Off-Season Vegetable Farming High Tunnel Rs. 16.58 Million Nov-2023 SMEDA

Pre-feasibility Study
Off Season Vegetable

Farming (High Tunnel)
November 2023
The figures and financial projections are approximate due to fluctuations in

exchange rates, energy costs, and fuel prices etc. Users are advised to focus on
understanding essential elements such as production processes and capacities,
space, machinery, human resources, and raw material etc. requirements. Project
investment, operating costs, andrevenues can change daily. For accurate financial
calculations, utilize financial calculators on SMEDA’s website and consult financial
experts to stay current with market conditions
Small and Medium Enterprises Development Authority

Ministry of Industries and Production
Government of Pakistan
Pre-Feasibility Study Off Season Vegetable Farming (High Tunnel)
TABLE OF CONTENTS
1 DISCLAIMER ..................................................................................................................................................2
1 EXECUTIVE SUMMARY .................................................................................................................................3
2 INTRODUCTION TO SMEDA .....................................................................................................................3
3 PURPOSE OF THE DOCUMENT ................................................................................................................4
4 BRIEF DESCRIPTION OF PROJECT & PRODUCT ................................................................................4
4.1 HIGH TUNNEL STRUCTURE SPECIFICATION ........................................................................................... 4
4.2 SUPPORT STRUCTURE ................................................................................................................................... 5
4.3 INSTALLED AND OPERATIONAL CAPACITIES ........................................................................................... 5
4.4 PRODUCTION PROCESS FLOW .................................................................................................................... 6
5 CRITICAL FACTORS .....................................................................................................................................6
6 GEOGRAPHICAL POTENTIAL FOR INVESTMENT ..............................................................................7
7 POTENTIAL TARGET CUSTOMERS / MARKETS.................................................................................7
8 PROJECT SUMMARY ....................................................................................................................................7
8.1 PROJECT ECONOMICS .................................................................................................................................... 7
8.2 PROJECT FINANCING....................................................................................................................................... 8
8.3 PROJECT COST ................................................................................................................................................. 9
8.4 LAND REQUIREMENT ....................................................................................................................................... 9
8.5 FARM TOOLS ................................................................................................................................................... 10
8.6 FURNITURE AND FIXTURE........................................................................................................................... 10
8.7 HIGH TUNNEL EQUIPMENT ......................................................................................................................... 10
8.8 PLASTIC SHEET AND STRUCTURE INSTALLATION REQUIREMENT ............................................. 11
8.9 RAW MATERIAL REQUIREMENTS ............................................................................................................. 11
8.10 HUMAN RESOURCE REQUIREMENT ........................................................................................................ 12
8.11 REVENUE GENERATION .............................................................................................................................. 13
8.12 OTHER COSTS ................................................................................................................................................ 13
9 CONTACT DETAILS ................................................................................................................................... 13
10 USEFUL WEB LINKS.................................................................................................................................. 14
11 ANNEXURES ................................................................................................................................................ 16
11.1 INCOME STATEMENT .................................................................................................................................... 16
11.2 BALANCE SHEET ............................................................................................................................................ 17
11.3 CASH FLOW STATEMENT ............................................................................................................................ 18
12 KEY ASSUMPTIONS .................................................................................................................................. 19
12.1 OPERATING COST ASSUMPTIONS ........................................................................................................... 19
12.2 PRODUCTION COST ASSUMPTIONS ........................................................................................................ 19
12.3 REVENUE ASSUMPTIONS ............................................................................................................................ 20
November 2023 1
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
Document Control
Document No. 68
Revision 6
Prepared by SMEDA-Punjab
Revision Date November 2023
For information helpdesk.punjab@smeda.org.pk
November 2023 2
1 EXECUTIVE SUMMARY
Tunnel farming is practiced in many areas of Pakistan and is gaining popularity.

