Feed Production FV

FEED
PRODUCTION
FEED PRODUCTION 2017
EXECUTIVE SUMMARY
The business would be involved in production of the feeds for cattle, swine and poultry with the
domestic raw materials. It would be located in Mongar, eastern part of the country in which the
livestock animals are increasing in the numbers and there is increase in demand of feeds for
livestock in winter.
The production would be carried out around the year since there is availability of raw materials
throughout the year. The proposed business would have only one production line with the
production of feeds for cattle, swine and poultry.
The feasibility study report presents the justification of the project, market analysis, resources
required, plant location, environmental aspects, implementation of the project, cost presentation
and financial analysis.
1. Justification of the project: Bhutan having large percentage of people depending on the
agriculture is depending largely on livestock for living facing difficulty in meeting the
feeds in winter season. As per Department of Livestock by 2015, the population of cattle
was 302,744; the swine was 15,727 and poultry 638,501.
2. Market analysis: Every year, the number of livestock in the country is increasing leading
more demand of feeds.
3. Resource required: the main raw materials required for the feed production is maize,
soybean, iodized salt, wheat and cultural yeast which are all available in the country.
4. Technology required: The production requires four types of machineries which includes
crusher machine, mixer machine, pelleting machine and conveyor machine which works
simultaneously one after another accordingly.
5. Plant location: Considering the availability of major livestock population, Mongar has
been proposed as the ideal location for the plant.
6. Environmental aspects: The production of the feed production may cause odors which
would affect the environment and the feed can also be the breeding ground for the insect
vectors. Moreover, Feed production uses antibiotics which could cause infection and
bacteria to animals.
7. Implementation of the project: The implementation of the project would take 4 months.
1 Compiled by IBEST Consultancy Services

8. Cost presentation and financial analysis
Fixed Cost 984,924
Working Capital 466,454
Total Investment 1,451,378
Break Even point 14,818 Units
Return On Investment on Sales (ROI) 309%
Return on Investment on Net Profit (ROI) 78%
Payback Period 2 years and 7 months

TABLE OF CONTENTS
EXECUTIVE SUMMARY ................................................................................................................................. 1
1 Business Model Canvassing ...................................................................................................................... 5
2 Justification of the project ......................................................................................................................... 6
2.1 The need of the project...................................................................................................................... 6
2.2 Competition Analysis ......................................................................................................................... 8
3 SWOT ANALYSIS ........................................................................................................................................... 9
4 Market Analysis.......................................................................................................................................... 10
4.1 Structure of the market .................................................................................................................. 10
4.2 Demand vs. supply ........................................................................................................................... 10
4.3 Pricing and Marketing Strategies ............................................................................................... 11
4.4 Technological changes that could impact costing................................................................ 11
4.5 Competitiveness of the project.................................................................................................... 12
4.6 Special attributes desired by target customers .................................................................... 12
4.7 Terms &conditions and product specifications desired by target customers .......... 12
4.8 Packaging & Transportation ........................................................................................................ 15
4.9 Assessment of Comparative Advantage ................................................................................... 16
5 Resource ....................................................................................................................................................... 17
5.1 Sources of inputs including water.............................................................................................. 17
5.2 Sources of raw material ................................................................................................................. 17
5.3 Assess the availability of manpower & skills ......................................................................... 18
5.4 Assess the need for skill development ..................................................................................... 19
6 The plant ....................................................................................................................................................... 19
6.1 Choice of the technology ................................................................................................................ 19
6.2 Source of technology ....................................................................................................................... 20
6.3 Rate of consumption of power, fuel, utilities & consumables ......................................... 20
6.4 Raw material consumption........................................................................................................... 21
6.5 Man power requirement and organization chart ................................................................ 22
6.6 Specification of product and byproduct if any ...................................................................... 23
7 Plant Location & Infrastructure with layout ................................................................................... 24

7.1 Raw material Availability .............................................................................................................. 24

7.2 Availability of Electricity ............................................................................................................... 24
7.3 Whether topography, hydrology 7 seismology data complies to requirement ....... 25
7.4 Availability of land ........................................................................................................................... 25
7.5 Availability of transportation facilities .................................................................................... 25
7.6 Availability of housing, schooling and hospital facilities .................................................. 25
7.7 Communication facilities ............................................................................................................... 26
7.8 Presence of approach road ........................................................................................................... 26
8 Environmental aspects- Regulation & environment issues ...................................................... 27
9 Project Implementation Schedule....................................................................................................... 28
10 Financial Analysis ................................................................................................................................. 29
10.1 Total Project capital Costs ............................................................................................................. 29
10.2 Working Capital Costs..................................................................................................................... 30
10.3 Cost of Production per unit........................................................................................................... 30
10.4 Human Resource cost ..................................................................................................................... 31
10.5 Marketing Cost................................................................................................................................... 31
10.6 Project profit and Loss Statement .............................................................................................. 32
10.7 Projected Cash flow statement .................................................................................................... 33
10.8 Projected Balance sheet statement............................................................................................ 34
11 Financial Ratio analysis ...................................................................................................................... 35
11.1 Interest on loan ................................................................................................................................. 35
11.2 Break Even Point .............................................................................................................................. 35
11.3 Return on Investment ..................................................................................................................... 36
11.4 Net Present Value and Internal Rate of Return..................................................................... 36
12 Final Finding and Recommendation.............................................................................................. 37
13 Conclusion- Is project feasible ......................................................................................................... 38
14 References ............................................................................................................................................... 39

