed Space (400x50’)

20,000

600

12,000,000

Feed Store (30x30’)

1,000

800

800,00

Room for Guards & Workers

1,200

1,000

1,200,000

Office Block11

1,200

1,100

1,320,000

Store Room

250

800

200,000

Generator Room

200

400

80,000

Water Container 1,000 Gallon

20,000

Boundary Wall (6 Feet High)

500,000

Total

16,640,000

3.7.1. Mode for Acquiring Land It is assumed that the land available will be on a lease (on a subsidised rate) in the locations mentioned below.

11

Includes changing room

17

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

3.7.2. Preferred Locations – Sindh Suburban and rural areas around the major cities of the country are the suitable areas for setting up a poultry farm. Setting up a farm at an isolated place will minimize the risk of disease. Proximity of the farm to the city enables the farmer to have a quick communication with the market for the purchase of Day Old Chicks, farm inputs (feed, etc.), and selling of mature birds. Hence, areas like Gharo, Dhabeji, Bhambhore, Karachi and Hyderabad are identified as a prime location for this project.

3.7.3. Infrastructure Requirement Poultry's farming needs to be handled tactically, right from the selection of the site to the final stage when the birds are sold. The farm should be located at a place where transportation of birds and feed can be handled easily. The entrepreneur should make sure that the following things are available at the farm site before setting up the farm: Electricity connection & drinking quality water.

3.8. Working Capital

Description

Rate in Rs.

Total Amount

Cost of Day Old Chicks

52

1,591,200

110 per bird for 35

3,305,020

(Broilers 30,600)

Feed for 1st flock of birds

days to gain on average 1.9 Kg - 2 Kg weight Salaries (For one month)

98,500

Cash

878,500

Total

5,774,720

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

4. The Financial Analysis 4.1. Project Economics Capital Investment

Amount in PKR

Land

1,000,000

Building/Infrastructure

15,640,000

Machinery & Equipment

6,926,000

Furniture & fixtures

250,000

Total Capital Costs

23,816,000

Working Capital

Amount in PKR

Inventory & Expenses**

4,896,220

Cash in Hand

878,500

Total Working Capital

5,774,720

**Inventory & Expenses include salary for one month, raw material i.e. fodder, one flock of birds, utilities, transport and fuel expenses

Total Investment

PKR 29,590,720

An Environmentally Controlled Poultry House with a population of 30,000 birds established in a purposebuilt controlled shed needs a capital investment estimated at Rs. 23,816,000 for construction and purchasing machinery & equipment. In addition to this, a sum of Rs. 5,774,720 is required as initial working capital, which should be used for purchasing day old chicks and other inputs like feed, vaccines, etc and one month’s salary of the staff. The total project cost is estimated at Rs. 29,590,720.

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

4.2. Financing Option Looking at the current market trends lending of up to 50% could be available on these projects. A list of financial institutions willing to facilitate such projects in given in Annexure B. The bank will charge a rate of at least 20% on financing per annum plus this need to be backed by 200% collateral . Initial Financing

Amount in PKR

Debt

50%

14,795,360

Equity

50%

14,795,360

4.2.1. Debt Assumptions

Debt Tenure Interest Rate on Long Term Debt Debt Payments

5 Years 20% Quarterly

20

4.3. Projected Income Statement

Statement Summaries EC Poultry House - SBI Projected Income Statement Year 1

Year 2

Year 3

Year 4

Year 5

Revenue from Sales (Birds & Empty Feed Bags)

53,194,080

58,513,488

64,364,837

70,801,320

77,881,453

Cost of DOCs

(12,093,120)

(12,697,776)

(13,332,665)

(13,999,298)

(14,699,263)

Cost of Feed per annum Cost of other goods (vaccination, electricity, diesel, spray etc)

(26,440,160)

(29,084,176)

(31,992,594)

(35,191,853)

(38,711,038)

(4,780,000)

(5,175,200)

(5,604,124)

(6,069,739)

(6,575,279)

Gross Profit

9,880,800

11,556,336

13,435,454

15,540,431

17,895,872

(1,182,000)

(1,300,200)

(1,430,220)

(1,573,242)

(1,730,566)

(50,000)

(55,000)

(60,500)

(66,550)

(73,205)

(45,000)

(49,500)

(54,450)

(59,895)

(65,885)

(45,000)

