Pre-Feasibility Study
DAIRY FARM
(25 Animal)
Small and Medium Enterprise Development Authority
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
st
REGIONAL OFFICE
PUNJAB
Waheed Trade Complex,
1st Floor, 36-Commercial Zone,
Phase III, Sector XX,
Khayaban-e-Iqbal, DHA Lahore.
Tel: (042) 111-111-456
Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk
REGIONAL OFFICE
SINDH
REGIONAL OFFICE
NWFP
REGIONAL OFFICE
BALOCHISTAN
5TH Floor, Bahria
Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk-qta@smeda.org.pk
March, 2002
Pre-Feasibility Study
Dairy Farm (25 Animals)
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-16
Revision
1
Prepared by
SMEDA-Punjab
Approved by
GM Punjab
Issue Date
March 2002
Issued by
Library Officer
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1
1.1
Dairy Farm (25 Animals)
INTRODUCTION
Project Brief
Dairy farming is an agro-based project. Buffaloes & cows are raised for milk production in
an organized manner for commercial purpose. Dairy animals are purchased from the
animal markets or breeders located in Sahiwal, Sheikupura, Faisalabad. Dairy animals are
fed on a high protein diet (concentrate) along with green fodder. The morning and evening
milk may be sold at the farm gate to the middleman or directly to the final consumer. The
milk price varies according to its type (buffalo or cow) and the season. Currently, the pure
buffalo and cow milk is sold at Rs 18 and Rs 15 per liter respectively in the Lahore milk
market. At a village level, the buffalo milk is sold at Rs 13 per liter and cow milk at Rs 11
per liter. Milk prices are lower in winter and higher in summer.
1.2
Opportunity Rationale
Dairy farming is a profitable business for small landholders. More than 70% farmers hold
less than 5 acres of land. Fodder can be grown on this land to feed the dairy animals.
Fodder is cultivated on the land to feed the dairy animals.
Dairy farming is one of the best projects to be effectively carried out on small land
holdings. The return of the land used for feeding animals is higher as compared to land
used for traditional cropping.
1.3
Proposed Capacity
The feasibility study suggests a herd size of 25 animals, which will grow into 50 animals
within 10 years. This size is economical to justify the overhead costs. Cows are also
proposed in the herd as they are high yielders and efficient converters of feed into milk.
A herd mix of 75% buffaloes and 25% cows is recommended for 25-animal dairy farm.
Buffaloes (Nilli, Ravi, Kundi) with second lactation (calving)
19 heads
Cows (Crossbred /Sahiwal) with second lactation (calving)
6 heads
A cow, on average, yields 14 liters of milk a day over a lactation period of 305 days
whereas the buffalo, on average, yields 10 liters a day over a lactation period of 280 days.
1.4
Total Project Cost
The total cost of the project is Rs 1.58 million, out of which capital cost of the project is Rs
1.3 million (for purchasing the animals and constructing the building infrastructure) and
the rest is working capital cost requirement.
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2
Dairy Farm (25 Animals)
CURRENT INDUSTRY STRUCTURE
Dairy farming is not yet considered as a commercial enterprise due lack of proper planning
for the marketing of the milk.
More than 90% of farming is done on subsistence level. There are very few progressive
farmers, which are running the business of dairy farming in a professional manner. Milk
processing was started in the country in late 1970s, which is still facing challenges due to
competition with the unprocessed milk. The processed milk has achieved only 2% of the
total milk market share. Processed milk is not the consumer's preference due to high price
differential. There are 28 milk-processing plants in the country, which were installed in
mid 1980s to promote the usage of processed milk. Most of these milk plants are closed
due to lack of professional management, inadequate milk supply and poor marketing
campaign of processed milk.
Table 2-1 Milk Processing Plants currently in operation
3
Project
Products
Location
Noon Pakistan.
Nestle Milkpak.
Prime Dairies.
Idara-e-Kisan (Halla).
Chaudhry Dairy.
Am-Pak Dairy.
Royal Dairy.
