Off Season Vegetables - High Tunnel (Rs. 1.16 Million)

Pre-Feasibility Study
(Off-Season Vegetable Farming High Tunnel)

Small and Medium Enterprises Development Authority
Ministry of Industries & Production
Government of Pakistan
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Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
May, 2014

Pre-Feasibility Study Off-Season Vegetable Farming - High Tunnel (Rs. 1.16 Million)
TABLE OF CONTENTS
1. DISCLAIMER .............................................................................................................. 2
2. PURPOSE OF THE DOCUMENT ................................................................................ 3
3. INTRODUCTION TO SMEDA ...................................................................................... 3
4. INTRODUCTION TO SCHEME ................................................................................... 4
5. EXECUTIVE SUMMARY ............................................................................................. 4
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT ................................................... 5
7. CRITICAL FACTORS .................................................................................................. 5
8. INSTALLED & OPERATIONAL CAPACITY ............................................................... 6
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT .................................................. 6
10. POTENTIAL TARGET MARKETS / CITIES ................................................................ 6
11. PRODUCTION PROCESS FLOW ............................................................................... 7
11.1. HIGH TUNNEL STRUCTURE SPECIFICATION............................................................. 7
11.2. SUPPORT STRUCTURE .......................................................................................... 8
12. PROJECT COST SUMMARY ...................................................................................... 8
12.1. PROJ ECT ECONOMICS .......................................................................................... 8
12.2. PROJ ECT FINANCING ............................................................................................ 9
12.3. PROJ ECT COST .................................................................................................... 9
12.4. LAND REQUIREMENT ........................................................................................... 10
12.5. MACHINERY AND TUNNEL FARM STRUCTURE ....................................................... 10
12.6. RAW MATERIAL REQUIREMENTS .......................................................................... 11
12.7. HUMAN RESOURCE REQUIREMENT ...................................................................... 12
12.8. REVENUE GENERATION....................................................................................... 12
12.9. OTHER COSTS ................................................................................................... 13
13. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS ....................................... 14
14. ANNEXURE .............................................................................................................. 15
14.1. INCOME STATEMENT ........................................................................................... 15
14.2. BALANCE SHEET ................................................................................................. 16
14.3. STATEMENT OF CASH FLOW ................................................................................ 17
14.4. RAW MATERIAL CALCULATION SHEETS ................................................................ 18
14.5. REVENUE CALCULATION SHEET ........................................................................... 19
14.6. USEFUL MANAGEMENT TIPS ................................................................................ 20
14.7. USEFUL LINKS .................................................................................................... 21
15. KEY ASSUMPTIONS ................................................................................................ 22

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST - 2

1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a
general idea and information on the subject. 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 visit our website:
www.smeda.org.pk


2. 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, 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 its successful
management.
Apart from carefully studying the whole document one must consider critical
aspects provided later on, which form the basis of any investment decisions.

3. 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
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 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.

4. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan Scheme, for young entrepreneurs, with
an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidised financing at 8% mark-up per annum for one hundred thousand
(100,000) beneficiaries, through designated financial institutions, initially by the
National Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL).
Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of
1 year grace period, and a debt : equity of 90 : 10 will be disbursed to SME
beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa,
Balochistan, Gilgit Baltistan, Azad J ammu & Kashmir and Federally Administered
Tribal Areas (FATA).

5. 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 farming unit,
spreading over 2 acres. Off-season vegetables are proposed to be cultivated in
this project using high tunnel technology. The two vegetables proposed to be
cultivated in this particular project are tomato and sweet pepper. The total time;
from land preparation to harvesting, is around 8 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
2 acres of land. The number of plantations each year are 14,000 plants of tomato
and 16,000 plants of sweet pepper. The estimated produce would be 63 tons of
tomato and 28.8 tons of sweet pepper excluding 10% wastage.
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. 1.16 million out of
which Rs. 0.32 million is the capital cost and Rs. 0.84 million is for working
capital. The project NPV is projected at Rs. 3.83 million, with an IRR of 51% and

a payback period of 2.14 years. The legal status of the business is proposed as
Sole Proprietorship.