(49,500)

(54,450)

(59,895)

(65,885)

Depreciation expense

(2,986,700)

(2,986,700)

(2,986,700)

(2,986,700)

(2,986,700)

Sub Total

(4,308,700)

(4,440,900)

(4,586,320)

(4,746,282)

(4,922,240)

Operating Profit

5,572,100

7,115,436

8,849,134

10,794,149

12,973,632

Less Financial Charges

2,809,907

2,391,408

1,880,884

1,258,133

498,515

Net Profit Before Tax

2,762,193

4,724,028

6,968,250

9,536,016

12,475,117

Provision For Income Tax Net Profit/Loss After Taxes

966,767

1,653,410

2,438,888

3,337,606

4,366,291

1,795,425

3,070,618

4,529,363

6,198,411

8,108,826

General istration & selling expenses istration expense Communications expense (phone, fax, mail, internet, etc.) Office expenses (stationary, entertainment, janitorial services, etc.) Professional fees (legal, audit, consultants, etc.)

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

4.4. Projected Cash Flow Statement

Calculations Poultry - SBI Cash Flow Statement Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Net profit

-

1,795,425

3,070,618

4,529,363

6,198,411

8,108,826

Add: Depreciation expense Amortization expense - Preoperating cost

-

2,986,700

2,986,700

2,986,700

2,986,700

2,986,700

-

-

-

-

-

Inventory Cash provided by operations

(4,896,220)

(524,538)

(576,926)

(634,618)

(698,080)

(767,889)

(4,896,220)

4,257,587

5,480,392

6,881,445

8,487,031

10,327,637

14,795,360

(1,913,931)

(2,333,831)

(2,845,852)

(3,470,207)

(4,231,539)

14,795,360

-

-

-

-

-

29,590,720

(1,913,931)

(2,333,831)

(2,845,852)

(3,470,207)

(4,231,539)

Operating activities

Financing activities Change in long term debt Change in short term debt Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities

(23,816,000)

Net Cash

878,500

2,343,656

3,146,562

4,035,592

5,016,824

6,096,098

878,500

878,500

3,222,156

6,368,718

10,404,310

15,421,134

3,222,156

6,368,718

10,404,310

15,421,134

21,517,231

Cash balance brought forward Cash available for appropriation

(23,816,000)

Dividend

0

0

0

0

0

0

Cash carried forward

878,500

3,222,156

6,368,718

10,404,310

15,421,134

21,517,231

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PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

5.5. Projected Balance Sheet

Projected Balance Sheet Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Cash & Bank

878,500

3,222,156

6,368,718

10,404,310

15,421,134

21,517,231

Inventory

4,896,220

5,420,758

5,997,684

6,632,302

7,330,382

8,098,271

Total Current Assets

5,774,720

8,642,914

12,366,402

17,036,612

22,751,516

29,615,502

Land

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

Furniture

250,000

212,500

175,000

137,500

100,000

62,500

Building/Infrastructure Machinery & Equipment

15,640,000

14,076,000

12,512,000

10,948,000

9,384,000

7,820,000

6,926,000

5,540,800

4,155,600

2,770,400

1,385,200

-

Total Fixed Assets

23,816,000

20,829,300

17,842,600

14,855,900

11,869,200

8,882,500

Total Assets

29,590,720

29,472,214

30,209,002

31,892,512

34,620,716

38,498,002

Current liabilities

-

1,913,931

2,333,831

2,845,852

3,470,207

4,231,539

s payable

-

-

-

-

-

-

Total Current Liabilities

-

1,913,931

2,333,831

2,845,852

3,470,207

4,231,539

Long Term Debt

14,795,360

12,881,429

10,547,598

7,701,746

4,231,539

-

14,795,360

14,795,360

16,590,785

19,661,403

24,190,766

30,389,176

1,795,425

3,070,618

4,529,363

6,198,411

8,108,826

14,795,360

16,590,785

19,661,403

24,190,766

30,389,176

38,498,002

29,590,720

29,472,214

30,209,002

31,892,512

34,620,716

38,498,002

Current Asset

Fixed Asset

Pre-operating cost

Liabilities & Shareholders' Equity

Shareholders' Equity Paid-up capital Retained Earnings Total Equity TOTAL CAPITAL AND LIABILITIES

