Maize Silage Unit Rs. 6.59 Million May-2022
Maize Silage Unit Rs. 6.59 Million May-2022
Maize Silage Unit Rs. 6.59 Million May-2022
MAIZE SILAGE
UNIT
May 2022
Table of Contents
1. DISCLAIMER .......................................................................................................................................... 3
2. EXECUTIVE SUMMARY....................................................................................................................... 3
3. PURPOSE OF THE DOCUMENT ......................................................................................................... 4
4. INTRODUCTION TO SMEDA............................................................................................................... 4
5. BRIEF DESCRIPTION OF PROJECT AND PRODUCT ................................................................... 5
5.1) PRODUCTION PROCESS FLOW ........................................................................................................... 6
5.2) INSTALLED AND OPERATIONAL CAPACITIES....................................................................................... 7
6. CRITICAL FACTORS ............................................................................................................................ 7
7. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ...................................................................... 7
8. POTENTIAL TARGET CUSTOMER/MARKETS .............................................................................. 7
9. PROJECT COST SUMMARY ................................................................................................................ 8
9.1) PROJECT ECONOMICS ........................................................................................................................ 8
9.2) PROJECT FINANCING .......................................................................................................................... 8
9.3) PROJECT COST................................................................................................................................... 9
9.4) SPACE REQUIREMENT ........................................................................................................................ 9
9.5) MACHINERY AND EQUIPMENT........................................................................................................... 10
9.6) FURNITURE AND FIXTURES ............................................................................................................... 10
9.7) OFFICE EQUIPMENT.......................................................................................................................... 11
9.8) HUMAN RESOURCE REQUIREMENT.................................................................................................. 11
9.9) UTILITIES AND OTHER COSTS (RAW MATERIAL AND OTHER EXPENSES)....................................... 11
9.10) REVENUE GENERATION .................................................................................................................... 12
10. CONTACTS ...................................................................................................................................... 13
11. USEFUL WEB LINKS ..................................................................................................................... 14
12. ANNEXURES ................................................................................................................................... 15
12.1) INCOME STATEMENT......................................................................................................................... 15
12.2) BALANCE SHEET ............................................................................................................................... 16
12.3) CASH FLOW STATEMENT.................................................................................................................. 17
13. KEY ASSUMPTIONS ...................................................................................................................... 18
13.1) OPERATING COST ASSUMPTIONS .................................................................................................... 18
13.2) PRODUCTION COST ASSUMPTIONS.................................................................................................. 18
13.3) REVENUE ASSUMPTIONS .................................................................................................................. 18
13.4) ECONOMY RELATED ASSUMPTIONS................................................................................................. 18
1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the said matter. Although, the material included in
this document is based on data/information gathered from various reliable sources;
however, it is based upon certain assumptions which may differ from case to case.
The information has been provided on as is where is basis without any warranties or
assertions as to the correctness or soundness thereof. Although, due care and
diligence has been taken to compile this document, the contained information may
vary due to any change in any of the concerned factors, and the actual results may
differ substantially from the presented information. SMEDA, its employees or agents
do not assume any liability for any financial or other loss resulting from this
memorandum in consequence of undertaking this activity. The contained information
does not preclude any further professional advice. The prospective user of this
memorandum is encouraged to carry out additional diligence and gather any
information which is necessary for making an informed decision; including taking
professional advice from a qualified consultant/technical expert before taking any
decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
2. EXECUTIVE SUMMARY
The proposed project will have the installed capacity of 10,800,000 Kg/ year but
keeping in view the ground realities of Pakistan, the operation will start with a
capacity of 60% (6,480,000 Kg/Year) and continue with the same.
The total Project Cost is Rs. 6,598,632 including the Capital Cost of Rs. 5,195,102
and the Working Capital of Rs. 1,403,530. Given the cost assumptions, Internal
Rate of Return (IRR) and payback are 65% and 1.76 years respectively, hence
making the project viable. The NPV @ 17% is Rs. 19,437,003.
The most critical consideration or factors for success of the project are:
Location must have sufficient maize crop. It should preferably be an area with
10,000 tons, however with a minimum 6,000 tons of harvest area the machine
will need to be moved to nearest area for capacity optimization.
Availability of 03 phase electricity and tractor.
Proximity of commercial dairy farms.
4. INTRODUCTION TO SMEDA
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the
number, scale and competitiveness of SMEs", SMEDA has carried out ‘sectoral
research’ to identify policy, access to finance, business development services,
strategic initiatives and institutional collaboration and networking initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a successful hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business development
services is also offered to the SMEs by SMEDA. These services include
identification of experts and consultants and delivery of need based capacity
building programs of different types in addition to business guidance through help
desk services.
The project is related to setting up Maize Silage Unit with following detail:
Technology: This proposed unit will start with imported Single Row Maize
Chopper and Baler. Generator may be added in case of unavailability of three
phase electricity connection.
Location: The unit may be located at areas having abundant maize crops
and preferably nearest to dairy farms with availability of three phase electricity
connection.
Product: The farm will produce maize silage bales of 60 Kg weight per bale.