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT
There is a great demand of vegetables all year round. High prices of the produce
can be fetched, provided modern techniques are applied to grow off-season
vegetable. 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 2 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, two crops are being proposed, namely, tomato
and sweet pepper.
The farm will provide employment opportunities to four (04) individuals directly,
while seasonal pickers & 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, yield of 91.8 tons per season excluding 10%
wastage can be attained.
The legal status of the proposed project can either be sole proprietorship or
partnership. The selection depends upon the choice of the entrepreneur. This
pre-feasibility assumes the legal status of individual as a farmer / leaseholder
with less than 12.5 acres of land.

7. 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.
Fertilization as per expert(s) recommendation.
Appropriate post harvest arrangement for washing, grading, packing, and
transportation of product to the market.

8. INSTALLED & OPERATIONAL CAPACITY
Following table provides information on the total production, exclusive of 10%
wastage.
Table 1 - Total Production Capacity on the basis of high tunnel technology
Vegetables Area (acres) Unit Qty
Total
Production (Kg)
Tomato 1 No. of Plants 14,000 70,000
Sweet pepper 1 No. of Plants 16,000 32,000

9. 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.

10. POTENTIAL TARGET MARKETS / CITIES
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.

11. PRODUCTION PROCESS FLOW
Following is the production process flow of off-season vegetables requiring
transplanting;

FIELD BED
PREPARATION
SOIL
FERTILIZING
NURSERY
TRANSPLANTATION
MOISTURE
CONDITIONING
HARVESTING
TOP DRESS
FERTILIZING
PLANT
PROTECTION
PACKING

TRANSPORTATION
NURSERY/
SAPLING
GRADING &
WASHING

11.1. High Tunnel Structure Specification
The specifications of high tunnel are given in the following table:
Table 2 - Specifications of High Tunnel
Material
Specification
Material Description
Bamboo Diameter 2-3 inch
Length8.5-20 ft (Different lengths)
Plastic 0.06 mm thick
Tunnel
Specification
Height 10 ft
Width 30-32 ft
Length 200 ft
No. of tunnels 6 per acre

The cost of such tunnel amounts to Rs. 139,700 per acre, excluding the cost
related to plastic used as a shield (Cover) and mulch.

Figure 1 - High Plastic Tunnel

11.2. 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 0.06 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.

12. PROJECT COST 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.
12.1. Project Economics
All the figures in this financial model have been calculated on the basis of two
vegetables i.e. tomato and sweet pepper cultivated at 1 acre of land each. The
estimated produce would be 63 tons of tomato and 28.8 tons of sweet pepper
excluding 10% wastage.


The following table shows internal rate of return, payback period and net present
value:
Table 3 - Project Economics
Description Details
Internal Rate of Return (IRR) 51%
Payback Period (Yrs) 2.14
Net Present Value (NPV) Rs. 3,829,408
Returns on investment and its profitability are highly dependent on the
entrepreneur having some practical knowledge about agriculture & farming,
selection of fertile land, selection of high yield seed, cultivation, vegetables and
selection of right time for vegetable cultivation.
12.2. Project Financing
Following table provides details of the equity required and variables related to
bank loan;
Table 4 - Project Financing
Description Details
Total Equity (10%) Rs. 116,340
Bank Loan (90%.) Rs. 1,047,060
Markup to the Borrower (%age/annum) 8%
Tenure of the Loan (Years) 8
Grace Period (Years) 1
12.3. Project Cost
Following requirements have been identified for operations of the proposed
business.
Table 5 - Capital Investment for the Project
Capital Investment Amount (Rs.)
Machinery & Equipment 20,000
Tunnel Equipment 279,400
Pre-operating Cost 20,000
Total Capital Costs 319,400
Initial Working Capital
Raw material inventory 487,000
Upfront land rent 100,000
Cash 257,000
Total Working Capital 844,000
Total Project Cost 1,163,400

12.4. 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 6 - Land Requirement
Vegetable Land Utilization
(Acres)
Land Lease Cost
per Acre (Rs.)
Total Land Lease
Cost (Rs.)
Tomato 1 50,000 50,000
Sweet pepper 1 50,000 50,000
Total 2 100,000

As land will be acquired on lease, hence total land lease cost during 1
st
year
would be approximately Rs. 100,000.

