Dairy Farm PDF

Pre-Feasibility Study
(Dairy Farm)
Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
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Punjab Sindh Khyber Pakhtunkhwa Balochistan
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Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Pre-Feasibility Study Dairy Farm
Table of Contents
1. DISCLAIMER ................................................................................................................................................... 2
2. PURPOSE OF THE DOCUMENT .................................................................................................................. 3
3. INTRODUCTION TO SMEDA ....................................................................................................................... 3
4. INTRODUCTION TO SCHEME .................................................................................................................... 3
5. EXECUTIVE SUMMARY ............................................................................................................................... 4
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ................................................................................. 4
7. CRITICAL FACTORS ..................................................................................................................................... 4
8. INSTALLED & OPERATIONAL CAPACITIES .......................................................................................... 5
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT............................................................................... 5
10. POTENTIAL TARGET MARKETS ........................................................................................................ 5
11. DAIRY PRODUCTION PROCESS .......................................................................................................... 5
12. PROJECT COST SUMMARY .................................................................................................................. 7
12.1. PROJECT ECONOMICS ................................................................................................................................ 7
12.2. PROJECT FINANCING ................................................................................................................................. 8
12.3. PROJECT COST........................................................................................................................................... 8
12.4. SPACE REQUIREMENT................................................................................................................................ 8
12.5. MACHINERY AND EQUIPMENT ................................................................................................................... 9
12.6. FURNITURE REQUIREMENT...................................................................................................................... 10
12.7. RAW MATERIAL REQUIREMENT .............................................................................................................. 10
12.8. HUMAN RESOURCE REQUIREMENT ......................................................................................................... 11
12.9. REVENUE GENERATION ........................................................................................................................... 12
12.10. OTHER COSTS.......................................................................................................................................... 12
13. CONTACTS OF SUPPLIERS AND CONSULTANTS ......................................................................... 12
14. ANNEXURE .............................................................................................................................................. 14
14.1. INCOME STATEMENT ............................................................................................................................... 14
14.2. BALANCE SHEET ..................................................................................................................................... 15
14.3. CASH FLOW STATEMENT......................................................................................................................... 16
14.4. USEFUL PROJECT MANAGEMENT TIPS .................................................................................................... 17
14.5. USEFUL LINKS ......................................................................................................................................... 18
15. KEY ASSUMPTIONS .............................................................................................................................. 20
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 1
1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general
idea and information on the subject. Although, the material included in this document is
based on data / information gathered from various reliable sources; however, it is based
upon certain assumptions which may differ from case to case. The information has been
provided on as is where is basis without any warranties or assertions as to the
correctness or soundness thereof. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA, its employees or agents do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of undertaking
this activity. The contained information does not preclude any further professional
advice. The prospective user of this memorandum is encouraged to carry out additional
diligence and gather any information which is necessary for making an informed
decision, including taking professional advice from a qualified consultant / technical
expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs
in project identification for investment. The project pre-feasibility may form the basis of
an important investment decision and in order to serve this objective, the document /
study covers various aspects of project concept development, start-up, production,
marketing, finance and business management.
The purpose of this document is to facilitate potential investors in dairy farm by
providing them with a general understanding of the business with the intention of
supporting potential investors in crucial investment decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes such
reports reveal certain thumb rules; best practices developed by existing enterprises by
trial and error, and certain industrial norms that become a guiding source regarding
various aspects of business set-up and its successful management.
Apart from carefully studying the whole document, one must consider critical aspects
provided later on, which form basis of any investment decision.
3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in
October 1998 with an objective to provide fresh impetus to the economy through
development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the national
income, through development of the SME sector, by helping increase the number, scale
and competitiveness of SMEs", SMEDA has carried out sectoral research to identify
policy, access to finance, business development services, strategic initiatives and
institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment has
been a hallmark of SME facilitation by SMEDA
Concurrent to the prefeasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include identification of
experts and consultants and delivery of need based capacity building programs of
different types in addition to business guidance through help desk services.
4. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan, for young entrepreneurs, with an allocated
budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized
financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries,
through designated financial institutions, initially by the National Bank of Pakistan (NBP)
and the First Women Bank Ltd. (FWBL).
Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year
grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries+
across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit
Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).
5. EXECUTIVE SUMMARY
This pre-feasibility is about setting up a dairy farm in which cows and buffaloes are kept
primarily for milk production in conventional housing system. The animals are fed green
fodder and roughage at 8-10% of live body weight in addition to nutritionally balanced
formulated feed and bred by Artificial Insemination method to gain optimum milk yields
in lactation cycle of average 300 days. Dairy farming involves housing, breeding,
feeding, watering, disease control and hygienic production of milk on farm.
A dairy farm with 12 animals (80% cows and 20% buffaloes) needs a total investment
estimated at Rs. 2.19 million out of which the capital cost of the project is Rs.2.01
million with working capital of Rs. 0.17 million. It is assumed that starting from 12
animals in year 1, the herd of animals would be increased to approximately 50 animals
till 10th year of business, keeping mortality rate and culling rate each at 5%.
The Internal Rate of Return (IRR), payback period and Net Present Value (NPV) of the
project are estimated to be 48%, 4.26 years and Rs. 5.85 million respectively. The farm
will provide employment opportunity to 02 individuals. The legal status of the project is
proposed as sole proprietorship.
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