Milk powder/ butter
UHT milk /Ghee
Pasteurized milk/yogurt
Pasteurization milk/UHT
UHT milk, milk powder
Pasteurization milk/
UHT milk
Bhalwal-Sarghodha
Sheikupura &Kabir wala
Manga-Lahore
Pattoki/Lahore
Bhaipheru
Raiwind-Lahore
Karachi
MARKETING
Metropolitan cities are the major markets for the consumption of milk. Currently, the
Gowallas1 collect milk from farmers in villages and deliver it to the consumer’s doorstep
in the cities. Milk collection networks of different processing companies collect milk
directly from the farm and transport it to the processing facilities.
3.1
Total Market Size and Growth
Pakistan is the fifth largest milk producer in the world. Milk production is 25 million tons
from 8 million animal heads.
Raw milk is used for drinking and tea making purpose. In rural areas, milk is used to make
desi ghee, yogurt, curd milk (lassi) and butter. Rural as well as the urban households are
the major consumers of the milk. Milk is also used to make Khoya and different types of
sweets. Milk processing companies use milk as a raw material to formulate different types
of milk i.e. pasteurized milk, UHT milk, condensed milk, skimmed milk, milk powder, etc.
Different value added products like yogurt, ice cream, butter and cheese are also produced
from the raw milk.
1
Local term used for milkman
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Dairy Farm (25 Animals)
The daily milk intake of Lahore is 2-3 million liters and that of Karachi is 4 million liters.
The demand for milk is increased during summers as the consumption of curd milk (lassi)
rises due to hot weather.
The processed milk market has increased its share in quality conscious consumers. During
the last two decades, processed milk has achieved 4% share in the milk market of Lahore.
According to the conservative estimates, the milk market is growing at a growth rate of
4.5% annually with increase in milk consumption.
4
4.1
4.1.1
FARM INPUTS
Land
Land Requirement
About 16 acres of land is required for a dairy farm project of 25 animals. Majority of this
land would be used for growing fodder for the animals. The other part would be used for
building a shed for the animals for protecting them from hostilities of the weather.
Table 4-1 Land Requirement
Description
Shed for Cows
Open Paddock for Cows
Shed for Buffaloes
Open Paddock for Buffaloes
Shed for Calves
Open Paddock for Calves
Shed for Calves (older than one year)
Open Paddock for Calves (older than one year)
Stores for fodder, concentrate & machine room
Utensils & milk storage
Servant Room, Wash room
Water Pond
Land for fodder
Total Land Requirement
4.1.2
Area (Acres)
0.01
0.02
0.02
0.03
0.01
0.02
0.01
0.01
0.01
0.01
0.01
0.02
15.90
16.08
Land Lease
Lease is a better option for a new investor. Land on lease is available in rural areas for a
period of 5-15 years. Advance rent for a few years will be charged initially. Good
agricultural land is available with an annual rent of Rs 3,000-5,000 per acre.
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4.1.3
Dairy Farm (25 Animals)
Suitable Locations
Rural and suburban areas where agriculture land is available on lease or self-owned can be
used for staring a dairy farm. The land should have ground water availability to irrigate
fodder crops.
4.2
4.2.1
Animals
Herd Mix
The ideal herd should consist of 50% cows and 50% buffaloes for the viability of a farm.
This is a fact that the cows are high yielders as compare to buffaloes. But due to
consumers’ preference of buffalo milk, a herd mix of 75% buffaloes and 25% cows is
recommended for 25 animal dairy farm. This means that there will be 19 buffaloes and 9
cows in the herd.
4.2.2
Buffalo Breed
Kundi and Ravi are the best breeds of buffaloes in Pakistan. The average purchase price of
high yielding buffalo on average is Rs 30,000. The price of an animal is dependent on the
season. The prices of buffalo are higher in the summer and the monsoon season, while they
are lower in winter. Milk animals in second lactation are preferred, as the probability of
higher milk production as compared to milk production from buffaloes in third and fourth
lactation periods.
4.2.3
Cow Breeds
Crossbred cows and the cows of Sahiwal breed are available at an average price of Rs
30,000. The price of animals is again dependent on the season. In summer, the prices of
cows are higher, but are lower than average in winter months.
