Pre-Feasibility Study Prime Ministers Small Business Loan Scheme

(Veterinary Clinic)

Small and Medium Enterprises Development Authority Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan e Iqbal, Egerton Road, Lahore Tel 92 42 111 111 456, Fax 92 42 36304926-7 helpdesk@smeda.org.pk REGIONAL OFFICE PUNJAB 3rd Floor, Building No. 3, Aiwan e Iqbal, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042)6304926-7 helpdesk.punjab@smeda.org.pk 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 KPK 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

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Table of Contents
1. DISCLAIMER .......................................................................................................................................... 3 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 4 3. INTRODUCTION TO SMEDA............................................................................................................... 4 4. INTRODUCTION TO SCHEME............................................................................................................ 4 5. EXECUTIVE SUMMARY....................................................................................................................... 5 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ......................................................................... 5 7. CRITICAL FACTORS ............................................................................................................................ 6 8. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ...................................................................... 6 10. PROJECT COST SUMMARY .............................................................................................................. 6 10.1. PROJECT ECONOMICS ........................................................................................................................ 7 10.2. PROJECT FINANCING ......................................................................................................................... 7 10.3. PROJECT COST ................................................................................................................................... 7 10.4. SPACE REQUIREMENT........................................................................................................................ 8 10.5. MACHINERY AND EQUIPMENT ........................................................................................................... 9 10.6. OFFICE EQUIPMENT ......................................................................................................................... 10 10.7. RAW MATERIAL REQUIREMENTS .................................................................................................... 10 10.8. HUMAN RESOURCE REQUIREMENT ................................................................................................. 10 10.9. REVENUE GENERATION ................................................................................................................... 11 10.10. OTHER COSTS.................................................................................................................................. 11 11. CONTACTS OF SUPPLIERS AND EXPERTS ................................................................................ 12 12 . ANNEXURE ......................................................................................................................................... 14 12.1. 12.2. 12.3. 12.4. 12.5. INCOME STATEMENT ....................................................................................................................... 14 STATEMENT OF CASH FLOW ............................................................................................................ 15 BALANCE SHEET ............................................................................................................................. 16 USEFUL PROJECT MANAGEMENT TIPS ............................................................................................ 17 USEFUL LINKS ................................................................................................................................. 18

13 . KEY ASSUMPTIONS .......................................................................................................................... 21

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

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2. PURPOSE OF THE DOCUMENT The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Veterinary Clinic by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and its successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision. 3. INTRODUCTION TO SMEDA The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs" , SMEDA has carried out sectoral research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a successful hallmark of SME facilitation by SMEDA. Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based capacity building programs of different types in addition to business guidance through help desk services. 4. INTRODUCTION TO SCHEME Prime Ministers Small Business Loans Scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand
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(100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Small business loans with tenure upto 7 years, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA). SMEDA has been tasked with an advisory role in the implementation of PMs scheme by providing fifty (50) updated pre-feasibilities for referencing by SME beneficiaries and participating banks to optimally utilize their financial resources. 5. EXECUTIVE SUMMARY This specific Pre-feasibility is for setting up Veterinary Clinic. Veterinary medicine is the branch of science that deals with the prevention, diagnosis and treatment of disease, disorder and injury in animals. The infectious diseases in animals pose a major threat to animal health and productivity thereby leading to overall economic loss. The most common diseases are foot and mouth disease (FMD), diarrhea, fever, respiratory inspections like pneumonia etc. However, these diseases can be cured through an early diagnosis and proper treatment. The population of animals is increasing day by day while clinical facilities for these animals currently lack in Pakistan. This creates an opportunity for setting up Veterinary Clinic. The project will provide medical facilities such as health check, vaccination, major and minor surgeries to livestock. The Clinic shall have its own laboratory and pharmacy run by a licensed veterinary compounder. The total project cost for Veterinary Clinic is estimated at Rs. 1.84 million out which capital cost is Rs. 1.44 million and working capital Rs. 0.39 million. The project is proposed to be financed through 90% debt and 10% equity. The project NPV is calculated to be around Rs. 1.84 million, with IRR 28% and payback period of 3.64 years. It is assumed that the clinic shall handle 4,514 cases. The total staff requirement for the project will be 7. The proposed location for project depends upon sizeable population of livestock such as Sahiwal, Pakpattan, Okara, DI Khan, Lasbela, Sukur etc. 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT This particular project is for establishing a Veterinary Clinic as large number animals die due to infectious ailments annually causing economic loss to the farmers and national output. However, it is pertinent to mention that most of these diseases are curable through appropriate diagnosis and treatment. The project can be started in rented premises. It will provide veterinary health care services such as, health check, vaccination, treatment and minor and major surgeries for livestock. The services will be extended not only to the farmers bringing in their animals to the clinic, but field visits will also be carried out to provide onsite diagnosis and medication.
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The clinic will be established in rented premises having a covered area of around 3,000 sqft. Since, an early diagnosis usually leads to accurate and successful treatment of the diseased animal, clinics diagnostic laboratory will be established to render necessary tests. The Project shall have a fully equipped surgical suite and welltrained staff to perform surgeries. A fully equipped pharmacy will also be run by a licensed Veterinary Compounder. The project will employ 7 individuals including the owner manager for providing standardized animal healthcare and support services. 7. CRITICAL FACTORS Background knowledge, experience and technical qualification of the entrepreneur. Appropriate project location with catchment area having sizeable livestock population. Hiring of qualified and responsive staff to meet clients requirements. Retention of staff through incentives to ensure smooth and regular services. Coverage of maximum area of operation and capturing the market through field visits and quality of service. Competition with non-qualified vet through competitive fee structure and standardized services.