1 Business Model Canvassing
Key Partners Key Activities Value Customer Customer

Propositions Relationship Segments
 Farmers
 Suppliers  In-person  Farmers
 Production
 Telephone  Livestoc
of Feeds for  Organic and
 Stores k owners
the livestock High quality
 Shops
 Supply of ingredients
the feeds  Extensive
 Logistics Lab Research
 Marketing
Key resource Channels
 Research  Online
Experts and
 Lab offline
Experts medias
Cost structure Revenue Streams
 Ingredients and Raw materials  Fixed Price

 Equipments  Yield management
 Salaries
 Marketing

2 Justification of the project
2.1 The need of the project

More than 79% of the total population lives in the rural areas and almost about 90
percent[Source: Investment Opportunity in Bhutan_2006] of rural households in Bhutan own
livestock, which forms an integral part of the Bhutanese farming system, providing support to
agri-culture through draught power and the providing manure. Livestock also provides
increasingly greater value by generating cash incomes from butter, cheese and meat. Cattle, yak,
buffalo, sheep & goats are the major livestock owned and reared by farmers.
Although the livestock has many source of fodder resources in summer such as
1. Forest grazing
2. Grazing crop and fallow land
3. Crop residues
4. Improved pasture
5. Native grassland
6. Fodder grown
7. Hay and silage
Yet there is Lack of animal feed during the winter months is an acute problem for almost all
Bhutanese farmers.
In order to conduct the business of the feed production, one must know the number of livestock
available in the country. The Research was conducted by the Department of Livestock through
various questionnaires in 205 gewogs.
The data is given below:

Dzongkhag Cattle Pig Poultry
Bumthang 10977 5102
Chhukha 21207 1435 54940
Dagana 17127 1781 28133
Gasa 977 1281
Haa 9730 75 8822
Lhuentse 13616 138 14170
Mongar 26367 1065 33456
Paro 12246 568 26657
PemaGatshel 7834 540 14955
Punakha 12153 254 10722
Samdrup Jongkhar 16741 460 20652
Samtse 31295 1977 58229
Sarpang 23968 2879 165041
Thimphu 3526 370 36689
Trashigang 27284 529 21658
Trashiyangtse 10955 259 7065
Trongsa 11315 75 11349
Tsirang 12482 1805 97345
Wangdue Phodrang 22149 726 13253
Zhemgang 10795 791 8982
Total
(Source: Department of Livestock, 2015)

The given data shows that the eastern part of the country has major population in livestock
(Mainly Cattle, pig and poultry) compared to other regions with additional advantage of
availability of raw materials in the region.
According to Karma Feed, with the start of 10 FYP, feeds demand for backyard farms promoted
through the One Gewog Three Products (OGTPs) Program started pouring in which shows that
the number of demands for feed products has increased over the years and so there is a need to
cater to the society.
Although there are some minor feed production in the country such as Pema Feed Mill in
Dekiling, Sarpang and the major supplier K arma Feed has its branch in central zone (Dagana,
Trongsa and Bumthang), eastern zone Trashigang, Lhuentse, Tashiyangtse, Pemagatshel,
Samdrupjongkhar and Mongar), southern zone (Tsirang, Sarpang, Chhukha, Phuentsholing,
Samtse and Pasakha) and western zone (Namseling, Paro, Haa, Punakha and Wangdue), yet the
market is not yet saturated by this companies.
Critical success factors
A. Raw material: The raw materials needed would be obtained within the country which
would be organic and would be available throughout the season.
B. Skilled manpower: The technical operators and labors would be skilled and would be
trained accordingly.
C. Quality: The proposed business would be providing good quality feeds according to the
customer demands which would increase the productivity of the livestock.
2.2 Competition Analysis

One of the leading manufacturers of feed in Bhutan is Karma Feeds which has its branches in
central zone (Dagana, Trongsa and Bumthang), eastern zone Trashigang, Lhuentse,
Tashiyangtse, Pemagatshel, Samdrupjongkhar and Mongar), southern zone (Tsirang, Sarpang,
Chhukha, Phuentsholing, Samtse and Pasakha) and western zone (Namseling, Paro, Haa,
Punakha and Wangdue). They have installed capacity of about 16,000 tons per annum to produce
all types of feeds (cattle, poultry, fish and pig). Pema Feed Mill in Dekiling, Sarpang and Shab
Feed are also known suppliers of animal feed in Bhutan.
As per Department of Livestock by 2015, the population of cattle was 302,744; the swine was
15,727 and poultry 638,501. On an average consumption of 2kg per animal per day as a dietary
supplement during the winter months only, the market is estimated to be 194,098 tons.
Therefore, there is definitely viable for new entrants in market.

3 SWOT ANALYSIS
STRENGTH WEAKNESS
 Accessibility to the target markets  Inadequate technical expertise
 People prefer local product over the imported  Poor brand image
ones
 Relatively lower price comparing to
competitors.
OPPORTUNITY THREAT
 Full market is not met  Existing major producers such as Karma feed
 Increase in number of livestock and its  Entrance of larger production unit in the
production future
One of the main strength of the business could be the easy access to the market, since the local
people chooses more of homemade products than that of imported ones, moreover the price of
the products would be lower comparing to the products sold in the market. Although there is
inadequate technical expertise and poor brand image in the market, the business would target
towards providing trainings and other necessary skills and developments and work towards
becoming largest supplier of feed products in the country which could eliminate the threat of the
existing as well as upcoming feed producers in the country.