The proposed dairy farm would be established on leased land with purpose built shed
constructed on conventional housing system. The farm would start the operations with
12 animals (10 cows and 2 buffaloes having daily per animal milk production of 13 and
8 litres respectively) to achieve milk production of 34,560 liters by the end of first year,
excluding the milk consumed by suckling calves. The breeding of animals would be
planned through Artificial Insemination method. Female calves would be given special
attention and raised as heifers and male calves would be sold for fattening purpose.
The milk will be primarily sold to bulk buyers at the rate of average Rs.60 per liter. The
farm will also offer milk sale to domestic individual consumers.
7. CRITICAL FACTORS
Background knowledge and related experience of the entrepreneur in dairy farm
operations.
Application of good husbandry practices such as timely feeding, watering and

vaccination to ensure animals health and disease-free environment.
Awareness about the supply and demand of milk in the market as demand of
milk is relatively higher in summer as compared to winter season.
Efficient marketing of the project and bulk supply to wholesalers.
8. INSTALLED & OPERATIONAL CAPACITY

In the proposed study, initially twelve (12) animals, preferably 80% cows and 20%
buffaloes, are recommended to obtain optimum milk production in the first year of
project. It is assumed that on average, 70-80% animals would be in lactation on farm.
The female heifers born at farm would be added in milking herd; hence the number of
animals would be 50 at 10th year of project. The male calves would be sold for meat.
Although, buffaloe milk has higher fat content (9-10%) as compared to cows milk (3-
6%) but total milk production of cows in average lactation period of 300 days is higher
as compared to buffaloes. The dairy farm will have the capacity to sale 34,560 liters
of milk, primarily directly to consumers and then milk contractors and processors in its
first year of operation.
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Dairy farming is a viable business proposition for both rural and peri-urban areas of
Pakistan. There is almost equal demand for milk in rural and peri urban areas around
the major cities such as Lahore, Faisalabad, Jhang, Sahiwal, Pakpattan, Jehlum,
Peshawar, Charsadda, D.I. Khan, Quetta, Zhob, Lasbela, Karachi, Hyderabad, Sakkar
etc. across the country; hence, from the demand point of view, the said project offers
good investment opportunities for small scale investment in all provinces of country.
10. POTENTIAL TARGET MARKETS
Apart from Lahore, Sialkot, kasur, Gujranwala, Bahawalpur, Okara, Dadu, Lasbela, D. I.
Khan etc., dairy farming in rural and peri-urban locations around all major cities are the
primary markets for dairy farming. The target clients for a dairy farm business include;
domestic consumers, milk contractors and suppliers, milk collection and processing
companies and dairyproducts manufacturing companies.
11. DAIRY PRODUCTION PROCESS

Selection of good dairy buffalo breeds namely, Nili-Ravi and Kundi and cattle
breeds such as Sahiwal, Red Sindhi and Cholistani. Crossbred cows (cross of
local non-descript cows with semen of exotic breeds e.g. Holstein, Friesian and
Jersey) may also be considered.
Selection of animals with excellent body condition and udder health: average daily
milk production of 8 liters or above for buffaloes and 12 liters or above for cows in
2nd or 3rd lactation, essentially with no disease history.
Housing: Good housing leads to good management practices and ultimately
optimum production. Generally, housing should be;
i. Less expensive
ii. Well ventilated, comfortable and dry with hygienic environment
iii. Equipped with easy drainage system and mechanism for removal
of dung urine and waste material
iv. Protected from extreme environmental conditions
v. Having maximum sun exposure: axis of length to be east to west
vi. Available with feed and water for 24 hours
vii. Planned so that future expansion may be possible when required
Feeding: Milking animal should be fed 1 kg of concentrate feed per 3 litres of milk
produced; hence animal with 10 litres of milk production would be offered 3-3.5 kg
of concentrate. Green fodder should be supplied @ 8-10% of body weight to the
animals. Additionally, urea molasses blocks and salt blocks can help in better milk
production. New born calves should be fed colostrum and milk @ 8-10% of body
weight for first month of age. After that, green fodder should be added to its
feeding plan
Watering: Supply of clean drinking water in clean troughs i.e. 50 to 80 liters of
water consumption/adult animal/day round the clock maintains the milk production
capacity of the animal.
Breeding: Efficient and timely Artificial Insemination (AI) of good genetic worth is a
key to success in good breeding programs of herd. The detection of heat in
buffaloes should be given special attention as they do not show signs of heat
(silent heat).
Calving: Pregnant animals should be given special attention in third trimester of
pregnancy and should be separated in pregnancy pens, if possible. Veterinary
assistance should be sought out in case of emergency. Calf care and heifer
management is very important in maintaining dairy farm production.
Udder health: Hygienic and clean milking twice a day (morning/ evening) lowers
the chances of mastitis as udder health and hygiene is most important in dairy
animals.
Storage: Proper storage of milk should be done preferably at temperature of 4 Oc.
Disease management: De-worming for endoparasitic infestations is necessary in
calves born at farm. Timely vaccination against infectious diseases should be done
as a prophylactic measure. At a well managed farm, mortality should not exceed 2-
3% per annum. The sick animals should be separated from rest of the animals and
kept in quarantine. Following is a tentative vaccination schedule;
Table 1: Tentative Vaccination Schedule

