Environmentally Controlled Poultry House

Pre-Feasibility Study
Environmentally Controlled
Poultry House
(30,000 Birds)
PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS
2010
Table of Contents
EXECUTIVE SUMMARY ........................................................................................................................................................................................ 3
1.
OVERVIEW OF THE POULTRY SECTOR ................................................................................................................................................ 4

1.1.
Industry Dynamics................................................................................................................................................................................. 4
1.1.1.
1.2.
1.3.
Segmentation ........................................................................................................................................................................................................... 5
Marketing Analysis ................................................................................................................................................................................ 5

Problems with Poultry in Pakistan ...................................................................................................................................................... 6
2.
PRE-FEASIBILITY STUDY FOR ENVIRONMENTALLY CONTROLLED POULTRY HOUSE ....................................................... 8

2.1.
Comparative Efficiency of ECH and COH ......................................................................................................................................... 8
2.2.
Existing Marketing Practice & Pricing................................................................................................................................................. 9
2.3.
Farm Management ............................................................................................................................................................................... 10
3.
THE PROJECT .............................................................................................................................................................................................. 13

3.1.
Project Brief ........................................................................................................................................................................................... 13
3.2.
Proposed Capacity ............................................................................................................................................................................... 13
3.3.
The Product ........................................................................................................................................................................................... 13
3.4.
Product Assumptions .......................................................................................................................................................................... 14
3.5.
Manpower Requirements .................................................................................................................................................................... 15
3.6.
Farm Equipment................................................................................................................................................................................... 16
3.7.
Land and Building ............................................................................................................................................................................... 17
3.7.1.
Mode for Acquiring Land........................................................................................................................................................................................ 17
3.7.2.
Preferred Locations Sindh ................................................................................................................................................................................... 18
3.7.3.
Infrastructure Requirement ................................................................................................................................................................................... 18
3.8.
4.
Working Capital ................................................................................................................................................................................... 18
THE FINANCIAL ANALYSIS ..................................................................................................................................................................... 19

4.1.
Project Economics................................................................................................................................................................................. 19
4.2.
Financing Option .................................................................................................................................................................................. 20
4.3.
Projected Income Statement ................................................................................................................................................................ 21
4.4.
Projected Cash Flow Statement .......................................................................................................................................................... 22
5.5.
Projected Balance Sheet ....................................................................................................................................................................... 23
KEY ASSUMPTIONS.............................................................................................................................................................................................. 24
ANNEX A .................................................................................................................................................................................................................. 27
ANNEX B .................................................................................................................................................................................................................. 28
ANNEX C .................................................................................................................................................................................................................. 29
IMPORTANT CONTACTS .................................................................................................................................................................................... 30
2010
Executive Summary
This Pre-feasibility study is conducted for establishment of Environmentally Controlled Poultry Farm in
Sindh. All the calculations have been based on a flock size of 30,000 birds, with raising 8 flocks per year.
The controlled poultry farm is a project of Livestock Sector, in which, the day old chicks (also known as
DOCs) are raised on high protein feed for a period of six weeks with a lag time of 10 15 days for the
cleaning and fumigation of the sheds and the farm. The purpose of the controlled poultry farm is to provide
all the facilities ranging from automatic operations of temperature control, feeding and nipple drinking
system for the broiler birds, monitored by the concerned & technical staff, all in-house. Broiler farming in
controlled environment is a profitable venture due to continuous increasing demand of the white meat in
the market. Poultry is an important sub sector of agriculture and has contributed enormously to food
production by playing a vital role in the domestic economy. Poultry meat contributes 19% of the total meat
production in the country. There is a tremendous opportunity for Environmental Control Poultry Houses in
Pakistan. Currently there are 2,500 houses working in Pakistan, out of which 75% (1,875) are in Punjab and
remaining 25% (625) are in other provinces1.
The initial cost of the project is Rs. 29,596,720, including of an initial working capital of Rs. 5,774,720.
1. Projected Revenues for the project for year 1, year 2, year 3, year 4 and year 5 is Rs. 53,194,080, Rs.
58,513,488, Rs. 64,364,837, Rs. 70,801,320 and Rs. 77,881,453, respectively.
2. Gross profit / (loss) for year 1, year 2, year 3, year 4 and year 5 is Rs. 9,880,800, Rs. 11,556,336, Rs.
13,435,454, Rs. 15,540,431 & Rs. 17,895,872, respectively.
3. Payback period of the project is approximately 3.5 years.
4. The IRR of the project is 21.52%.
Source: Environmental Controlled Poultry Farm, SMEDA, April 2010
2010
1. Overview of the Poultry Sector