Faisalabad, Mamokanjan, Gujranwala, Okara & Sahiwal are the most prominent
cities for tunnel farming.
The proposed project is a medium sized off-season vegetable tunnel farm, spreading
over 9 acres. Off-season vegetables will be cultivated in this project using high
tunnel technology. The three vegetables cultivated in this particular project are
Tomato, Sweet Pepper and Cucumber. The total time; from land preparation to
harvesting, is around 7 months.
The estimated yield of the farm varies according to the type of vegetables selected.
The proposed vegetable mix for this pre-feasibility will be cultivated on 9 acres of
land. The numbers of plantations each year are 10,000 plants of tomato, 15,000
plants of sweet pepper and 15,000 plants of cucumber. The estimated produce
would be 55 tons of tomato, 25 tons of sweet pepper and 45 tons of cucumber
respectively.
Complete adherence to best agronomic practices is critical to the success of this
project. Therefore, technical knowledge & experience of the entrepreneur is
absolutely necessary.
The cost for setting up the high tunnel farm is estimated at Rs. 16.58 million out of
which Rs. 5.46 million is the capital cost and Rs. 11.12 million is for working capital.
The project NPV is projected at Rs. 8.59 million with an IRR of 39% and payback
period is 3.12 years respectively.
2 INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was

established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
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 ‘sectorial 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.
November 2023 3
3 PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential

entrepreneurs in project identification for investment. The project pre-feasibility may
form the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept
development, start-up, and production, marketing, finance and business
management. The purpose of this document is to facilitate potential investors in Off-
season Vegetable Farming (High Tunnel) by providing them with a general
understanding of the business with the intention of supporting potential investors in
crucial investment decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes such
reports reveal certain thumb rules; best practices developed by existing enterprises
by trial and error, and certain industrial norms that become a guiding source
regarding various aspects of business set-up and it’s successful management.
Apart from carefully studying the whole document one must consider critical aspects
provided later on, which form basis of any Investment Decision.
4 BRIEF DESCRIPTION OF PROJECT & PRODUCT
Vegetables can be cultivated in off-season, with introduction of techniques like tunnel

technology, in which temperature and moisture is controlled for growth of vegetables
in specific conditions. The production of vegetables all-round the year, enables the
technically competent growers to fully utilize their resources and achieve higher
income as compared to traditional crops.
The proposed project is designed as a medium sized off-season vegetable farming
unit on 9 acres of land. Off-season vegetables, such as, tomatoes, chillies / hot
pepper, cucumber, brinjal, sweet peppers, ridge-gourd (teenda) and bitter-gourd
(karela) can be cultivated using high tunnel technology. However, for the purpose of
this pre-feasibility, three crops are being proposed, namely, tomato, sweet pepper,
and cucumber.
The farm will provide employment opportunities to 10 individuals directly, while
seasonal pickers and packers would also be required. The estimated yield potential
of the farm varies according to the selected type of vegetable. With above-mentioned
vegetable mix, combined yield of 125 tons per season excluding wastage.
4.1 High Tunnel Structure Specification
The proposed off-season vegetable farm is recommended with the use of high
tunnels of bamboo structure, for which construction cost is quite low. The details of
high tunnel structure is given in the following table:
November 2023 4
Table 1 : Specifications of High Tunnel

Material Description
Diameter 2~3 inch
Material Specification Bamboo
Length 8.5~20 ft
Plastic 0.10 mm thick
Dimensions Requirement
Height 10 ft
Tunnel Specification Width 30~32 ft
Length 200 ft
No. of tunnels 6 per acre
The cost of such tunnel amounts to Rs. 5,184,000 excluding the cost related to
plastic used as a shield (Cover) and mulch.
Figure 1 - High Plastic Tunnel
4.2 Support Structure

Each tunnel will be 200 feet long, 10 feet high and 30~32 feet wide. The tunnel is
built by 2~3 inch diameter bamboo having 8.5~20 feet length. The bamboos are
fixed at regular distance of approximately 10~15 feet. Each tunnel structure will then
be covered by 0.10 mm thick plastic sheet. Approximately 6 tunnels can be
constructed on an acre of land depending on the type of vegetable, i.e. tomato,
sweet pepper and cucumber.
4.3 Installed and Operational Capacities

Following table provides information on the total production, inclusive of 10%
wastage:
November 2023 5
Table 2: Total Production Capacity

Area No of Plants / Total Production
Vegetables
(Acres) Acre (kgs)
Tomato 4 10,000 55,000
Sweet Pepper 2 15,000 25,000
Cucumber 3 15,000 45,000
4.4 Production Process Flow
5 CRITICAL FACTORS
Following principles need to be pursued for best productivity of vegetables:

 Proper soil analysis for determining soil nutritional level.
 Use of high quality hybrid seeds.
 Fertile land and its maintenance within the tunnel during the period of
cultivation.
 Timely control of pests, diseases and implementation of all
recommended agronomic measures.
 Selection of profitable vegetables on the basis of best analysis of cost
and revenues for a given season. Cost efficiency through better
management.
 Maintenance and control of internal temperature and humidity of the
tunnel.
 Timely irrigation, fertilization, training and grading of plantation.
November 2023 6
 Fertilization as per expert(s) recommendation.