Disease Vaccine Time for vaccination Dose/ Administration
Foot & Mouth FMD (VRI) February/March & 5 ml sub cut.
Disease (FMD) September/October
Black Quarter BQ March/April 5 ml sub cut.
Haemorrhagic HS (VRI) May/June & 5 ml / 300 kg body wt

Septicemia (HS) November/December sub cut.
Anthrax Anthrax August 1 ml sub cut.
Brucella Abortus BA Once in life for heifers 1ml sub cut.

(4-12 months of age)
(VRI: Veterinary Research Institute, Lahore)
Record keeping: The animals should be ear-tagged having information of animal

such as breed, age, date of birth / purchase, number of lactations, vaccination etc.
The records for daily milk yields, weight, Artificial Inseminations (AI), calving,
vaccination and medication etc. are also important.
Culling: Good productive animals should be selected and uneconomical animals
should be culled.
Care: Regular technical assistance from the livestock professionals and experts.
Returns on the scheme and its profitability are highly dependent on the efficiency of
above mentioned factors. In case dairy farm is not able to attain its target milk
production or implement effective husbandry practices, it will not be able to cover the
potential market and recover payments; hence, cost of operating the business will
increase.
12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of
dairy farm project under the Prime Ministers Youth Business Loan. Various cost and
revenue related assumptions along with results of the analysis are outlined in this
section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexure.
12.1. Project Economics

The following table shows Internal Rate of Return (IRR), payback period and Net
Present Value (NPV) of the proposed project;
Table 2: Project Economics

Description Details
Internal Rate of Return (IRR) 48%
Payback Period (Year) 4.26
Net Present value (NPV) Rs. 5,852,328
12.2. Project Financing

Following table provides details of the equity required and variables related to bank
financing;
Table 3: Project Financing
Description Details
Total Equity (10%) Rs. 218,736
Bank Loan (90%) Rs. 1,968,626
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Years) 1
12.3. Project Cost

Following table shows the operational requirements identified for the proposed
business;
Table 4: Capital Investment for the Project
Capital Investment Amount (Rs.)

Building/ Infrastructure 373,068
Cows and buffaloes cost 1,460,000
Furniture and fixture 10,000
Machinery & equipment 97,800
Pre-operating costs 72,065
Total Capital Costs 2,012,933
Raw material inventory 54,429
Cash in hand 100,000
Upfront land lease for 1/2 acres per year 20,000
Total Working Capital 174,429
Total Project Cost 2,187,362
12.4. Space Requirement

Following table shows calculations for project space requirement;
Table 5: Space Requirement in Year 1

Area per Total Required Area
Description
animal (Sqft) Sq.ft. (year 1-3)
Shed space for cows 40 480
Open paddock for cows 80 960
Shed space for buffalos 50 100
Open paddock for buffalos 100 200
Shed space for calves younger than 1 year 20 240
Open paddock for calves younger than 1 year 40 480
Shed space for calves older than one year 25 125
Open paddock for calves older than one year 50 250
Stores for fodder, concentrate & machine - 150
Pregnancy/ Calving pen - 140
Store for milk and utensils - 150
Servant washroom - 80
Total space requirements 3,355
Total investment in construction of building and infrastructure is estimated to be

approximately Rs. 0.37 million. Since, farm space would be increased as the number of
animals increases in herd; hence shed is constructed keeping in view the expected
expansion in the start of year 4. Considering expansion in herd size, total land
requirement is estimated at 4 Kanals (0.5 acres). It is proposed that 4 Kanals land be
acquired on lease at the start of the project and Rs. 20,000 is appropriated as annual
lease expense.
12.5. Machinery and Equipment

Following table provides list of machinery and equipment required for the proposed
dairy farm;
Table 6: List of Machinery and Equipment
Description Unit Rate (Rs.) No. Cost (Rs.)

