Poultry Feed

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SUBMITTED TO:

Mr. JAVAID IQBAL (Chairman)

SUBMITTED BY:

NAME ROLL NO

HASAN QURESHI (29)

RAHIQA FATIMA (21)

JAWAD UL HASAN (08)

Msc (Accounting & Finance) 3rd_Semester

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It is stated that the student of Department of Commerce

presently in M.Sc (Accounting & Finance) 3

rd

_{semester have}

given project on “POULTRY FEED INDUSTRY”

Department of Commerce is being aware of the importance of practical

training, requires every M.Sc (Accounting & Finance) student to make a

project Assignment.

We also have also visited a Poultry Feed Industry Named as

SHAMIM

FEED INDUSTRY SAMA SATTA LINK ROAD,

BAHAWALPUR.

We have tried our best to collect the knowledge and information. It has

broadened out knowledge and vision about the market.

This Report is the Explanation of all work done by project Team.

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To

TO

Due to one person we are able to do such a works.

He has produce skills in our selves. We have

dedicated all our work to very

Intelligent Charming, Educated, And Lime light

For student The One and Best

OUR

Teacher:

Thank you Sir

DEDICATED

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Up and above everything, we are thankful to ALMIGHTY

ALLAH, the most Beneficent and merciful, and His Holy

Prophet (Peace be upon him) Who is forever a true torch of

guidance for whole humanity. We am greatly obliged to

“ALLAH” by Whom grace we have been able to complete this

Project Report successfully.

We also offer our thanks to Honorable Mr. Javaid Iqbal for

providing us a chance to work in such a Profitable Industrial

Project.

We also offer our thanks to Respect Parents for being supports

us in all means Financially and Mentally to complete our work.

We also thank to the General Manager Mr. Saqib Faheem

Butt, & officer of the Shamim Feed Industry Sama Satta Link

Road, BAHAWALPUR. to Help us in completing our work..

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Page#

Executive Summary

07 Name & Location of Project

09 Objectives & Key Success Factors

12 Introduction

14 Management

15 Project Scheduling Diagram

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Technical Analysis

18 Market Analysis

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Economic Analysis

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Ratios

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Assumptions underlying Earning Forecast

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Projected Financial Statements

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Break Even Analysis

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Weighted Average Cost of Capital

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Internal Financial Rate of Return

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Auditing Plan

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Exit Strategy and Risk Assessment

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Title:

“POULTRY FEED INDUSTRY”

Project Assignment:

Each student of MSc. (Accounting & Finance) 3

rd

_semester

required preparing a sold Project Assignment. The Project

assignment is given to increase our knowledge about “Project

Management”.

Objectives:

1. SWTO analysis of Poultry Feed.

2. Identify and list down the all aspects and important points

of Feed Industry.

3. What is a Production Process.

4. What is Cost of unit, Means of finance, Estimated income

statement, Estimated Balance sheet, etc.

Approach to Project:

The Team of project will, analyze, summarize, and interpret the

data, which are collected different primary and secondary

sources.

Data Collection:

Both primary and secondary means of data will be used to

collect the Data. Like Books, Internet, personal visits, teacher

guidance etc.

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Primary Sources:

The Team of Project personally visited the FEED INDUSTRY

for practical view: Unit selected is;

‘SHAMIM FEED INDUSTRY BAHAWALPUR’

Questionnaire:

Project Team has prepared a Questionnaire that contains 100

Questions and exists on 15 pages for Management of

‘SHAMIM FEED INDUSTRY BAHAWALPUR’

.

Data Preparation & Analysis:

After collection of all the data through both primary &

secondary means, team will used MS. Word, MS. Excel, MS.

Power point etc.

Time Frame:

Time period is allowed is one month 15/12/2009 to 18/01/2010.

Limitation:

Team has visited the various people but the information given

by them is just based of approximation.