8. INSTALLED & OPERATIONAL CAPACITIES Since this is a service based venture, there are no installed capacities, however, based on 300 operational days per year, the clinic a year with capacity to manage 4,514 cases per annum. The project will handle around 3,610 cases by operating at 80 % of capacity utilization in first year. 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT Selection of district or particular city of the project has an imperial effect on the project itself. The proposed location should be near the area where population of animals is greater in numbers. The proposed project location for the veterinary clinic is suggested to be at Sahiwal or comparable districts across Pakistan. Such as Sargodha, Sheikhupura, Faislabad, Jhang, Sialkot, Sahiwal, Peshawar, DI Khan, Sukur, Lasbela, Qilla Saifullah and other similar cities/areas. 10. PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of Veterinary Clinic project under the Prime Ministers Small Business Loan Scheme. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendix
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10.1.

Project Economics

All the figures in this financial model have been calculated for rendering services to the live stock & poultry farmers. The following table shows internal rates of return and payback period. Table 1: Project Economics Description Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) Details 28% 3.64 1,844,609

Returns on the scheme and its profitability are highly dependent on the availability of efficiency of qualified Vet doctors and trained staff, provision of accurate and quality service on time and ability to handle emergency cases by accurate diagnosis and successful treatment. In case Veterinary Clinic Project is not very efficient, it will not be able to cover the potential market. Hence, cost of operating the business will increase. 10.2. Project Financing Following table provides details of the equity required and variables related to bank loan; Table 2: Project Financing Description Details Total Equity (10%) Rs. 184,636 Bank Loan (90 %) Rs. 1,661,720 Markup to the Borrower (%age/annum) 8% Tenure of the Loan (Years) 7 10.3. Project Cost

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

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Table 3: Capital Investment Capital Investment Machinery & equipment Furniture & fixtures Office vehicles Office equipment Pre-operating costs Training costs Total Capital Costs Raw material inventory Upfront building rent Upfront insurance payment Cash Total Working Capital Total Project Cost 10.4. Space Requirement (Rs.) 695,000 258,500 20,000 73,600 251,965 50,000 1,449,065 64,119 180,000 6,000 147,172 397,290 1,846,355

The area has been calculated on the basis of space requirement for management office, pharmacy, animal shed, operation theatre, laboratory, Veterinary Doctors office, Vet. Assistants room, kitchen, washrooms, waiting area and some open area. Following table shows calculations for project space requirement. Table 4: Space Requirement Building and Civil Work Animal Sheds/ Animal Holding Area Operation Theater Management Office Pharmacy Vet. Doctors Office Veterinary Assistants' Room Laboratory Kitchen Wash Rooms Waiting Room/Reception Open area Total Space Required Space Required (Sq. ft) 500 500 400 120 240 100 350 80 108 100 500 2,998

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The veterinary clinic is assumed to be established at rented property. The monthly rent is estimated to be Rs. 30,000 per month. 10.5. Machinery and Equipment Following table provides list of machinery and equipment required for an average foundry unit working for electrical fan sector. Following laboratory equipments and installations are required. Table 5: Machinery & Equipment Items Surgical Kit Dystocia Kit Refrigerator Lab Equipment - Micro Scope (Binocular) - Blood Analyzer - Centrifugal Machine - Autoclave Machine Other Lab equipments Total No. of Items 1 2 1 1 1 1 1 1 Unit cost (Rs.) 15,000 10,000 30,000 60,000 450,000 50,000 20,000 50,000 Total (Rs.) 15,000 20,000 30,000 60,000 450,000 50,000 20,000 50,000 695,000

