Pre-Feasibility Study

Sausages Production Unit

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th Floor, LDA Plaza, Egerton Road, Lahore.
Tel: (042) 111-111-456, Fax: (042) , 6304926, 6304927
Helpdesk@smeda.org.pk
REGIONAL OFFICE
PUNJAB
8th Floor, LDA Plaza, Egerton
Road, Lahore.
Tel: (042) 111-111-456
Fax: (042) 6304926, 6304927
helpdesk@smeda.org.pk
REGIONAL OFFICE
SINDH
5TH Floor, Bahria
Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
Helpdesk-khi@smeda.org.pk
April, 2010
REGIONAL OFFICE REGIONAL OFFICE
NWFP BALOCHISTAN
Bungalow No. 15-A
Ground Floor
Chaman Housing Scheme
State Life Building
Airport Road, Quetta.
The Mall, Peshawar.
Tel: (081) 2831623,
Tel: (091) 9213046-47
2831702
Fax: (091) 286908
Fax: (081) 2831922
helpdesk-pew@smeda.org.pk
helpdesk-qta@smeda.org.pk
Pre-feasibility Study Sausages Production unit

DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject matter and
provide a general idea and information on the said area. All the material included in this
document is based on data/information gathered from various sources and is based on certain
assumptions. 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 does not assume
any liability for any financial or other loss resulting from this memorandum in consequence of
undertaking this activity. Therefore, the content of this memorandum should not be relied upon
for making any decision, investment or otherwise. The prospective user of this memorandum is
encouraged to carry out his/her own due diligence and gather any information he/she considers
necessary for making an informed decision. The content of the information memorandum does
not bind SMEDA in any legal or other form.

DOCUMENT CONTROL
Document No. PREF-21
Revision -
Prepared by SMEDA-Balochistan
Issued by Library Officer
Issue Date 27 April 2010

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Pre-feasibility Study Sausages Production unit

TABLE OF CONTENTS

1 PURPOSE OF THE DOCUMENT............................................................................................................. 5

2 PROJECT PROFILE.................................................................................................................................. 5
2.1 PROJECT BACKGROUND .......................................................................................................................... 5
2.2 PROJECT BRIEF....................................................................................................................................... 6
2.3 OPPORTUNITY RATIONALE ..................................................................................................................... 6
2.4 MARKET ENTRY TIMING ......................................................................................................................... 7
2.5 PROPOSED BUSINESS LEGAL STATUS ...................................................................................................... 8
2.6 PROJECT CAPACITY ................................................................................................................................ 8
2.7 PROPOSED PRODUCT MIX ....................................................................................................................... 8
2.8 PROJECT INVESTMENT ............................................................................................................................ 8
2.9 PROPOSED LOCATION ............................................................................................................................. 8
2.10 KEY SUCCESS FACTORS .......................................................................................................................... 8
3 CURRENT INDUSTRY STRUCTURE ..................................................................................................... 9
3.1 GLOBAL SCENARIO ................................................................................................................................ 9
3.1.1 World Top Ten Fast Food Consumption Countries......................................................................... 10
3.2 CURRENT DOMESTIC INDUSTRY ............................................................................................................ 11
3.2.1 Facts of Pakistan Market ............................................................................................................... 11
3.2.2 Demand......................................................................................................................................... 11
3.2.3 Future Growth............................................................................................................................... 12
4 MARKETING STRATEGY ..................................................................................................................... 12
4.1 TARGET MARKET ................................................................................................................................. 12
4.2 PRICING STRATEGY .............................................................................................................................. 12
5 PRODUCTION UNIT LAYOUT.............................................................................................................. 13
5.1 GENERAL REQUIREMENT FOR ESTABLISHING A SAUSAGE PLANT ............................................................ 13
5.1.1 Commercial Consideration ............................................................................................................ 13
5.1.2 Location ............................................................................................................................................. 13
5.1.3 Building materials, Floors and walls................................................................................................... 14
5.1.4 Sanitation ........................................................................................................................................... 14
5.2 PROCESS FLOW .................................................................................................................................... 14
5.2.1 Receiving and chilling ................................................................................................................... 15
5.2.2 Cutting and Trimming Section........................................................................................................ 15
5.2.3 Non Meat ingredients Section ........................................................................................................ 15
5.2.4 Meat Chopping, Mixing and Stuffing Section.................................................................................. 15
5.2.5 Smoking and Cooking Section ........................................................................................................ 15
5.2.6 Wrapping ...................................................................................................................................... 15
5.2.7 Storage and Dispatch Section ........................................................................................................ 16
6 PROJECT REQUIREMENTS ................................................................................................................. 18
6.1 EQUIPMENT DETAILS ............................................................................................................................ 18
6.2 FURNITURE & FIXTURE ......................................................................................................................... 18
6.3 HUMAN RESOURCE REQUIREMENT ........................................................................................................ 19
7. LAND & BUILDING REQUIREMENT........................................................................................................ 19
7.1. VEHICLE REQUIREMENT ....................................................................................................................... 19
7.2. FURNITURE AND EQUIPMENT MAINTENANCE......................................................................................... 19

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7.3. TOTAL CAPITAL REQUIREMENT ............................................................................................................ 20

7.4. CAPITAL STRUCTURE OF THE PROJECT ................................................................................................... 20
8. KEY ASSUMPTIONS............................................................................................................................... 21

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Introduction to SMEDA

The Small and Medium Enterprise Development Authority (SMEDA) was established with the
objective to provide fresh impetus to the economy through the launch of an aggressive SME
support program.1

Since its inception in October 1998, SMEDA had adopted a sectoral SME development
approach. A few priority sectors were selected on the criterion of SME presence. In depth
research was conducted and comprehensive development plans were formulated after
identification of impediments and retardants. The all-encompassing sectoral development
strategy involved recommending changes in the regulatory environment by taking into
consideration other important aspects including financial aspects, niche marketing, technology
up gradation and human resource development.

SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables,
marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical
instruments, urban transport and dairy. Whereas the task of SME development at a broader scale
still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of business development services is also offered
to the SMEs by SMEDA. These services include identification of viable business opportunities
for potential SME investors. In order to facilitate these investors, SMEDA provides business
guidance through its help desk services as well as development of project specific documents.
These documents consist of information required to make well-researched investment decisions.
Pre-feasibility studies and business plan development are some of the services provided to
enhance the capacity of individual SMEs to exploit viable business opportunities in a better way.
This document is in the continuation of this effort to enable potential investors to make well-
informed investment decisions.