 Appropriate post-harvest arrangement for washing, grading, packing,
and transportation of product to the market.
6 GEOGRAPHICAL POTENTIAL FOR INVESTMENT
As per the information gathered from Agriculture Department, Government of

Punjab, and National Agricultural Research Center, Islamabad, following are the
potential areas of off-season vegetable production:
Mamonkangan, Nankana Sahib, Faisalabad, Kamalia in Toba Tek Singh, Rahim Yar
Khan, Chack Shahzad, Islamabad, Swat, Tarnab, Mardan, Khairabad, Mirpur Khas,
Chiniot, etc., in addition to few other locations in Sindh and Balochistan.
7 POTENTIAL TARGET CUSTOMERS / MARKETS
Keeping in view the product price level, demand and purchasing power of
customers; whole sale vegetable markets in metropolitan cities / urban areas are the
potential markets for off season vegetables.
8 PROJECT SUMMARY
A detailed financial model has been developed to analyze the commercial viability of
Off Season Vegetable Farming (High Tunnel). Various cost and revenue related
assumptions along with results of the analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are
attached as annexure.
8.1 Project Economics

The following table shows internal rate of return, payback period and net present
value of the project.
Table 3 : Project Economics
Description Details
Internal Rate of Return (IRR) 39%
Payback Period (Yrs.) 3.12
Net Present Value (NPV) Rs. 8,589,341
Returns on investment and its profitability are highly dependent on the entrepreneur
having some practical knowledge about agriculture and farming, selection of fertile
land, selection of high yield seed, cultivation, vegetables and selection of right time
November 2023 7
for vegetable cultivation.

Table 4: Breakeven (100% Equity Based)
Break-Even Year
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Analysis 10
Break-Even
Revenue 2.0 2.1 2.2 2.4 2.6 2.7 3.0 3.2 3.4 3.7
(In Millions)
Break-even
Produce 57,052 54,389 52,118 52,151 50,156 47,969 48,031 46,542 45,238 45,283
(Kgs)
Margin of
84% 85% 86% 86% 87% 87% 87% 87% 87% 87%
Safety
8.2 Project Financing

Table 5: Project Economics Based on Debt (50%): Equity (50%)
Description Details
Internal Rate of Return (IRR) 39%
Payback Period (Yrs.) 3.12
Net Present Value (NPV) Rs. 8,272,888
Following table provides details of the equity required and variables related to bank
loan:
Table 6 : Project Financing

Description Details
Total Equity (50%) 8,290,085
Bank Loan (50%) 8,290,085
Markup to the Borrower (%age/annum) 26%
Tenure of the Loan (Years) 5
November 2023 8
8.3 Project Cost

Following requirements have been identified for operations of the proposed
business:
Table 7 : Project Cost Summary
Description Amount Rs.
Capital Cost
Farm Tools 135,000
Furniture and Fixtures 96,000
Tunnel Equipment 5,184,000
Pre-operating Cost 50,000
Total Capital Cost 5,465,000
Working Capital
Cash 3,049,533
Raw Material Inventory 6,715,636
Upfront Land Lease Rental 1,350,000
Total Working Capital 11,115,169
Total Project Cost 16,580,169
8.4 Land Requirement

The area has been calculated on the basis of minimum viable land required for
setting up Off-Season Vegetable Farm (High Tunnel). However, the existing units do
not follow any set pattern. Following table shows calculations for project space
requirement.
Table 8 : Land Requirement
Land Utilization Land Lease Cost Total Land Lease

Vegetable
(Acres) per Acre (Rs.) Cost (Rs.)
Tomato 4 150,000 600,000
Sweet pepper 2 150,000 300,000
Cucumber 3 150,000 450,000
Total 9 1,350,000
November 2023 9
As land will be acquired on lease, hence total land lease cost during 1st year would
be approximately Rs. 1,350,000.
8.5 Farm Tools

Farm tools required for an off-season vegetable farm can be purchased or rented by
paying on hourly basis. In this particular Pre-feasibility, it has been assumed that
machinery for hoeing and land preparation would be rented, while spray machine
and some tools would be purchased.
Following table provides list of machinery and tunnel farm equipment required for
Off-Season Vegetable Farming (High Tunnel).
Table 9 : List of Machinery
Replacement Cost Total

