1st Draft

PRE-FESIBILITY STUDY

Pre-Feasibility Report
(Goat Fattening)

PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD

MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH

Government of Pakistan

www.parc.gov.pk

January 2014
 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 generated from experiments and field testing by a team of relevant scientists; however, it is
based upon certain assumptions which may differ from case to case. The contained information may vary
due to any change in any of the concerned factors, and the actual results may differ accordingly from the
presented information. The PARC and its employees do not assume any liability for any financial or other
loss resulting from this memorandum in consequence of undertaking this activity. The prospective user of
this memorandum is encouraged to contact qualified consultant/technical expert, especially designated
focal person(s) of this enterprise for reaching to an informed decision.

1. PURPOSE OF DOCUMENT

The purpose of this document is to facilitate potential investors in Goat Fattening by providing them with
a general understanding of the business, with the intention of supporting potential investors in crucial
investment decisions. 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, finance, and business management. 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, certain industrial norms and well established research findings that become a
guiding source regarding various aspects of business set-up and it’s successful management. Apart from
carefully studying the whole document, one must consider critical aspects provided later on, which form
the basis of investment decisions.

2. INTRODUCTION TO SCHEME
Prime Minister’s Youth Business Loan Program, 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 through
National Bank of Pakistan (NBP) and 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).

3. EXECUTIVE SUMMARY
Goat Fattening Farm is proposed to be located at any suitable areas of Pakistan. The project is related to
Goat and sheep fattening purposes, the total capacity is 50 goats. Project Cost Estimate is Rs. 1.31 Million
with fixed investment of Rs. 1.077 Million. The cost assumptions, IRR 29% and payback 1 year of goats.

4. BRIEF DESCRIPTION OF PROJECT

The following parameters must be addressed as per pre-feasibility study,
 Selection of suitable Goat breed
In Punjab, Beetal, Teddy goat and Kajli, Lohi, Thalli and Sipli breeds are most suitable. In Sindh,
Kamori, Pateri, Kacchan, Jattan goat breed and Kocca are most suitable breeds. In KPK, Damani goat
breeds are most suitable and in Baluchistant, Baluchi most suitable breed.
 Location:
The farm can be established in goat rearing areas of country where range grazing is available. In
Punjab, the suitable areas to establish the gaot farming are Southern Punjab (Thal, Cholistan) and
also pothowar areas. In Sind Province, goat fattening is profitable in their respective ecological
zones like Thar and Indus basin. Districts of Sukkur, Tando Muhamamd Khan, Sanghar, Dadu etc
in Sind province.

 Targets Market
In addition to major cities such as Lahore, Multan, Quetta, Karachi, Hyderabad and Islamabad,
there is demand of Pakistani mutton in Middle East and Malaysia countries.
• Employment Generation: The proposed project will provide direct employment to two individuals.
Financial analysis shows the profitability of proposed business within first year of its operation.

5. Critical factors
 Selection of suitable Goat & Sheep breed
 In Punjab, Beetal, Teddy goat and Kajli, Lohi, Thalli and Sipli breeds are most suitable. In Sindh,
Kamori, Pateri, Kacchan, Jattan goat breed and Kocca are most suitable breeds. In KPK, Damani goat
breeds are most suitable and in Baluchistant, Baluchi most suitable breed.
 Prophylactics measures
Strict vaccination and deworming program for successful operation may be followed.
 Farm Management
Good feeding and management practice will give the success in the business. Fresh water will be
available all the time. In the concentrate; minerals may also be included.
.
6. Operational Capacity
The farm will start production with 50 goats. The limit of 50 goats has been imposed on the farm because
a very large flock would be difficult to manage. The farm would focus on rearing of young stock for
fattening and marketing. Goat from aged less than 1 year of age will be purchased and resold in the market
after a fattening period of 120 days.
7. Potential markets
Target market would be the areas where breeding is being undertaken as well as major cities like Karachi,
Lahore, Rawalpindi, Islamabad, Peshawar etc. In addition to local markets there is an enormous export
potential to Middle Eastern countries.
8. Production process flow
Animals selected for fattening should be of less than 1 year of age. During this age the daily weight-gain
capacity is also better particularly in goat.
9. Breed Selection
The farmers should not only select good quality breed which can bring better results for fattening but also
select most suitable animals from the selected breed. Through better management, the weight gain of these
selected breeds would be higher.
10. Project Cost Summary
A detailed financial model has been developed to analyze the commercial viability of Goat Fattening
Farm. Various cost and revenue related assumptions along with results of the analysis are outlined in this
section.
11. Project Economics
All the figures in this financial model have been calculated for 50 goat for total area of around 21,00 sq.ft,
that would be used for different functions of the farm. The following table shows internal rates of return
and payback period.
Table 1. Project Economics
Description Goat
Internal Rate of Return (IRR) 33%
Payback Period (yrs) 1
Net Present Value (NPV) 2,654,537.74