4 Market Analysis
4.1 Structure of the market

In Bhutan, the animal feed marketing system can comprise of:
Manufacturer/Importers
Wholesalers
Retailers
Ultimate users
4.2 Demand vs. supply

Cattle is one of the major contributors of the livestock in the country which provides significant
component of the Bhutanese dietary system which includes the dairy products like butter and
cheese, which has become an important source of cash for some households. Poultry is also
found to be one of the important livestock components. 63% of the Bhutanese households in
rural areas raise chickens (Source: RNR Census, 2000). Poultry provides egg, meat, feathers,
and manure to the farmers and is an integral part of Bhutanese farming system, many of which
are operated at a subsistence level. Another livestock which acts as one of the important
contributor to human welfare in the past, and may possess characteristics that will be needed
again to meet new or re-emerging needs in the country also includes the swine/ pigs.
As per the Department of Livestock by 2015, the population of cattle was 302,744; the swine
was 15,727 and poultry 6385,01. If one looks at an average consumption of 2kg per animal per
day as a dietary supplement during the winter months only, the market is estimated to be194,098
tons. Therefore, there is definitely viable space for new entrants in this market. It has been
estimated that in a day the animals can have 2 kg of feed. For 956,972 animals, average demand
for feed will be 1,913,944 kg per day. To meet the above demand of composite animal feed
adequate amount of supply is required. Out of 698,586 tons required annually or about 58,216
tons/month, Karma Feeds supplies about 1,300 tons/month.

4.3 Pricing and Marketing Strategies

Segmentation: The feed production market would be mainly segmented to rural parts of the
country. It can be classified in to
1. Individuals:
For animal feed individual consumers would be lower income group generally the
farmers. In 2012, 90% of the farmers in Bhutan owned an average of two to three
cattle.
2. Institutional Buyers
Institutional buyers can be split into following groups:
 Dairy Farms
 Cattle Farms
 Poultry Farms
Targeting: The Company should try to focus much in winters to serve the farmers as there will
be scarcity of natural feed during this period. But for institutional side, the company has to focus
meeting up the demand all throughout the year. The Sales team should have clearly spelt out
responsibilities for team members to address the above segment with a properly devised sales
plan.
Other viable positioning statements include:
 Nutritional value of the feed which would help to make the cattle healthy and increase
their productivity
 Affordably priced with good quality

The existing price for the various feeds in the market ranges from Nu.1100- Nu. 1500
however, the price of the proposed business should charge Nu.1000-Nu.1100 which is not
only cheaper than the prevailing market price but also reasonable for the customers to
purchase. The prices are set taking into account of the investment and production made by
the company.
 Readily available round the year – even in winter
4.4 Technological changes that could impact costing

One of the biggest technological changes that can impact the way the unit would conduct
business in the future would be the progress of information technology in shaping e-commerce
and its adaption in the Bhutanese economy.

It may be used to find out the customers on line. Similarly it may be possible to generate and
respond to customer’s enquiries on line and transact business with those who stay outside the
country.
It has been found that most of the raw materials are imported. So, if these things are produced
within the country it would make the product more cost effective. The basic impact of all this
would help to reduce the cost and therefore the price of the product.
4.5 Competitiveness of the project

The project plans on setting up a manufacturing plant of cattle, swine and poultry feed. This
would compete against some of the manufacturers of feed producers and would reduce the
import rate of feeds.
The unit aspires to deliver quality products which would be beneficial for the health of the
livestock and improve their longevity and productivity. It is expected that there would be a
demand pull at the customer end which can be further strengthened through innovative
promotional strategies. The demand pull is estimated to be significant thereby ensuring
lowering of costs through economies of scale. It is expected that some of the competition
would eventually get eliminated.
4.6 Special attributes desired by target customers

Every customer undeniably looks for good quality feeds which would be able to increase the
productivity of the livestock.
Customers generally look for:
 High Quality Graded Feed

 They would prefer an affordable price: some may prefer to have a credit period
 Some would look forward to promotional offer
 Timely delivery in good condition
4.7 Terms &conditions and product specifications desired by target

customers
Types of Cattle Feed
A. Calf Starter:
B. Cattle Concentrate
C. Milk Ration

Types of Swine Feed
A. Creep Feed crumble

B. Pig Starter Crumble
C. Pig Grower Pellet
D. Pig Finisher Pellet
E. Pig Sow Ration Pellet
Types of Poultry Feed

A. Chicken starter
B. Chicken grower
C. Layer Feed
Nutrient Content of Feeds
The table below shows the nutrient content of different types of Feeds
Types of Feeds ME(kcal/g) Moisture% CP% Ca% P%
Calf Starter 3,000 13% 19% 0.6% 0.5%
Cattle Concentrate 2,500 13% 18% 0.8% 0.7%
Milk Ration 2,890 13% 18% 0.85% 0.75%
Chick Starter Crumble 2800 12% 18.5% 1% 0.7%
Chicken Grower 2789 12% 17.5% 1% 0.65%

Crumble
Layer Pellet 2800 12% 17.5% 4.1% 0.65%

Creep Feeds 3100 13% 20% 0.9% 0.7%
Pig Starter 3000 13% 18% 0.7% 0.79%
Pig Grower 2900 13% 15% 0.86% 0.7%
Pig Finisher 2800 13% 13% 0.65% 0.7%
Sow Ration 3000 13% 15% 0.89% 0.74%
PRODUCTION PROCESS
The production process and the recipes for all the products are same. The process is given below:
Step 1: Collection of necessary items of the feed production
Step 2: Sorting the items or quality inspection
Step 3: Batch weighing (per formulation)
Step 4: Crushing of the maize, oats and wheat
Step 5: Mixing of the other ingredients with the above crushed raw materials
Step 6: Pelleting of those items
Step 7: Cooling of the product
Step 8: Crumbling and conveying of the products
Step 7: Quality Inspection
Step 8: Weighing and packaging of the products in their respective sags.
Step 9: Storage

4.8 Packaging & Transportation

Large loads of premixed feed stuffs are packed into bulk bags. If the ingredients have to travel
greater distances packaging sags are used to assist in stability and maximize the load.
Machines and the market are filled with printed Open Mouth Bottom Weld, Block Bottom and
Valve Sacks printed to the individual requirements of the product and company however the
proposed business would mainly use Woven Polypropylene Sacks since it have a significant role
within this sec-tor predominantly because of their inherent strength.
It needs to satisfy the following objectives:
 Protects the quality of the product.

