Pre-Feasibility Study

ENVIRONMENTAL CONTROLLED POULTRY FARM

(60,000 Birds)

Small and Medium Enterprises Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6 Floor , LDA Plaza, Egerton Road, Lahore Tel: (042) 111-111-456, Fax: (042) 6304926-7
th

helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

8th Floor LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456 Fax: (042) 6304926-7 helpdesk.punjab@smeda.org.pk

April, 2010

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Environmental Controlled Farm (60,000 Birds)

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. 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 does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form.

DOCUMENT CONTROL
Document No. Revision Prepared by Issue Date Issued by PREF 105 1 SMEDA-Punjab April, 2010 Library Officer

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EXECUTIVE SUMMARY

The Environmental Controlled Poultry Farm is a project of livestock sector, in which, the day old chicks (DOCs) are raised on high protein feed for an approximate period of six weeks with a lag time of 15 days for cleaning and fumigation of the farm. The entire specific requirement will be met by automatic operations of temperature control, feeding and nipple drinking system, which will be monitored by the concerned staff. Broiler farming in controlled environment is a profitable venture due to continuous increasing demand of the white meat in the market. According to the World Health Organization standards, daily required dietary protein allowance from animal sources are 27 grams but in Pakistan this amount is only 13.6 grams. Poultry sector is one of the vibrant segments of agriculture industry of Pakistan. This sector generates employment (direct/indirect) and income for about 1.5 million people. Its contribution in agriculture growth is 4.81% and in Livestock growth 9.84%. Poultry meat contributes 19% of the total meat production in the country. According to Industry sources there is capacity of 5,000 Environmental Control Houses in Pakistan and currently 2,500 houses are working, out of which 75% (1,875) are in Punjab and remaining 25% (625) are in other provinces. An Environmentally Controlled Poultry House with a population of 60,000 birds needs a capital investment estimated at Rs. 28.43 million for construction and purchasing machinery & equipment. In addition to this, an estimated sum of Rs. 10.50 million is required as working capital, which should be used for purchasing day old chicks and other inputs like feed, vaccines, etc. The total project cost is estimated at Rs. 38.93 million. Projected IRR, Net Present Value and Payback of this project are 37%, Rs. 33,320,508 and 3.68 years respectively. In this pre-feasibility study, all the calculations have been based on a flock size of 60,000 birds, with raising 7 flocks per year. These birds are kept in a double story shed of 20,000 Sq. ft each. Proposed space of a bird is 0.65 Sq. ft.

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2.1

INTRODUCTION
Project Brief

The Environmental Controlled Poultry Farm is a project of livestock sector, in which, the day old chicks (DOCs) are raised on high protein feed for an approximate period of six weeks. Broiler meat is the cheapest source of animal protein available in the country. The time required for rearing broiler birds is lesser than that for large animals. The consumption of white meat is increasing due to growing health consciousness in the masses. Broiler farming in controlled environment is a profitable venture due to continuous increasing demand of the white meat in the market. Annually, seven flocks of birds will be reared on the same premises of the farm. The broiler birds are sold to traders and the whole sellers markets in the urban areas. Some times birds can also be sold directly to the shopkeepers in the urban markets. This unit is proposed for the rearing of broilers. These birds are marked for white meat purpose to the masses. The broiler chicks will be purchased from private hatcheries. A flock of 60,000 commercial broiler chicks will be bought after every 52 days. The chicks will be set in brooding on litter floor providing specific requirement during 0-4 week and then finishing phase from 4-6 weeks. The entire specific requirement will be met by automatic operations of temperature control, feeding and nipple drinking system, which will be monitored by the concerned staff. After marketing of broiler approximately at 6 weeks of age the broiler house will be given 15 days for the preparation to receive the new flock. During these days, proper cleaning, washing, white washing, disinfection and fumigation will be performed prior to the arrival of the new flock. During flock, strict measures for bio-security will be observed at the unit. 2.2 Opportunity Rationale

Poultry sector is one of the vibrant segments of agriculture industry of Pakistan. This sector generates employment (direct/indirect) and income for about 1.5 million people. Its contribution in agriculture growth is 4.81% and in Livestock growth 9.84%. Poultry meat contributes 19% of the total meat production in the country.1 The existing daily availability of protein quantity per capita in Pakistan deriving from animal source including beef, mutton, poultry and fish combined amounts to 13.6 grams. This is far less than the recommended daily dietary protein allowance from animal source of 27 grams, according to the World Health Organization standards. In our Country per capita consumption of meat is only 5 KG and 40-45 eggs annually whereas developed world is consuming 41 KG meat and over 300 Eggs per capita per year.2 According to Industry sources there is capacity of 5,000 Environmental Control Houses in Pakistan and currently 2,500 houses are working,
1 2