12. Project Financing

Following table provides details of the equity required and variables related to bank loan;

Description Goat
Total Equity (@ 10%) Rs. 1317250
Bank Loan (@ 90%) Rs. 1077750
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Year) 1

13. Project cost

Following requirements have been identified for operations of the proposed business.

Project Investment Amount (Rs.)

Building 330000
Machinery & Equipment 90000
Total Capital Cost 420000

14. Space Requirement

Details of the area required are given below:

Table 2 Space requirement

Description Space per Total space Cost per sq ft Total cost
animal sq ft sq ft (Rs.)
Shed for 50 kids (covered) 12 600 300 180000
 Open paddock for 50 kids 24 1200 50 60000
Isolation Pen for 5 kids 12 60 300 18000
(covered)
Stores for ration &  - 240 300 72000
machinery (12x20)
Total 330000

15. Machinery and Equipment

Following table provides list of machinery and equipment required for Goat Fattening Farm working for
Livestock sector.

Table 3 List of Machinery and Equipment

Farm supplies Unit Cost (Rs) Total Cost (Rs)
Feeding mangers 5 3000 15000
Chaff cutter 50000 50000
Water pump 20000 20000
Other farm equipment  - 5000
Total cost 90000

16. Human resource requirement

Table 4 Human resource requirement
Description No. of Employees Salary per
month

Worker 1 10,000

The table above provides details of human resource required for goat fattening farm.
17. Revenue Generation

Product Sales Average weight First Year First Year

Price per kg live Production Sales
(Rs./Unit) weight Revenue (Rs)
Sale of Live Goats 350 kg 45 50 787500
Total Sales Revenue 787500

 Key Assumptions
Particulars Assumption
Sales Price Growth Rate 5 % per year
Capacity Utilization Growth Rate 10 % per year
Increase in Cost of Raw Materials 5 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water / Gas) 10 % per year
Debt / Equity Ratio 90 : 10
Depreciation
Plant Building 10 % per annum
Machinery 10 % per annum
Office Furniture & Equipment 10 % per annum
Loan Period 8 Years (inclusive of 1 year grace period)
Loan Installments
Financial Charges (Loan Rate) Quarterly

