Abstract:
1.1.
Poultry farming in Pakistan began in sixties and it has been recognized as food processing industry by the Government of Pakistan. Poultry industry in Pakistan has made great progress in recent years. The investment in poultry industry is now almost Rs. 80 billion and it has played a key role in reducing the unemployment level in the country being labor intensive.
1.2.
Poultry products have emerged as good and cheap substitute of beef and mutton. As the rate of increase in population has arisen to an alarming level, it is becoming more and more difficult to meet demand of mutton and beef. Whereas poultry industry has been providing meet and eggs to plug the gap between demand and supply.
1.3.
The total project cost for setting up the hatchery unit has been estimated at 33.958 million. It includes plant & machinery, furniture & fixture, computer, loading van, etc along with preliminary expenses and working capital.
1.4.
The project shall be financed through equity contribution by the investor to the extent of 40% and the remaining 60% through a long term bank loan. The repayment of loan shall be in 5 years in equal quarterly installments commencing one year after the disbursement. The mark-up on loan shall be 9.5% per annum.
1.5.
Based on the projected financial statements, the returns on the project are satisfactory.
1.6.
The internal rate of return is calculated to 9% per annum.
1.7.
Payback period of the project is approximately six years.
1.8.
Return on capital employed (ROCE) of the project is -3.04%, 3.75%, 13.61%, 18.45% & 23.08% for the years 2008, 2009, 2010, 2011 & 2012 respectively.
1.9.
Return on equity (ROE) of the project is -8.08%, 8.75%, 25.40%, 27.71% & 28.31% for the years 2008, 2009, 2010, 2011 & 2012 respectively.
1.10.According to the sensitive analysis of the project if there is 15% decrease in the sale price of the product, the gross profit percentage will be 34.92% & net profit percentage before tax will be 13.49%.
1.11.According to the sensitive analysis of the project if there is 15% increase in the cost of goods sold then the gross profit percentage will be 41.92% & net profit percentage before tax will be 23.70%.