Poultry is an important sub sector of agriculture and has contributed enormously to food production by
playing a vital role in the domestic economy. It has great potential and can play a significant role in the
national economy by contributing towards food security of the country, reducing pressure on demand for
mutton and beef and earning of foreign exchange. Poultry industry can broadly be divided into three groups,
viz. hatchery, poultry farming and feed sectors. This sector generates employment and income for about 1.5
million people in Pakistan. Its contribution in agriculture growth is 4.81% and in Livestock growth is 9.84%,
whereas, the total poultry meat contributes to 23.8% of the total meat production in the country.
Pakistan, with a population of 170 Million people, has gone through a sizeable growth in the production of
poultry meat and eggs. Per capita availability went up from 23 in 1991 to 46 eggs in 2009 and poultry meat
availability increased from 1.48kg to 2.88 kg during the same period2. In our Country per capita consumption
of meat is only 7 KG and 60-65 eggs annually. Whereas developed world is consuming 41 KG meat and over
300 Eggs per capita per year. According to Industry sources there is capacity of 5,000 Environmental Control
Houses in Pakistan and currently only 2,500 houses are working.
1.1. Industry Dynamics

The generation line of broiler comes from pure line (Strains) that make the Great Grand Parents (GGP),
which are imported. These great grandparents produce grandparents which are available in Pakistan. These
grandparents produce parent stocks (Breeders) and parent stock end up in producing the final product
which is broiler. Pakistans poultry industry is importing 100,000 Grandparents (GP) chicks annually from
Australia, Holland, Germany and USA with the cost of US$100 per day-old female chick. The farmers get day
old broiler from hatcheries. These hatcheries maintain their breeder farms, or in some cases, purchase their
hatching eggs from breeder farms. These breeder farms depend on producers of parent stock.
Poultry feed mills are the major player in the poultry industry, which produce a specific formula feed mix.
Poultry feed consists of rich protein elements like soya bean meal, canola meal, rapeseed meal, sunflower
meal, feather meal and rich energy elements like grains, gluten, etc. When feed efficiency matters most you
can gain the right weight of your bird. The major component of cost of production of chicken meat accounts
for feed cost.
FAOSTAT (2009)
2010
1.1.1. Segmentation3
Total Investment
No. of Hatcheries
No of Feed Mills
Grand Parents
Parents
Broiler
Poultry Meat
Rs. 200 Billion

400
150
200,000
6 Million
600 Million
621,000 Metric Ton
1.2. Marketing Analysis
PKR Million
The total Poultry population in Pakistan is approximately 610 Million. The chart below illustrates the
increase in the number of poultry population over the years4.
Figure 1: Increase in the number of Poultry population in Pakistan (2000 - 2010)
Similarly, there has been a substantial increase in the Livestock products pertaining to Poultry i.e. Poultry
meat and and Eggs3.
Source: Environmental Controlled Poultry Farm, SMEDA, April 2010
Source: Economic Survey of Pakistan 2010 2011
2010
Figure 2: Increase in the number of Poultry Eggs & Meat in Pakistan (2000 - 2010)
According to FAO, to produce chicken meat in 2008, 517 million birds were slaughtered and 601 million
tonne meat was acquired. In the same year world total chicken meat production was 52,887 million ton.
There are around 25,000 poultry farms are in the country5. The poultry production is concentrated around
the large urban centres in the provinces of Sindh especially in Karachi. In the provinces of Sindh, there are
farms in Mirpurkhas, Sukkar, Nawabshah as well as in small cities. Many big companies have established
their poultry farms in different parts of the country. To name a few such key players are K&N, Sabir, Hitech,
SB and Jadeed.
1.3. Problems with Poultry in Pakistan

A balanced diet is essential for good health, vigour and productive capacity of the people. Proteins play an
important role in the formation of balanced human diet. There are mainly two sources of proteins i.e.
animals and plants. The human diet in Pakistan is deficient in animal proteins, as approximately 66%
Pakistanis are deficient in proteins. The requirement of proteins is 102.7 g per person per day, while only
69.61 g per person per day is being used in the country.
The main sources of animal proteins in Pakistan are beef, mutton, milk, poultry meat and eggs. To overcome
the gap between supply and demand of proteins, poultry meat is contributing a dominant share which can
be enhanced by improving the profitability of producers and by decreasing prices at the retail level. The
profitability can be increased through better management practices and establishment of fully equipped
controlled poultry houses.
5
Source: Pakistan Poultry Association (www.ppapaknorthern.com)
2010
Pakistan, being a tropical country, experience various temperatures throughout the year of which summer is
the most common. During this period the temperature reaches over 40C in different parts of Pakistan. This
affects the efficiency of the poultry farms and the chickens. Hot and humid weather conditions coupled with
manual and poor management practices increases the mortality in flocks, depresses their growth and makes
poultry production an unmanageable and uneconomical pursuit. Chickens can tolerate high temperatures
but react negatively if they are too warm. The body temperature of an adult chicken is 105-107F (40.6 to
41.7C). The thermo-neutral zone is 65-75F (18-24C), which allows chickens to maintain their body
temperature. If the temperature is above this zone, heat must be lost in some way. Chickens have no sweat
glands. Since eating increases body temperature, chickens reduce their feed intake during hot weather, and
therefore gains will be less. Chickens begin panting at 85F (29.4C) to help dissipate heat, and drink more to
avoid dehydration. A combination of high temperature and high humidity is a problem, because panting
does not cool them under these conditions. During this period owner has to either continue his flock
compromising with poor performance in feed intake, growth rate, weight gain, FCR (Feed Conversion Ratio)
in broilers along with mortality or he has to totally close his business to avoid all these risks. This situation
creates severe shortage of poultry meat which is the cheapest and easily available source of animal protein.
The poultry industry also faces problems like the incidence of diseases, substandard and costly feed and
inefficient marketing system. In all stages of development, there is a need for improving the efficiency and
lowering the cost of distribution.
Losses occur in case of death of birds due to diseases and poor handling. Grading is largely ignored in egg
trade because of extra cost required for grading. Inadequate health facilities are one of the major
constraints in poultry production. It is due to viral, bacterial infection and parasitic infestation.
Environment controlled houses can overcome such critical situations, which counteracts the adverse effects
of heat stress providing tunnel ventilation and enhancing the wind chill effect. These houses when equipped
with highly mechanized system of automatic chain feeding and nipple drinking makes the environment quite
conducive for poultry production and reduces the risk of bacteria during different seasons.
2010
2. Pre-Feasibility Study for Environmentally Controlled Poultry House