 Critical Factors
 Establishment of the farm in areas where cheap land is available, but it should not be far away
from the market..
 The farming should be done on scientific grounds taking care of Vaccination, Medicine etc.
 Healthy and quality male stock should be selected for fattening.
 New feeding techniques including concentrate feeding and preparation of urea molasses
blocks,etcshould be used for better results.
 Well-trained / experienced staff adding to the efficiency of the farm.
Useful links
 Prime Minister’s Office, www.pmo.gov.pk
 Government of Pakistan, www.pakistan.gov.pk
 Ministry of Industries & Production, www.moip.gov.pk
 Small & Medium Enterprises Development Authority (SMEDA),
 www.smeda.org.pk
 Ministry of Education, Training & Standards in Higher Education
 http://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
 Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
 www.fpcci.com.pk
 State Bank of Pakistan (SBP), www.sbp.org.pk
 National Bank of Pakistan (SBP), www.nbp.com.pk
 First Women Bank Limited (FWBL), www.fwbl.com.pk
 Ministry of National Food Security & Research, www.mnfsr.gov.pk
 Ministry of Education, Training & Standards in Higher Education,
 www.moptt.gov.pk
 Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.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
 All Pakistan Meat Exporters and Processors Association, Lahore,
 www.apmepa.com
 Punjab Agriculture and Meat Company (PAMCO), Lahore, www.pamco.bz
 Pakistan Agricultural Research Council (PARC), Islamabad, Tel. 0519203966
www.parc.gov.pk
 National Agricultural Research Centre (NARC), Islamabad, Tel. 0519255061,
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
 Faculty of Animal Husbandry, University of Agriculture, Faisalabad,
www.uaf.edu.pk
 Faculty of Veterinary Sciences, University of Agriculture, Faisalabad,
www.uaf.edu.pk
 Faculty of Veterinary and Animal Sciences, Lasbela University of Agriculture, Water & Marine
Sciences, Lasbela, www.luawms.edu.pk
 Faculty of Veterinary Sciences and Animal Husbandry, 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
 College of Veterinary & Animal Sciences, Jhang,
www.uvas.edu.pk/other_campuses
 Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk
 Animal Husbandry In-Service Training Institute (AHITI), Peshawar, Tel.
091-2960109, 9210309
 Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-
99220140
 Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
 Directorate of Livestock Farms, L&DD, Lahore, Tel: 042-99201126-7
 Govt. Livestock Farm (GLF) Kallurkot District Bhakkar, Tel: 0453-200928
 Livestock Experiment Station (LES), Rakh Ghulaman, District Bhakkar, Tel:
0453-446134
 Livestock Experiment Station (LES), Khizarabad, District Sargodha, Tel:
048-3019835
 Research & Development Centre, Rakh Khairewala, District Layyah
 Livestock Experiment Station (LES), Khushab, Tel: 0454-215543
 Livestock Experiment Station (LES), Chak Katora, District Bahawalpur, Tel:
062-2442589
 Livestock Experiment Station (LES), Haroonabad, District Bahawalnagar,
Tel: 063-2252960
 Directorate of BLPRI, Kherimurat (Attock), L&DD, Punjab, Tel: 057-
2213422, 2212130, 2210781
 Directorate of Small Ruminants, Multan, L&DD, Punjab, Tel: 061-9210417
 Directorate of Livestock Training Centre (LSTC), Bahadurnagar, Okara, Tel:
044-2661393
 Livestock Training Centre (LSTC), Sheikhupura, Tel: 056-9200056
 Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk
 Agriculture & Livestock Department, Government of KPK,
www.khyberpakhtunkhwa.gov.pk
 Livestock Research Station, Jaba, Mansehra, (Jaba Goat and Goat Farm), Tel: 0997-301866
  Livestock & Dairy Development, Government of Balochistan,
www.balochistan.gov.pk
 Bhagnari Cattle Cum Balochi Goat Farm Usta Muhammad, Dera Allah Yar
c/o L&DD Quetta, Tel: 081-9202564
 Income Statement
  Year Year Year Year Year Year Year Year Year Year
1 2 3 4 5 6 7 8 9 10

Revenues 787,500 866,250 952,875 1,048,163 1,152,979 1,268,277 1,395,104 1,534,615 1,688,076 1,856,884
                     
60,00 63,00 66,15 69,4 72,9 76,5 80,4 84,4 88,64 93,08
Wages (Direct labour) 0 0 0 58 30 77 06 26 7 0
247,50 259,87 272,86 286,5 300,8 315,8 331,6 348,2 365,67 383,95
Feed cost 0 5 9 12 38 80 74 57 0 4
307,50 322,87 339,01 355,9 373,7 392,4 412,0 432,6 454,31 477,03
Cost of Goods Sold 0 5 9 70 68 57 79 83 8 3
                     
480,00 543,37 613,85 692,1 779,2 875,8 983,0 1,101,9 1,233,75 1,379,85
Gross Profit 0 5 6 93 11 20 25 31 9 0
           
