1st Draf

PRE-FESIBILITY STUDY

(Goat Fattening)

PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD

MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH

Government of Pakistan

www.parc.gov.pk

January 2014

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CONTENTS
1. DISCLAIMER.......................................................................................................................................1
2. PURPOSE OF THE DOCUMENT.......................................................................................................2
3. INTRODUCTION TO SCHEME..........................................................................................................2
4. EXECUTIVE SUMMARY..................................................................................................................2
5. BRIEF DESCRIPTION OF PROJECT.................................................................................................3
 Selection of suitable breed………….……………………………………………….3
 Location……………………………….……………………………………………...3
 Target Markets………………………………….…………………………………….3
 Employment Generation……………………………………….…………………….3
6. CRITICAL FACTORS.....................................................................................................................….3
7. OPERATIONAL CAPACITIES............................................................................................................4
8. POTENTIAL TARGET MARKET.......................................................................................................4
9. PRODUCTION PROCESS FLOW.......................................................................................................4
10. BREED SELECTION.........................................................................................................................4
11. PROJECT COST SUMMARY............................................................................................................4
11.1 Project Economics……………………………………………………………………..4
11.2 Project Financing……………………………………………………………………….5
11.3 Project Cost……………………………………………………………………………..5
11.4 Space Requirement……………………………………………………………………..5
11.5 Machinery and Equipment……………………………………………………………..6
11.6 Human Resource Requirement…………………………………………………………6
11.7 Revenue Generation…………………………………………………………………….6
12. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS..........................................……….......6
13. USEFUL LINKS.................................................................................................................................7
14. ANNEXURES...................................................................................................................................11
15. KEY ASSUMPTIONS.......................................................................................................................13

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LIST OF TABLES

Table 1: Project Economics 4

Table 2: Project Financing 5

Table 3: Project Cost 5

Table 4: Space Requirement 5

Table 5: List of Machinery and Equipment 6

Table 6: Human Resource Requirement 6

Table 7: Revenue Generation 6

LIST OF ANNEXURES

14.1. Income Statement 11

14.2. Cash Flow Statement 12

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 1. DISCLAIMER

This information memorandum is to introduce the subject matter and provide a general idea and
information on the subject. Although, the material included in this document is based on data / information
generated from experiments and field testing by a team of relevant scientists; however, it is based upon
certain assumptions which may differ from case to case. The contained information may vary due to any
change in any of the concerned factors, and the actual results may differ accordingly from the presented
information. The PARC and its employees do not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The prospective user of this
memorandum is encouraged to contact qualified consultant/technical expert, especially designated focal
person(s) of this enterprise for reaching to an informed decision.

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 2. PURPOSE OF DOCUMENT

The purpose of this document is to facilitate potential investors in Goat Fattening by providing them with
a general understanding of the business, with the intention of supporting potential investors in crucial
investment decisions. The project pre-feasibility may form the basis of an important investment decision
and in order to serve this objective, the document/study covers various aspects of project concept
development, start-up, production, finance, and business management. 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, certain industrial norms and well established research findings 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
the basis of investment decisions.

3. INTRODUCTION TO SCHEME
Prime Minister’s Youth Business Loan Program, for young entrepreneurs, with an allocated budget of Rs.
5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up per annum for
one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through
National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Loans from Rs. 0.1 million to Rs.
2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be
disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit-Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

4. EXECUTIVE SUMMARY
Goat Fattening Farm is proposed to be located at any suitable areas of Pakistan. The project is related to
Goat fattening purposes, the total capacity is 50 goats. Project Cost Estimate is Rs. 0.64 Million with fixed
investment of Rs. 0.07 Million. The cost assumptions, IRR 20% and payback 5.83 years of goats.