12.5. Machinery and Tunnel Farm Structure
Plant and machinery 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 7 - List of Machinery
Description Replacement
Year
Quantity Cost
Rs./unit
Total
Rs.
Farm Tools (Hand Tools) 5 1 10,000 10,000
Spray Machines 5 2 5,000 10,000
Total 20,000

As mentioned above, off-season vegetable cultivation is recommended with the
use of high tunnels of bamboo structure on the basis of its low construction cost.
The details of high tunnel structure are given in the following table:


Table 8 - Structure Requirement for High Tunnel
Description
Replacement
Year
Unit
/Acre
Units
for 2
acres
Unit
Cost
(Rs.)
Total
Amount
(Rs.)
Bamboos (No.) 3 1080 2,160 110 237,600
Wire (G. Iron) (Kg) 3 40 80 135 10,800
Wire stretchers (No.) 3 100 200 75 15,000
Structure installation cost 3 8,000 16,000
Total Cost 279,400

12.6. Raw Material Requirements
Following table shows raw material requirement:
Table 9 Plants Cost
Vegetables Area
(acres)
No. of Plants Unit Rate
Rs.
Total Cost
of Plants
Tomato 1 14,000 5.00 70,000
Sweet pepper 1 16,000 4.00 64,000
Total Cost of Plants 134,000

Apart from high yield seeds, following other raw material will also be required for
cultivating off-season vegetables:

Table 10 Other Raw Material Requirement
Farm Inputs Unit Qty/Acre
Unit Rate
(Rs./Bag)
Total Fertilizer
Cost (Rs.)
CAN

Bags 3 1,600 9,600
Nitrophos

Bags 5 2,500 25,000
DAP

Bags 3 3,750 22,500
SOP

Bags 3 4,250 25,500
Total 82,600


12.7. Human Resource Requirement
Permanent staff required for the project is given in the table below:
Table 11 - Human Resource Requirement (Permanent)
Description No. of
Employees
Salary /
Employee /
Month
Salary /
Season
Owner / Manager 1 20,000 160,000
Permanent Labor 3 12,000 252,000
Total Staff 4 412,000

Owner / Manager will be engaged for 8 months per year, whereas, permanent
and temporary labor will be engaged for 7 months and 3 months respectively.
Five pickings per month are assumed from 1 acre with an average rate of Rs.
250 per picking per person. Following table shows the calculations for temporary
labor wage:
Table 12 - Human Resource Requirement (Temporary)
Description Number
Wages (Rs. per
picking / person)
Total Seasonal
Wages (Rs.)
Temporary
Labor
5
Male: 250
Female: 250
37,500
Salaries of all employees / workers are estimated to increase at 10% annually.

12.8. Revenue Generation
Expected production and sale prices of some vegetables are given in the table
below:
Table 13 - Expected Production and Land Utilization
Vegetable Land
Utilization
(Acres)
Sale Price
(Rs./ Kg )
First Year
Production excl.
Wastage (Kg)
First Year
Sales
Revenue (Rs)
Tomato 1 30 63,000 1,890,000
Sweet pepper 1 22 28,800 633,600
Sale of empty fertilizer bags 280
Total Sales Revenue 2,523,880

The price of vegetables in normal season is around one-third of the price of
vegetables grown in off-season.

