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Business Plan Poultry Industry

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This is an actual report on Poultry farming of the earlier uploaded presentation http://www.slideshare.net/HariyoKakro/rato-bhale

This is an actual report on Poultry farming of the earlier uploaded presentation http://www.slideshare.net/HariyoKakro/rato-bhale

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  • The            setup            in            the            video            no            longer            works.           
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  • 1. INTERNATIONAL AMERICAN UNIVERSITY 2012 Business Plan: Rato Bhale Poultry Farm ( A Project Worksubmitted in partial fulfillmentof the requirement of the course of BBA VI Semester ) Presented By Suraj Ghimire Put Forward To Mr. Sushil Sir K I N G ’ S C O L L E G E , P U R A N O B A N E S H W O R , K A T H M A N D U
  • 2. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Rato Bhale Poultry farm RATO BHALE Proprietor Suraj Ghimire
  • 3. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Look Through Purpose of initiation............................................................................................................... 5 Objectives................................................................................................................................ 5 Keys to success........................................................................................................................ 5 Mission: ................................................................................................................................... 6 Company Summary: .............................................................................................................. 6 Ownership structure:............................................................................................................. 6 Start-up Summary: ................................................................................................................ 6 Introduction to poultry farming............................................................................................ 7 Nepalese Context .................................................................................................................... 8 Requirements of poultry farming ......................................................................................... 8 Site selection............................................................................................................................ 8 Shape and size ......................................................................................................................... 8 Poultry expertise..................................................................................................................... 9 Acquisition of materials:........................................................................................................ 9 Marketing and distribution ................................................................................................... 9 Preparation and disinfection of shed . ................................................................................. 9 Feeding..................................................................................................................................... 9 Vaccination and medication .............................................................................................. 10 Litter management: 10 Brooding and rearing:.......................................................................................................... 10 Plan of work .......................................................................................................................... 11
  • 4. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Sales ....................................................................................................................................... 12 REQUIREMENTS ............................................................................................................... 13 Total capital structure.......................................................................................................... 14 Products: ............................................................................................................................... 14 Market Segmentation:.......................................................................................................... 14 Market Analysis.................................................................................................................... 15 Market Needs........................................................................................................................ 16 BUSINESS RISKS.......................................................................................................... 16 Competitive Edge: ................................................................................................................ 17 Sales Forecast........................................................................................................................ 17 Management Team:.............................................................................................................. 18 Financial Plan:...................................................................................................................... 18 Important Assumptions:...................................................................................................... 18 Break-even Analysis:............................................................................................................ 19 Monthly Revenue Break-even............................................................................................. 19 Assumptions:......................................................................................................................... 19 Projected Profit and Loss:................................................................................................... 20 Pro Forma Profit and Loss:................................................................................................. 20 Projected Balance Sheet....................................................................................................... 21 Pro Forma Balance Sheet .................................................................................................... 21 Business Ratios:.................................................................................................................... 21
