Off Season Vegetables ( Low Tunnel )

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Pre-Feasibility Study

(Off Season Vegetables – Low Tunnel)

Small and Medium Enterprises Development Authority

Ministry of Industries & ProductionGovernment 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

[email protected]

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) [email protected]

5TH Floor, BahriaComplex II, M.T. Khan Road,

Karachi.

Tel: (021) 111-111-456


Ground FloorState Life Building

The Mall, Peshawar.

Tel: (091) 111-111-456


Bungalow No. 15-AChaman Housing Scheme

Airport Road, Quetta.

Tel: (081) 2831623, 2831702


Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost

December, 2013



Table of Contents

1. DISCLAIMER .......................................................................................................................................... 2 2. PURPOSE OF THE DOCUMENT ......................................................................................................... 3 3. INTRODUCTION TO SMEDA .............................................................................................................. 3 4. INTRODUCTION TO SCHEME ........................................................................................................... 4 5. EXECUTIVE SUMMARY ...................................................................................................................... 4 6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ........................................................................ 4 7. CRITICAL FACTORS ............................................................................................................................ 5 8. INSTALLED & OPERATIONAL CAPACITIES ................................................................................. 6 9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..................................................................... 6 10. POTENTIAL TARGET MARKETS / CITIES ............................................................................... 6 11.

PRODUCTION PROCESS FLOW .................................................................................................. 6

1111..11 LLOOWW TTUUNNNNEELL SSTTRRUUCCTTUURREE SSPPEECCIIFFIICC A ATTIIOONNSS .................................................................................. 7 1111..22 SSUUPPPPOORRTT SSTTRRUUCCTTUURREE .................................................................................................................... 7 12. PROJECT COST SUMMARY ......................................................................................................... 8 12.1 PROJECT ECONOMICS .................................................................................................................... 8 12.2 PROJECT FINANCING ....................................................................................................................... 9 12.3 PROJECT COST ............................................................................................................................... 9 12.4 L AND REQUIREMENT ..................................................................................................................... 10 12.5 M ACHINERY & EQUIPMENT ........................................................................................................... 10 12.6 R AW M ATERIAL REQUIREMENTS .................................................................................................. 10 12.7 HUMAN RESOURCE REQUIREMENT .............................................................................................. 12 12.8 REVENUE GENERATION ................................................................................................................ 12 12.9 OTHER COSTS ............................................................................................................................... 13 13. CONTACT DETAILS OF GOVT. INSTITUTIONS / EXPERTS / CONSULTANTS ............. 13 14. ANNEXURE ..................................................................................................................................... 15 14.1 INCOME STATEMENT ..................................................................................................................... 15 14.2 STATEMENT OF C ASH FLOW ......................................................................................................... 16 14.3 B ALANCE SHEET ........................................................................................................................... 17 14.4 R AW M ATERIAL C ALCULATION SHEETS ........................................................................................ 18 14.5 S ALES REVENUE C ALCULATION SHEET ....................................................................................... 19 14.6 USEFUL M ANAGEMENT TIPS ......................................................................................................... 20 14.7 USEFUL LINKS ............................................................................................................................... 20 15. KEY ASSUMPTIONS ..................................................................................................................... 21



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 fromcase 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

SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2

http://www.smeda.org.pk/





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 conceptdevelopment, start-up, production, marketing, finance and business

management.

The purpose of this document is to facilitate potential investors in Off-Season

Farming (Low Tunnel) by providing them 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 existingenterprises by trial and error, and certain industrial norms 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 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 theeconomy 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 Minister’s Youth Business Loan’ scheme, for young entrepreneurs, with

an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide

subsidised financing at 8% mark-up per annum for one hundred thousand

(100,000) beneficiaries, through designated financial institutions, initially byNational 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).

5. EXECUTIVE SUMMARY

Tunnel farming is gaining popularity, and is being practiced in all regions of

Pakistan.

The proposed project is a medium sized off-season vegetable farming unit,

spreading over 7 acres. Off-season vegetables are proposed to be cultivated in

this project using low tunnel technology. The two fruits assumed to be cultivated

in this particular project are watermelon and muskmelon. The total time; from

land preparation to harvesting, is around 8 months.