Table 14 - Revenue Assumptions
Sales price growth rate 10%
Percentage wastage 10%
Production capacity utilization year 1 10 100%

12.9. 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. Cost per km is
estimated to be Rs. 100 per km, which will increase at the rate of 10%. Fuel cost
for year one is Rs. 573,750, reflected as transportation cost from farm to market.
Similarly, electricity expense is estimated to be around Rs. 1,000 per month,
calculated at a production of 6 months.
Table 15 Other Cost Assumptions
Transportation of farm produce
Cost per kilometer (Rs.) 100
Farm to market distance (km) 125
Per trip cost (Rs.) 12,500
Load per trip (tons) 2
No. of trips 46
Pesticides expense per Acre per season (Rs.) 50,000
Water expense
Number of months for irrigation 7
Total number of irrigations per season 10
Cost per irrigation per acre (Rs.) 450
Total cost of green manuring, land preparation and sowing per
acre (Rs.)
12,500
Total cost of Mechanical Hoeing twice per season per acre

1,750
Average packing expense per kg (Rs.) 1.23


13. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS
Dr. M. Aslam Parvez
Director,
Institute of Horticultural Sciences,
Faculty of Agriculture,
University of Agriculture, Faisalabad
Ph: +92-41-9201281, +92-41-9200161 Ext. 2952

Dr. Ghulam J ellani,
Principal Scientific Officer (Vegetable)
Programme on Vegetable Crop
Horticulture Research Institute
National Agricultural Research Centre
Park Road, Islamabad
Ph: +92-51 9255061, +92-51 9255012 Fax: +92-51 9255034

Dr. Muhammad Anjum Ali
Director General (Extension)
Agriculture Department, Govt. of Punjab
21-Davis Road, Lahore
Ph: 92-42-99200732
Fax No: 92-42-99200743

Chief Executive Officer
Pakistan Horticulture Development and Export Company
30 N, Model Town Extension, Lahore (54700), Pakistan.
Ph: +92-42-99232210-17
Fax: +92-42-99232220

14. ANNEXURE
14.1. 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 2,523,880 2,776,268 3,053,895 3,359,284 3,695,213 4,064,734 4,471,207 4,918,328 5,410,161 5,951,177
Cost of sales
Plastic Sheet (white) 115,000 126,500 139,150 153,065 168,372 185,209 203,730 224,102 246,513 271,164
Plastic Mulch 14,400 15,840 17,424 19,166 21,083 23,191 25,510 28,062 30,868 33,954
Plants expense 134,000 147,400 162,140 178,354 196,189 215,808 237,389 261,128 287,241 315,965
Fertilizer expense 82,600 90,860 99,946 109,941 120,935 133,028 146,331 160,964 177,060 194,766
Pesticideexpense 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795
Green Manuring and Land Preparation 25,000 27,500 30,250 33,275 36,603 40,263 44,289 48,718 53,590 58,949
Weeding 7,000 7,700 8,470 9,317 10,249 11,274 12,401 13,641 15,005 16,506
Irrigation expense 9,000 9,180 9,364 9,551 9,742 9,937 10,135 10,338 10,545 10,756
Direct labor 289,500 318,450 350,295 385,325 423,857 466,243 512,867 564,154 620,569 682,626
Transportation Cost fromFarmto Market 573,750 631,125 694,238 763,661 840,027 924,030 1,016,433 1,118,076 1,229,884 1,352,872
Packing expense 112,800 118,440 124,362 130,580 137,109 143,965 151,163 158,721 166,657 174,990
Total cost of sales 1,463,050 1,602,995 1,756,638 1,925,335 2,110,575 2,313,998 2,537,404 2,782,776 3,052,290 3,348,343
Gross Profit 1,060,830 1,173,273 1,297,257 1,433,950 1,584,638 1,750,736 1,933,803 2,135,552 2,357,871 2,602,834
General administration & selling expenses
Administration expense 160,000 176,000 193,600 212,960 234,256 257,682 283,450 311,795 342,974 377,272
Land rental expense 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795
Electricity expense 6,000 6,600 7,260 7,986 8,785 9,663 10,629 11,692 12,862 14,148
Travelling expense 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 18,616
Communications expense(phone, mail, etc.) 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 18,616
Misc. expenses 9,600 10,560 11,616 12,778 14,055 15,461 17,007 18,708 20,578 22,636
VegetableMarketing expense 126,194 138,813 152,695 167,964 184,761 203,237 223,560 245,916 270,508 297,559
Depreciation expense 95,133 95,133 95,133 109,813 109,813 112,366 129,360 129,360 129,360 149,033
Amortization of pre-operating costs 4,000 4,000 4,000 4,000 4,000 - - - - -
Subtotal 524,927 566,307 611,764 676,384 731,252 790,090 873,325 946,113 1,026,100 1,133,674
Operating Income 535,903 606,966 685,493 757,565 853,385 960,646 1,060,478 1,189,439 1,331,770 1,469,160
Other income(interest on cash) - - - - - - - - - -
Earnings BeforeInterest & Taxes 535,903 606,966 685,493 757,565 853,385 960,646 1,060,478 1,189,439 1,331,770 1,469,160
Interest expenseon long termdebt (Project Loan) 85,440 81,475 71,946 61,640 50,493 38,436 25,396 11,291 - -
Interest expenseon long termdebt (Working Capital Loan) - - - - - - - - - -
Subtotal 85,440 81,475 71,946 61,640 50,493 38,436 25,396 11,291 - -
Earnings BeforeTax 450,463 525,491 613,546 695,925 802,892 922,210 1,035,082 1,178,148 1,331,770 1,469,160
Tax 45,069 56,324 69,532 81,889 97,934 115,831 132,762 154,222 177,265 197,874
NET PROFIT/(LOSS) AFTER TAX 405,393 469,168 544,014 614,036 704,959 806,379 902,320 1,023,926 1,154,505 1,271,286