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‘A-1 FEED INDUSTRY’

Head office:

“P.O. BOX. 1245 Small-Industries Bahawalpur”

Tel:

0622-88473

Fax:

+92-62-88844, 88843

Contact Person:

Hasan Qureshi ( CEO)

E-mail:

jawad_hasan@ yahoo.com Jawad ul Hasan

Branch:

Sama Satta Link Road Bahawalpur.

“ Pakistan- Bahawalpur”

“ Small- Industries”

Name of Project

Location of Project

CITY

LOCATION

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1-Brailer Feed (for starter & finisher)

2-Layer Feed (for starter & finisher)

3-Breeder

The capacity of projected plant produces 361200 Bags at 100% Efficiency per Year.

Fixed Cost

36136892

Initial Working Capital +34999705

71136597

Debt

49%

Equity

51%

PRODUCTS

Installed Capacity

Cost of Project

Means of Finance

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Muslim Commercial Bank Ltd. Bahawalpur.

A- Hasan Qureshi

B- Jawad ul Hasan

C- Rahiqa Fatima

“Amin & Co. LDA Plaza, Lahore”

.

“Uzair & Co. Engineering Limited,Lahore”

Names of Lender

Names of Sponsors

Name of Civil

Contaractor

Name of

MachinerySupplier

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Implementation Schedule

Implementation Schedule Sr.N

o. Activities Month Year

1

Engineering studies and designing of civil

works: 2010

Start January 2010

Complete February 2010

3 Construction of Building and Civil works: 2010

Start February 2010

Complete September 2010

4 Order for foreign machinery March 2010

5 Arrival of foreign machinery at sea port September 2010 6 Arrival of foreign machinery a site October 2010

7 Order for local machinery June 2010

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Current Ratio

Current Ratio 2.16 1.87 1.71 Current Ratio 0.00 0.50 1.00 1.50 2.00 2.50 1 2 3 Y ea rs Times Series1

Gross Profit Ratio

G R O S S P R O F I T 12.15% 12.99% 11.54%

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10.0% 11.0% 12.0% 13.0% 14.0% 1

2 3 4

Gross Profit Ratio

Series1

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OPERATING PROFIT 9.30% 10.26% 8.83% 1 ₂ 3 S1 8.0% 8.5% 9.0% 9.5% 10.0% 10.5% year

Operating Profit Ratio

Series1

Net Profit Ratio

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Net Profit Ratio 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 0 1 2 3 4 Series1

Internal Rate of Return

IRR= 24%

Payback Period

2 YEARS.

Sponsor’s Stake

51%

Introduction of Company

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Shamim Group of Industries

• Shamim Feed Industry

• Shamim Ghee Mill

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Brief Description of Market

Role of feed and nutrition for livestock production is as essential as management or animal itself but its fiscal contribution surpasses all other aspects. A good nutrition plays a significant role for optimum production and in my opinion, on a scale of 1 to 10, it has rating of 7. Since last two decades science of nutrition, both in humans and animals, has taken centre-stage in the field of research, rather it is considered more important than pathological or medicinal aspects of production and life.

To provide feed in Punjab Late Mian Mukhtar (elder brother of Mian Mumtaz) constructed a feed mill, Ani Feed in Gujranwala in 1967. The late Dr. Naseer Butt was the first full time veterinarian nutritionist; Dr. Abdul Ghafoor, Dr. Tariq Anjum and Dr. Zia Qureshi joined Ani Feed as his assistants. In 1968 Aftab Feed was built in Karachi by Mian Aftab; but later on changed its name to Mehran Feeds.

Shahzor group (now named as Sabir's) has erected and started Multan Feeds near Multan while Sharif Feed by Sharif's (Shahbaz Sharif family) has also commenced its commercial operation. Hi Tech and SB group are currently in the process to build new feed mills in Sahiwal, both feed mills are planned to manufacture 120 tons pellet feed per hour. Big Feed has also build a new feed mill tower at the old location and currently producing feed from new facility.

