Muhammad Anis 15 Shakir Rashid 27 Hafiz Zahid Mahmood 45

M.Com (Finance) 4th Semester Session 2008-10

Department of Commerce

OUTLINE

Introduction to industryMarket AnalysisTechnical AnalysisPersonal AnalysisFinancial AnalysisSWOT AnalysisRecommendation & Conclusion

IntroductionThe economy of Pakistan is the 27th largest economy in the world in terms of purchasing power, and the 45th largest in absolute dollar terms. Pakistan has a semi-industrialized economy, which mainly encompasses textiles, chemicals, food processing, agriculture and other industries. Pakistan has an agriculture base of more then 79.6 Mn Hectares of total area with 22 Mn Hectares land under cultivation. 18 Mn Hectares of land is under cultivation through irrigation system while 4 Mn Hectares of land relies its cultivation exclusively on rain.

Strong Potential Contribution to Economy Fisheries & Livestock Production Investment Opportunities Fiscal Incentives for Agriculture Sector

Agriculture contribution to economy Contributes 26% to GDP Employs 44% of labor force 70% of exports are Agricultural & Agri processed products

Fisheries & Livestock production

Fisheries potential (annual catch) 7.5 Mn Tons

Buffaloes (Number) 23 Mn

Cattle (Number) 22 Mn

Sheep & Goats (Number) 75 Mn

Poultry (Number) 530 Mn

Fiscal Incentives for Agriculture Sector 0% customs duty on import of agricultural machinery, equipment

and implements Exemption of duty on transfer of land for CAF Tax relief; Initial depreciation allowance @ 50% of machinery

cost. Dividends from corporate agriculture farms not subject to tax Farm income given more favorable treatment

Major Crops ForestryFisheriesMinor Crops

Agriculture

Dairy Farming Poultry Industry

Livestock

History of Poultry Industry

Poultry in Pakistan was kept as a backyard business for household needs

Prior to 1963 the native breed “Desi” was mainly rose which produce a maximum of 73 eggs per year under local conditions

In early 60’s; Pakistan International Airline in collaboration with shaver poultry Breeding Farms started the first Commercial Hatchery in Karachi

1st commercial Feed Mill was started by Lever Brothers in Rahim Yar Khan

Phase 1: The Introductory Period 1965-1970

Directorate of poultry production at KarachiThe Income tax exemptionLiberal import of parent and grand parent stocksMachinery and equipmentFree export of Poultry and its products

Phase 2: Institutional Development 1971-1975

The Federal Poultry Board establishedResearch services were introducedA dramatic increase in poultry production resulted due to

diverted investments from the nationalization of industries in other sectors

At the same time the clustering of production units led to large disease outbreaks and the lack of marketing facilities due to ban on export of poultry products limited industry growth

This phase is characterized by both the greatest success of the poultry industry and its greatest failure

Phase 3: The Production Boom 1976-1980

A policy to attract investment in poultry farming by offering estate land under 10 year leases

Commercial egg production and broiler production increased this period

Serious financial set backs to poultry farming in Pakistan

Formation the Pakistan poultry association in 1979 on the advice of the federal poultry board

Phase 4: Depression and Adjustment 1981-1990

Disease problems possessed a serious threat to the sound development and consolidation of the industry

The large Karachi poultry estates began to close in 1984 and a number of poultry farms closed in other areas of Sindh

Production showed a decreased growth or even depression early 1980 particularly of increases in the Punjab, Baluchistan and NWFP

Faced with disease problem, lower productivity and numerous environmental and climatic difficulties, some of most successful farmers decided to produce under more modernized conditions and to establish their poultry farms in cooler, less polluted area of the country

1990-- Hydro pericardium syndrome

1991-- Gumboro attacked to the Chicks of Broiler, layer and parent flock that resulted in great mortality

1992-- At National level Institutes done efforts to reduce these diseases

1995-- Avian Influenza appeared and mortality in parent flock rose up to 80%

1996-- Parent flock increased in number due to absence of planning1997-- Ban on serving of dinner in marriage parties that reduce the demand of poultry

products in the market up to 40%1998-- It started improving and by increase in price of Chick the companies got a great

profit1999-- Again a syndrome like Influenza broke that cause great loss in some areas

while some areas were safe

2006-- Bird flu broke out again due to which 40% of the industry were destroyed

2010-- In Pakistan poultry industry is at 2nd place after Textile industry

1991 to Know

Nature of Poultry Farm

1. Backyard Farms

2. Semi Commercial / Conventional Farms

3. Commercial / Environmental Control Farms

Backyard Farms

Brick/wood/net builtDuring day chickens roam freely, at night

kept in the house Level of Bio Security: Very low

Semi Commercial / Conventional Farms

Chickens kept in a large area fenced with Net/multistoried pen/separate room in a house Feed/water given inside Level of bio-security: Low

Commercial / Environmental Control Farms

Entry and exit are highly restricted Separate techniques used for feed and water Punctual medication Controlled temperature Level of bio-security: moderate high

Environmental Controlled Shed

The modern trend of environment control houses (ECH) in poultry production has brought a great revolution in poultry industry of Pakistan in the recent years. This has solved a great hurdle of heat stress in the way economical commercial poultry production. The ECH with evaporative cooling system, providing tunnel ventilation, giving the wind chill effect has markedly improved the broiler production system.

