Pre-Feasibility Study: (Dairy Farm)

Pre-Feasibility Study
(Dairy Farm)
Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE
Punjab
REGIONAL OFFICE
Sindh
REGIONAL OFFICE
Khyber Pakhtunkhwa
REGIONAL OFFICE
Balochistan
3rd Floor, Building No. 3,

Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
helpdesk.punjab@smeda.org.pk
5th Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 35610572
helpdesk-khi@smeda.org.pk
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 111-111-456
Fax: (091) 5286908
helpdesk-pew@smeda.org.pk
Bungalow No. 15-A

Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Dairy Farm
Table of Contents
1. DISCLAIMER ................................................................................................................................................... 2
2. PURPOSE OF THE DOCUMENT .................................................................................................................. 3
3. INTRODUCTION TO SMEDA ....................................................................................................................... 3
4. INTRODUCTION TO SCHEME .................................................................................................................... 3
5. EXECUTIVE SUMMARY ............................................................................................................................... 4
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ................................................................................. 4
7. CRITICAL FACTORS ..................................................................................................................................... 4
8. INSTALLED & OPERATIONAL CAPACITIES .......................................................................................... 5
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT............................................................................... 5
10. POTENTIAL TARGET MARKETS ........................................................................................................ 5
11. DAIRY PRODUCTION PROCESS .......................................................................................................... 5
12. PROJECT COST SUMMARY .................................................................................................................. 7
12.1.
12.2.
12.3.
12.4.
12.5.
12.6.
12.7.
12.8.
12.9.
12.10.
13.
14.
14.1.
14.2.
14.3.
14.4.
14.5.
15.
PROJECT ECONOMICS ................................................................................................................................ 7

PROJECT FINANCING ................................................................................................................................. 8
PROJECT COST........................................................................................................................................... 8
SPACE REQUIREMENT................................................................................................................................ 8
MACHINERY AND EQUIPMENT ................................................................................................................... 9
FURNITURE REQUIREMENT...................................................................................................................... 10
RAW MATERIAL REQUIREMENT .............................................................................................................. 10
HUMAN RESOURCE REQUIREMENT ......................................................................................................... 11
REVENUE GENERATION ........................................................................................................................... 12
OTHER COSTS.......................................................................................................................................... 12
CONTACTS OF SUPPLIERS AND CONSULTANTS ......................................................................... 12

ANNEXURE .............................................................................................................................................. 14
INCOME STATEMENT ............................................................................................................................... 14
BALANCE SHEET ..................................................................................................................................... 15
CASH FLOW STATEMENT......................................................................................................................... 16
USEFUL PROJECT MANAGEMENT TIPS .................................................................................................... 17
USEFUL LINKS ......................................................................................................................................... 18
KEY ASSUMPTIONS .............................................................................................................................. 20
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -
Dairy Farm
1. 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 gathered from various reliable sources; however, it is based
upon certain assumptions which may differ from case to case. The information has been
provided on as is where is basis without any warranties or assertions as to the
correctness or soundness thereof. 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, its employees or agents do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of undertaking
this activity. The contained information does not preclude any further professional
advice. The prospective user of this memorandum is encouraged to carry out additional
diligence and gather any information which is necessary for making an informed
decision, including taking professional advice from a qualified consultant / technical
expert before taking any decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
Dairy Farm
2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs
in project identification for investment. 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,
marketing, finance and business management.
The purpose of this document is to facilitate potential investors in dairy farm by
providing them with a general understanding of the business with the intention of
supporting potential investors in crucial investment decisions.
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, and certain industrial norms that become a guiding source regarding
various aspects of business set-up and its successful management.
Apart from carefully studying the whole document, one must consider critical aspects
provided later on, which form basis of any investment decision.
3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was established in
October 1998 with an objective to provide fresh impetus to the economy through
development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the national
income, through development of the SME sector, by helping increase the number, scale
and competitiveness of SMEs", SMEDA has carried out sectoral research to identify
policy, access to finance, business development services, strategic initiatives and
institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment has
been a hallmark of SME facilitation by SMEDA
Concurrent to the prefeasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include identification of
experts and consultants and delivery of need based capacity building programs of
different types in addition to business guidance through help desk services.
4. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan, 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,
Dairy Farm
through designated financial institutions, initially by the National Bank of Pakistan (NBP)
and the 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).
5. EXECUTIVE SUMMARY
This pre-feasibility is about setting up a dairy farm in which cows and buffaloes are kept
primarily for milk production in conventional housing system. The animals are fed green
fodder and roughage at 8-10% of live body weight in addition to nutritionally balanced
formulated feed and bred by Artificial Insemination method to gain optimum milk yields
in lactation cycle of average 300 days. Dairy farming involves housing, breeding,
feeding, watering, disease control and hygienic production of milk on farm.
A dairy farm with 12 animals (80% cows and 20% buffaloes) needs a total investment
estimated at Rs. 2.19 million out of which the capital cost of the project is Rs.2.01
million with working capital of Rs. 0.17 million. It is assumed that starting from 12
animals in year 1, the herd of animals would be increased to approximately 50 animals
till 10th year of business, keeping mortality rate and culling rate each at 5%.
The Internal Rate of Return (IRR), payback period and Net Present Value (NPV) of the
project are estimated to be 48%, 4.26 years and Rs. 5.85 million respectively. The farm
will provide employment opportunity to 02 individuals. The legal status of the project is
proposed as sole proprietorship.
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

