Pre-Feasibility Study

(Broiler Farm)

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 Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
Punjab Sindh Khyber Pakhtunkhwa Balochistan
3rd Floor, Building No. 3, 5th Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 111-111-456 Tel: (081) 2831623, 2831702
Fax: (042) 36304926-7 Fax: (021) 35610572 Fax: (091) 5286908 Fax: (081) 2831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
 Table of Contents
1. DISCLAIMER .......................................................................................................................................... 2
2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3
3. INTRODUCTION TO SMEDA .............................................................................................................. 3
4. INTRODUCTION TO SCHEME ........................................................................................................... 4
5. EXECUTIVE SUMMARY ...................................................................................................................... 4
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 4
7. CRITICAL FACTORS ............................................................................................................................ 5
8. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 5
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 5
10. POTENTIAL TARGET MARKET ................................................................................................... 5
11. BROILER PRODUCTION PROCESS ............................................................................................. 6
12. PROJECT COST SUMMARY .......................................................................................................... 8
12.1. PROJECT ECONOMICS ............................................................................................................................ 8
12.2. PROJECT FINANCING ...................................................................................................................... 8
12.3. PROJECT COST .................................................................................................................................. 9
12.4. SPACE REQUIREMENT .................................................................................................................... 9
12.5. MACHINERY AND EQUIPMENT .................................................................................................... 9
12.6. OFFICE EQUIPMENT & FURNITURE ........................................................................................... 10
12.7. RAW MATERIAL REQUIREMENTS.............................................................................................. 10
12.8. HUMAN RESOURCE REQUIREMENT .......................................................................................... 11
12.9. REVENUE GENERATION ............................................................................................................... 11
12.10. OTHER COSTS ................................................................................................................................. 11
13. CONTACTS OF SUPPLIERS AND EXPERTS ............................................................................ 12
14. ANNEXURE ...................................................................................................................................... 13
14.1. INCOME STATEMENT ................................................................................................................... 13
14.2. BALANCE SHEET ............................................................................................................................ 14
14.3. CASH FLOW STATEMENT............................................................................................................. 15
14.4. USEFUL PROJECT MANAGEMENT TIPS..................................................................................... 16
14.5. USEFUL LINKS ................................................................................................................................ 17
15. KEY ASSUMPTIONS ...................................................................................................................... 18
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 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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Pre-Feasibility Study Broiler Farm

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, production, marketing, finance and business
management.
The purpose of this document is to facilitate potential investors in broiler farm by
providing them 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 it’s 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.

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Pre-Feasibility Study Broiler Farm

4. INTRODUCTION TO SCHEME
Prime Minister’s ‘Youth Business Loan’, 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 by the
National Bank of Pakistan (NBP) and the 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).

5. EXECUTIVE SUMMARY

Broiler meat is a rich source of protein with an ever growing demand. In broiler
farming, the Day Old Chicks (DOCs) of specific broiler strain e.g. Babcock,
purchased from reputed hatchery/ company are raised on specially formulated
feed for a period of about six weeks, with a turnover of six flocks per year. Both
rural and semi-urban areas are suitable for this business.
Success of broiler farm largely depends on good management practices. After
brooding and rearing period, birds are sold at farm gate on ‘Live Body Weight’
basis to traders or transported to market. The farm gate price of live bird is
determined on daily basis.
A conventional broiler farm of 10,000 birds is suggested in this pre-feasibility
study as a viable economic size to enter this business. The proposed business
started in a rented shed requires total estimated investment of Rs. 2.16 million
with a staff of 03 persons. This project is proposed to be started on 90% debt and
10% equity basis. The project’s Internal Rate of Return (IRR), Net Present Value
(NPV) and payback period are 51%, 4.96 million and 1.48 years respectively.