2.1. Comparative Efficiency of ECH and COH
The modern trend of environment control houses (ECH) in poultry production has brought a great revolution
in poultry industry of Pakistan in the recent years. This has solved a great hurdle of heat stress in the way
economical commercial poultry production. The ECH with evaporative cooling system, providing tunnel
ventilation, giving the wind chill effect has markedly improved the broiler production system. The
technology of ECH is rapidly becoming popular among broiler producers. A comparison is given below of ECH
and a traditional house which highlights significant advantages of an ECH are given below:
No
Specification
Control House
Traditional House
Feed Conversion Ratio
1.9 2.3
2. 5
Feed wastage
Nil
10 %
Feed distribution
Automatic
Laborious
Body Wt / bird 42 days
1.9 Kg
1.65 Kg
Humidity of shed
Controlled
High
Brooding
Energy saving
Energy wastage
Carbon mono oxide poisoning
Nil
Very high
Ammonia poisoning
Nil
Very high
Mortality
58%
10 30 %
10
Electricity
Required
No required
11
Rodent Control
Successful
Failed
12
Wild protection
No risks
High risky
13
Bio-security measure
Very easy
Very difficult
14
Noise stress
Nil
Very high
15
Environmental Stress
Nil
Very high
16
Mortality due to heat stress
Nil
20-100 %
17
Over head / bird
Rs.10.00
Rs.8.00

18
Dosage of vaccine & medicine
Accurate
Wastage
19
Medication & vaccination application
Appropriate
Difficult
20
Litter humidity
Under control
Not control able
21
Flock Sizing
One size
Multiple size
22
Shed temperature
Automatic
Big variation
23
Expenditure of maintenance energy
Accurate
Wastage
24
Poultry environment (neighboring)
Health
Contaminated
25
Fly control
Successful
Not possible
26
Feed and water intake
Recordable
No recordable
27
Light intensity
Controlled
Not control able
28
Feed storage environment
Appropriate
Humid
29
Flock monitoring
Computerized
Error
2010
All these significant features in ECH have reduced the cost of production of broiler to Rs. 7 to 8 Per Bird as
compared to COH.
2.2. Existing Marketing Practice & Pricing

The Broilers are distributed in the market through Middleman and Whole seller. Broilers are transported to
the urban market and are sold on live-weight basis. The current pricing of the broilers and other poultry
products are mentioned below6:
Product
Chicken Meat per KG
Chicken (Live)
Eggs per Dozen
Day Old Chick Broiler
Day Old Chick Layer
PKR Rs.
170
120
55
50
60
200
145
75
65
70
Source: Pakistan Poultry Association (www.ppapaknorthern.com). There is an increase of 25% from what is mentioned on the PPA Website as
those rates are pertaining to the Punjab Province whereas in Sindh the rates are high.
2010
During the years 2008-09 and 2009-10 sharp fluctuations occurred in the prices of day old chicks. The data
made available by Poultry Research Institute shows price of day old broiler and layer chick was Rs 11 and Rs
35.5 respectively in January 2008. The lowest price during the period for broiler and layer day old chick was
Rs. 6 and Rs. 28 respectively and the highest price was Rs 71.9 and Rs 39 in October 2009. On the basis of
information provided by Poultry Research Institute and by leading companies of poultry industry to the CCP
the cost of production of day old broiler chick was around Rs 18 per chick. The chick was being sold below
cost during almost all months of the year 2008 and since January 2009 the prices rapidly increased and
touched the figure of Rs 71.9, leading towards proportional increase in the prices of poultry meat, since the
price of day old broiler chick are directly related to price of poultry meat. The current price of DOCs range
from Rs. 50 Rs. 65 whereas DOC layer costs Rs. 60 Rs. 70.
The prices of poultry feed also showed a consistent increase during the years of 2008 to 2010. The average
price of a bag of 50 kg poultry feed had been Rs. 955 during year 2008, which rose to Rs. 1,450 in 2010. One
of the factors of increase in the prices of day old chicks and poultry meat is the increase in prices of feed that
is one of the basic inputs in poultry industry.
2.3. Farm Management