 Provide information to buyers, such as variety, weight, specification of the product,
quality grade, producer’s name, country, area of origin, etc.

4.9 Assessment of Comparative Advantage
a) Abundance of Hydroelectric Power
Bhutan is an energy surplus state. 97% of its energy is obtained from hydro power which is the
main reason low tariff rate is being charged which helps the company in lowering the cost of
production.
b) Availability of Water
Bhutan is endowed with rich perennial water resources fed with permanent glaciers, glacier
lakes and recurrent monsoons. The per capita mean flow availability is as high as 109,000 m3.
This compares very favorably with a developing economy like India which has per capita mean
flow availability as low as 1,588 m3.
c) Ready availability of Limestone, Maize, Bran of Cereals & Other Grains (Rice &
Wheat)
Limestone, maize, bran of cereals and other grains (rice, wheat) are some of the raw materials
that are used for manufacturing of cattle feed and these raw materials are readily available in
Bhutan.

5 Resource
5.1 Sources of inputs including water

Utilities required by the plant consist of electricity, water and furnace oil.
Electricity is required to run the production machinery and to provide lighting for the plant. So
except for very remote areas availability of electricity is not a handicap.
Water is required for general purposes and for supplying to the boiler, where steam is produced
to be supplied to the molasses tank. Bhutan is drained by many rivers flow and it doesn’t have
any water shortages problem in the country.
5.2 Sources of raw material

Some of the main ingredients for the feed production are:
I. Maize: Research has shown that yellow corn has a higher nutritional value than the
ordinary white maize, due to its higher levels of protein, energy, Vitamins and Minerals
content in it which is one of the main ingredient for the feed production of the proposed
business.
II. Soybean Oil: It is common that soybean oil meal is used as a protein source, High in
Fiber, and excellent Source of Essential Amino Acids. Similar to humans, dairy cattle
need essential amino acids in their diets which are contained in the Soyabean oil.
According to the research paper from Penn State, “Soybeans are an excellent source of
essential amino acids and easily fit into any type of forage-based ration.” Soybeans also
can provide high quality protein, degradable, un-degradable and soluble protein, energy,
fat, and fiber which is why many dairy nutritionists recommend adding soybeans into
dairy livestock rations.
III. Iodized salt: Using salt to supplement your livestock and animals’ diets is essential to
their health, as well as their production. Salt is made up of two vital nutrients: sodium and
chloride. Sodium is necessary for the animals’ nervous system, muscles, blood, and other
required functions. Chloride also benefits the blood and aids in digestion. This basic
mineral has a huge impact on the livestock’s’ production. Wheat has deficient in calcium
which can be covered up by mixing salt in it.
IV. Wheat: Although the wheat has deficiency in vitamin and calcium in it, the glutenous
nature of wheat makes it an excellent pelleting aid. 10% wheat in a formula will often
enhance pellet durability, particularly in rations with little other natural binder.
V. Cultural yeast: Yeast product and its supplements can beneficially modify microbial
activities, fermentative and digestive functions in the rumen. The research conducted by

European Union has demonstrated that viable yeast product preparations can stimulate
specific groups of beneficial bacteria in the rumen and has provided mechanistic models
that can explain their effects on animal performance.
Most of the items are available locally within the country while the some of the items would be
imported from:
Atlas No.55, K.J.Building
34/A Khadak Street, Near Snow White Hotel
Masjid Bunder (W)
Mumbai: 400009Maharastra, India
Contact Number: 08046035474
5.3 Assess the availability of manpower & skills

Unemployment Rate in Bhutan decreased to 2.50 percent in 2016 from 2.60 percent in 2015.
Unemployment Rate in Bhutan averaged 2.56 percent from 1995 until 2016, reaching an all time
high of 4 percent in 2010 and a record low of 1.15 percent in 1997.
With the given availability of the unemployment person in the market, the proposed business
would be able to render the skills and knowledge of the manpower.
(Source: Trading economics, 2016)

5.4 Assess the need for skill development

As the workforce is mostly unskilled, there is a need to develop their skills according to the
need of the industry. Workshops or on-site short term trainings may be organized by the
suppliers of machineries on how to control the temperature, operate machineries etc. The
training should be a combination of theory sessions, on the job coaching sessions and on the
job supervision. For people joining with no relevant experience training in their respective
functional area would be mandatory. There should be a periodic skill assessment done by the
management on the basis of observation of on the job performance. Based on the findings, a
training calendar needs to be drawn up.
6 The plant
6.1 Choice of the technology

The business would have only one production line with the production of feeds for cattle, swine
and poultry. The production requires four types of machineries which includes crusher machine,
mixer machine, pelleting machine and conveyor machine which works simultaneously one after
another accordingly.
Crusher Machine
Model: TZFS-420
Power: 7065 KW 380w
Capacity: 500-600kg/h
Size: 98*90*1750cm
Weight: 140kg with electric motor
Mixer Machine
Model: TZJB-1000
Power: 7.5 KW
Capacity: 1000kg/h
Size: 107*1.05*2.7m
Weight: 5010kg
Discharging speed is adjustable