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

In the proposed broiler farm, the Day Old Chicks (DOCs) are raised on high
protein and energy feed in a conventional open housing system for a period of
six weeks (All in-All out system). The purpose built farm is acquired on rental
basis.
After six weeks, the birds are sold on live body weight basis to traders, wholesale
markets or sold directly to the shopkeepers in the urban markets. With ever

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Pre-Feasibility Study Broiler Farm

increasing demand for white meat, broiler farming can be a profitable venture.
Annually, six flocks of birds are raised on the farm, depending on area climate.

7. CRITICAL FACTORS

• Background knowledge and related experience of the entrepreneur in

broiler farm operations.
• Application of good poultry husbandry practices such as timely feeding,
watering, lighting, vaccination, medication, temperature / humidity control
and culling of uneconomical birds to ensure flock’s best performance and
higher efficiency in disease-free environment.
• Awareness of supply and demand of chicken in the market as the price of
chicken meat fluctuates throughout the year.
• Efficient marketing of the project and bulk supply to wholesalers.

8. INSTALLED & OPERATIONAL CAPACITIES

In this pre-feasibility study, all the calculations have been based on a flock size of
10,000 birds. As six flocks are produced per year, hence total 60,000 birds are
reared per annum. There will be a lag time of two weeks for cleaning and
disinfection (e.g. fumigation) on the farm.

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Rural and peri-urban areas around major cities are suitable for setting up a
broiler 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 establish links
with the market for buying farm inputs and selling of grown-up birds, swiftly. Sub-
urban and rural areas around big cities e.g. Lahore, Rawalpindi, Faisalabad,
Hyderabad, Karachi, Peshawar and Quetta are recommended for starting a
broiler farm.

10. POTENTIAL TARGET MARKET

Marketing of chickens follow traditional channels of distribution. Generally,
grown-up birds are distributed in the market through market agents and
intermediaries such as Arhti and wholesalers. In some cases, the middleman
provides DOCs and other farm inputs (feed, vaccination, medication etc.) to the
broiler farmers under a contract to buy back mature birds from them.
Birds are transported to the urban market and are sold to retailers or market-
street poultry shops. Few poultry meat processing plants process raw poultry

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Pre-Feasibility Study Broiler Farm

meat into dressed chicken, quality cuts or other forms to the market. The
integrated processing units distribute frozen and dressed chicken packed in
whole or cut-ups to the consumer through retail shops under their brand names.
Major domestic markets include all major cities across the country including
Karachi, Lahore, Peshawar and Quetta etc. The wholesale and retail price of
poultry meat is determined daily on consumer’s demand and supply situation.

11. BROILER PRODUCTION PROCESS

• The broiler farming must begin with a clean and sanitized shed. The layout
of open conventional shed should be north-south to ensure clean, dry and
well-ventilated shed as this provides fresh air and carries off humidity.
• The entire building and all equipment should be properly disinfected and
fumigated. The equipment and walls of the shed should be checked for
cleanliness, disinfection and spraying before the arrival of DOCs.
Disinfectants can be prepared with Phenol, Potassium Permanganate,
Carbolic Acid and Formalin. A solution of Sodium Hydroxide/Caustic Soda
with warm water can also be used to clean the house.
• To sanitize the shed from germs and insects, it is fumigated with
Formaldehyde gas, produced by putting Formalin on Potassium
Permanganate. The house should be vacant and sealed for 30 minutes
after the fumigation so that the gas infiltrates in every corner.
• Litter is spread on the floor to prevent direct contact of birds with the floor.
Rice-husk and sawdust are generally used as litter. It should be dry and
free of moulds. Caked or moldy material should be removed and refilled
with fresh materials. Extensively wet and dusty litter should also not be
used. Using new litter for each flock is good for raising disease-free broiler
birds.
• The DOCs should be procured from well reputed hatcheries and should be
of uniform size, active and bright eyed, having healed navel. The skin of
shanks should be shiny.
• The DOCs should arrive at the farm early in the morning so that the
management has a full day to observe them for any issue.
• Flushing should be done by offering 250 gm glucose per gallon of water
as readily available source of energy and to clear the digestive tract.
• Keep light at high intensity 20–22 hours per day for the first week. Closely
regulate temperature of shed.
• Special attention should be given to temperature and relative humidity
maintenance in the shed. The temperature for brooders should be 99 F,
encircled by chick guard/sheets. The brooder is essential part of broiler