23

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Key Assumptions

Net Bird Calculation – Flocks/Year Total birds per flock

30,600

No. of birds per flock

30,000

Excessive birds @ 2% of Birds

600

Mortality in Birds

@ 5% of 30,600 = 1,538

Net birds after Mortality per flock

29,070

Net birds after Mortality for the year

232,560

Net Bird Calculation – Cost of Feed Description No. of Birds Total Mortal Birds During first two weeks Mortal birds @ 50% of Total Mortality During 3rd and 4th weeks Mortal birds @ 30% of Total Mortality During 5th and 6th weeks Mortal birds @ 20% of Total Mortality Cost of Feed Consumed by Mortal Birds Per Flock Cost of Feed Consumed by Remaining Birds Total Cost of Feed Consumed by the Birds Per Flock Total Cost of Feed Consumed by the Birds Per Year

Amount in PKR 1,530 765

33,660

459

36,720

306

37,000

1,530

107,320

29,070

3,197,700 3,305,020 26,440,160

24

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Expenses Assumption – Project Income Statement

Communication expense

4% of istration expense

Office expenses (Misc.)

4% of istration expense

Professional fees (legal, audit, consultants, etc.)

0.08% of revenue

Depreciation Assumptions

Depreciation Method

Straight Line Method

Building depreciation rate

10%

Machinery & Equipment depreciation rate

10%

Office Equipment depreciation rate

10%

Furniture & Fixtures depreciation rate

15%

Cost of Goods Assumptions

DOC (Day Old Chicks) (Rs.)

52

Feed Conversion Ratio (FCR) i.e. Feed required to gain 1 Kg weight (Kgs.)

1.90

Vaccination. Medication and Disinfection Cost per Bird (Rs.)

6

Feed Price per Bag (50 Kgs) Cost of Feed per Kg – Rs. Price of Empty Feed Bags – Rs.

1,445 32 6

25

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Growth Rate of Goods

Sales Growth Rate

10%

CGS Growth Rate (DOC, Vaccine & Medication, Litter & Spray)

5%

Cost of Feed Growth Rate

5%

Salaries Growth Rate

10%

Electricity & Diesel Growth Rate

10%

26

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Annex A The product assumptions are based on real time data derived from useful resources and poultry associations in Pakistan. A breakdown of the assumptions is explained below: Number of Flocks per year A flock will contain 30,600 birds i.e. Day Old Chicks, which will be raised 8 times in an year with a raising period of 35 days (45 days including lag time) Number of birds per flock It is estimated that a flock will contain 30,600 birds as it will be viable to raise them in the ECH proposed location/area Time required per flock 35 days is approximately estimated to raise the birds i.e. one flock (30,000 birds) Lag time required per Flock (Days) 10 days are required to clean, paint & fumigate the farm/shed before the next lot is brought in. With the help of new technology and machinery the lag time has been brought down to 10 days from 15 days, as conducted in previous studies. Total Annual Production Capacity Total birds produced in an year will be 30,600 x 8 (flocks per year) = 244,800 – morality rate of 5% = 232,560 Shed Space Required per Bird (Sq.ft) Recent survey has indicated that these days Day Old Chicks requires very little space. But as they grow and after 5 weeks of feeding the total space required by a bird would be 0.65 sq. ft. Hence, this figure is taken initially and the construction and area will be build up according to these details. Sale price growth rate Keeping in view the past trends it would be viable to say that there will be a 10% increase in the sale price of the chicken. This increase keeps in view different factors like quality of chicken, bird weight, other economic factors like inflation, taxes etc. Production capacity utilization The plant/shed would be used to its fullest capacity throughout the year apart from the days when it be closed down for cleaning i.e. Lag Time.

27

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Annex B Name of Financial Institutions ZTBL

Khushali Bank Ltd

Habib Bank Limited

Rozgar Microfinance Bank ltd

Bank Al-Falah Limited

Tameer Microfinance bank ltd

Askari Bank Limited

Kashf Bank Limited

United Bank Limited

Muslim Commercial Bank

28

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

Annex C

FRONT

INSIDE

SIDE

CONTROL ROOM

29

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2010

IMPORTANT S SINDH BOARD OF INVESTMENT Government of Sindh st Block B, 1 Floor, FTC Building Shahra-e-Faisal Karachi, Pakistan Tel: 021 – 99207512 – 4 Fax: 021 - 99207515 Email: [email protected] Website: http://www.sbi.gos.pk