Description Quantity
Year Rs. / Unit Rs.
Farm Tools (Hand Tools) 5 1 75,000 75,000
Spray Machines 5 5 12,000 60,000
Total 135,000
8.6 Furniture and Fixture

Furniture and fixture required for an off-season vegetable farm are given below in the
table:
Table 10 : Furniture and Fixture Requirement
Replacement Cost Total

Description Quantity
Year Rs. / Unit Rs.
Working Tables 5 4 15,000 60,000
Chairs 5 8 4,500 36,000
Total 96,000
8.7 High Tunnel Equipment

High tunnel structure requirements for 9 acres are given in the table below:
Table 11 : Structure Requirement for High Tunnel
Replacement Unit Cost Total Amount

Description Qty.
Year (Rs.) (Rs.)
Bamboos (Nos.) 3 94,500 50 4,725,000
November 2023 10
Wire (G. Iron) (Kg) 3 900 300 270,000
Wire stretchers (Nos.) 3 630 300 189,000
Total Equipment Cost 5,184,000
8.8 Plastic Sheet and Structure Installation Requirement

Plastic sheet and structure installation requirement for 9 acres of land are given in
the table below:
Table 12: Plastic Sheet and Structure Installalation Requirement
Unit Cost Total Amount

Description Qty.
(Rs.) (Rs.)
Plastic Sheet - White (Kg) 2,250 600 1,350,000
Plastic Mulch - Black (Kg) 180 630 113,400
Structure installation cost (Acres) 9 120,000 1,080,000
Total 2,543,400
8.9 Raw Material Requirements

Following table shows raw material requirement:
Table 13: Plants Cost
Unit Cost Total Cost of

Area No. of Plants /
Vegetables Plants / Acre
(acres) Acre Rs. (Rs.)
Tomato 4 10,000 10 100,000
Sweet pepper 2 15,000 7 105,000
Cucumber 3 15,000 5 75,000
Total 9 280,000
November 2023 11
Apart from high yield seeds, following other raw material will also be required for
cultivating off-season vegetables:
Table 14: Fertilizer Requirement
Total Fertilizer
Qty. Bags /
Description Unit Costs (Rs.) Cost / Acre
Acre
(Rs.)
CAN 8 3,326 26,608
Nitrophos 4 8,274 33,096

DAP 2 13,300 26,600
SOP 8 12,750 102,000

Total Cost of Fertilizer 188,304
Table 15: Pesticides Requirement
Description Unit Qty. Unit Costs (Rs.) Total Cost

(Rs.)
Fungicide Area 9 60,000 540,000
Insecticide Area 9 20,000 180,000
Total Pesticide Spray Cost 720,000
8.10 Human Resource Requirement

Owner / Manager will be engaged for 8 months per year, whereas, permanent and
temporary labor will be engaged for 7 months and 2 months respectively.
Table 16 : Human Resource Requirement (Permanent)
No. of Salary per Salary /

Description
Employees Month (Rs.) Season (Rs.)
Owner / Farm Manager 1 50,000 400,000
Permanent Labor 9 32,000 2,016,000
Total Staff 2,416,000
Five pickings per month are assumed from 1 acre with an average rate of Rs. 550
per picking per person. Following table shows the calculations for temporary labor
wage:
November 2023 12
Table 17 : Human Resource Requirement (Temporary)

Wages (Rs. per picking Total Seasonal
Description Number
/ person) Wages (Rs.)
Male: 550
Temporary Labor 9 623,700
Female: 550
Salaries of all employees / workers are estimated to increase at 10% annually.
8.11 Revenue Generation

Expected production and sale prices of vegetables are given in the table below:
Table 18: Expected Production and Revenue Generation

Land First Year First Year
Sale Price
Vegetable Utilization Production excl. Sales
(Rs./ Kg )
(Acres) Wastage (Kg) Revenue (Rs)
Tomato 4 55 55,000 12,100,000
Sweet pepper 2 60 25,000 3,000,000
Cucumber 3 50 45,000 6,750,000
Empty bags of
1,980
Fertilizer
Total Sales
21,851,980
Revenue
The price of vegetables in normal season is around one-third of the price of

vegetables grown in off-season.
8.12 Other Costs

An essential cost to be borne by the farm is the transportation cost incurred during
transfer of vegetables from the farm to the market, which is estimated as Rs.
607,500 for year one. Similarly, electricity expense is estimated to be around Rs.
52,500 for first year.
9 CONTACT DETAILS
In order to facilitate potential investors, contact details of private sector Service