Calf feeder 1,200 4 4,800
Teat dip cup 500 2 1,000
Fodder cutter 20,000 1 20,000
Water pump 20,000 1 20,000
Freezer 22,000 1 22,000
Hand carts 5,000 2 10,000
Miscellaneous 20,000 Lump sum 20,000
(Milk utensils, buckets etc.)

Total 97,800
12.6. Furniture Requirement

Table 7: Furniture Requirements
Description Qty Rate (Rs.) Cost (Rs.)

Furniture and fixture Lump sum 10,000 10,000
Total 10,000
12.7. Raw Material Requirement

Following tables show raw material requirement to run the proposed dairy farm in first
year of production;
Table 8: Daily Feeding Requirements for One Cow*

Description Kg/ Animal/ Day** Rs./ Kg Amount (Rs.)
Green fodder 32.00 2 64.00
(@8-10 % of body weight)
Silage/ wheat straw 9.38 5 46.90
Concentrate 4.33 35 151.67
(@1 kg for 3 liters of milk)
Total daily feed 262.57
* Average. weight of cow is assumed to be 400 kg with 13 liters of daily milk production for 300 days
lactation period
** Figures are rounded off at two decimal places.
Table 9: Daily Feeding Requirements for One Buffalo*

(@8-10 % of body weight)
Wheat straw 11.73 5 58.63
Concentrate 2.67 35 93.33
(@1 kg for 3 liters of milk)
Total 231.96
* Average weight of buffalo is assumed to be 500 kg with average 8 liters of daily milk production for 300
days lactation period
** Figures are rounded off at two decimal place.
Table 10: Daily Feeding Requirements of One Calf* (younger than 1 year)
Total 23.30
* Average weight of calf younger than one year is assumed to be 80 kg.
Table 11: Daily Feeding Requirements of One Calf* (older than 1 year)

Total 58.25
* Average weight of calf older than one year is assumed to be 180 kg.
Table12: Total Cost of Feeding in Year 1
Description No. of Animals Cost in Year 1 (Rs.)

Cows 10 958,368
Buffaloes 2 169,330
Female calves older than 1 year 6 127,568
Male calves younger than 1 year 6 51,026
Total 1,306,292
12.8. Human Resource Requirement

Table 13: Human Resource Requirement
Description No. Monthly Salary Annual Salary
(Rs.) (Rs.)
Owner/ Farm supervisor 01 15,000 180,000
Farm worker 01 10,000 120,000
Total 02 300,000
One trained farm worker will be required to assist the owner for husbandry practices
and farm operations.
12.9. Revenue Generation

Table 14: Revenue Generation
Description Units Quantity Rate Annual Revenue in

(Rs./Unit) Year 1 (Rs.)
Milk sales Liters 34,560 60* 2,073,600
Sale of male calves Calf 3 15,000 45,000
Total 2,118,600
* Average sale price of milk is estimated at Rs. 60.
12.10. Other Costs

An essential cost to be borne by the farm is electricity cost which is assumed to be Rs.
60,000 per annum. The cost of vaccination & medication for adult animals and young
calves is taken as Rs. 550 and Rs. 200 per annum respectively, hence in year 1, the
total cost is Rs. 7,800. The Artificial Insemination (AI) cost is assumed to be Rs. 2,000
per animal; hence, it would be Rs. 24,000 per annum respectively. The communication
expense is Rs. 12,000 per annum. The travelling expense is estimated to be 1% of total
revenue hence Rs. 21,186 in year one.
13. CONTACTS OF SUPPLIERS AND CONSULTANTS