The estimated yield of the farm varies according to the crop mix selected. The

proposed mix for this feasibility will be cultivated on 7 acres of land. The quantity

of seeds sown each year is 900 grams of watermelon seeds and 1,600 grams ofmuskmelon seeds. The estimated produce would be 162 tones of watermelon

and 86.4 tones of muskmelon excluding 10% wastage.

Complete adherence to best agronomic practices as recommended is critical to

the success of this project, therefore technical knowledge & experience of the

entrepreneur is absolutely necessary.

The cost for setting up the proposed low tunnel farm is estimated at Rs. 2.19

million. The project is proposed to be financed through 90% debt and 10%

equity. The project NPV is projected around Rs. 7.47 million, with an IRR of 51%

and a payback period of 2.28 years. The legal business status of this project isproposed as ‘Sole Proprietorship’.

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

There is a great demand of fruits and vegetables all year round. Prices are at the

highest at the start and end of the season. If modern techniques are applied to

grow off season crops, high prices can be fetched. Vegetable / fruit can be




cultivated in off-season, with introduction of techniques like tunnel technology, in

which temperature and moisture is controlled for growth of vegetables in specific

conditions. The production of vegetables all around the year enables the

technically competent growers to fully utilize their resources and supplement

relatively high income from fruits growing as compared to traditional crops.

The proposed project is designed as a medium sized off-season vegetable / fruit

farming unit on 7 acres of land. These tunnels are suitable for heavy individual

fruit bearing vegetables, i.e. melons, watermelons, pumpkin, bitter gourds,

squashes, etc. The crop yield in this type of tunnel is however low compared to

other types. However, for the purpose of this pre-feasibility two crops are being

proposed, namely: Watermelon and Muskmelon.

The farm will provide employment opportunities to four (04) individuals directly,

while seasonal pickers & packers are also required. The estimated yield potential

of the farm varies according to the selected type of vegetable. With above

mentioned crop mix, yield of 248 tons per season excluding 10% wastage can be

attained.

This Pre-feasibility assumes the legal status of individual as a farmer with less

than 12.5 acres of land.

7. CRITICAL FACTORS

Following principles need to be pursued for the best productivity of vegetables:

• Proper soil analysis for determining soil nutritional level.

• Use of high quality hybrid seeds.• Fertile land and its maintenance within the tunnel during the period of

cultivation.

• Selection of profitable vegetables on the basis of best analysis of cost andrevenues for a given season. Cost efficiency through better management.

• Timely control of pests, diseases and exercise of all recommendedagronomic measures.

• Maintenance and control of internal temperature and humidity of thetunnel.

• Timely irrigation, fertilization, training and grading of plantation.

• Fertilization as per expert(s) recommendation.

• Appropriate post harvest arrangement for washing, grading, packing, andtransportation of product to the market.




8. INSTALLED & OPERATIONAL CAPACITIES

Following table provides information on the total production, inclusive of 10%

wastage:

Table 1 - Total Production Capacity

Vegetables Area (acres) Unit Qty Total Production(kg)

Watermelon 3 Grams of Seeds 900 180,000

Muskmelon 4 Grams of Seeds 1,600 96,000

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

As per the information gathered from Agriculture Department, Government of

Punjab, and National Agricultural Research Center, Islamabad, following are the

potential areas of off-season vegetable production:

Mamonkangan, Nankana Sahib, Faisalabad, Kamalia in Toba Tek Singh, Rahim

Yar Khan, Chack Shahzad, Islamabad, Swat, Tarnab, Mardan, Khairabad, Mirpur

Khas, Chiniot, etc., in addition to few locations in Sindh and Balochistan.

10. POTENTIAL TARGET MARKETS / CITIES

Keeping in view the product price level, demand and purchasing power of

customer; whole sale markets, metropolitan cities / urban area are the potential

markets for off season vegetables.