Some new feed mill plants are under construction in Punjab; Dawood Feed by Pakasia group near Pattoki and Khawaja Feeds in Multan, both of these plants are expected to start production within this year. OK Feed (Van Aarsen Pellet Mill C750) by OK Oil is being also constructed near Pattoki. Dr. Ghulam Nabi of Asia Feeds too is planning to build a new feed mill in Karachi along with Mr. Nabi Bakhsh of Sind Feeds, moreover Dr. Aslam of Islamabad group is planning for a new feed mill in Okara area. Younger brother of Dr. Sadiq, Mian Javed who recently separated from SB Poultry to start his own brand as Jadeed Chicks is also assembling a feed mill near Khanewal. These feed mills are expected to commence their operation in 2010.

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Province Feed capacity 2003 2004 2005 2006 2007 2008 2009 Punjab 3600 1100 1251 1420 2180 2250 2600 3000 Sindh 1500 370 456 510 420 620 680 875 NWFP 250 90 100 100 120 130 80 50 Balochistan 120 66 84 97 97 100 50 50 Total Pakistan 5470 1625 1891 2127 2817 3100 3410 3975

The Demand of feed in last few years is increasing because the agriculture sector is now growing and the demand of feed is also increasing.

Present Demand

Distributuion Channel

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The process of feed production is given below

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Hammer Mill

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Strainer

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Packing Machine

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5- RAW MATERIAL REQUIREMENT

Poultry Feed (For Bridder&Brialer)/50kg 50kg Material

Descriptio n

For one Bag Annual Bags _Produced Material in kg for annual

Production Unit cost

Annually Cost each Material Items Maiz 13% 240,800 1,565,200 40 62,608,000 Wheat 14% 1,685,600 23 38,768,800 Rice 14% 1,685,600 13 21,912,800 Sun Fiower 5% 602,000 30 18,060,000 cotton seed Meal 2% 240,800 7 1,685,600 Soyabeen Seed 5% 602,000 20 12,040,000 Cynola seed 5% 602,000 20 12,040,000 Na,Ca,Mg 6% 722,400 5 3,612,000 Vit,Pro,nd other chemicals 5% 602,000 6 3,612,000 Fish,chicken wastage 11% 1,324,400 17 22,514,800 Grains 8% 963,200 8 7,705,600 Minerls,Mola sses 12% 1,444,800 13 18,782,400 Packing material (Bags) 1 240,800 3 722,400 Total Annual Cost 224,064,400

Raw Materials

Required

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Poultry Feed For Layer

50kg

Material Description Require_d

Annual Bags Produce d Requireme nt of Material in unit for annual Production Unit cost Annually Cost each Material Items Maiz 13% 782,600 40 31,304,00₀ Wheat 14% 842,800 23 19,384,40₀ Rice 14% 842,800 13 10,956,40₀ Sun Fiower 5% 301,000 30 9,030,000 cotton seed Meal 2% 120,400 7 842,800 Soyabeen Seed 5% 120,400 301,000 20 6,020,000 Cynola seed 5% 301,000 20 6,020,000 Na,Ca,Mg 6% 361,200 5 1,806,000 Vit,Pro,nd other chemicals 5% 301,000 6 1,806,000 Fish,chicken wastage 11% 662,200 17 11,257,40₀ Grains 8% 481,600 8 3,852,800 Minerls,Molasses 12% 722,400 13 9,391,200 Packing material (Bags) 1 120,400 3 361,200 Total Annual Cost 11203220₀

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Brief Description of Personnel

The personnel or the human resource depends upon the work and the total employees the personnel of a small feed unit and a big feed industry is different. So, the

employees will be efficient and effective so that the feed industry can do better work.