The proposed dairy farm would be established on leased land with purpose built shed
constructed on conventional housing system. The farm would start the operations with
12 animals (10 cows and 2 buffaloes having daily per animal milk production of 13 and
8 litres respectively) to achieve milk production of 34,560 liters by the end of first year,
excluding the milk consumed by suckling calves. The breeding of animals would be
planned through Artificial Insemination method. Female calves would be given special
attention and raised as heifers and male calves would be sold for fattening purpose.
The milk will be primarily sold to bulk buyers at the rate of average Rs.60 per liter. The
farm will also offer milk sale to domestic individual consumers.
7. CRITICAL FACTORS
Background knowledge and related experience of the entrepreneur in dairy farm

operations.
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Application of good husbandry practices such as timely feeding, watering and

vaccination to ensure animals health and disease-free environment.
Awareness about the supply and demand of milk in the market as demand of
milk is relatively higher in summer as compared to winter season.
Efficient marketing of the project and bulk supply to wholesalers.
8. INSTALLED & OPERATIONAL CAPACITY

In the proposed study, initially twelve (12) animals, preferably 80% cows and 20%
buffaloes, are recommended to obtain optimum milk production in the first year of
project. It is assumed that on average, 70-80% animals would be in lactation on farm.
The female heifers born at farm would be added in milking herd; hence the number of
animals would be 50 at 10th year of project. The male calves would be sold for meat.
Although, buffaloe milk has higher fat content (9-10%) as compared to cows milk (36%) but total milk production of cows in average lactation period of 300 days is higher
as compared to buffaloes. The dairy farm will have the capacity to sale 34,560 liters
of milk, primarily directly to consumers and then milk contractors and processors in its
first year of operation.
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Dairy farming is a viable business proposition for both rural and peri-urban areas of
Pakistan. There is almost equal demand for milk in rural and peri urban areas around
the major cities such as Lahore, Faisalabad, Jhang, Sahiwal, Pakpattan, Jehlum,
Peshawar, Charsadda, D.I. Khan, Quetta, Zhob, Lasbela, Karachi, Hyderabad, Sakkar
etc. across the country; hence, from the demand point of view, the said project offers
good investment opportunities for small scale investment in all provinces of country.
10.
POTENTIAL TARGET MARKETS
Apart from Lahore, Sialkot, kasur, Gujranwala, Bahawalpur, Okara, Dadu, Lasbela, D. I.
Khan etc., dairy farming in rural and peri-urban locations around all major cities are the
primary markets for dairy farming. The target clients for a dairy farm business include;
domestic consumers, milk contractors and suppliers, milk collection and processing
companies and dairyproducts manufacturing companies.
11.
DAIRY PRODUCTION PROCESS

Selection of good dairy buffalo breeds namely, Nili-Ravi and Kundi and cattle
breeds such as Sahiwal, Red Sindhi and Cholistani. Crossbred cows (cross of
local non-descript cows with semen of exotic breeds e.g. Holstein, Friesian and
Jersey) may also be considered.
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Selection of animals with excellent body condition and udder health: average daily
milk production of 8 liters or above for buffaloes and 12 liters or above for cows in
2nd or 3rd lactation, essentially with no disease history.
Housing: Good housing leads to good management practices and ultimately