Providers relevant to the proposed project be given.
Institution Phone
Agriculture Department, Govt. of Punjab 21-Davis 92-42-99200732
Road, Lahore
November 2023 13
Institute of Horticultural Sciences, +92-41-9201281

Faculty of Agriculture,
University of Agriculture, Faisalabad
Horticulture Research Institute +92-51 9255061
National Agricultural Research Centre
Park Road, Islamabad
10 USEFUL WEB LINKS

Small & Medium Enterprises Development www.smeda.org.pk
Authority (SMEDA)
Government of Pakistan www.pakistan.gov.pk
Ministry of Industries & Production www.moip.gov.pk
Ministry of Education, Training & Standards in http://moptt.gov.pk

Higher Education
Government of Punjab www.punjab.gov.pk
Government of Sindh www.sindh.gov.pk
Government of Khyber Pakhtunkhwa www.khyberpakhtunkhwa.gov.pk
Government of Balochistan www.balochistan.gov.pk
Government of Gilgit Baltistan www.gilgitbaltistan.gov.pk
Government of Azad Jamu Kashmir www.ajk.gov.pk
Trade Development Authority of Pakistan www.tdap.gov.pk

(TDAP)
Security Commission of Pakistan (SECP) www.secp.gov.pk
Federation of Pakistan Chambers of www.fpcci.com.pk

Commerce and Industry (FPCCI)
State Bank of Pakistan (SBP) www.sbp.org.pk
Punjab Small Industries Corporation www.psic.gop.pk
Sindh Small Industries Corporation www.ssic.gos.pk
Pakistan Horticulture Development and
www.phdec.org.pk
Export Company (PHDEC)
Punjab Agriculture Department www.agripunjab.gov.pk
Ministry of National Food Security and http://www.mnfsr.gov.pk/
Research (MNFS&R)
Punjab Agriculture and Meat Company www.pamco.bz
Farmers Associates Pakistan www.farmersassociates.com

Punjab Agriculture Department www.agripunjab.gov.pk
November 2023 14
Pakistan Agriculture And Dairy Farm

www.padfapak.org
Association
Sindh Chamber of Agriculture www.sindhchamberofagriculture.com
November 2023 15
11 ANNEXURES
11.1 Income Statement
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 21,851,980 24,037,178 26,440,896 29,084,985 31,993,484 35,192,832 38,712,116 42,583,327 46,841,660 51,525,826
Cost of sales
Plastic Sheet (white) 1,350,000 1,485,000 1,633,500 1,796,850 1,976,535 2,174,189 2,391,607 2,630,768 2,893,845 3,183,229
Plastic Mulch 113,400 124,740 137,214 150,935 166,029 182,632 200,895 220,985 243,083 267,391
Structure installation cost 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228 1,739,351 1,913,286 2,104,614 2,315,076 2,546,584
Plants expense 835,000 918,500 1,010,350 1,111,385 1,222,524 1,344,776 1,479,253 1,627,179 1,789,897 1,968,886
Fertilizer expense 1,694,736 1,864,210 2,050,631 2,255,694 2,481,263 2,729,389 3,002,328 3,302,561 3,632,817 3,996,099
Pesticide expense 720,000 792,000 871,200 958,320 1,054,152 1,159,567 1,275,524 1,403,076 1,543,384 1,697,722
Green Manuring and Land Preparation 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1,273,292
Weeding 45,000 49,500 54,450 59,895 65,885 72,473 79,720 87,692 96,461 106,108
Irrigation expense 337,500 344,250 351,135 358,158 365,321 372,627 380,080 387,681 395,435 403,344
Direct labor 2,639,700 2,903,670 3,194,037 3,513,441 3,864,785 4,251,263 4,676,390 5,144,029 5,658,431 6,224,275
Transportation Cost from Farm to Market 607,500 668,250 735,075 808,583 889,441 978,385 1,076,223 1,183,846 1,302,230 1,432,453
Packing expense 424,333 445,550 467,828 491,219 515,780 541,569 568,647 597,080 626,934 658,280
Total cost of sales 10,387,169 11,377,670 12,465,619 13,660,699 14,973,555 16,415,896 18,000,597 19,741,818 21,655,131 23,757,663
Gross Profit 11,464,811 12,659,508 13,975,277 15,424,287 17,019,929 18,776,936 20,711,519 22,841,509 25,186,529 27,768,163
General administration & selling expenses