Description Number Salary per _{month Rs,} Annual cost

CEO 1 60,000 720,000 General Manager 1 40,000 480,000 Financial Manager 1 40,000 480,000 Export Manager 1 40,000 480,000 Sectery 1 15,000 180,000 Accountant 1 12,000 144,000 clerks 4 8,000 384,000 Computer operator 1 8,000 96,000 Recepnicet 1 8,000 96,000 Time Keeper 3 8,000 288,000 Drivers 2 7,000 168,000 security Guard 3 6,000 216,000 Gate keeper 3 6,000 216,000 Office Attendence 2 6,000 144,000 Mali 1 6,000 72,000 Sweepers 2 5,000 120,000 TOTAL 4,284,000

Add: Fringe Benefits @ 5% 214,200

TOTAL ADMIN COST 4,498,200

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Brief Description of Finance

In Financial Analysis we see the sources of finance and calculate the ratios of our project that how much it is profitable for us and also we make financial statements to know that how much it is feasible for us.

Cost of Project

The total cost of project is Rs. 69510128

Means of Finance

In the sources of finance we take Loan from MCB and the remaining is from the Sponsors.

Financial

Analysis

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Initial Net Working Capital

CURRENT ASSETS- A Amount

Cash 6 months 8,850,292 Accounts Receivable 5% of sales 12,864,278 Raw materials 1 months 18,205,233 Finished Goods Inventory 3% production 5,863,441 Marketables Securities 4,970,857 spares & stores 98,916 Advances & deposits to supplier of Raw Material 1,000,000

Tools 100,000

Total Current Assests 51,953,016 CURRENT LIABILITIES-B

Accounts Payable 3% material cost 6,553,884 Accrued Expenses 3% material cost 6,553,884 Dealers Deposits 100,000 short -term bank borrowings 20% Inventories 3,745,544

Total Current Liabilities 16,953,311 INITIAL NET WORKING CAPITAL( A-B) 34,999,705

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A-1 POULTRY FEED COMPANY BAHAWALPUR

PROJECT COST & MEANS OF FINANCE (in RS.)

COST OF THE PROJECT LOCAL FRGN TOTAL

Land & Land Devolpment 8,606,250 0 8,606,250

Building & Civil Works 9,236,220 0 9,236,220

Foreign Machinery MCB(FCL) 0 6,846,000 6,846,000

Marine insurance etc. 300,770 0 300,770

Customs Duty 12% _Machinary Imported 821,520 0 821,520 Import and Iqra surcharges 1% _MachinaryImported 68,460 0 68,460 Engineering /Technical Fees 2% Machinary 136,920 0 136,920 Erection & Installation 1% Machinary 68,460 0 68,460

Interest during construction 5,950,000 0 5,950,000

Furniture & Fixture 511,100 0 511,100

Vehicles 1,040,000 0 1,040,000

Pre-production Expenses 2,251,192 0 2,251,192

Contingencies 300,000 0 300,000

TOTAL FIXED COST: 29,290,89₂ 6,846,00₀ 36,136,89₂

Initial Net Working Capital 34,999,705 0 34,999,705

TOTAL COST OF THE PROJECT 64,290,59₇ 6,846,00₀ 71,136,59₇

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A-1 POULTRT FEED INDUSTRY . BAHAWALPUR

For the year ending Dec. 31, I II III Efficiency Assumed : 65% 70% 75% SALES a ) Bridder Feed 86,086,738 103,113,878 110,510,856 b) Bria Feedler 86,086,738 102,131,841 109,458,372 c) Layer Feed 85,112,074 101,946,435 109,259,665 Total Sales 257,285,551 307,192,154 329,228,894 Less:

COST OF GOODS SOLD :

Raw Materials 218,462,790 247,031,001 264,676,073 Labour 6,582,600 6,780,078 6,983,480 Manufacturing Expenses 3,779,755 3,953,676 4,069,624 Excise Duty \ Sales tax 3% 7,718,567 9,215,765 9,876,867 Royalty fee (Straight

line method)

0 0 0

Deprication 1,213,744 1,213,744 1,213,744

Cost of Goods Manufactured 237,757,456 268,194,264 286,819,787 Add: Opening Inventory 0 11,726,882 12,628,950 Less: Ending Inventory 11,726,882 12,628,950 8,198,110 COST OF G00DS SOLD 226,030,574 267,292,196 291,250,627