1
For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk

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1 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in
project identification for investment. The project pre-feasibility may form the basis of an
important investment decision and in order to serve this objective, the document/study covers
various aspects of project concept development, start-up, and production, finance and business
management.

2 PROJECT PROFILE
The project is about establishing a Sausages Production unit in the adjoining areas of major cities
like Quetta, Lahore, Peshawar and Karachi etc.
2.1 Project Background
Finely chopped and seasoned meat mixed with different ingredients, usually stuffed into a
prepared animal intestine or other casing and cooked or cured are named as sausages. The word
sausage derives from the Latin salsisium, meaning something that has been salted. Centuries ago
what started out simply as a means of using and preserving all of the animal trimmings has
turned into the art of sausage-making. Simply saying, sausage is meat mixed with fat, salt and
other seasonings, preservatives and sometimes fillers. Such a mixture is usually packed into a
casing (animal intestine). Sausages can differ dramatically depending on their ingredients,
additives, shape, curing technique, level of dryness and freshness. Moreover when it comes to
cooking, sausages can be prepared as follows

 Fully cooked; Sausages are ready-to-serve products, basically made from already cooked
fresh or exceptionally cured raw materials, subjected to final cooking after stuffing, with
or without additional smoking. An example of fully cooked sausages is hot dog.
 Smoked Cooked; Smoked precooked sausages are mostly cured, non fermented
products; their shelf life is increased by heating due to partial reduction of their moisture
content; they are usually cooked before consumption. i.e. Gyulai kolbász, kielbasa and
Mortadella.
 Fresh; Fresh sausages are made from fresh meats which are, as a rule, neither cured,
smoked, fermented nor cooked. Fresh sausages must be kept under refrigeration prior to
eating. They are heated by the consumer himself before serving. Examples include
Boerewors, Italian sausage and breakfast sausage.
 Dry sausages (Cured or Fermented sausages); Sausages are made from cured or
uncured, fermented and often smoked meats but they are not heat processed in any way;
they are divided into semidry and dry sausages. Examples include salami, Droë wors,
Sucuk, Landjäger, and summer sausage.
 Emulsion-type sausages; Sausages comprises of ready-to-eat products made from
comminuted and well-homogenized cured meats, fatty tissue, water and seasonings,
usually smoked and slightly cooked
 Moreover sausages are eaten in raw or prickle appearance etc.

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Sausages are prepared & eaten around the world, it has become an important aspect of modern
age but history of sausage making is quite old. It begins at the times of ancient Greeks and
Romans. Sausages prepared at that time were usually plain and unspiced. Art of modern sausages
begin in the Middle Ages when people starts to add various meat & spice in sausages for
flavoring. The art furnished even more in the last decades when it got liaison with modern
technology for commercial scale production. In result sausage become one of the major
components of food industry. Presently there are more than 1500 different types of sausages
prepared all over the world. Many of the sausages that became famous were named for the
localities where they were first made i.e. the frankfurter in Frankfurt (Germany), the bologna in
Bologna (Italy) and the genoa salami in Genoa (Italy).
2.2 Project Brief
The proposed project is about establishing a sausages production unit in the adjoining areas of
major cities like Quetta, Lahore, Peshawar and Karachi etc. A Sausages production facility
located in any of the above stated areas can create a strong market in the country. Whereas it can
also be exported if produced according to international standards and compliance. The project
would serve as facility to utilize abundant raw material available in the country usually ends up
as waste, especially the large resources of casings. On the other hand it would generate
employment for the local inhabitants and more over would possibly generate cash inflow for the
country as well. Currently the project is being designed / proposed for adjoining areas of major
cities but the same can be proposed for several other cities which can fulfill input and logistic
requirements of the proposed project.

The project would serve as a focal point for efficient utilization of natural resources while on the
same time it would be facilitating consumer that desire to eat fast food any time they want.
Initially the project is proposed to attract domestic customers but after its maturity, international
customers could also be easily targeted. The main feature of the project would include sausages
prepared according to international quality standards. The Product mix may include different
varieties of vegetable, meat or mixture of both. Whereas value addition will be done in shape of
quality processing, standardize packaging, and final product with proper preservation. In addition
to above, another very important key success factor of the proposed project is that the project
would be focusing on preparing “HALAL” sausages according to Islamic values.
2.3 Opportunity Rationale
Livestock plays an important role in the economy of Pakistan in terms of income and
employment. It enables poor and landless farmers to earn income using common property
rangelands. The rapidly growing demand for livestock products reinforces the value of livestock
as part of household asset portfolios and its potential to reduce poverty.

Opportunities in Livestock Sector

 Swift increases in consumption/demand of live stock products;
 Increasing demand of byproducts, blood, skin, etc.
 Technological improvement in live stock production and processing in developed
countries which can be replicated in the developing countries.

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There is no doubt about the rich potential associated with country production of animal meat and
byproducts but deficiency exist only in its usage. Every year tons of animal meat and its
byproducts are wasted or sold at minimum price with in and outside the country. There is a huge
potential for a facility or unit, that can process & pack these valuable resources. If this sector is
explored properly it can provide a base point of heavy cash inflows & employment generation
for the country. Sausages production unit can provide a solid platform for above stated purpose.
An overview of the annual production of animal meat & byproduct of Pakistan is described in
the following table 1.

Table 1: Total Production of Animal byproducts in Pakistan

ITEMS UNITS 2008-09
Meat 000 Tons 2,618
Edible Offal `` 325
Fat `` 221.56
Casings 000 No`s 13,426
Economic Survey 2008-09

There2 are about 37 registered and non-registered animal casings processing firms/facilities in
Pakistan. The registered firms are those which are duly approved by the Ministry of Food
Agriculture and Livestock, Government of Pakistan and European Union at Brussels for the
processing and export of animal casings. With these limited facilities export of raw casing has
increased from 11.23 million USD in year 2003 to 14.24 million USD in year 2007, and it is still
on a increasing trend3. There is a strong need of a facility that can utilize our potential resources
with in the boundary of our homeland.