optimum production. Generally, housing should be;
i.
ii.
iii.
iv.
v.
vi.
vii.
Less expensive
Well ventilated, comfortable and dry with hygienic environment
Equipped with easy drainage system and mechanism for removal
of dung urine and waste material
Protected from extreme environmental conditions
Having maximum sun exposure: axis of length to be east to west
Available with feed and water for 24 hours
Planned so that future expansion may be possible when required
Feeding: Milking animal should be fed 1 kg of concentrate feed per 3 litres of milk
produced; hence animal with 10 litres of milk production would be offered 3-3.5 kg
of concentrate. Green fodder should be supplied @ 8-10% of body weight to the
animals. Additionally, urea molasses blocks and salt blocks can help in better milk
production. New born calves should be fed colostrum and milk @ 8-10% of body
weight for first month of age. After that, green fodder should be added to its
feeding plan
Watering: Supply of clean drinking water in clean troughs i.e. 50 to 80 liters of
water consumption/adult animal/day round the clock maintains the milk production
capacity of the animal.
Breeding: Efficient and timely Artificial Insemination (AI) of good genetic worth is a
key to success in good breeding programs of herd. The detection of heat in
buffaloes should be given special attention as they do not show signs of heat
(silent heat).
Calving: Pregnant animals should be given special attention in third trimester of
pregnancy and should be separated in pregnancy pens, if possible. Veterinary
assistance should be sought out in case of emergency. Calf care and heifer
management is very important in maintaining dairy farm production.
Udder health: Hygienic and clean milking twice a day (morning/ evening) lowers
the chances of mastitis as udder health and hygiene is most important in dairy
animals.
Storage: Proper storage of milk should be done preferably at temperature of 4 Oc.
Disease management: De-worming for endoparasitic infestations is necessary in
calves born at farm. Timely vaccination against infectious diseases should be done
as a prophylactic measure. At a well managed farm, mortality should not exceed 2-
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3% per annum. The sick animals should be separated from rest of the animals and
kept in quarantine. Following is a tentative vaccination schedule;
Table 1: Tentative Vaccination Schedule
Disease
Vaccine
Time for vaccination
Dose/ Administration
Foot & Mouth

Disease (FMD)
FMD (VRI)
February/March &
September/October
5 ml sub cut.
Black Quarter
BQ
March/April
5 ml sub cut.
Haemorrhagic
Septicemia (HS)
HS (VRI)
May/June &
November/December
5 ml / 300 kg body wt
sub cut.
Anthrax
Anthrax
August
1 ml sub cut.
Brucella Abortus
BA
Once in life for heifers

(4-12 months of age)
1ml sub cut.
(VRI: Veterinary Research Institute, Lahore)
Record keeping: The animals should be ear-tagged having information of animal

such as breed, age, date of birth / purchase, number of lactations, vaccination etc.
The records for daily milk yields, weight, Artificial Inseminations (AI), calving,
vaccination and medication etc. are also important.
Culling: Good productive animals should be selected and uneconomical animals
should be culled.
Care: Regular technical assistance from the livestock professionals and experts.
Returns on the scheme and its profitability are highly dependent on the efficiency of
above mentioned factors. In case dairy farm is not able to attain its target milk
production or implement effective husbandry practices, it will not be able to cover the
potential market and recover payments; hence, cost of operating the business will
increase.
12.
PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of
dairy farm project under the Prime Ministers Youth Business Loan. Various cost and
revenue related assumptions along with results of the analysis are outlined in this
section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexure.
12.1.
Project Economics
The following table shows Internal Rate of Return (IRR), payback period and Net
Present Value (NPV) of the proposed project;
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Table 2: Project Economics

Description
Internal Rate of Return (IRR)
Payback Period (Year)
Net Present value (NPV)
12.2.
Details
48%
4.26
Rs. 5,852,328
Project Financing
Following table provides details of the equity required and variables related to bank
financing;
Table 3: Project Financing
Description
Details
Rs. 218,736
Rs. 1,968,626
8%
8
1
Total Equity (10%)

Bank Loan (90%)
Markup to the Borrower (%age/annum)
Tenure of the Loan (Years)
Grace Period (Years)
12.3.
Project Cost
Following table shows the operational requirements identified for the proposed
business;
Table 4: Capital Investment for the Project
Capital Investment
Building/ Infrastructure
Cows and buffaloes cost
Furniture and fixture
Machinery & equipment
Pre-operating costs
Total Capital Costs
Raw material inventory
Cash in hand
Upfront land lease for 1/2 acres per year
Total Working Capital
Total Project Cost
12.4.
Amount (Rs.)
373,068
1,460,000
10,000
97,800
72,065
2,012,933
54,429
100,000
20,000
174,429
2,187,362
Space Requirement
Following table shows calculations for project space requirement;
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Table 5: Space Requirement in Year 1

Area per
Total Required Area
Description
animal (Sqft)
Sq.ft. (year 1-3)
Shed space for cows
40
480
Open paddock for cows
80
960
Shed space for buffalos
50
100
Open paddock for buffalos
100
200
Shed space for calves younger than 1 year
20
240
Open paddock for calves younger than 1 year
40
480
Shed space for calves older than one year
25
125
Open paddock for calves older than one year
50
250
Stores for fodder, concentrate & machine
150
Pregnancy/ Calving pen
140
Store for milk and utensils
150
Servant washroom
80
Total space requirements
3,355
Total investment in construction of building and infrastructure is estimated to be
approximately Rs. 0.37 million. Since, farm space would be increased as the number of
animals increases in herd; hence shed is constructed keeping in view the expected
expansion in the start of year 4. Considering expansion in herd size, total land
requirement is estimated at 4 Kanals (0.5 acres). It is proposed that 4 Kanals land be
acquired on lease at the start of the project and Rs. 20,000 is appropriated as annual
lease expense.
12.5.
Machinery and Equipment
Following table provides list of machinery and equipment required for the proposed
dairy farm;
Table 6: List of Machinery and Equipment
Description
Calf feeder
Teat dip cup
Fodder cutter
Water pump
Freezer
Hand carts
Miscellaneous
Unit Rate (Rs.)

