Analysis of Pakistan Industries

Industry: Livestock- Poultry Farm

ASSIGNMENT 2: Marketing Plan
Submitted to Sir Salman Ahmed Shaikh





Submitted By:
Adeel Ahmed
Bisma Yusufzai
Ibad Desmukh
Musaid Raheel
Samita Khoja

2

Introduction
Poultry farming is an extremely important part of the livestock sector in Pakistan, which is in
fact the 3
rd
largest in the whole world. Poultry demand is increasing by 6.1 percent per annum in
Pakistan, which can be explained by an increase in population, increasing health consciousness
of people and the relatively low price as compared to other forms of meat. Poultry meat
contributes about 19 percent of the total meat production in the country. However, it is not
sufficient to meet the increasing demand.
Target Market
Generally, fully grown birds are transported to the consumer market through market agents and
intermediaries, like middlemen and wholesalers. The poultry is taken to the main market in
Karachi, where it is sold to middlemen, who purchase the poultry and distribute it further,
keeping a commission for themselves. With the increasing number of franchises like KFC,
McDonalds, Johnny Rockets etc, the demand of white meat has been increasing in the recent
years. The increase in per capita income also increases the purchasing power of people. Hence,
the target market of poultry meat has been on the rise.
Product
The product will be poultry, which will meet the national standard of quality. The poultry farm
will be situated on the outskirts of Karachi. There are many areas that are available for the
development of a full-fledged poultry farm, where the land can be rented.

In the broiler farm, the young chicks are raised on high protein and energy feed in a conventional
open housing system for a period of six to eight weeks. After six weeks, the birds are sold on
live body weight basis to traders, which will transport the chickens further to the final consumer
markets.
Level of technology used
In a controlled environment the temperature, feed and drinking system is operated automatically
and monitored by the trained staff. After the first batch of the broiler is sold, the broiler house is
given 15 days for the preparation to receive the new flock. Preparation includes proper cleaning,
washing, white washing, disinfecting and fumigation.

Heat stress is the major problem in poultry farming and can undo all of the hard work with
relative ease. Being a tropical country where the temperature reaches over 40C during summers,
its not ideal for poultry farming. Hot and humid weather conditions and poor management
practices increase in the mortality in the chicks and reduces their growth.

Controlled environment poultry farms can overcome this critical summer situation. These farms
are equipped with highly mechanized systems of automatic chain feeding and nipple drinking
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systems which make the environment quite conducive for poultry production and ensure
continuous production. The temperature can be brought down by 10C to 15C in controlled-
environment farms as compared to the conventional farms which greatly improves mortality
rates. It also reduces incidence of diseases and helps cut down on the cost of vaccine and
medication of Rs. 2-3 per bird as compared to conventional farming. Less labor is also required
in it.
Promotional Plan
No such advertising or marketing is needed to ensure sale of poultry as the demand is prevalent
and the distribution channel is well established. There is a demand supply gap where the demand
is way ahead of the market supply, hence the potential of such a business is very high.

The medium used is as follows:

Farm Middleman Wholesalers Retailers End Consumers
Production Process
The broiler farming must begin with a clean and sanitized shed. The layout of open conventional
shed should be north-south to ensure clean, dry and well-ventilated shed as this provides fresh air
and carries off humidity. The entire building and all equipment should be properly disinfected
and fumigated. The equipment and walls of the shed should be checked for cleanliness,
disinfection and spraying before the arrival of DOCs (day old chicks).
Litter is spread on the floor to prevent direct contact of birds with the floor. Rice-husk and
sawdust are generally used as litter. It should be dry and free of moulds. Caked or moldy
material should be removed and refilled with fresh materials. Extensively wet and dusty litter
should also not be used. Using new litter for each flock is good for raising disease-free broiler
birds.
The DOCs should be procured from well reputed hatcheries and should be of uniform size, active
and bright eyed, having healed navel. The skin of shanks should be shiny. The DOCs should
arrive at the farm early in the morning so that the management has a full day to observe them for
any issue.
Keep light at high intensity 2022 hours per day for the first week. Closely regulate temperature
of shed. Mostly, 24 hours light is provided during brooding and early growing period. Initially,
for first fifteen days, light intensity should be 40-60 watts 200 sq. ft of space which can be
replaced by 15 watts bulb in the start of third week.
Starter feed should be offered as a source of energy to chicks as it is easily digestible and a good
source of energy. Broilers are fed two types of ration i.e. broiler starter (mash or crumb form) fed
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up to four weeks of age and then broiler finisher (mash or crumb form) fed from fifth to sixth
week. There are many feed mills that prepare these formulated feeds. Feeding three or four times
each day will stimulate feed intake and prevent wastage. The desired Feed Conversion Ratio
(FCR) is 2.20. Check regularly the availability of water and feed for chicks. Keep feed free from
aflatoxins. Remove all leftover feed from bins, hoppers and troughs.
Place rodenticide out of the reach of DOCs. Remove dead birds immediately and dispose them
properly. Send the dead birds to lab for postmortem examination if there is excessive mortality.
Follow bio-security plans by not allowing visitors or attendants to enter sheds without
disinfected boots and clothes.
SWOT Analysis