Table 15: List of Suppliers and Consultants
Consultants
Dr. M. Sarwar Prof. Dr. Muhammad Younas
Dean, Faculty of Animal Husbandry Faculty of Animal Husbandry
University of Agriculture, Faisalabad University of Agriculture, Faisalabad
Ph: 041-9920161-70 Ph: 041-9200161-170
Dr. Muhammad Abdullah Dr. Nawaz Saeed
Dean, Faculty of Animal Production Director General (Extension)
University of Veterinary & Animal Sciences, Livestock & Dairy Development Department
Lahore (L&DD), Govt. Of Punjab,
Ph: 042 - 99211374 16-Cooper Road, Lahore,
Ph: 042-99201117
Feed Suppliers AI / Semen Suppliers
ICI Pakistan Cattle Feed Al - Haiwan Sires, 5-Km, Pakpattan Road,
63-Mozang Road Lahore Sahiwal
Ph: 042-36370042 Ph: 040-4501271-72
Doctors Dairy Feeds Altaf & Company, Altaf & Co Plaza, 16/1, Out
203/7, UC-3, Cattle colony, Bin Qasim, Fall Road, Lahore.
Karachi. Ph: 042-35763411-4
Ph: 021-5081923-27
Alhalal Wanda Ghazi Brothers
Al-Halal Livestock Concern Company B-35 KDA Scheme no 1, Mian Muhammad
Super High Way Jahania Shah Road, Karachi.
Ph: 065-2002373 Ph: 021-4543579
Machinery Suppliers Milk Contractors/ Processors
Kurdson Industries Nestle Pakistan
Sabri Road, Angoori Scheme, Baghbanpura, 308, Upper Mall, Lahore
Lahore Ph: 042-35757082-95
UAN +92-42-111637853
Ph: 042-36843472
Nestle, Engro, Gourmet, etc.
Gourmet Pvt. Ltd.
73-F, Quid-e- Azam Industrial estate,
Kot lakhpat Lahore
Ph: 0423-5121052
Livestock Mandies
The animals may be procured from local livestock breeders and livestock mandies scheduled in
different districts such as Pattoki, Okara, Bahawalnagar, Lodhran, Vehari, Khanewal, Arifwala,
Pakpattan etc. scheduled by Livestock and Dairy Development Department, Govt. of The
Punjab Lahore. Free Landline: 0800-78685, 0800-78686
14. ANNEXURE
14.1. Income Statement

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 2,118,600 2,328,810 2,894,986 3,557,465 4,348,831 5,453,588 7,304,459 10,607,147 16,538,134 22,759,469
Cost of goods sold (Feed, vaccine, medication, AI, electricity etc) 1,398,092 1,545,725 1,731,681 2,068,111 2,417,994 3,071,041 3,807,597 5,196,041 7,167,419 9,276,570
Gross Profit 720,508 783,085 1,163,305 1,489,354 1,930,838 2,382,548 3,496,862 5,411,107 9,370,715 13,482,899
General administration & selling expenses

Administration expense 300,000 330,000 363,000 399,300 439,230 483,153 531,468 584,615 643,077 707,384
Rental expense
p 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159
Communications expense (phone, fax, etc.) 12,000 13,200 14,520 15,972 17,569 19,326 21,259 23,385 25,723 28,295
Transportation Cost 21,186 23,288 28,950 35,575 43,488 54,536 73,045 106,071 165,381 227,595
Depreciation expense 29,433 29,433 29,433 29,433 69,146 69,146 69,146 69,146 119,768 119,768
Amortization expense 7,207 7,207 7,207 7,207 7,207 7,207 7,207 7,207 7,207 7,207
Subtotal 389,826 425,128 467,310 514,107 605,922 665,578 737,556 829,398 1,004,028 1,137,408
Operating Income 330,682 357,957 695,995 975,247 1,324,915 1,716,969 2,759,306 4,581,708 8,366,687 12,345,491
Other income - - - - - - - - - -
Earnings Before Interest & Taxes 330,682 357,957 695,995 975,247 1,324,915 1,716,969 2,759,306 4,581,708 8,366,687 12,345,491
Interest expense 163,395 149,590 131,445 111,794 90,513 67,465 42,504 15,471 - -
Earnings Before Tax 167,287 208,367 564,550 863,453 1,234,403 1,649,505 2,716,802 4,566,237 8,366,687 12,345,491
Taxable earnings for the year 167,287 208,367 564,550 863,453 1,234,403 1,649,505 2,716,802 4,566,237 8,366,687 12,345,491
Tax - - 16,455 52,018 107,660 177,401 401,700 892,371 2,150,840 3,543,421
NET PROFIT/(LOSS) AFTER TAX 167,287 208,367 548,095 811,435 1,126,742 1,472,104 2,315,102 3,673,866 6,215,848 8,802,070
Balance brought forward 167,287 375,654 923,749 1,735,184 2,861,926 4,334,030 6,649,132 10,322,998 16,538,846
Total profit available for appropriation 167,287 375,654 923,749 1,735,184 2,861,926 4,334,030 6,649,132 10,322,998 16,538,846 25,340,915
Dividend - - - - - - - - - -
Balance carried forward 167,287 375,654 923,749 1,735,184 2,861,926 4,334,030 6,649,132 10,322,998 16,538,846 25,340,915
14.2. Balance Sheet