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Pre-Feasibility Study Broiler Farm

farming, also known as ’Artificial Mother’ as it provides necessary heat to

DOCs shortly after arrival till 7 days of age.
• Mostly, 24 hours light is provided during brooding and early growing
period. Initially, for first fifteen days, light intensity should be 40-60 watts
per 200 sq. ft of space which can be replaced by 15 watts bulb in the start
of third week.
• Starter feed should be offered as a source of energy to chicks as it is
easily digestible and a good source of energy. Broilers are fed two types
of ration i.e. broiler starter (mash or crumb form) fed up to four weeks of
age and then broiler finisher (mash or crumb form) fed from fifth to sixth
week. There are many feed mills that prepare these formulated feeds.
• Feeding three or four times each day will stimulate feed intake and
prevent wastage. The desired Feed Conversion Ratio (FCR) is 2.20.
Check regularly the availability of water and feed for chicks.
• Keep feed free from aflatoxins. Remove all leftover feed from bins,
hoppers and troughs.
• Place rodenticide out of the reach of DOCs.
• Remove dead birds immediately and dispose them properly. Send the
dead birds to lab for postmortem examination if there is excessive
mortality.
• Follow bio-security plans by not allowing visitors or attendants to enter
sheds without disinfected boots and clothes.
• Follow the recommended vaccination schedule. Vaccination can be
provided to chicks through eye drops, drinking water and subcutaneous
injections. Following is a typical vaccination schedule for broiler birds;
Table 1: Vaccination Schedule for Broiler Birds

Age in Days Disease Vaccination Procedure

Infectious Bronchitis Aerial spray or eye
1 day IB-Vaccine
Disease (IBD) drops
5 days Newcastle Disease (ND) ND-Vaccine (Lasota) Eye drops
Infectious Bursal IBD Vaccine
8 days Eye drops
Disease (IBD) (Gumboro)
Hydro Pericardium
17-18 days HPS- Hydro Vaccine Sub-cut injection
Disease
Infectious Bursal IBD Vaccine
21-22 days In drinking water
Disease (IBD) (Gumboro)
25-26 days IBD+ND IBD+ND Vaccines In drinking water

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Pre-Feasibility Study Broiler Farm

• Mortality losses should be kept below 8% by timely prophylactic measures

(vaccination, medication, disinfection etc.). The New Castle Disease and
Gumboro are extremely dangerous diseases that can eradicate the entire
flock.

12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial
viability of broiler farm (10,000 birds) under the Prime Minister’s Youth 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.

12.1. Project Economics

The following table shows Internal Rate of Return, Net Present Value and
payback period;
Table 2- Project Economics
Description Details
Internal Rate of Return (IRR) 51%
Payback Period (yrs) 1.48
Net Present Value (NPV) Rs.4,955,546
12.2. PROJECT FINANCING

Following table provides details of the equity required and variables related to
bank loan;
Table 3 - Project Financing
Description Details
Total Equity (10%) Rs. 215,529
Bank Loan (90%) Rs. 1,939,761
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Year) 1

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12.3. PROJECT COST

Following requirements have been identified for operations of the proposed

business;
Table 4: Capital Investment for the Project
Capital Investment Amount (Rs.)
Machinery & equipment 152,239
Furniture & fixtures 10,000
Office equipment 3,000
Pre-operating cost 144,625
Total Capital Cost 309,864
Raw material inventory 1,505,382
Upfront building rent 240,044
Cash in hand 100,000
Initial Working Capital 1,845,426
Total Project Cost 2,155,290
12.4. SPACE REQUIREMENT

Following table shows calculations for project space requirement;

Table 5: Space Requirement
Space Requirement Space (Sq.ft)
Management building 100
Shed space 10,000
Feed store 180
Room for workers 144
Pavement/ Boundary walls 104
Total Area 10,528
The rental cost is calculated at approximately Rs. 20,000 per month.