Administration expense 400,000 440,000 484,000 532,400 585,640 644,204 708,624 779,487 857,436 943,179
Administration benefits expense 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159
Land lease rental expense 1,350,000 1,485,000 1,633,500 1,796,850 1,976,535 2,174,189 2,391,607 2,630,768 2,893,845 3,183,229
Electricity expense 52,500 57,750 63,525 69,878 76,865 84,552 93,007 102,308 112,538 123,792
Travelling expense 35,000 36,750 38,588 40,517 42,543 44,670 46,903 49,249 51,711 54,296
Communications expense (phone, mail, etc.) 21,000 22,050 23,153 24,310 25,526 26,802 28,142 29,549 31,027 32,578
Misc. expenses 20,000 22,000 24,200 26,620 29,282 32,210 35,431 38,974 42,872 47,159
Vegetable Market expense 2,185,198 2,403,718 2,644,090 2,908,499 3,199,348 3,519,283 3,871,212 4,258,333 4,684,166 5,152,583
Depreciation expense 1,751,100 1,751,100 1,751,100 2,023,476 2,023,476 2,040,706 2,356,015 2,356,015 2,356,015 2,721,025
Amortization of pre-operating costs 10,000 10,000 10,000 10,000 10,000 - - - - -
Subtotal 5,844,798 6,250,368 6,696,355 7,459,169 7,998,497 8,598,825 9,566,373 10,283,657 11,072,481 12,305,001
Operating Income 5,620,013 6,409,141 7,278,922 7,965,118 9,021,432 10,178,111 11,145,145 12,557,853 14,114,048 15,463,162
Earnings Before Interest & Taxes 5,620,013 6,409,141 7,278,922 7,965,118 9,021,432 10,178,111 11,145,145 12,557,853 14,114,048 15,463,162
Interest expense on long term debt (Project Loan) - - - - - - - - - -

Interest expense on long term debt (Working Capital Loan) - - - - - - - - - -
Subtotal - - - - - - - - - -
Earnings Before Tax 5,620,013 6,409,141 7,278,922 7,965,118 9,021,432 10,178,111 11,145,145 12,557,853 14,114,048 15,463,162
Tax 1,332,004 1,608,199 1,912,622 2,152,791 2,522,501 2,927,338 3,265,801 3,760,248 4,304,916 4,777,107
NET PROFIT/(LOSS) AFTER TAX 4,288,009 4,800,942 5,366,300 5,812,327 6,498,931 7,250,772 7,879,345 8,797,605 9,809,131 10,686,056
November 2023 16
11.2 Balance Sheet
Balance Sheet
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 3,049,533 9,232,003 16,524,310 18,577,074 27,491,486 37,182,069 41,143,184 53,203,232 66,532,483 73,218,002 109,604,824
Accounts receivable 419,079 440,033 484,036 532,440 585,684 644,252 708,678 779,545 857,500 943,250
Raw material inventory 6,715,636 7,360,200 8,068,680 8,847,457 9,703,550 10,644,679 11,679,337 12,816,864 14,067,536 15,442,655 337,500
Pre-paid annual land lease 1,350,000 1,485,000 1,633,500 1,796,850 1,976,535 2,174,189 2,391,607 2,630,768 2,893,845 3,183,229 -
Total Current Assets 11,115,169 18,496,282 26,666,523 29,705,417 39,704,010 50,586,620 55,858,381 69,359,542 84,273,409 92,701,386 110,885,574
Fixed assets
Machinery & equipment 135,000 121,500 108,000 94,500 81,000 239,798 209,068 178,338 147,609 116,879 86,149
Furniture & fixtures 96,000 86,400 76,800 67,200 57,600 48,000 38,400 28,800 19,200 9,600 -
Tunnel equipment 5,184,000 3,456,000 1,728,000 6,001,128 4,000,752 2,000,376 6,947,056 4,631,371 2,315,685 8,042,085 5,361,390
Total Fixed Assets 5,415,000 3,663,900 1,912,800 6,162,828 4,139,352 2,288,174 7,194,524 4,838,509 2,482,494 8,168,564 5,447,539
Intangible assets
Pre-operation costs 50,000 40,000 30,000 20,000 10,000 - - - - - -
Total Intangible Assets 50,000 40,000 30,000 20,000 10,000 - - - - - -
TOTAL ASSETS 16,580,169 22,200,182 28,609,323 35,888,245 43,853,362 52,874,794 63,052,905 74,198,050 86,755,903 100,869,951 116,333,113
Liabilities & Shareholders' Equity