Pelleting Machine
Weight: 3500 kg
Voltage: 380V,50HZ,3PH
Type: Feed Pellet Machine
Warranty: one year except spare parts
Certification: ISO9001
Condition: New
Conveyor Machine
Condition: New
Warranty: 1 year
Voltage: 220V or 380V
Certification: CE ISO
Capacity: 5-45 t/h
6.2 Source of technology

The machineries on the feed production would be brought from dealer of Alibaba, Henan Hexie
Machinery Manufacturing Company Ltd, while the necessary construction materials will be
purchased from Karma Tshongkhag, Phuentsholing.
6.3 Rate of consumption of power, fuel, utilities & consumables

A plant with annual capacity of 16,000 tones is envisaged considering the market study and
minimum economies of scale. The plant will operate a single shift of 8 hours a day, and 320
days a year.

The table below shows the annual requirement of utilities:
Annual Requirement of Utilities
Sl. No. Item Annual Requirement
1 Electricity 175 KW
2 Water 10,000 cubic meter
3 Fuel Oil 50,000 liter
6.4 Raw material consumption

Particulars Daily Requirement (units)
Maize Corn (50Kg) 7
Soya bean oil (Cartoon) 1
Iodized Salt (Bag) 1
Wheat (50kg) 7
Oat Hulls (50kg) 6
Limestone (kg) 3
Fish Meal (kg) 2
Cultural Yeast (Packet) 2
Packaging Sags (Packet) 2

6.5 Man power requirement and organization chart

Particulars Monthly Salary Year 1 Year 2 Year 3 Year 4 Year 5
Manager 20,000 1 1 1 1 1
Nutritionist 11,000 1 1 1 1 1
Finance manager 11,000 1 1 1 1 1
Marketing Manager 11,000 1 1 1 1 1
Lab Assistant 7,000 1 1 1 3 5
Store Keeper 5,000 1 1 1 3 5
Labour 5,000 5 5 6 6 7
Total 11 11 12 16 21

6.6 Specification of product and byproduct if any

The proposed business will deal with the feed production for the cattle, poultry and swine.
The feeds would be provided different types of feeds according to their breed such as:
1) Cattle: Calf Starter, Cattle concentrate and Milk Ration

2) Chicken Feeds: Chick Starter Crumble, Chicken Grower Crumble and Layer Pellet
3) Swine feed: Creep Fee, Pig Starter, Pig Grower, Pig Finisher and Sow Ration
Nutrient Content of Feeds
The table below shows the nutrient content of different types of Feeds
ME(kcal/g Moisture
Types of Feeds ) % CP% Ca% P%
Calf Starter 3,000 13% 19% 0.6% 0.5%
Cattle Concentrate 2,500 13% 18% 0.8% 0.7%
Milk Ration 2,890 13% 18% 0.85% 0.75%
Chick Starter Crumble 2800 12% 18.5% 1% 0.7%
Chicken Grower 2789 12% 17.5% 1% 0.65%

Crumble
Layer Pellet 2800 12% 17.5% 4.1% 0.65%

Creep Feeds 3100 13% 20% 0.9% 0.7%
Pig Starter 3000 13% 18% 0.7% 0.79%
Pig Grower 2900 13% 15% 0.86% 0.7%
Pig Finisher 2800 13% 13% 0.65% 0.7%
Sow Ration 3000 13% 15% 0.89% 0.74%
7 Plant Location & Infrastructure with layout

It will be established in Mongar which is one of the most developed Dzongkhag in the country.
The business will lease 30 decimal of land for the construction of a semi-permanent building
which will serve as the processing unit and as well as administrative house for the business.
One of the significant factors of the business being established in Mongar is the availability of
main ingredients (maize) in the area which would be purchased from the group of farmer
dealers. Other ingredients such as yeast and wheat are
also dominant in eastern part of the country.
Mongar, located in the eastern part of the country is one

of the fastest growing dzongkhags in the country which
makes it one of the potential market for the feed
production.
7.1 Raw material Availability

Maize & wheat are the major raw materials for the
production of animal feed. Limestone, another raw
material required for production of animal feed is readily
available in Mongar Dzongkhag. Other raw materials
would be imported from Phuentsholing.
7.2 Availability of Electricity

The Kurichhu Hydropower Plant is located at Gyalpozhing, Mongar, on the Kurichhu River in
Eastern Bhutan. It is a run-of-river scheme, with a dam of height 55 m (from its deepest
foundation), crest length of 285 m and a surface power house located at the toe of the dam. The
Project has an installed capacity of 60 MW consisting of four units of 15 MW each and a mean
annual energy generation capacity of 400 million units (MU). Kurichu Hydro power project has
brought tremendous socio-economic changes in the Dzongkhag. 50% of the population has
access to power, in spite of remote and inaccessible settlements.
7.3 Whether topography, hydrology 7 seismology data complies to

requirement
The geographical coordinates of Mongar are 27.275 deg latitude, 91.240 deg longitude, and
5,390 ft elevation. Topography, Hydrology & Seismology of the location must be checked before
setting up the manufacturing plant.
7.4 Availability of land

Industrial activities consist of small scale units in furniture making, chilly powdering, automobile
workshops, lemon grass distillation, milk collection centre etc. The Government in the recent
past established a regional trade and industry office in Mongar town. As per the licensing
records, a total of 496 trade licenses (488 retail and 8 dealership licenses), 29 production and
manufacturing licenses (3 for small and 26 for cottage industries) and 227 service licenses (9 for
small and 218 for cottage scale) were issued as on 31.12.2005.
7.5 Availability of transportation facilities
7.6 Availability of housing, schooling and hospital facilities