11. PRODUCTION PROCESS FLOW

Following is the production process flow of off- season vegetables farming:

FIELD BED PREPARATION

SOIL FERTILIZING

NURSERY TRANSPLANTATION

MOISTURE CONDITIONING

HARVESTING TOP DRESS FERTILIZING

PLANT PROTECTION

PACKING TRANSPORTATION

NURSERY/ SAPLING

GRADING &

WASHING




1111..11 LLooww TTuunnnneell SSttr r uuccttuur r ee SSppeeccii f f iiccaatt iioonnss

The specifications of low tunnel are given in the following table:

Table 2 - Specifications of Low Tunnel

Material

Specification

Material Plastic pipe (PVC material)

Plastic pipe(PVC material)

Diameter 3/4 inch

Length 9 ft

Plastic 0.04 mm thick and 10 ft wide

TunnelSpecification

Height 3.5 ft, half moon shaped

Width 4 ft

Length 200 ft

No. of tunnels 25 per acre

The cost of such tunnel amount to Rs. 67,750 per acre excluding the cost relatedto plastic used as a shield (cover) and mulch.

Figure 1 – Low Plastic Tunnel

1111..22 SSuuppppoor r tt SSttr r uuccttuur r ee

Each tunnel will be 200 feet long, 3.5 feet high and 4 feet wide. The tunnel is builtby a 3/4 inch diameter plastic pipe (PVC material) of 9 feet length, in half moonshape. The plastic pipes are placed at regular intervals of approximately 10-15feet. Each tunnel structure will then be covered by a 0.04-mm thick and 10 feet




wide plastic sheet. Approximately 25 tunnels can be constructed on an acre ofland depending on the type of vegetable, i.e. watermelon, muskmelon orpumpkin.

Figure 2 - Support structure in low tunnels

12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercialviability of Off Season Farming (Low Tunnel). Various cost and revenue relatedassumptions along with results of the analysis are outlined in this section.

The projected Income Statement, Cash Flow Statement and Balance Sheet are

attached as appendix.

12.1 Project Economics

The proposed crop mix is watermelon and muskmelon cultivated on 3 acres and4 acres of land, respectively. The estimated produce would be 162 tons ofwatermelon and 86.4 tons of muskmelon excluding 10% wastage.

Table 3 - Total Production Capacity

Produce Area(acres)

Seeds sown(grams)

Pants /acre

No. ofproduce /

plant

Weightof

produce(kg)

TotalProduction

Quantity(kg)

Watermelon 3 900 6,000 2 5 180,000

Muskmelon 4 1,600 8,000 3 1 96,000




The following table shows internal rate of return, payback period and net presentvalue:

Table 4 - Project Economics

Description DetailsInternal Rate of Return (IRR) 51%

Payback Period (Yrs) 2.28

Net Present Value (NPV) 7,469,866

Returns on the scheme and its profitability are highly dependent on the

entrepreneur having some practical knowledge about agriculture & farming,

selection of fertile land, selection of high yield seed, cultivating the in-demand

vegetables and selection of right time for vegetable cultivation.

12.2 Project Financing

Following table provides details of the equity required and variables related tobank loan:

Table 5 - Project FinancingDescription Details

Total Equity (10%) Rs. 219,470

Bank Loan (90%.) Rs. 1,975,230

Markup to the Borrower (%age/annum) 8%

Tenure of the Loan (Years) 8

Grace Period (Year) 1

12.3 Project Cost

Following requirements have been identified for operations of the proposedbusiness:

Table 6 - Capital Investment for the ProjectCapital Investment Amount (Rs.)

Machinery & Equipment 55,000

Pre-operating Cost 25,000

Total Capital Costs 80,000Initial Working Capital 2,114,700

Total Project Cost 2,194,700




12.4 Land Requi rement

The area has been calculated on the basis of minimum viable land required forsetting up an Off-Season Vegetable Farm (Low Tunnel). However, the existingunits do not follow any set pattern. Following table shows calculations for project

space requirement.

Table 7 - Land RequirementVegetable Land Utilization

(Acres)Land Lease Cost

per Acre (Rs.)Total Land Lease

Cost (Rs.)

Watermelon 3 50,000 150,000

Muskmelon 4 50,000 200,000

Total 7 350,000

As the land will be acquired on lease, hence total land lease cost during 1st year

would be approximately Rs. 350,000.

12.5 Machinery & Equipment

Plant and machinery required for an off-season vegetable farm can be purchased

or leased by paying on hourly basis. In this particular pre-feasibility it has been

assumed that the machinery for hoeing and land preparation would be rented,

whereas, spray machine and some tools would be purchased.