Farm input required for a broiler farm includes farm equipment (Automatic feeding system, water nipple
system, exhaust fans, cooling pads, diesel heaters, control panels and other consumable items (feed,
vaccines, medicines, rice husk, water, electricity etc.). The figure below illustrates what the farm will look
like once constructed and ready for flock raising.
10
2010
Below are features of the Environmentally Controlled Poultry House:

Day Old Chicks
The Chicks should be uniform size, alert and bright eyed. The shank or leg covering (skin) of health chicks
appears bright and shiny.
Brooding
Proper brooding temperature is required to keep the chicks in comfort. Diesel heaters supply heat at the
stage of brooding in the Poultry Farm. In the first week 32 C is quite comfortable. As chicks grow, the
temperature may be reduced at the rate of 2 C per week until 24 C reached in last week.
Feeding
Broilers re usually feed with following two types of broiler starter. It is feed to the broiler up to 5 weeks of
age. Secondly, is the Broiler Finisher which is feed to the Broiler of more than 5 weeks and continued till the
age of marketing.
Housing
The Broiler control house size 400 feet long and 50 feet side is enough for 30,000 birds.
Feeders
The pan feeders of automatic feeding system are for 65-70 birds. Therefore, 465 feeders in a house are
enough for 30,000.
Lighting
The control house broiler grows on artificial light (not the sunlight). One house 20,000 sq feet requires 100
energy saver of 9 watts each i.e. 900 watts.
Automatic feeding system
The nipple is enough for 12-15 birds. In 30,000 broilers house total nipples required are 2500 there are
automatic water system, whenever bird touches the nipple water flows out and when bird will away no
water is there.
Litter
Litter is spread on the floor. Rice husk is usually for the making the litter. It should be dry and free of mould.
Caked or mould material should be removed and refilled with fresh materials. Extensively wet and dusty
litter should be also not be used. Using new litter for each flock is good for raising disease free broiler.
11
2010
Vaccination
Vaccination can be provided through spray and drinking water.
Disinfection
It is essential to check all equipment and walls of the broiler house carefully that they are clean and washed
with detergents, disinfectants. The house should be fumigated before the birds.
12
2010
3. The Project
3.1. Project Brief
The Broiler Control House is a project of Livestock sector, in which day old chicks (DCOs) are raised on high
protein feed for a period of six weeks.
This pre-feasibility highlights the capacity and efficiency of Broiler Control House which covers all the
required facilities for the fast growing broilers. Annually eight flocks of birds will be raised on the same
premises of the farm.
3.2. Proposed Capacity

A Broiler farm of about 30,000 birds is considered to be economically viable size, which will justify the fixed
and operational costs. In this pre-feasibility study, all calculations have been based on a flock size of 30,000
birds with raising seven flocks per year. An additional lag time of 10 days will be included for the cleaning
and disinfection of the farm/house.
3.3. The Product

The proposed project should generate revenues from sale of chicken after they have been raised for 6-7
weeks in the Environmentally Controlled Poultry Shed. Assumptions used for the product mix are as follows:
Product
Chicken
Average Weight
1.90 Kg
Price
228
Hence, the cost of Price per Kg is 228/1.9 = Rs. 120. 7
This price is taken as the current average market rate (2010). Source: Pakistan Poultry Association (www.ppapaknorthern.com)
13
2010
3.4. Product Assumptions8

Number of Flocks per year
Number of Birds per Flock
30,600
Time required per Flock (Days)
35
Lag time required per Flock (Days)
10
Total Annual Production Capacity
244,800
Shed Space Required per Bird (Sq.ft)

Mortality Rate
Average Rate per bird
Broiler Sale price per Kg (Live)
5%
1.9 Kg
Rs. 120
Sale price growth rate
10%
Cost of 50 Kg Feed bag
Rs. 1,600
Cost of Feed per Kg bag
0.65
Rs. 32
Analysis attached in Annexure A
14
2010
3.5. Manpower Requirements

Skilled and Semi skilled workers are needed to manage the operation of a broiler farm of 30,000 birds. These
workers will look after the feeding, vaccination and cleaning operations at the farm. The personal needed for
the farm is as under:
Description
Required Personal
Salary Per Month
Salary for the Year
Supervisor
24,000
288,000
Doctor
12,000
144,000
Housemen
6,500
234,000
Electrician
10,000
120,000
Watchmen
7,500
180,000
Cleaner
6,000
216,000
Total
11
98,500
1,182,000
15
2010
3.6. Farm Equipment

In order to make sure the birds are being fed properly and in a timely manner the following farm
equipments and technology have been identified. This technology for feeding, drinking and handling of birds
is most suitable for a high tech. Controlled poultry house. A full illustration is provided in Annexure C
Description
Amount PKR
Flux Pan feeding, Tope screw nipple drinking
2,300,000
system with BD sile (one house)9
Exhaust fan with 1 NP Motor type EOS50 1.06 Alu
780,000
(13 required at Rs. 60,000 each)

Evaporative cooling pads (91 required at Rs. 6,000
546,000
each)
Heater type combi term 140E (1 required)
420,000
Minimum ventilation system (1 required)
680,000
Electrical control panel (1 required)
250,000
Generator 50 KVA (Perkins 1104A-44TG1)
950,000
Cost of Uniforms, shoes, bio-security equipments
750,000
& other miscellaneous expenses10
Installation cost
250,000
Total
6,926,000
Rates have been taken from Cumberland Poultry Services: http://www.cumberlandpoultry.com/
10
Equipments (Drinkers & Feeders for chicks) and trays, heaters, fire extinguishers etc.
16
2010
3.7. Land and Building

