Project RePORT ON broiler Farming unit for cooperatives.

PROJECT REPORT ON BROILER

FARMING UNIT FOR

COOPERATIVES

1

CONTENTS

S.No

Particulars

Page No

1

Abbreviations

2

Executive Summary

3

The Project

3

i

Need for the project

3

ii

Vision, Mission &Objective

4

iii

Business Strategy (SWOT)

4

About the Proposal

4-10

A. Bird Sheds

B. Other parameters

C. Implementation

D. Scheduling

E. Costing

F. Feasibility Study

G. Risk Assessment

5

Conclusion

11

6

Annexures

12-16

2

Abbreviations:

S.No.

Abbreviation

Full form

1

PDS

Public Distribution System

2

Kg.

Kilogram

3

LD

Least Developed

4

DSCR

Debt Service Coverage Ratio

3

Executive Summary:

The project report is regarding setting up a broiler project for Cooperative

Societies to generate additional income and provide gainful employment to its

members.

The project is designed to cater huge demand and supply gap in broiler

chicken in local areas. Chicken meat is in huge demand and in particular in festive

seasons and winter and there is no commercial broiler farm locally available. Broiler

unit if managed properly gives high return on investment with a vow to provide

unadulterated chicken meat to the local market at an affordable price.

Based on certain realistic assumptions the future cash flow of the project has

been also worked out. The average Debt Service Coverage Ratio (DSCR) is worked

out to be 1.53 which signifies that project will be able to generate significant revenue

to easily repay its debt/ loan.

The project is thus very important for the Cooperative Society to generate

revenue and provide gainful employment to the members of the society.

Broiler Project for Cooperative Society.

The Indian Poultry Industry is the 2nd largest in the market, especially the broiler

industry segment growing at 8-10% every year. In comparison to the layer units,

broiler farms are finding more popularity as broilers are market ready within 7-8

weeks. With increase in acceptance of frozen food (meat), the market penetration for

broiler chicken has seen an significant increase.

Need of the project for the organization:

 Coop.Society needs rehabilitation by starting a new business activity..

 No commercial poultry farming unit established in the area till date.

 Broiler unit, viable business activity and income generating activity at a small

scale.

 Generates return from the starting year.

 Inculcate collective farming practices by supporting member workers.

Vision:

To be a preferred supplier of poultry product through a sustainable business model.

Mission:

Providing employment to the members and healthy animal product to the people by

establishing a viable broiler farming business unit.

4

Objectives :

• To set up a profitable broiler faming unit.

• To supply unadulterated healthy animal product to the local market.

Business Strategy:

A SWOT Analysis is drawn out to gain clarity about the positive aspects and

drawbacks about project and decide on the course of implementation of the same

accordingly :

About the Proposal:

A) Bird Sheds :

 Bird-sheds are constructed with a sloping roof ,each shed is preferably

constructed with a gap of 1.00 feet owing to Bio Security measures.

 The roof has to be sloping roof (12ft high in centre & 6-8 ft high on the side

wall to prevent rainwater entering the farm. Building material can be either

asbestos or cement

 Wall of the shed : height: 1.00 ft; brick wall on four sides ; extended with 4 ft

wire netting above the brick.

 Floor: cemented, covered with straws, impervious to moisture.

 Doors : two doors, 4ft wide & 6 ft high ; opposite to each other.

1

STRENGTH

• No Competitor: ready market

• Availability of land : ease for creation

of poultry shed etc.

• Member workers: no hiring of

external workers

• Availability of land nearby a local

bazaar(haat) : minimizes logistic cost

WEAKNESS

• No prior technical training.

• Market penetration.

2

OPPURTUNITIES

• Increase in acceptance of frozen food

in market.

• Non vegetarian population.

• Retail outlet just in the vicinity of the

farm unit.

THREATS

• Animal disease: sudden

epidemics like Bird Flu

:potential threats for the

business.

• Away from main location (

cities, commercial area)

5

B) Other parameters about the Project :

Sn

No.

Particulars

Value/Details

1

System of rearing

Deep Litter System

2

Batch Size (no. of birds)

1000 +5%

3

Batch Interval

(45 rearing + 7 days

cleaning)

4

Mortality rate

5%

5

Cycle size

1000

6

Cost of day old chick

Rs.25.00

7

Cost kg. of feed

Rs. 28.00

8

Cost of equipments

Rs. 15 /bird

9

Cost of insurance /medicine/

vaccine

Rs. 4/bird/year

10

No. of batches in a year

6

11

No. of batches in a year sold

6

12

Selling Price of kg of a broiler

Rs. 73.00

13

Avg. age at selling

39 days

14

Avg.wt. of birds at the time of sale

2.00 kg

15

Feed req. to attain 1.8 kg body

weight

3.5 kg

16

interest rate on term loan

10.60%

17

Interest rate on working capital

10.00%

18

Additional products for sale

Farmyard manure &

Gunny Bags

Availability of the raw material: The day old chicks will be supplied from the

hatchery of the Poultry & Animal Husbandry department along with the

feed/concentrate & antibiotics required for rearing of the birds. The agreement upon

this is already worked out as per their extension programme.

