Pre-Feasibility Study

Prime Ministers Small Business Loan Scheme

Sheep Fattening 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, Egerton Road, Lahore Tel 92 42 111 111 456, Fax 92 42 36304926-7 helpdesk@smeda.org.pk REGIONAL OFFICE PUNJAB 3rd Floor, Building No. 3, Aiwan e Iqbal, Egerton Road Lahore, Tel: (042) 111-111-456 Fax: (042)6304926-7 helpdesk.punjab@smeda.org.pk REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 helpdesk-khi@smeda.org.pk REGIONAL OFFICE KPK Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

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Table of Contents 1 2 3 4 5 6 7 8 9 Disclaimer.........................................................................................................1 purpose of the document .............................................................................2 Introduction to SMEDA .................................................................................2 Introduction to Scheme ................................................................................3 Executive Summary.......................................................................................3 Brief description of Project & Product .....................................................3 Critical Factors................................................................................................4 Installed & Operational Capacities ............................................................4 Geographical Potential for Investment ....................................................5

10 Potential Target Markets / cities.................................................................5 11 Production Process Flow .............................................................................5

11.1 11.2 12.1 12.2 12.3 12.4 12.5 12.6 12.7 13.1 13.2 13.3 13.4 13.5 Breed Selection .......................................................................................................... 5 Characteristics of Breeds Recommended for Sheep Fattening: ........................ 6 Project Economics ..................................................................................................... 6 Project Financing ....................................................................................................... 7 Project Cost ................................................................................................................ 7 Space Requirement ................................................................................................... 8 Machinery and Equipment ........................................................................................ 9 Human Resource Requirement ............................................................................... 9 Revenue Generation ................................................................................................. 9 Profit & Loss Statement .......................................................................................... 10 Projected Balance Sheet ............................................................................................. 11 Projected Cash Flow Statement .................................................................................. 12 Useful Project Management Tips ............................................................................... 13 Useful Links ............................................................................................................... 14

12 Project Cost Summary ..................................................................................6

13 Annexure ........................................................................................................10

14 Key Assumptions .........................................................................................16

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1 DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. 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

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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, and production, marketing, finance and business management. The purpose of this document is to facilitate potential investors in Sheep Fattening 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 successful 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.

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4 INTRODUCTION TO SCHEME
Prime Ministers Small Business Loans 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 through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Small business loans with tenure upto 7 years, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah, Balochistan, Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

5 EXECUTIVE SUMMARY
Sheep Fattening Farm is proposed to be located at promising areas of Balochistan. The project is related to Sheep fattening purposes, the total installed capacity 450 Sheep with initial utilization of 70% (315 sheep). Total Cost Estimates is Rs. 2.19 Million with fixed investment Rs. 1.29 Million and working capital Rs. 0.90 Million. Given the cost assumptions IRR and payback are 31% and 3.31 years respectively The most critical considerations or factors for success of the project are: 1. Selection of Quality Sheep 2. Farm Management The livestock sector is a leading sub-sector of the agriculture sector in Pakistan. In 2012-13 it contributed over 55.4 per cent to the Agriculture sector with growth rate of 3.7 % and 11.9 % to the GDP which is more than the aggregated contribution of entire crop sector of the country. Livestock in Balochistan has its potential in contributing to increased incomes to the farmers. Growth in output has varied over the years but in general has barely kept pace with population growth.

6 BRIEF DESCRIPTION OF PROJECT & PRODUCT

Following key parameters pertaining to subject pre-feasibility study are elaborated to briefly describe the project. Location: The farm would be established in sheep rearing areas of country where range grazing is available. In Balochistan the suitable areas to establish
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sheep farm are Southern, central and some northern parts. Major production areas in Balochistan include Kalat, Khuzdar, Kharan, Mastung, Noshki Mashkel, Sibi, Naseerabad, Jaffarabad, Kohlo, Dera Bugti, Killa Saifullah, Ziarat, Loralai, Zhob, Barkhan and Lasbela Districts Product (Breed): The most suitable breeds for fattening include Balochi, Harnai and Bibrik sheep. The farmers not only has to select the better breed which can bring results for fattening but also has to select most suitable animals from the selected breed. Through better management the weight gain of these selected breeds would be higher. Target Market: In addition to local markets in Karachi, Lahore and Islamabad an enormous export market for Middle Eastern countries, Iran etc. Employment Generation: The proposed project will provide direct employment to 4 people. Financial analysis shows the unit shall be profitable from the very first year of operation