4.2.4
Buffalo Bull
A bull needs to be kept at the farm for impregnation of the buffaloes, as buffaloes can be
silent during the mating period. Bull prices are in the range of Rs 8,000-10,000.
4.2.5
Animal Breeding
Animal breeding is done to improve progeny. This can also be used for reducing calving
intervals. Animal breeding through artificial insemination (AI) will result in better herd
management which in turn, would lead to higher milk yields. Cost of AI is Rs. 100 per
animal for cows.
4.2.6
Animal Markets
Animal markets (mandies), Government and private livestock farms are the main sources
for purchasing milk animals. Animal markets are situated in different places in Punjab.
Sheikupura, Okara, Sahiwal, Arifwala, Muridke and Jhelum are some of the important
markets. These markets operate on rotational basis in a week, or once a month.
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Dairy Farm (25 Animals)
There are different contractors available in the market who help locating the proper animal.
These contractors work on commission basis and the commission rate charged may vary
from 1-2% of the animal cost.
4.2.7
Animal Housing
Animal housing consists of a built up animal shed, a brick soling paddock for animals, one
room for milk storage and another for storing farm equipment. It should be facilitated with
drinking water for animals. The housing should have proper drainage system to keep
hygiene at the farm.
There is no hard and fast rule for the designing of sheds for animals. It should be airy with
protection of the animals from extreme temperatures and strong winds.
As the capital cost will be budgeted for 4 years, therefore the initial infrastructure cost has
been calculated on the basis of 4th year infrastructure requirement.
Table 4-2 Space Requirement
Description
Shed space for a cow/buffalo
Open Paddock for a cow/buffalo
Shed for a calf
Open paddock for a calf
Shed for a calf (older than one year)
Open Paddock for a calf (older than one year)
Stores for fodder & concentrate plus machine room
Utensils & milk storage
Servant room, wash room
Water pond
4.3
Sq ft
39
80
26
40
36
60
12
4
10
14
Total Infrastructure Cost
Description
Shed for Cows
Open Paddock for Cows
Shed for Buffaloes
Open Paddock for Buffaloes
Shed for Calves
Open Paddock for Calves
Shed for Calves (older than one year)
Open Paddock for Calves (older then one year)
Stores for fodder, concentrate & machine room
Utensils & milk storage
Servant Room, Wash room
Water Pond
Total Infrastructure Cost
Sq.ft
273
560
741
1,520
468
720
320
533
395
329
329
623
6,809
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Rate/Sq.ft
150
5
150
5
150
5
150
5
150
150
200
20
Total Cost
40,950
2,800
111,150
7,600
70,200
3,600
47,952
2,664
59,184
49,320
65,760
12,454
473,634
Pre-Feasibility Study
4.4
Dairy Farm (25 Animals)
Farm Machinery
The pre-feasibility suggests, hiring a tractor for fodder sowing. Only few farm equipments
like fodder chopper, water pumps, milk utensils will be purchased.
Table 4-4 Farm Equipment
Farm supplies
Calf feeder
Teat Dip Cup
Toka machine (fodder cutter)
Water pump
Generator (Peter engine–20HP)
Tube Well
Miscellaneous Supplies
Freezer
Cart (Mule drawn)
Ceiling Fans
Exhaust Fans
Miscellaneous farm utensils
Electrical fixtures(lighting, etc)
Total Cost (Rs)
Additional investment required during 4 years2
Total Machinery Cost
4.5
4.5.1
No.
5
3
1
1
1
1
Rate
1,200
350
12,000
5,000
20,000
18,000
Rate
Rs
6,000
1050
12,000
5,000
20,000
18,000
Rs
1
1
3
3
20,000
5,000
2,000
1,800
20,000
5,000
6,000
5,400
7,500
7,500
113,450
21,100
134,550
No.
Feed
Feed Ration
This is given fed with the fodder to increase animal productivity. This ration feed includes
cotton seed cakes, corn gluten, wheat bran, molasses, and choker3. About 1 kg of
concentrate is required for the production of 3 liters of milk. The concentrate feed price is
Rs 4.5 per kg.
4.5.2
Mineral Mixture
This is used as a feed supplement. It includes a mix of minerals (magnesium, iron, sodium
and salts). Mineral mixtures are good source of energy and increase the animal
productivity to give milk.