Description
Area (Sq.ft.)
Cost
Total
Land
1 Acre
1,000,000
1,000,000
Description
Area (Sq.ft.)
Cost (Rs. / Sq.ft.)
Total
Shed Space (400x50)
20,000
600
12,000,000
Feed Store (30x30)
1,000
800
800,00
Room for Guards & Workers
1,200
1,000
1,200,000
Office Block11
1,200
1,100
1,320,000
Store Room
250
800
200,000
Generator Room
200
400
80,000
Water Container 1,000 Gallon
20,000
Boundary Wall (6 Feet High)
500,000
Total
16,640,000
3.7.1. Mode for Acquiring Land

It is assumed that the land available will be on a lease (on a subsidised rate) in the locations mentioned
below.
11
Includes changing room
17
2010
3.7.2. Preferred Locations Sindh

Suburban and rural areas around the major cities of the country are the suitable areas for setting up a
poultry farm. Setting up a farm at an isolated place will minimize the risk of disease. Proximity of the farm to
the city enables the farmer to have a quick communication with the market for the purchase of Day Old
Chicks, farm inputs (feed, etc.), and selling of mature birds. Hence, areas like Gharo, Dhabeji, Bhambhore,
Karachi and Hyderabad are identified as a prime location for this project.
3.7.3. Infrastructure Requirement

Poultry's farming needs to be handled tactically, right from the selection of the site to the final stage when
the birds are sold. The farm should be located at a place where transportation of birds and feed can be
handled easily. The entrepreneur should make sure that the following things are available at the farm site
before setting up the farm: Electricity connection & drinking quality water.
3.8. Working Capital
Description
Rate in Rs.
Total Amount
Cost of Day Old Chicks
52
1,591,200
110 per bird for 35
3,305,020
(Broilers 30,600)
Feed for 1st flock of birds
days to gain on
average 1.9 Kg - 2
Kg weight
Salaries (For one month)
98,500
Cash
878,500
Total
5,774,720
18
2010
4. The Financial Analysis

4.1. Project Economics
Capital Investment
Amount in PKR
Land
1,000,000
Building/Infrastructure
15,640,000
Machinery & Equipment
6,926,000
Furniture & fixtures
250,000
Total Capital Costs
23,816,000
Working Capital
Amount in PKR
Inventory & Expenses**
4,896,220
Cash in Hand
878,500
Total Working Capital
5,774,720
**Inventory & Expenses include salary for one month, raw material i.e. fodder, one flock of birds, utilities, transport and fuel expenses
Total Investment
PKR 29,590,720
An Environmentally Controlled Poultry House with a population of 30,000 birds established in a purposebuilt controlled shed needs a capital investment estimated at Rs. 23,816,000 for construction and purchasing
machinery & equipment. In addition to this, a sum of Rs. 5,774,720 is required as initial working capital,
which should be used for purchasing day old chicks and other inputs like feed, vaccines, etc and one months
salary of the staff. The total project cost is estimated at Rs. 29,590,720.
19
2010
4.2. Financing Option

Looking at the current market trends lending of up to 50% could be available on these projects. A list of
financial institutions willing to facilitate such projects in given in Annexure B. The bank will charge a rate of
at least 20% on financing per annum plus this need to be backed by 200% collateral .
Initial Financing
Amount in PKR
Debt
50%
14,795,360
Equity
50%
14,795,360
4.2.1. Debt Assumptions
Debt Tenure
Interest Rate on Long Term Debt
Debt Payments
5 Years
20%
Quarterly
20
4.3. Projected Income Statement
Statement Summaries EC Poultry House - SBI

Projected Income Statement
Year 1
Year 2
Year 3
Year 4
Year 5
Revenue from Sales (Birds &

Empty Feed Bags)
53,194,080
58,513,488
64,364,837
70,801,320
77,881,453
Cost of DOCs
(12,093,120)
(12,697,776)
(13,332,665)
(13,999,298)
(14,699,263)
Cost of Feed per annum

Cost of other goods
(vaccination, electricity, diesel,
spray etc)
(26,440,160)
(29,084,176)
(31,992,594)
(35,191,853)
(38,711,038)
(4,780,000)
(5,175,200)
(5,604,124)
(6,069,739)
(6,575,279)
Gross Profit
9,880,800
11,556,336
13,435,454
15,540,431
17,895,872
(1,182,000)
(1,300,200)
(1,430,220)
(1,573,242)
(1,730,566)
(50,000)
(55,000)
(60,500)
(66,550)
(73,205)
(45,000)
(49,500)
(54,450)
(59,895)
(65,885)
(45,000)
(49,500)
(54,450)
(59,895)
(65,885)
Depreciation expense
(2,986,700)
(2,986,700)
(2,986,700)
(2,986,700)
(2,986,700)
Sub Total
(4,308,700)
(4,440,900)
(4,586,320)
(4,746,282)
(4,922,240)
Operating Profit
5,572,100
7,115,436
8,849,134
10,794,149
12,973,632
Less Financial Charges
2,809,907
2,391,408
1,880,884
1,258,133
498,515
Net Profit Before Tax
2,762,193
4,724,028
6,968,250
9,536,016
12,475,117
Provision For Income Tax