Moreover statistics reveals that world trade of Muslim Halal food worth more than $81 billion4
annually and is growing rapidly due to emergence of new markets and population growth. There
is no doubt that Pakistan economy possesses all the positive aspects that any business require to
be successful. It has strong demand both at domestic & international level, backed with sufficient
availability of natural resources and economical labor, whereas the discrepancy prevails only at
the entrepreneurial side. In Pakistan, Sausages production facility should be started on
commercial scale, based on Halaal ingredients. It must not contain any ham, pork product or lard
to capture Muslim population, while at the same time it must include all features that must fulfill
the international quality standards for exports to capitalize the huge market potential in western
countries as well.
2.4 Market Entry Timing
Sausages aren’t seasonal products; they are consumed all over the world throughout the year.
Hence it provides round the year business for sausage producers. In contrast to such healthy
demand, raw material requirements of proposed project such as meat and casings etc. are also
available in almost every season but found more abundantly during the month of Eid-ul-Azha.
2
Pre feasibility report Animal casing processing unit SMEDA
3
ITC calculations based on COMTRADE statistics
4
Article: M. M. Nazri "Prospects of Manufacturing Halal Sausages in Cans".2000

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The project is proposed to become operational at the end of Eid-ul-Azaha to acquire to raw
material more economically as compare to other seasons.
2.5 Proposed Business Legal Status
The proposed legal structure of the business entity is either sole proprietorship or partnership.
Although selection totally depends upon the choice of the entrepreneur but proposed
prefeasibility is based on a Sole Proprietorship.
2.6 Project Capacity
The proposed daily capacity of the plant would be around 1800 packs of finished product of 550
gms (0.55 kg) each.

2.7 Proposed Product Mix

The proposed product mix for the stated project is sausages that would be prepared & packed
according to the market standards. In addition proposed product mix would consist of different
varieties of sausages prepared of meat, vegetable or combination of both. Sausages prepared will
be be 100% Halal in order to attract Muslim customers across globe.
2.8 Project Investment
The total investment required for this project is Rs.22.27 M. The investment mainly covers
capital costs of Rs.19.09 M and working capital requirement of 3.17 M.
Table 2: Project Investment
Description Amount (Rs)
Total Fixed Cost 19,096,718
Working Capital 3,179,146
Total 22,275,864

2.9 Proposed Location

The proposed location for the project could be in any of the adjoining areas of major cities in
Pakistan such as Quetta, Hub, Lahore, Peshawar & Karachi etc. However, such a project could
also be established in other areas with high livestock potential after careful analysis of market
demand and project viability. In choosing location, preferences should be given to site with
adequate availability of infrastructure, raw material and comparatively high traffic rate.
2.10 Key Success Factors
Prior to establishing a sausages production unit, there are critical points that must be kept in
mind for success.

 Location plays the most important role for such a project. More convenient availability of
raw material and good transportation facility make a location ideal for the proposed
project.
 Trained personnel would increase the chances of success for the project.
 Awareness among the general people would attract more customers therefore; use of
proper marketing techniques is important.
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 Highway and International Airport availability are vital for projects as they provide
perfect connectivity of the proposed location.
 Target customers should initially be the domestic customers. Upon its maturity,
international customers could also be attracted.
 Priority would be given to Halal Production in order to attract Muslim customer not only
from Pakistan but also from abroad.
 Availability of raw material at low prices would be another key success factor.

3 CURRENT INDUSTRY STRUCTURE

3. 1 Global Scenario
The liaison between traditional sausages making art & modern industrial processing has led to
commercial sausages advancement of modern era. Though the process has gone through many
metamorphoses but the rationale behind today's sausage production and traditional practices
remains the same, namely, obtaining a product of high taste value and longer shelf life. At
present sausages is one of the most known fast food types, prepared & eaten all over the world. It
is prepared in many different varieties with Germany boasting over 1200 types, Britain with over
470, and United States with more than 200.

Sausages are an excellent source of high quality protein, containing all the essential amino acids
necessary for growth, maintenance and repair of body tissue. Sausages also provide significant
amounts of vitamins and minerals. It is for the reason that sausages are prolific & popular world
wide for thousands of years. In accordance with the year 2009 statistics provided by British
Sausages week5, there are more than 470 recipes and flavors for sausages in Britain only. In
Britain 90% of British households use sausages. Where as each household spends an average of
£22.51 per year on sausages while five million Britons eat sausages every day. Craze of sausage
consumption is not limited to Britain only. In accordance with statistics provided by AMIKO
(Russian consultancy firm), Russian sausage market consumes 60% of the total meat market
every year. Russian sausage consumer expenditures are also very high as Russian sausage market
amounted to US$21 billion in retail prices in 2006 only and still on the increasing trend. Beside
above two, USA market is also characterized as one of the high sausage consumption countries.
According to figures for 20086, dinner sausage sales increased 2 percent, with more than $1.7
billion in sales. While Breakfast sausage sales remained relatively steady, at $9 million in sales
on annual basis.

According to a report7 the global fast food market grew by 4.8% in 2006 to reach a value of
$102.7 billion. In 2011, the global fast food market is forecast to have a value of $125.4 billion,
an increase of 22.2% since 2006. As sausage being one of the major parts of fast food is also
expected to increase in the same fashion.

5
http://www.britishsausageweek.com/documents/FASTFACTSONSAUSAGES.pdf
6
Refrigerated dinner sausage and breakfast sausage figures based on data collected during the calendar year of 2008, by Information Resources
Inc
7
http://www.researchandmarkets.com/reports/c71910

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Sausages’ eating is not limited as road site snack food only, but it is consumed in events, Lunch
times, parties and even by the households. Sausages are mainly eaten in evening time but are also
consumed at other times as in breakfast & lunch etc. The consumption Sausages craze is not
limited to western countries only but; they are also popular in Muslim’s countries as well. There
is a huge market for the sausages in all over the world, especially in Muslim countries if Halal
sausages are prepared and delivered to them.