Current liabilities
Total Current Liabilities - - - - - - - - - - -
Other liabilities
Deferred tax 1,332,004 2,940,203 4,852,825 7,005,616 9,528,117 12,455,455 15,721,256 19,481,504 23,786,420 28,563,527
Long term debt (Project Loan) - - - - - - - - - - -
Long term debt (Working Capital Loan) - - - - - - - - - - -
Total Long Term Liabilities - 1,332,004 2,940,203 4,852,825 7,005,616 9,528,117 12,455,455 15,721,256 19,481,504 23,786,420 28,563,527
Shareholders' equity
Paid-up capital 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169 16,580,169
Retained earnings 4,288,009 9,088,950 14,455,250 20,267,577 26,766,508 34,017,280 41,896,625 50,694,230 60,503,361 71,189,417
Total Equity 16,580,169 20,868,178 25,669,120 31,035,419 36,847,746 43,346,677 50,597,450 58,476,795 67,274,399 77,083,530 87,769,586
TOTAL CAPITAL AND LIABILITIES 16,580,169 22,200,182 28,609,323 35,888,245 43,853,362 52,874,794 63,052,905 74,198,050 86,755,903 100,869,951 116,333,113
November 2023 17
11.3 Cash Flow Statement
Cash Flow Statement
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 4,288,009 4,800,942 5,366,300 5,812,327 6,498,931 7,250,772 7,879,345 8,797,605 9,809,131 10,686,056
Add: depreciation expense 1,751,100 1,751,100 1,751,100 2,023,476 2,023,476 2,040,706 2,356,015 2,356,015 2,356,015 2,721,025
amortization of pre-operating costs 10,000 10,000 10,000 10,000 10,000 - - - - -
Deferred income tax 1,332,004 1,608,199 1,912,622 2,152,791 2,522,501 2,927,338 3,265,801 3,760,248 4,304,916 4,777,107
Accounts receivable (419,079) (20,954) (44,003) (48,404) (53,244) (58,568) (64,425) (70,868) (77,955) (85,750)
Raw material inventory (6,715,636) (644,564) (708,480) (778,777) (856,093) (941,129) (1,034,658) (1,137,527) (1,250,672) (1,375,119) 15,105,155
Cash provided by operations (6,715,636) 6,317,470 7,440,807 8,217,242 9,094,097 10,060,535 11,125,591 12,299,208 13,592,328 15,016,989 33,203,592
Financing activities
Project Loan - principal repayment - - - - - - - - - -
Working Capital Loan - principal repayment - - - - - - - - - -
Add: land lease expense 1,350,000 1,485,000 1,633,500 1,796,850 1,976,535 2,174,189 2,391,607 2,630,768 2,893,845 3,183,229
Land lease payment (1,350,000) (1,485,000) (1,633,500) (1,796,850) (1,976,535) (2,174,189) (2,391,607) (2,630,768) (2,893,845) (3,183,229) -
Additions to Project Loan - - - - - - - - - - -
Additions to Working Capital Loan - - - - - - - - - - -
Issuance of shares 16,580,169 - - - - - - - - - -
Purchase of (treasury) shares
Cash provided by / (used for) financing activities 15,230,169 (135,000) (148,500) (163,350) (179,685) (197,654) (217,419) (239,161) (263,077) (289,384) 3,183,229
Investing activities
Capital expenditure (5,465,000) - - (6,001,128) - (172,298) (6,947,056) - - (8,042,085) -
Acquisitions
Cash (used for) / provided by investing activities (5,465,000) - - (6,001,128) - (172,298) (6,947,056) - - (8,042,085) -
NET CASH 3,049,533 6,182,470 7,292,307 2,052,764 8,914,412 9,690,583 3,961,116 12,060,047 13,329,251 6,685,519 36,386,822
November 2023 18
12 KEY ASSUMPTIONS
12.1 Operating Cost Assumptions