MINISTRY OF FOOD, AGRICULTURE & LIVESTOCK B Block, Pak Secretariat, Islamabad , Pakistan Tel: +92-51-9203307, 9210351 Fax: +92-51-9210616

TRADE DEVELOPMENT AUTHORITY OF PAKISTAN (TDAP) 5th Floor, Block "A", Finance & Trade Centre, Shahra-e-Faisal, Karachi - Pakistan Tel: (92-21) 9206462 Fax: (92-21) 9206461

SMEDA 5 TH Floor, Bahria Complex II, M.T. Khan Road, Karachi Pakistan Tel: (021) 111-111-456 Fax: (021) 5610572 Email: [email protected]

K&N 160 Banglore Town, Shara-e-Faisal, Karachi-75350, Pakistan Tel: 021 - 34533623 - 34541419

LIVESTOCK & FISHERIES DEPARTMENT - SINDH Barrack Number 90, Sindh Sectt. No. 48, Opp. Sindh Assembly Building Karachi – Pakistan Tel: 021 – 99203291

SUPREME FEEDS (PVT.) LTD. Head Office: 176-Shan 1 Lahore. Phone: +92-42-37522104-7 Fax: +92-42-37573106

BIG BIRD POULTRY BREEDERS (PVT.) LTD. 2-A,Ahmed Block, New Garden Town Lahore Phone: +92-42-35835373-4 Fax: +92-42-35835371 HI-TECH POULTRY BREEDERS (PVT.) LTD. 1-A, Shan Chowk Jail Road, Lahore Phone: +92-42-37564503 Fax: +92-42-37564508 ISLAMABAD POULTRY BREEDING CO. D-98, Satellite Town, Murree Road Rawalpindi. Phone: +92-51-4427139 Fax: +92-51-4421203 JADEED FARMS (PVT.) LTD. 6,Allied Commercial Plaza, Murree Road, Chandni Chowk Rawalpindi. Phone: +92-51-4851280-84 Fax: +92-51-4851255

NATIONAL FEEDS LTD. 171 Shan – II Lahore. Phone: +92-42 37551405-8 Fax: +92-42- 37573045 ASIA FEED (PVT.) LTD. 359 Shamsabad Colony, Humayun Road Multan. Phone: +92-61-6224414 Fax: +92-61-6224414 FAST POULTRY FEEDS 12-KM Near Nai Sabzi Mandi Jhang Road, Faisalabad. Phone: +92-41-2577171-2 Fax: +92-41-2517474

30

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

SB POULTRIES SB PLAZA 48-C Satellite Town, Murree Road, Chandni Chowk, Rawalpindi. Phone: +92-51-4457561 Fax : +92-51-4511191 PAKISTAN POULTRY ASSOCIATION NOTHERN ZONE(NWFP PUNJAB& AJK) HOUSE# 24, BLOCK R JOHAR TOWN, LAHORE PAKISTAN Tel: +92-42-7550132-7572764, +92-333 4888555

RUSTUM FEEDS Flat No.6, 1st Floor, United Centre Shamsabad, Murree Road, Rawalpindi Phone: +92-51-4455362 Fax: +92-51-4847382 Golden Birds Poultry Agency S/No. 230 Kh. Shahbuddin Mkt. Sdr, Karachi Tel: 021 - 32253309

Ghazi Brothers D-35, KDA Scheme No. 1, Miran Muhammad Shah Road, Karachi Tel: 021 - 34543579, 34543785 M.R. Poultry Service Shop No. 57, Goal Mkt., Nr. Jama Masjid, Nazimabad No. 3, Karachi Tel: 021 - 36610436, 36681537

Dastagir Poultry Nadim Centre,BS-38,Block-7,Opp.Dastagir Post Office, F.B Area, Karachi Tel: 021 - 36333283, 0300-2945245 Bismillah Chicken Centre Garden West, Near Macca Masjid, Chandni Chowk, Karachi, Pakistan Tel: 0333-3002843

Amir Poultry Farm Shop No. 41, Gole Mkt., Nazimabad No. 3, Karachi, Pakistan Tel: 0333-2275130, 6614501

Data Poultry Farm Shop No. 43, Main Gole Mkt., Nazimabad No. 3, Karachi, Pakistan Tel: 6681019, 6614511

2010

31