Strengths Weakness
Chicken meat preferred over other meat
Chicken meat is predominately used in
traditional as well as fast food
Eggs bring cholesterol, but people still prefer
them in Pakistan

Lack of branding
Weighting issues
High investment cost
No prior experience in
livestock
Opportunities Threats
Growing urban population.
No ban on marriage dinners.
Export to Island countries.
Quality consciousness increasing.

Hygiene and Quality issues
Lack of hospitals and
vaccination
Long hours of electricity load-
shedding

Supply chain
The first step in the chain would be to purchase the DOCs. There are a number of vendors
which are in this business which include Big Poultry Farm Breeders, Hi-Tech Poultry Breeders,
Jadeed Farms and many others. The next step would be poultry breeding which would require
feeding the chickens. This would involve vendors like Supreme Feeds, Asia Feed, Fast Poultry
who provide the feed stock for chickens. Apart from the direct stakeholders, a couple of other
players are also involved in the supply chain. There will be machinery and equipment suppliers
who will take care of the installation of equipment at the farm. Moreover, there will be
consultants who would regularly advice on the technicalities of poultry farming.
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Resources required
Land is required for the plant which is ample enough to hold the plant, the generator, the
supplies, medication, feed and rooms for the watchmen and supervisor. The land needs to be
connected to the city so the distribution is made easy. According to our research, a 1 acre plot of
land should be enough for all of this. One such piece of land somewhere in Port Qasim Industrial
Area can be bought for around Rs. 6 million which would be close to the main road to facilitate
ease of access. A generator is imperative because without it the cooling plant will not be able to
function 24/7 and the temperature will become too high which will lead to high mortality rate for
the chicks.
As for the labor, we will need a constant on-site supervisor in case something goes wrong. We
will also need watchmen to make sure the safety and security is not compromised. Other than
that, an electrician, janitor and other staff can be hired as required or brought about when needed.
Pricing plan
A 1.75-2kg chicken ideally costs a farmer around Rs. 240 which means that it costs them
approximately Rs. 135 per kg. Therefore, the price should be set around Rs. 150 per kg keeping
in consideration the ongoing crisis owing to the increasing costs of breeding. This would give us
a margin of almost Rs. 15 per kg to hedge against future possible cost increase. The cost takes
into account raw materials required for chickens i.e DOCs and vaccination which has a
combined cost of around Rs. 45 per unit.

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Analysis of Pakistan Industries
Industry: Livestock- Poultry Farm
ASSIGNMENT 3: Costing and Forecasted Financial Statements





Submitted By:
Adeel Ahmed
Bisma Yusufzai
Ibad Desmukh
Musaid Raheel
Samita Khoja

7

Project Cost
The total project cost for the project is estimated to be Rs. 2.156 Million. The calculation of the
cost is given below:
Capital Investment Amount (Rs.)
Machinery & equipment 152,239
Furniture & fixtures 10,000
Office equipment 3,000
Pre-operating cost 144,625
Total Capital Cost 309,864
Raw material inventory 1,505,382
Upfront Building Rent 240,044
Cash in hand 100,000
Initial Working Capital 1,845,426
Total project cost 2,155,290

Space Requirements
The rental cost is estimated to be approximately Rs. 20,000 per month.
Space Requirement Space (Sq.ft)
Management building 100
Shed space 10,000
Feed store 180
Room for workers 144
Pavement/ Boundary walls 104
Total Area 10,528