CRITICAL FACTORS
The livestock sector is a leading sub-sector of the agriculture sector in Pakistan. In 2012-13 it contributed over 55.4 per cent to the Agriculture sector with growth rate of 3.7 % and 11.9 % to the GDP which is more than the aggregated contribution of entire crop sector of the country 1. Swift increases in consumption/demand of live stock products. Increasing demand of byproducts, blood, skin, etc. Technological improvement in live stock production and processing in developed countries which can be replicated in the developing countries

8 INSTALLED & OPERATIONAL CAPACITIES

The farm will start production with 315 sheep (70% of total capacity). The farm will achieve maximum capacity of 405 sheep (90% of total capacity) in its 7th year. The limit of 450 animals has been imposed on the farm because very large flock would be difficult to manage. The farm would focus on the rearing of young stock for fattening and marketing. Lambs and kids from six to eight months of age will be purchased and resold in the market after a fattening period of 120 days.

Economic Survey of Pakistan 4

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9 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Over the years, the livestock sector has emerged as a leading sub-sector of the agriculture sector in Pakistan. In 2005-06 livestock accounted for 49.6% of agricultural value added and about 10.7% of GDP. The role of livestock in the rural economy is critical, with approximately 35 million people located in rural areas engaged in raising livestock, which generates approximately 30-40% of their income2. In Balochistan contribution of livestock is estimated to be 40% towards agriculture share, the Livestock is the mainstay of more than 75% of the people inhabiting in the countryside of Balochistan. The potential areas for investment to establish proposed projects in sheep rearing areas of country where range grazing is available. In Balochistan the suitable areas to establish sheep farm are Southern, central and some northern parts.

10 POTENTIAL TARGET MARKETS / CITIES

The farm can be established in sheep rearing areas of country where range grazing is available. In Balochistan the suitable areas to establish sheep farm are Southern, central and some northern parts. Major production areas in Balochistan include Kalat, Khuzdar, Kharan, Mastung, Noshki Mashkel, Sibi, Naseerabad, Jaffarabad, Kohlo, Dera Bugti, Killa Saifullah, Ziarat, Loralai, Zhob, Barkhan and Lasbela Districts

11 PRODUCTION PROCESS FLOW

Animals selected for fattening should be from six months to eight months of age. At this age the animal is weaned and used to eating green fodder and grass. As compare to grown up sheep the daily weight gain capacity is also better at this age. Weight and age of all the selected animals should also be similar otherwise the larger and older animals would not let the smaller animals to eat feed according to their requirement. Selected animals should not be sick, weak or with physical disabilities. 1 1 .1 Breed Selection

The farmers not only has to select the better breed which can bring results for fattening but also has to select most suitable animals from the selected breed. Through better management the weight gain of these selected breeds would be higher. The most suitable breeds for fattening include Balochi, Harnai and Bibrik sheep. The animals should be tagged on arrival to the farm, the information to be recorded include breed of animal, live weight of animal and age of animals date of purchase etc.
2

Economic Survey of Pakistan 2005-06

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1 1 .2

Characteristics of Breeds Recommended for Sheep Fattening:

11.2.1 Balochi Sheep The Balochi sheep originated in the southwest Pakistan, eastern Iran and southern Afghanistan. It is a large sized fat tailed breed important in central, southern and some south-western parts of the Balochistan. It is a mutton and dairy sheep, producing coarse wool. Its fleece is white with pigmented head and legs. Body size varies between 35 and 40 Kg in adult eves, milk yield between 40-50 kg in a period of about 125 days. The average fleece production is 1.3 1.8 Kg. 11.2.2 Bibrik It is a fat tailed, mutton type sheep that is found in parts of Loralai Kohlu, Bugti, Barkhan, Musakhel and Sibi districts in Balochistan province. It is a medium size breed. Body colour is white with black or brown head. The wool yield is about 1.7 Kg. the tail is fat and short. Average adult live-weight is 27 kg. 11.2.3 Harnai The Harnai is a fat tail, mutton /wool type breed. They are found in parts of Loralai, Quetta, Sibi and Zhob districts in Balochistan. They are medium size with a white body coat with a black or tan spotted d head and ears. The wool yield is 2.6 kg with medium fiber diameter. They have a compact body with a small fat tail, high fiber density. Its wool is dense and heavy. Average adult body weight is around 30-32 kg. The breed also produces excellent quality mutton.

12 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of Sheep Fattening Farm under the Prime Ministers Small Business Loan Scheme. 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 appendix 1 2 .1 Project Economics

All the figures in this financial model have been calculated for 450 sheep for total area of around 9,400 sq.ft, that would be used for different functions of the farm. The following table shows internal rates of return and payback period.

