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Bankable Project Report on Establishment of a Feed plant

Bankable Project Report on the Establishment of a Feed Plant

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Bankable Project Report on Establishment of a Feed plant

  1. 1. Project Report on Establishment of a Feed Processing Plant For Cattle and Poultry By Dr. Vishnu Vardhan Reddy Pulimi M.V.Sc (Animal Nutrition) Dr. Srikala Devarapalli M.V.Sc (Animal Nutrition) Veterinary Assistant Surgeons, Animal Husbandry Department Andhra Pradesh Contact No: +91 9177568030 Email: dr.vickylolo17@gmail.com
  2. 2. ACKNOWLEDGEMENT We have immense pleasure in presenting this Project on Establishment of a Feed Processing Unit for Cattle and Poultry. It gave us an opportunity to have a detailed study on the subject and showed how things work in the practical world. We came to understand and analyze the scenario of the Indian feed industry and also its importance in Livestock sector. We had a great time working on this project and we have provided information to the fullest of our knowledge and findings. We wish all the best to Entrepreneurs who want to establish a Feed Processing unit. Regards, Dr. Vishnu Vardhan Reddy Pulimi M.V.Sc (Animal Nutrition) Dr. Srikala Devarapalli M.V.Sc (Animal Nutrition)
  3. 3. PURPOSE OF THE DOCUMENT The objective of this project report is primarily to facilitate potential entrepreneurs to provide an overview about Indian Feed Industry. The document may form the basis of an important investment decision and in order to serve this objective, the document covers various aspects of Feed Production for both ruminants and non-ruminants which includes startup, production, finance and business management. The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information collected from various sources and is based on certain assumptions. 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. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information he/she feels necessary for making an informed decision.
  4. 4. DISCLAIMER This project report has been prepared by “Dr. Vishnu Vardhan Reddy Pulimi and Dr. Srikala Devarapalli” and is for information purposes only. This report does not constitute an offer, invitation or inducement to invest in any sector or industry. Neither the information contained in this project report nor any further information made available with the subject matter contained herein will form the basis of any contract. Any recommendations contained in this document must not be relied upon as investment advice based on the recipient's personal circumstances. In the event that further clarification is required on the words or phrases used in this material, the recipient is strongly recommended to seek independent legal or financial advice. The material in this project report is general information intended for recipients who understand the risks and opportunities associated with making investment in Indian Feed Industry. It does not take account of whether an investment, course of action, or associated risks are suitable for the recipient. This report does not purport to be comprehensive or to contain all the information on which a prospective investor can make an investment decision. The information contained herein is based on publicly available information and sources, which we believe to be reliable, but we do not represent it as accurate or complete. The recipient of this report must make his own investigation and assessment of the information presented herein. No representation, warranty or undertaking, express or implied, is or will be made or given and no responsibility or liability is or will be accepted by us, in relation to the accuracy or completeness of this project report or any other written or oral information made available in connection with the information presented herein. Any responsibility or liability for any such information is expressly disclaimed.
  5. 5. Cattle and Poultry Feed Processing Unit 1. Concept of the Project: The project aims to establish a manufacturing and processing unit for Cattle and Poultry Feed in Andhra Pradesh. Given abundance in terms of dairy and poultry industry in Andhra Pradesh there is high demand for the quality concentrate feed. 2. Importance of Feed in Livestock Sector: The success of livestock farming is largely dependent on the continuous supply of good quality nutritious feeds at competitive price. Feed alone constitute about 60-70 per cent of total cost of production of livestock products. Therefore, it needs more attention though other factors are also important for remunerative return from livestock enterprises. Compound cattle feed is an important constituent of ration, considering the fact that dairy animals in India have limited access to cultivated green fodder and grasses. Most of the macro and micro nutrients to meet animals’ requirement are provided by compound feed, especially on crop residue based diets. It is possible to formulate balanced rations for growing and lactating animals only if the feed used conforms to the laid down specifications, for energy, protein, minerals, vitamins etc. The feed shall be free from harmful constituents, metallic pieces and adulterants. The feed shall also be free from fungal growth and insect infestation and from fermented Musty or rancid or any other objectionable odor. 3. Products and its Application: Properly composited balanced cattle and poultry feed will provide all the nutrients to the animals as per the requirement and would definitely help in increasing the present animal productivity in terms of milk, meat and eggs followed by more income and self-sufficiency which is the key object or application of producing cattle and poultry feed.