Source: Economic Survey of Pakistan 2008-09. (Chapter No. 2 Page No.34) Source: Pakistan Poultry Association (www.ppapaknorthern.com) 3

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out of which 75% (1,875) are in Punjab and remaining 25% (625) are in other provinces. 2.3 Total Project Cost

An Environmentally Controlled Poultry House with a population of 60,000 birds established in a purpose-built controlled shed needs a capital investment estimated at Rs. 28.43 million for construction and purchasing machinery & equipment. In addition to this, a sum of Rs. 10.50 million is required as working capital, which should be used for purchasing day old chicks and other inputs like feed, vaccines, etc. The total project cost is estimated at Rs. 38.93 million. 2.4 Proposed Capacity

In this pre-feasibility study, all the calculations have been based on a flock size of 60,000 birds, with raising 7 flocks per year. A lag time of 15 days for cleaning and fumigation of the farm is proposed.

CURRENT INDUSTRY STRUCTURE

The generation line of broiler comes from pure line (Strains) that make the Great Grand Parents (GGP), which are imported. These great grand parents produce grand parents which are available in Pakistan. These grand parents produce parent stocks (Breeders) and parent stock end up in producing the final product which is broiler. Pakistans poultry industry is importing 100,000 Grandparents (GP) chicks annually from Australia, Holland, Germany 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 soyabean 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 accounts for feed cost. 3.1 Sector Information3 Total Investment No. of Hatcheries No of Feed Mills Grand Parents Parents Broiler Poultry Meat
3

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

Source: Pakistan Poultry Association (www.ppapaknorthern.com) 4

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In this way, poultry sector is contributing its major share to provide animal protein to the masses and is striving hard to fulfill the gap of animal protein in the country. 3.2 Problems faced by Poultry Industry

This important sector is facing a great problem in the form of heat stress. Pakistan is a tropical country and during summer the temperature reaches over 40C. Even the average temperature remains well beyond the higher side of thermo neutral zone for the greater part of the year. 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. Business is also adversely affected for four long months due to severe environment. 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. Environment controlled houses can overcome this critical situation, 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. 3.3 Poultry Trend in Pakistan

Figure 3.1: Broilers' Population (1999-2009)4

Poultry (Million Birds)
600 500 Million Birds 400 300 200 100 0
20 05 -0 6 20 00 -0 1 20 07 -0 8 19 99 -0 0 20 02 -0 3 20 01 -0 2 20 03 -0 4 20 08 -0 9 20 04 -0 5 20 06 -0 7

Poultry (Million Birds)

It can be seen from above figure that Broilers Population is increasing year by year.
4

Source: Economic Survey of Pakistan 2008-09

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The poultry meat production has showed a growing trend over the past few years. The meat production trend of chicken meat, beef and mutton from the year 19992009 is presented below. Figure 3.2: Meat Production Trends5
Meat Production Trend
1750 1500 1250 000, Tons 1000 750 500 250 0
19 99 -0 0 20 04 -0 5 20 07 -0 8 20 02 -0 3 20 06 -0 7 20 08 -0 9 20 03 -0 4 20 00 -0 1 20 05 -0 6 20 01 -0 2

Be ef

Mutton

Poultry Me at

It can be seen from the above figure that from 1999-00 to 2004-05 the production of poultry meat was lower then the Mutton Meat but from 2005-06 to 2008-09 there is a rise in the production of Poultry Meat. It is evident from the above figure that Poultry has taken the share of Mutton although Beef production is always higher then Poultry meat and Mutton. 3.4 Comparative Efficiency of Environment Control House (ECH) and Conventional Open-Side House (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 due to its following significant advantages: 1. The ECH brings down the temperature by 10C to 15C as compared to the COH and makes it comfortable like colder regions. 2. ECH maintains the uniform temperature round the clock providing very conducive environment to the broilers avoiding fluctuation in the day and night temperature.