No.
1,200
4
500
2
20,000
1
20,000
1
22,000
1
5,000
2
20,000 Lump sum
Cost (Rs.)
4,800
1,000
20,000
20,000
22,000
10,000
20,000
9
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(Milk utensils, buckets etc.)

Total
12.6.
97,800
Furniture Requirement
Table 7: Furniture Requirements
Description
Furniture and fixture
Qty
Lump sum
Rate (Rs.)
Cost (Rs.)
10,000
10,000
Total
12.7.
10,000
Raw Material Requirement
Following tables show raw material requirement to run the proposed dairy farm in first
year of production;
Table 8: Daily Feeding Requirements for One Cow*
Description
Kg/ Animal/ Day**
Rs./ Kg
Amount (Rs.)
Green fodder
32.00
2
64.00
(@8-10 % of body weight)
Silage/ wheat straw

Concentrate
(@1 kg for 3 liters of milk)
9.38
46.90
4.33
35
151.67
Total daily feed
262.57
* Average. weight of cow is assumed to be 400 kg with 13 liters of daily milk production for 300 days
lactation period
** Figures are rounded off at two decimal places.
Table 9: Daily Feeding Requirements for One Buffalo*

Description
Green fodder
Kg/ Animal/ Day**
Rs./ Kg
Amount (Rs.)
40.00
80.00
Wheat straw
11.73
58.63
Concentrate
2.67
35
93.33
(@8-10 % of body weight)
(@1 kg for 3 liters of milk)
Total
231.96
* Average weight of buffalo is assumed to be 500 kg with average 8 liters of daily milk production for 300
days lactation period
** Figures are rounded off at two decimal place.
10
Dairy Farm
Table 10: Daily Feeding Requirements of One Calf* (younger than 1 year)
Description
Green fodder
Kg/ Animal/ Day**
Wheat straw
Rs./ Kg
Amount (Rs.)
6.40
12.80
2.10
10.50
Total
23.30
* Average weight of calf younger than one year is assumed to be 80 kg.

Table 11: Daily Feeding Requirements of One Calf* (older than 1 year)
Description
Green fodder
Kg/ Animal/ Day**
Wheat straw
Rs./ Kg
Amount (Rs.)
16.00
32.00
5.25
26.25
Total
58.25
* Average weight of calf older than one year is assumed to be 180 kg.
Table12: Total Cost of Feeding in Year 1

Description
Cows
Buffaloes
Female calves older than 1 year
Male calves younger than 1 year
Total
12.8.
No. of Animals
10
2
6
6
Cost in Year 1 (Rs.)

958,368
169,330
127,568
51,026
1,306,292
Human Resource Requirement
Table 13: Human Resource Requirement

Monthly Salary
Annual Salary
Description
No.
(Rs.)
(Rs.)
Owner/ Farm supervisor
01
15,000
180,000
Farm worker
01
10,000
120,000
Total
02
300,000
One trained farm worker will be required to assist the owner for husbandry practices
and farm operations.
11
12.9.
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Revenue Generation
Table 14: Revenue Generation
Description
Milk sales
Sale of male calves
Units
Quantity
Liters
34,560
Calf
Rate
(Rs./Unit)
Annual Revenue in
Year 1 (Rs.)
60*
2,073,600
15,000
45,000
Total
2,118,600
* Average sale price of milk is estimated at Rs. 60.
12.10.
Other Costs
An essential cost to be borne by the farm is electricity cost which is assumed to be Rs.
60,000 per annum. The cost of vaccination & medication for adult animals and young
calves is taken as Rs. 550 and Rs. 200 per annum respectively, hence in year 1, the
total cost is Rs. 7,800. The Artificial Insemination (AI) cost is assumed to be Rs. 2,000
per animal; hence, it would be Rs. 24,000 per annum respectively. The communication
expense is Rs. 12,000 per annum. The travelling expense is estimated to be 1% of total
revenue hence Rs. 21,186 in year one.
13.
CONTACTS OF SUPPLIERS AND CONSULTANTS

Table 15: List of Suppliers and Consultants
Consultants
Dr. M. Sarwar
Dean, Faculty of Animal Husbandry
University of Agriculture, Faisalabad
Ph: 041-9920161-70
Dr. Muhammad Abdullah
Dean, Faculty of Animal Production
University of Veterinary & Animal Sciences,
Lahore
Ph: 042 - 99211374
Feed Suppliers
Prof. Dr. Muhammad Younas