12.5. MACHINERY AND EQUIPMENT

Following table provides list of machinery and equipment required for broiler farm
in open shed conventional housing system;

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Table 6: List of Machinery and Equipment

Capacity Cost Total
Description Quantity
Birds/unit Rs/unit Rs.
Brooder 500 20 1,000 20,000
Chick guard 200 50 150 7,500
Small waterers 50 182 90 16,380
Small feeding trays 50 182 90 16,380
Large automatic waterers 140 70 300 21,000
Large round feeders 130 80 300 24,000
Buckets 6 500 3,000
Manual balance 1 2,000 2,000
Exhaust fans 4 1,000 4,000
DOC shifting boxes 10 1,800 18,000
Drum heaters 4 2,000 8,000
Miscellaneous 1 5,000 5,000
Installation 6,979
Total Machinery &
152,239
Equipment
12.6. OFFICE EQUIPMENT & FURNITURE

Table 7: Office Equipment & Furniture

Description Quantity Cost (Rs.) Amount (Rs.)
Telephone 1 3,000 3,000
Furniture and fixture Lump sum 10,000 10,000
Total 13,000
12.7. RAW MATERIAL REQUIREMENTS

Following table shows raw material requirement for the proposed project;
Table 8: Cost of Material
Values
Total Rate
Description Unit (Rs. per
units (Rs./ Unit)
year)
*Day Old Chicks (DOC) Per DOC 60,000 35 2,100,000
Total feed required per birds
@ 2.2 FCR Per Bird *56,304 178.2 10,033,372
(Incl. 2% extra DOCs)
Vaccination, medication and
Per Bird *56,304 8 450,432
disinfection

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(Incl. 2% extra DOCs)

Direct Electricity Cost Per bird 2.25 *56,304 126,684
Litter & Spray
Per Flock 6 14,000 84,000
(Saw dust or rice husk)
* 2% extra chicks provided by DOC supplier to cover the transportation mortality, hence total birds to
consume feed and vaccination/ medication would be 56,304 per annum after 8% mortality loss.

12.8. HUMAN RESOURCE REQUIREMENT

Table 9: Human Resource Requirement

Monthly Salary per
Description No. of Employees
Employee (Rs.)
Owner / Farm manager 1 30,000
Farm Labor 2 12,000
Total Staff 3

Two semi skilled workers are needed to look after the general poultry husbandry
operations at the farm. In addition, owner would act as farm manager. The
salaries are estimated to increase at 10% annually.
12.9. REVENUE GENERATION

Table 10: Revenue Generation

Sale Price First Year Revenue in
Description Unit
Rs. Production First Year Rs.
Broiler birds (1.8-2.0 Per
261 56,304 14,695,344
kg) after 6 weeks bird
Other revenues (litter, Per
8 56,304 450,432
empty feed bags etc.) bird
Total Revenue 15,145,776
12.10. OTHER COSTS

An essential cost to be borne by the farmer is electricity expense which is

estimated to be Rs. 2.25 per bird. The fixed electricity cost for rest of the area is
estimated to be Rs. 800 per month. Average vaccination and medication cost per
bird is taken at Rs.8.00 per bird.

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13. CONTACTS OF SUPPLIERS AND EXPERTS