Description Details
Administration Benefit Expenses 05% of Admin Expense

Communication Expenses 21,000 Annual Expense
Travelling Expense 35,000 Annual Expense
Promotional expense % of admin expense 1.0% of Revenue
Professional Fees (Legal, Audit, Consultant) 0.5% of Revenue
Office Expenses (stationary, entertainment, 5.0%
janitorial services, etc.)
Depreciation on Tunnel Equipment 33%
Operating Costs Growth Rate 10%
Accounts Receivable Cycle 07 Days
Raw Material Inventory 06 Months
Amortization Of Pre-Operating Expenses 05 Years
12.2 Production Cost Assumptions
Description Details
Cost of Goods Sold Growth Rate 10%
Operating Cost Growth Rate 05%
Vegetable Market Expense 10% of Revenue
Miscellaneous Expense 05% of Admin Expense
Rs. 607,500
Per Trip Cost: 15,000
Farm to Market Trip Cost
Per Trip Load: 10 (Tons)
No. of Trip: 41
Pesticides Expense per Season Rs. 720,000
Cost of Irrigation (9 acres) Rs. 337,500
November 2023 19
Cost of Green manuring, Land Preparation, &

Rs. 540,000
Sowing (9 acres)
Cost of Mechanical Hoeing (9 acres) Rs. 45,000
Total packing expense per season for 9 acres Rs. 424,333
12.3 Revenue Assumptions

Description Details
Sales Price Growth Rate 10%
Production Capacity Utilization (1-10 Yr.) 100%
Days Operational / Year 180
November 2023 20
Small and Medium Enterprises Development Authority

HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
www.smeda.org.pk, helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH KPK BALOCHISTAN
3rd Floor, Building No. 3, 5TH Floor, Bahria Ground Floor Bungalow No. 15-A
Aiwan-e-Iqbal Complex, Complex II, M.T. Khan Road, State Life Building Chaman Housing Scheme
Egerton Road Lahore, Karachi. The Mall, Peshawar. Airport Road, Quetta.
Tel: (042) 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 831623, 831702
Fax: (042) 36304926-7 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
November 2023 21

Off-Season Vegetable Farming High Tunnel Rs. 16.58 Million Nov-2023 SMEDA

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Off-Season Vegetable Farming High Tunnel Rs. 16.58 Million Nov-2023 SMEDA

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Pre-feasibility Study

Off Season Vegetable

The figures and financial projections are approximate due to fluctuations in

Small and Medium Enterprises Development Authority

Tunnel farming is practiced in many areas of Pakistan and is gaining popularity.

The Small and Medium Enterprises Development Authority (SMEDA) was

3 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential

4 BRIEF DESCRIPTION OF PROJECT & PRODUCT

Vegetables can be cultivated in off-season, with introduction of techniques like tunnel

4.1 High Tunnel Structure Specification

Table 1 : Specifications of High Tunnel

Figure 1 - High Plastic Tunnel

4.2 Support Structure

4.3 Installed and Operational Capacities

Table 2: Total Production Capacity

4.4 Production Process Flow

Following principles need to be pursued for best productivity of vegetables:

 Fertilization as per expert(s) recommendation.

6 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

As per the information gathered from Agriculture Department, Government of

7 POTENTIAL TARGET CUSTOMERS / MARKETS

8.1 Project Economics

Internal Rate of Return (IRR) 39%

Payback Period (Yrs.) 3.12

Net Present Value (NPV) Rs. 8,589,341

for vegetable cultivation.

8.2 Project Financing

Internal Rate of Return (IRR) 39%

Payback Period (Yrs.) 3.12

Net Present Value (NPV) Rs. 8,272,888

Table 6 : Project Financing

Total Equity (50%) 8,290,085

Bank Loan (50%) 8,290,085

Markup to the Borrower (%age/annum) 26%

Tenure of the Loan (Years) 5

8.3 Project Cost

Table 7 : Project Cost Summary

Description Amount Rs.

Farm Tools 135,000

Furniture and Fixtures 96,000

Tunnel Equipment 5,184,000

Pre-operating Cost 50,000

Total Capital Cost 5,465,000

Raw Material Inventory 6,715,636

Upfront Land Lease Rental 1,350,000

Total Working Capital 11,115,169

Total Project Cost 16,580,169

8.4 Land Requirement

Table 8 : Land Requirement

Land Utilization Land Lease Cost Total Land Lease

Tomato 4 150,000 600,000

Sweet pepper 2 150,000 300,000

Cucumber 3 150,000 450,000

8.5 Farm Tools

Table 9 : List of Machinery

Replacement Cost Total

Farm Tools (Hand Tools) 5 1 75,000 75,000