Faculty of Animal Husbandry
University of Agriculture, Faisalabad
Ph: 041-9200161-170
Dr. Nawaz Saeed
Director General (Extension)
Livestock & Dairy Development Department
(L&DD), Govt. Of Punjab,
16-Cooper Road, Lahore,
Ph: 042-99201117
AI / Semen Suppliers
ICI Pakistan Cattle Feed

63-Mozang Road Lahore
Ph: 042-36370042
Al - Haiwan Sires, 5-Km, Pakpattan Road,

Sahiwal
Ph: 040-4501271-72
Doctors Dairy Feeds

203/7, UC-3, Cattle colony, Bin Qasim,
Karachi.
Altaf & Company, Altaf & Co Plaza, 16/1, Out

Fall Road, Lahore.
Ph: 042-35763411-4
12
Dairy Farm
Ph: 021-5081923-27
Alhalal Wanda
Al-Halal Livestock Concern Company
Super High Way Jahania
Ph: 065-2002373
Ghazi Brothers
B-35 KDA Scheme no 1, Mian Muhammad
Shah Road, Karachi.
Ph: 021-4543579
Machinery Suppliers
Milk Contractors/ Processors
Kurdson Industries
Sabri Road, Angoori Scheme, Baghbanpura,
Lahore
Ph: 042-36843472
Nestle Pakistan
308, Upper Mall, Lahore
Ph: 042-35757082-95
UAN +92-42-111637853
Nestle, Engro, Gourmet, etc.
Gourmet Pvt. Ltd.

73-F, Quid-e- Azam Industrial estate,
Kot lakhpat Lahore
Ph: 0423-5121052
Livestock Mandies
The animals may be procured from local livestock breeders and livestock mandies scheduled in
different districts such as Pattoki, Okara, Bahawalnagar, Lodhran, Vehari, Khanewal, Arifwala,
Pakpattan etc. scheduled by Livestock and Dairy Development Department, Govt. of The
Punjab Lahore. Free Landline: 0800-78685, 0800-78686
13
14.
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ANNEXURE
14.1.
Income Statement
Statement Summaries
SMEDA
Income Statement
Year 8
Rs. in actuals
Year 9
Year 10
7,304,459
10,607,147
16,538,134
22,759,469
3,071,041
2,382,548
3,807,597
3,496,862
5,196,041
5,411,107
7,167,419
9,370,715
9,276,570
13,482,899
439,230
29,282
17,569
43,488
69,146
7,207
605,922
1,324,915
483,153
32,210
19,326
54,536
69,146
7,207
665,578
1,716,969
531,468
35,431
21,259
73,045
69,146
7,207
737,556
2,759,306
584,615
38,974
23,385
106,071
69,146
7,207
829,398
4,581,708
643,077
42,872
25,723
165,381
119,768
7,207
1,004,028
8,366,687
707,384
47,159
28,295
227,595
119,768
7,207
1,137,408
12,345,491
975,247
1,324,915
1,716,969
2,759,306
4,581,708
8,366,687
12,345,491
131,445
564,550
111,794
863,453
90,513
1,234,403
67,465
1,649,505
42,504
2,716,802
15,471
4,566,237
8,366,687
12,345,491
208,367
208,367
564,550
16,455
548,095
863,453
52,018
811,435
1,234,403
107,660
1,126,742
1,649,505
177,401
1,472,104
2,716,802
401,700
2,315,102
4,566,237
892,371
3,673,866
8,366,687
2,150,840
6,215,848
12,345,491
3,543,421
8,802,070
167,287
375,654
375,654
375,654
923,749
923,749
923,749
1,735,184
1,735,184
1,735,184
2,861,926
2,861,926
2,861,926
4,334,030
4,334,030
4,334,030
6,649,132
6,649,132
6,649,132
10,322,998
10,322,998
10,322,998
16,538,846
16,538,846
16,538,846
25,340,915
25,340,915
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Revenue
2,118,600
2,328,810
2,894,986
3,557,465
4,348,831
5,453,588
Cost of goods sold (Feed, vaccine, medication, AI, electricity etc)

Gross Profit
1,398,092
720,508
1,545,725
783,085
1,731,681
1,163,305
2,068,111
1,489,354
2,417,994
1,930,838
General administration & selling expenses

Administration expense
Rental expense
p
Communications expense (phone, fax, etc.)
Transportation Cost
Depreciation expense
Amortization expense
Subtotal
Operating Income
300,000
20,000
12,000
21,186
29,433
7,207
389,826
330,682
330,000
22,000
13,200
23,288
29,433
7,207
425,128
357,957
363,000
24,200
14,520
28,950
29,433
7,207
467,310
695,995
399,300
26,620
15,972
35,575
29,433
7,207
514,107
975,247
Other income
Earnings Before Interest & Taxes
330,682
357,957
695,995
Interest expense
Earnings Before Tax
163,395
167,287
149,590
208,367
Taxable earnings for the year