Net Profit/Loss After Taxes
966,767
1,653,410
2,438,888
3,337,606
4,366,291
1,795,425
3,070,618
4,529,363
6,198,411
8,108,826
General administration &

selling expenses
Administration expense
Communications expense
(phone, fax, mail, internet, etc.)
Office expenses (stationary,
entertainment, janitorial
services, etc.)
Professional fees (legal, audit,
consultants, etc.)
2010
4.4. Projected Cash Flow Statement
Calculations Poultry - SBI

Cash Flow Statement
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Net profit
1,795,425
3,070,618
4,529,363
6,198,411
8,108,826
Add: Depreciation expense

Amortization expense - Preoperating cost
2,986,700
2,986,700
2,986,700
2,986,700
2,986,700
Inventory
Cash provided by
operations
(4,896,220)
(524,538)
(576,926)
(634,618)
(698,080)
(767,889)
(4,896,220)
4,257,587
5,480,392
6,881,445
8,487,031
10,327,637
14,795,360
(1,913,931)
(2,333,831)
(2,845,852)
(3,470,207)
(4,231,539)
14,795,360
29,590,720
(1,913,931)
(2,333,831)
(2,845,852)
(3,470,207)
(4,231,539)
Operating activities
Financing activities
Change in long term debt
Change in short term debt
Issuance of shares
Cash provided by / (used
for) financing activities
Investing activities
Capital expenditure
Cash (used for) / provided
by investing activities
(23,816,000)
Net Cash
878,500
2,343,656
3,146,562
4,035,592
5,016,824
6,096,098
878,500
878,500
3,222,156
6,368,718
10,404,310
15,421,134
3,222,156
6,368,718
10,404,310
15,421,134
21,517,231
Cash balance brought

forward
Cash available for
appropriation
(23,816,000)
Dividend
Cash carried forward
878,500
3,222,156
6,368,718
10,404,310
15,421,134
21,517,231
22
2010
5.5. Projected Balance Sheet
Projected Balance Sheet

Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Cash & Bank
878,500
3,222,156
6,368,718
10,404,310
15,421,134
21,517,231
Inventory
4,896,220
5,420,758
5,997,684
6,632,302
7,330,382
8,098,271
Total Current Assets
5,774,720
8,642,914
12,366,402
17,036,612
22,751,516
29,615,502
Land
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
Furniture
250,000
212,500
175,000
137,500
100,000
62,500
Building/Infrastructure
Machinery &
Equipment
15,640,000
14,076,000
12,512,000
10,948,000
9,384,000
7,820,000
6,926,000
5,540,800
4,155,600
2,770,400
1,385,200
Total Fixed Assets
23,816,000
20,829,300
17,842,600
14,855,900
11,869,200
8,882,500
Total Assets
29,590,720
29,472,214
30,209,002
31,892,512
34,620,716
38,498,002
Current liabilities
1,913,931
2,333,831
2,845,852
3,470,207
4,231,539
Accounts payable
Total Current Liabilities
1,913,931
2,333,831
2,845,852
3,470,207
4,231,539
Long Term Debt
14,795,360
12,881,429
10,547,598
7,701,746
4,231,539
14,795,360
14,795,360
16,590,785
19,661,403
24,190,766
30,389,176
1,795,425
3,070,618
4,529,363
6,198,411
8,108,826
14,795,360
16,590,785
19,661,403
24,190,766
30,389,176
38,498,002
29,590,720
29,472,214
30,209,002
31,892,512
34,620,716
38,498,002
Current Asset
Fixed Asset
Pre-operating cost
Liabilities &
Shareholders' Equity
Shareholders' Equity
Paid-up capital
Retained Earnings
Total Equity
TOTAL CAPITAL AND
LIABILITIES
23
2010
Key Assumptions
Net Bird Calculation Flocks/Year

Total birds per flock
30,600
No. of birds per flock
30,000
Excessive birds @ 2% of Birds
600
Mortality in Birds
@ 5% of 30,600 = 1,538
Net birds after Mortality per flock
29,070
Net birds after Mortality for the

year
232,560
Net Bird Calculation Cost of Feed

Description
No. of Birds
Total Mortal Birds
During first two weeks Mortal birds @ 50% of
Total Mortality
During 3rd and 4th weeks Mortal birds @ 30%
of Total Mortality
During 5th and 6th weeks Mortal birds @ 20%
of Total Mortality
Cost of Feed Consumed by Mortal Birds Per
Flock
Cost of Feed Consumed by Remaining Birds
Total Cost of Feed Consumed by the Birds Per
Flock
Total Cost of Feed Consumed by the Birds Per
Year
Amount in PKR
1,530
765
33,660
459
36,720
306
37,000
1,530
107,320
29,070
3,197,700
3,305,020
26,440,160
24
2010
Expenses Assumption Project Income Statement
Communication expense
4% of administration expense
Office expenses (Misc.)
4% of administration expense
Professional fees (legal, audit, consultants, etc.)
0.08% of revenue
Depreciation Assumptions
Depreciation Method
Straight Line Method
Building depreciation rate
10%
Machinery & Equipment depreciation rate
10%
Office Equipment depreciation rate
10%
Furniture & Fixtures depreciation rate
15%
Cost of Goods Assumptions
DOC (Day Old Chicks) (Rs.)
52
Feed Conversion Ratio (FCR) i.e. Feed required

to gain 1 Kg weight (Kgs.)
1.90
Vaccination. Medication and Disinfection Cost

per Bird (Rs.)
Feed Price per Bag (50 Kgs)