14.2. 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
Current assets
Cash & Bank 257,000 644,895 1,083,797 1,265,718 1,849,746 2,495,173 2,887,733 3,760,779 4,750,947 5,635,233 8,596,852
Accounts receivable 103,721 108,907 119,798 131,778 144,955 159,451 175,396 192,936 212,229 233,452
Raw material inventory 487,000 534,980 587,744 645,769 709,582 779,761 856,942 941,825 1,035,180 1,137,855 9,000
Pre-paid land rent 100,000 110,000 121,000 133,100 146,410 161,051 177,156 194,872 214,359 235,795 -
Total Current Assets 844,000 1,393,596 1,901,447 2,164,385 2,837,515 3,580,940 4,081,281 5,072,871 6,193,422 7,221,111 8,839,304
Fixed assets
Machinery & equipment 20,000 18,000 16,000 14,000 12,000 35,526 30,973 26,421 21,868 17,315 12,763
Tunnel equipment 279,400 186,267 93,133 323,440 215,627 107,813 374,423 249,615 124,808 433,441 288,961
Total Fixed Assets 299,400 204,267 109,133 337,440 227,627 143,339 405,396 276,036 146,676 450,756 301,724
Intangible assets
Total Intangible Assets 20,000 16,000 12,000 8,000 4,000 - - - - - -
TOTAL ASSETS 1,163,400 1,613,863 2,022,581 2,509,825 3,069,142 3,724,279 4,486,677 5,348,907 6,340,098 7,671,868 9,141,028
Current liabilities
Total Current Liabilities - - - - - - - - - - -
Other liabilities
Deferred tax 45,069 101,393 170,925 252,813 350,747 466,578 599,340 753,562 930,828 1,128,702
Long termdebt (Project Loan) 1,047,060 1,047,060 930,287 803,985 667,377 519,622 359,810 186,957 - - -
Long termdebt (Working Capital Loan) - - - - - - - - - - -
Total Long TermLiabilities 1,047,060 1,092,129 1,031,680 974,910 920,190 870,369 826,388 786,298 753,562 930,828 1,128,702
Shareholders' equity
Paid-up capital 116,340 116,340 116,340 116,340 116,340 116,340 116,340 116,340 116,340 116,340 116,340
Retained earnings 405,393 874,561 1,418,575 2,032,612 2,737,570 3,543,949 4,446,269 5,470,195 6,624,700 7,895,986
Total Equity 116,340 521,733 990,901 1,534,915 2,148,952 2,853,910 3,660,289 4,562,609 5,586,535 6,741,040 8,012,326
TOTAL CAPITAL AND LIABILITIES 1,163,400 1,613,863 2,022,581 2,509,825 3,069,142 3,724,279 4,486,677 5,348,907 6,340,098 7,671,868 9,141,028
Liabilities & Shareholders' Equity
Assets