  6. 6. Plant Capacity & Product Mix: Generally, cattle and poultry feed plants need to be higher capacities say 100 tons to 500 tons per day but here is considered for 20 tons/day for MSME entrepreneur as being this is a viable capacity for small scale production. The plant will be versatile to produce cattle and poultry feeds both as markets are potential for both these segments. 4. Scope for feed industry With the increased demand for livestock products for domestic consumption as well as export, the farmers realized maintaining of quality animals with proper feeding and management. The proportion of crossbred animals or improved strains of birds increased over the years. This has necessitated higher demand for balanced concentrate feed. Presently, various milk unions, poultry corporations/ federations and private companies are supplying both cattle and poultry feed of different qualities and forms (mash/ pellets/ crumbles) to the farmers. Large size poultry farm/dairy farm owners, hatcheries and cooperative poultry units are normally manufacturing their own feed by installing the necessary plant and machinery on the farm. Some of the farmers are still feeding broken grains, cakes, gur, salt, etc. to dairy animals by mixing at home. The feed production could not keep pace with the growth in various species of farm animals and poultry. To meet the growing demand of processed and complete feeds for different class of animals, the unconventional feeds should also be used in the rations through proper processing for removal of anti-nutritional factors. Thus, it indicates that there is a good scope for setting up feed processing plants of different capacities for production of various quality feeds. As per the report given by IGFRI, concentrate feed is deficit by nearly 37% and the same scenario will continue up to 2025 which is briefly explained in Annexure-1. Moreover, the demand
  7. 7. for small ruminants (goat and sheep) under stall fed conditions, rabbits and pigs is not estimated. Considering their requirements, the gap is much more. Annexure-1 Requirement and availability of Fodder and Feed (Dry matter in million tonnes) Feed/Fodder Parameter 2015 2020 2025 Dry Fodder Requirement 491 530 550 Availability 387 408 433 Deficiency 104 122 117 Green Fodder Requirement 840 880 1000 Availability 619 596 600 Deficiency 221 284 400 Concentrate Requirement 87 96 105 Availability 58 61 65 Deficiency 29 35 40 Deficiency % 33% 37% 38% IGFRI, Jhansi in its Vision- 2050 5. Details of the Company Name of the Company : Address of the Company : Date of Formation : Date of Registration : Date of Incorporation : Date of Commencement of Business : Registration Number : Authorized Capital (Rs.) : Paid-up Capital (Rs.) : Objective of the Company : Area of Operation :
  8. 8. 6. Profile of the Entrepreneur Name : Date of Birth : Father’s Name : Age : Sex : Nationality : PAN : Adhar Card No : Languages Known : Permanent Address : Address for Communication : Academic Qualifications : Technical Qualifications : 7. Technical Aspects Process of Manufacturing The ingredients are pulverized in a pulverizer to the required mesh size. The product is mixed and meshed in a vibrating screen to ensure correct particle size. The product is packed in ordinary gunny bags or polythene lined gunny bags.