Following table provides a list of machinery and tunnel farm equipment required

for Off-Season Vegetable Farming (Low Tunnel).

Table 8 - List of Machinery

Description ReplacementYear

Quantity CostRs./unit

TotalRs.

Working Tables 5 2 5,000 10,000

Chairs 5 4 2,500 10,000

Farm Tools (Hand Tools) 5 1 20,000 20,000

Spray Machines 5 3 5,000 15,000

Total 55,000

12.6 Raw Material Requirements

The estimated yield potential of the farm varies according to the selected type ofvegetable. The quantity of seeds sown each year on 7 acres of land is 900 grams




of watermelon seeds and 1,600 grams of muskmelon seeds. Following tableshows the raw material requirement:

Table 9 – Seeds CostVegetables Area

(acres)

Seeds sown Unit Rate

Rs.

Total Cost

of SeedsWatermelon 3 900 (grams) 25 22,500

Muskmelon 4 1,600 (grams) 37 59,200

Total Cost of Seeds Sown 81,700

As mentioned above off-season vegetable cultivation is recommended with theuse of low tunnels. It is the cheapest among the available options and quitesimilar to conventional method. The specifications of low tunnel are given in thefollowing table:

Table 10 – Structure expense for low tunnelDescription Unit /

AcreUnits for7 acres

Unit Cost(Rs.)

Total Amount

(Rs.)

PVC pipe material (No.) 500 3,500 75 262,500

Plastic String (Kg) 10 70 125 8,750

Plastic Sheet - White (Kg) 100 700 230 161,000

Plastic Mulch – Black (Kg) 25 175 240 42,000

Total Cost 474,250

Apart from high yield seeds following other raw material will also be required for

cultivating off-season vegetables:

Table 11 – Other Raw Material requirement

Farm Inputs Unit Qty/AcreUnit Rate(Rs./Bag)

Total FertilizerCost (Rs.)

CAN Bags 2 2,250 31,500

Nitrophos Bags 4 3,500 98,000

DAP Bags 2 4,250 59,500

SOP Bags 2 4,250 59,500

Total 248,500




12.7 Human Resource Requirement

Permanent staff required for the project is given in the table below:

Table 12 – Human Resource Requirement (Permanent)

Description No. of Employees Salary peremployee permonth (Rs.)

Owner / Farm Manager 1 25,000

Permanent Labor 3 12,000

Total Staff 4

Part time workers would be required during the picking season of three months.Five pickings per month are assumed with an average rate of Rs. 250 per pickingper person. Following table shows the calculations for temporary labor wages:

Table 13 - Human Resource Requirement (Temporary)Descr ipt ion Number Wages (Rs. per

picking per person)Total Seasonal

Wages (Rs)

TemporaryLabor

11 Male: 250Female: 250

288,750

Salaries of all employees / workers are estimated to increase at 10% annually.

12.8 Revenue Generation

Expected production and sale prices of the proposed produce are given in the

table below:Table 14 - Expected Production and Land Utilization

Vegetable LandUtilization

(Acres)

Sale Price(Rs./ Kg )

First YearProduction excl.

Wastage (Kg)

First YearSales Revenue

(Rs)

Watermelon 3 15 162,000 2,430,000

Muskmelon 4 20 86,400 1,728,000

Sale of emptybags of fertilizer

700

Total Sales Revenue 4,158,700

The prices of vegetables in normal season are around one-third of the prices ofproduce grown in off-seasons.

Table 15 - Revenue AssumptionsSales price growth rate 10%

Percentage wastage 10%

Production capacity utilization year 1 - 10 100%




12.9 Other Costs

An essential cost to be borne by the farm is the transportation cost incurredduring transfer of vegetables from the farm to the market. The fuel cost is takenas aprox. Rs. 110 per liter. Cost per km is estimated to be Rs. 25 per km which

will increase at the rate of 10%. Fuel cost for year one is Rs. 388,125. Similarly,electricity expense is estimated to be around Rs. 5,000 per month.