The dzongkhags has sufficient facilities

Mongar has excellent health facilities. One Referral Hospital at Mongar and 17 Basic Units
(BHU) spread over the entire Dzongkhag deliver public health service to the population. Mongar
has achieved immunization
7.7 Communication facilities
Bhutan Telecom Limited, Tashi InfoComm Limited, Samden Tech and Drukcom are the four
Internet Service Providers (ISPs) in the country. Bhutan Telecom Limited is the sole provider of
fixed-line telecommunication services while cellular mobile services are provided by Bhutan
Telecom Limited and Tashi InfoComm Limited. With the exception of Bhutan Telecom, all
other ISPs are private sector ventures.
Road connections are available and quality of roads is reasonably good.
7.8 Presence of approach road
Presence of approach road from and to the plant must be taken into consideration before
zeroing down on the plot.

8 Environmental aspects- Regulation & environment issues
The following environmental aspects need to be considered.
Odors: One of the most common complaints associated with feed production are the odors
produced. The odors that feed production emits are a complex mixture of ammonia, hydrogen
sulfide, and carbon dioxide, as well as volatile and semi-volatile organic compounds (Heederik
et al., 2007). These odors are worse than smells formerly associated with smaller livestock farms.
The anaerobic reaction that occurs when manure is stored in pits or lagoons for long amounts of
time is the primary cause of the smells. Odors from waste are carried away from farm areas on
dust and other air particles.
Insect Vectors: Feed production and their waste can be breeding grounds for insect vectors.
Houseflies, stable flies, and mosquitoes are the most common insects associated with feed
production. Houseflies breed in manure, while stable and other flies breed in decaying organic
material, such as livestock bedding. Mosquitoes breed in standing water, and water on the edges
of manure lagoons can cause mosquito infestations to rise. Flies can change from eggs to adults
in only 10 days, which means that substances in which flies breed need to be cleaned up
regularly.
Antibiotics: Antibiotics are commonly administered in animal feed in the United States.
Antibiotics are included at low levels in animal feed to reduce the chance for infection and to
eliminate the need for animals to expand energy fighting off bacteria, with the assumption that
saved energy will be translated into growth.
The main purposes of using non-therapeutic doses of antimicrobials in animal feed are so that
animals will grow faster, produce more meat, and avoid illnesses. Supporters of antibiotic use
say that it allows animals to digest their food more efficiently, get the most benefit from it, and
grow into strong and healthy animals. The trend of using antibiotics in feed has increased with
the greater numbers of animals held in confinement. The more animals that are kept in close
quarters, the more likely it is that infection or bacteria can spread among the animals. Seventy
percent of all antibiotics

9 Project Implementation Schedule
PROJECT TIMELINE
2016
Activities
1st Month 2nd Month 3rd Month 4th Month
Feasibility study and

development of the
project proposal
If the project is going to

be funded:
Start of the Construction

of Semi-permanent
Building
Purchase of Inventories
and Start of Production

10 Financial Analysis
10.1 Total Project capital Costs
COMPONENTS OF PROJECT COST

Amount in Nu.
Forex.
Domestic Total
PARTICULARS Compone Remark
Component Cost
nt s
Land (30 decimal / 12,258
sq ft) 36,774 36,774 Lease
Civil Works
Semi-permanent Building 250,500

Total Cost 250,500 250,500
Plant & Machinery
Crusher machine 63,700
Mixer machine 91,000
Pelleting machine 130,000
Conveyor 143,000
Total 427,700
Miscellaneous Fixed Assets:
Office furniture 49,500
Spare Parts 87,750
Stationery 5,000
Labour uniform 8,200
Laptop 75,000
Telephone 4,500
Printer 20,000
Total 249,950 249,950
Preliminary Expenses 20,000 20,000
Total Project Startup Cost 984,924

10.2 Working Capital Costs

Particulars Monthly Yearly
Advertising 1,000 12,000
Delivery Expenses 3,000 36,000
Inventory Purchases 291,840 3,502,080
Miscellaneous 2,000 24,000
Office Expenses 1,500 18,000
Payroll 90,000 1,080,000
Taxes and Licenses 26,614 319,367
Utilities & Telephone 1,000 12,000
Others: 49,500 594,000
Total 466,454 5,597,447
10.3 Cost of Production per unit

Year 1 Year 2 Year 3 Year 4 Year 5
Total Units
5,472 6,019 6,621 7,283 8,012
Cost of Production
4,868,243 5,057,963 5,305,553 5,565,522 5,838,490
Unit Cost of
Production 889.66 840.30 801.31 764.16 728.76

10.4 Human Resource cost
MANPOWER COST
Particulars Monthly Year 1 Year 2 Year 3 Year 4 Year 5
Direct Labor
43,000 516,000 541,800 568,890 597,335 627,201
Salary &
Allowances 47,000 564,000 592,200 621,810 652,901 685,546
Wages
- - - -
Total
90,000 1,080,000 1,134,000 1,190,700 1,250,235 1,312,747
10.5 Marketing Cost
The annual marketing cost incurred would be Nu.12000 through various media channels such as
Television, websites and radios.