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Table 1 - Project Economics

Description Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV)

Details 31% 3.31 848,681

Establishment of the farms in areas where cheap land is available, but still not very far from the animal markets. The farming should be done on scientific grounds taking care of Vaccination, Medicine etc. Healthy and attractive local female without horn should be selected, as it has better characteristics compatible with the local environment. Healthy and quality male stock should be selected for breeding. New feeding techniques including concentrate feeding and preparation of urea molasses blocks, wheat straw treatment should be used for better results. Well-trained/experienced staff adding in the efficiency of the farm 1 2 .2 Project Financing

Following table provides details of the equity required and variables related to bank loan; Description Total Equity (@ 10%) Rs. Bank Loan (@ 90%) Rs. Markup to the Borrower (%age/annum) Tenure of the Loan (Years) 1 2 .3 Project Cost
Table 1: Capital Investment for the Project

Details 218,884 1,969,955 8% 7

Following requirements have been identified for operations of the proposed business. Capital Investment Total Capital Cost Initial Working Capital Total Project Cost Amount (Rs.) 1,292,373 896,466 2,188,839

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1 2 .4

Space Requirement
Table 2: Space Requirement

Details of the area required are given in below accordingly

Item

Space / Animal Sq.ft.

Total Area Sq.ft.

Cost / Sq.ft. (Rs.)

Total cost. Rs.

144 500 72,000 Owners Room Shed Space 20 3,000 150 450,000 240 300 72,000 Stores for Raw Material 136 300 40,800 Attendants Room 50 6,000 5 30,000 Open Paddock 664,800 Total Cost Total investment in building and infrastructure is calculated to be approximately Rs. 0.66 million.

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1 2 .5

Machinery and Equipment

Following table provides list of machinery and equipment required for Sheep Fattening Farm working for Livestock sector.
Table 3: List of Machinery and Equipment
Description

Unit 1 1 10. 5 1 1 1

Chopper Water Pump with boring Mangers Tubs Hand Cart Weigh Scale Misc Total 1 2 .6 Human Resource Requirement

Unit Price (Rs.) 15,000 250,000 2,500 1,500 5,000 50,000 15,000

Total Cost. (Rs.) 15,000 250,000 25,000 7,500 5,000 50,000

15,000

367,500

Table 4: Human Resource Requirement

Description Owner Manager Farm Attendants Total Staff

No. of Employees 1 3 4

Salary per month 25,000 30,000 55,000

The table above provides details of human resource required for sheep fattening farm. 1 2 .7 Revenue Generation Product Sales Price (Rs./Unit) 12,375 First Year Production (Sheep) 315 First Year Sales Revenue (Rs) 3,898,125 3,898,125

Sale of Live Sheep Total Sales Revenue

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13 ANNEXURE 1 3 .1 Profit & Loss Statement

SMEDA
Year 1 Revenue Cost of Goods Sold Feed & Vaccination Cost Cost of Sheeps Direct Labor Repair & Maintenance Utilities Total Cost of Sales Gross Profit General administration & selling expenses Administration expense Travelling & Comm. expense (phone, fax, etc.) Office vehicles running expense Office expenses (stationary, etc.) Depreciation expense Amortization expense Property tax expense Miscellaneous expense Subtotal Operating Income Other income Gain / (loss) on sale of assets Earnings Before Interest & Taxes Interest expense Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX Balance brought forward Total profit available for appropriation Dividend Balance carried forward 3,898,125 709,774 1,724,625 360,000 15,000 60,000 2,869,399 1,028,726 Year 2 4,385,391 780,751 1,897,088 396,000 16,875 70,714 3,161,428 1,223,963 Year 3 4,911,638 858,826 2,086,796 435,600 18,900 82,971 3,483,094 1,428,544 Year 4 5,479,546 944,709 2,295,476 479,160 21,085 96,973 3,837,403 1,642,143 Year 5 6,091,965 1,039,180 2,525,023 527,076 23,442 112,945 4,227,666 1,864,299 Year 6 6,396,564 1,143,098 2,777,526 579,784 24,614 124,239 4,649,260 1,747,303 Year 7 6,716,392 1,257,407 3,055,278 637,762 25,845 136,663 5,112,956 1,603,436 Year 8 7,052,211 1,383,148 3,360,806 701,538 27,137 150,330 5,622,959 1,429,252 Year 9 7,404,822 1,521,463 3,696,887 771,692 28,494 165,363 6,183,898 1,220,924 Rs. in actuals Year 10 7,775,063 1,673,609 4,066,576 848,861 29,918 181,899 6,800,863 974,200

Statement Summaries
Income Statement

309,000 60,000 7,500 70,490 31,768 19,491 498,248 530,478 530,478 151,131 379,347 379,347