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 100,000 293,222 306,424 649,370 1,269,336 2,260,676 3,636,481 6,014,078 10,171,832 18,512,951 31,594,505
Raw material inventory 54,429 63,133 74,127 93,195 114,253 153,052 199,147 285,465 413,674 561,930 -
Pre-paid annual land lease 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159 -
Total Current Assets 174,429 378,355 404,751 769,185 1,412,871 2,445,938 3,871,059 6,338,517 10,628,377 19,122,040 31,594,505
Fixed assets
Land - - - - - - - - - - -
Building/Infrastructure 373,068 354,414 335,761 317,107 914,972 865,492 816,013 766,534 1,495,842 1,407,423 1,319,005
Animals (original herd) 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000 1,460,000
Revaluation Surplus/ (loss) - 144,600 318,180 485,566 934,350 1,328,205 2,140,494 3,445,536 4,421,057 5,434,699 -
Net value of animals 1,460,000 1,604,600 1,778,180 1,945,566 2,394,350 2,788,205 3,600,494 4,905,536 5,881,057 6,894,699 1,460,000
Machinery & equipment 97,800 88,020 78,240 68,460 147,551 128,884 110,217 91,550 189,708 159,358 129,009
Furniture & fixtures 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 -
Office vehicles - - - - - - - - - - -
Office equipment - - - - - - - - - - -
Total Fixed Assets 1,940,868 2,056,034 2,200,181 2,338,133 3,462,872 3,787,581 4,530,723 5,766,619 7,568,608 8,462,481 2,908,014
Intangible assets
Pre-operation costs 72,065 64,859 57,652 50,446 43,239 36,033 28,826 21,620 14,413 7,207 -
Training costs - - - - - - - - - - -
Total Intangible Assets 72,065 64,859 57,652 50,446 43,239 36,033 28,826 21,620 14,413 7,207 -
TOTAL ASSETS 2,187,362 2,499,249 2,662,584 3,157,764 4,918,982 6,269,552 8,430,609 12,126,757 18,211,398 27,591,728 34,502,519
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable - - - - - - - - - - -
Export re-finance facility - - - - - - - - - - -
Short term debt - - - - - - - - - - -
Other liabilities - - - - - - - - - - -
Total Current Liabilities - - - - - - - - - - -
Other liabilities
Lease payable - - - - - - - - - - -
Deferred tax - - - 16,455 68,473 176,133 353,534 755,234 1,647,605 3,798,445 7,341,866
Long term debt 1,968,626 1,968,626 1,750,014 1,513,258 1,256,852 979,163 678,427 352,730 - - -
Total Long Term Liabilities 1,968,626 1,968,626 1,750,014 1,529,713 1,325,324 1,155,296 1,031,961 1,107,964 1,647,605 3,798,445 7,341,866
Shareholders' equity
Paid-up capital 218,736 218,736 218,736 218,736 924,125 924,125 924,125 924,125 1,819,738 1,819,738 1,819,738
Gain/ (Loss) on revaluation of animals - 144,600 318,180 485,566 934,350 1,328,205 2,140,494 3,445,536 4,421,057 5,434,699 -
Retained earnings - 167,287 375,654 923,749 1,735,184 2,861,926 4,334,030 6,649,132 10,322,998 16,538,846 25,340,915
Total Equity 218,736 530,623 912,570 1,628,051 3,593,658 5,114,256 7,398,648 11,018,793 16,563,793 23,793,283 27,160,653
TOTAL CAPITAL AND LIABILITIES 2,187,362 2,499,249 2,662,584 3,157,764 4,918,982 6,269,552 8,430,609 12,126,757 18,211,398 27,591,728 34,502,519
14.3. Cash Flow Statement

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 - 167,287 208,367 548,095 811,435 1,126,742 1,472,104 2,315,102 3,673,866 6,215,848 8,802,070
Add: depreciation expense - 29,433 29,433 29,433 29,433 69,146 69,146 69,146 69,146 119,768 119,768
amortization expense - 7,207 7,207 7,207 7,207 7,207 7,207 7,207 7,207 7,207 7,207
Deferred income tax - - - 16,455 52,018 107,660 177,401 401,700 892,371 2,150,840 3,543,421
Raw material inventory (54,429) (8,704) (10,994) (19,068) (21,058) (38,799) (46,095) (86,318) (128,209) (148,256) 561,930
Cash provided by operations (54,429) 195,222 234,013 582,122 879,035 1,271,956 1,679,763 2,706,837 4,514,381 8,345,406 13,034,396
Financing activities
Change in long term debt 1,968,626 - (218,611) (236,756) (256,407) (277,688) (300,736) (325,697) (352,730) - -
Change in short term debt - - - - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159
Land lease payment (20,000) (22,000) (24,200) (26,620) (29,282) (32,210) (35,431) (38,974) (42,872) (47,159) -
Lease principal repayment - - - - - - - - - - -
Issuance of shares 218,736 - - - 705,388 - - - 895,613 - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing ac 2,167,362 (2,000) (220,811) (239,176) 446,320 (280,616) (303,957) (329,240) 538,986 (4,287) 47,159
Investing activities
Capital expenditure (2,012,933) - - - (705,388) - - - (895,613) - -
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing ac (2,012,933) - - - (705,388) - - - (895,613) - -
NET CASH 100,000 193,222 13,202 342,946 619,966 991,340 1,375,806 2,377,596 4,157,754 8,341,119 13,081,555
Cash balance brought forward 100,000 293,222 306,424 649,370 1,269,336 2,260,676 3,636,481 6,014,078 10,171,832 18,512,951
Cash available for appropriation 100,000 293,222 306,424 649,370 1,269,336 2,260,676 3,636,481 6,014,078 10,171,832 18,512,951 31,594,505
Dividend - - - - - - - - - - -
Cash carried forward 100,000 293,222 306,424 649,370 1,269,336 2,260,676 3,636,481 6,014,078 10,171,832 18,512,951 31,594,505
14.4. Useful Project Management Tips