2
As the capital cost will be budgeted for 4 years, therefore the initial machinery and equipment cost has
been calculated on the basis of 4th year machinery requirement.
3
A byproduct of flour used as feed for dairy animals
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4.5.3
Dairy Farm (25 Animals)
Fodder Crop
Fodder is grown at the land, which is acquired on lease or owned by the entrepreneur. Only
good nutritional fodder crops are suggested to grow. Fodder corps of berseem, millet, and
lucern are grown in winter season while maize and hybrid sorghum are sown in summer.
The fodder yield varies between 10 tons to 40 tons per acre depending upon the fertility of
land.
4.5.4
Daily Fodder Requirement
There is no fixed fodder requirement for the animals but a rule of thumb says that an
animal needs daily fodder equal to 9%-10% of its body weight. According to estimates,
buffalo consumes 40-55 kg fodder daily while cow consumes about 30-40 kg.
4.5.5
Wheat Straw (Toori)
This is used as the roughage component of animal feed. Its price varies from Rs 15-30 per
40 kg, the lowest being during the wheat-threshing season in early May.
Table 4-5 Daily Feed Requirement
Animal
Daily Requirement
(kg)
Cost/kg
Amount
50
5
3
0.08
0.78
4.50
4.08
3.88
14.30
22.26
59
5
3
0.08
0.78
4.50
4.83
3.88
14.30
23.00
Cow
Green Fodder
Dry
Concentrate
Total
Buffalo
Green Fodder
Dry
Concentrate
Total
4.6
4.6.1
Medication
Vaccination & Medicine
Vaccination & medicine is required to prevent any disease outbreak in the animal herd.
Each new animal will be vaccinated before entering into the farm. It will cost Rs. 250 for
both cow and buffalo per year.
4.6.2
Insemination Charges
Insemination charges will be Rs 300 per animal for both cow and buffalo.
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4.7
Dairy Farm (25 Animals)
Labor Requirement
For a dairy enterprise, manpower is required for performing different activities at the farm
e.g. feeding, milking, etc. One mature person can handle eight milk animals easily. Three
farm workers are recommended for handling twenty-five animals. A supervisor cum farm
manager can be hired to look after all the farm activities. A semi skilled person with
primary education is capable of handling the administration and account matters at the
dairy farm.
Table 4-6 Labor Requirement
Description
Assistant Manager
Workers
Total Labor Cost
5
No.
Salary/month
1
5,000
3
2,500
4
7,500
Annual Salary
60,000
90,000
150,000
FARM OUTPUT
5.1.1
Lactation Period
The lactation period is the period during which the animals provide milk. These animals
are called wet animals. Generally the lactation days of cows are 305 days and that of
buffaloes is 280 days. For calculation, the feasibility has taken 77% of the total number of
cows as wet cows and 67% of the total number of buffaloes as wet buffaloes. The calving
interval in a buffalo is about 18-20 months, while cow has15-16 months.
5.1.2
Milk Composition
Cow milk is relatively lower in fat contents, which is 3-4% and is higher in solids i.e.
9.5%. The buffalo has higher fat contents, which are 6-8% and lower solids i.e. 6.5%.
5.1.3
Progeny Development
The proposed farmer will develop his own progeny for quality animals. The first progeny
will be capable of giving milk after 3 years in case of cows and 4 years in case of
buffaloes.
5.1.4
Increase in Milk Yield
The milk yield will be improved as a result of controlled breeding. The feasibility has
taken this increase as 12% in cows and 8% in buffaloes for the first four progenies. After
that, it remains constant in the later years. Low yielding animals are sold in the market. On
an average, cows are productive for 7 to 8 years while buffaloes are productive for 8 to 9
years.
5.1.5
Sale Price
Near the urban market, the selling price of buffalo’s milk will be Rs 13 while cow’s milk
will be Rs 11 per liter.
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5.1.6
Dairy Farm (25 Animals)
Evening Milk
Milk can be stored in a freezer with a capacity of 250 liters at the farm if milk collection is
not possible in the evening.