  9. 9. Quality Specification As per the BIS standards given in Annexure-2. Annexure-2: BIS Standards for Type 1, Type 2 and Type 3 Cattle Feed S. No Characteristic Type of Feed Type 1 Type 2 Type 3 1 Moisture, percent by mass, Max 11 11 11 2 Crude protein (N x 6.25), percent by mass, Min 22 20 18 3 Crude fat, percent by mass, Min 4.0 2.5 2.0 4 Crude fibre, percent by mass, Max 10 12 15 5 Acid insoluble ash, percent by mass, Max 3.0 4.0 5.0 6 Salt (as NaCl), percent by mass, Max 1.0 1.0 1.0 7 Calcium (as Ca), percent by mass, Min 0.8 0.8 0.8 8 Total phosphorus, percent by mass, Min 0.5 0.5 0.5 9 Available phosphorus, percent by mass, Min 0.25 0.25 0.25 10 Urea, percent by mass, Max 1.0 1.0 1.0 11 Vitamin A, I.U./kg, Min 7000 7000 7000 12 Vitamin D3, I.U./kg, Min 1200 1200 1200 13 Vitamin E, I.U./kg, Min 30 30 30 14 Aflatoxin BI (ppb), Max 20 20 20 8. Project Profile S. No Cost Parameters Quantity Unit Unit Cost Total Cost 1 Land (5 years Rent) 1 Acres 1,50,000 1,50,000 2 Land Development a Chain link wire fencing 2000 Sq. Mts 20 40,000 b Internal roads 50,000 lump sum 50,000 c Gate 6 Sq. Mts 500 30,000 d Security Cabin 30 Sq. Mts 1000 30,000 Sub Total 1,50,000
  10. 10. 3 Civil structures a Office 100 Sq. Mts 2000 2,00,000 b Furniture for Office lump sum 2,00,000 c Storage Godown-1 400 Sq. Mts 1200 4,80,000 d Storage Godown-2 400 Sq. Mts 1200 4,80,000 e Plant 300 Sq. Mts 1200 3,60,000 f Generator Room 20 Sq. Mts 1200 24,000 g Labor rest room 50 Sq. Mts 1000 50,000 h Vehicle parking Shed 50 Sq. Mts 800 40,000 i Water Supply System 2,00,000 lump sum 2,00,000 2,00,000 Sub Total 20,34,000 4 Machinery and Equipment a Computer for Office Work 1 Unit 40,000 40,000 b Electronic Weigh Bridge 1 Unit 4,00,000 4,00,000 c Weighing Machine 500 kg capacity 1 Unit d Weighing scale 5 ton capacity 1 Unit 20,000 20,000 e Grinding Machine 1 All of the machineries are available as a single unit 15,00,000 15,00,000 f Powder Conveyor g Batch Mixer h Screw Conveyor i Temporary Storage Silo j Pellet Mill k Belt Conveyor l Pellet Cooling Machine M Pellet Sieving Machine n Aspiration Unit o Crumbler for Poultry Feed 1 Unit 80,000 80,000 p Molasses Day Tank Unit 1 Unit 50,000 50,000 q Bagging Machine 1 Unit 3,00,000 3,00,000 r Stitching Machine 1 Unit 10,000 10,000 S Generator 1 Unit 2,50,000 2,50,000 t Transformer with VCB 1 Unit 2,00,000 2,00,000 Sub Total 28,50,000 28,50,000
  11. 11. 9. Working Capital Requirement (Amount in Lakhs) Particulars Period Cost/Ton Year 1 Year 2 Year 3 Year 4 Year 5 Capacity of utilization NA NA 70 80 90 100 100 Raw material consumption including wastage (Tonnes/Day) NA NA 11.31 12.93 14.54 16.16 16.16 Raw materials inventory 30 days 23090.40 78.36 89.55 100.75 111.94 111.94 Packing material 30 days 300.00 1.02 1.16 1.31 1.45 1.45 Work in progress 1 day 24506.40 2.77 3.17 3.56 3.96 3.96 Power and Fuel 15 days 350.00 0.59 0.68 0.76 0.85 0.85 Finished goods inventory 7 days 25413.30 20.12 23.00 25.87 28.75 28.75 Sundry debtors 7 days 29000.00 22.96 26.24 29.52 32.80 32.80 Less: Sundry creditors 7 days 23090.40 18.28 20.90 23.51 26.12 26.12 Total working capital requirement NA NA 144.11 164.70 185.29 205.88 205.88 Margin money on working capital @ 25% NA NA 36.03 41.18 46.32 51.47 51.47 Incremental margin on working capital NA NA NA 5.15 5.15 5.15 0.00 Working capital loan NA NA 108.09 123.53 138.97 154.41 154.41 Interest on working capital loan (@12% per annum) NA NA 12.97 14.82 16.68 18.53 18.53 10.Non Recurring Cost of the Project and Means of Finance S. No Particulars Cost 1 Land (Leasehold 5 years) 1,50,000 2 Land Development 1,50,000 3 Civil Construction Works 20,34,000 4 Machinery and Equipment (Including Installation Charges) 28,50,000 5 Working Capital (1st Cycle) 1,45,10,710 6 Total 1,96,94,710