Tax
NET PROFIT/(LOSS) AFTER TAX
167,287
167,287
Balance brought forward

Total profit available for appropriation
Dividend
Balance carried forward
167,287
167,287
14
Year 7
14.2.
Dairy Farm
Balance Sheet
Statement Summaries
SMEDA
Balance Sheet
Year 0
Assets
Current assets
Cash & Bank
Pre-paid annual land lease
Total Current Assets
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Rs. in
Year 9
actuals
Year 10
100,000
54,429
20,000
174,429
293,222
63,133
22,000
378,355
306,424
74,127
24,200
404,751
649,370
93,195
26,620
769,185
1,269,336
114,253
29,282
1,412,871
2,260,676
153,052
32,210
2,445,938
3,636,481
199,147
35,431
3,871,059
6,014,078
285,465
38,974
6,338,517
10,171,832
413,674
42,872
10,628,377
18,512,951
561,930
47,159
19,122,040
31,594,505
31,594,505
Fixed assets
Land
Building/Infrastructure
Animals (original herd)
Revaluation Surplus/ (loss)
Net value of animals
Machinery & equipment
Furniture & fixtures
Office vehicles
Office equipment
Total Fixed Assets
373,068
1,460,000
1,460,000
97,800
10,000
1,940,868
354,414
1,460,000
144,600
1,604,600
88,020
9,000
2,056,034
335,761
1,460,000
318,180
1,778,180
78,240
8,000
2,200,181
317,107
1,460,000
485,566
1,945,566
68,460
7,000
2,338,133
914,972
1,460,000
934,350
2,394,350
147,551
6,000
3,462,872
865,492
1,460,000
1,328,205
2,788,205
128,884
5,000
3,787,581
816,013
1,460,000
2,140,494
3,600,494
110,217
4,000
4,530,723
766,534
1,460,000
3,445,536
4,905,536
91,550
3,000
5,766,619
1,495,842
1,460,000
4,421,057
5,881,057
189,708
2,000
7,568,608
1,407,423
1,460,000
5,434,699
6,894,699
159,358
1,000
8,462,481
1,319,005
1,460,000
1,460,000
129,009
2,908,014
Intangible assets
Pre-operation costs
Training costs
Total Intangible Assets
TOTAL ASSETS
72,065
72,065
2,187,362
64,859
64,859
2,499,249
57,652
57,652
2,662,584
50,446
50,446
3,157,764
43,239
43,239
4,918,982
36,033
36,033
6,269,552
28,826
28,826
8,430,609
21,620
21,620
12,126,757
14,413
14,413
18,211,398
7,207
7,207
27,591,728
34,502,519
Liabilities & Shareholders' Equity

Current liabilities
Accounts payable
Export re-finance facility
Short term debt
Other liabilities
Total Current Liabilities
Other liabilities
Lease payable
Deferred tax
Long term debt
Total Long Term Liabilities
1,968,626
1,968,626
1,968,626
1,968,626
1,750,014
1,750,014
16,455
1,513,258
1,529,713
68,473
1,256,852
1,325,324
176,133
979,163
1,155,296
353,534
678,427
1,031,961
755,234
352,730
1,107,964
1,647,605
1,647,605
3,798,445
3,798,445
7,341,866
7,341,866
Shareholders' equity
Paid-up capital
Gain/ (Loss) on revaluation of animals
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES
218,736
218,736
2,187,362
218,736
144,600
167,287
530,623
2,499,249
218,736
318,180
375,654
912,570
2,662,584
218,736
485,566
923,749
1,628,051
3,157,764
924,125
934,350
1,735,184
3,593,658
4,918,982
924,125
1,328,205
2,861,926
5,114,256
6,269,552
924,125
2,140,494
4,334,030
7,398,648
8,430,609
924,125
3,445,536
6,649,132
11,018,793
12,126,757
1,819,738
4,421,057
10,322,998
16,563,793
18,211,398
1,819,738
5,434,699
16,538,846
23,793,283
27,591,728
1,819,738
25,340,915
27,160,653
34,502,519
15
14.3.
Dairy Farm
Cash Flow Statement
Statement Summaries
SMEDA
Cash Flow Statement