Cost of Feed per Kg Rs.
Price of Empty Feed Bags Rs.
1,445
32
6
25
2010
Growth Rate of Goods
Sales Growth Rate
10%
CGS Growth Rate (DOC, Vaccine & Medication,

Litter & Spray)
5%
Cost of Feed Growth Rate
5%
Salaries Growth Rate
10%
Electricity & Diesel Growth Rate
10%
26
2010
Annex A
The product assumptions are based on real time data derived from useful resources and poultry associations in Pakistan. A
breakdown of the assumptions is explained below:
Number of Flocks per year
A flock will contain 30,600 birds i.e. Day Old Chicks, which will be raised 8 times in an year with a raising period of 35 days (45 days
including lag time)
Number of birds per flock
It is estimated that a flock will contain 30,600 birds as it will be viable to raise them in the ECH proposed location/area
Time required per flock
35 days is approximately estimated to raise the birds i.e. one flock (30,000 birds)
Lag time required per Flock (Days)
10 days are required to clean, paint & fumigate the farm/shed before the next lot is brought in. With the help of new technology
and machinery the lag time has been brought down to 10 days from 15 days, as conducted in previous studies.
Total Annual Production Capacity
Total birds produced in an year will be 30,600 x 8 (flocks per year) = 244,800 morality rate of 5% = 232,560
Shed Space Required per Bird (Sq.ft)
Recent survey has indicated that these days Day Old Chicks requires very little space. But as they grow and after 5 weeks of
feeding the total space required by a bird would be 0.65 sq. ft. Hence, this figure is taken initially and the construction and area
will be build up according to these details.
Sale price growth rate
Keeping in view the past trends it would be viable to say that there will be a 10% increase in the sale price of the chicken. This
increase keeps in view different factors like quality of chicken, bird weight, other economic factors like inflation, taxes etc.
Production capacity utilization
The plant/shed would be used to its fullest capacity throughout the year apart from the days when it be closed down for cleaning
i.e. Lag Time.
27
2010
Annex B
Name of Financial Institutions
ZTBL
Khushali Bank Ltd
Habib Bank Limited
Rozgar Microfinance Bank ltd
Bank Al-Falah Limited
Tameer Microfinance bank ltd
Askari Bank Limited
Kashf Bank Limited
United Bank Limited
Muslim Commercial Bank
28
2010
Annex C
FRONT
INSIDE
SIDE
CONTROL ROOM
29
2010
IMPORTANT CONTACTS
SINDH BOARD OF INVESTMENT
Government of Sindh
st
Block B, 1 Floor, FTC Building
Shahra-e-Faisal
Karachi, Pakistan
Tel: 021 99207512 4
Fax: 021 - 99207515
Email: info@sbi.gos.pk
Website: http://www.sbi.gos.pk
MINISTRY OF FOOD, AGRICULTURE & LIVESTOCK

B Block, Pak Secretariat, Islamabad , Pakistan
Tel: +92-51-9203307, 9210351
Fax: +92-51-9210616
TRADE DEVELOPMENT AUTHORITY OF PAKISTAN

(TDAP)
5th Floor, Block "A", Finance & Trade Centre,
Shahra-e-Faisal, Karachi - Pakistan
Tel: (92-21) 9206462
Fax: (92-21) 9206461
SMEDA
5 TH Floor, Bahria Complex II, M.T. Khan Road, Karachi Pakistan
Tel: (021) 111-111-456
Fax: (021) 5610572
Email: helpdesk.sindh@smeda.org.pk
K&N
160 Banglore Town,
Shara-e-Faisal, Karachi-75350, Pakistan
Tel: 021 - 34533623 - 34541419
LIVESTOCK & FISHERIES DEPARTMENT - SINDH

Barrack Number 90, Sindh Sectt.
No. 48, Opp. Sindh Assembly Building
Karachi Pakistan
Tel: 021 99203291
SUPREME FEEDS (PVT.) LTD.

Head Office: 176-Shadman 1 Lahore.
Phone: +92-42-37522104-7
Fax: +92-42-37573106
BIG BIRD POULTRY BREEDERS (PVT.) LTD.