5. BRIEF DESCRIPTION OF PROJECT

The following parameters must be addressed as per pre-feasibility study,
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  Selection of suitable Goat breed
In Punjab, Beetal, Teddy goat breeds are most suitable. In Sindh, Kamori, Pateri, Kacchan, Jattan
goat breeds are most suitable. In KPK, Damani goat breeds are most suitable most suitable breeds.
 Location:
The farm can be established in goat rearing areas of country where range grazing is available. In
Punjab, the suitable areas to establish the goat farming are Southern Punjab (Thal, Cholistan) and
also pothowar areas. In Sind Province, goat fattening is profitable in their respective ecological
zones like Thar and Indus basin. Districts of Sukkur, Tando Muhamamd Khan, Sanghar, Dadu etc
in Sind province.
 Targets Market
In addition to major cities such as Lahore, Multan, Karachi, Hyderabad and Islamabad, there is
demand of Pakistani mutton in Middle East and Malaysia countries.
 Employment Generation: The proposed project will provide direct employment to two individuals.
Financial analysis shows the profitability of proposed business within first year of its operation.

6. CRITICAL FACTORS
The following are critical factors for the successful commercial goat farming.
 Strict vaccination and deworming program for successful operation may be followed.
 Good feeding and management practice will give the success in the business. Fresh water will be
available all the time. In the concentrate; minerals may also be included.
 Establishment of the farm in areas where cheap land is available, but it should not be far away
from the market.
 The farming should be done on scientific grounds taking care of Vaccination, Medicine etc.
 Healthy and quality male stock should be selected for fattening.
 New feeding techniques including concentrate feeding and preparation of mixed ration will give
the good results.
 Well-trained / experienced staff adding to the efficiency of the farm.

7. OPERATIONAL CAPACITY
The farm will start production with 50 goats. The limit of 50 goats has been imposed on the farm because
a very large flock would be difficult to manage. The farm would focus on rearing of young stock for
fattening and marketing. Goat from aged less than 1 year of age will be purchased and resold in the market
after a fattening period of 120 days.
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 8. POTENTIAL MARKETS
Target market would be the areas where breeding is being undertaken as well as major cities like Karachi,
Lahore, Rawalpindi, Islamabad, Peshawar etc. In addition to local markets there is an enormous export
potential to Middle Eastern countries.
9. PRODUCTION PROCESS FLOW
Animals selected for fattening should be of less than 1 year of age. During this age the daily weight-gain
capacity is also better particularly in goat.
10. BREED SELECTION
The farmers should not only select good quality breed which can bring better results for fattening but also
select most suitable animals from the selected breed. Through better management, the weight gain of these
selected breeds would be higher.
11. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of Goat Fattening
Farm. Various cost and revenue related assumptions along with results of the analysis are outlined in this
section.
11.1 Project Economics
All the figures in this financial model have been calculated for 50 goat for total area of around 21,00 sq.ft,
that would be used for different functions of the farm. The following table shows internal rates of return
and payback period.
Table 1. Project Economics
Description Goat
Internal Rate of Return (IRR) 20 %
Payback Period (yrs) 5.83
Net Present Value (NPV) 552,121

11.2Project Financing
Following table provides details of the equity required and variables related to bank loan;

Table 2. Project Financing

Description Goat
Total Equity (@ 10%) Rs. 642177
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 Bank Loan (@ 90%) Rs. 71353

Markup to the Borrower (%age/annum) 8%

Tenure of the Loan (Years) 8
Grace Period (Year) 1

11.3Project cost
Following requirements have been identified for operations of the proposed business.

Table 3. Project cost

Project Investment Amount (Rs.)

Building 330000
Machinery & Equipment 90000
Total Capital Cost 420000

11.4 Space Requirement

Details of the area required are given below:

Table 4. Space Requirement

Description Space per Total space sq Cost per sq ft Total cost

animal sq ft ft (Rs.)
Shed for 50 kids (covered) 12 600 300 180000
Open paddock for 50 kids 24 1200 50 60000
Isolation Pen for 5 kids (covered) 12 60 300 18000
Stores for ration & machinery (12x20) - 240 300 72000
Total 330000

11.5Machinery and Equipment

Following table provides list of machinery and equipment required for Goat Fattening Farm working for
Livestock sector.

Table 5 List of Machinery and Equipment

Farm supplies Unit Cost (Rs) Total Cost (Rs)

Feeding mangers 5 3000 15000
Chaff cutter 50000 50000
Water pump 20000 20000
Other farm equipment - 5000
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 Total cost 90000

11.6Human resource requirement

The table above provides details of human resource required for goat fattening farm.