3.1.1 World Top Ten Fast Food Consumption Countries

According to the research carried out by Euromonitor International8, among the top ten per
capita fast food consumption countries of world USA has the lead. USA per capita fast food
expenditures stood at $566 in 2005, followed by Canada, UK and Australia with $456, $390 and
$363 respectively. Surprisingly, South Korea has a higher per capita consumption than several
relatively wealthy European countries, namely Austria, Germany, Switzerland and Sweden, with
$239 spent on fast food in 2005. This high level of per capita fast food consumption
demonstrates the importance of fast food as a lifestyle in these countries. Following figure
presents the world top ten fast food consumption countries in ascending order.

Fig. 1: Per capital expenditure on fast food – top 10

8
http://www.euromonitor.com/Who_eats_the_most_fast_food

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3. 2 Current Domestic Industry

Among industry view point, sausages are characterized as a part of fast food industry. According
to data a promising potential does exist for the sausages industry. The overview of Pakistan fast
food industry is described below:
3.2.1 Facts of Pakistan Market
According to the statistics provided by World Bank report “Consumer Asia9”, Pakistan made up
a strong market for the fast food industry. Table 3 present trends of food consumption for the last
5 years in Pakistan.

Table 3: Pakistan statistics

Indicator 2005 2006 2007 2008 2009
Population: 6,158.18 6,333.64 6,511.59 6,693.46 6,881.08
January 1st ('000)
Consumer expenditure 33,352.5 37,681.1 42,374.2 46,334.2 47,209.1
on food (US$ million)
Source: World Bank Report – Consumer Asia

It is obvious from the table that both consumer expenditure (on food), along with Population
growth is on increasing trend in Pakistan. Hence it provides an opportunity for investors to
capitalize such a remarkable potential. The graphical representation of the above stated figures
on consumer expenditure is represented in the following figure.

Fig 2: Consumer food expenditure trend in Pakistan

Consumer Food Expenditure Trend

50000

40000

30000

20000

10000

0
2005 2006 2007 2008 2009

3.2.2 Demand
Pakistan has a total population of 169 million with a growing middle-class. Approximately one-
quarter of the total population represents the potential market for processed and packaged foods.

9
www.euromonitor.com/factfile.aspx?country=PK

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Moreover increased exposure to international food products and brands via cable and satellite
TV, and traveling has increased fast food desirability among Pakistani consumers. Evidence of
the viability of the packaged and processed food market can be seen in the success of
international fast food chains in Pakistan such as McDonald’s, KFC, Pizza Hut, Pizza Express,
Subway and Dunkin’ Donuts.

Pakistan processed food market is valued at approximately $2 billion; whereas significant

percentage is imported every year (i.e. 25% in year 2008) to full fill the local demand. The
market has been growing at an annual rate of 10 per cent10. Evidences proved profitability of fast
food industry but yet this market is dominated by some bunch of international food suppliers.
There is a need to build up a fast food production facility like sausages manufacturing units in
Pakistan that can prepare and sell sausages at reasonable price within the market. Sausages being
very popular in Pakistan especially among the youth but unfortunately not sold as per demand
requirement. The overall sausage selling market is composed of few restaurants situated only in
big cities like Islamabad, Lahore, Karachi, Peshawar & Quetta etc. and some International food
chains like McDonalds and K&N’s etc. However there are insufficient sausage production
facilities existing in Pakistan to capitalize the abundant resources & potential demand.
3.2.3 Future Growth
According to the figures released by Federal Bureau of Statistics, Consumer Price Index has
shown a remarkable increase over the last few years. It has increased to 7.39 percent in February
2007 only with food prices contributed the largest share with an increase of 9.9 percent11 and the
same is forecasted in the upcoming years. In addition factors like increasing life standard, rising
preference towards fast food & exposure to international fast food through media etc. has already
created a healthy market for the fast food items. Gap exists only from supplier’s side that can be
fulfilled by establishing such proposed projects.

4 MARKETING STRATEGY
4. 1 Target Customers
The target market of the project is very wide in nature. All the fast food lovers whether domestic
or international could be the major consumer base for this project. Initially main focus would be
given to domestic market while preferring young generation with a craze for fast food,
additionally office workers, retailers, hotels & restaurants etc. can also be targeted. As the project
passes the growth stage mark, foreign market can also be targeted for the proposed product mix.
Moreover to attract more customers, sausage stands or outlets can be established in major super
markets, to create market awareness & additional revenue.
4. 2 Pricing Strategy
Since the project has a very wide range of customer class, the pricing strategy should be
appealing enough to give its customers the value of their spending. At the same time, the charges
should neither be very high nor very low to avoid negative impression in the market. After

10
http://www.austrade.gov.au/Food-to-Pakistan/default.aspx
11
Daily Times - Friday, March 16, 2007

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carefully analyzing the current fast food market in industry, it is proposed that the customers
should be charged somewhere between Rs. 275 – 500 on the final product depending on its size.

5 PRODUCTION UNIT LAYOUT

A need for development of innovative and unique high quality sausage products using the
greatest possible efficiency, experience and new knowledge is permanently present in all
segments of the sausage manufacturing field. This goal can be achieved through continued
development of new value-added sausage products and by taking advantage of present
processing equipment and knowledge. A value-added sausage utilizes one or more raw material
available at economical rate in combination with other ingredients to create a sausage which can
be sold at a higher price.

The custom fit of a new sausage formula into sausage plant production often requires
modification of the original formula. Versatility in the usual sausage processing line can create
not only one but several new products for the market. For example, a simple grind-mix-grind
system with a stuffer not only produces a fresh sausage but also a variety of other products. The
quality aspects of a new product determine the product's continued success. A new sausage
product must be delicious in flavor and exhibit a desirable texture, as visually poor-looking
products do not attract customers. Certain modifications are required according to geographical
area, such as hot or mild seasoning or the product's physical appearance, etc. Simply stated,
excellent quality in new sausage items is a must and this can be achieved without high-cost
materials by utilizing modern technology for the production of quality sausages.
5. 1 General Requirement for establishing a Sausage Plant
Simplicity of design and costs are of particular importance for sausage plants. Whenever the
construction of a new sausage plant is envisaged, a plan to overcome possible defects is
recommended. It is of paramount importance to draw up a plan giving the greatest efficiency to
the entire sausage plant. Hence there are some points which must be considered before
undertaking construction of sausages manufacturing plant.
5.1.1 Commercial Consideration
Economic and marketing considerations are vitally important in determining the most suitable
location for a sausage manufacturing plant. The first and the most important consideration is of
efficient meat supply for the proposed plant, followed by the distribution of sausage products to
consumers. Secondly, discrepancies between the retail price paid for meat & other animal
byproducts and the price for locally sold sausages should be determined on the basis of
commercial research. Finally it is advisable to build a sausage plant large enough to deal with the
periodic marketing peaks i.e. Plant must have the capacity to easily extend to hours of processing
during peak season.
5.1.2 Location
The site of a sausage plant should be selected on the basis of certain factors. The sausage plant
should be located in an area free from objectionable odors, smoke, dust etc. The selected place
should be completely separated from any other plant or building. Attention should be given to an
adequate clean water supply, also including adequate arrangement of electric power sources.