339,900 66,000 8,250 70,490 31,768 21,927 538,335 685,628 685,628 133,067 552,561 552,561 379,347 931,908 931,908

373,890 72,600 9,075 70,490 31,768 24,558 582,381 846,163 846,163 113,513 732,649 732,649 931,908 1,664,558 1,664,558

411,279 79,860 9,983 70,490 31,768 27,398 630,777 1,011,366 1,011,366 92,348 919,017 919,017 1,664,558 2,583,575 2,583,575

452,407 87,846 10,981 70,490 31,768 30,460 683,951 1,180,348 1,180,348 69,439 1,110,909 1,110,909 2,583,575 3,694,484 3,694,484

497,648 96,631 12,079 70,490 31,983 708,830 1,038,473 1,038,473 44,640 993,833 993,833 3,694,484 4,688,317 4,688,317

547,412 106,294 13,287 70,490 33,582 771,065 832,371 832,371 17,798 814,573 814,573 4,688,317 5,502,891 5,502,891

602,154 116,923 14,615 70,490 35,261 839,443 589,809 589,809 589,809 589,809 5,502,891 6,092,700 6,092,700

662,369 128,615 16,077 70,490 37,024 914,575 306,348 306,348 306,348 306,348 6,092,700 6,399,048 6,399,048

728,606 141,477 17,685 70,490 38,875 997,133 (22,933) (22,933) (22,933) (22,933) 6,399,048 6,376,115 6,376,115

379,347 379,347

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13.2
Balance Sheet

Projected Balance Sheet

SMEDA
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs. in actuals Year 10

Statement Summaries

Assets Current assets Cash & Bank Accounts receivable Finished goods inventory Equipment spare part inventory Raw material inventory Total Current Assets Fixed assets Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office vehicles Office equipment Total Fixed Assets Intangible assets Pre-operation costs Legal, licensing, & training costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Long term debt Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITI

80,000 5,000 811,466 896,466

188,079 213,596 5,906 937,244 1,344,825

467,492 226,946 6,946 1,082,516 1,783,899

872,937 254,713 8,136 1,250,306 2,386,093

1,418,108 284,690 9,498 1,444,104 3,156,400

2,103,499 317,028 10,471 1,667,940 4,098,938

2,591,283 342,151 11,545 1,926,471 4,871,450

2,844,958 359,259 12,728 2,225,073 5,442,018

3,183,774 377,222 14,033 2,569,960 6,144,989

3,189,944 396,083 15,471 2,968,304 6,569,802

6,066,649 415,887 6,482,536

91,233 664,800 367,500 10,000 1,133,533

91,233 631,560 330,750 9,500 1,063,043

91,233 598,320 294,000 9,000 992,553

91,233 565,080 257,250 8,500 922,063

91,233 531,840 220,500 8,000 851,573

91,233 498,600 183,750 7,500 781,083

91,233 465,360 147,000 7,000 710,593

91,233 432,120 110,250 6,500 640,103

91,233 398,880 73,500 6,000 569,613

91,233 365,640 36,750 5,500 499,123

91,233 332,400 5,000 428,633

158,839 158,839 2,188,839

127,071 127,071 2,534,939

95,304 95,304 2,871,756

63,536 63,536 3,371,692

31,768 31,768 4,039,741

4,880,021

5,582,043

6,082,121

6,714,602

7,068,925

6,911,169

185,893 185,893

207,352 207,352

231,395 231,395

258,349 258,349

288,551 288,551

322,370 322,370

360,347 360,347

403,018 403,018

450,993 450,993

316,170 316,170

1,969,955 1,969,955

1,750,815 1,750,815

1,513,612 1,513,612

1,256,855 1,256,855

978,933 978,933

678,102 678,102

352,472 352,472

218,884 218,884 2,188,839

-

218,884 379,347 598,231 2,534,939

-

218,884 931,908 1,150,792 2,871,756

-

218,884 1,664,558 1,883,442 3,371,692

-

218,884 2,583,575 2,802,459 4,039,741

-

218,884 3,694,484 3,913,368 4,880,021

-

218,884 4,688,317 4,907,201 5,582,043

-

218,884 5,502,891 5,721,775 6,082,121

-

218,884 6,092,700 6,311,584 6,714,602

-

218,884 6,399,048 6,617,932 7,068,925

-

218,884 6,376,115 6,594,999 6,911,169

-

Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0

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13.3

Projected Cash Flow Statement

SMEDA
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs. in actuals Year 10

Statement Summaries
Cash Flow Statement

Operating activities Net profit Add: depreciation expense amortization expense Deferred income tax Accounts receivable Finished good inventory Equipment inventory Raw material inventory Accounts payable Other liabilities Cash provided by operations Financing activities Change in long term debt Issuance of shares Purchase of (treasury) shares Cash provided by / (used for) financ