Table 16 – Other Cost AssumptionsTransportation of farm produce

Cost per kilometer (Rs.) 25

Farm to market distance (km) 125

Per trip cost (Rs.) 3,125

Load per trip (tons) 2

No. of trips 124

Pesticides expense per Acre per season (Rs.) 20,000

Water expense

Number of months for irrigation 8

Total number of irrigations per season 10

Cost per irrigation per acre (Rs.) 450

Total cost of green manuring, land prep and sowing per acre 12,500

Total cost of Mechanical Hoeing – twice per season per acre 1,750

Average packing expense per kg (Rs.) 0.46

13. Contact Details of Govt. Institutions / Experts /Consultants

Dr. M. Aslam ParvezDirector,Institute of Horticultural Sciences,Faculty of Agriculture,University of Agriculture, FaisalabadPh: +92-41-9201281, +92-41-9200161Ext. 2952

Dr. Ghulam Jellani,PSO/ P.L (Vegetable)Programme on Vegetable CropHorticulture Research InstituteNational Agricultural Research CentrePark Road, IslamabadTel: +92-51 9255061, +92-51 9255012Fax: +92-51 9255034

Dr. Muhammad Anjum AliDirector General (Extension)

Agriculture Department, Govt. ofPunjab21-Davis Road, LahorePhone No: 92-42-99200732Fax No: 92-42-99200743

CEOPakistan Horticulture Development andExport Company30 N, Model Town Extension, Lahore(54700), Pakistan.Tel: +92-42-99232210-17Fax: +92-42-99232220




14. ANNEXURE

14.1 Income Statement

Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 4,158,700 4,574,570 5,032,027 5,535,230 6,088,753 6,697,628 7,367,391 8,104,130 8,914,543 9,805,997

Cost of sales

Plastic Sheet (white) 161,000 177,100 194,810 214,291 235,720 259,292 285,221 313,743 345,118 379,630

Plastic Mulch 42,000 46,200 50,820 55,902 61,492 67,641 74,406 81,846 90,031 99,034

Plastic Rope 8,750 9,625 10,588 11,646 12,811 14,092 15,501 17,051 18,756 20,632

Structure (PVC pipe material) 262,500 288,750 317,625 349,388 384,326 422,759 465,035 511,538 562,692 618,961

Seeds expense 81,700 89,870 98,857 108,743 119,617 131,579 144,737 159,210 175,131 192,644

Fertilizer expense 248,500 273,350 300,685 330,754 363,829 400,212 440,233 484,256 532,682 585,950

Pesticide expense 140,000 154,000 169,400 186,340 204,974 225,471 248,019 272,820 300,102 330,113

Green Manuring and Land Preparation 87,500 96,250 105,875 116,463 128,109 140,920 155,012 170,513 187,564 206,320

Mechanical Hoeing 24,500 26,950 29,645 32,610 35,870 39,457 43,403 47,744 52,518 57,770

Irrigation expense 31,500 32,130 32,773 33,428 34,097 34,779 35,474 36,184 36,907 37,645

Direct labor 576,750 594,825 654,308 719,738 791,712 870,883 957,972 1,053,769 1,159,146 1,275,060

Transportation Cost from Farm to Market 388,125 426,938 469,631 516,594 568,254 625,079 687,587 756,346 831,980 915,178

Packing expense 115,200 120,960 127,008 133,358 140,026 147,028 154,379 162,098 170,203 178,713

Total cost of sales 2,168,025 2,336,948 2,562,024 2,809,254 3,080,837 3,379,192 3,706,977 4,067,118 4,462,831 4,897,651

Gross Profit 1,990,675 2,237,623 2,470,003 2,725,976 3,007,915 3,318,436 3,660,413 4,037,011 4,451,712 4,908,346

General administration & selling expenses

Administration expense 200,000 192,500 211,750 232,925 256,218 281,839 310,023 341,025 375,128 412,641

Land rental expense 350,000 385,000 423,500 465,850 512,435 563,679 620,046 682,051 750,256 825,282

Electricity expense 30,000 33,000 36,300 39,930 43,923 48,315 53,147 58,462 64,308 70,738

Travelling expense 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213 44,324 46,540

Communications expense (phone, fax, mail, internet, etc.) 18,000 18,900 19,845 20,837 21,879 22,973 24,122 25,328 26,594 27,924

Misc. expenses 12,000 11,550 12,705 13,976 15,373 16,910 18,601 20,462 22,508 24,758