Following office furniture and equipments are required for vet hospital. Table 6: Furniture & Fixture Items Doctors' Room Tables Doctors' Room Chairs Visitors' Chairs Veterinary Assistants' Room Tables Veterinary Assistants' Room Chairs Visitors' Chairs Pharmacy Table Pharmacy Chair Laboratory Table Laboratory Chairs Operation Theatre - Steel Table Computer Tables Computer Chairs Reception Table Bench for visitors Total
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No. of Items 1 1 3 1 1 2 1 1 1 2 2 1 1 1 4

Cost (Rs.) 15,000 3,500 2,500 10,000 2,000 2,500 10,000 2,000 10,000 2,000 20,000 10,000 2,000 7,500 5,000

Total (Rs.) 15,000 3,500 7,500 10,000 2,000 5,000 10,000 2,000 10,000 4,000 40,000 10,000 2,000 7,500 20,000 178,500

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10.6.

Office Equipment

These costs are based on the assumption that a setup will be required to carry on the activities at veterinary clinic. Following office equipment is required. Table 7: Office Equipment Description No. of Items Unit Cost (Rs.) 45,000 15,000 10,000 1,200 55,000 Total (Rs.) 45,000 15,000 10,000 3,600 55,000 25,000 153,600

Computers 1 Printer 1 Fax Machine 1 Telephone Sets 3 Air Conditioners 1 Electric Installations Total Office Vehicles required for the project are as follows: Table 8: Office Vehicle Motor Cycles (100 cc) Total Number 2

Cost 60,000

Amount (Rs.) 120,000 120,000

The proposed project will be using Two Motor cycles costing Rs. 60,000/- each to cover the outdoor cases. 10.7. Raw Material Requirements It is assumed that 25% of the revenues would be spent on the purchase of stock of veterinary medicines and the sales margin on medicines is 15%. 10.8. Human Resource Requirement Table 9: Human Resource Rquirement No. of Employees Admin. & Accounts Officer 1 Veterinary Doctors 1 Veterinary Assistants 1 AI Technicians 1 Receptionist / Operator 1 Security Guard, Gate Keepers 1 Office Boy cum sweeper 1 Total 7 Description Monthly Salary (Rs.) 15,000 30,000 10,000 10,000 9,000 9,000 9,000 Annual Salary (Rs.) 180,000 360,000 120,000 120,000 108,000 108,000 108,000 1,104,000

The table above provides details of human resource required for the project. Salaries of all employees are estimated to increase at 10% annually.
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10.9.

Revenue Generation Table 10: Revenue Generation Particulars Expected No. of patients/ year Fee in Rs. 300 5,000 300 500 200 5,000 200 300 100 200 100 Revenue in Year 1 33,000 275,000 210,000 200,000 20,000 1,500,000 32,000 33,000 100,000 35,000 50,000 2,488,000 280,000 309,693 3,077,693

The table below shows revenue generation.

Large Ruminants (cattle, buffaloes, camels, horses etc.) Soft Tissue Surgery Minor 110 Soft Tissue Surgery Major 55 Out Door animals 700 Artificial Insemination 400 Castration 100 Parturition Cases 300 Small Ruminants (goats and sheep etc.) Soft Tissue Surgery Minor 160 Soft Tissue Surgery Major 110 Out Door Fee per animal 1,000 Indoort patients - Admission 175 Castration 500 Sub Total 3,610 Income from Farm visits Sale of Medicine Total Revenue 10.10. Other Costs

An essential cost to be borne by the company is the fuel cost incurred by staff during their outdoor visits to deliver the services. It is estimated that each motorcycle would be used for travelling of 100 kms per day for 280 working days annually. Cost of fuel is taken to be Rs. 5.0 per km which will increase at the rate of 10% (rate of inflation) per year. In year one therefore, fuel cost amounts to Rs. 94,769 for two motor cycles. Similarly, electricity expense is estimated to be about 12,000 per month. The gas expense is estimated to be Rs. 2,000 per month. The communication during field visits is very necessary to keep the staff informed about the cases. The communication charges are estimated to be Rs. 3,000 per month. The other office expenses related to stationery, entertainment and janitorial services are expected to be Rs. 36,000 per annum.