Source: Economic Survey of Pakistan 2008-09

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3. Due to severe heat stress during four long summer months the broiler production is stopped in COH, resultantly only 4-5 flocks are possible in such houses in a year. However, in ECH 7 flocks are marketed without any break. 4. ECH being complete closed system has minimized the incidence of diseases, cutting down the cost of vaccine and medication of Rs. 2-3 per bird as compared to COH. 5. Mortality in ECH has been decreased to 2 to 3 percent as compared to 10 percent in COH. 6. Installation of highly mechanized automatic feeding and nipple drinking system in ECH has provided the solution of manual and poor management practices. 2 housemen at daytime and 2 at night time are sufficient to look after a flock of 60,000 birds. In COH nearly 8-12 housemen are required to manage such a flock. 7. Equal distribution of feed and water to broilers through automatic system in ECH has markedly improved the uniformity up to 95% as compared to 75% in COH. 8. In ECH a broiler flock is ready for market in 37 days as compared to 45 days in COH. 9. An individual broiler in COH usually consumes 3 to 3.3 kg feed to gain 1.5 kg weight reflecting its Feed Conversion Ratio (FCR) = 2 to 2.2. Whereas this figure of FCR is improved to 1.8 in ECH. 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.

MARKETING

The marketing of chickens follows the traditional channels of distribution. Generally, broilers are distributed in the market through middlemen (Arti) and wholesalers. The role of Arti is to identify a farm and negotiate the price. In some cases, the middleman provides Day Old Chicks and other farm inputs (feed, etc.) to the broiler farmers and then agrees to buy back the mature birds from them. Birds are transported to the urban market and are sold to retailers. Birds are sold on live-weight basis. The time spent in getting broilers from the farm to the retail shop is brief. Although collection and handling of birds has improved with the use of loader vehicles, but it is an established fact that greater the distance between the poultry producer and consumer, more complicated is the marketing system including their collection, handling and transportation to the consumer or processing plants. The trick in marketing is quick availability of market information of chicken supply and demand, which will determine the selling price.

FARM MANAGEMENT

Farm inputs required for a Controlled House include farm equipment (drinkers, feed trays, brooders, and feeders) and other items like feed, vaccines & medicines, ricehusk or saw-dust, water, electricity, etc.

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The following practices starting from arrival of the chicks to marketing of broilers should be performed under the supervision of an expert. 1. Low temperature should be controlled with the help of diesel heaters and high temperature with evaporative cooling system. 2. Watering through automatic nipple drinking system. 3. Feeding through automatic feeding system. 4. Specific vaccination schedule should be adopted for disease control. 5. Prophylactic medication should be provided according to requirement. 6. Sanitation and disinfection program should be strictly followed during and after the completion of one flock. 7. Record should be maintained for feed intake, body weight, FCR and mortality. 8. Marketing of finished (ready) broilers.

PRODUCT

The proposed project should generate revenues from sale of chicken. Assumptions used for the product mix are as follows: Table 6.1: Product Mix Product Chicken Table 6.2: Production Assumptions Number of Flocks per year Number of Birds per Flock Time required per Flock (Days) Lag time required per Flock (Days) Total Annual Production Capacity Shed Space Required per Bird (Sq.ft) Sale price growth rate Production capacity utilization 7 60,000 37 15 420,000 0.65 10% 100% Avg. Live Weight (Kg) 1.85 Price per Kg6 Rs. 100

MANPOWER REQUIREMENTS

Semi skilled workers are needed to look after the feeding, vaccination and cleaning operations at the farm. Thirteen people should be hired to mange the operations of the automated shed. The personal needed for the farm is as under:

As per flock wise analysis, attached in Annexure 1 8

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Table 7.1: Human Resource Requirement Description Supervisor Housemen Electrician Watchmen Cleaner Total No. 1 5 1 4 2 13 Salary Per Month 20,000 7,500 10,000 7,500 7,000 Salary for the Year 240,000 450,000 120,000 360,000 168,000 1,338,000

8
8.1

TECHNOLOGY
Machinery & Equipment Requirement7

Various types of farm equipment are needed for feeding, drinking and handling the birds. List of farm equipment, which should be needed, is as under: Table 8.1: Machinery Details8 Description WATERING SYSTEM Floor Regulator Kit with 30" Flex Standpipe 10' PVC Nipple pipe kit ( 20 high flow quinch nipples) with conduit and winching, 8' drop End Assembly kit with 30" Flex Standpipe 1500Lb winch (Worm gear / split drum) Winch handle for VB312 PVC Cement Glue Pint Installation / management manual for watering system VAL-CO PAN FEEDING SYSTEM End House Control Pan Unit - Mechanical Switch 1/2 HP Direct Drive Motor & Gearbox 368RPM 50HZ - 3PH - 380V 200 lb. Capacity Feed Hopper Single Outlet Boot Assembly Broiler Feeder Pan - 13" Dia, Low Profile 10' Tube 4 Holes Ribbed Tube 1.75" Tube Clamp
7 8

Unit

Amount (PKR)

4 156 4 4 1 1 1 3 3 3 3 468 117 96

List of Machinery Suppliers is attached in ANNEXTURE 2 Equipments are proposed of VALCO, USA based company. 9