Table 11: List of Suppliers and Consultants
Feed Suppliers DOC Suppliers
Supreme Feeds (Pvt.) Ltd. Big Bird Poultry Breeders (Pvt.) Ltd.
Head Office: 176-Shadman 1 Lahore. 2-A,Ahmed Block, New Garden Town
Ph: 042-37522104-7 Lahore
Ph: 042-35835373-4
Ghazi Brothers Hi-Tech Poultry Breeders (Pvt.) Ltd.
Ghazi House, D-35, KDA Scheme, No. 1, 1-A, Shadman Chowk Jail Road, Lahore
Miran Muhammad Shah Road, Karachi Ph: 042-37564503
Ph: 021-111250365
Asia Feed (Pvt.) Ltd. Islamabad Poultry Breeding Co.
359 Shamsabad Colony, Humayun Road D-98, Satellite Town, Murree Road
Multan. Rawalpindi.
Ph: 061-6224414 Ph: 051-4427139
Fast Poultry Feeds Jadeed Farms (Pvt.) Ltd.
12-KM Near Nai Sabzi Mandi Jhang 6- Allied Commercial Plaza, Murree Road,
Road, Faisalabad. Chandni Chowk Rawalpindi.
Ph: 041-2577171-2 Ph: 051-4851280-84
Rustum Feeds Sadiq Poultry Pvt Ltd
Flat No.6, 1st Floor, United Center SB Plaza, 48-C, Satellite Town, Chandni
Shamsabad, Murree Road, Rawalpindi Chowk, Rawalpindi
Ph: 051-4455362 Ph: 051-111-505-050
Machinery & Equipment Suppliers Consultants
Biovet (Pvt.) Ltd. Prof. Dr. M. Akram
97-A, Jail Road Lahore Department of Poultry Production,
Ph: 042-37534508 Uni. Of Veterinary and Animal Sciences
(UVAS), Lahore
Ph: 042-99211461
Eastern Veterinary Services Dr. Abdul Rehman
4- C Chouburji Center, Near Venus Director, Poultry Research Institute,
Cinema, Multan Road, Lahore. Shamsabad, Murree Road, Rawalpindi
Ph: 042-37417649-50 Ph: 051-9290163-5
Dr. Fawwad Ahmad
Faculty of Animal Husbandry, University of
Agriculture, Faisalabad
Ph: 041-9920161-70

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14. ANNEXURE

14.1. INCOME STATEMENT

Statement Summaries Broiler Farm

Income Statement
Rs. in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 15,145,776 16,615,310 18,231,798 20,009,935 21,965,885 24,117,430 26,484,130 29,087,500 31,951,207 35,101,284
Cost of goods sold 13,082,489 14,390,738 15,829,811 17,412,793 19,154,072 21,069,479 23,176,427 25,494,070 28,043,477 30,847,824
Gross Profit 2,063,287 2,224,573 2,401,987 2,597,142 2,811,813 3,047,951 3,307,703 3,593,431 3,907,730 4,253,460

General administration & selling expenses

Utilities expense 9,665 10,631 11,694 12,864 14,150 15,565 17,121 18,833 20,717 22,788
Professional fees (legal, audit, etc.) - - - - - - - - - -
Depreciation expense 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524
Amortization expense 28,925 28,925 28,925 28,925 28,925 - - - - -
Mortality 523,300 575,630 633,192 696,512 766,163 842,779 927,057 1,019,763 1,121,739 1,233,913
Subtotal 1,189,257 1,303,638 1,429,456 1,567,857 1,720,098 1,858,638 2,042,849 2,245,482 2,468,378 2,713,563
Operating Income 874,030 920,935 972,530 1,029,285 1,091,715 1,189,313 1,264,854 1,347,948 1,439,353 1,539,897
Earnings Before Interest & Taxes 874,030 920,935 972,530 1,029,285 1,091,715 1,189,313 1,264,854 1,347,948 1,439,353 1,539,897

Interest expense 160,999 147,396 129,518 110,155 89,186 66,476 41,881 15,244 - -
Earnings Before Tax 713,031 773,539 843,013 919,130 1,002,530 1,122,838 1,222,973 1,332,704 1,439,353 1,539,897

Tax 31,303 38,531 48,952 60,369 72,879 90,926 105,946 122,405 138,403 155,479
NET PROFIT/(LOSS) AFTER TAX 681,728 735,008 794,061 858,760 929,650 1,031,912 1,117,027 1,210,299 1,300,950 1,384,418

Balance brought forward 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147 7,358,446 8,659,396
Total profit available for appropriation 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147 7,358,446 8,659,396 10,043,814
Balance carried forward 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147 7,358,446 8,659,396 10,043,814