  • 5. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Purpose of initiation ore than 60 % of total meat consumption in the country was met by the export from other countries, with the national production fulfilling only the 40% of the demand. The data is not the current one but still our country has not been able to be self dependent in the meat production. In this scenario, poultry farming has got a huge potential in Nepal. Putting all the various factors into consideration, we ( Suraj, and Umesh, proprieties of Rato Bhale company ) decided to capitalize this opportunity to serve the people and to make the country self dependent in the poultry products. We have decided to name the company as Rato Bhale poultry farm. Preliminary research has indicated that 1000 chickens would be optimum for the initial operation of the business. The farm’s production site would be located in Gokarna which has plenty open space, cheap labors, road connection, water availability and immediate access to the huge market of our product i.e. Kathmandu valley. An area of about 10,000 sq. feet would be occupied by the farm and a house with 3 rooms would be rented for the storage of pellets and other equipments as well as for the employees to reside and guard the farm. The land has been taken into lease for 5 years with the options of extension and the feasibity study by the experts has shown positive results. Initial investment would be Rs. 10,00,000 that would be spent on buying chickens, building cage house, stocking the pellets, hiring the expert and other miscellaneous tasks. The farm expects to make 80% gross margin within 6 months of its operations withholding the chances of any accidental or unexpected incidence. The aforementioned fund has been collected partly from ourselves and partly funded by Agricultural development bank. Three lakhs from each partner totaling six lakhs is from our side and loan consists of the rest four lakhs. The company expects to repay the loan within 3 years and obtain the breakeven point within 2 years. Objectives Becoming the "Best and most hygienic poultry producer in the area" complying by the national standards for food and drugs. Turn in profits from the first month of operations. Maintain an 80% gross margin ratio. Winning the hearts and tastes of our beloved consumers and establishing a brand image of the company through heavy marketing campaigns in the first one year. Keys to success State of art cage framework accommodating optimum number of chickens with mitigated possible hazards. Diverse slaughters network, market chain management, optimum inventory level and ‘customer is king’ policy. Regular visits by medical workers and hygienic poultry house environment. M
  • 6. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Mission: Rato Bhale poultry producer will make its best effort to live up to the consumer’s expectations by delivering the best of its product to the end users. The quality of our product wouldn’t be challenged either inside or outside the country. This confidence would be earned by the unparalleled Excellency in the poultry farm. The nutritious and protein rich product from our farm would always be the first choice of our consumers. Company Summary: Rato Bhale would be a limited liability company, producing chickens, eggs, and, litter as a by- product in its state of art poultry farm units. The company would have a status small and cottage industry. Ownership structure: The company would be jointly owned by Mr. Suraj Ghimire, and Mr. Umesh B.C. It would be a partnership enterprise with each of the owners holding 50-50 % of the share Start-up Summary: The start-up expenses (Rs 96,000) includes: Expenses for hiring advisors and technical experts Rs. 10,000. Marketing promotion expenses for the brand imaging of Rato Bhale trademark in the amount of Rs 5,500 and as well as brochures and pamphlets (3,000 pieces at Rs0.1per copy) for the total amount of Rs 5,700. Insurance (general liability, workers' compensation and chicken casualty) coverage at a total premium of Rs 4000. Pre-paid rent expenses for six month at Rs1 per square feet in the total amount of Rs 60,000. Battery style cage structures build up expenses of Rs 12,000. Other start-up expenses including transportation(Rs 2,000) and phone and utility deposits (Rs2,000). Stationeries and Office supplies – Rs 300 The required start-up assets of Rs 904 ,000 include: Operating capital in the total amount of Rs 45,000, which includes salary of two unskilled labors (4,000 per person) and technician's salary of Rs7,000 for the first month and cash reserves for the first three months of operation (approximately Rs10,000 per month). Bank balance Rs. 3,82,000. Start-up inventory of Rs 95,000, which includes: Broiler chicks (1000 heads @ Rs 30 per head) – Rs 30,000 Pellet balls (30 quintals @ Rs 3,000 per quintal) – Rs 90,000 Protein supplements, vitamins and antibiotics. – Rs 5,000 Equipments and machineries Nets, baskets, buckets, tillers and other equipments – Rs 17,000 Heating, lighting system and pellet machine –Rs 40,000.
  • 7. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Farm house building – Rs 200,000. Introduction to poultry farming In egg-producing farms, birds are typically housed in rows of battery cages. Environmental conditions are automatically controlled, including light duration, which mimics summer daylength. This stimulates the birds to continue to lay eggs all year round. Normally, significant egg production only occurs in the warmer months. Critics argue that year-round egg production stresses the birds more than normal seasonal production. Broilers in a production house Meat chickens, commonly called broilers, are floor-raised on litter such as wood shavings or rice hulls, indoors in climate-controlled housing. Poultry producers routinely use nationally approved medications, such as antibiotics, in feed or drinking water, to treat disease or to prevent disease outbreaks arising from overcrowded or unsanitary conditions. I In egg-producing farms, cages allow for more birds per unit area, and this allows for greater productivity and lower space and food costs, with more efforts put into egg-laying. In common practice, the current recommendation by the United Egg Producers is 67 to 86 in² (430 to 560 cm²) per bird, which is about 9 inches by 9 inches. Modern poultry farming is very efficient and allows meat and eggs to be available to the consumer in all seasons at a lower cost than free range production, and the poultry have no exposure to predators. The cage environment of egg producing does not permit birds to roam. The closeness of chickens to one another frequently causes cannibalism. Cannibalism is controlled by de-beaking (removing a portion of the