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Tube Hanger (for Ribbed Tube) 405 Roll 1.438" O.D. Auger Insulator Bracket & Tube Clamp Assembly Spring for Anti-Roost Shocker Wire 1/16" Anti-Roost Shocker Wire 1/16" Cable Clamp for Anti Roost Wire Hopper Level Mechanical Switch - 3PH FEEDER LINE WINCHING 390' Winching kit with 10' drops Winch Handle FEED BIN HOPPER AND FILL SYSTEM 30 Degree Plastic Upper Boot Transition-Green 3.5" HV Single Outlet Lower Boot 800KG Taper hopper 2 piece collar kit for 60 deg hopper Basic Hardware Carton 3.5" 45 Degree Formed PVC Tube PVC Cement Quart 3.5" x 10" Straight PVC Tubes 3.5" PVC TUBE SPLICE 2.71" OD Auger 3.5" formed tube hanger #2 Hanger Chain S Hook x 2.25" 3.5" Standard Poly Drop With Shutoff 3.5" x 12' Translucent Downspout Tube 3.5" Stainless Steel Downspout Clamp Poly Discharge Head - 3PH 3.5" HV Port & Driver Kit 0.75HP Direct Drive Motor & Gearbox box 368RPM - 50HZ - 3PH TUNNEL VENTILATION SYSTEM 48" Hypermax GALV CONE FAN, 50 HZ, 3PH, 380V 48" WHITE PVC SHUTTER 2.0 x 0.6 x 0.15 CoolPad, 45/45 FLUTE MINIMUM AND TRANSITIONAL VENTILATION SYSTEM 39" Galvanised Box Fan with 6 S/S blades Adjustable Minimum Vent, With Bird Screen
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147 3 21 21 1230 25 1 3 1 1 1 1 1 1 3 1 7 1 125 10 250 10 2 2 3 1 1 1

8 8 60

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3/16" Galvanised 7 x 7 cable Adjustable Wall Puley Kit 3 1/2" Cast Iron Pulley with Eye Bolt 1200Lb ratchet winch Right Angle Mounting Plate For Winch 3/16" Galv. Cable Clamp 3/8" x 3" Lag Screw 7/16" Clamp With Long Slot ENVIRONMENTAL CONTROL 12 Channel GainTrac Temperature Sensor Relative Humidity Sensor Sensor cable Total Machinery Cost for 1 Shed Total Machinery Cost for 2 Sheds Generator Set (75 KVA) Diesel Heaters Fire Extinguisher etc. (Set) Weigh Bridge 30 Ton, 8` X 16` Other Equipments (Shovels, Hand Trolley, Uniforms, etc) Total Machinery & Equipment Required Erection & Installation of Machinery Contingencies (3% of Total Machinery) Total Machinery & Equipment Required (incl. Erection & Installation etc.)

820 4 4 2 2 24 8 42 1 4 1 2 2,366,022 4,732,043 1,500,000 507,000 84,500 300,000 30,000 7,153,545 118,300 214,606 7,486,450

2 2 2 1

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LAND & BUILDING

Table 9.1: Land Requirement Land 3 Acre Table 9.2: Building Requirement Description Shed Space Ground Floor (50' X 400') Shed Space 1st Floor (50' X 400') Building for Resident & Office Purposes Ground Floor Feed Store Toilet Block Admin Office Areas for Corridor Generator Set Room Store for Vaccine & Medicines & Misc. Total Area for Ground Floor Changing/Store Room for Staff Rooms for Staff Kitchen Total Area for 1st Floor Feed Hopper Room Double Story Water Tank 1,000 Gallon (2) Boundary wall 7 feet height Total Building & Infrastructure Cost 9.1 Area (sq.ft.) 20,000 20,000 Cost (Rs. Total (Rs.) / sq.ft.) 350 7,000,000 325 6,500,000 Per Acre Cost 1,000,000 Total Cost 3,000,000

500 100 100 150 400 150 1,400 100 400 80 580 450 500 700,000

500 500 13,000

290,000 225,000 26,000 700,000 15,441,000

Recommended Mode for Acquiring Land

It is recommended that the proposed project should be started on a purchased land. 9.2 Suitable Locations

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.
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9.3

Other Requirements

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

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10 PROJECT DETAIL
Table 10.1: Project Economics
Capital Investment Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office equipment Pre-operating costs Total Capital Costs Working Capital Raw material inventory & Salaries etc (based on per/flock approx.) Cash Total Working Capital Total Investment Initial Financing Debt Equity Export re-finance facility Project Returns Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) Rs. Rs. in actuals 3,000,000 15,441,000 7,486,449 35,000 46,500 2,417,200 28,426,149 Rs. in actuals 10,003,891 500,000 10,503,891 38,930,040 Rs. in actuals 19,465,020 19,465,020 Equity 47% 3.60 30,807,026 Project 37% 3.68 33,320,508