Availability of Professional expertise / skilled manpower: The nearby

Agricultural University will play a key role in terms of providing training support. The

agreement upon this is already worked out as per their extension programme under

which the training component is taken care of.

Availability of Statutory and other clearances required:

1.No objection certificate (NOC) from the local gram panchayat had been obtained.

2. NOC has been received from pollution board

3. Permission from electricity department to have a transformer based on the poultry

size (no. of motors you use in the poultry ) have been received.

6

4. Ground water department/ Municipality of the district.

Availability of utilities – water, electricity, fuel etc: The society already has a

water connection from the Municipality with adequate water supply to fill 2000-3000

lit. water reservoirs every day. The recurring cost for such utilities is taken into

consideration in the working capital component of the project.

C. Implementation:

 Each batch will consist of 1000 chicks.

 After every fortnight the next bird shed is filled with day old chicks with a batch

of 1000 day old chicks.

 Therefore, by the time the 4th shed is filled, the birds in the 1

st

shed are ready

for market.

 In this way a scheduling is automatically in place for the batch for ready to be

processed broilers.

 Each year: 5-6 cycle, rearing of 5000-6000 chicks.

 The society comprises of 10 members who will run the broiler unit on their

own.

 Training in terms of essential aspects with respect to the functionality of the

project will be imparted to the members in subjects like :

 Hands-on training for running a broiler unit.

 Processing & marketing of the product.

 Essentials of accountancy & book-keeping for Cooperatives.

D. Business Model:

Step 1

Purchase of day old chicks from Agriculture University

Step 2

Building of 4 sheds & training of members of the society.

Step 3

Procurement of 1

st

batch of day old chick

Step 4

1

st

batch ready for selling after 2 months ,i.e 60 days*

Step 5

Availability of near by market place, logistics ensured by

members of the cooperative.

Step 6

Sales of meat, bird litter sold as manure and the gunny

bags of the feed/concentrate may be again sold in the

market which adds up to the total sale of Rs. 8.824 lakh

in 1

st

year.

7

E. Scheduling:

Sl.

No.

Particulars

Commencement

(Month and

year)

Completion

(Month & year)

1

Land Acquisition

Owned

2

Land Development

-

1 month

3

Building of Sheds

-

45 day

4

Training to staffs and

Management

-

15 days

5

Water and Sanitation

-

15 day

6

Electricity

-

On the day

7

Procurement of feed,

medicine, equipments

etc.

-

10 days

8

Procurement of day old

chicks

-

On the day

9

Rearing

-

The first batch will

be ready for

market by 60 days

F. Cost Details:

Sn.

No.

CAPITAL COST

AMOUNT ( Rs.)

1

Construction of Brooder cum

grower house(1 sq.ft/bird for 1000

birds @ Rs. 150/sq. ft.)

150000

2

Equipments for 1000 birds @

Rs.15/bird

15000

3

Electrification & Electrical

installation

15000

4

Feed store 100sq. Ft. @ 200 /sq. ft.

20000

5

Cost of chicks 1030 @ Rs.25/chick (

5% extra for mortality ,2% free from

hatchery)

25750

6

Cost of concentrate feed @ 3.5 kg

/bird @ Rs. 28/kg for 1st batch

98000

8

7

Misc. expenditure (electricity,

vaccine medicine, insurance etc.

Including veterinary aid @ Rs. 4

/bird/batch and contingency

6250

8

Training Cost

37500

9

Margin money for WC

32500

Total Project Cost

400000

WORKING CAPITAL CALC

1

Cost of chicks 1030 @ Rs.25/chick (

5% extra for mortality ,2% free from

hatchery)

25750

2

Cost of concentrate feed @ 3.5 kg

/bird @ Rs. 28/kg for 1st batch

98000

3

Misc. expenditure ( electricity,

vaccine medicine, insuranceetc.