Technology
List of Machinery & Equipment: (As per Section 12.5)
Animal Selection: Selection of disease free animals with good breed
characteristics, body conditions and health.
Feed, Vaccination, Medication, AI Services: Should be procured from
reputed and reliable sources.
Energy Requirement: Should not be overestimated or installed in excess
and alternate source of energy for critical operations be arranged in advance
Machinery Suppliers: Should be asked for after sales services under the
contract with the machinery suppliers
Quality Assurance & Standards: Quality standards need to be defined
and a system of record keeping should be developed to check quality
standards to improve credibility
Marketing
Advertisement and Promotion: Business promotion and dissemination
through banners and launch events is highly recommended. Product
broachers from good quality service providers
Sales & Distribution Network: Local contacts and relationship building
with farmers and dairy farms is important for developing business.
Human Resources
List of Human Resource: (As per Section 12.8)
Adequacy & Competencies: Skilled and experienced staff should be hired
for the project.
Performance Based Remuneration: Employees should be paid and
rewarded on the basis of their performance.
Training & Skill Development: Encouraging training and skill
development of self & employees through experts and exposure of best
practices can be an asset for the business. Least cost options for Training
and Skill Development (T&SD) may be linked with compensation benefits and
awards.
14.5. Useful Links

Prime Ministers Office, www.pmo.gov.pk
Government of Pakistan, www.pakistan.gov.pk
Ministry of Industries & Production, www.moip.gov.pk
Ministry of National Food Security & Research, www.mnfsr.gov.pk
Ministry of Education, Training & Standards in Higher Education,
www.moptt.gov.pk
Government of Punjab, www.punjab.gov.pk
Government of Sindh, www.sindh.gov.pk
Government of Khyber Pakhtunkhwa, www.khyberpakhtunkhwa.gov.pk
Government of Balochistan, www.balochistan.gov.pk
Government of Gilgit Baltistan, www.gilgitbaltistan.gov.pk
Government of Azad Jammu & Kashmir, www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
www.fpcci.com.pk
Punjab Board of Investment & Trade (PBIT), 23-Aikman Road, GOR-I, Lahore
Tel. 042-99205201, www.pbit.gop.pk
Sindh Board of Investment (SBI), 1st Floor, Tower B, Finance & Trade Center,
Shahra-e-Faisal, Karachi, Tel. 021-99207512-4, www.sbi.gos.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
First Women Bank Limited (FWBL), www.fwbl.com.pk
Pakistan Agricultural Research Council (PARC), Islamabad, Tel. 051-9203966
www.parc.gov.pk
National Agricultural Research Centre (NARC), Islamabad, Tel. 051-9255061,
www.parc.gov.pk
National Veterinary Laboratory, NARC, Islamabad Tel. 051-9255108
Balochistan Agricultural Research Centre (BARC), Quetta, Tel: 081-9213286-7,
www.parc.gov.pk
Southern-zone Agricultural Research Centre (SARC), Karachi, Tel: 021-
99261661, 99261561, www.parc.gov.pk
Arid Zone Research Institute (AZRI), Bahawalpur, Tel: 0622-876833,
www.parc.gov.pk
Punjab Livestock & Dairy Development Board (PLDDB), 11- Shami Road, Lahore
Cantt. Tel. 042-36676821, www.plddb.pk
University of Agriculture, Faisalabad, www.uaf.edu.pk
Lasbela University of Agriculture, Water & Marine Sciences, Lasbela,
www.luawms.edu.pk
Sindh Agriculture University, Tondojam, www.sau.edu.pk
Gomal College of Veterinary Sciences, Dera Ismail Khan, www.gu.edu.pk