Year 0
Operating activities
Net profit
Add: depreciation expense
amortization expense
Deferred income tax
Cash provided by operations
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Rs. in actuals
Year 9
Year 10
(54,429)
(54,429)
167,287
29,433
7,207
(8,704)
195,222
208,367
29,433
7,207
(10,994)
234,013
548,095
29,433
7,207
16,455
(19,068)
582,122
811,435
29,433
7,207
52,018
(21,058)
879,035
1,126,742
69,146
7,207
107,660
(38,799)
1,271,956
1,472,104
69,146
7,207
177,401
(46,095)
1,679,763
2,315,102
69,146
7,207
401,700
(86,318)
2,706,837
3,673,866
69,146
7,207
892,371
(128,209)
4,514,381
6,215,848
119,768
7,207
2,150,840
(148,256)
8,345,406
8,802,070
119,768
7,207
3,543,421
561,930
13,034,396
Financing activities
Change in long term debt
Change in short term debt
Change in export re-finance facility
Add: land lease expense
Land lease payment
Lease principal repayment
Issuance of shares
Purchase of (treasury) shares
Cash provided by / (used for) financing ac
1,968,626
(20,000)
218,736
2,167,362
20,000
(22,000)
(2,000)
(218,611)
22,000
(24,200)
(220,811)
(236,756)
24,200
(26,620)
(239,176)
(256,407)
26,620
(29,282)
705,388
446,320
(277,688)
29,282
(32,210)
(280,616)
(300,736)
32,210
(35,431)
(303,957)
(325,697)
35,431
(38,974)
(329,240)
(352,730)
38,974
(42,872)
895,613
538,986
42,872
(47,159)
(4,287)
47,159
47,159
Investing activities
Capital expenditure
Acquisitions
Cash (used for) / provided by investing ac
(2,012,933)
(2,012,933)
(895,613)
(895,613)
(705,388)
(705,388)
NET CASH
100,000
193,222
13,202
342,946
619,966
991,340
1,375,806
2,377,596
4,157,754
8,341,119
13,081,555
Cash balance brought forward

Cash available for appropriation
Dividend
Cash carried forward
100,000
100,000
100,000
293,222
293,222
293,222
306,424
306,424
306,424
649,370
649,370
649,370
1,269,336
1,269,336
1,269,336
2,260,676
2,260,676
2,260,676
3,636,481
3,636,481
3,636,481
6,014,078
6,014,078
6,014,078
10,171,832
10,171,832
10,171,832
18,512,951
18,512,951
18,512,951
31,594,505
31,594,505
16
14.4.
Dairy Farm
Useful Project Management Tips
Technology
List of Machinery & Equipment: (As per Section 12.5)
Animal Selection:
Selection of disease free animals with good breed
characteristics, body conditions and health.
Feed, Vaccination, Medication, AI Services: Should be procured from

reputed and reliable sources.
Energy Requirement: Should not be overestimated or installed in excess

and alternate source of energy for critical operations be arranged in advance
Machinery Suppliers: Should be asked for after sales services under the
contract with the machinery suppliers
Quality Assurance & Standards: Quality standards need to be defined

and a system of record keeping should be developed to check quality
standards to improve credibility
Marketing
Advertisement and Promotion:

Business promotion and dissemination
through banners and launch events is highly recommended. Product
broachers from good quality service providers
Sales & Distribution Network:

Local contacts and relationship building
with farmers and dairy farms is important for developing business.
Human Resources
List of Human Resource: (As per Section 12.8)
Adequacy & Competencies: Skilled and experienced staff should be hired

for the project.
Performance Based Remuneration: Employees should be paid and

rewarded on the basis of their performance.
Training & Skill Development:

Encouraging
training
and
skill
development of self & employees through experts and exposure of best
practices can be an asset for the business. Least cost options for Training
and Skill Development (T&SD) may be linked with compensation benefits and
awards.
17
14.5.
Dairy Farm
Useful Links
Prime Ministers Office, www.pmo.gov.pk