5.1.7
Farm Revenues
Farm revenue will increase with the passage of time, as the milk production will increase
with the growth in herd size.
5.1.8
Male Calves
Male calves will be sold at the end of year for Rs.3, 000-4,000 per animal. They can also
be reared in separately for beef production.
6
KEY SUCCESS FACTORS
Healthy and high yielding milk animals is the keys to success of a farm.
7
7.1
THREATS FOR THE BUSINESS
Animal Disease
Animal diseases like foot and mouth, diarrhea & digestive disorders are very common in
the animals. Only proper vaccination can keep the animals healthy. A mortality loss of
upto 2% in cows and 1% in buffaloes is acceptable.
7.2
Perishability of Product
Milk is a perishable commodity. The natural shelf life of milk is 4 hours at room
temperature after milking. Milk cannot be stored for more than 4 hours if appropriate
refrigeration facility is not available.
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8
Dairy Farm (25 Animals)
PROJECT COST
Table 8-1 Project Economics
Account Head
Building/Infrastructure
Machinery & equipment
Animal Cost4
Pre-operating costs5
Total Capital Cost
Raw material inventory
Upfront land lease rental
Cash
Total Working Capital
Total Project Cost (Rs)
Total Cost (Rs)
473,634
134,550
765,000
32,500
1,405,684
18,747
80,000
80,000
178,747
1,584,431
Table 8-2 Project Returns
Equity
27%
177,130
6.05
IRR
NPV (Rs)
Payback Period (yrs)
Project
22%
491,518
5.47
Table 8-3 Financing Plan
Financing
Equity
Debt
4
5
Ratio
50%
50%
Rs
792,216
792,216
Includes cost of supporting animals i.e. a donkey and a bull costing Rs. 5,000 and Rs. 10,000 respectively.
Includes 5 months salary of Assistant Manager and 1 month salary of workers.
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9
Dairy Farm (25 Animals)
Financial Analysis
9.1
Projected Income Statement
Statem ent Sum m aries
SM ED A
Incom e Statem ent
Y ear 1
863,729
34,690
898,419
Y ear 2
873,534
94,204
967,738
Y ear 3
777,010
130,688
907,698
Y ear 4
792,359
128,138
920,497
Y ear 5
909,263
211,263
1,120,526
Y ear 6
1,009,966
196,077
1,206,043
Y ear 7
1,118,466
260,243
1,378,709
Y ear 8
1,174,389
253,503
1,427,892
Y ear 9
1,361,002
325,096
1,686,098
Y ear 10
1,496,196
358,497
1,854,693
224,967
13,750
11,212
249,929
648,490
230,843
13,860
12,639
257,342
710,396
215,757
12,128
12,560
240,445
667,253
182,011
12,097
13,456
207,564
712,934
220,294
14,039
15,284
249,617
870,909
240,319
15,443
17,487
273,249
932,794
265,767
16,952
19,412
302,131
1,076,577
273,960
17,800
21,963
313,723
1,114,169
319,011
20,315
25,631
364,957
1,321,141
337,940
22,184
29,838
389,961
1,464,731
G eneral adm inistration & selling expenses
Administration expense
Land lease rental expense
O ffice expenses (stationary etc.)
Professional fees (legal, audit, consultants, etc.)