10.6 Project profit and Loss Statement

INCOME STATETMENT PROJECTION FOR 5 YEARS
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Revenue
5,932,800 6,852,384 7,914,504 9,141,252 10,558,146
Cost of Goods Sold

4,072,080 4,227,300 4,438,665 4,660,598 4,893,628
Gross Profit / (Loss)

1,860,720 2,625,084 3,475,839 4,480,653 5,664,517
Expenses
796,163 830,663 866,888 904,924 944,862
Net Operating Income /

(Loss) 1,064,558 1,794,422 2,608,951 3,575,730 4,719,656
Less: BIT (30%)

319,367 538,326 782,685 1,072,719 1,415,897
Net Income / (Loss)

745,190 1,256,095 1,826,266 2,503,011 3,303,759
Additional info:
Depreciation Expenses
106,163 106,163 106,163 106,163 106,163
% of Net Income / (Loss) 68.56 45.39 37.06 31.99
% of Average Net Income

/ (Loss) 26.14

10.7 Projected Cash flow statement

Projected Cash Flow Statement
Beginnin
g Cash
5,932,800 6,734,607 7,555,064 8,918,602 10,930,441
Balance
Accts. Rec.
Collections 593,280 685,238 791,450 914,125 1,055,815
Loan
Proceeds 1,451,378
Sales &
Receipts 5,339,520 6,167,146 7,123,053 8,227,126 9,502,331
Total Cash
Inflows 7,384,178 6,852,384 7,914,504 9,141,252 10,558,146
Available
Cash
13,316,978 13,586,991 15,469,568 18,059,854 21,488,587
Balance
Advertising 12,000 12,600 13,230 13,892 14,586
Delivery 36,000 37,800 39,690 41,675 43,758
Inventory
Purchases 3,502,080 3,628,800 3,810,240 4,000,752 4,200,790
Miscellaneo
us 24,000 25,200 26,460 27,783 29,172
Office 18,000 18,900 19,845 20,837 21,879
Payroll 1,080,000 1,134,000 1,190,700 1,250,235 1,312,747
Taxes &
Licenses 319,367 538,326 782,685 1,072,719 1,415,897
Utilities &
Telephone 12,000 12,600 13,230 13,892 14,586
Other: 594,000 623,700 654,885 687,629 722,011
Subtotal 5,597,447 6,031,926 6,550,965 7,129,413 7,775,425
Capital
Purchases 984,924
Subtotal 984,924 -
Total Cash
Outflows 6,582,371 6,031,926 6,550,965 7,129,413 7,775,425
Ending
Cash 10,930,44
6,734,607 7,555,064 8,918,602 13,713,161
Balance 1

10.8 Projected Balance sheet statement

Projected Balance Sheet For 5 Years
Assets
Cash & Bank
6,734,607 7,555,064 8,918,602 10,930,441 13,713,161
Accounts Receivable
593,280 685,238 791,450 914,125 1,055,815
Prepaid Expenses
76,774
Total Current Assets 11,844,56

7,404,661 8,240,303 9,710,053 14,768,976
6
Net Fixed Assets

801,988 695,825 589,663 483,500 377,338
Other Assets
Total Assets 12,328,06

8,206,648 8,936,128 10,299,715 15,146,313
6
Liabilities &
Capital
Accounts Payable
367,556 876,406 1,960,098 3,601,980 5,909,754
Total Current
Liabilities 367,556 876,406 1,960,098 3,601,980 5,909,754
Long-Term Notes
Payable 1,161,102 870,827 580,551 290,276 0
Total Long-Term
Liabilities 1,161,102 870,827 580,551 290,276 0
Total Liabilities 1,528,658 1,747,233 2,540,649 3,892,256 5,909,754
Owner's Equity 5,932,800 5,932,800 5,932,800 5,932,800 5,932,800

Net Profit
745,190 1,256,095 1,826,266 2,503,011 3,303,759
Total Capital
6,677,990 7,188,895 7,759,066 8,435,811 9,236,559
Total Liabilities &

12,328,06
Capital 8,206,649 8,936,128 10,299,715 15,146,313
6

11 Financial Ratio analysis
11.1 Interest on loan

Interest 162,036 133,452 101,242 64,948 24,050
Loan Principle 225,385 253,969 286,179 322,474 363,371
Loan Balance 1,225,993 972,024 685,845 363,371 0
EMI 387,421 387,421 387,421 387,421 387,421
11.2 Break Even Point
Unit Unit Unit Cost Total Fixed

Time Unit Price
Start Increment Variable Costs
Month - 3,000 1,084 1,023 908,150
BREAK EVEN X BREAK EVEN Y LABEL
14,818 16,065,832 break even unit =14818

11.3 Return on Investment
RETURN ON INVESTMENT
Year
Product Year 1 Year 2 Year 3 Year 4
5
Cattle feed (50kg) 115% 139% 166% 198% 229%
Poultry feed(50 kg) 94% 114% 136% 162% 187%
Swine feed(50 kg) 99% 119% 143% 170% 196%
612
Total ROI 309% 372% 445% 530%
%
11.4 Net Present Value and Internal Rate of Return
Net Present Value (NPV)