Machinery and Equipment
Description Capacity
Birds/unit
Quantity Cost
Rs/unit
Total
Rs.
Brooder 500 20 1,000 20,000
Chick guard 200 50 150 7,500
Small waterers 50 182 90 16,380
Small feeding trays 50 182 90 16,380
Large automatic waterers 140 70 300 21,000
Large round feeders 130 80 300 24,000
Buckets 6 500 3000
Manual Balance 1 2000 2000
Exhaust Fans 4 1000 4000
DOC Shifting boxes 10 1800 18000
Drum Heaters 4 2000 8000
Miscellaneous 1 5000 5000
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Installation 6979
Total Machinery & Equipment 152239

Office Equipment & Furniture
Description Quantity Cost (Rs.) Amount (Rs.)
Telephone 1 3,000 3,000
Furniture and fixture Lump sum 10,000 10,000
Total 13,000

Raw Material Requirements
Description Unit Total units Rate
(Rs./ Unit)
Values
(Rs. per year)
*Day Old Chicks (DOC) Per DOC 60,000 35 2,100,000
Total feed required per birds @ 2.2
FCR
(Incl. 2% extra DOCs)
Per Bird *56,304 178.2 10,033,372
Vaccination, medication and
disinfection
Per Bird *56,304 8 450,432
(Incl. 2% extra DOCs)
Direct Electricity Cost Per bird 2.25 *56,304 126,684
Litter & Spray
(Saw dust or rice husk)
Per Flock 6 14,000 84,000
* 2% extra chicks provided by DOC supplier to cover the transportation mortality, hence total birds to consume feed and
vaccination/ medication would be 56,304 per annum after 8% mortality loss.

Human Resource Requirement
Description No. of Employees Monthly Salary per Employee (Rs.)
Owner / Farm manager 1 30,000
Farm Labor 2 12,000
Total Staff 3
Two semi-skilled workers are needed to look after the general poultry husbandry operations at the
farm. In addition, owner would act as farm manager. The salaries are estimated to increase at 10%
annually.
Revenue Generation
Description Unit Sale Price
Rs.
First Year
Production
Revenue in First
Year Rs.
Broiler birds (1.8-2.0 kg) after 6
weeks
Per
bird
261 56,304 14,695,344
Other revenues (litter, empty
feed bags etc.)
Per
bird
8 56,304 450,432
Total Revenue 15,145,776
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Other costs
An essential cost to be borne by the farmer is electricity expense which is estimated to be Rs. 2.25
per bird. The fixed electricity cost for rest of the area is estimated to be Rs. 800 per month. Average
vaccination and medication cost per bird is taken at Rs.8.00 per bird.
Forecasted Income Statement for 1
st
year
Income Statement
Year 1
Revenue 15,145,776
Cost of goods sold 13,082,489
Gross Profit 2,063,287
General administration & selling expenses
Utilities expense 9,665
Professional fees (legal, audit, etc.) -
Depreciation expense 16,524
Amortization expense 28,925
Mortality 523,300
Subtotal 1,189,257
Operating Income 874,030
Earnings Before Interest & Taxes 874,030
Interest expense 160,999
Earnings Before Tax 713,031
Tax 31,303
NET PROFIT/(LOSS) AFTER TAX 681,728
Balance brought forward
Total profit available for appropriation 681,728
Balance carried forward 681,728


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Forecasted Balance Sheet for 1
st
Year
BALANCE SHEET Year 0 Year 1
Assets
Current assets
Cash & Bank 429,254 2,065,675
Accounts receivable -
Raw material inventory 1,396,169 1,689,364
Pre-paid building rent 20,004 22,004
Total Current Assets 1,845,426 3,777,043
Fixed assets
Machinery & equipment 152,239 137,015
Furniture & fixtures 10,000 9,000
Office equipment 3,000 2,700
Total Fixed Assets 165,239 148,715
Intangible assets
Pre-operation costs 144,625 115,700
Total Intangible Assets 144,625 115,700
TOTAL ASSETS 2,155,290 4,041,458
Liabilities and Shareholder's Equity
Current liabilities
Accounts payable 0 1,173,137
Total Current Liabilities 0 1,173,137
Other liabilities
Long term debt 1,939,761 1,939,761
Total Long Term Liabilities 1,939,761 1,939,761
Shareholders' equity
Paid-up capital 215,529 215,529
Retained earnings 0 681,728
Total Equity 215,529 897,257
TOTAL CAPITAL AND LIABILITIES 2,155,290 4,010,155

Note: Total assets value will differ from project cost due to first installment of leases paid at the
start of year 0