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It is estimated that marketing would be done to promote the services of veterinary clinic through local media resources such as newspapers and cable networks. These promotional expenses are expected to be Rs. 40,000 per annum. 11. CONTACTS OF SUPPLIERS AND EXPERTS Pakistan Veterinary Medical Council (PVMC) Government of Pakistan House# 850, St.No. 26, G-9/1, Islamabad Ph: +92-51-9262108,Fax: +92-519262106 A&K Pharmaceuticals 94-A,Punjab Small Industrial Estate, Sargodha Road, Faisalabad Ph: 041-8869076 Web. www.aandkpharma.com Attabak Pharmaceuticals Plot 5-C, Sector I-10/3, Service Road, Industrial Area, Islamabad Ph: 051-4434125 Web. www.attabak.com

ICI Pakistan Ltd. 63 Mozang Road, Lahore Ph: 042-36302685, Web. www.akzonobel.com/pk

Agriprom Pakistan (Pvt) Ltd 80-A Judicial Colony, Thokar Niaz Baig, Lahore Ph: 042-35310854, 35063332 Web www.agriprom.pk Ghazi Brothers Ghazi House, D-35, K.D.A Scheme No. 1, Miran Muhammad Shah Road, Karachi 212- Defence Road, Lahore Ph: 021-111250365, 042-35341260-61 Naseem Traders International 12, Satellite Plaza, 6th Road, Rawalpindi Ph: 051-4421339 Web. www.naseemtraders.com Orient Animal Health Suiete No. M-16, Falak Niaz Tower, Opp. Jinnah Airport, Shahrah-e-Faisal, Karachi Ph: 021-34494555, Web. www.oah.com.pk Selmore Pharmaceuticals (Pvt.) Ltd. 36 Km, Multan Road, Lahore Ph: 042-35380381 Web. www.selmorepharma.com Star Laboratories (Pvt) Ltd. 23, K.M. Multan Road, Lahore
12

Pfizer Laboratories Ltd. 12-Dockyard Road, West Wharf, Karachi Ph: 021-2310051, 2310053 Web. www.pfizer.com.pk Prix Pharmaceutical 26-Abbot Road, Lahore Ph: 042-36312582, 36316499 Web. www.prixpharma.com

Saadat International 117 - Habitat Apartment, Shadman II, Jail Road, Lahore Ph: 042-37550143-5, 37522528 - 30 Web. www.saadatinternational.com UM Enterprises 786 - Sharjah Centre, 3rd Floor, 62
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Shadman Market, Lahore Ph: 042-37566937-8 Delta Chemical & Machinery Corporation 28/2 Taj Arcade, 73-Jail Road, Lahore Tel. 042-7568704 Web. www.deltachemcorp.com Selmore Pharmaceuticals (Pvt.) Ltd. 36 Km, Multan Road, Lahore Ph: 042-35380381 Web. www.selmorepharma.com

Ph: 042-7511331 Web. www.starlabs.com.pk Symans Pharmaceuticals (Pvt.) Ltd. 1st Floor Symans Tower 25-Lower Mall, Lahore Tel: 042-37248226 Web. www.symans.org Bio- Labs Plot # 145, Kahuta Industrial Triangle. Kahuta Road. Islamabad Ph: 051 4491742 & 3 Web. www.bio-labs.net

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12.

ANNEXURE Income Statement

Year 1 3,077,693 Year 2 3,589,132 Year 3 4,117,503 Year 4 4,405,728 Year 5 4,714,129 Year 6 5,044,118 Year 7 5,397,206 Year 8 5,775,011 Year 9 6,179,261 Year 10 6,611,810

12.1.
Income Statement
Revenue

Cost of sales Purchase of medicines for use and sale Direct labor Office vehicles running expense Vehicle maintenance Operating costs 3 (direct electricity) Operating costs 5 (direct gas) Total cost of sales Gross Profit General administration & selling expenses Administrative Salaries expense Building rental expense Travelling expense Communications expense (phone, fax, mail, internet, etc.) Office expenses (stationary, entertainment, janitorial services, etc.) Promotional expense Insurance expense Professional fees (legal, audit, consultants, etc.) Depreciation expense Amortization of pre-operating costs Amortization of legal, licensing, and training 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 Balance brought forward Total profit available for appropriation Balance carried forward

