Calves Farm
Mr Badwi Sawan
Kferhabou
06/250 267
BIAT Experts
May, 2011
Strictly Confidential
Table of Contents
Executive Summary ...........................................................3
Market description .............................................................4
Financial Projections ..........................................................5
Loan ............................................................................... 5
Projected Income Statements ............................................. 5
Projected Cash Flows ........................................................ 6
Page 2
Executive Summary
 Mr Badwi Sawan is a farmer for many years. He’s buying young and new born calves,
feed them for few months and then sell them to butchers.
 He owns the premises upon which he will raise the calves in his town, Kferhabou.
 At the same time, Mr Badwi is a school bus driver, from which he generates a net
income of around $4000/year.
 He’s planning, along with his daughter, to expand his farm by increasing the number of
calves per year.
 His daughter is a teacher, and she’s planning to turn her father’s farm into a big and
successful business. Her plan is divided into different stages:

The first stage is to expand the existing farm by increasing the number of calves.
That’s the stage they are working on right now, and for which they require a
Kafalat loan.

At a later stage, they are planning to buy a certain number of cows and sell the
milk obtained from them in the local market.

Try to convert their farm into a more productive one, by implementing
professional and scientific breeding methods to obtain good quality and increase
production.

Become one of the biggest farms in the North within few years.
 The intended expansion will be by acquiring 12 calves.
 Initial Investment = $13,709. It will be funded through a Kafalat loan of $9,977 (78% of
the Initial Investment) to acquire 12 calves and through Private Equity of around
$2,830 (22% of the Initial Investment) to purchase the feeding materials and pay for
rehabilitation of the farm.
Page 3
Initial Investment
Description
Amount
Source of Funds
Calves (12)
$9,977
Kafalat Loan
Feeding Materials
$2,098
Private Equity
$732
Private Equity
Rehabilitation Costs
Total
$12,807
NB: The 12 calves require around $7,000/year for feeding. It is divided into 2 parts:
-
Mr Badwi has a stock of feeding materials that he has already purchased at low price.
-
The $2,098 listed above will be used to obtain the rest of feeding materials needed.
At the first stage, no personnel needed as Mr Badwi will take care of the calves by himself.
Once the other stages are implemented, new and experienced staff will be hired.
Market description
The demand on meat and especially the local meat is increasing continuously. Most of
Lebanese residents prefer to buy local fresh meat than the imported ones.
For that reason, Mr Badwi intends to expand his farm and breeding more calves as he will get a
good income in return.
The principal will use the net cash flows generated at the end of each year to increase the
number of calves, and to start implementing the other phases of his plan.
Page 4
Financial Projections
Loan
The loan amount of $9,977 will be repaid over a period of 5 years with a grace period of 6
months.
Loan Repayments
Repayments
Year 1
Year 2
Year 3
Year 4
Year 5
1,109*
$2,217
$2,217
$2,217
$2,217
*1st year includes 6 months of grace period, thus repayments will be for the rest 6 months of
the year + 4 years.
Projected Income Statements
Projected Income Statements
Year 1
Year 2
Year 3
Year 4
Year 5
12
13
15
16
18
600
600
600
600
600
Total weight
7,200
7,920
8,712
9,583
10,542
Selling Price per kg
$5.0
$5.0
$5.0
$5.0
$5.0
Total Revenue
$36,000
$39,600
$43,560
$47,916
$52,708
Cost of calves
($9,977)
($10,974)
($12,072)
($13,279)
($14,607)
Feeding costs
($7,008)
($7,709)
($8,480)
($9,328)
($10,260)
($350)
($357)
($364)
($371)
($379)
($17,335)
($19,040)
($20,916)
($22,978)
($25,246)
Earnings before tax
$18,665
$20,560
$22,644
$24,938
$27,461
Less: Income Tax (15%)
($2,800)
($3,084)
($3,397)
($3,741)
($4,119)
Net Profit
$15,865
$17,476
$19,248
$21,197
$23,342
Nb of calves
Average weight of 1 calve(kg)
Veterinary/ medicine costs
Total costs
NB: the number of calves is estimated to increase by 10% every year.
Page 5
Projected Cash Flows
Projected Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
Net Profit
$15,865
$17,476
$19,248
$21,197
$23,342
Private Equity
$2,830
Kafalat Loan
$9,977
Total Cash Inflow
$28,672
$17,476
$19,248
$21,197
$23,342
Cash Inflow
Cash Outflow
Project Cost
($12,807)
Loan Repayments
0
($1,766)
($1,766)
($1,766)
($1,766)
Total Cash Outflow
($12,807)
($1,766)
($1,766)
($1,766)
($1,766)
Net Cash Flow
$15,865
$15,710
$17,482
$19,431
$21,576
Cumulative Cash Flow
$15,865
$31,575
$49,057
$68,488
$90,064
Page 6