Vegetable Market expense 291,109 320,220 352,242 387,466 426,213 468,834 515,717 567,289 624,018 686,420 Depreciation expense 5,500 5,500 5,500 5,500 5,500 12,520 12,520 12,520 12,520 12,520

Subtotal 941,609 1,003,170 1,099,917 1,206,213 1,323,006 1,453,358 1,594,379 1,749,349 1,919,655 2,106,823

Operating Income 1,049,066 1,234,453 1,370,086 1,519,763 1,684,910 1,865,078 2,066,034 2,287,662 2,532,057 2,801,524

Other income (interest on cash) - - - - - - - - - -

Earnings Before Interest & Taxes 1,049,066 1,234,453 1,370,086 1,519,763 1,684,910 1,865,078 2,066,034 2,287,662 2,532,057 2,801,524

Interest expense on long term deb t (Pro ject Loan) 163 ,943 150,092 131,886 112,169 90,816 67,691 42,646 15,523 - -

Interest expense on long term debt (Working Capi ta l Loan) - - - - - - - - - -

Subtotal 163,943 150,092 131,886 112,169 90,816 67,691 42,646 15,523 - -

Earnings Before Tax 885,123 1,084,361 1,238,200 1,407,594 1,594,093 1,797,386 2,023,388 2,272,139 2,532,057 2,801,524

Tax 110,268 140,154 163,230 188,639 216,614 247,108 281,008 318,321 357,308 397,728

NET PROFIT/(LOSS) AFTER TAX 774,855 944,207 1,074,970 1,218,955 1,377,480 1,550,279 1,742,380 1,953,819 2,174,749 2,403,795




14.2 Statement of Cash Flow

Cash Flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities

Net profit 774,855 944,207 1,074,970 1,218,955 1,377,480 1,550,279 1,742,380 1,953,819 2,174,749 2,403,795

Add: depreciation expense 5,500 5,500 5,500 5,500 5,500 12,520 12,520 12,520 12,520 12,520

Deferred income tax 110,268 140,154 163,230 188,639 216,614 247,108 281,008 318,321 357,308 397,728

Accounts receivable (170,905) (8,545) (17,945) (19,740) (21,714) (23,885) (26,273) (28,901) (31,791) (34,970)

Raw material inventory (944,450) (94,445) (103,890) (114,278) (125,706) (138,277) (152,105) (167,315) (184,047) (202,451) 2,226,964

Pre-paid building rent (350,000) (35,000) (38,500) (42,350) (46,585) (51,244) (56,368) (62,005) (68,205) (75,026) 825,282

Cash provided by operations (1,294,450) 595,272 943,926 1,074,127 1,226,063 1,393,359 1,577,549 1,780,314 2,003,507 2,235,309 5,831,319

Financing activities

Project Loan - principal repayment - (219,345) (237,550) (257,267) (278,620) (301,745) (326,790) (353,913) - -

Working Capital Loan - principal repayment - - - - - - - - - -

Additions to Project Loan 1,975,230 - - - - - - - - - -

Additions to Working Capital Loan - - - - - - - - - - -

Issuance of shares 219,470 - - - - - - - - - -

Cash provided by / (used for) financing acti 2,194,700 - (219,345) (237,550) (257,267) (278,620) (301,745) (326,790) (353,913) - -

Investing activities

Capital expenditure (80,000) - - - - (70,195) - - - - -

Cash (used for) / provided by investing acti (80,000) - - - - (70,195) - - - - -

NET CASH 820,250 595,272 724,582 836,576 968,796 1,044,544 1,275,803 1,453,524 1,649,593 2,235,309 5,831,319




Pre-Feasibility Study Off-Season Farming (Low Tunnel)

14.3 Balance Sheet

Balance Sheet

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 1

Current assets

Cash & Bank 820,250 1,415,522 2,140,104 2,976,680 3,945,476 4,990,020 6,265,824 7,719,348 9,368,941 11,604,251 17,435,56

Accounts receivable 170,905 179,451 197,396 217,135 238,849 262,734 289,007 317,908 349,699 384,66

Raw material inventory 944,450 1,038,895 1,142,785 1,257,063 1,382,769 1,521,046 1,673,151 1,840,466 2,024,512 2,226,964 -