  12. 12. 11.Means of Finance S. No Particulars % Contribution Amount in Lakhs 1 Fixed Capital 51.84 a Entrepreneur Margin 25% 12.96 b Bank Loan 75% 38.88 2 Working Capital 145.11 a Entrepreneur Margin 25% 36.28 b Bank Loan 75% 108.83 3 Total 196.95 12.Projected Profitability Statement (Amount in Lakhs) S. No Particulars Year 1 Year 2 Year 3 Year 4 Year 5 1 Sales* 974.40 1113.60 1252.80 1392.00 1392.00 2 Expenses a Raw Material 775.84 886.67 997.51 1108.34 1108.34 b Packaging 10.08 11.52 12.96 14.40 14.40 c Salaries 9.58 10.94 12.31 13.68 13.68 d Power & Fuel 11.76 13.44 15.12 16.80 16.80 e Depreciation 2.71 3.09 3.48 3.87 3.87 f Marketing 7.76 8.87 9.98 11.08 11.08 g Interest on Term Loan @12% 4.67 3.73 2.80 1.87 0.93 h Interest on Working Capital Loan @12% 12.97 14.82 16.68 18.53 18.53 i Miscellaneous @0.5% on sales 4.9 5.6 6.3 7.0 7.0 j Repayments Towards the Term loan 7.78 7.78 7.78 7.78 7.77 k Repayments Towards the Working Capital 108.09 123.53 138.97 154.41 154.41 Total Expenses 956.14 1089.99 1223.89 1357.76 1356.81 3 Profit Before Tax 18.26 23.61 28.91 34.24 35.19 4 Provision for Tax @ 30% 5.48 7.08 8.67 10.27 10.56 5 Net Profit 12.78 16.53 20.24 23.97 24.63 6 Cash Inflows 15.49 19.62 23.72 27.84 28.50 *Note: Clear Explanation is available in 15th para
  13. 13. 13.Break Even Analysis (Amount in Lakhs) S. No Particulars Year 1 Year 2 Year 3 Year 4 Year 5 1 Fixed Costs a Salaries 9.58 10.94 12.31 13.68 13.68 b Depreciation 2.71 3.09 3.48 3.87 3.87 c Interest on Term Loan 4.67 3.73 2.80 1.87 0.93 Total Fixed Cost 16.96 17.76 18.59 19.42 18.48 2 Variable Costs a Raw Material 775.84 886.67 997.51 1108.34 1108.34 b Power and Fuel 11.76 13.44 15.12 16.80 16.80 c Miscellaneous 4.9 5.6 6.3 7.0 7.0 d Interest on Working Capital 12.97 14.82 16.68 18.53 18.53 Total Variable Cost 805.47 920.53 1035.61 1150.67 1150.67 3 Gross Receipts 974.40 1113.60 1252.80 1392.00 1392.00 4 Contribution (3-2) 168.93 193.07 217.19 241.33 241.33 5 Break Even Point (in %) 57.03 51.79 47.88 44.76 42.87 Note: Break Event Point (in %) = (Annual Fixed Cost*100) / (Annual Fixed Cost + Net Profit) 14.Calculation of Financial Indicators S. No Particulars Year 1 Year 2 Year 3 Year 4 Year 5 1 Net Profit in Lakhs 12.78 16.53 20.24 23.97 24.63 2 Depreciation in Lakhs 2.71 3.09 3.48 3.87 3.87 Net Cash Accruals in Lakhs 15.49 19.62 23.72 27.84 28.50 3 Interest on Term Loan in Lakhs 4.67 3.73 2.80 1.87 0.93 4 Interest on Working Capital Loan in Lakhs 12.97 14.82 16.68 18.53 18.53 Total Interest Repaying in Lakhs 17.64 18.55 19.48 20.4 19.46 5 Repayment of Term Loan 7.78 7.78 7.78 7.78 7.77 6 Debit Service Coverage Ratio (DSCR) 1.30 1.45 1.58 1.71 1.76 7 Net Present Value (After 5 years) 33 Lakhs 8 Benefit Cost Ratio 1.02 9 Internal Rate of Return (IRR) 18% Note: Discount Factor taken as 10%
  14. 14. 15. Schedule of Receipts S. No Particulars Value 1 Production Capacity of Plant per Hour (in Ton.) 1 2 Total No. of Working Days In a Year 300 3 No. of Working Hours In a Day 16 4 Total Quantity of Feed to be produced per day (At 100% Capacity In Ton) 16 5 Selling Price of One Ton Feed (In Rs) 29,000 6 Annual Production In MT (100% Capacity) 4800 7 Annual Collection from the Sale Feed 13,92,00,000 S. No Year 100% Capacity Sales (Amount in Lakhs) Capacity of Utilization Sales (Amount in Lakhs) 1 Year 1 1392.00 70% 974.40 2 Year 2 1392.00 80% 1113.60 3 Year 3 1392.00 90% 1252.80 4 Year 4 1392.00 100% 1392.00 5 Year 5 1392.00 100% 1392.00 DRM Software Review

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