Off Season Vegetables - High Tunnel Rs. 2.20 Million

Prime Minister's Youth Business Loan
Pre-Feasibility Study
(Off-Season Vegetable Farming – High Tunnel)
Small and Medium Enterprises Development Authority

Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
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
helpdesk@smeda.org.pk
REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE
Punjab Sindh Khyber Pakhtunkhwa 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) 111-111-456 Tel: (081) 2831623, 2831702
Fax: (042) 36304926-7 Fax: (021) 35610572 Fax: (091) 5286908 Fax: (081) 2831922
helpdesk.punjab@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
Pre-Feasibility Study Off-Season Vegetable Farming (High Tunnel)
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 CAPACITIES ................................................................................. 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. PROJECT ECONOMICS ....................................................................................................................... 8
12.2. PROJECT FINANCING ........................................................................................................................ 9
12.3. PROJECT COST ............................................................................................................................... 10
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................................................................................................................................ 20
15. KEY ASSUMPTIONS ..................................................................................................................... 22
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
SMEDA Services / Information related to PM’s Youth Business Loan are FREE OF COST - 2
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 it’s 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 Minister’s 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 Jammu & 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 3.5 acres. Off-season vegetables are proposed to be cultivated in
this project using high tunnel technology. The three vegetables proposed to be
cultivated in this particular project are tomato, sweet pepper and cucumber. 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
3.5 acres of land. The number of plantations each year are 22,500 plants of
tomato, 14,000 plants of sweet pepper and 18,000 plants of cucumber. The
estimated produce would be 81 tons of tomato, 22.5 tons of sweet pepper and
45.0 tons of cucumber 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. 2.20 million out of
which Rs. 0.58 million is the capital cost and Rs. 1.62 million is for working
capital. The project NPV is projected at Rs. 4.58 million, with an IRR of 38% and
a payback period of 3.2 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 3.5 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 seven (07) 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 148.5 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
Total
Vegetables Area (acres) Unit Qty
Production (Kg)
Tomato 1.5 No. of Plants 22,500 81,000
Sweet pepper 1 No. of Plants 14,000 22,500
Cucumber 1 No. of Plants 18,000 45,000
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 NURSERY
NURSERY/ SOIL TRANSPLANTATION
SAPLING PREPARATION FERTILIZING
PLANT
TOP DRESS MOISTURE
HARVESTING PROTECTION
FERTILIZING CONDITIONING
GRADING &
PACKING TRANSPORTATION
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 Material Description
Specification Bamboo Diameter 2-3 inch
Length8.5-20 ft (Different lengths)
Plastic 0.06 mm thick
Tunnel Height 10 ft
Specification 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
The proposed vegetable mix is tomato cultivated on 1.5 acre of land and sweet
pepper & cucumber cultivated on 1 acre each. The estimated produce would be
81 tons of tomato, 22.5 tons of sweet pepper and 45 tons of cucumber excluding
10% wastage.
Table 3 - Total Production Capacity

Area Total Production
Vegetables No. of Plants
(acres) Quantity (kg)
Tomato 1.5 22,500 81,000
Sweet pepper 1 14,000 22,500
Cucumber 1 18,000 45,000
The following table shows internal rate of return, payback period and net present
value:
Table 4 - Project Economics
Description Details
Internal Rate of Return (IRR) 38%
Payback Period (Yrs) 3.23
Net Present Value (NPV) Rs. 4,583,669
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 5 - Project Financing
Description Details
Total Equity (10%) Rs. 219,995
Bank Loan (90%.) Rs. 1,979,956
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 6 - Capital Investment for the Project
Capital Investment Amount (Rs.)
Machinery & Equipment 65,000
Tunnel Equipment 488,950
Pre-operating Cost 25,000
Total Capital Costs 578,950
Initial Working Capital 1,621,002
Total Project Cost 2,199,952
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 7 - Land Requirement
Vegetable Land Utilization Land Lease Cost Total Land Lease
(Acres) per Acre (Rs.) Cost (Rs.)
Tomato 1.5 50,000 75,000
Sweet pepper 1 50,000 50,000
Cucumber 1 50,000 50,000
Total 3.5 175,000
As land will be acquired on lease, hence total land lease cost during 1st year
would be approximately Rs. 175,000.
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 8 - List of Machinery