G R O S S P R O F I T 31,254,977 39,899,958 37,978,266

Less :

OPERATING EXPENSES

Admin & General Expenses 3,287,831 3,717,777 3,983,333 Selling Expenses 4,050,398 4,651,836 4,930,863

Total Operating Expenses 7,338,229 8,369,613 8,914,196

OPERATING PROFIT 23,916,749 31,530,344 29,064,070

Add:

OTHER INCOME 0 0 0

Less:

NON OPERATING EXPENSES

Financial Expenses 5950000 5,650,055 4,460,055 Amortzn. of Prelim. Exp 281,399 281,399 281,399 Workers participation fund 4% 956,670 1,261,214 1,162,563 workers wekfore fund 4% 956,670 1,261,214 1,162,563

Total Operating Expenses 8,144,739 8,453,881 7,066,579

Profit Transferred to Profit& losss

Appropriaion account 15,772,010 23,076,463 21,997,491

Income

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A-1 POULTRY FEED INDUSTRY . BAHAWALPUR

ESTIMATED BALANCE SHEETS

Construction

year I II III

ASSETS

Fixed Assets

Fixed Assets at cost 33,885,70₀ 33,885,70₀ 33,885,70₀ 33,885,700

Less: Accumulated Dprcn. 01,213,7442,427,488 3,641,232

Net Fixed Assets 33,885,70₀32,671,95₆31,458,21₂30,244,468

Preliminary Expenses: 2,251,1921,969,7931,688,394 1,406,995

Total Fixed Assets 36,136,8₉₂34,641,7₄₉33,146,6₀₆31,651,46₃ Current Assets

Cash 8,850,29254,270,43₉75,133,03₁ 72,756,82₀ Marketable Securities 4,970,857 313,580 75,683 1,866,517 Accounts Receivables 12,864,27₈12,864,27₈13,063,62₀ 16,461,44₅ Finished Goods Inventory 5,863,44111,726,88₂12,628,95_{0 8,198,110}

Raw Material Inventory 18,205,23₃13,107,76_{79,175,437 6,881,578} Stores & Spares 98,916 99,000 20,000 958,259 Advances & Depostis 1,000,0001,419,142 30,000 968,259

Total Current Assets 51,853,01693,801,088110,126,72₁108,090,988

TOTAL ASSETS 87,989,9₀₈128,442,8₃₇143,273,3₂₇139,742,4₅₁

LIABILITIES & EQUITY

Long-term Liabilities Muslim Commercial Bank:

Outstanding Loan principal 35,000,00₀35,000,00₀28,000,00₀ 21,000,00₀

Total Long-term Liab.: 35,000,0₀₀35,000,0₀₀28,000,0₀₀21,000,00₀ Current Liabilities

- Accounts Payable 6,553,8848,738,5129,881,240 10,587,04₃ - Accrued Expenses 6,553,8847,718,5679,215,765 9,876,867 - Workers Partcpn. Fund 0 956,6702,217,884 3,380,447 -Workers Welfare Fund 0 956,6702,217,884 3,380,447 Provision for Taxation 0 1,892,641 4,661,817 7,301,516

- Bank Borrowings 3,745,54417,213,81₂17,984,79₉ 17,261,68₈ outstanding loan instalments 05,950,00012,650,05₅ 11,460,05₅ Interest payable

Total Current Liabilities: 16,853,343,426,858,829,463,248,06

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11 71 43 2 EQUITY

Equity 36,136,59₇36,136,59₇36,136,59₇ 36,136,59₇ Balance c/d from Profit & loss appropriation

account 013,879,36920,307,287 19,357,792

Total Equity: 36,136,5₉₇50,015,9₆₆56,443,8₈₄55,494,38₉ Total Liab. & Equity: 87,989,9₀₈128,442,8₃₇143,273,3₂₇139,742,4₅₁