D epreciation expense
Amortization of pre-operating costs
Subtotal
O perating Incom e
150,000
80,000
3,000
4,319
37,137
3,250
277,705
370,785
164,604
80,000
3,292
4,368
37,137
3,250
292,651
417,745
144,504
80,000
2,890
3,885
37,137
3,250
271,666
395,587
158,573
80,000
3,171
3,962
37,137
3,250
286,093
426,840
217,515
80,000
4,350
4,546
37,969
3,250
347,631
523,279
238,693
88,000
4,774
5,050
37,969
3,250
377,735
555,059
261,932
88,000
5,239
5,592
37,969
3,250
401,982
674,595
287,435
88,000
5,749
5,872
37,969
3,250
428,274
685,895
315,420
88,000
6,308
6,805
40,780
3,250
460,563
860,579
346,129
88,000
6,923
7,481
40,780
3,250
492,563
972,169
Earnings Before Interest & T axes
370,785
417,745
395,587
426,840
523,279
555,059
674,595
685,895
860,579
972,169
Interest expense on long term debt
Subtotal
Earnings Before T ax
120,198
120,198
250,587
101,008
101,008
316,737
78,559
78,559
317,028
52,297
52,297
374,543
21,574
21,574
501,704
555,059
674,595
685,895
860,579
972,169
Taxable earnings for the year
Tax
N ET PR O FIT/(L O SS) A FTER TA X
250,587
112,764
137,823
316,737
142,532
174,205
317,028
142,663
174,365
374,543
168,544
205,999
501,704
225,767
275,937
555,059
249,776
305,282
674,595
303,568
371,027
685,895
308,653
377,242
860,579
387,260
473,318
972,169
437,476
534,693
Balance brought forward
Total profit available for appropriation
D ividend
Balance carried forward
137,823
68,911
68,911
68,911
243,117
121,558
121,558
121,558
295,924
295,924
295,924
501,922
501,922
501,922
777,860
777,860
777,860
1,083,142
541,571
541,571
541,571
912,598
456,299
456,299
456,299
833,542
416,771
416,771
416,771
890,089
445,045
445,045
445,045
979,737
489,869
489,869
Revenue from sale of milk
O ther Incom e (Sale of anim als)
Total
Cost of sales
Cost of goods sold (Feed Cost)
M edicine, V accination & Insem ination Charges
D irect electricity & feul charges
Total cost of sales
G ross Profit
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9.2
Dairy Farm (25 Animals)
Projected Cash Flow Statement
Statement Summaries
SMEDA
Cash Flow Statement
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Rs. in actuals
Year 9
Year 10
137,823
37,137
3,250
(1,451)
176,758
174,205
37,137
3,250
376
214,968
174,365
37,137
3,250
2,264
217,016
205,999
37,137
3,250
(4,756)
241,630
275,937
37,969
3,250
(3,245)
313,910
305,282
37,969
3,250
(4,120)
342,381
371,027
37,969
3,250
(2,445)
409,801
377,242
37,969
3,250
(7,153)
411,308
473,318
40,780
3,250
(4,411)
512,937
534,693
40,780
3,250
43,688
622,411
792,216 (112,973) (132,162) (154,611) (180,873) (211,596)
80,000
80,000
80,000
80,000
80,000
(80,000) (80,000) (80,000) (80,000) (80,000) (88,000)
792,216
16,638
1,504,432 (112,973) (132,162) (154,611) (164,236) (219,596)
88,000
(88,000)
-
88,000
(88,000)
-
88,000
(88,000)
54,187
54,187
88,000
(88,000)
-
88,000
88,000
-
-
(54,187)
(54,187)
-
-
Year 0
Operating activities
Net profit
Add: depreciation expense
amortization expense
Raw material inventory
Cash provided by operations
Financing activities
Change in long term debt
Add: land lease expense
Land lease payment
Issuance of shares
Cash provided by / (used for) financing activities
Investing activities
Capital expenditure
Cash (used for) / provided by investing activities
(18,747)
(18,747)
(1,405,684)
(1,405,684)
-
-
-
(16,638)
(16,638)
-
NET CASH
80,000
63,785
82,806
62,405
60,756
94,314
342,381
409,801
411,308
512,937
710,411
Cash balance brought forward
Cash available for appropriation
Dividend
Cash carried forward
80,000
80,000
80,000
143,785
68,911
74,874
74,874
157,680
121,558
36,121
36,121
98,526
98,526
98,526
159,283
159,283
159,283
253,597
253,597
253,597
595,978
541,571
54,407
54,407
464,209
456,299
7,909
7,909
419,217
416,771