Description Replacement Quantity Cost Total
Year Rs./unit Rs.
Working Tables 5 3 5,000 15,000
Chairs 5 6 2,500 15,000
Farm Tools (Hand Tools) 5 1 20,000 20,000
Spray Machines 5 3 5,000 15,000
Total 65,000
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 9 - Structure Requirement for High Tunnel

Units Unit Total
Replacement Unit
Description for 3.5 Cost Amount
Year /Acre
acres (Rs.) (Rs.)
Bamboos (No.) 3 1080 3,780 110 415,800
Wire (G. Iron) (Kg) 3 40 140 135 18,900
Wire stretchers (No.) 3 100 350 75 26,250
Structure installation cost 3 8,000 28,000
Total Cost 488,950
12.6. Raw Material Requirements

Following table shows raw material requirement:
Table 10 – Plants Cost
Area Unit Rate Total Cost
Vegetables No. of Plants
(acres) Rs. of Plants
Tomato 1.5 22,500 2.45 55,125
Sweet pepper 1 14,000 1.80 25,200
Cucumber 1 18,000 3.00 54,000
Total Cost of Plants 134,325
Apart from high yield seeds, following other raw material will also be required for
cultivating off-season vegetables:
Table 11 – Other Raw Material Requirement
Unit Rate Total Fertilizer

Farm Inputs Unit Qty/Acre
(Rs./Bag) Cost (Rs.)
CAN Bags 3 2,250 23,625
Nitrophos Bags 5 3,500 61,250
DAP Bags 3 4,250 44,625
SOP Bags 3 4,250 44,625
Total 174,125
12.7. Human Resource Requirement

Permanent staff required for the project is given in the table below:
Table 12 - Human Resource Requirement (Permanent)
Description No. of Salary per Salary /
Employees Month Season
Owner / Manager 1 25,000 200,000
Permanent Labor 6 12,000 504,000
Total Staff 7 704,000
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 13 - Human Resource Requirement (Temporary)

Wages (Rs. per Total Seasonal
Description Number
picking / person) Wages (Rs.)
Temporary Male: 250
11 144,375
Labor Female: 250
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 14 - Expected Production and Land Utilization

Vegetable Land Sale Price First Year First Year
Utilization (Rs./ Kg ) Production excl. Sales
(Acres) Wastage (Kg) Revenue (Rs)
Tomato 1.5 25 81,000 2,025,000
Sweet pepper 1 30 22,500 675,000
Cucumber 1 15 45,000 675,000
Sale of empty fertilizer bags 490
Total Sales Revenue 3,375,490
The price of vegetables in normal season is around one-third of the price of
vegetables grown in off-season.
Table 15 - 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. The fuel cost is taken
as approx. Rs. 117 per liter. Cost per km is estimated to be Rs. 25 per km, which
will increase at the rate of 10%. Fuel cost for year one is Rs. 232,031, reflected
as transportation cost from farm to market. Similarly, electricity expense is
estimated to be around Rs. 5,000 per month, calculated at a production of 6
months.
Table 16 – Other Cost Assumptions
Transportation of farm produce
Cost per kilometer (Rs.) 25
Farm to market distance (km) 125
Per trip cost (Rs.) 3,125
Load per trip (tons) 2
No. of trips 74
Pesticides expense per Acre per season (Rs.) 40,000
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 12,500
acre (Rs.)
Total cost of Mechanical Hoeing – twice per season per acre 1,750
Average packing expense per kg (Rs.) 1.06
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 Jellani,