14.3. Statement of Cash Flow

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 405,393 469,168 544,014 614,036 704,959 806,379 902,320 1,023,926 1,154,505 1,271,286
Add: depreciation expense 95,133 95,133 95,133 109,813 109,813 112,366 129,360 129,360 129,360 149,033
Deferred income tax 45,069 56,324 69,532 81,889 97,934 115,831 132,762 154,222 177,265 197,874
Accounts receivable (103,721) (5,186) (10,891) (11,980) (13,178) (14,496) (15,945) (17,540) (19,294) (21,223)
Raw material inventory (487,000) (47,980) (52,764) (58,025) (63,813) (70,179) (77,181) (84,883) (93,355) (102,674) 1,128,855
Pre-paid land rent (100,000) (10,000) (11,000) (12,100) (13,310) (14,641) (16,105) (17,716) (19,487) (21,436) 235,795
Cash provided by operations (587,000) 387,895 555,675 631,664 720,636 818,708 926,794 1,045,898 1,177,126 1,317,727 2,961,620
Financing activities
Project Loan - principal repayment - (116,773) (126,302) (136,608) (147,755) (159,812) (172,853) (186,957) - -
Working Capital Loan - principal repayment - - - - - - - - - -
Additions to Project Loan 1,047,060 - - - - - - - - - -
Additions to Working Capital Loan - - - - - - - - - - -
Issuance of shares 116,340 - - - - - - - - - -
Cash provided by / (used for) financing activities 1,163,400 - (116,773) (126,302) (136,608) (147,755) (159,812) (172,853) (186,957) - -
Investing activities
Capital expenditure (319,400) - - (323,440) - (25,526) (374,423) - - (433,441) -
Cash (used for) / provided by investing activities (319,400) - - (323,440) - (25,526) (374,423) - - (433,441) -
NET CASH 257,000 387,895 438,902 181,921 584,028 645,427 392,559 873,046 990,169 884,285 2,961,620

Pre-Feasibility Study Off-Season Vegetables - High Tunnel (Rs. 1.16 Million)

14.4. Raw Material Calculation Sheets

Rawmaterial costs
Total cost of seeds Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
Plastic Sheet (white) 115,000 126,500 139,150 153,065 168,372 185,209 203,730 224,102 246,513 271,164
Plastic Mulch 14,400 15,840 17,424 19,166 21,083 23,191 25,510 28,062 30,868 33,954
Total 129,400 142,340 156,574 172,231 189,455 208,400 229,240 252,164 277,380 305,118
Total cost of plants Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
Tomato Plant 70,000 77,000 84,700 93,170 102,487 112,736 124,009 136,410 150,051 165,056
Sweet Pepper Plant 64,000 70,400 77,440 85,184 93,702 103,073 113,380 124,718 137,190 150,909
Cucumber Plant 0 0 0 0 0 0 0 0 0 0
Total 134,000 147,400 162,140 178,354 196,189 215,808 237,389 261,128 287,241 315,965
Total cost of fertilizer Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
CalciumAmoniumNitrate 9,600 10,560 11,616 12,778 14,055 15,461 17,007 18,708 20,578 22,636
Nitrophos 25,000 27,500 30,250 33,275 36,603 40,263 44,289 48,718 53,590 58,949
DAP 22,500 24,750 27,225 29,948 32,942 36,236 39,860 43,846 48,231 53,054
SOP 25,500 28,050 30,855 33,941 37,335 41,068 45,175 49,692 54,662 60,128
Total 82,600 90,860 99,946 109,941 120,935 133,028 146,331 160,964 177,060 194,766
Packing Expense
Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
Tomato 84,000 88,200 92,610 97,241 102,103 107,208 112,568 118,196 124,106 130,312
Sweet pepper 28,800 30,240 31,752 33,340 35,007 36,757 38,595 40,524 42,551 44,678
Cucumber - - - - - - - - - -
Total Packing expense 112,800 118,440 124,362 130,580 137,109 143,965 151,163 158,721 166,657 174,990


