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1st Draft

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

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 Requirement6
11.7 Revenue Generation.6
12. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS.................................................6
13. USEFUL LINKS.................................................................................................................................7
14. ANNEXURES...................................................................................................................................11
15. KEY ASSUMPTIONS.......................................................................................................................13

LIST OF TABLES
Table 1: Project Economics

Table 2: Project Financing

Table 3: Project Cost

Table 4: Space Requirement

Table 5: List of Machinery and Equipment

Table 6: Human Resource Requirement

Table 7: Revenue Generation

LIST OF ANNEXURES
14.1. Income Statement

11

14.2. Cash Flow Statement

12

ii

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.

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 prefeasibility 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 its 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 Ministers 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,
2

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.
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
4

Description
Total Equity (@ 10%)

Goat
Rs. 642177

Bank Loan (@ 90%)

Rs. 71353

Markup to the Borrower (%age/annum)


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

8%
8
1

11.3Project cost
Following requirements have been identified for operations of the proposed business.
Table 3. Project cost
Project Investment

Amount (Rs.)

Building
Machinery & Equipment
Total Capital Cost
11.4

330000
90000
420000

Space Requirement

Details of the area required are given below:


Table 4. Space Requirement
Description
Shed for 50 kids (covered)
Open paddock for 50 kids
Isolation Pen for 5 kids (covered)
Stores for ration & machinery (12x20)
Total

Space per
animal sq ft
12
24
12
-

Total space sq Cost per sq ft


ft
600
300
1200
50
60
300
240
300

Total cost
(Rs.)
180000
60000
18000
72000
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
Feeding mangers 5
Chaff cutter

Unit Cost (Rs)


3000
50000
5

Total Cost (Rs)


15000
50000

Water pump
Other farm equipment
Total cost

20000
-

20000
5000
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

Worker

Salary per month

10,000

11.7Revenue Generation
Table 7. Revenue Generation
Product
Sale of Live Goats
Total Sales Revenue

Sales
Price
(Rs./Unit)
350 kg

Average weight
per kg live
weight
45

First Year
Production
50

12. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS


1. Dr. M. FatehUllah Khan

Animal Sciences Institute (ASI), NARC


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

First Year
Sales
Revenue (Rs)
787500
787500

13. USEFUL LINKS

Prime Ministers 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
7

Ministry of Education, Training & Standards in Higher Education,


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: 0819213286-7, www.parc.gov.pk
Southern-zone Agricultural Research Centre (SARC), Karachi, Tel: 02199261661, 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.
8

091-2960109, 9210309
Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 04299220140
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: 0572213422, 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

14. ANNEXURES
14.1

Income Statement

Revenue
Feed & Vaccination Cost
Cost of Calves
Direct Labor
Repair & Maintenance
Utilities
Total Cost of Sales
Gross Profit
General administration &
selling expenses -Travelling &
Comm. expense (phone, fax, etc.)
Depreciation expense
Amortization expense
Subtotal
Operating Income
Earnings Before Interest & Taxes
Interest expense
Earnings Before Tax
NET PROFIT/(LOSS) AFTER
TAX
Balance brought forward
Total profit available for
appropriation
Balance carried forward

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

826,875
252,500
375,000
60,000
4,900
29,400
723,800
103,075

888,891
265,125
393,750
66,000
5,145
32,340
764,460
124,431

955,557
278,369
413,438
72,600
5,402
35,574
807,588
147,970

1,027,224
292,312
434,109
79,860
5,672
39,131
853,401
173,824

1,104,266
306,938
455,815
87,846
5,956
43,045
902,030
202,236

1,187,086
322,280
478,606
96,631
6,254
47,349
953,671
233,415

1,276,117
338,374
502,536
106,294
6,566
52,084
1,008,534
267,584

1,371,826
355,307
527,663
116,923
6,895
57,292
1,066,894
304,932

1,474,713
373,070
554,046
128,615
7,240
63,022
1,128,947
345,766

1,585,317
391,704
581,748
141,477
7,602
69,324
1,194,957
390,360

6,000

6,300

6,615

6,946

7,293

7,658

8,041

8,443

8,865

9,308

42,000
9,726
69,726
33,349
33,349
53,300
(19,951)

42,000
9,726
70,626
53,805
53,805
48,797
5,008

42,000
9,726
71,571
76,399
76,399
42,878
33,521

42,000
9,726
72,563
101,260
101,260
36,468
64,793

42,000
9,726
73,605
128,631
128,631
29,526
99,105

42,000
64,973
168,442
168,442
22,007
146,434

42,000
66,122
201,462
201,462
13,865
187,597

42,000
67,328
237,604
237,604
5,047
232,557

42,000
68,594
277,172
277,172
277,172

42,000
69,924
320,436
320,436
320,436

(19,951)

5,008

33,521

64,793

99,105

146,434

187,597

232,557

277,172

320,436

(19,951)

(14,944)

18,577

83,370

182,475

328,909

516,506

749,064

1,026,235

(19,951)

(14,944)

18,577

83,370

182,475

328,909

516,506

749,064

1,026,235

1,346,672

(19,951)

(14,944)

18,577

83,370

182,475

328,909

516,506

749,064

1,026,235

1,346,672

10

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

(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

(209,167)

(21,440)

(23,633)

(26,069)

(28,736)

(31,675)

(34,915)

(38,509)

(42,448)

(46,790)

503,381

Operating activities
Net profit

Raw material inventory

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)
Financing activities642,177
Change in long term debt
Issuance of shares
71,353
Cash provided by / (used for)
713,530
financing activities
Investing activities- Capital
(468,630)
expenditure
Cash (used for) / provided by
(468,630)
investing activities
NET CASH
34,100

Accounts payable

45,708

35,195

61,418

90,182

121,725

156,272

194,040

235,278

275,782

850,819

(71,312)

(77,231)

(83,641)

(90,583)

(98,102)

(106,244)

(115,062)

(71,312)

(77,231)

(83,641)

(90,583)

(98,102)

(106,244)

(115,062)

45,708

(36,117)

(15,813)

6,541

31,142

58,170

87,795

120,215

275,782

850,819

Cash balance brought forward


Cash available for
appropriation
Cash carried forward

34,100

79,808

43,690

27,877

34,418

65,560

123,730

211,526

331,741

607,523

34,100

79,808

43,690

27,877

34,418

65,560

123,730

211,526

331,741

607,523

1,458,342

34,100

79,808

43,690

27,877

34,418

65,560

123,730

211,526

331,741

607,523

1,458,342

11

15. Key Assumptions


Particulars
Sales Price Growth Rate
Capacity Utilization Growth Rate
Increase in Cost of Raw Materials
Increase in Staff Salaries
Increase in Utilities (Electricity / Water / Gas)
Debt / Equity Ratio
Depreciation
Plant Building
Machinery
Office Furniture & Equipment
Loan Period
Loan Installments

Assumption
5 % per year
10 % per year
5 % per year
10 % per year
10 % per year
90 : 10
10 % per annum
10 % per annum
10 % per annum
8 Years (inclusive of 1 year grace period)
Quarterly

12