2,446
2,446
515,384
445,045
70,339
70,339
780,750
489,869
290,881
13
PREF-16/March, 2002/1
Pre-Feasibility Study
9.3
Dairy Farm (25 Animals)
Projected Balance Sheet
Statement Summaries
SMEDA
Balance Sheet
Assets
Current assets
Cash & Bank
Raw material inventory
Pre-paid annual land lease
Total Current Assets
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Rs. in
Year 9
actuals
Year 10
80,000
18,747
80,000
178,747
74,874
20,199
80,000
175,072
36,121
19,823
80,000
135,944
98,526
17,558
80,000
196,085
159,283
22,314
80,000
261,597
253,597
25,560
88,000
367,157
54,407
29,679
88,000
172,087
7,909
32,124
88,000
128,033
2,446
39,277
88,000
129,724
70,339
43,688
88,000
202,027
290,881
290,881
Fixed assets
Building/Infrastructure
Animals
Revaluation Surplus/ (loss)
Net value of animals
Machinery & equipment
Total Fixed Assets
473,634
765,000
765,000
134,550
1,373,184
449,953
426,271
402,589
395,545
371,031
346,518
322,004
765,000
765,000
765,000
765,000
765,000
765,000
765,000
(12,960) (176,068)
(78,577)
(56,068)
(16,140)
(25,966)
45,922
752,040
588,932
686,423
708,932
748,860
739,034
810,922
121,095
107,640
94,185
80,730
67,275
53,820
40,365
1,323,088 1,122,843 1,183,197 1,185,207 1,187,166 1,139,372 1,173,291
349,641
765,000
60,509
825,509
28,946
1,204,096
322,520
765,000
144,163
909,163
15,288
1,246,971
295,399
765,000
765,000
1,629
1,062,028
Intangible Assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS
32,500
32,500
1,584,432
29,250
29,250
1,527,410
26,000
26,000
1,284,787
22,750
22,750
1,402,032
19,500
19,500
1,466,304
6,500
6,500
1,340,320
3,250
3,250
1,452,248
1,352,909
792,216
792,216
679,243
679,243
547,081
547,081
392,469
392,469
211,596
211,596
Liabilities & Shareholders' Equity
Other liabilities
Long term debt
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Gain/ (Loss) on revaluation of animals
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES
792,216
792,216
1,584,432
-
13,000
13,000
1,324,458
(0)
9,750
9,750
1,311,075
(0)
(0)
792,216
792,216
792,216
808,853
808,853
808,853
808,853
(12,960) (176,068)
(78,577)
(56,068)
(16,140)
(25,966)
45,922
68,911
121,558
295,924
501,922
777,860
541,571
456,299
848,167
737,706 1,009,563 1,254,707 1,570,573 1,324,458 1,311,075
1,527,410 1,284,787 1,402,032 1,466,304 1,570,573 1,324,458 1,311,075
14
PREF-16/March, 2002/1
16,250
16,250
1,570,573
(0)
863,040
60,509
416,771
1,340,320
1,340,320
(0)
863,040
144,163
445,045
1,452,248
1,452,248
(0)
863,040
489,869
1,352,909
1,352,909
Pre-Feasibility Study
Dairy Farm (25 Animal)
10 Key Assumptions
Table 10-1 Financial Assumptions
Project life (years)
Debt Equity ratio
Interest rate on long-term debt
Interest rate on short term debt
Debt tenure (years)
Debt payments per year
Discount rate
Dividend rate6
10
50:50
16%
16%
5
4
15%
50%
Table 10-2 Revenue Assumptions
Starting herd size
Target herd size (in 10 years)
Milk Yield per Cow (liters/day)
Milk Yield per Buffalo (liters/day)
Milk sale price (cow) (Rs)
Milk sale price (Buffalo) (Rs)
Capacity utilization
Production Capacity in first year (liters)
25
50
14
10
11
13
100%
68,993
Table 10-3 Expense Assumptions
Price of a Cow (Rs)
Price of a Buffalo (Rs)
Price of one year male calf (Rs)
Raw material inventory (months)
Up-front land lease (months)
Office expenses (stationary etc)
Professional fees
30,000
30,000
3,500
1
12
2% of admin. expenses
0.5% of revenue
Table 10-4 Economy-Related Assumptions
Electricity growth rate
Water growth rate
Machinery & equipment price growth rate
Wage growth rate
6
10%
10%
10%
10%
Dividend is calculated on the basis of 50% of the profit available for appropriation given that the cash
available for appropriation is more than the dividend payment.
15
PREF-16/March, 2002/1