50% 50%

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11 FINANCIAL ANALYSIS
11.1 Projected Income Statement

Calculations
Income Statement
Year 1 76,876,380 180,699 420,000 77,477,079 23,100,000 37,242,740 690,000 2,441,880 2,940,000 3,231,000 574,000 70,219,620 7,257,459 648,000 19,440 32,400 19,440 19,440 38,739 1,528,845 483,440 2,789,743 4,467,716 92,559 4,560,275 1,372,964 1,372,964 3,187,310 796,828 2,390,483 Year 2 84,564,018 198,769 462,000 85,224,787 24,255,000 39,849,732 759,000 2,563,974 3,234,000 3,554,100 602,700 74,818,506 10,406,281 712,800 21,384 35,640 21,384 21,384 42,612 1,528,845 483,440 2,867,489 7,538,792 243,962 7,782,754 1,376,372 1,140,003 2,516,375 5,266,379 1,316,595 3,949,784 Year 3 93,020,420 218,646 508,200 93,747,266 25,467,750 42,639,213 834,900 2,692,173 3,557,400 3,909,510 632,835 79,733,780 14,013,485 784,080 23,522 39,204 23,522 23,522 46,874 1,528,845 483,440 2,953,010 11,060,476 496,720 11,557,196 1,128,001 872,250 2,000,250 9,556,945 2,389,236 7,167,709 Year 4 102,322,462 240,511 559,020 103,121,992 26,741,138 45,623,958 918,390 2,826,781 3,913,140 4,300,461 664,477 84,988,344 18,133,648 862,488 25,875 43,124 25,875 25,875 51,561 1,528,845 483,440 3,047,082 15,086,566 944,076 16,030,642 838,300 564,510 1,402,810 14,627,831 3,656,958 10,970,874 Year 5 112,554,708 264,562 614,922 113,434,192 28,078,194 48,817,635 1,010,229 2,968,120 4,304,454 4,730,507 697,701 90,606,840 22,827,351 948,737 28,462 47,437 28,462 28,462 56,717 1,528,845 483,440 3,150,562 19,676,789 1,630,343 21,307,133 500,393 210,812 711,205 20,595,927 5,148,982 15,446,946 Year 6 123,810,179 291,018 676,414 124,777,611 29,482,104 52,234,869 1,111,252 3,116,526 4,734,899 5,203,558 732,586 96,615,794 28,161,816 1,043,610 31,308 52,181 31,308 31,308 62,389 1,528,845 2,780,950 25,380,867 2,709,921 28,090,788 106,259 106,259 27,984,529 6,996,132 20,988,397

Environmental Controlled Shed Farm - SMEDA

Rs. In actuals Year 10 181,270,483 426,079 990,338 182,686,900 35,835,682 68,469,258 1,626,984 3,788,157 6,932,366 7,618,529 890,462 125,161,439 57,525,461 1,527,950 45,839 76,398 45,839 45,839 91,343 1,528,845 3,362,051 54,163,410 12,171,484 66,334,893 66,334,893 16,583,723 49,751,170

Revenue from the sale of Birds Sale of Feed Bags Sale of Rice Husk Total Revenue Cost of sales Cost of DOC Cost of Feed Operation costs 1 (direct labor) Vaccination, Medication & Disinfection Direct Exlectricity Diesel for Generators & Heater Litter & Spray Cost Total cost of sales Gross Profit General administration & selling expenses Administration expense Administration benefits expense Travelling expense Communications expense (phone, fax, mail, internet, etc.) Office expenses (stationary, entertainment, janitorial services, etc.) Professional fees (legal, audit, consultants, etc.) Depreciation expense Amortization of pre-operating costs Subtotal Operating Income Other income (interest on cash) Earnings Before Interest & Taxes Interest expense on long term debt (Project Loan) Interest expense on long term debt (Working Capital Loan) Subtotal Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX

Year 7 136,191,197 320,120 744,056 137,255,372 30,956,209 55,891,310 1,222,377 3,272,353 5,208,389 5,723,914 769,215 103,043,767 34,211,605 1,147,972 34,439 57,399 34,439 34,439 68,628 1,528,845 2,906,160 31,305,445 4,273,461 35,578,906 35,578,906 8,894,727 26,684,180