Target Market: Dairy farms in the nearest areas of farm’s location as well as
other provinces.
Employment Generation: The proposed project will initially provide direct
employment to 04 persons. The indirect employment is at the time of maize
harvesting season.
Profitability: The Financial Analysis shows the unit to be profitable from the
very first year of the operation.
Maize Harvesting
The single row maize chopper can harvest about 4 acres crop per day, provided it is
being pulled by 70 hp tractor.
Inoculant Spray
Before loading on the maize bailer and wrapper, the maize is sprayed with inoculant
for better preservation. A bottle costing Rs. 8,500 per pack is sufficient for treatment
of 260 bales.
Making Bales
Thought the installed capacity of this machinery with 24 hours working and 06
Months season assumption is 12,960 tons per year but keeping in view the ground
realities, the machine will operate a maximum of 12 hours a day. This report
considers the maize season to be of 06 months, that is, from May to October. The
farm will start with operational capacity producing 6,480 tons maize silage per year
(50 bales per hour with weight of 60 Kg per bale) which is the optimum capacity as
well.
6. CRITICAL FACTORS
Location must have sufficient maize crop. It should preferably be an area with
10,000 tons, however with a minimum 6,000 tons of harvest area the machine
will need to be moved to nearest area for capacity optimization.
Availability of 03 phase electricity and tractor.
Proximity of commercial dairy farms.
A detailed financial model has been developed to analyze the commercial viability of
the Maize Silage Unit. Various cost and revenue related assumptions along with
results of the analysis are outlined in this section.
All the figures in this financial model have been calculated for installed and
operational capacity as mentioned in the above section.
The following table shows internal rates of return and payback period.
Capital Cost
Working Capital
Cash 450,000
Following table provides list of machinery and equipment. Costs may vary from area
to area and underground water table.
10
Such type of project only requires a cell phone for communication. A smart cell
capable of hosting social media apps worth Rs. 25,500/ will be purchased.
9.9) Utilities and Other Costs (Raw Material and Other Expenses)
On the basis of 260 bales per bottle of inoculants about 415 bottles are required to
suffice 108,000 bales for a total of 06 months. Similarly, as a single role of wrapping
paper packs 55 bales, so, every year 1,962 roles are needed.
The electricity charges are based on the assumption of baler operating for 12 hours
a day, and 180 days per year. Rs. 388,800 per year will be the direct electricity
charges (Rs. 0.6 per Kg of Silage).
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Table 7: Miscellaneous
Description Rs./Production Cycle
Machinery Maintenance 30,000
Travelling Expenses 70,000
Communication Expenses 12,000
Electricity 24,000
Total 136,000
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10. CONTACTS
Circles International
Cattle Kit
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12. ANNEXURES
Revenue 25,920,000 28,512,000 31,363,200 34,499,520 37,949,472 41,744,419 45,918,861 50,510,747 55,561,822 61,118,004
Cost of goods sold 18,628,110 20,481,517 22,519,349 24,759,959 27,223,528 29,932,244 32,910,504 36,185,133 39,785,626 43,744,414
Gross Profit 7,291,890 8,030,483 8,843,851 9,739,561 10,725,944 11,812,175 13,008,357 14,325,614 15,776,196 17,373,590
Other income - - - - - - - - - -
Gain / (loss) on sale of assets - - - - - - - - - -
Earnings Before Interest & Taxes 5,284,428 5,894,523 6,558,901 7,289,483 8,093,004 8,986,804 9,959,214 11,029,160 12,206,559 13,502,340
Tax 1,566,833 1,794,864 2,026,308 2,281,386 2,562,573 2,875,777 3,186,949 3,529,331 3,906,099 4,320,749
NET PROFIT/(LOSS) AFTER TAX 3,329,521 3,814,086 4,305,904 4,847,946 5,445,468 6,111,027 6,772,266 7,499,829 8,300,460 9,181,591
15
Prefeasibility Study Semi Intensive Tilapia Aquaculture
12.2) Balance Sheet
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 450,000 823,671 1,645,892 1,972,878 2,055,445 6,777,342 12,636,962 19,060,354 26,094,706 33,790,064 47,219,321
Accounts receivable - 2,130,411 2,236,932 2,460,625 2,706,687 2,977,356 3,275,091 3,602,601 3,962,861 4,359,147 4,795,061
Finished goods inventory - - - - - - - - - - -
Equipment spare part inventory - - - - - - - - - - -
Raw material inventory 813,030 983,767 1,190,358 1,440,333 1,742,803 2,108,792 2,551,638 3,087,482 3,735,853 4,520,382 -
Pre-paid annual land lease - - - - - - - - - - -
