Group Members

Hamza Irfan Project Manager

Awais Younas CFO
Usman Bukhari Marketing Manager
Asim Khalid Operations Manager
Mudassar Nawaz Chief Accounts Officer
Shazib Qamar Legal Advisor
Project Type (Turn-key)
National

Non Industrial

Conventional Technology

Medium in Scope

A Grass Root Project

Normal in nature
Hierarchy

Owner

Project
Construction Management Supply Technical
Company
Feasibility Study
 Demand Study-
Market Potential
2008-09
51.8% contribution of total agricultural sector
11.3% contribution to national GDP
Value of livestock is 6.1% more than combined
major and minor crops
Focal point of government policies
Increasing trend in livestock
White Revolution
Strategic agreements between
 ZTBL & M/S Nestle Pakistan limited
 ZTBL & M/S Pakistan Dairy development company
Increase milk supply,
Mitigate poverty and
Improve the living standard of the rural population.
 Raw material study
Wheat straw(from land owners)
Green fodder(grow themselves on leased
land)
Mineral mixture(available from factories or
outlets)
High domestic demand

Pakistan: 175 million people, high milk consuming tradition

Some facts about agri-sector

• Irrigable land in Pakistan –20 million hectares
• Fodder cultivated in 2.8 million hectares, i.e. only 14%
• Fodder yield very low -24 Tones/hectare (Australia approx 70
Tones/hectare)
• Largest irrigation network in the world
• Cheap farm labor, though unskilled
(Still demand is high and supply is low)
Proposed supply Capacity

The feasibility study suggests an initial herd size of 200

Cows, which is economical to justify the overhead cost. The
farm size will increase to approximately 1,000 cows within
10 years. Herd mix of 100% cows is recommended to get the
maximum milk production round the year.
pricing
Cost-based strategy
In this feasibility study, it is assumed that all the milk
will be sold to milk processing companies, dairies &
milk shops etc. @ Rs. 40/liter.
Target Customers
Following are some of the target clients for a dairy
farmer.
1. Milk outlets in local markets
2. Dairy Companies
3. Milk collection companies
The cost of production per liter of raw milk should be lower
than its sale price so that farmer could feel it economical.
About the sector
SWOT Analysis
Strengths
• Back bone and main stay of economy. Provides raw
material for food & Leather industry.
• Major source of food, i.e. Milk & Meat
• Source of Farmyard Manure (FYM).
• Sizeable foreign exchanges earning through exports.
• Wide scope of Milk Production, ranking 5th in the
world.
• Ample human resource employment sector.
• Stationed, Permanently located secured loaning sector.
• Huge demand and supply gap in dairy sector.
Weaknesses
Lack of appropriate knowledge, research extension
• Lack of commercially viable breeds of animal
• Lack of education and initiative in farmer, traditional approach
due to lack of skills and management.
• Unorganized sector, unaware of basic farm management
practices.
• Remote area, lack of farm to market approach & transportation.
• Non-availability of communication services.
• Lack of farm/ market infra structures & marketing information.
• Lack of record keeping on farm.
Opportunities
 Govt. of Pakistan & Sate Bank of Pakistan priority sector.
 Dairy products needs are 30% higher than supply.
 Ample opportunities are available in the Banking Sector.
 Commercially viable sector with great credit potential
and absorption capacity.
 Vast range of area of operation, more needs and scope of
development.
 Value added dairy products are in demand.
Threats
 Implementation of WTO will result in open & competitive
commodity pricing.
 Due to fear of default, banker community has reluctance for
lending loans.
 High risks of diseases in live stock.
 Defective and unorganized markets.
 Imbalance between prices of inputs & outputs.
 Rising trend of cost of production with higher rate of interest
as compared to profit ratio.
 Lack of media projection, non-recognition of problems and
monopoly of multinationals.
 Lack of community organizations and out dated farm
practices.
Facts over the years
Dairy Market Players
Noon Pakistan
Nestle Milkpak
Prime Dairies
Idara-e-Kisan (Halla)
Chaudhry Dairy
Millack foods
Dairy Land
Engro foods Limited
ShakarGunj Foods
Alturhem Milk
JK Dairies
Doctor Dairies
Gourmet Foods
The proposal
Proposed capacity: for 200 cows with an upper limit
of 1000 cows at most.
Herd mix: 100% cows.
Business status: Sole
Proprietorship/Partnership/Company Pvt Ltd.
Total Project Cost: 84,000,000.
 Location
Location of our dairy farm is Darajke, Sadhoke
20 km off G.T road Lahore District.
 Availability and cost of land
Availability of land is easy because of the links of the
project director over there. We need 3 acres of land for
our dairy farm and it cost Rs. 3, 000, 000.

Approach to site
Approach to the dairy farm is convenient. While coming from Ravi
bridge G.T road it is 40 km and coming from Thokar Niaz baig it is 56
km approxiamately. The road is also doubled well carpeted from ravi
bridge to Sadhoke. From Sadhoke to Darajke is single road but well built.
Any vehicle from car to 24 wheeler truck could approach there easily.
 Source of raw material
 As raw material here mostly, consists of feed and feed will be
purchased from all over the Pakistan like magnesium, calcium,
rice straw, fodder etc. But the most consumable feed is fodder for
which the priority will be to purchase it from surrounding villages.

Transportation and marketing of finished product

Our finished product has to reach to two targets
1. Milk outlets in local markets
2. Dairy companies
3. Collection companies
Milk outlets and dairy companies are easily accessible in the
areas of Lahore, Gujranwala, Sheikhupura and Sialkot.
Gujranwala is further 60km through G.T road, Sialkot through
Pasrur road is further 50km.
 Source and Availability of water
Darajke is in the center of city Kamoke and Muridke and these
both cities are the hub for rice cultivation, so the availability of
water is in too much excess over here. Upper Chenab canal also
passes through these areas. So, the water will be attained by the
canal and through boring.