Year 8 149,810,316 352,131 818,461 150,980,909 32,504,020 59,803,702 1,344,615 3,435,970 5,729,228 6,296,305 807,676 109,921,516 41,059,393 1,262,769 37,883 63,138 37,883 37,883 75,490 1,528,845 3,043,892 38,015,502 6,271,427 44,286,929 44,286,929 11,071,732 33,215,197

Year 9 164,791,348 387,345 900,307 166,079,000 34,129,221 63,989,961 1,479,076 3,607,769 6,302,151 6,925,935 848,059 117,282,173 48,796,827 1,389,046 41,671 69,452 41,671 41,671 83,039 1,528,845 3,195,396 45,601,431 8,731,297 54,332,728 54,332,728 13,583,182 40,749,546

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11.2 Projected Cash-flow Statement

Calculations
Cash Flow Statement
Year 0 Operating activities Net profit Add: depreciation expense amortization of pre-operating costs amortization of training costs Deferred income tax Accounts receivable Finished goods inventory Equipment inventory Raw material inventory Advance insurance premium Accounts payable Other liabilities Cash provided by operations Financing activities Project Loan - principal repayment Working Capital Loan - principal repayment Short term debt principal repayment Additions to Project Loan Additions to Working Capital Loan Issuance of shares Purchase of (treasury) shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Acquisitions Cash (used for) / provided by investing activities NET CASH Year 1 2,390,483 1,528,845 483,440 796,828 (6,318,607) (655,184) 6,036,468 4,262,273 Year 2 3,949,784 1,528,845 483,440 1,316,595 (315,930) (700,258) 376,795 6,639,271 Year 3 7,167,709 1,528,845 483,440 2,389,236 (663,454) (748,595) 401,016 10,558,197 Year 4 10,970,874 1,528,845 483,440 3,656,958 (729,799) (800,443) 426,837 15,536,711 Year 5 15,446,946 1,528,845 483,440 5,148,982 (802,779) (856,070) 454,368 21,403,731 Year 6 20,988,397 1,528,845 6,996,132 (883,057) (915,766) 483,725 28,198,275

Environmental Controlled Shed Farm - SMEDA

Rs. In actuals Year 10 49,751,170 1,528,845 16,583,723 (1,292,884) 17,831,219 (942,335) 83,459,739

Year 7 26,684,180 1,528,845 8,894,727 (971,363) (979,844) 515,031 35,671,576

Year 8 33,215,197 1,528,845 11,071,732 (1,068,499) (1,048,642) 548,421 44,247,055

Year 9 40,749,546 1,528,845 13,583,182 (1,175,349) (1,122,526) 584,037 54,147,735

(10,003,891) -

(10,003,891)

8,961,129 10,503,891 19,465,020 38,930,040

(1,559,922) (1,559,922)

(1,492,618) (1,792,883) (3,285,501)

(1,740,989) (2,060,636) (3,801,625)

(2,030,690) (2,368,376) (4,399,065)

(2,368,596) (2,722,074) (5,090,670)

(1,328,236) (1,328,236)

(28,426,149) (28,426,149) 500,000

2,702,351

3,353,770

6,756,572

11,137,645

16,313,061

26,870,039

35,671,576

44,247,055

54,147,735

83,459,739

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11.3 Projected Balance Sheet

Calculations
Balance Sheet
Year 0 Assets Current assets Cash & Bank Accounts receivable Raw material inventory Total Current Assets Fixed assets Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office vehicles Office equipment Total Fixed Assets Intangible assets Pre-operation costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Deferred tax Long term debt (Project Loan) Long term debt (Working Capital Loan) Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIES Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Environmental Controlled Shed Farm - SMEDA

Rs. In actuals Year 10

Year 7

Year 8

Year 9

500,000 10,003,891 10,503,891 3,000,000 15,441,000 7,486,449 35,000 46,500 26,008,949 2,417,200 2,417,200 38,930,040

3,202,351 6,318,607 10,659,075 20,180,033 3,000,000 14,668,950 6,737,804 31,500 41,850 24,480,104 1,933,760 1,933,760 46,593,896

6,556,121 6,634,537 11,359,333 24,549,991 3,000,000 13,896,900 5,989,159 28,000 37,200 22,951,259 1,450,320 1,450,320 48,951,570

13,312,693 7,297,991 12,107,928 32,718,612 3,000,000 13,124,850 5,240,514 24,500 32,550 21,422,414 966,880 966,880 55,107,906

24,450,338 8,027,790 12,908,372 45,386,500 3,000,000 12,352,800 4,491,869 21,000 27,900 19,893,569 483,440 483,440 65,763,509

40,763,399 8,830,569 13,764,442 63,358,410 3,000,000 11,580,750 3,743,224 17,500 23,250 18,364,724 81,723,134