2-A,Ahmed Block, New Garden Town
Lahore
Phone: +92-42-35835373-4
Fax: +92-42-35835371
HI-TECH POULTRY BREEDERS (PVT.) LTD.
1-A, Shadman Chowk Jail Road, Lahore
Phone: +92-42-37564503
Fax: +92-42-37564508
ISLAMABAD POULTRY BREEDING CO.
D-98, Satellite Town, Murree Road
Rawalpindi.
Phone: +92-51-4427139
Fax: +92-51-4421203
JADEED FARMS (PVT.) LTD.
6,Allied Commercial Plaza, Murree
Road, Chandni Chowk Rawalpindi.
Phone: +92-51-4851280-84
Fax: +92-51-4851255
NATIONAL FEEDS LTD.

171 Shadman II Lahore.
Phone: +92-42 37551405-8
Fax: +92-42- 37573045
ASIA FEED (PVT.) LTD.
359 Shamsabad Colony, Humayun Road
Multan.
Phone: +92-61-6224414
Fax: +92-61-6224414
FAST POULTRY FEEDS
12-KM Near Nai Sabzi Mandi Jhang
Road, Faisalabad.
Phone: +92-41-2577171-2
Fax: +92-41-2517474
30
SB POULTRIES
SB PLAZA 48-C Satellite Town, Murree
Road, Chandni Chowk, Rawalpindi.
Phone: +92-51-4457561
Fax : +92-51-4511191
PAKISTAN POULTRY ASSOCIATION NOTHERN
ZONE(NWFP PUNJAB& AJK)
HOUSE# 24, BLOCK R JOHAR TOWN, LAHORE
PAKISTAN
Tel: +92-42-7550132-7572764, +92-333 4888555
RUSTUM FEEDS
Flat No.6, 1st Floor, United Centre
Shamsabad, Murree Road, Rawalpindi
Phone: +92-51-4455362
Fax: +92-51-4847382
Golden Birds Poultry Agency
S/No. 230 Kh. Shahbuddin Mkt. Sdr, Karachi
Tel: 021 - 32253309
Ghazi Brothers
D-35, KDA Scheme No. 1, Miran Muhammad Shah
Road, Karachi
Tel: 021 - 34543579, 34543785
M.R. Poultry Service
Shop No. 57, Goal Mkt., Nr. Jama Masjid,
Nazimabad No. 3, Karachi
Tel: 021 - 36610436, 36681537
Dastagir Poultry
Nadim Centre,BS-38,Block-7,Opp.Dastagir Post Office, F.B
Area, Karachi
Tel: 021 - 36333283, 0300-2945245
Bismillah Chicken Centre
Garden West, Near Macca Masjid, Chandni Chowk,
Karachi, Pakistan
Tel: 0333-3002843
Amir Poultry Farm

Shop No. 41, Gole Mkt., Nazimabad No. 3, Karachi,
Pakistan
Tel: 0333-2275130, 6614501
Data Poultry Farm

Shop No. 43, Main Gole Mkt., Nazimabad No. 3, Karachi,
Pakistan
Tel: 6681019, 6614511
2010
31

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Pre-Feasibility Study

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

OVERVIEW OF THE POULTRY SECTOR ................................................................................................................................................ 4

Marketing Analysis ................................................................................................................................................................................ 5

PRE-FEASIBILITY STUDY FOR ENVIRONMENTALLY CONTROLLED POULTRY HOUSE ....................................................... 8

THE PROJECT .............................................................................................................................................................................................. 13

Mode for Acquiring Land........................................................................................................................................................................................ 17

Preferred Locations Sindh ................................................................................................................................................................................... 18

Infrastructure Requirement ................................................................................................................................................................................... 18

Working Capital ................................................................................................................................................................................... 18

THE FINANCIAL ANALYSIS ..................................................................................................................................................................... 19

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

Source: Environmental Controlled Poultry Farm, SMEDA, April 2010

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

1. Overview of the Poultry Sector

1.1. Industry Dynamics

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

Rs. 200 Billion

1.2. Marketing Analysis

Figure 1: Increase in the number of Poultry population in Pakistan (2000 - 2010)

Source: Environmental Controlled Poultry Farm, SMEDA, April 2010

Source: Economic Survey of Pakistan 2010 2011

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

1.3. Problems with Poultry in Pakistan

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

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2. Pre-Feasibility Study for Environmentally Controlled Poultry House

Feed Conversion Ratio

Body Wt / bird 42 days

Carbon mono oxide poisoning

Mortality due to heat stress

Over head / bird

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

Dosage of vaccine & medicine

Medication & vaccination application

Not control able

Expenditure of maintenance energy

Poultry environment (neighboring)

Feed and water intake

Not control able

Feed storage environment

2.2. Existing Marketing Practice & Pricing

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

2.3. Farm Management

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

Below are features of the Environmentally Controlled Poultry House:

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

3.2. Proposed Capacity

3.3. The Product

Hence, the cost of Price per Kg is 228/1.9 = Rs. 120. 7

PRE-FEASIBILITY, CONTROLLED POULTRY HOUSE OF 30,000 BIRDS

3.4. Product Assumptions8

Number of Birds per Flock

Time required per Flock (Days)

Lag time required per Flock (Days)

Total Annual Production Capacity

Shed Space Required per Bird (Sq.ft)

Sale price growth rate

Cost of 50 Kg Feed bag

Cost of Feed per Kg bag

Analysis attached in Annexure A