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Moreover in planning a sausage plant, consideration must be given to a location or an

arrangement of buildings that will permit future expansion.

5.1.3 Building materials, Floors and walls

In general, space of a sausage plant must be compact and designed for economical use in relation
to the capital and operating costs. The whole structure must suit local climatic conditions. In
order to carry out proper construction of sausages production plant following points must be
considered

 A hard, smooth and impervious floor must be constructed in a fashion that it resist
slip ness, won’t absorb moisture and can be readily cleaned.
 The surfaces of interior walls must be impervious, smooth and made of non-absorbent
materials. Walls should be covered and coated with lead-free paint or tiled at least to
a height of 1.8 m.
 Ceiling surfaces of rooms, where wet operations are conducted, should be smooth and
flat and of sufficient height.
 The slope (usually of 1.8–2.0 percent) of floors to drainage inlets must enable rapid
disposal of effluent. All effluent drainage lines must have a sufficient inside diameter
of at least 10 cm with the fat traps incorporated in the drainage system. Drainage lines
from toilets and urinals should be constructed separately.
5. 1. 4 Sani t at i on
A well-designed sausage plant cannot be attained through buildings alone. Sanitation is also
essential in a well-run sausage producing plant. The hygienic maintenance of equipment and the
plant as a whole is a fundamental factor for production efficiency and keeping quality of finished
products. Tile walls, hard-surfaced brick or concrete floors, carefully sloped to drains, stainless
steel table tops; galvanized metal tracks and barrels are an integral part of a good sanitation
program. Simply stating, strict sanitary methods and conditions must be employed through out
the entire process for quality assurance.
5.2 Process Flow
A proper integration of section layouts is required if maximum efficiency, smooth flow of
operations, reduced labor and managerial control are to be achieved. Layouts of these sections
can be combined in varying ways depending on the size and shape of space available, amount
and structure of production, the methods selected etc. Basically a sausage plant is composed of
the following sections:

 Receiving and chilling

 Cutting and trimming
 Non-meat ingredients
 Meat chopping and mixing
 Smoking and cooking
 Wrapping and dispatch sections.

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The details of the above is described as below

5.2.1 Receiving and chilling
The receiving area is the place where all raw materials arrived are checked and their weight
determined by means of a scale. The area around the entrance door is more suitable for the
respective section. The receiving section, even in the smallest sausage plant, should be so
designed that the meat moves from the receiving door into the processing section with in
minimum time, effort and without any possible interference of operations & contact of the meat
with other raw materials.

The selection of type and size of chiller (cooling device) depends largely upon the capacity and
character of processing conducted. The temperature of the chiller should be 0° to 4°C. Access to
the chiller and its connection with the cutting and trimming area must be easy. The chiller must
have separate area with suitable facilities for holding by-products and meat.
5.2.2 Cutting and Trimming Section
This section, adjacent to the chopping and stuffing area, includes the space occupied by cutting
and trimming tables. There should be sufficient room for free movement and safe use of knives,
cleavers and other tools. A room temperature of 13°C is considered to be suitable good practice.
The humidity should be low enough to give a dew point close to that of the surface temperature
of the product.
5.2.3 Non Meat ingredients Section
This section needs a separate, dry and cool area, protected from insects, humidity and provided
with tables, scales & other facilities for storage, control and preparation of spices, casings,
containers etc
5.2.4 Meat Chopping, Mixing and Stuffing Section
This section includes the space in which the meat is processed, mixed with other ingredients and
stuffed into casings. This section is occupied by basic processing equipment such as a grinder,
cutter, mixer, stuffer and working tables. It is extremely important that all equipment is designed
for easy cleaning.
5.2.5 Smoking and Cooking Section
The principles applicable to the layout of this section are:

 The smokehouse should be built so that its fireplace opens externally. Whereas good
air and smoke circulation in the smokehouse is essential and a thermometer for
checking the temperature is highly desirable.
 The smoking and cooking section should be well isolated from other areas with
adequate ventilation.
5.2.6 Wrapping
The wrapping for the proposed project is to be outsourced in order to achieve economical rates.
The per unit cost of packaging for final product would be Rs. 3.

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5. 2. 7 Storage and Dispatch Section

The type and size of this section is determined not only by the number and structure of finished
products but mainly by the method of marketing. A specific area would be allocated for Cold
storage facility. This section may be located in an area outside the main building but in many
plants it is established in another section at the end of the process flow. Special attention should
be devoted to the arrangement of an adequate storage area.

The comprehensive layout of the sausages manufacturing plant is depicted be the following
figure 3.1. Whereas the overall process flow is shown in fig 3.2.