14.5. Revenue Calculation Sheet

Sales Revenue
Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
No. of Kgs per acre
Tomato 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
Sweet pepper 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000
Cucumber 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Total Production in Kgs (excl. wastege)
Tomato 63,000 63,000 63,000 63,000 63,000 63,000 63,000 63,000 63,000 63,000
Sweet pepper 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800 28,800
Cucumber - - - - - - - - - -
91,800 91,800 91,800 91,800 91,800 91,800 91,800 91,800 91,800 91,800
Sales Price per kg
Tomato 30.00 33.00 36.30 39.93 43.92 48.32 53.15 58.46 64.31 70.74
Sweet pepper 22.00 24.20 26.62 29.28 32.21 35.43 38.97 42.87 47.16 51.87
Cucumber 15.00 16.50 18.15 19.97 21.96 24.16 26.57 29.23 32.15 35.37
Sales Revenue
Tomato 1,890,000 2,079,000 2,286,900 2,515,590 2,767,149 3,043,864 3,348,250 3,683,075 4,051,383 4,456,521
Sweet pepper 633,600 696,960 766,656 843,322 927,654 1,020,419 1,122,461 1,234,707 1,358,178 1,493,996
Cucumber - - - - - - - - - -
Sale of empty bags of fertilizer 280 308 339 373 410 451 496 546 600 660
Total sales Revenue 2,523,880 2,776,268 3,053,895 3,359,284 3,695,213 4,064,734 4,471,207 4,918,328 5,410,161 5,951,177

14.6. Useful Management Tips
Technology
Required material & consumables: Suppliers credit agreements and
availability as per schedule of maintenance be ensured before start of
operations
Energy Requirement: Should not be overlooked and alternate source of
energy for critical operations be arranged in advance
Quality Assurance & Standards: Product quality & service standards need
to be defined on the packaging and a system to check them should be
instituted.
Human Resources
Adequacy & Competencies: Skilled and experienced staff should be
considered an investment and should be retained on long term basis to
ensure the smooth operations and growth.


14.7. Useful Links
Prime Ministers Office, www.pmo.gov.pk
Small and Medium Enterprises Development Authority,
www.smeda.org.pk
National Bank of Pakistan (NBP), www.nbp.com.pk
First Women Bank Limited (FWBL), www.fwbl.com.pk
Government of Pakistan, www.pakistan.gov.pk
Ministry of Industries & Production, www.moip.gov.pk
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 J ammu Kashmir, www.ajk.gov.pk
Trade Development Authority of Pakistan (TDAP), www.tdap.gov.pk
Securities and Exchange Commission of Pakistan (SECP),
www.secp.gov.pk
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
www.fpcci.com.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
Punjab Agriculture and Meat Company, www.pamco.bz
Farmers Associates Pakistan, www.farmersassociates.com
Punjab Agriculture Department, www.agripunjab.gov.pk
Pakistan Agriculture and Dairy Farm Association, www.padfapak.org
Sindh Chamber of Agriculture, www.sindhchamberofagriculture.com


15. KEY ASSUMPTIONS
Table 16 - Expense Assumptions
CoGS growth rate 10%
Operating costs growth rate 5%
Vegetable market expense 5% % of revenue
Travelling expense Rs. 12,000 per annum
Communication expense Rs. 12,000 per annum
Misc. expenses 6% % of admin expense
Tools and machinery depreciation

10% % of machinery & equip. cost
Tunnel equipment depreciation rate 33% % of tunnel equipment cost
Furniture & Fixtures depreciation rate 10% % of furniture & fixture cost

Table 17 - Economy Related Assumptions
Inflation rate 10%
Electricity growth rate 10%
Water price growth rate 2%
Wage growth rate 10%

Table 18 - Cash Flow Assumptions
Time period per season (months) 7
Accounts receivable in days 15
Raw material inventory (months) 6

Table 19 - Financial Assumptions
Project life (Years) 10
Debt 90%
Equity 10%
Interest rate on long-term debt 8%
Debt tenure (Years) 8
Debt payments per year 2
Grace Period (Years) 1


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Pre-Feasibility Study

(Off-Season Vegetable Farming High Tunnel)

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