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14.2. BALANCE SHEET

Statement Summaries Broiler Farm

Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets
Current assets
Cash & Bank 429,254 2,065,675 2,444,877 2,817,420 3,175,115 3,507,378 3,800,652 4,037,714 4,196,819 4,613,466 13,563,326
Accounts receivable - - - - - - - - - - -
Raw material inventory 1,396,169 1,689,364 2,044,131 2,473,398 2,992,812 3,621,303 4,381,776 5,301,949 6,415,358 7,762,584 -
Pre-paid building rent 20,004 22,004 24,204 26,625 29,287 32,216 35,438 38,981 42,880 47,168 -
Total Current Assets 1,845,426 3,777,043 4,513,212 5,317,443 6,197,214 7,160,896 8,217,866 9,378,644 10,655,057 12,423,218 13,563,326

Fixed assets
Machinery & equipment 152,239 137,015 121,791 106,567 91,343 76,120 60,896 45,672 30,448 15,224 0
Furniture & fixtures 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 -
Office equipment 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 -
Total Fixed Assets 165,239 148,715 132,191 115,667 99,143 82,620 66,096 49,572 33,048 16,524 0

Intangible assets
Pre-operation costs 144,625 115,700 86,775 57,850 28,925 - - - - - -
Total Intangible Assets 144,625 115,700 86,775 57,850 28,925 - - - - - -
TOTAL ASSETS 2,155,290 4,041,458 4,732,178 5,490,960 6,325,283 7,243,516 8,283,961 9,428,216 10,688,105 12,439,742 13,563,326

Li abi l i ti es & Sharehol ders' Equi ty

Current liabilities
Accounts payable - 1,173,137 1,305,725 1,454,778 1,622,618 1,811,938 2,025,873 2,268,076 2,542,819 2,855,103 2,438,791
Total Current Liabilities - 1,173,137 1,305,725 1,454,778 1,622,618 1,811,938 2,025,873 2,268,076 2,542,819 2,855,103 2,438,791

Other liabilities
Long term debt 1,939,761 1,939,761 1,724,355 1,491,070 1,238,423 964,807 668,480 347,558 - - -
Total Long Term Liabilities 1,939,761 1,971,064 1,794,189 1,609,856 1,417,578 1,216,841 1,011,439 796,464 571,311 709,714 865,193

Shareholders' equity
Paid-up capital 215,529 215,529 215,529 215,529 215,529 215,529 215,529 215,529 215,529 215,529 215,529
Retained earnings - 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147 7,358,446 8,659,396 10,043,814
Total Equity 215,529 897,257 1,632,265 2,426,326 3,285,086 4,214,737 5,246,649 6,363,676 7,573,975 8,874,925 10,259,343
TOTAL CAPITAL AND LIABILITIES 2,155,290 4,041,458 4,732,178 5,490,960 6,325,283 7,243,516 8,283,961 9,428,216 10,688,105 12,439,742 13,563,326
- - - - - - - - - -

Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0

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Pre-Feasibility Study Broiler Farm

14.3. CASH FLOW STATEMENT

Statement Summaries Broiler Farm

Cash Flow Statement
Rs. in actuals
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 - 681,728 735,008 794,061 858,760 929,650 1,031,912 1,117,027 1,210,299 1,300,950 1,384,418
Add: depreciation expense - 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524
amortization expense - 28,925 28,925 28,925 28,925 28,925 - - - - -
Accounts receivable - - - - - - - - - - -
Raw material inventory (1,396,169) (293,195) (354,767) (429,267) (519,414) (628,491) (760,474) (920,173) (1,113,409) (1,347,225) 7,762,584
Pre-paid building rent (20,004) (2,000) (2,200) (2,420) (2,662) (2,929) (3,222) (3,544) (3,898) (4,288) 47,168
Accounts payable - 1,173,137 132,587 149,054 167,840 189,320 213,934 242,203 274,743 312,284 (416,312)
Cash provided by operations (1,416,173) 1,636,421 594,608 605,827 610,343 605,879 589,601 557,984 506,664 416,647 8,949,860