bird's beak with a hot blade so the bird cannot effectively peck). Another condition that can occur in prolific egg laying breeds is osteoporosis. This is caused from year- round rather than seasonal egg production, and results in chickens whose legs cannot support them and so can no longer walk. During egg production, large amounts of calcium are transferred from bones to create eggshell. Although dietary calcium levels are adequate, absorption of dietary calcium is not always sufficient, given the intensity of production, to fully replenish bone calcium. Under intensive farming methods, a meat chicken will live less than six weeks before slaughter. This is half the time it would take traditionally. This compares with free-range chickens which will usually be slaughtered at 8 weeks, and organic ones at around 12 weeks. In intensive broiler sheds, the air can become highly polluted with ammonia from the droppings. This can damage the chickens’ eyes and respiratory systems and can cause painful burns on their legs (called hock burns) and feet. Chickens bred for fast growth have a high rate of leg
  • 8. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire deformities because they cannot support their increased body weight. Because they cannot move easily, the chickens are not able to adjust their environment to avoid heat, cold or dirt as they would in natural conditions. The added weight and overcrowding also puts a strain on their hearts and lungs. Nepalese Context The demand of poultry meat and eggs is increasing at the annual rate of 25% and 10% respectively in urban areas The annual increment was more than 10% feeds, meat, eggs and other related items in late half of the past decades (Bhattarai e al 2004).In the last decades , the average meat and egg production was about 10 percent and 18percent, r annual report (Pultry Mnch 1997 ).Commercial poultry farming is growing at a rate about 15 % per annum and about 16 million broilers are produced annually .Increased demand for animal protein s, shift in consumers preferences for egg and broiler meat , access to commercial poultry production technologies and services and quick returns to the investment seem more of the major attracting forces for such investment. The demand of poultry meat and eggs is increasing at the annual rate of 25% and 10% respectively in urban area(DALS,1991). Poultry entrepreneurs said the production of chicken had nose-dived by around 30 per cent as compared to normal period. Soaring demands for chicken have also driven up the price. The supply of live broiler chicken dropped to 160 tonnes per day against the demand of around 205 tonnes, as farmers raised lower number of chicken during the past months. The other factor that led to the increase in chicken price is the rise in the price of chicks. According to poultry farmers, the price of layers chicks increased to NPR 42 each from NPR 38. According to Nepal Poultry Entrepreneurs' Forum – an umbrella organisation of poultry producers – around 56.1 million broiler live chickens are produced every year. Likewise, the annual egg production stands at around 714.6 million. Poultry farmers produce around 58,000 tons of chicken every year. There are over 2,500 poultry farms (small and big) throughout the country. More than NPR 16 billion has been invested in poultry business. Requirements of poultry farming Site selection Before establishing a firm, location plays an important role in business i.e such location should be selected which has got link with motor able road, abundant water supply, 24 hour electricity and all around communication facility. Shape and size
  • 9. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Poultry farming is such a business which we can start with any amount of fund and infra structures. Even chicken are brought up in households feeding the spillover foods and other wastes. But to run it in the commercial scale, optimum number of chickens and equivalent size of the farm with abundant supply of pellets should be made first considering the present demand and tastes of the consumers. Poultry expertise A specialist on the field of poultry with the knowledge of diseases and medications should always be in constant contact and regular inspection of the farm by vet nary doctors should be made. The paid workers and entrepreneur should also have some knowledge of handling the chickens and identification of some disease. Acquisition of materials: Raw materials needed for the farm should always be available and stock should be plenty in the time of shortages as chickens cannot survive much time without any food. Pellets bought in big lots also give economies of scale. Protein rich supplements, antibiotics and vitamins should also be given in regular basis. Temperature and lightings for egg-layers should also be maintained precisely. Required amount of feed and day old broiler bird will be purchased from local market. Marketing and distribution Poultry farms, especially with the broilers, won’t make profits if the finished products i.e. hen are not taken to the market after specified time which is normally 6 weeks. After 6 weeks the hens won’t convert the feeds into flesh so, it would be unproductive to hold them any longer. Preparation and disinfection of shed The movable equipments such as feeders and water available in IAAS will be removed from the poultry shed for cleaning and disinfection . Floors , interior of the walls and roof will be scrubbled and previous litters will removed from the poultry house . After removing litters, dust from poultry house pens will be washed with fresh water . Farm house pens will be disinfected using 5% phenol solution ,followed by spraying of 3% solution of Korhsolin (disinfectant) inside and outside the shade .Battery brooders will also washed using a disinfectant , 5% solution of phenol and 3% solution of Khorsolin will also be sprayed inside and outside the brooders. Feeding The birds will be given starter ration from 0 to 3 week of age . The ration from 0to 3 weeks will have energy value of 3200MEKcal/kg and cp content will be same where as cp content will be 20%. Baghel and Netke (1987) have shown that a combination of 23.5 sesame meal and 28% soyabean meal (almost 0.88.1 ratio) have given good result in broiler performance ,provided the minimum recommended levels of lysine , methionine and cystine were taken care in broilers diets.Wethli and Paris (1995) reported that a diet formulated using locally available sesame seeds ingredient without a premix but receiving green leaves , produced a weight gain that was about 20% lower than that attained by a commercial diet , with about 15% inferior feed conversion and a similar mortality.