3,657,962
Internal Rate of Return (IRR) 59%

12 Final Finding and Recommendation

Agriculture with livestock rearing is an important component of the whole farming system in
Bhutan. More than 79% of the total population lives in the rural areas and domestic animals are
found in almost all the six agro-ecological zones ranging from the subtropical to the alpine
region.
Cattle is one of the major contributors of the livestock in the country which provides significant
component of the Bhutanese dietary system which includes the dairy products, especially butter
and cheese, which now has become an important source of cash for some households. Poultry is
also found to be one of the important livestock components. It is estimated that over 63% of the
Bhutanese households in rural areas raise chickens (RNR Census, 2000). Poultry provides egg,
meat, feathers, and manure to the farmers and is an integral part of Bhutanese farming system,
many of which are operated at a subsistence level. Another livestock which acts as one of the
important contributor to human welfare in the past, and may possess characteristics that will be
needed again to meet new or re-emerging needs in the country also includes the swine/ pigs.
One of the potential markets for production of feeds for such livestock is Mongar, which located
in the eastern part of the country which after the installation of Kurichu Hydro power project has
access to power, in spite of remote and inaccessible settlements, which also plays as one of the
key element in successful venture of the business since there is easy access to electricity as well
as water energy.
Another positive point on venturing feed production business in Mongar is the availability of
Maize & wheat which is one of the major raw materials for the production of animal feed.
Limestone, another raw material required for production of animal feed is readily available in the
area.
The Kurichhu Hydropower Plant is located at Gyalpozhing, Mongar, on the Kurichhu River in
Eastern Bhutan. It is a run-of-river scheme, with a dam of height 55 m (from its deepest
foundation), crest length of 285 m and a surface power house located at the toe of the dam. The
Project has an installed capacity of 60 MW consisting of four units of 15 MW each and a mean
annual energy generation capacity of 400 million units (MU). Kurichu Hydro power project has
access to power, in spite of remote and inaccessible settlements.
Although we have some local feed producer and supplier in the market, with the given livestock
available in the country, there is huge scope for carrying out the feed production since the
number of livestock and its productivity is increasing every year due to increase in the demand of
local products.

13 Conclusion- Is project feasible

The project is feasible. The Research was conducted by the Department of Livestock through
various questionnaires in 205 gewogs. The given data shows that the eastern part of the country
has major population in livestock (Mainly Cattle, pig and poultry) compared to other regions
with the additional advantage of availability of raw materials in the region.
Dzongkhag Cattle Pig Poultry
Bumthang 10977 5102
Chhukha 21207 1435 54940
Dagana 17127 1781 28133
Gasa 977 1281
Haa 9730 75 8822
Lhuentse 13616 138 14170
Mongar 26367 1065 33456
Paro 12246 568 26657
PemaGatshel 7834 540 14955
Punakha 12153 254 10722
Samdrup Jongkhar 16741 460 20652
Samtse 31295 1977 58229
Sarpang 23968 2879 165041
Thimphu 3526 370 36689
Trashigang 27284 529 21658
Trashiyangtse 10955 259 7065
Trongsa 11315 75 11349
Tsirang 12482 1805 97345
Wangdue Phodrang 22149 726 13253
Zhemgang 10795 791 8982
(Source: Department of Livestock, 2015)

Although there are other feed production companies in the country, yet the market is not
saturated and dominated by these companies. Every company has a potential to succeed in the
market.
There is Lack of animal feed during the winter months although there are plenty of sources for
summer for the livestock which is an acute problem for almost all Bhutanese farmers.
14 References
1. Department of Livestock (2007). Livestock Population and Production Bulletin.

Department of Livestock, Ministry of Agriculture.
2. Labour Force Survey Report 2012, Department of Employment, Ministry of Labour and Human
Resources,Royal Government of Bhutan(2012)
3. Livestock Statistics 2015, Department of Livestock, Ministry of Agriculture and Forests, Royal
Government of Bhutan (2015)

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1 Compiled by IBEST Consultancy Services

8. Cost presentation and financial analysis

Fixed Cost 984,924

Working Capital 466,454

Total Investment 1,451,378

Break Even point 14,818 Units

Return On Investment on Sales (ROI) 309%

Return on Investment on Net Profit (ROI) 78%

Payback Period 2 years and 7 months

2 Compiled by IBEST Consultancy Services

3 Compiled by IBEST Consultancy Services

7.1 Raw material Availability .............................................................................................................. 24

4 Compiled by IBEST Consultancy Services

1 Business Model Canvassing

Key Partners Key Activities Value Customer Customer

Cost structure Revenue Streams

 Ingredients and Raw materials  Fixed Price

5 Compiled by IBEST Consultancy Services

2 Justification of the project

2.1 The need of the project

The data is given below:

6 Compiled by IBEST Consultancy Services

Dzongkhag Cattle Pig Poultry

Bumthang 10977 5102

Chhukha 21207 1435 54940

Dagana 17127 1781 28133

Gasa 977 1281

Haa 9730 75 8822

Lhuentse 13616 138 14170

Mongar 26367 1065 33456

Paro 12246 568 26657

PemaGatshel 7834 540 14955

Punakha 12153 254 10722

Samdrup Jongkhar 16741 460 20652

Samtse 31295 1977 58229

Sarpang 23968 2879 165041

Thimphu 3526 370 36689

Trashigang 27284 529 21658

Trashiyangtse 10955 259 7065

Trongsa 11315 75 11349

Tsirang 12482 1805 97345

Wangdue Phodrang 22149 726 13253

Zhemgang 10795 791 8982

(Source: Department of Livestock, 2015)

7 Compiled by IBEST Consultancy Services

Critical success factors

2.2 Competition Analysis

8 Compiled by IBEST Consultancy Services

9 Compiled by IBEST Consultancy Services

4.1 Structure of the market

4.2 Demand vs. supply

10 Compiled by IBEST Consultancy Services

4.3 Pricing and Marketing Strategies

Other viable positioning statements include:

 Affordably priced with good quality

 Readily available round the year – even in winter

4.4 Technological changes that could impact costing

11 Compiled by IBEST Consultancy Services

4.5 Competitiveness of the project

4.6 Special attributes desired by target customers

Customers generally look for:

 High Quality Graded Feed