Salaries                    
30,00 33,00 36,30 39,9 43,9 48,3 53,1 58,4 64,30 70,73
land Rent 0 0 0 30 23 15 47 62 8 8
60,00 66,00 72,60 79,8 87,8 96,6 106,2 116,9 128,61 141,47
Utilities 0 0 0 60 46 31 94 23 5 7
Insurance                    
Advertising                    
3,00 3,00 3,00 3,00 3,00 3,00 3,00 3,00 3,00 3,00
Depreciation 0 0 0 0 0 0 0 0 0 0
Other Office Expenditure                    
Others - - - - - - - - - -
30,24 30,24 26,85 23,1 19,2 14,9 10,3 5,37
Interest on Loan 0 0 1 91 38 68 58 8 0 0
123,24 132,24 138,75 145,9 154,0 162,9 172,7 183,7 195,92 215,21
Sub - Total 0 0 1 81 07 14 98 63 3 5
356,76 411,13 475,10 546,2 625,2 712,9 810,2 918,1 1,037,83 1,164,63
Operating Income 0 5 5 12 04 06 27 69 6 5
1,11 7,51 14,6 22,5 31,2 44,0 60,2 78,17 97,19
Tax - 4 1 21 20 91 34 25 5 5
356,76 410,02 467,59 531,5 602,6 681,6 766,1 857,9 959,66 1,067,44
Net Income 0 2 5 91 83 15 93 44 0 0
 CASHFLOW STATEMENT

  Year Year Year Year Year Year Year Year Year Year Year
  0 1 2 3 4 5 6 7 8 9 10
3 410,0 467,5 531,5 602,6 681,6 766,1 857,9 959,6 1,0
Net Income  
56,760 22 95 91 83 15 93 44 60 67,440
3,0 3,0 3,0 3,0 3,0 3,0 3,0 3,0
Depreciation    
00 00 00 00 00 00 00 00 3,000
( (29,9 (32,9 (36,2 (39,8 (43,8 (48,2 (53,0 (58,3 6
Net Inventory
(247,500) 27,225) 48) 42) 36) 60) 46) 31) 54) 59) 41,951
1,1 7,5 14,6 22,5 31,2 44,0 60,2 78,1
Tax  
- 14 11 21 20 91 34 25 75 97,195
Cash from Operations 329 384,18 445,16 512,97 588,34 672,06 764,99 868,11 982,47 1,809
Inflow / Outflow (A:G) (247,500) ,535 8 3 6 4 0 6 5 6 ,586
30, 30,24 26,85 23,19 19,23 14,96 10,35 5,37
Interest on Loan   0
240 0 1 1 8 8 8 8 0
Net Cash from Operations (247,5 299 353,94 418,31 489,78 569,10 657,09 754,63 862,73 982,47 1,809
Inflow / Outflow (I - J) 00) ,295 8 2 5 6 1 8 7 6 ,586
Owners Equity            
1,317,250        
42,3 45,7 49,4 53,3 57,6 62,2 67,2
Principal Amount  
- 63 52 13 66 35 46 25 (0) (0)
Long Term Loan  
1,077,750                  
Cash from Financing
Inflow / Outflow (L+M) 2,395,000 - 42,363 45,752 49,413 53,366 57,635 62,246 67,225 (0) (0)
 
Building (330,000)                  
           
Land Rent (03 acres) (30,000)        
           
Machinery and Equipment (90,000)        
Net Cash from Investing (450,
Activities 000) - - - - - - - - - -
Net Cash -
Inflow / Outflow (K+N+Q) 1,697,500 299,295 396,311 464,065 539,197 622,472 714,726 816,884 929,962 982,476 1,809,586

Opening Balance - 1,697,500 1,996,795 2,393,106 2,857,170 3,396,368 4,018,840 4,733,566 5,550,450 6,480,412 7,462,888

Closing Balance 1,697,500 1,996,795 2,393,106 2,857,170 3,396,368 4,018,840 4,733,566 5,550,450 6,480,412 7,462,888 9,272,475