Pre-paid building rent 350,000 385,000 423,500 465,850 512,435 563,679 620,046 682,051 750,256 825,282 -

Total Current Assets 2,114,700 3,010,323 3,885,839 4,896,989 6,057,816 7,313,594 8,821,755 10,530,872 12,461,618 15,006,195 17,820,23

Fixed assets

Machinery & equipment 55,000 49,500 44,000 38,500 33,000 97,695 85,176 72,656 60,137 47,617 35,09

Furniture & fixtures - - - - - - - - - - -

Office equipment - - - - - - - - - - -

Total Fixed Assets 55,000 49,500 44,000 38,500 33,000 97,695 85,176 72,656 60,137 47,617 35,09

Intangible assets

Total Intangible Assets 25,000 20,000 15,000 10,000 5,000 - - - - - -

TOTAL ASSETS 2,194,700 3,079,823 3,944,839 4,945,489 6,095,816 7,411,290 8,906,931 10,603,528 12,521,755 15,053,812 17,855,33

Current liabilities

Total Current Liabilities - - - - - - - - - - -

Other liabilities

Deferred tax 110,268 250,422 413,652 602,291 818,905 1,066,013 1,347,021 1,665,342 2,022,650 2,420,37

Long term debt (Project Loan) 1,975,230 1,975,230 1,755,885 1,518,335 1,261,068 982,448 680,703 353,913 - - -

Long term debt (Working Capital Loan) - - - - - - - - - - -

Total Long Term Liabilities 1,975,230 2,085,498 2,006,308 1,931,987 1,863,359 1,801,353 1,746,716 1,700,934 1,665,342 2,022,650 2,420,37

Shareholders' equityPaid-up capital 219,470 219,470 219,470 219,470 219,470 219,470 219,470 219,470 219,470 219,470 219,47

Retained earnings 774,855 1,719,062 2,794,032 4,012,987 5,390,466 6,940,745 8,683,125 10,636,943 12,811,692 15,215,48

Total Equity 219,470 994,325 1,938,532 3,013,502 4,232,457 5,609,936 7,160,215 8,902,595 10,856,413 13,031,162 15,434,95

TOTAL CAPITAL AND LIAB IL ITIES 2,194,700 3,079,823 3,944,839 4,945,489 6,095,816 7,411,290 8,906,931 10,603,528 12,521,755 15,053,812 17,855,33

Liabilities & Shareholders' Equity

Asset s





14.4 Raw Material Calculation Sheets

Raw material costs

Total cost of Tunnel Structure Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-1

Plastic Sheet (white) 161,000 177,100 194,810 214,291 235,720 259,292 285,221 313,743 345,118 379,63

Plastic Mulch 42,000 46,200 50,820 55,902 61,492 67,641 74,406 81,846 90,031 99,03

Plastic Rope 8,750 9,625 10,588 11,646 12,811 14,092 15,501 17,051 18,756 20,63

Structure (PVC pipe material) 262,500 288,750 317,625 349,388 384,326 422,759 465,035 511,538 562,692 618,96

Total 474,250 521,675 573,843 631,227 694,349 763,784 840,163 924,179 1,016,597 1,118,25

Total cost of seeds Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-1

Watermelon Seed 22,500 24,750 27,225 29,948 32,942 36,236 39,860 43,846 48,231 53,05

Muskmelon Seed 59,200 65,120 71,632 78,795 86,675 95,342 104,876 115,364 126,900 139,59

Total 81,700 89,870 98,857 108,743 119,617 131,579 144,737 159,210 175,131 192,64

Total cost of fertilizer Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-1

Calcium Amonium Nitrate 31,500 34,650 38,115 41,927 46,119 50,731 55,804 61,385 67,523 74,27

Nitrophos 98,000 107,800 118,580 130,438 143,482 157,830 173,613 190,974 210,072 231,07

DAP 59,500 65,450 71,995 79,195 87,114 95,825 105,408 115,949 127,544 140,29

SOP 59,500 65,450 71,995 79,195 87,114 95,825 105,408 115,949 127,544 140,29

Total 248,500 273,350 300,685 330,754 363,829 400,212 440,233 484,256 532,682 585,95