67,633,438 9,713,625 14,680,208 92,027,272 3,000,000 10,808,700 2,994,579 14,000 18,600 16,835,879 108,863,151

103,305,015 10,684,988 15,660,052 129,650,054 3,000,000 10,036,650 2,245,935 10,500 13,950 15,307,035 144,957,089

147,552,069 11,753,487 16,708,693 176,014,249 3,000,000 9,264,600 1,497,290 7,000 9,300 13,778,190 189,792,439

201,699,805 12,928,836 17,831,219 232,459,859 3,000,000 8,492,550 748,645 3,500 4,650 12,249,345 244,709,204

285,159,543 14,221,719 299,381,263 3,000,000 7,720,500 10,720,500 310,101,763

6,036,468 6,036,468 796,828 8,961,129 8,943,969 18,701,926 19,465,020 2,390,483 21,855,503 46,593,896

6,413,263 6,413,263 2,113,422 7,468,511 7,151,086 16,733,019 19,465,020 6,340,267 25,805,287 48,951,570

6,814,279 6,814,279 4,502,659 5,727,522 5,090,450 15,320,630 19,465,020 13,507,976 32,972,996 55,107,906

7,241,116 7,241,116 8,159,617 3,696,832 2,722,074 14,578,523 19,465,020 24,478,850 43,943,870 65,763,509

7,695,484 7,695,484 13,308,598 1,328,236 14,636,834 19,465,020 39,925,795 59,390,815 81,723,134

8,179,209 8,179,209 20,304,731 20,304,731 19,465,020 60,914,192 80,379,212 108,863,151

8,694,240 8,694,240 29,199,457 29,199,457 19,465,020 87,598,371 107,063,391 144,957,089

9,242,662 9,242,662 40,271,189 40,271,189 19,465,020 120,813,568 140,278,588 189,792,439

9,826,699 9,826,699 53,854,371 53,854,371 19,465,020 161,563,114 181,028,134 244,709,204

8,884,364 8,884,364 70,438,095 70,438,095 19,465,020 211,314,284 230,779,304 310,101,763

8,961,129 10,503,891 19,465,020 19,465,020 19,465,020 38,930,040

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12 KEY ASSUMPTIONS
Table 12.1: Net Birds Calculation for Revenue No. of Birds Per Flock Excessive Birds @ 2% of Birds 9 Total Birds Per Flock Mortality in Birds @ 3% of Total Birds Net Birds after Mortality Per Flock Net Birds after Mortality for the Year (For Revenue) Table 12.2: Net Birds Calculation for Cost of Feed 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 1,836 918 551 367 1836 59,364 Amount in Rs. 30,524 36,628 36,628 103,780 5,216,612 5,320,391 37,242,740 60,000 1,200 61,200 1,836 59,364 415,548

Table 12.3: Expense Assumption Administration benefits expense Traveling expense Communication expense Office expenses (Misc.) Professional fees (legal, audit, consultants, etc.) 3% of administration expense 5% of administration expense 3% of administration expense 3% of administration expense 0.05% of revenue

Excessive birds are given as per market practices. 18

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Table 12.4: Depreciation Assumption Depreciation Method Building depreciation rate Machinery & Equipment depreciation rate Office Equipment depreciation rate Furniture & Fixtures depreciation rate Table 12.5: COGS Details: Description DOC (Day Old Chicks) (Rs.) Feed Conversion Ratio (FCR) i.e. Feed required to gain 1 Kg weight (Kgs.) Feed required per 1000 birds - (50 Kgs bags) Feed Requirement/bird/day - Kgs Vaccination. Medication and Disinfection Cost per Bird (Rs.) Feed Price per Bag (50 Kgs) Cost of Feed per Kg Rs. Table 12.6: Growth Rate Description Sales Growth Rate CGS Growth Rate (DOC, Vaccine & Medication, Litter & Spray) Cost of Feed Growth Rate Salaries Growth Rate Electricity & Diesel Growth Rate Table 12.7: Debt Assumption Debt Tenure Interest Rate on Long Term Debt Debt Payments Working Capital Loan Debt Payment 5 Years 16% Semi Annually 14% Monthly 55 1.90 70.3 0.10 5.70 1,250 25 Straight Line Method 5% 10% 10% 10%