Fig 3.1: Layout of sausage plant

Receiving & Cutting & Non-Meat

Chilling Trimming Ingredients

Wrapping & Smoking & Meat Chopping

Dispatch Section & Mixing
Cooking

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Fig 3.2
PROCESS FLOW CHART

Receiving Raw Meat

Receiving of
Non Meat
Storage Raw Meat Ingredients
(Refrigerated)

Storage Non
Temporary Frozen Meat
Meat Ingredients

Preparation of Raw Weighing of

Meat Non Meat
Ingredients

Combine ingredients /
Processing
Rework

Stuffing

Cooking / Smoking

Storage Casings
/ Packaging Chilling
Materials

Portioning

Packaging / Labeling

Finished Product
Storage

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6 PROJECT REQUIREMENTS
6. 1 Equipment Details
The details of the different machinery and equipment required for the project are given as below:
Table 6.1.1: Equipment & Machinery Details
Description No Price/Unit (Dollar-$) Total Price (PKR)
Assuming $1=85PKR
Cold storage Capacity ( 250 T , 50x 50x 15) -30 C 1 2,240,000
Meat & Bone Separator 1 51,429 4,371,465
Cutting & Mixing Machine 1 14,726 1,251,710
Vacuumed Filling Machine 1 7,529 639,965
Smoke House 1 16,913 1,437,605
Smoking Trolley 1 572 48,620
Smoking Stick 1 3 255
Generators 1 350,000
Total 10,339,620

Table 6.1.2: Office Equipment Deta1ils

Other Equipment Details Qty Cost/Unit Total Cost (PKR)
Computer 1 25,000 25,000
Printers 1 6,000 6,000
Fax 1 12,000 12,000
Telephone Sets 2 1000X2=1,000 2,000
Total 45,000
6. 2 Furniture & fixture
Description Total Amount (PKR)
Furniture 244,000
Air conditioners (1.5 Ton Window) 24,000
Carpeting 100,000
Total 368,000

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6. 3 Human Resource Requirement

The manpower required for operating the Sausages Production unit is as follows:
Table 6.2: Human Resource Requirement Details
Description – HR Requirements Nos Salary per month Salary per year
Manager 1 25,000 300,000
Accounts & Admin Officer 1 15,000 180,000
Technicians 3 12,000 432,000
Supporting Staff 4 10,000 480,000
Peon
Guard Annual Contract 160,000
Sweeper
Total 1,552,000
Note: The staff salaries are estimated according to the market trends; however, the investor may set
different pay scales.

7. LAND & BUILDING REQUIREMENT

The land & building required for operating the Sausages Production unit is as follows:
Table 7: Land & Building Requirement Details
Description – Land & Building Cost/Sq. Ft Area in Sq. ft Total Cost
Land 200 10,000 2,000,000
Office Building (12*14 per room) 1,200 500 600,000
Warehouse & Cold storage 1,000 1000 1,000,000
section
Processing 1,700 2,000 3,400,000
Total 7,000,000

7.1. Vehicle Requirement

The Vehicle required for operating the Sausages Production unit is as follows:

Table 7.1: Vehicle Requirement Details

Vehicle Nos Cost
Shahzor 1 9,00,000
Registration 1 9,000
Total Cost 909,000

7. 2. Furniture and Equipment Maintenance

The furniture and equipment maintenance process will be conducted on yearly basis.

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7. 3. Total Capital Requirement

Table 7.2: Total Capital Requirements

Capital Investment Rs. in actuals

Land 2,000,000
Building/Infrastructure 5,000,000
Machinery & equipment 10,339,620
Furniture & fixtures 368,000
Office vehicles 909,000
Office equipment 45,000
Pre-operating costs 435,098
Total Capital Costs 19,096,718

Working Capital Rs. in actuals

Equipment spare part inventory 12,938
Raw material inventory 2,328,750
Upfront insurance payment 337,459
Cash 500,000
Total Working Capital 3,179,146

Total Investment 22,275,864

7. 4. Capital Structure of the project

Table 7-3 Project Financing

Initial Financing Rs. in actuals

Debt 8,975,457
Equity 13,300,406

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8. KEY ASSUMPTIONS

Table 8-1 Cost of Goods Sold per Unit of Production

COGS 1 (Raw material per unit) Rs. 220
COGS 2 (Packing cost and Fumigation Overhead per unit) Rs.5
COGS growth rate per annum 8%

Table 8-2 Production Related Assumptions

Production capacity per year 540,000 Packs
Sale price per unit in year 1 Rs. 255
Sale price growth rate per annum 10%
Production capacity utilization in first year 60%
Production capacity utilization growth rate 5%
Maximum production capacity utilization 95%

Table 8-3 Economic Related Assumptions

Inflation rate 10%
Wage growth rate 10%
Electricity Growth Rate 10%
Water Price Growth Rate 10%
GAS Price Growth Rate 10%

Table 8-4 Financing Assumptions

Interest rate on long term debt 20%
Project Debt Component 40%
Project Equity Component 60%
Tax rate 22%
Required rate of return on equity 16%
WACC 12%
Owners Withdrawals 50% of available cash

Table 8-5 Expense Assumptions

Administrative benefit expense 5% of administrative expense
Travelling expense 5% of administrative expense
Communication expense 5% of administrative expense
Office vehicle running expense 10% of vehicle cost
Office expense 5% of administrative expense

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Promotional Expense 0.5% of revenue

Machinery & equipment insurance rate 3%
Office vehicle insurance rate 3%
Professional Fee (Legal, Audit etc) 0.1% of revenue
Bad debt expense 1% of revenue
Pre-Operational Expense Rs. 406,108

Table 8-6 Depreciation Rates

Building & Infrastructure 5%
Furniture & fixtures 5%
Machinery 5%
Office equipment 5%
Office Vehicle 10%

Table 8-7 Cash Flow Assumptions

Accounts Receivables Cycle (In Days) 30
Accounts Payable Cycle (In Days) 30
Initial cash on hand Rs. 500,000

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Financial Evaluation of …
Sausages Production unit SMEDA

Key Variables
Total Investment in Project 22,275,864
Equity 60% 13,300,406
Debt 40% 8,975,457
Interest Rate 17%
Debt Tenure 10
Debt Payments per year 1

Rs. in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Free Cash Flow to Equity (FCFE) (977,292) 4,535,269 6,336,063 9,805,848 12,738,054 19,075,640 25,364,117 32,291,514 39,406,773 60,537,603
Free Cash Flow to Firm (FCFF) 147,856 6,629,992 7,959,551 11,449,857 14,406,071 20,771,748 27,093,090 34,058,940 41,219,189 83,707,484

Profit margin on sales 3% 5% 7% 8% 10% 11% 13% 14% 15% 17%

ROE 14% 23% 27% 29% 29% 28% 27% 25% 23% 22%
Times interest earned 2.75 5.02 8.07 12.28 18.63 27.20 41.34 63.77 107.01 236.92

Equity Project
Internal Rate of Return (IRR) 52% 42%
Modified Internal Rate of Return (MIRR)* 34% 28%
Payback Period (yrs) 3.25 3.66
Net Present Value (NPV) @ 16% 61,177,941 @ 10% 100,607,766
*Re-investment rate has been taken to be the interest on cash in bank, which in this case is 2%