Improved feed conversion ratio Better quality bird meat Increased productivity and health of the chicken Reduced mortality Fully system controlled with no manual controls

Muhammad AnisRoll No. 15

Market Analysis

Fixed investment in poultry sector is over Rs. 200 Billions Present turnover of Pakistan Poultry Industry is about Rs.

300 Billions There are about 25,000 Poultry farms in the country Poultry sector generates employment and income for about

fifteen hundred thousands people Poultry sector is one of the most organized branches of the

agro based sector of Pakistan. Its growth rate is 10-12% annually

At present over 50 Billions’ of agriculture produce and bio products of agriculture are being used in poultry feeds

40% of the total meat consumption is being produced from poultry products

In Pakistan 7,830 million table eggs produced annually

13,936 Metric Tons chicken meat annually In Pakistan per capita consumption of meat is only

7 Kg and 60-65 eggs annually, whereas developed word is consuming 41 Kg meat and over 300 eggs per capita per year

Number of Hatcheries 400Number of Feed mills 150Number of People /dependent 1.5 Millions

Population of Chicken

Broiler Breeder 8.5 Million Birds Layer Breeder 0.428 Million Birds Commercial Broiler “ 8.6 x 105 = 900 Million Birds Layer Birds 29 Million Birds Feed consumption 5.51 M.M.T

Exports In 1978 export of poultry products started 1978-80 increased by 102% Started declining in the following years due to sever

competition from the countries having big home markets 2008-09 exports declined to $ 4,55,000 from $ 16,01,000

(71.58%)

Reasons for decrease in exports Global competition Disease attacks Lack of refrigerated Cargo Non-Availability of space for Day-Old-Chick High Air freight charges Lack of subsidy for exports

Technical Analysis

There are four major points involved in technical analysis

Land for Project Machinery for Project Labor for Project Raw Material

Land: 1 Acre @ 1,500,000 /Acre Chak 34BC, Dera Bakkah, Hasilpur Road, B.W.P

Charges :

Cost of Registration 1%

Cost of Transfer 1%

Cost of Stamp duty 2%

Legal & Brokerage charges 4%

Machinery

Raw Material

Labor for Project (Personnel Analysis)

S.No. Types of Staff Required Salary/Month Salaries/Year

1 General Manager 1 10,000 112,000

2 Accountant 1 8,000 96,000

3 Supervisor 1 11,000 132,000

4 Doctor 1 20,000 240,000

5 Workers 6 7,000 504,000

6 Electrician 1 9,000 108,000

7 Cook 1 7,000 84,000

8 Sweeper 2 4,000 96,000

9 Security Guard 1 6,000 72,000

Total 15 1,440,000

Process Flow Chart

Distribution Channel

DEALERSFARM

CONSUMERS RETAILERS

Financial AnalysisRatios 2011 2012 2013

Gross Margin 27.4% 29.2% 30.6%

Operating Margin 25.6% 27.5% 29.0%

Net Margin 19.5% 20.8% 22.8%

Current Ratio 1.97 2.45 2.97

Cash Ratio 1.60 2.06 2.57

Debt/Equity Ratio 36% 20% 10%

IRR 39%

Pay Back Period 2 Years Approximately

Hafiz Zahid MehmoodRoll No. 45

StrengthsImproved feed conversion ratioBetter quality bird meatIncreased productivity and health of the chickenReduced mortalityFully system controlled with no manual controlsLess chances of diseasesMaintain temperature

Weakness

Adoption of new vaccines High cost Not availability of space Diseases Unhygienic condition Processing plant Poor management Lack of trained worker

Opportunities

Scope for frozen company Economic beneficial Advantage for small business person Scope for restaurant Continuous increase in demand of meat in market Sales price are reasonable & internal rate of return

is also high Production on large scale can maximize profit

Threats

Effect of change in the government regulation Bird Flu Heavy duty charge on incubator Present crisis Continuously too much variation in sales prices Energy crises Variation in chicks prices

Conclusion & Recommendations

Broiler meat is the cheapest source of animal protein available in the country. The time required for raising broiler birds is lesser than that for big animals. The consumption of meat is increasing due to growing health consciousness in the masses. According to the Agriculture Statistics of Pakistan the per capita consumption of poultry meat is increasing at a rate of 4% per annum.

We conclude that on the basis of field work and survey of control shed that the meat is necessary product so its demand increases day by day. There is no chance to decrease the demand of meat. Availability of raw material is very easy. So, conclusion is that the control shed is a profit motive business because no chance of decrease of demand.

Our recommendation to new investors is that they must invest in control shed because from the last 5-6 year there is a great change or entrance of new control shed in Pakistan. So, they step forward to come and invest or to start this business, and also contribute in the economic as well as industrial growth of Pakistan.

ANY QUESTION?