KPK Agricultural University, Peshawar, www.aup.edu.pk
Pir Mehr Ali Shah Arid Agricultural University, Rawalpindi, www.uaar.edu.pk
University College of Veterinary & Animal Sciences, Islamia University
Bahawalpur (IUB), www.iub.edu.pk
University of Veterinary & Animal Sciences (UVAS), Out Fall Road, Lahore,
www.uvas.edu.pk
Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk
Nestle Sarsabz Training Institute, Renala Khurd, Okara c/o Nestle Lahore, Tel:
0423-111-637-853
Animal Husbandry In-Service Training Institute (AHITI), Peshawar, Tel. 091-
2960109, 9210309
Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-
99220140
Al - Haiwan Sires Training Institute, Jogi Chowk, Sahiwal, Tel. 040-4227196,
4221486, 061-6775708
Altaf & Co Livestock Training Institute, Altaf & Co Plaza,16/1,Out Fall Road,
Lahore, Tel: 042-35763411-4, www.altafandco.com
Solve Agri Pak Ltd, F-6/2, Main Link Road, Model Town, Lahore, Tel: 042-
35969602-3 www.solveagripak.com
Dairy & Rural Development Foundation (DRDF), Lahore,
www.dairyproject.org.pk
Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
Directorate of Livestock Farms, L&DD, Lahore, Tel: 042-99201126-7
Directorate of Small Holder Dairy Development, Gujranwala, Tel: 055-9200410-
11, 9200194
Buffalo Research Institute Bhunikey, District Pattoki, Tel: 049-4421887, 4420072
Livestock Experiment Station (LES), Dera Chahl Lahore, L&DD, Punjab, Tel:
042-99239818, 99239819
Research Centre for Conservation of Sahiwal Cattle (RCCSC), Jhang, Tel: 047-
9200329, 9200371, www.rccsc.com.pk
Directorate of Livestock Training Centre (LSTC), Bahadurnagar, Okara, Tel: 044-
2661393
Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk
Agriculture & Livestock Department, Government of KPK,
www.khyberpakhtunkhwa.gov.pk
Livestock & Dairy Development, Government of Balochistan,
www.balochistan.gov.pk
15. KEY ASSUMPTIONS

Table 16: Key Assumptions
Description Details
Milk sale price (cow) Rs. 60
Milk sale price (buffalo) Rs. 60
Milk sale price growth rate (%) 10
Capacity utilization (%) 100
Cow: Buffalo ratio in the herd 80:20
Average lactation length of herd (days) 300
Purchase price of a cow (Rs.) 120,000
Purchase price of a buffalo (Rs.) 130,000
Sale price of a low yielder cow (Rs.) 60,000
Sale price of a low yielder buffalo (Rs.) 60,000
Sale price of one year male calf (Rs.) 15,000
Milk yield per cow / day (liters) 13
Milk yield per buffalo / day (liters) 8

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Pre-Feasibility Study

Small and Medium Enterprises Development Authority

2. PURPOSE OF THE DOCUMENT

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

Application of good husbandry practices such as timely feeding, watering and

8. INSTALLED & OPERATIONAL CAPACITY

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

10. POTENTIAL TARGET MARKETS

11. DAIRY PRODUCTION PROCESS

Table 1: Tentative Vaccination Schedule

Haemorrhagic HS (VRI) May/June & 5 ml / 300 kg body wt

Brucella Abortus BA Once in life for heifers 1ml sub cut.

Record keeping: The animals should be ear-tagged having information of animal

12. PROJECT COST SUMMARY

12.1. Project Economics

Table 2: Project Economics

12.2. Project Financing

12.3. Project Cost

Capital Investment Amount (Rs.)

12.4. Space Requirement

Table 5: Space Requirement in Year 1

Total investment in construction of building and infrastructure is estimated to be

12.5. Machinery and Equipment

Description Unit Rate (Rs.) No. Cost (Rs.)

(Milk utensils, buckets etc.)

12.6. Furniture Requirement

Description Qty Rate (Rs.) Cost (Rs.)

12.7. Raw Material Requirement

Table 8: Daily Feeding Requirements for One Cow*

Table 9: Daily Feeding Requirements for One Buffalo*

Description Kg/ Animal/ Day** Rs./ Kg Amount (Rs.)

Description Kg/ Animal/ Day** Rs./ Kg Amount (Rs.)

Table12: Total Cost of Feeding in Year 1

Description No. of Animals Cost in Year 1 (Rs.)

12.8. Human Resource Requirement

12.9. Revenue Generation

Description Units Quantity Rate Annual Revenue in

12.10. Other Costs

13. CONTACTS OF SUPPLIERS AND CONSULTANTS

14.1. Income Statement

General administration & selling expenses

14.2. Balance Sheet

Liabilities & Shareholders' Equity

14.3. Cash Flow Statement

14.4. Useful Project Management Tips

14.5. Useful Links

Gomal College of Veterinary Sciences, Dera Ismail Khan, www.gu.edu.pk

15. KEY ASSUMPTIONS

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