Including veterinary aid @ Rs. 4

/bird/batch and contingency

6250

Working Capital Required

130000

A

NCDC Assitance

Loan (65%)

260000

Subsidy (25%)

100000

Total (90%)

360000

B

Beneficiery Contribution (10%)

40000

G. Feasibility Study :

Assessment of feasibility of the project is undertaken before the

implementation of the project to check the viability of the project.

i) Technical feasibility: The tropical dry weather condition is feasible for

functioning poultry unit which essentially requires dry environment. The

community has a considerable population of non- vegetarian

population which will cater as a ready market for the chicken. The

number of sheds are according to the number of cycles taken up each

year which automatically acts as a scheduling mechanism for the

batch of birds ready for processing .

ii) Organization /Managerial feasibility: The members of the Cooperative

Society will manage the farm all by themselves who will be trained for

running a poultry/broiler unit in the adjoining University as a part of the

Extension Programme module.

iii) Economic feasibility: The project will start generating profit from the

very first year. This project can serve as a model and can be replicated

to create more such projects at a bigger scale. This business unit will

give employment to the members as well as act as mode of

9

employment to the local community in due course of expansion of the

project. In present scenario, food market is full of adulterated animal

products in terms of additives incorporated to enhance the

weight/volume of the product so as to get more price. In comparison to

these unfair practices Coop. Society will provide quality, farm fresh

produce without any adulteration. Thus, the genuineness for the

product (USP) will create market preference and generate good returns

establishing viability of the project.

iv) Commercial feasibility: The nearby Agricultural University will play a

key role in terms of providing raw materials and training support. The

day old chicks will be supplied from the hatchery of the Poultry &

Animal Husbandry department along with the feed/concentrate &

antibiotics required for rearing of the birds. The agreement upon this is

already worked out as per their extension programme under which the

training component is taken care of. Along with the sales of meat, the

litter of the birds can be sold as manure and the gunny bags collected

from the feed/concentrate may be again sold in the market which adds

up to the total sale of Rs. 8.824 lakh in the first year, itself. There are

no other commercial poultry unit in the district and the adjoining areas

thus market is already available. The scheduling is planned in a

manner that all the 5 sheds in the farm are filled with a batch of birds

one after the other after every 15 days. Therefore, by the end of 2

months, when the 4

th

shed is filled with day old chicks, the batch of

birds in the first shed is ready for market. This gives an automatic

sequence to the batches. Since within the vicinity of the farm there is a

bazaar / haat ,the logistics support becomes very easy. The society

members proposes to use their owned autorickshaw / other carrier

vehicles to transit the broilers to the retail outlet in the bazaar. In

forthcoming years, the society may buy a carrier vehicle, as per the

future demand and the profit generated in the coming years.

v) Financial feasibility : The total project cost is Rs. 4.00 lakh. Out of

which, Loan is Rs.2.60 lakh(65% of the total project cost), LD subsidy

is Rs.1.00 lakh (25% of total project cost ) and society’s share is Rs.

0.40 lakh (10% of total project cost), The total sales in first year works

out to be Rs. 8.824 lakh with profit of Rs.0.163 lakh. The project

being an agricultural project has a moratorium of one year. Over the

period of 8 year the profit reaches to Rs.3.71 lakh. The average DSCR

of the project is assessed to be1.53, i.e. 1.53 times of the loan amount,

cash is available for servicing of the debt amount.

H. Risk Assessment:

1) Operational Risk

• Non technical member worker

10

• Deviation in maintaining bio-sanitation- deterioration in the

quality of the product.

• Sudden epidemic like Brid Flu etc.

2) Market Risk

• Minimized competitors.

• Possibilities of replication of such similar business in

near future.

• No arrangement for supplying to other potential

market at nearby cities and towns : for business

expansion , market outreach needs to be worked out

in future .

3) Liquidity Risk

• Flow of working capital is ensured by margin money

loan .

• But proper planning and coordination needs to be

ensured for timely payments to the supplier of day

old chicks and feed because this may directly affect

the farm produce.

4) Credit Risk

• Project is subject to availability or sanction of loan.

• Depends upon back ended subsidy (25%) of Central

Govt.

• Late availability of subsidy hinders the efficiency of

the project.

• Collateral is the 1.5 acre land owned by the society

which secures its loan amount.

• The value of land is more then 1.12 times of the loan

amount of Rs.2.60 lakh.

5) Managerial Risk

• Lack of professionalism in primary societies.

Professionalism is important to make a business

viable and productive.

• Inexperienced member worker without any prior

knowledge of handling business in terms of books of

accounts etc.

• No past experience of handling of any kind of animal

production unit.

• But will be trained during the project period in

technical and accounting aspects as per the need in

the project.

11

Conclusion :

The project is thus very important for the Cooperative Societies to

generate revenue and provide gainful employment to the members of

the society.

12

COST DETAILS OF THE PROJECT

Annexure 1

Sn.

No.

CAPITAL COST

AMOUNT ( Rs.)