769,423 600,000 94,769 12,000 144,000 24,000 1,644,192 1,433,500

897,283 658,417 104,246 12,600 158,400 26,400 1,857,346 1,731,786

1,029,376 722,521 114,671 13,230 174,240 29,040 2,083,078 2,034,425

1,101,432 792,867 126,138 13,892 191,664 31,944 2,257,936 2,147,792

1,178,532 870,062 138,752 14,586 210,830 35,138 2,447,900 2,266,229

1,261,029 954,772 152,627 15,315 231,913 38,652 2,654,309 2,389,809

1,349,302 1,047,730 167,889 16,081 255,105 42,517 2,878,624 2,518,582

1,443,753 1,149,738 184,678 16,885 280,615 46,769 3,122,439 2,652,571

1,544,815 1,261,679 203,146 17,729 308,677 51,446 3,387,493 2,791,769

1,652,952 1,384,517 223,461 18,616 339,544 56,591 3,675,682 2,936,128

504,000 360,000 25,200 36,000 36,000 40,000 6,000 15,388 131,638 50,393 10,000 1,214,619 218,881 17,923 236,804 100,052 27,170 127,222 109,582 548 109,034

553,070 396,000 27,654 37,800 37,800 41,200 5,400 17,946 131,638 50,393 10,000 1,308,900 422,886 24,895 447,781 88,093 23,874 111,968 335,813 25,186 310,627 109,034 419,662 419,662

606,918 435,600 30,346 39,690 39,690 42,436 4,800 20,588 131,638 50,393 10,000 1,412,098 622,327 47,474 669,800 75,149 20,305 95,454 574,347 71,793 502,553 419,662 922,215 922,215

666,008 479,160 33,300 41,675 41,675 43,709 4,200 22,029 108,086 50,393 10,000 1,500,234 647,557 73,381 720,939 61,137 16,440 77,577 643,362 96,504 546,858 922,215 1,469,073 1,469,073

730,852 527,076 36,543 43,758 43,758 45,020 3,600 23,571 107,350 50,393 10,000 1,621,921 644,308 100,435 744,743 45,970 12,254 58,224 686,519 102,978 583,541 1,469,073 2,052,614 2,052,614

802,008 579,784 40,100 45,946 45,946 46,371 3,000 25,221 107,350 1,695,726 694,082 126,952 821,035 29,553 7,720 37,273 783,762 117,564 666,197 2,052,614 2,718,811 2,718,811

880,093 637,762 44,005 48,243 48,243 47,762 2,400 26,986 107,350 1,842,845 675,737 152,088 827,825 11,783 2,810 14,593 813,233 142,316 670,917 2,718,811 3,389,728 3,389,728

965,780 701,538 48,289 50,656 50,656 49,195 1,800 28,875 107,350 2,004,139 648,433 187,948 836,381 836,381 146,367 690,014 3,389,728 4,079,742 4,079,742

1,059,810 771,692 52,991 53,188 53,188 50,671 1,200 30,896 107,350 2,180,986 610,782 234,764 845,546 845,546 147,971 697,576 4,079,742 4,777,318 4,777,318

1,162,995 848,861 58,150 55,848 55,848 52,191 600 33,059 107,350 2,374,901 561,227 292,129 853,356 853,356 149,337 704,019 4,777,318 5,481,337 5,481,337

109,034 109,034

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12.2.
Cash Flow Statement

Statement of Cash Flow

Year 0 Year 1 109,034 131,638 50,393 10,000 548 (252,961) (14,394) 600 70,680 102,538 Year 2 310,627 131,638 50,393 10,000 6,712 (21,018) (16,062) 600 11,878 481,469 Year 3 502,553 131,638 50,393 10,000 (68,793) (42,732) (11,680) 600 11,869 580,218 Year 4 546,858 108,086 50,393 10,000 (61,336) (33,559) (13,122) 600 7,055 610,982 Year 5 583,541 107,350 50,393 10,000 (65,652) (24,519) (14,743) 600 7,606 650,184 Year 6 666,197 107,350 (98,751) (26,235) (16,564) 600 8,202 635,968 Year 7 670,917 107,350 (81,367) (28,072) (18,609) 600 8,848 654,352 Year 8 690,014 107,350 (83,104) (30,037) (20,908) 600 9,548 667,618 Year 9 697,576 107,350 (83,791) (32,139) (23,490) 600 10,307 669,982 Year 10 704,019 107,350 (84,377) (34,389) 213,689 600 (8,603) 969,028