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Statement Summaries SMEDA

Initial Investment

Capital Investment Rs. in actuals

Land 2,000,000
Building/Infrastructure 5,000,000
Machinery & equipment 10,339,620
Furniture & fixtures 368,000
Office vehicles 909,000
Office equipment 45,000
Pre-operating costs 435,098
Total Capital Costs 19,096,718

Working Capital Rs. in actuals

Equipment spare part inventory 12,938
Raw material inventory 2,328,750
Upfront insurance payment 337,459
Cash 500,000
Total Working Capital 3,179,146

Total Investment 22,275,864

Initial Financing Rs. in actuals

Debt 8,975,457
Equity 13,300,406
* Provisioning for the first year installments

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Statement Summaries SMEDA

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 79,177,500 98,139,938 116,284,781 137,077,194 160,865,242 188,040,128 219,041,338 254,362,389 280,413,570 308,454,927
Cost of goods sold 71,703,650 87,204,133 101,394,349 117,299,053 135,102,096 155,005,812 177,232,808 203,473,405 220,312,073 238,023,590
Gross Profit 7,473,850 10,935,805 14,890,432 19,778,141 25,763,146 33,034,316 41,808,530 50,888,984 60,101,497 70,431,338

General administration & selling expenses

Administration expense 504,000 553,070 606,918 666,008 730,852 802,008 880,093 965,780 1,059,810 1,162,995
Rental expense - - - - - - - - - -
Utilities expense - - - - - - - - - -
Travelling & Comm. expense (phone, fax, etc.) 48,000 52,673 57,802 63,429 69,605 76,382 83,818 91,979 100,934 110,761
Office vehicles running expens e 90,900 99,990 109,989 120,988 133,087 146,395 161,035 177,138 194,852 214,337
Office expenses (stationary, etc.) 24,000 26,337 28,901 31,715 34,802 38,191 41,909 45,990 50,467 55,381
Promotional expense 395,888 490,700 581,424 685,386 804,326 940,201 1,095,207 1,271,812 1,402,068 1,542,275
Insurance expense 337,459 319,222 300,986 282,749 264,513 290,195 267,567 244,938 222,310 199,682
Profess ional fees (legal, audit, etc.) 79,178 98,140 116,285 137,077 160,865 188,040 219,041 254,362 280,414 308,455
Depreciation expense 878,531 878,531 878,531 878,531 878,531 1,024,926 1,024,926 1,024,926 1,024,926 1,024,926
Amortization expense 87,020 87,020 87,020 87,020 87,020 - - - - -
Property tax expense - - - - - - - - - -
Miscellaneous expense 791,775 981,399 1,162,848 1,370,772 1,608,652 1,880,401 2,190,413 2,543,624 2,804,136 3,084,549
Subtotal 3,236,749 3,587,082 3,930,702 4,323,675 4,772,253 5,386,740 5,964,010 6,620,550 7,139,917 7,703,361
Operating Income 4,237,101 7,348,723 10,959,730 15,454,466 20,990,893 27,647,576 35,844,520 44,268,434 52,961,580 62,727,976

Other income 5,000 45,353 154,066 315,485 540,924 859,061 1,303,459 1,880,015 2,596,998 3,596,442
Gain / (loss) on sale of assets - - - - 363,600 - - - - -
Earnings Before Interest & Taxes 4,242,101 7,394,076 11,113,796 15,769,951 21,895,418 28,506,637 37,147,979 46,148,449 55,558,577 66,324,418

Interest expense 1,540,547 1,472,409 1,377,968 1,284,693 1,175,562 1,047,879 898,489 723,703 519,204 279,939
Earnings Before Tax 2,701,554 5,921,667 9,735,828 14,485,258 20,719,856 27,458,758 36,249,490 45,424,746 55,039,374 66,044,479

Tax 594,342 1,302,767 2,141,882 3,186,757 4,558,368 6,040,927 7,974,888 9,993,444 12,108,662 14,529,785
NET PROFIT/(LOSS) AFTER TAX 2,107,212 4,618,900 7,593,946 11,298,501 16,161,487 21,417,831 28,274,602 35,431,302 42,930,712 51,514,693

Balance brought forward 2,107,212 6,726,112 14,320,058 25,618,559 41,780,047 63,197,878 91,472,480 126,903,782 169,834,493
Total profit available for appropriation 2,107,212 6,726,112 14,320,058 25,618,559 41,780,047 63,197,878 91,472,480 126,903,782 169,834,493 221,349,187
Dividend - - - - - - - - - -
Balance carried forward 2,107,212 6,726,112 14,320,058 25,618,559 41,780,047 63,197,878 91,472,480 126,903,782 169,834,493 221,349,187

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Statement Summaries SMEDA

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 500,000 - 4,535,269 10,871,332 20,677,180 33,415,234 52,490,874 77,854,990 110,146,504 149,553,277 210,090,880
Accounts receivable - 6,507,740 7,287,018 8,811,975 10,412,136 12,244,210 14,338,577 16,729,375 19,454,948 21,977,094 24,200,075
Finished goods inventory - 3,117,550 3,645,189 4,237,376 4,901,075 5,643,952 6,474,444 7,401,834 8,496,692 9,179,670 9,917,650
Equipment spare part inventory 12,938 16,072 19,087 22,551 26,525 31,076 36,282 42,228 46,659 51,441 -
Raw material inventory 2,328,750 2,975,687 3,634,835 4,417,203 5,343,979 6,439,816 7,733,381 9,257,987 10,521,631 11,931,530 -
Pre-paid annual land lease - - - - - - - - - - -
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Pre-paid insurance 337,459 319,222 300,986 282,749 264,513 290,195 267,567 244,938 222,310 199,682 -
Total Current Assets 3,179,146 12,936,271 19,422,384 28,643,187 41,625,408 58,064,483 81,341,124 111,531,353 148,888,743 192,892,694 244,208,605