Table 6 Human Resource Requirement

Description No. of Employees Salary per month

Worker 1 10,000

11.7Revenue Generation

Table 7. Revenue Generation

Product Sales Average weight First Year First Year

Price per kg live Production Sales
(Rs./Unit) weight Revenue (Rs)
Sale of Live Goats 350 kg 45 50 787500
Total Sales Revenue 787500

12. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS

1. Dr. M. FatehUllah Khan

Animal Sciences Institute (ASI), NARC

Email: drmfatahullah@gmail.com, Phone: 051-8443944

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13. 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
 Small & Medium Enterprises Development Authority (SMEDA),
 www.smeda.org.pk
 Ministry of Education, Training & Standards in Higher Education
 http://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 Jammu & Kashmir, www.ajk.gov.pk
 Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
 Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
 www.fpcci.com.pk
 State Bank of Pakistan (SBP), www.sbp.org.pk
 National Bank of Pakistan (SBP), www.nbp.com.pk
 First Women Bank Limited (FWBL), www.fwbl.com.pk
 Ministry of National Food Security & Research, www.mnfsr.gov.pk
 Ministry of Education, Training & Standards in Higher Education,
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 www.moptt.gov.pk
 Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.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
 All Pakistan Meat Exporters and Processors Association, Lahore,
 www.apmepa.com
 Punjab Agriculture and Meat Company (PAMCO), Lahore, www.pamco.bz
 Pakistan Agricultural Research Council (PARC), Islamabad, Tel. 0519203966
www.parc.gov.pk
 National Agricultural Research Centre (NARC), Islamabad, Tel. 0519255061,
www.parc.gov.pk
 National Veterinary Laboratory, NARC, Islamabad, Tel. 051-9255108
 Balochistan Agricultural Research Centre (BARC), Quetta, Tel: 081-
9213286-7, www.parc.gov.pk
 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
 Animal Husbandry In-Service Training Institute (AHITI), Peshawar, Tel.
091-2960109, 9210309
 Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-
99220140
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  Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
 Directorate of Livestock Farms, L&DD, Lahore, Tel: 042-99201126-7
 Govt. Livestock Farm (GLF) Kallurkot District Bhakkar, Tel: 0453-200928
 Livestock Experiment Station (LES), Rakh Ghulaman, District Bhakkar, Tel:
0453-446134
 Livestock Experiment Station (LES), Khizarabad, District Sargodha, Tel:
048-3019835
 Research & Development Centre, Rakh Khairewala, District Layyah
 Livestock Experiment Station (LES), Khushab, Tel: 0454-215543
 Livestock Experiment Station (LES), Chak Katora, District Bahawalpur, Tel:
062-2442589
 Livestock Experiment Station (LES), Haroonabad, District Bahawalnagar,
Tel: 063-2252960
 Directorate of BLPRI, Kherimurat (Attock), L&DD, Punjab, Tel: 057-
2213422, 2212130, 2210781
 Directorate of Small Ruminants, Multan, L&DD, Punjab, Tel: 061-9210417
 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
 Livestock Research Station, Jaba, Mansehra, (Jaba Goat and Goat Farm), Tel: 0997-301866
 Livestock & Dairy Development, Government of Balochistan,
www.balochistan.gov.pk
 Bhagnari Cattle Cum Balochi Goat Farm Usta Muhammad, Dera Allah Yar
c/o L&DD Quetta, Tel: 081-9202564