Operating activities Net profit Add: depreciation expense amortization of pre-operating costs amortization of training costs Deferred income tax Accounts receivable Raw material inventory Advance insurance premium Accounts payable Cash provided by operations Financing activities Project Loan - principal repayment Working Capital Loan - 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 Cash (used for) / provided by investing activities NET CASH Cash balance brought forward Cash available for appropriation Cash balance Cash carried forward

(64,119) (6,000) (100,119)

1,304,158 357,561 184,636 1,846,355

(145,076) (39,706) (184,782)

(157,035) (43,002) (200,037)

(169,979) (46,571) (216,550)

(183,991) (50,436) (234,428)

(199,158) (54,623) (253,781)

(215,575) (59,156) (274,731)

(233,345) (64,066) (297,411)

(1,449,065) (1,449,065) 297,172

(82,244) 297,172 214,928 214,928 214,928

281,433 214,928 496,361 496,361 496,361

363,667 496,361 860,028 860,028 860,028

376,554 860,028 1,236,582 1,236,582 1,236,582

396,403 1,236,582 1,632,986 1,632,986 1,632,986

361,236 1,632,986 1,994,222 1,994,222 1,994,222

356,940 1,994,222 2,351,162 2,351,162 2,351,162

667,618 2,351,162 3,018,780 3,018,780 3,018,780

669,982 3,018,780 3,688,762 3,688,762 3,688,762

969,028 3,688,762 4,657,790 4,657,790 4,657,790

297,172 297,172 297,172

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12.3.
Balance Sheet

Balance Sheet
Year 0 Assets Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Current assets Cash & Bank Accounts receivable Raw material inventory Pre-paid insurance Total Current Assets Fixed assets Machinery & equipment Furniture & fixtures Office vehicles Office equipment Total Fixed Assets Intangible assets Pre-operation costs Legal, licensing, & training 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

297,172 64,119 6,000 397,290

214,928 252,961 78,512 5,400 584,801

496,361 273,979 94,574 4,800 906,014

860,028 316,711 106,254 4,200 1,327,123

1,236,582 350,270 119,376 3,600 1,753,751

1,632,986 374,789 134,119 3,000 2,193,209

1,994,222 401,024 150,683 2,400 2,601,476

2,351,162 429,096 169,292 1,800 3,009,811

3,018,780 459,132 190,200 1,200 3,733,620

3,688,762 491,271 213,689 600 4,465,061

4,657,790 525,660 5,183,450

695,000 258,500 120,000 73,600 1,147,100

625,500 232,650 108,000 49,312 1,015,462

556,000 206,800 96,000 25,024 883,824

486,500 180,950 84,000 736 752,186

417,000 155,100 72,000 644,100

347,500 129,250 60,000 536,750

278,000 103,400 48,000 429,400

208,500 77,550 36,000 322,050

139,000 51,700 24,000 214,700

69,500 25,850 12,000 107,350

251,965 50,000 301,965 1,846,355

201,572 40,000 241,572 1,841,835

151,179 30,000 181,179 1,971,016

100,786 20,000 120,786 2,200,095

50,393 10,000 60,393 2,458,244

2,729,959

3,030,876

3,331,861

3,948,320

4,572,411

5,183,450

70,680 70,680

82,558 82,558

94,427 94,427

101,482 101,482

109,088 109,088

117,290 117,290

126,138 126,138

135,685 135,685

145,992 145,992

137,389 137,389

1,304,158 357,561 1,661,720

548 1,159,083 317,855 1,477,485

7,260 1,002,048 274,853 1,284,161

(61,533) 832,069 228,282 998,817

(122,870) 648,078 177,845 703,054

(188,521) 448,920 123,223 383,621

(287,273) 233,345 64,066 10,139

(368,640) (368,640)

(451,744) (451,744)

(535,535) (535,535)

(619,911) (619,911)

184,636 184,636 1,846,355

184,636 109,034 293,670 1,841,835

184,636 419,662 604,297 1,971,016

184,636 922,215 1,106,851 2,200,095

184,636 1,469,073 1,653,708 2,458,244

184,636 2,052,614 2,237,250 2,729,959

184,636 2,718,811 2,903,447 3,030,876

184,636 3,389,728 3,574,364 3,331,861

184,636 4,079,742 4,264,378 3,948,320

184,636 4,777,318 4,961,954 4,572,411

184,636 5,481,337 5,665,972 5,183,450

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12.4. Technology

Useful Project Management Tips

List of Machinery & Equipment Required spare parts & consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations Energy Requirement: Should not be overestimated or installed in excess and alternate source of energy for critical operations be arranged in advance Machinery Suppliers: Should be asked for training and after sales services under the contract with the machinery suppliers Quality Assurance Equipment & Standards: Whatever means required products quality standards need to be defined on the packaging and a system to check them instituted, this improves credibility

Marketing Product Development & Packaging: Expert's help may be engaged for product/service and packaging design & development Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product broachers from good quality service providers Sales & Distribution Network: agreements are required with. Expert's advise and distribution

Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Price during introductory phase may be lower and used as promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed.