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Pre-paid insurance 140,500 126,450 112,400 98,350 84,300 70,250 56,200 42,150 28,100 14,050 -
Total Current Assets 1,403,530 4,064,299 5,185,581 5,972,186 6,589,235 11,933,739 18,519,892 25,792,587 33,821,520 42,683,643 52,014,383
Fixed assets
Land 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001
Building/Infrastructure 1,250,000 1,187,500 1,125,000 1,062,500 1,000,000 937,500 875,000 812,500 750,000 687,500 625,000
Machinery & equipment 2,810,000 2,529,000 2,248,000 1,967,000 1,686,000 1,405,000 1,124,000 843,000 562,000 281,000 -
Furniture & fixtures 60,000 54,000 48,000 42,000 36,000 30,000 24,000 18,000 12,000 6,000 -
Office vehicles - - - - - - - - - - -
Office equipment 25,500 22,950 20,400 17,850 15,300 12,750 10,200 7,650 5,100 2,550 -
Total Fixed Assets 5,145,501 4,793,451 4,441,401 4,089,351 3,737,301 3,385,251 3,033,201 2,681,151 2,329,101 1,977,051 1,625,001
Intangible assets
Pre-operation costs 49,600 39,680 29,760 19,840 9,920 - - - - - -
Legal, licensing, & training costs - - - - - - - - - - -
Total Intangible Assets 49,600 39,680 29,760 19,840 9,920 - - - - - -
TOTAL ASSETS 6,598,632 8,897,430 9,656,743 10,081,377 10,336,456 15,318,991 21,553,093 28,473,738 36,150,621 44,660,695 53,639,384
Other liabilities
Lease payable - - - - - - - - - - -
Deferred tax - 449,600 449,600 449,600 449,600 449,600 359,680 269,760 179,840 89,920 -
Long term debt 3,299,316 2,196,711 1,743,762 1,231,929 653,559 - - - - - -
Total Long Term Liabilities 3,299,316 2,646,311 2,193,362 1,681,529 1,103,159 449,600 359,680 269,760 179,840 89,920 -
Shareholders' equity
Paid-up capital 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316 3,299,316
Retained earnings - 1,664,761 2,739,423 3,522,664 4,185,305 9,630,773 15,741,800 22,514,066 30,013,894 38,314,355 47,495,946
Total Equity 3,299,316 4,964,077 6,038,739 6,821,980 7,484,621 12,930,089 19,041,116 25,813,382 33,313,210 41,613,671 50,795,262
TOTAL CAPITAL AND LIABILITIES 6,598,632 8,897,430 9,656,743 10,081,377 10,336,456 15,318,991 21,553,093 28,473,738 36,150,621 44,660,695 53,639,384
16
Prefeasibility Study Semi Intensive Tilapia Aquaculture
12.3) Cash Flow Statement
Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit - 3,329,521 3,814,086 4,305,904 4,847,946 5,445,468 6,111,027 6,772,266 7,499,829 8,300,460 9,181,591
Add: depreciation expense - 352,050 352,050 352,050 352,050 352,050 352,050 352,050 352,050 352,050 352,050
amortization expense - 9,920 9,920 9,920 9,920 9,920 - - - - -
Deferred income tax - 449,600 - - - - (89,920) (89,920) (89,920) (89,920) (89,920)
Accounts receivable - (2,130,411) (106,521) (223,693) (246,062) (270,669) (297,736) (327,509) (360,260) (396,286) (435,915)
Finished good inventory - - - - - - - - - - -
Equipment inventory - - - - - - - - - - -
Raw material inventory (813,030) (170,736) (206,591) (249,975) (302,470) (365,989) (442,846) (535,844) (648,371) (784,529) 4,520,382
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Advance insurance premium (140,500) 14,050 14,050 14,050 14,050 14,050 14,050 14,050 14,050 14,050 14,050
Accounts payable - 1,287,043 137,599 153,226 170,809 190,625 212,996 238,299 266,974 299,533 (112,982)
Other liabilities - - - - - - - - - - -
Cash provided by operations (953,530) 3,141,037 4,014,593 4,361,482 4,846,243 5,375,456 5,859,621 6,423,392 7,034,351 7,695,358 13,429,257
Financing activities
Change in long term debt 3,299,316 (1,102,605) (452,949) (511,832) (578,371) (653,559) - - - - -
Change in short term debt - - - - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Change in lease financing - - - - - - - - - - -
Issuance of shares 3,299,316 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing6,598,632
activities (1,102,605) (452,949) (511,832) (578,371) (653,559) - - - - -
Investing activities
Capital expenditure (5,195,102) - - - - - - - - - -
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing(5,195,102)
activities - - - - - - - - - -
NET CASH 450,000 2,038,432 3,561,644 3,849,649 4,267,872 4,721,897 5,859,621 6,423,392 7,034,351 7,695,358 13,429,257
17
Prefeasibility Study
Semi Intensive Tilapia Aquaculture
Description Details
Hours Operational Per Day 12
Days Operational Per Month 30
Days Operational Per Year 180
Operating Cost Growth Rate (per annum) 10%
Description Details
COGS Annual Growth Rate 10%
Description Details
Sales Price Growth Rate 10%
Maximum Capacity Utilization 60%
Initial Capacity Utilization 60%
Description Details
Inflation Rate 10%
Electricity Price Growth Rate 10%
Wage Growth Rate 10%
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Small and Medium Enterprises Development Authority
HEAD OFFICE
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