A-1 Poultry Feed Industry . BAHAWALPUR

E S T I M A T E D C A S H F L O W S

For the year ended, Const. Yr. I II III

SOURCES

Operating Profit 0 23,916,749 31,530,344 29,064,070 Add Back: Depreciation 0 1,213,744 1,213,744 1,213,744 Amortization 0 281,399 281,399 281,399

Funds from Operations 0 25,411,892 33,025,487 30,559,213

other income 0 0 0 0 Equity 36,136,597 0 0 0 Loan from Mcb 35,000,000 0 0 0 - Custom Debentures 0 0 0 0 Increase in Current Liab. 9,000,000 26,573,560 15,402,572 4,418,619 Increase in Bank Borrowings 3,745,544 13,468,268 770,987 -723,111

TOTAL SOURCES 83,882,141 65,453,720 49,199,046 34,254,722

APPLICATION OF FUNDS

Investment in Fixed Assets: 33,885,700 0 0 0 -Preliminary Exp 2,251,192 281,399 281,399 281,399 Financial Expenses 0 5,950,000 5,650,055 4,460,055

Repayment of : 0 0 0 0 Loan from Mcb 0 0 7,000,000 7,000,000

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provision for tax 0 1,892,641 2,769,176 2,639,699 profit distributed 0 0 0 0 Increase in current Assets: 43,002,724 5,888,425 10,113,397 19,924,655

TOTAL 79,139,616 15,925,805 28,336,454 36,630,933

Surplus/(Deficit) 4,742,525 49,527,914 20,862,592 -2,376,211 Cash Balance - Opening 0 4,742,525 54,270,439 75,133,031 Cash Balance - Ending 4,742,525 54,270,439 75,133,031 72,756,820

Strengths:

The labor to manufacture feed is easily available we can reach easily to low cost labor. Moreover the location for our project is very attractive. We can avail maximum advantage from this market.

Weaknesses:

Our weakness is that we are not producing feed up to the present demand of the consumer. Because we have dependend on govt for wheat & other raw materials like grains and rice and electricity problem is also our weakness.

Opportunities:

Pakistan is an agricultureal country, the production of feed is very high.feed is neccessry for the chicks(Brailer & Layer) so, demand of feed is repedly increases.also there is no enough feed mills to fullfill the demand so, there is great opportunity to establish feed mill.

Threats:

The market of the flour mills is highly competitive; therefore if the entrepreneur is not well responsive and fulfilling the demand of the consumer he/she may not be able to capitalize the opportunity properly..

SWOT

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Conclusion & Recommendations

We conclude that on the basis of field work and survey of

feed mills that the feed is necessary product so its demand

increase day by day. There is no chance to decrease the

demand of feed. Pakistan is an agricultural country and it

plays a very important role in our economy. Feed contributes

3.2% GDP in our economy. Availability of raw material is

very easy. So, conclusion is that the feed mill is a profit

motive business because no chance of decrease of demand.

Our recommendation to new investors is that they must

invest in feed mill because from the last year there is a great

change or entrance of new poultry farmers in Pakistan. So,

they step forward to come and invest or to start this

business, and also contribute in the economic as well as

social growth of Pakistan.

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Special Thanks

We bow our head, before ALLAH Almighty, who blessed us with potential and stamina to complete our feasibility report on Feed mill.

First of all would like to pay our special regards to Respected “Sir Mr. JAVED IQBAL” who provides us guidance at each and every step, in completion of all this feasibility report. We are especially thankful to those personalities who help us in collecting data during the fieldwork and also in our practical work. In this regard our thanks goes to:

Mr:Arsalan Rabbani, Mr: Hunain khan, Mr: Farzan Rafi, Mr: Shakeel Ahmed, Mr: Mohsin shazad, Mr: Adnan Ch., Mr: Farhan Khizer & Mr. Amir Faraz and all of our Class Fellows.

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