  • 10. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Vaccination and medication To maintain health of poultry, timely vaccination and medication by vetenerian will be done. Litter management: Rice husk will be user as litter by maintaining 5 cm thick on floor. The litter will be stirred twice in a week to prevent watery. Wet litter will be removed and dry will be replaced. Before placing the litter in poultry house, dust lime will be used as disinfectant. Brooding and rearing: After receiving of chicks they will be put in well heated brooder which has run 24 hr before the arrival of chocks with proper temperature of 90 to 95 degree Celsius with adequate dry litter. The temperature is maintained as below: Age temperature (°F) 1st week 95 2nd week 90 3rd week 85 4th week 80 5th week 75 6th week 70 Lighting management: Brooder house will be provided with 24 hour light throughout the growing period with one 60 watt bulb for each 200 sq. feet of floor space. Floor space: 1sq. feet per bird will be provided. Vaccination: Broiler will be vaccinated as follows: Age days of vaccination One day Marek or F1 vaccine 14th day Gambaro intermediate 26th day Ranikhet F1 or Lasota. 28th day Gambaro intermediate Observation The following parameters will be measured during the following period: Initial weight Weekly live weight Weekly feed consumption
  • 11. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Average weekly feed intake Average daily gain Daily water consumption Weekly live weight gain FCR=Average daily feed intake Average daily gain Economics of production Net income per birds (RS) = Gross income-Gross expenditure/Number of live birds Net income per kg live weight = Net income from bird/Total live weight of bird -Carcass characteristics = Dressing % = Dressed wt of bird (kg)/live wt of bird (kg) x100 Statistical methods and data analysis -Data recorded will be analyzed using analysis of variance mean comparison using Microsoft Excel and Data recording S.N. Weekly live weight (Kg) Weight gain (Kg) Feed consumption Feed conversion ratio (FCR) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11- Plan of work Month Work schedule January 15th day-shed preparation 20th day – disinfection of shed 25th day – buying of chicken February 1st day-ration feeding; live weight March Similar as February calendar April Selling in market and consumption Paper preparation and publication in journal Expected outcomes The weekly weight gain and feed efficiency will be known. Growth performance of broilers will be identified.
  • 12. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Carcass characteristics and nutrient digestibility will be identified. Rearing of broilers will be known. Beneficiaries -Primary beneficiaries will be poultry rising. -Secondary beneficiaries will be business man and industrialist and consumer. -The tertiary beneficiaries will be students and researchers government and non-government organization. Relation Between sales, gross margin and net profit 0 50000 100000 150000 200000 250000 300000 350000 400000 450000 500000 15,00,000 16,00,000 18,00,000 Year1 Year 2 Year 3 gross Margin Net Profit Sales
  • 13. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire REQUIREMENTS AMOUNT Start-up Expenses Technical expertise Rs10,000 Stationery etc. Rs 300 Brochures Rs 200 Promotions Rs 5,500 Insurance Rs 4000 Rent Rs 60,000 Cage build up Rs12,000 transportation Rs2,000 Phone and utilities Rs 2000 Total Start-up Expenses Rs96,000 Start-up Assets Cash in hand Rs 30,000 Pre paid salary Rs 15,000 Bank balance Rs 382,000 Broiler chicks Rs 30,000 Pellet balls Rs 90000
  • 14. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Protein supplements Rs 5000 Equipment Rs 57000 Farm house structure Rs 200,000 Total Capital required Rs 10,00,000 Total capital structure Products: In the first phase of the operation, the poultry farm will entirely produce mature broiler hens for the purpose of meat only. This will be achieved by using highly-nutritious pellet ingredients and will maintain a high level of hygiene. The battery cage units will accommodate maximum possible number of chickens in the allocated space. And the marketing activities will be focused on maximizing the sales of higher margin robust high-bred hens. The price list would be verified according to the latest market trend and optimum mix for the demand and supply would be maintained. MarketSegmentation: 0 100000 200000 300000 400000 500000 600000 structure Investment Equity Loan Expense
  • 15. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Rato Bhale poultry will focus its marketing activities on reaching the highly acclaimed slaughters house which are the main supplier of meat to the various class of wide ranged customers. Our target groups would be the high end customers vying for the best possible chicken either locally available or imported ones. We have that confidence to displace the third country import of quality chickens from the countries like Bangladesh, India, Indonesia, Brazil, etc. The chart and table below outline the total market potential (in number of Demands) of chicken consumers of the Kathmandu Valley. MarketAnalysis Year 1 Year 2 Year 3 Potential Customers Growth CAGR Slaughter House 4% 11,25,000 12,00,000 13,50,000 4.00% Hotels 3% 225,000 240,000 270000 3.00% Individuals 1% 135000 144000 162000 1.00% Other 0.5% 90,000 96,000 108,000 0.50% Total 2.13% 1500,000 16,00,000 18,00,000 2.13% market segmentation Slaughter house 75% hotels 15% Individuals 9% Others 6%
