PROJECT REPORT

FOR
Vm farms
(Manufactures of Poultry Feeds, hatching of poultry eggs and poultry farming)
AT
Calicut

Promoter
Jemmise george,Administrative Office,
calicut
Ph:7510867777

Prepared by:

CA. Chacko B.Sc, FCA

Chartered Accountant
 TABLE OF CONTENTS

 INTRODUCTION

 PROMOTER & MANAGEMENT

 THE PROJECT

 PRODUCTS AND MARKET DEMAND

 FINANCIAL FORECAST AND PROFITABILITY

 COST OF PROJECT AND MEANS OF FINANCE

 PROJECTED OPERATIONAL STATEMENT

 PROJECTED BALANCE SHEET

 PROJECTED CASH FLOW STATEMENT

 COMPUTATION OF WORKING CAPITAL

 INTEREST AND REPAYMENT OF PRINCIPAL

 DEPRECIATION CALCULATION

 BREAK EVEN ANALYSIS

 BREAK UPS FOR SALES AND COSTS

 VIABILITY INDICATORS
 INTRODUCTION

Dietary habits of people have changed over the last few decades. Growing
consciousness for protein rich food has given an impetus to the poultry farming.
Today, the poultry industry is a large organized sector with both private and
government participation Poultry in India started as a backyard activity and in the
past three decades it has gone through a revolutionary change. From a backyard
activity it has got transformed into well-organized, scientifically oriented and
technologically driven industry. Today India ranks 4th in egg production and 8th in
broiler production in the world. India's poultry industry is growing at a rate of 13 %,
which is one of the fastest growing industries in the world. In the coming years due
to the affordability of chicken meat and eggs would increase leading to a greater
demand for poultry products. The productive efficiency levels of the Indian poultry
industry are comparable to the world standards.

By realizing the potential of poultry industry, this project aims to establish

poultry feed manufacturing unit, hatching of poultry eggs and poultry farm unit.
Hatchery is the centre of the Poultry Industry. The success of poultry farming is
largely dependent on the continuous supply of good quality nutritious feeds. The
project has its own in-house manufacturing unit for the manufacture of poultry feed
to make sure the uninterrupted supply of good quality nutritious feeds at
competitive price.

PROMOTER & MANAGEMENT

Mr. K. T. Devassia of VMRP Group is the promoter of this project. The Vmrp
Group of companies with its head office at Nilambur, Malappuram has been traders
of natural rubber based products for the last 16 years. The group’s major activity is a
leading trader of natural latex, becoming over the years one of the largest exporters
of all grades of natural rubber from India. Promoter K T Devassia is the holder of
Karshaka Sangham Award and he has received Deepika Best Businessman award
for three years. The promoter is energetic having good technical, managerial, and
marketing skills. He is hard working in nature and fully confident of running the
unit successfully. A good team of skilled and experienced persons will also be there
to support the day to day functioning of the unit. Being in the business for a long
time the promoter studied the various aspects of the industry and now confidently
came forward to establish a separate business segment.

THE PROJECT

The project involves setting up of a poultry farm having three segmental units
namely poultry feed manufacturing, hatchery and farming.
1. Poultry Feed Manufacturing: - This unit manufactures poultry feeds. The raw
materials required for feed manufacturing are maize, soya, rice bran oil, die
calcium phosphate, calcite and feed supplement