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 14. ANNEXURES

14.1 Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 826,875 888,891 955,557 1,027,224 1,104,266 1,187,086 1,276,117 1,371,826 1,474,713 1,585,317
Feed & Vaccination Cost 252,500 265,125 278,369 292,312 306,938 322,280 338,374 355,307 373,070 391,704
Cost of Calves 375,000 393,750 413,438 434,109 455,815 478,606 502,536 527,663 554,046 581,748
Direct Labor 60,000 66,000 72,600 79,860 87,846 96,631 106,294 116,923 128,615 141,477
Repair & Maintenance 4,900 5,145 5,402 5,672 5,956 6,254 6,566 6,895 7,240 7,602
Utilities 29,400 32,340 35,574 39,131 43,045 47,349 52,084 57,292 63,022 69,324
Total Cost of Sales 723,800 764,460 807,588 853,401 902,030 953,671 1,008,534 1,066,894 1,128,947 1,194,957
Gross Profit 103,075 124,431 147,970 173,824 202,236 233,415 267,584 304,932 345,766 390,360
General administration &
selling expenses -Travelling & 6,000 6,300 6,615 6,946 7,293 7,658 8,041 8,443 8,865 9,308
Comm. expense (phone, fax, etc.)
Depreciation expense 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000
Amortization expense 9,726 9,726 9,726 9,726 9,726 - - - - -
Subtotal 69,726 70,626 71,571 72,563 73,605 64,973 66,122 67,328 68,594 69,924
Operating Income 33,349 53,805 76,399 101,260 128,631 168,442 201,462 237,604 277,172 320,436
Earnings Before Interest & Taxes 33,349 53,805 76,399 101,260 128,631 168,442 201,462 237,604 277,172 320,436
Interest expense 53,300 48,797 42,878 36,468 29,526 22,007 13,865 5,047 - -
Earnings Before Tax (19,951) 5,008 33,521 64,793 99,105 146,434 187,597 232,557 277,172 320,436
NET PROFIT/(LOSS) AFTER
(19,951) 5,008 33,521 64,793 99,105 146,434 187,597 232,557 277,172 320,436
TAX
Balance brought forward (19,951) (14,944) 18,577 83,370 182,475 328,909 516,506 749,064 1,026,235
Total profit available for
(19,951) (14,944) 18,577 83,370 182,475 328,909 516,506 749,064 1,026,235 1,346,672
appropriation
Balance carried forward
(19,951) (14,944) 18,577 83,370 182,475 328,909 516,506 749,064 1,026,235 1,346,672

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14.2 CASHFLOW 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 - (19,951) 5,008 33,521 64,793 99,105 146,434 187,597 232,557 277,172 320,436
Add: depreciation expense - 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000
amortization expense - 9,726 9,726 9,726 9,726 9,726 - - - - -
Equipment inventory (1,633) (167) (185) (203) (224) (247) (273) (301) (331) (365) 3,931
Raw material inventory (209,167) (21,440) (23,633) (26,069) (28,736) (31,675) (34,915) (38,509) (42,448) (46,790) 503,381
Accounts payable - 35,540 2,278 2,444 2,624 2,817 3,025 3,253 3,500 3,766 (18,929)
Cash provided by operations (210,800) 45,708 35,195 61,418 90,182 121,725 156,272 194,040 235,278 275,782 850,819
Financing activities-
642,177 - (71,312) (77,231) (83,641) (90,583) (98,102) (106,244) (115,062) - -
Change in long term debt
Issuance of shares 71,353 - - - - - - - - - -
Cash provided by / (used for)
713,530 - (71,312) (77,231) (83,641) (90,583) (98,102) (106,244) (115,062) - -
financing activities
Investing activities- Capital
(468,630) - - - - - - - - - -
expenditure
Cash (used for) / provided by
(468,630) - - - - - - - - - -
investing activities
NET CASH 34,100 45,708 (36,117) (15,813) 6,541 31,142 58,170 87,795 120,215 275,782 850,819
Cash balance brought forward 34,100 79,808 43,690 27,877 34,418 65,560 123,730 211,526 331,741 607,523
Cash available for
34,100 79,808 43,690 27,877 34,418 65,560 123,730 211,526 331,741 607,523 1,458,342
appropriation
Cash carried forward 34,100 79,808 43,690 27,877 34,418 65,560 123,730 211,526 331,741 607,523 1,458,342

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 15. Key Assumptions

Particulars Assumption
Sales Price Growth Rate 5 % per year
Capacity Utilization Growth Rate 10 % per year
Increase in Cost of Raw Materials 5 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water / Gas) 10 % per year
Debt / Equity Ratio 90 : 10
Depreciation
Plant Building 10 % per annum
Machinery 10 % per annum
Office Furniture & Equipment 10 % per annum
Loan Period 8 Years (inclusive of 1 year grace period)
Loan Installments Quarterly

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