Human Resources List of Human Resource Adequacy & Competencies: Skilled and experienced staff should be considered an investment even to the extent of offering share in business profit. Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation.
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Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure of best practices is route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards. 12.5. Useful Links

Prime Ministers Office, www.pmo.gov.pk Government of Pakistan, www.pakistan.gov.pk Ministry of Industries & Production, www.moip.gov.pk Ministry of Education, Training & Standards in Higher Education, www.moptt.gov.pk Government of Punjab, www.punjab.gov.pk Government of Sindh, www.sindh.gov.pk Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk Government of Balochistan, www.balochistan.gov.pk Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk Government of Azad Jamu Kashmir, www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk Security Commission of Pakistan (SECP), www.secp.gov.pk Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk Punjab Board of Investment & Trade (PBIT), 23-Aikman Road, GOR-I, Lahore Tel. 042-99205201, www.pbit.gop.pk Sindh Board of Investment (SBI), 1st Floor, Tower B, Finance & Trade Center, Shahra-e-Faisal, Karachi, Tel. 021-99207512-4, www.sbi.gos.pk State Bank of Pakistan (SBP), www.sbp.org.pk National Bank of Pakistan (NBP), www.nbp.com.pk First Women Bank Limited (FWBL), www.fwbl.com.pk Pakistan Veterinary Medical Council (PVMC), Islamabad, www.pvmcregistration.net National Vocational and Technical Training Commission (NAVTTC) Head Quarter, Islamabad, www.navttc.org Pakistan Agricultural Research Council (PARC), Islamabad Tel. 051-9203966, www.parc.gov.pk National Agricultural Research Centre (NARC), Islamabad, Tel. 051-9255061, www.parc.gov.pk National Veterinary Laboratory, NARC, Park Road, Islamabad Tel. 051-9255108 Balochistan Agricultural Research Centre (BARC), Quetta, Tel: 081-9213286-7, www.parc.gov.pk
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Southern-zone Agricultural Research Centre (SARC), Karachi, Tel: 021-99261661, 99261561, www.parc.gov.pk Arid Zone Research Institute (AZRI), Bahawalpur, Tel: 0622-876833, www.parc.gov.pk Punjab Livestock & Dairy Development Board (PLDDB), 11- Shami Road, Lahore Cantt. Tel. 042-36676821, www.plddb.pk Faculty of Animal Husbandry, University of Agriculture, Faisalabad, www.uaf.edu.pk Faculty of Veterinary Sciences, University of Agriculture, Faisalabad, www.uaf.edu.pk Faculty of Veterinary and Animal Sciences, Lasbela University of Agriculture, Water & Marine Sciences, Lasbela, www.luawms.edu.pk Faculty of Veterinary Sciences and Animal Husbandry, Sindh Agriculture University, Tondojam, www.sau.edu.pk Gomal College of Veterinary Sciences, Dera Ismail Khan, www.gu.edu.pk KPK Agricultural University, Peshawar, www.aup.edu.pk Pir Mehr Ali Shah Arid Agricultural University, Rawalpindi, www.uaar.edu.pk University College of Veterinary & Animal Sciences, Islamia University Bahawalpur (IUB), www.iub.edu.pk University of Veterinary & Animal Sciences (UVAS), Out Fall Road, Lahore, www.uvas.edu.pk College of Veterinary & Animal Sciences, Jhang, www.uvas.edu.pk/other_campuses Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk Nestle Sarsabz Training Institute, Renala Khurd, Okara c/o Nestle Lahore, Tel: 0423-111-637-853 Animal Husbandry In-Service Training Institute (AHITI), Peshawar, Tel. 0912960109, 9210309 Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 04299220140 Al - Haiwan Sires Training Institute, Jogi Chowk, Sahiwal, Tel. 040-4227196, 4221486, 061-6775708, Cell. 0321-8695054, 0300-9695054 Altaf & Co Livestock Training Institute, Altaf & Co Plaza,16/1,Out Fall Road, Lahore, Tel: 042-35763411-4, www.altafandco.com Solve Agri Dairy Institute, F-6/2, Main Link Road, Model Town, Lahore, www.solveagripak.com Dairy & Rural Development Foundation (DRDF), Lahore, www.dairyproject.org.pk Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk Directorate of Animal Health, L&DD, Punjab, Tel: 042-99201115