  • 16. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire MarketNeeds The poultry industry in Nepal has emerged as the most dynamic and fastest expanding segment in animal husbandary sector .There has been a phenomenol growth in the Nepalese poultry industry in the last 3 decades. The contribution of agriculture to GDP is 38.15 % and the contribution of livestock to AGDP is 27.66% (MOAC, 2006). The net meat production during the year 2006/2007 was 2, 27,105 metric ton out of which the distribution from chicken was 1, 61, 26 metric ton (MOAC, 2006/2007) There are about 14.5 million poultry birds in Nepal which contribute about 9.70 thousands metric tons of meat and 980.4 million eggs to the human diets (CBS, 1997). The per capita consumption of poultry meat and egg in Nepal is very low (0.32 kg meat and 0.48 kg egg per person per year ) as compared to the world average (about 8 kg /person / year meat and egg respectively ) . Nepal ranked 96 th position among the egg producing countries (Olintine,1997) . It is essential to supply 40 gm protein to daily human diets of which 50% should be supplied through animal protein source for good health (Heinz,1975) . Thus poultry birds are good source of animal protein .Feed cost of poultry accounts more than 70% of the total cost of production. However recent estimation revealed that Nepal had deficient in feed production by about 36% (Pariyar, 1996). With increasing human population and expected per capita income, there is tremendous scope of poultry production in Nepal; however the price of feed ingredient is increasing. Poultry industry in Nepal growing at a rate of 15% per annum involving over 30,000 farms families directly or indirectly (Nakarmi ,2001 ) .Besides providing better nutrition in terms of egg and meat ,it also gives employment to a large number of people in the country . Poultry farming has emerged as major income generating enterprises in agriculture sector during the last four decades. Considering the trends of population growth, urbanization, road access, transportation linkages, change in food habit of the people, increasing awareness on nutrition and growing demands it can be assumed that this sector will grow continuously in foreseeable future. Poultry perhaps have higher requirements for each nutrient than do other domesticated animals. Eating regulation in poultry differ from those of other animals. Poultry eat to provide for energy needs. Poultry have higher body temperature than other animals and accordingly require a higher energy ration .Feed alone cost 65-75% of total broiler production and ultimately results in high price of poultry meat. Nowadays this industry has expanded well enough to replace imports of feeds, chicks, eggs, and meat products thus has played vital role in boosting the national income of the country. BUSINESS RISKS The farm faces certain risks inherent to food commodities in general and meat products in particular. Financial Risks. Our quarterly revenues and operating results are difficult to predict and may fluctuate significantly from quarter to quarter as a result of a variety of factors. Among these factors are:
  • 17. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire  Changes in our own or competitors' pricing policies  Fluctuations in expected revenues from advertisers, sponsors and strategic relationships  Timing of costs related to acquisitions or payments. Legislative / Legal Landscape. Our participation in the health care arena presents unique risks:  Malpractice and other related liability  State regulations on quarantine, insurance and the practice of medicine.  Storage, transmission and disclosure of firm’s information and hygiene records Operational Risks. To attract and retain users to the Rato Bhale products, we must continue to provide quality and Hygienic content. This confers certain risks including the failure to:  Anticipate and respond to consumer preferences for content, Preference and service  Attract, excite and retain a large audience of consumers to the Rato Bhale Products.  Create and maintain successful strategic alliances with high quality partners  Deliver high quality, "24/7" customer service and web site performance  Build the Rato Bhale brand rapidly and substantially  The required feed will be available.  Timely availability of budget.  Poultry raising environment will be favorable for growth.  Poultry grower will adopt technology  Outbreak of birdflue remains normal  Compete effectively against better-established Poultry Farm companies, such as Ratna Hatchery (P) Ltd , Gems Agro Livestock Industries Pvt. Ltd etc Competitive Edge: Rato Bhale will position itself as unique poultry farm where it produces not only meat products but also enjoy the best of its kind you can ever achieve. Hygienic poultry environment in which chicks are fed with nutritious and chicken friendly pellets differentiates itself from Incumbent competitors. Sales Forecast Feeds costs are assumed at 80% of the total cost incurred on each chicken. Seasonal consumer preference and the probable uncertainties of outbreak of market rumors for the outbreak of avian flu will dictate certain sales seasonality with revenues slightly decreasing during such periods. The chart and table below outline our projected sales forecast for the next three years.