10% 5% 7% 10% 10%

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13 ANNEXURE 1
Flock wise Calculation of Live Bird prices against Day Old Chick10 In this report it is assumed that the flock will be ready after 37 days, and 15 days for lag time. By analyzing the past data, keeping in view the flock preparation time and lag time, there is difference of 52 days for purchasing the new Day Old Chick and 37 days for selling them into the market. For example if Day Old Chicks are purchased on January 01, 2008 the following schedule of flocks will be formed.
Day Old Chick Purchases Dates Flock 1 Flock 2 Flock 3 Flock 4 Flock 5 Flock 6 Flock 7 Flock 8 Flock 9 Flock 10 Flock 11 Flock 12 Flock 13 Flock 14 Flock 15 Flock 16 1-Jan-08 22-Feb-08 14-Apr-08 5-Jun-08 27-Jul-08 17-Sep-08 8-Nov-08 30-Dec-08 20-Feb-09 13-Apr-09 4-Jun-09 26-Jul-09 16-Sep-09 7-Nov-09 29-Dec-09 19-Feb-10

DOC Rate 15 13 21 5 15 26 18 75 33 28 30 44 64 77 42 68

Live Birds Sale Dates 7-Feb-08 30-Mar-08 21-May-08 12-Jul-08 2-Sep-08 24-Oct-08 15-Dec-08 5-Feb-09 29-Mar-09 20-May-09 11-Jul-09 1-Sep-09 23-Oct-09 14-Dec-09 4-Feb-10 28-Mar-10

Live Bird Sale Rate 58 80 60 70 90 74 77 90 106 90 92 98 100 80 95 120

Difference

43 67 39 65 75 48 59 15 73 62 62 54 36 3 53 52

Average

35.88

86.25

50.38

From the above it can be seen that there is 50.38 Avg. price differences of Day Old Chick and Live Bird Farm Gate rate. It means that from the past trend Live Bird farm gate rate is Rs. 50.38 higher then the Day Old Chick rate that is purchased before 37 days. In this report the price of Day Old Chick is taken at Rs. 55 and Live Bird Farm Gate rate at Rs. 100. So the difference of Rs. 45 has been proposed between Day Old Chick and Live bird farm gate rate.
10

As per the rates provided by Pakistan Poultry Association (PPA) 20

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Day Old Chick Vs. Live Bird Farm Gate Rate 140 120 100 Pak Rs. 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Live Bird Farm Gate Rate Linear (Live Bird Farm Gate Rate)

Flocks
DOC Rate Linear (DOC Rate)

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ANNEXURE 2
Table 13.1: Feed & DOC Supplier Feed Suppliers Supreme Feeds (Pvt.) Ltd. Head Office: 176-Shadman 1 Lahore. Phone: +92-42-37522104-7 Fax: +92-42-37573106 National Feeds Ltd. 171 Shadman 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 DOC Suppliers 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, Shadman 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

Fast Poultry Feeds 12-KM Near Nai Sabzi Mandi Jhang Road, Faisalabad. Phone: +92-41-2577171-2 Fax: +92-41-2517474

Jadeed Farms (Pvt.) Ltd. 6,Allied Commercial Plaza, Murree Road, Chandni Chowk Rawalpindi. Phone: +92-51-4851280-84 Fax: +92-51-4851255

Rustum Feeds Flat No.6, 1st Floor, United Center Shamsabad, Murree Road, Rawalpindi Phone: +92-51-4455362 Fax: +92-51-4847382

SB Poultries SB PLAZA 48-C Satellite Town ,Murree Road, Chandni Chowk, Rawalpindi. Phone: +92-51-4457561 Fax : +92-51-4511191

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Table 13.2: Machinery Suppliers & Consultants Machinery Suppliers Biovet (Pvt.) Ltd. 97-A, Jail Road Lahore Phone : +92-42-37534508 Fax : +92-42-37534510 www.biovet.com.pk Eastern Veterinary Services 4- C Chubirji Center, Near Venus Cinema, Multan Road, Lahore. Phone : +92-42-37417649-50 B.A.Traders H.No. 210-Riwaz Garden, Lower Mall, Lahore Phone: +92-42-37225666 Fax: +92-42-37323129 www.batraders.com Automation Masters Office No. 1, 2nd floor, Block 2, National Business Center, Shamsabad Murree Road, Rawalpindi. Phone: +92-51-4841782-3 Fax: +92-51-4451088 PEPCO (Pvt.) Ltd. Sialkot Bypass, Near Beacon House School, Mohala Haji Park, Gujranwala. Phone: +92-55-3204402-4 Fax: +92-55-3204401 Consultants Dr. Imtiaz Alam Mobile:+92-333-4093001

Dr. Ahtsham Mobile:+92-300-6888807

Dr. Asim Cheema Mobile:+92-300-4203674

Dr. Asif Raza Mobile:+92-301-8459002

Dr. Anwar Mobile:+92-300-4355542

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