Government of Pakistan, www.pakistan.gov.pk
Ministry of Industries & Production, www.moip.gov.pk
Ministry of National Food Security & Research, www.mnfsr.gov.pk
Ministry of Education, Training & Standards in Higher Education,
www.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
Securities & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
www.fpcci.com.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
State Bank of Pakistan (SBP), www.sbp.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
First Women Bank Limited (FWBL), www.fwbl.com.pk
Pakistan Agricultural Research Council (PARC), Islamabad, Tel. 051-9203966
www.parc.gov.pk
National Agricultural Research Centre (NARC), Islamabad, Tel. 051-9255061,
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: 02199261661, 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
University of Agriculture, Faisalabad, www.uaf.edu.pk
Lasbela University of Agriculture, Water & Marine Sciences, Lasbela,
www.luawms.edu.pk
Sindh Agriculture University, Tondojam, www.sau.edu.pk
18
Dairy Farm
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
Bahauddin Zakariya University (BZU), Multan, www.bzu.edu.pk
Nestle Sarsabz Training Institute, Renala Khurd, Okara c/o Nestle Lahore, Tel:
0423-111-637-853
Animal Husbandry In-Service Training Institute (AHITI), Peshawar, Tel. 0912960109, 9210309
Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 04299220140
Al - Haiwan Sires Training Institute, Jogi Chowk, Sahiwal, Tel. 040-4227196,
4221486, 061-6775708
Altaf & Co Livestock Training Institute, Altaf & Co Plaza,16/1,Out Fall Road,
Lahore, Tel: 042-35763411-4, www.altafandco.com
Solve Agri Pak Ltd, F-6/2, Main Link Road, Model Town, Lahore, Tel: 04235969602-3 www.solveagripak.com
Dairy & Rural Development Foundation (DRDF), Lahore,
www.dairyproject.org.pk
Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
Directorate of Livestock Farms, L&DD, Lahore, Tel: 042-99201126-7
Directorate of Small Holder Dairy Development, Gujranwala, Tel: 055-920041011, 9200194
Buffalo Research Institute Bhunikey, District Pattoki, Tel: 049-4421887, 4420072
Livestock Experiment Station (LES), Dera Chahl Lahore, L&DD, Punjab, Tel:
042-99239818, 99239819
Research Centre for Conservation of Sahiwal Cattle (RCCSC), Jhang, Tel: 0479200329, 9200371, www.rccsc.com.pk
Directorate of Livestock Training Centre (LSTC), Bahadurnagar, Okara, Tel: 0442661393
Livestock & Fisheries Department, Government of Sindh, www.sindh.gov.pk
Agriculture & Livestock Department, Government of KPK,
www.khyberpakhtunkhwa.gov.pk
Livestock & Dairy Development, Government of Balochistan,
www.balochistan.gov.pk
19
15.
Dairy Farm
KEY ASSUMPTIONS
Table 16: Key Assumptions
Description
Details
Milk sale price (cow) Rs.
60
Milk sale price (buffalo) Rs.
60
Milk sale price growth rate (%)
10
Capacity utilization (%)

Cow: Buffalo ratio in the herd
Average lactation length of herd (days)
100
80:20
300
Purchase price of a cow (Rs.)
120,000
Purchase price of a buffalo (Rs.)
130,000
Sale price of a low yielder cow (Rs.)
60,000
Sale price of a low yielder buffalo (Rs.)
60,000
Sale price of one year male calf (Rs.)
15,000
Milk yield per cow / day (liters)

Milk yield per buffalo / day (liters)
13
8
20

Pre-Feasibility Study: (Dairy Farm)

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Pre-Feasibility Study

Small and Medium Enterprises Development Authority

3rd Floor, Building No. 3,

5th Floor, Bahria

Bungalow No. 15-A

PROJECT ECONOMICS ................................................................................................................................ 7

CONTACTS OF SUPPLIERS AND CONSULTANTS ......................................................................... 12

2. PURPOSE OF THE DOCUMENT

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

Background knowledge and related experience of the entrepreneur in dairy farm

Application of good husbandry practices such as timely feeding, watering and

8. INSTALLED & OPERATIONAL CAPACITY

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

POTENTIAL TARGET MARKETS

DAIRY PRODUCTION PROCESS

Housing: Good housing leads to good management practices and ultimately

Time for vaccination

Foot & Mouth

Once in life for heifers

1ml sub cut.

(VRI: Veterinary Research Institute, Lahore)

Record keeping: The animals should be ear-tagged having information of animal

PROJECT COST SUMMARY

Table 2: Project Economics

Total Equity (10%)

Following table shows calculations for project space requirement;

Table 5: Space Requirement in Year 1

Machinery and Equipment

Unit Rate (Rs.)

(Milk utensils, buckets etc.)

Furniture and fixture

Raw Material Requirement

Silage/ wheat straw

Total daily feed

Table 9: Daily Feeding Requirements for One Buffalo*

Kg/ Animal/ Day**

(@8-10 % of body weight)

(@1 kg for 3 liters of milk)

Kg/ Animal/ Day**

* Average weight of calf younger than one year is assumed to be 80 kg.

Kg/ Animal/ Day**

Table12: Total Cost of Feeding in Year 1

Cost in Year 1 (Rs.)

Human Resource Requirement

Table 13: Human Resource Requirement

* Average sale price of milk is estimated at Rs. 60.

CONTACTS OF SUPPLIERS AND CONSULTANTS

Prof. Dr. Muhammad Younas

ICI Pakistan Cattle Feed

Al - Haiwan Sires, 5-Km, Pakpattan Road,

Doctors Dairy Feeds

Altaf & Company, Altaf & Co Plaza, 16/1, Out

Milk Contractors/ Processors

Gourmet Pvt. Ltd.

Cost of goods sold (Feed, vaccine, medication, AI, electricity etc)

General administration & selling expenses

Taxable earnings for the year

Balance brought forward

Liabilities & Shareholders' Equity

Cash Flow Statement

Cash Flow Statement

Cash balance brought forward

Useful Project Management Tips