Packing Expense

Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Y

Watermelon - - - - - - - - -

Muskmelon 115,200 120,960 127,008 133,358 140,026 147,028 154,379 162,098 170,203 17

Total Packing expense 115,200 120,960 127,008 133,358 140,026 147,028 154,379 162,098 170,203 17





14.5 Sales Revenue Calculation Sheet

Sales Revenue

Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10

No. of Kgs per acre

Watermelon 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000

Muskmelon 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000

Total Production in Kgs (excl. wastege)

Watermelon 162,000 162,000 162,000 162,000 162,000 162,000 162,000 162,000 162,000 162,000

Muskmelon 86,400 86,400 86,400 86,400 86,400 86,400 86,400 86,400 86,400 86,400

248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400 248,400

Sales Price per kg

Watermelon 15.00 16.50 18.15 19.97 21.96 24.16 26.57 29.23 32.15 35.37

Muskmelon 20.00 22.00 24.20 26.62 29.28 32.21 35.43 38.97 42.87 47.16

Sales Revenue

Watermelon 2,430,000 2,673,000 2,940,300 3,234,330 3,557,763 3,913,539 4,304,893 4,735,383 5,208,921 5,729,813

Muskmelon 1,728,000 1,900,800 2,090,880 2,299,968 2,529,965 2,782,961 3,061,257 3,367,383 3,704,121 4,074,534

Sale of empty bags of fertilizer 700 770 847 932 1,025 1,127 1,240 1,364 1,501 1,651

Total sales Revenue 4,158,700 4,574,570 5,032,027 5,535,230 6,088,753 6,697,628 7,367,391 8,104,130 8,914,543 9,805,997





14.6 Useful Management Tips

• Required material & consumables: Suppliers credit agreements and

availability as per schedule of maintenance be ensured before start of

operations

• Energy Requirement: Should not be overlooked and alternate source of

energy for critical operations be arranged in advance

• Machinery Suppliers: Should be asked for training and on-job maintenance

under the contract with the machinery suppliers

• Quality Assurance Equipment & Standards: Whatever means required

products quality & service standards need to be defined on the packaging and

a system to check them instituted, this improves credibility

Human Resources

• Adequacy & Competencies: Skilled and experienced staff should be

considered an investment and should be retained on long term basis to ensure

the smooth operations and growth.

14.7 Useful Links

• Prime Minister’s Office, www.pmo.gov.pk

• Small and Medium Enterprise Development Authority, www.smeda.org.pk

•

National Bank of Pakistan (NBP), www.nbp.com.pk• First Women Bank Limited (FWBL), www.fwbl.com.pk

• Government of Pakistan, www.pakistan.gov.pk

• Ministry of Industries & Production, www.moip.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



http://www.nbp.com.pk/

http://www.fwbl.com.pk/

http://www.fwbl.com.pk/

http://www.nbp.com.pk/





• Federation of Pakistan Chambers of Commerce and Industry (FPCCI),www.fpcci.com.pk

• State Bank of Pakistan (SBP), www.sbp.org.pk

15. KEY ASSUMPTIONS

Table 17 - Expense AssumptionsCoGS growth rate 10%

Operating costs growth rate 5%

Vegetable market expense 7% % of revenue

Travelling expense Rs. 30,000 per annum

Communication expense Rs. 18,000 per annum

Misc. expenses 6% % of admin expense

Tools and machinery depreciation 10% % of machinery & equip.

Tunnel equipment depreciation rate 100% % of tunnel equipment costFurniture & Fixtures depreciation rate 10% % of furniture & fixture cost

Table 18 - Economy Related AssumptionsInflation rate 10%

Electricity growth rate 10%

Water price growth rate 2%

Wage growth rate 10%

Table 19 - Cash Flow Assumptions

Time period per season (months) 8 Accounts receivable in days 15

Accounts payable in days 0

Raw material inventory (months) 6

Table 20 - Financial Assumpt ionsProject life (Years) 10

Debt 90%

Equity 10%

Interest rate on long-term debt 8%

Debt tenure (Years) 8Debt payments per year 12

Grace Period (Year) 1

http://www.sbp.org.pk/




Off Season Vegetables ( Low Tunnel )

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