Construction of Brooder cum grower

house(1 sq.ft/bird for 1000 birds @ Rs.

150/sq. ft.)

150000

Equipments for 1000 birds @ Rs.15/bird

15000

Electrification & Electrical installation

15000

Feed store 100sq. Ft. @ 200 /sq. ft.

20000

Cost of chicks 1030 @ Rs.25/chick ( 5%

extra for mortality ,2% free from hatchery)

25750

Cost of concentrate feed @ 3.5 kg /bird @

Rs. 28/kg for 1st batch

98000

Misc. expenditure ( electricity, vaccine

medicine, insuranceetc. Including

veterinary aid @ Rs. 4 /bird/batch and

contingency

6250

Training Cost

37500

Margin money for WC

32500

Total Project Cost

400000

WORKING CAPITAL CALC

Cost of chicks 1030 @ Rs.25/chick ( 5%

extra for mortality ,2% free from hatchery)

25750

Cost of concentrate feed @ 3.5 kg /bird @

Rs. 28/kg for 1st batch

98000

Misc. expenditure ( electricity, vaccine

medicine, insuranceetc. Including

veterinary aid @ Rs. 4 /bird/batch and

contingency

6250

Working Capital Required

130000

A

NCDC Assitance

Loan (65%)

260000

Subsidy (25%)

100000

Total (90%)

360000

B

Beneficiery Contribution (10%)

40000

13

Cash Flow for the project

Annexure 2

Particulars

1st Year

2nd Year

3rd Year

4th Year

5th Year

6th year

7th Year

8th Year

Total(in Rs.)

Cost of day old

chick

154500

1236000.00

Cost of feed for

birds

588000

4704000.00

Misc. expenditure

( electricity,

vaccine medicine,

insuranceetc.

Including

veterinary aid @

Rs. 4 /bird/batch

and contingency

37500

300000.00

Technical training

to the Cooperative

worker

37500

37500.00

Interst on term

loan (10.6%)

27560

23622.86

19685.71

15748.57

11811.43

7874.286

3937.143

137800

interst on WC loan

(10%)

13000

104000

TOTAL

EXPENDITURE

858060

820560

816622.9

812685.7

808748.6

804811.4

800874.3

796937.1

6519300

Sale of broiler @

Rs146/ bird(2

kg.@ Rs.73/kg)

876000

7008000.00

Sale of gunny bags

2900

23200.00

Sale of manure

3500

28000.00

Depriciation on

shed & building @

10% / year

17000

15300

13770

12393

11153.7

10038.33

9034.497

8131.047

96820.57

Depriciation on

equipments @15%

year

2250

1912.5

1625.625

1381.781

1174.514

998.337

848.5864

721.2984

10912.64

Total Depriciation

19250

17212.5

15395.63

13774.78

12328.21

11036.67

9883.083

8852.346

107733.22

TOTAL SALE

882400

7059200.00

GROSS PROFIT

24340

61840

65777.14

69714.29

73651.43

77588.57

81525.71

85462.86

539900.00

Profit Before Tax

5090

44627.5

50381.52

55939.5

61323.21

66551.9

71642.63

76610.51

432166.78

Tax (33%)

8032.2

20407.2

21706.46

23005.71

24304.97

25604.23

26903.49

28202.74

178167.00

Profit after Tax

(PAT)

16307.8

41432.8

44070.69

46708.57

49346.46

51984.34

54622.23

57260.11

361733.00

Term Loan

Repayment

37142.85714

37142.86

260000.00

DSCR

2.29

1.33

1.37

1.41

1.46

1.53

1.61

1.71

1.53

Average DSCR

1.53

14

REPAYMENT SCHEDULE Annexure 3

Year

Loan

Principal

Interest

Instalment

amount for

repayment(in

Rs.)

1

260000

27560

2

260000

37142.86

27560

64702.86

3

222857.1

37142.86

23622.86

60765.71

4

185714.3

37142.86

19685.71

56828.57

5

148571.4

37142.86

15748.57

52891.43

6

111428.6

37142.86

11811.43

48954.29

7

74285.71

37142.86

7874.286

45017.14

8

37142.86

3937.143

41080.00

260000

137800

397800.00

15

Annexure 4

DEPRICIATION (in Rs.)

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Depreciation on

land and building

17000

15300

13770

12393

11153.7

10038.33

9034.497

8131.047

96820.57

depreciation on

equipments

2250

1912.5

1625.625

1381.781

1174.514

998.337

848.5864

721.2984

10912.64

Total Depriciation

19250

17212.5

15395.63

13774.78

12328.21

11036.67

9883.083

8852.346

107733.2