Availability of power and source

Electricity and sui gas is needed in terms of power for the dairy
farm. WAPDA is present over here at Darajke but during summer
season load shedding leads to 10-12 hours. So, for this reason we
have purchased a 25KVA generator to overcome the load shedding.
Sui gas commercial connection is installed in the dairy farm.
Facilities of drainage and effluent
disposal

Farm has its own well-designed system for drainage of

liquid effluents. As far as cow-dung is concerned, it is
used as farmyard manure (FYM). Therefore, it would
be sold to fertilizer companies as well as the local
farmers. It is also used for household fuel
requirements by the villagers.
Land Requirements
Description Area (acres)

Shed for cows 1.57

Cage for calves 0.08

Shed for calves 0.51

Stores for fodder 0.01

Utensils and milk storage 0.01

Servant premises 0.01

Bunker silage 0.77

Total 3 (appx)
Farm machinery
Equipment Cost (Rs)

Maize cutter (1) 450,000

Milking machine (1) 4,000,000

Milk chillers (2) 1,400,000

Generator (25 KVA) 500,000

Pump (1) 350,000

Ventilating fans (4) 300,000

Trolley (1) 150,000

Tractor (1) 600,000

Total 9,000,000
Personnel Requirements
Description No. Annual Salary (Rs)

Farm Manager 1 420,000

Technician 1 180,000

Workers 8 672,000

Tractor driver 1 84,000

Total 11 1,356,000
Feed
 Minerals (magnesium, calcium, potassium,
sodium, iron)
 Fodder crop (wheat straw, grasses, cotton seed hull,
sugarcane grass, rice straw, oats, oat straw, maize,
millets, corn cobs etc).
 Daily consumption/animal: Approximately 50kg
fodder per day.
Clinical Charges
Artificial Insemination charges: Almost 5000 Rs
per animal per year.

Medical Charges (vaccination etc): 2000 Rs per

animal per year.
Herd Mix

Holstein Australian Freisian Sahiwal Jersey

Financial Aspect
Project cost
Capital Investment Rs. in actual
 Animal Cost (200) 40,000,000
 Building/Infrastructure 20,000,000
 Land (3 Acre) 3,000,000
 Machinery & equipment 9,000,000
 Pre-operating cost 900,000
 Office Vehicle 1,000,000
 Office equipment 100,000
 Total Capital Costs 73,500,000
Project cost
Working Capital Rs. in actual
 Raw material Inventory 1,000,000
 Cash in hand 500,000
 Total Working Capital 1,500,000
____________________________________________________

 Total Capital Cost 73,500,000

 Total Working Capital 1,500,000
 Total Project cost 84,000,000
Project Financing

Investment Rs. in actual

 Personal Investment (50%) 42,000,000
 Bank Financing (50%) 42,000,000
 Total Investment 84,000,000
Annual Revenue (est.)
No. of Cows * Milk per Cow (Liters) * No. of Days = Total Consumption
200 * 20 * 365 = 1,460,000

Total Milk Production (Liters) * Sales Price (per liters) = Total Revenue
1,460,000 * 40 = 58,400,000
 Operating Cost (est.)
Fodder per Cow (Kg) * No. of Cows * Days in Year = Total Annual Consumption
20* 200* 365 = 1,460,000
Price of Fodder (per Kg) * Total Consumption = Total cost of Fodder
12* 1,460,000 = 17,520,000

_______________________________________________________________
Rs. In Actual
Total Revenue 58,400,000
Raw Material Cost 17,520,000
Gross Profit 40,880,000
Operating Cost 10,500,000
Net Profit30,380,000
Project Viability
Pay Back Period (PBP):

Pay Back period (PBP) = Original Investment / Annual Income = No. of Years
84,000,000 / 30,380,000 = 2.75 years

Return on Investment (ROI):

Return on Investment (ROI) = Average Annual Earning / Average book Investment

(30,380,000 * 10) / 10 = 55%
84,000,000 + 26,000,00
Salvage Value Rs. In Actual
Land 25,000,000
Animals (30,000*200) 6,000,000
Plant & Machinery 4,000,000
Project Viability
Net Present Value (NPV):

NPV = Discounted Inflows – Original Investment

NPV = 164,849,271 – 84,000,000 = 80,849,271

Benefit Cost Ratio (BCR):

BCR = Discounted inflows / Original Investment

BCR = 164,849,271 / 84,000,000 = 1.962
Order of Magnitude Estimates
Farm layout
Shed Cross-section
Process Flow Diagram
Purchase of Electrical and
Construction
land wiring

Water and gas Installment of Purchase of

piping equipment cattle

Housing of Sale of dairy

Milking process
cattle products
Sub-contracting
Construction: The construction contract is done with
Izhar construction Pvt Ltd.
Electrical works, gas and water piping is to sub-
contracted by the construction company itself.
The total contract has been undertaken at an amount
of Rs 20 million.
Time Estimte
Guestimating Approach

te = (to + 4tm + tp) / 6

to = 5 months
tm = 7 months
tp = 9 months

te = 7 Months
* This method is used on the based on previous industry information
Time-line
Zero date – 1st Feb 2011 Ending date – 31st august 2011

Feb MarchApril May June July Aug Sept Oct Nov Dec Jan Feb March

15 1 15 1 15 1 15 1 15 1 15 1 15 1 15 1 15 1 15 1 15 1 15 1 15 1 15

Purchase of land

Construction
Electrical

Water & gas

Equipment installation

Purchase of cattle
Housing of cattle
Milking process

Sale