(5,000) (811,466) (816,466)

379,347 70,490 31,768 (213,596) (906) (125,777) 185,893 327,219

552,561 70,490 31,768 (13,350) (1,040) (145,273) 21,459 516,616

732,649 70,490 31,768 (27,767) (1,191) (167,790) 24,043 662,202

919,017 70,490 31,768 (29,977) (1,362) (193,797) 26,954 823,093

1,110,909 70,490 31,768 (32,338) (974) (223,836) 30,202 986,222

993,833 70,490 (25,124) (1,073) (258,531) 33,819 813,414

814,573 70,490 (17,108) (1,183) (298,603) 37,977 606,146

589,809 70,490 (17,963) (1,305) (344,886) 42,671 338,817

306,348 70,490 (18,861) (1,438) (398,344) 47,974 6,170

(22,933) 70,490 (19,804) 15,471 2,968,304 (134,823) 2,876,705

1,969,955 218,884 2,188,839

(219,139) (219,139)

(237,204) (237,204)

(256,757) (256,757)

(277,922) (277,922)

(300,832) (300,832)

(325,630) (325,630)

(352,472) (352,472)

Investing activities Capital expenditure (1,292,373) Acquisitions Cash (used for) / provided by invest (1,292,373) NET CASH Cash balance brought forward Cash available for appropriation Dividend Cash carried forward 80,000

108,079 80,000 188,079 188,079

279,413 188,079 467,492 467,492

405,445 467,492 872,937 872,937

545,171 872,937 1,418,108 1,418,108

685,390 1,418,108 2,103,499 2,103,499

487,784 2,103,499 2,591,283 2,591,283

253,674 2,591,283 2,844,958 2,844,958

338,817 2,844,958 3,183,774 3,183,774

6,170 3,183,774 3,189,944 3,189,944

2,876,705 3,189,944 6,066,649 6,066,649

80,000 80,000

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13.4

Useful Project Management Tips

Technology List of Machinery & Equipment (As per Section 12.5)

Required spare parts & consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations 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 training and after sales services under the contract with the machinery suppliers Quality Assurance Equipment & Standards: Whatever means required products quality standards need to be defined on the packaging and a system to check them instituted, this improves credibility

Marketing Product Development & Packaging: Expert's help may be engaged for product/service and packaging design & development Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is highly recommended. Product broachers from good quality service providers Sales & Distribution Network: agreements are required with. Expert's advise and distribution

Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Price during introductory phase may be lower and used as promotional tool. Product cost estimates should be carefully documented before price setting. Government controlled prices shall be displayed.

Human Resources List of Human Resource (As per Section 12.8)

Adequacy & Competencies: Skilled and experienced staff should be considered an investment even to the extent of offering share in business profit. Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation.
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Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure of best practices is route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards. 13.5 Useful Links

Prime Ministers Office www.pmo.gov.pk Small & Medium Enterprises Development Authority (SMEDA) www.smeda.org.pk National Bank of Pakistan (SBP) 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 Ministry of Education, Training & Standards in Higher Education http://moptt.gov.pk Government of Punjab www.punjab.gov.pk Government of Sindh www.sindh.gov.pk Government of Khyber Pakhtoonkhwa www.khyberpakhtunkhwa.gov.pk Government of Balochistan www.balochistan.gov.pk Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk Government of Azad Jamu Kashmir
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(Sheep Fattening Farm)

www.ajk.gov.pk Trade Development Authority of Pakistan (TDAP) www.tdap.gov.pk

Security Commission of Pakistan (SECP) www.secp.gov.pk Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk State Bank of Pakistan (SBP) www.sbp.org.pk Pakistan Institute of Fashion Design(PIFD) www.pifd.edu.pk Pakistan Fashion Design Council (PFDC) www.pfdc.org

15 September 2013

Pre-Feasibility Study

(Sheep Fattening Farm)

14 KEY ASSUMPTIONS Particulars

Sales Price Growth Rate Capacity Utilization Growth Rate Increase in Cost of Raw Materials Increase in Staff Salaries Increase in Utilities (Electricity / Water / Gas) Debt / Equity Ratio Depreciation Plant Building Machinery Office Furniture & Equipment Loan Period Loan Installments Financial Charges (Loan Rate) 10 % per annum 10 % per annum 10 % per annum 7 Years Quarterly 08 % per annum 5 % per year 5 % per year 10 % per year 10 % per year 10 % per year 90 : 10

Assumption

16 September 2013