  • 18. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Sales Forecast Year 1 Year 2 Year 3 Sales Chickens Rs13,00,000 Rs14,00,000 Rs15,00,000 Eggs Rs 2,00,000 Rs 200,000 Rs3,00,000 Total Sales Rs15,00,000 Rs16,00,000 Rs18,00,000 Direct Cost of Sales Year 1 Year 2 Year 3 Chickens Rs7,80,000 Rs8,40,000 Rs9,00,000 Eggs Rs104,000 Rs104.000 Rs2.10,000 Total Direct Cost Rs884000 Rs944000 Rs11,10,000 Management Team: The management team consists of the energetic and able managers cum owners. Mr. Suraj Ghimire is the General Manager and also responsible to look after the sales, marketing and operation department. Shekhar basnyat is responsible for the human resource, finance and public relation department. Advisory board consists of dignified personalities like Mr. Sushil Pant, Dr Shyam Maskey and different experts in the field. Financial Plan: Rato Bhale will capitalize on the strong demand for high-quality and nutritious poultry products. The owners have provided the company with sufficient start-up capital. With successful management aimed at establishing and growing a loyal customer base, the company will see its net worth doubling in two years. Rato Bhale will maintain a healthy 50% gross margin, which combined with reasonable operating expenses, will provide enough cash to finance further growth. Important Assumptions:
  • 19. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% Tax Rate 25.42% 25.00% 25.42% Other 0 0 0 Break-even Analysis: Monthly Revenue Break-even Rs31,247 Assumptions: Average Percent Variable Cost 35% Estimated Monthly Fixed Cost Rs20,311
  • 20. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Projected Profit and Loss: Annual projected sales of Rs 584,000 in FY2009 translate into Rs 150.00 of sales per square foot, which is in line with the industry averages for this size of poultry farm. Overall, as the company gets established in the local market, its net profitability increases from 17.06% in FY2012 to 17.63% in FY2013. The table below outlines the projected Profit and Loss Statement for FY2012- 2014 Pro Forma Profit and Loss: Year 1 Year 2 Year 3 Sales Rs584,000 Rs642,400 Rs706,640 Direct Cost of Sales Rs204,400 Rs224,840 Rs247,324 Other Rs0 Rs0 Rs0 Total Cost of Sales Rs204,400 Rs224,840 Rs247,324 Gross Margin Rs379,600 Rs417,560 Rs459,316 Gross Margin % 65.00% 65.00% 65.00% Expenses Payroll Rs124,600 Rs143,800 Rs155,144 Sales and Marketing and Other Expenses Rs25,800 Rs27,600 Rs31,000 Depreciation Rs5,400 Rs5,500 Rs5,500 Rent Rs48,400 Rs52,800 Rs52,800 Rent Rs6,000 Rs6,000 Rs6,000 Maintenance Rs5,840 Rs6,424 Rs7,066 Utilities/Phone Rs9,000 Rs9,500 Rs10,000 Payroll Taxes Rs18,690 Rs21,570 Rs23,272 Other Rs0 Rs0 Rs0 Total Operating Expenses Rs243,730 Rs273,194 Rs290,782 Profit Before Interest and Taxes Rs135,870 Rs144,366 Rs168,534 EBITDA Rs141,270 Rs149,866 Rs174,034 Interest Expense Rs2,821 Rs2,326 Rs1,618 Taxes Incurred Rs33,740 Rs35,510 Rs42,424 Net Profit Rs99,308 Rs106,530 Rs124,491 Net Profit/Sales 17.00% 16.58% 17.62%