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 3,375,490 3,713,039 4,084,343 4,492,777 4,942,055 5,436,260 5,979,886 6,577,875 7,235,663 7,959,229
Cost of sales
Plastic Sheet (white) 201,250 221,375 243,513 267,864 294,650 324,115 356,527 392,179 431,397 474,537
Plastic Mulch 25,200 27,720 30,492 33,541 36,895 40,585 44,643 49,108 54,018 59,420
Plants expense 134,325 147,758 162,533 178,787 196,665 216,332 237,965 261,761 287,938 316,731
Fertilizer expense 174,125 191,538 210,691 231,760 254,936 280,430 308,473 339,320 373,252 410,578
Pesticide expense 140,000 154,000 169,400 186,340 204,974 225,471 248,019 272,820 300,102 330,113
Green Manuring and Land Preparation 43,750 48,125 52,938 58,231 64,054 70,460 77,506 85,256 93,782 103,160
Weeding 12,250 13,475 14,823 16,305 17,935 19,729 21,702 23,872 26,259 28,885
Irrigation expense 15,750 16,065 16,386 16,714 17,048 17,389 17,737 18,092 18,454 18,823
Direct labor 648,375 713,213 784,534 862,987 949,286 1,044,214 1,148,636 1,263,499 1,389,849 1,528,834
Transportation Cost from Farm to Market 232,031 255,234 280,758 308,834 339,717 373,689 411,058 452,163 497,380 547,118
Packing expense 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699 244,334
Total cost of sales 1,784,556 1,953,877 2,139,711 2,343,689 2,567,604 2,813,428 3,083,329 3,379,690 3,705,131 4,062,533
Gross Profit 1,590,934 1,759,162 1,944,632 2,149,089 2,374,451 2,622,832 2,896,557 3,198,185 3,530,532 3,896,696
General administration & selling expenses

Administration expense 200,000 220,000 242,000 266,200 292,820 322,102 354,312 389,743 428,718 471,590
Land rental expense 175,000 192,500 211,750 232,925 256,218 281,839 310,023 341,025 375,128 412,641
Electricity expense 30,000 33,000 36,300 39,930 43,923 48,315 53,147 58,462 64,308 70,738
Travelling expense 30,000 31,500 33,075 34,729 36,465 38,288 40,203 42,213 44,324 46,540
Communications expense (phone, mail, etc.) 18,000 18,900 19,845 20,837 21,879 22,973 24,122 25,328 26,594 27,924
Misc. expenses 12,000 13,200 14,520 15,972 17,569 19,326 21,259 23,385 25,723 28,295
Vegetable Marketing expense 236,284 259,913 285,904 314,494 345,944 380,538 418,592 460,451 506,496 557,146
Depreciation expense 169,483 169,483 169,483 195,174 195,174 203,469 233,209 233,209 233,209 267,636
Subtotal 875,768 943,496 1,017,877 1,125,261 1,214,991 1,316,852 1,454,867 1,573,816 1,704,500 1,882,510
Operating Income 715,166 815,666 926,755 1,023,828 1,159,459 1,305,980 1,441,690 1,624,369 1,826,032 2,014,186
Other income (interest on cash) - - - - - - - - - -

Earnings Before Interest & Taxes 715,166 815,666 926,755 1,023,828 1,159,459 1,305,980 1,441,690 1,624,369 1,826,032 2,014,186
Interest expense on long term debt (Project Loan) 164,335 150,451 132,202 112,438 91,034 67,853 42,748 15,560 - -
Interest expense on long term debt (Working Capital Loan) - - - - - - - - - -
Subtotal 164,335 150,451 132,202 112,438 91,034 67,853 42,748 15,560 - -
Earnings Before Tax 550,831 665,215 794,553 911,390 1,068,426 1,238,127 1,398,942 1,608,809 1,826,032 2,014,186
Tax 60,124 77,282 96,683 114,208 137,764 163,219 187,341 218,821 251,405 279,628
NET PROFIT/(LOSS) AFTER TAX 490,706 587,933 697,870 797,181 930,662 1,074,908 1,211,601 1,389,987 1,574,627 1,734,558
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
Assets
Current assets
Cash & Bank 699,352 1,195,042 1,707,965 1,748,355 2,465,104 3,220,861 3,539,120 4,661,533 5,948,436 7,028,795 11,421,371
Accounts receivable 138,719 145,655 160,220 176,242 193,866 213,253 234,578 258,036 283,840 312,224
Raw material inventory 746,650 820,055 900,775 989,542 1,087,159 1,194,511 1,312,571 1,442,409 1,585,203 1,742,247 15,750
Pre-paid land rent 175,000 192,500 211,750 232,925 256,218 281,839 310,023 341,025 375,128 412,641 -
Total Current Assets 1,621,002 2,346,316 2,966,145 3,131,042 3,984,723 4,891,077 5,374,967 6,679,546 8,166,803 9,467,522 11,749,345
Fixed assets
Machinery & equipment 65,000 58,500 52,000 45,500 39,000 115,458 100,662 85,867 71,071 56,275 41,479
Tunnel equipment 488,950 325,967 162,983 566,021 377,347 188,674 655,240 436,827 218,413 758,522 505,681
Total Fixed Assets 553,950 384,467 214,983 611,521 416,347 304,132 755,902 522,693 289,484 814,797 547,160
Intangible assets
Total Intangible Assets 25,000 20,000 15,000 10,000 5,000 - - - - - -
TOTAL ASSETS 2,199,952 2,750,782 3,196,128 3,752,563 4,406,070 5,195,209 6,130,869 7,202,239 8,456,287 10,282,319 12,296,505
Liabilities & Shareholders' Equity