Fixed assets
Land 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000
Building/Infrastructure 5,000,000 4,750,000 4,500,000 4,250,000 4,000,000 3,750,000 3,500,000 3,250,000 3,000,000 2,750,000 2,500,000
Machinery & equipment 10,339,620 9,822,639 9,305,658 8,788,677 8,271,696 7,754,715 7,237,734 6,720,753 6,203,772 5,686,791 5,169,810
Furniture & fixtures 368,000 349,600 331,200 312,800 294,400 276,000 257,600 239,200 220,800 202,400 184,000
Office vehicles 909,000 818,100 727,200 636,300 545,400 1,918,454 1,681,158 1,443,863 1,206,568 969,272 731,977
Office equipment 45,000 42,750 40,500 38,250 36,000 33,750 31,500 29,250 27,000 24,750 22,500
Total Fixed Ass ets 18,661,620 17,783,089 16,904,558 16,026,027 15,147,496 15,732,919 14,707,992 13,683,066 12,658,140 11,633,213 10,608,287

Intangible assets
Pre-operation costs 435,098 348,078 261,059 174,039 87,020 - - - - - -
Legal, licensing, & training cos ts - - - - - - - - - - -
Total Intangible Assets 435,098 348,078 261,059 174,039 87,020 - - - - - -
TOTAL ASSETS 22,275,864 31,067,438 36,588,001 44,843,253 56,859,923 73,797,401 96,049,116 125,214,419 161,546,883 204,525,907 254,816,891

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable - 6,013,542 7,318,431 8,528,411 9,888,529 11,415,598 13,128,244 15,047,098 17,151,198 18,606,947 19,029,940
Export re-finance facility - - - - - - - - - - -
Short term debt - 477,292 - - - - - - - - -
Other liabilities - - - - - - - - - - -
Total Current Liabilities - 6,490,834 7,318,431 8,528,411 9,888,529 11,415,598 13,128,244 15,047,098 17,151,198 18,606,947 19,029,940

Other liabilities
Lease payable - - - - - - - - - - -
Deferred tax - 594,342 1,137,358 1,137,358 1,137,358 1,137,358 1,137,358 1,137,358 1,137,358 1,137,358 1,137,358
Long term debt 8,975,457 8,574,644 8,105,692 7,557,019 6,915,071 6,163,992 5,285,229 4,257,077 3,054,139 1,646,702 -
Total Long Term Liabilities 8,975,457 9,168,986 9,243,050 8,694,377 8,052,429 7,301,350 6,422,588 5,394,435 4,191,497 2,784,060 1,137,358

Shareholders' equity
Paid-up capital 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406 13,300,406
Retained earnings - 2,107,212 6,726,112 14,320,058 4 25,618,559 41,780,047 63,197,878 91,472,480 126,903,782 169,834,493 221,349,187
Total Equity 13,300,406 15,407,619 20,026,519 27,620,465 38,918,966 55,080,453 76,498,284 104,772,886 140,204,188 183,134,900 234,649,593
TOTAL CAPITAL AND LIABILITIES22,275,864 31,067,438 36,588,001 44,843,253 56,859,923 73,797,401 96,049,116 125,214,419 161,546,883 204,525,907 254,816,891
BAL-PREF-/ 2009
Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0
Pre-feasibility Study Sausages Production unit
- - - - - - - - 0 (0) 0

Statement Summaries SMEDA

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 - 2,107,212 4,618,900 7,593,946 11,298,501 16,161,487 21,417,831 28,274,602 35,431,302 42,930,712 51,514,693
Add: depreciation expense - 878,531 878,531 878,531 878,531 878,531 1,024,926 1,024,926 1,024,926 1,024,926 1,024,926
amortization expense - 87,020 87,020 87,020 87,020 87,020 - - - - -
Deferred income tax - 594,342 543,016 - - - - - - - -
Accounts receivable - (6,507,740) (779,278) (1,524,957) (1,600,161) (1,832,074) (2,094,367) (2,390,798) (2,725,572) (2,522,147) (2,222,981)
Finished good inventory - (3,117,550) (527,639) (592,187) (663,699) (742,877) (830,492) (927,390) (1,094,857) (682,978) (737,980)
Equipment inventory (12,938) (3,135) (3,015) (3,464) (3,974) (4,551) (5,206) (5,946) (4,431) (4,783) 51,441
Raw material inventory (2,328,750) (646,937) (659,148) (782,368) (926,776) (1,095,837) (1,293,564) (1,524,606) (1,263,644) (1,409,899) 11,931,530
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Advance insurance premium (337,459) 18,236 18,236 18,236 18,236 (25,682) 22,628 22,628 22,628 22,628 199,682
Accounts payable - 6,013,542 1,304,890 1,209,980 1,360,118 1,527,069 1,712,646 1,918,853 2,104,100 1,455,750 422,993
Other liabilities - - - - - - - - - - -
Cash provided by operations (2,679,146) (576,479) 5,481,513 6,884,736 10,447,796 14,953,086 19,954,403 26,392,269 33,494,452 40,814,210 62,184,305

Financing activities
Change in long term debt 8,975,457 (400,813) (468,952) (548,673) (641,948) (751,079) (878,762) (1,028,152) (1,202,938) (1,407,437) (1,646,702)
Change in short term debt - 477,292 (477,292) - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Change in lease financing - - - - - - - - - - -
Iss uance of shares 13,300,406 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing22,275,864
activities 76,479 (946,244) (548,673) (641,948) (751,079) (878,762) (1,028,152) (1,202,938) (1,407,437) (1,646,702)

Investing activities
Capital expenditure (19,096,718) - - - - (1,463,954) - - - - -
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing
(19,096,718)
activities - - - - (1,463,954) - - - - -

NET CASH 500,000 (500,000) 4,535,269 6,336,063 9,805,848 12,738,054 19,075,640 25,364,117 32,291,514 39,406,773 60,537,603

Cash balance brought forward 500,000 - 4,535,269 10,871,332 20,677,180 33,415,234 52,490,874 77,854,990 110,146,504 149,553,277
Cash available for appropriation 500,000 (0) 4,535,269 10,871,332 20,677,180 33,415,234 52,490,874 77,854,990 110,146,504 149,553,277 210,090,880
Dividend - - - - - - - - - - -
Cash carried forward 500,000 - 4,535,269 10,871,332 20,677,180 33,415,234 52,490,874 77,854,990 110,146,504 149,553,277 210,090,880

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BAL-PREF-/ 2009