  • 21. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Projected Balance Sheet The company's net worth is expected to increase from approximately Rs212,000 by the end of FY2012 to approximately Rs443,000 in FY2013. The table below summarizes the projected balance sheets for this period. Pro Forma Balance Sheet Year 1 Year 2 Year 3 Assets Current Assets Cash Rs195,358 Rs296,358 Rs417,648 Inventory Rs21,175 Rs23,293 Rs25,622 Other Current Assets Rs0 Rs0 Rs0 Total Current Assets Rs216,533 Rs319,651 Rs443,270 Long-term Assets Long-term Assets Rs59,170 Rs61,170 Rs63,170 Accumulated Depreciation Rs5,400 Rs10,900 Rs16,400 Total Long-term Assets Rs53,770 Rs50,270 Rs46,770 Total Assets Rs270,303 Rs369,921 Rs490,040 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable Rs31,974 Rs31,947 Rs34,836 Current Borrowing Rs6,700 Rs3,400 Rs100 Other Current Liabilities Rs0 Rs0 Rs0 Subtotal Current Liabilities Rs38,674 Rs35,347 Rs34,936 Long-term Liabilities Rs20,000 Rs16,415 Rs12,454 Total Liabilities Rs58,674 Rs51,762 Rs47,390 Paid-in Capital Rs140,000 Rs140,000 Rs140,000 Retained Earnings (Rs27,680) Rs71,628 Rs178,159 Earnings Rs99,308 Rs106,530 Rs124,491 Total Capital Rs211,628 Rs318,159 Rs442,650 Total Liabilities and Capital Rs270,303 Rs369,921 Rs490,040 Net Worth Rs211,628 Rs318,159 Rs442,650 Business Ratios: The table below outlines the company's business ratios. The last column represents industry average business ratios for Specialty poultry products . Ratio Analysis
  • 22. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Year 1 Year 2 Year 3 Industry Profile Sales Growth 0.00% 10.00% 10.00% 7.60% Percent of Total Assets Inventory 7.83% 6.30% 5.23% 3.60% Other Current Assets 0.00% 0.00% 0.00% 35.60% Total Current Assets 80.11% 86.41% 90.46% 43.70% Long-term Assets 19.89% 13.59% 9.54% 56.30% Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 14.31% 9.56% 7.13% 32.70% Long-term Liabilities 7.40% 4.44% 2.54% 28.50% Total Liabilities 21.71% 13.99% 9.67% 61.20% Net Worth 78.29% 86.01% 90.33% 38.80% Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 65.00% 65.00% 65.00% 60.50% Selling, General & Administrative Expenses 47.94% 48.47% 47.37% 39.80% Advertising Expenses 2.26% 2.18% 2.26% 3.20% Profit Before Interest and Taxes 23.27% 22.47% 23.85% 0.70% Main Ratios Current 5.60 9.04 12.69 0.98 Quick 5.05 8.38 11.95 0.65 Total Debt to Total Assets 21.71% 13.99% 9.67% 61.20% Pre-tax Return on Net Worth 62.87% 44.64% 37.71% 1.70% Pre-tax Return on Assets 49.22% 38.40% 34.06% 4.30% Additional Ratios Year 1 Year 2 Year 3 Net Profit Margin 17.00% 16.58% 17.62% n.a Return on Equity 46.93% 33.48% 28.12% n.a Activity Ratios Inventory Turnover 10.91 10.11 10.11 n.a Accounts Payable Turnover 11.25 12.17 12.17 n.a Payment Days 27 30 29 n.a Total Asset Turnover 2.16 1.74 1.44 n.a Debt Ratios Debt to Net Worth 0.28 0.16 0.11 n.a Current Libility 0.66 0.68 0.74 n.a
  • 23. Business Plan: Rato Bhale Poultry Farm Suraj Ghimire Ratios Net Working Capital Rs177,858 Rs284,304 Rs408,334 n.a Interest Coverage 48.16 62.07 104.13 n.a Additional Ratios Assets to Sales 0.46 0.58 0.69 n.a Current Debt/Total Assets 14% 10% 7% n.a Acid Test 5.05 8.38 11.95 n.a Sales/Net Worth 2.76 2.02 1.60 n.a Dividend Payout 0.00 0.00 0.00 n.a

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