Financing activities
Change in long term debt 1,939,761 - (215,406) (233,285) (252,647) (273,617) (296,327) (320,922) (347,558) - -
Issuance of shares 215,529 - - - - - - - - - -
Cash provided by / (used for) financing act 2,155,290 - (215,406) (233,285) (252,647) (273,617) (296,327) (320,922) (347,558) - -

Investing activities
Capital expenditure (309,864) - - - - - - - - - -
Cash (used for) / provided by investing acti (309,864) - - - - - - - - - -

NET CASH 429,254 1,636,421 379,202 372,543 357,695 332,263 293,274 237,062 159,106 416,647 8,949,860

Cash balance brought forward 429,254 2,065,675 2,444,877 2,817,420 3,175,115 3,507,378 3,800,652 4,037,714 4,196,819 4,613,466
Cash available for appropriation 429,254 2,065,675 2,444,877 2,817,420 3,175,115 3,507,378 3,800,652 4,037,714 4,196,819 4,613,466 13,563,326
Cash carried forward 429,254 2,065,675 2,444,877 2,817,420 3,175,115 3,507,378 3,800,652 4,037,714 4,196,819 4,613,466 13,563,326

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Pre-Feasibility Study Broiler Farm

14.4. USEFUL PROJECT MANAGEMENT TIPS

Technology
• List of Machinery & Equipment (As per Section 12.5)
• DOCs Selection: Selection of disease free birds with strain characteristics,
body conditions and health.
• Feed, Vaccination and Medication: Should be procured from reputed and reliable
sources.
• 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 after sales services under the contract
with the machinery suppliers
• Quality Assurance & Standards: Whatever means required for animal
production quality standards need to be defined on the ear tags and a system of
record keeping to check them to improve credibility
Marketing
• Product Development: Expert's help may be engaged for marketing of each
batch of animal
• 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: Expert's advise and distribution agreements
are required with.
• 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 (As per Section 12.8)
• 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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Pre-Feasibility Study Broiler Farm

• 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.
14.5. 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
• Ministry of National Food Security & Research, www.mnfsr.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
• Securities & Exchange 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 Poultry Association (PPA), Islamabad, www.ppacentral.pk
• Pakistan Agricultural Research Council (PARC), Park Road, 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, Islamabad Tel. 051-9255108
• University of Agriculture, Faisalabad, www.uaf.edu.pk
• Lasbela University of Agriculture, Water & Marine Sciences, Lasbela,
www.luawms.edu.pk
• 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

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Pre-Feasibility Study Broiler Farm

• University of Veterinary & Animal Sciences (UVAS), Out Fall Road, Lahore,
www.uvas.edu.pk
• Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk
• Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-99220140
• Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
• Poultry Research Institute (PRI), Rawalpindi, Tel: 051-9290162, 9290173,
www.poultry.punjab.gov.pk
• Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk
• Agriculture & Livestock Department, Government of KPK,
www.khyberpakhtunkhwa.gov.pk
• Livestock & Dairy Development, Government of Balochistan, www.balochistan.gov.pk

15. KEY ASSUMPTIONS

Table 12: Production Assumptions
Production capacity utilization 100%
Maximum capacity utilization 100%
Number of birds per flock 10,000
Extra Chicks supplied by DOC supplier (2%) 200
Number of flocks per year 6
Mortality rate 8%
Annual production (birds) 60,000
Time required per flock (days) 42
Lag time between the flock (weeks) 2

Table 13: Revenue Assumptions

Sales price per bird (1.8 Kg approx) 261
Average weight per bird (kg) 1.8-2.0

Table 14: Expense Assumptions

Day Old Chicks (DOC) in Rs. 35
Feed Conversion Ratio (FCR) 2.20
Average feed requirement/bird/day (kg) 0.09
Cost of feed (in Rs/kg) 45
Feed cost per bird (Rs.) 178.2
Cost of feed bag (Rs. per 50 Kgs Bag) 2,250
Vaccination cost per bird in Rs. 8
Spray cost per flock 6,000

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