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Directorate of Animal Disease Reporting and Surveillance, L&DD, Punjab, Tel: 042-99201116 Foot and Mouth Disease (FMD) Research Centre, L&DD, Lahore, Tel: 04299201115 Directorate of Livestock Farms, L&DD, Lahore, Tel: 042-99201126-7 Directorate of Small Holder Dairy Development, Gujranwala Tel: 055-9200410-11, 9200194 Buffalo Research Institute Bhunikey, District Pattoki, Tel: 049-4421887, 4420072 Directorate of Small Ruminants, Multan, L&DD, Punjab, Tel: 061-9201311 Research Centre for Conversation Sahiwal Cattle (RCCSC), Jhang, Tel: 0479200329, 9200371, www.rccsc.com.pk Directorate of Livestock Training Centre (LSTC), Bahadurnagar, Okara, Tel: 0442661393 Livestock Training Centre (LSTC), Sheikhupura, Tel: 056-9200056 Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk Agriculture & Livestock Department, Government of KPK, www.khyberpakhtunkhwa.gov.pk Cattle Breeding & Dairy Farm, Harichand, District Charsadda, KPK, Tel: 0916640187 Buffalo Breeding & Dairy Farm, D.I.Khan, KPK, Tel: 0966-923150 Livestock & Dairy Development, Government of Balochistan, www.balochistan.gov.pk Directorate of Animal Health and Production Extension, L&DD, Quetta, Tel 0819202564 Para Veterinary Training Institute, L&DD, Quetta, Tel: 081-9202564

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13. KEY ASSUMPTIONS Table A: Project Assumptions Projected Life of The Project in Years Sponsors' Equity Debt Financing Annual Mark Up Rate (Short Term & Long Term) Debt Tenure in Years General Inflation Rate Operating Assumptions Total No. of Days in One Year Total No. of Months in One Year No of Working Days in One Year Table B: Depreciation Rate Assumptions Tools & Equipment Fittings & Installations Office Equipments Furniture & Fixtures Vehicles Stock of medicines Stores and Spares Accounts Payable Bills Expenses Salaries, Wages & other benefits Inflation Rate for Salaries & Wages Medicines & Supplies consumed Repair & Maintenance Vehicle Repair & Maintenance Repair & Maintenance Traveling & Conveyance Telephone Fax and Postage Vehicles insurance rate Description Medicines Consumed and kept
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10 10% 90% 8% 7 10% 365 12 300

10% 10% 33% 10% 20%

of the Written Down Value of the Written Down Value of the Written Down Value of the Written Down Value of the Written Down Value

Table C: Working Capital Assumptions 30 Days medicines Consumption 30 Days Stores & Spares Consumption 30 Days of Total Annual Purchases 30 Days of Total Annual Expenditure Table D: Expenditures 10% 15% of total revenue 10% 3% 3% 1% 5% of the Cost. of the Cost. of Total income of Total income of Written down value Rationale % of revenue

Table E: Expense Assumptions Cost / Rate 25%

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for Sale Cost of goods sold growth rate Vehicle maintenance Operating costs 3 (direct electricity) Operating costs 5 (direct gas) Operating costs growth rate Administration benefits expense Travelling expense No. 2 Total Class Motor cycles

% of vehicle cost Per annum (Rs. 12,000 per 144,000 month) 24,000 Per annum (Rs. 2,000 per month) 5.0% 0.0% % of administration expense 5.0% % of administration expense Annual Tours 280 Total cost 94,769 94,769

5.0% 10%

Table F: Vehicle Running Expenses Consumption Rate/Ltr Traveling/ of petrol Day (km) 65 Km per Petro 110 100 litre l Table G: Promotional Expenses Description News Paper Ad Cable Ad Quantity 2 10 Table H: Communication Expense Rs. Per unit 5,000 3,000

Description Office vehicles running expense Office expenses (stationary, entertainment, janitorial services, etc.)

Per annum 3.0% of vehicles cost Rs. 36,000 Per annum

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