Input mix for feed manufacturing

calcite, 1
dcp, 2 feed supliments,
ricebran oil, 3 1

maize
soya
ricebran oil
soya, 32
dcp
maize, 61
calcite
feed supliments

The expected production capacity will be 5 to 6 tons per hour. This unit
requires plant with a hammer mill, feed elevators, storage bin, mixer and
motors. The consolidated machinery cost is estimated to Rs, 13,80,000/-
including installation charge. The machinery is supplied and installed by
Preethi Constructions, Bangalore. This unit requires a plant building with
plant office. The estimated cost for plant building will be Rs. 50,00,000/- (
5000 square feet with Rs 1000 per square feet). There will be a warehouse for
keeping raw material and finished product. The cost manufacturing
warehouse will be Rs. 80,00,000 (10,000 square feet with Rs. 800 per square
 feet). The electrical panel expense, Transportation and other plant
implementation cost is expected to be Rs. 200,0000/-
2. Hatchery: - Hatchery is a facility where chicken eggs are hatched under
artificial conditions. Hatchery period will be 21 days. This is a hatchery unit
with twelve double setter fully automated incubator of capacity 30240 eggs
and six 10,000 egg capacity. The estimated cost of machineries is Rs. 42,00,000.
The installation cost will be Rs 6,30,000 and the unit requires a 3000 square
feet building. The building construction cost is estimated to be Rs. 24,00,000 (
Rs. 800 per square feet). Other implementation cost will be 70,000 and
3. Poultry Farm: - Raising chicks commercially for the purpose of meat and
eggs. The growing period is 40 to 42 days. The farm consists of 10 sheds
including shed for workers. Theses sheds will be 3000 square feet per shed.
The estimated cost of construction of sheds will be Rs. 81,00,000.

The project also requires two pick up van and a lorry. The estimated cost of vehicles
will be Rs. 40,00,000/- The total estimated cost of the project is Rs.750,00,000 which
includes Rs. 400,00,000 for working capital. Out of total expected project cost of Rs.
750,00,000, expecting an assistance from Financial Institutions Rs. 300,00,000 as
working capital loan. The balance amount and other contingency amount will be
brought by promoter.
Location of the project is at Pullippadam, Nilambur. The promoter owns 3.13
acres of land at Pullippadam and that will be using as the project site.

Integration: The unit will also doing integration. Integration is nothing but contract
farming. Farmers/Contractors are given the chicks, chicken food, vaccinations and
support for the chickens’ health, including nutrient supplements like vitamin D
replacement. Integrators visit the farms to check on the chickens. They check bird
mortality and growth. The birds are returned to the integrators after they are grown
within 40 to 42 days, and the farmers are paid for their services. Promoter is
planning to establish an integration chain by purchasing chicks from outside also.

Project subsidy: - NABARD and Ministry of Micro, Small and Medium Enterprises
(MSME) expect to promote this project to encourage entrepreneurship and
employment opportunities in rural and backward areas. NABARD provides 25 % of
outlay as back ended capital subsidy. Means the interested business person or an
entrepreneur has to first avail a bank loan only then subsidy can be availed. In
simple terms, 25% of our total investment will be adjusted as back ended capital
subsidy.

PRODUCTS AND MARKET DEMAND

Poultry has an important role in India as eggs and meats are the important
and comparatively cheap source of protein and vitamins. Chicken is most widely
accepted meat in India. Secondly, chicken has no religious taboos like pork and beefs
So there will be high demand for the product. The marketing of the product is the
decision making factor of the existence of any unit. Considering this as the key
factor, the promoter’s vast experience in the trading industry will do a major role.
The group has business units and branches all over Kerala, which is an additional
factor for developing and establishing a specific share in the market. This project
includes start to end of poultry business by manufacturing poultry feeds, Hatchery
and farming so that the entity can ensure uninterrupted supply of chicken and will
be able to maintain customer satisfaction.

FINANCIAL FORECAST AND PROFITABILITY

The profitability of the unit, projected balance sheets and the cash flows has been
attached to the project report. This has been prepared on the following assumptions.
1. All selling prices and purchase prices are based on prevailing market prices.
Sale values are net of VAT collected and purchases are net of Input VAT if
any.
2. The working capital loan will be up to Rs. 300,00,000 and the interest rate is
assumed to be 12%
3. It is assumed that working capital loan is fully utilized throughout the year
4. The unit will be maintaining raw material stock (Raw materials for Feeds) for
1 month’s consumption.
 5. The finished poultry feeds will be 15 days consumption in own poultry farm
and 5 days for outside demand
6. Average credit allowing to the customers will be an average of 15 days
7. Expecting an average credit period of 21 days (three weeks) from suppliers.
8. Plant is assumed to start operate at 65% capacity and gradually increase the
capacity utilization
9. Expecting an increase in the sales volume by 1% per year.
10. Expecting a normal price increase of 1% for products in every year.

The financial projections have been worked out on extremely conservative

assumptions. From the viability indicators prepared on the basis of projected
statements attached to this report, it is very clear all the indices are extremely
favorable and achievable. Also the projections are made on the pessimistic estimates
of various costs. Still the projections show high profitability. Considering all the
above aspects, it can be concluded that the project is commercially viable and
financially feasible.