Current liabilities
Total Current Liabilities - - - - - - - - - - -
Other liabilities
Deferred tax 60,124 137,407 234,089 348,298 486,061 649,280 836,622 1,055,443 1,306,847 1,586,475
Long term debt (Project Loan) 1,979,956 1,979,956 1,760,087 1,521,968 1,264,086 984,799 682,332 354,760 - - -
Long term debt (Working Capital Loan) - - - - - - - - - - -
Total Long Term Liabilities 1,979,956 2,040,081 1,897,493 1,756,058 1,612,383 1,470,861 1,331,612 1,191,382 1,055,443 1,306,847 1,586,475
Shareholders' equity
Paid-up capital 219,995 219,995 219,995 219,995 219,995 219,995 219,995 219,995 219,995 219,995 219,995
Retained earnings 490,706 1,078,639 1,776,510 2,573,691 3,504,353 4,579,262 5,790,862 7,180,850 8,755,477 10,490,035
Total Equity 219,995 710,701 1,298,635 1,996,505 2,793,687 3,724,349 4,799,257 6,010,857 7,400,845 8,975,472 10,710,030
TOTAL CAPITAL AND LIABILITIES 2,199,952 2,750,782 3,196,128 3,752,563 4,406,070 5,195,209 6,130,869 7,202,239 8,456,287 10,282,319 12,296,505
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 490,706 587,933 697,870 797,181 930,662 1,074,908 1,211,601 1,389,987 1,574,627 1,734,558
Add: depreciation expense 169,483 169,483 169,483 195,174 195,174 203,469 233,209 233,209 233,209 267,636
Deferred income tax 60,124 77,282 96,683 114,208 137,764 163,219 187,341 218,821 251,405 279,628
Accounts receivable (138,719) (6,936) (14,565) (16,022) (17,624) (19,387) (21,325) (23,458) (25,804) (28,384)
Raw material inventory (746,650) (73,405) (80,720) (88,767) (97,617) (107,352) (118,060) (129,838) (142,794) (157,044) 1,726,497
Pre-paid land rent (175,000) (17,500) (19,250) (21,175) (23,293) (25,622) (28,184) (31,002) (34,103) (37,513) 412,641
Cash provided by operations (921,650) 495,690 732,792 844,530 974,632 1,118,001 1,275,966 1,449,985 1,641,664 1,838,880 4,392,576
Financing activities
Project Loan - principal repayment - (219,870) (238,119) (257,882) (279,287) (302,467) (327,572) (354,760) - -
Working Capital Loan - principal repayment - - - - - - - - - -
Additions to Project Loan 1,979,956 - - - - - - - - - -
Additions to Working Capital Loan - - - - - - - - - - -
Issuance of shares 219,995 - - - - - - - - - -
Cash provided by / (used for) financing activities 2,199,952 - (219,870) (238,119) (257,882) (279,287) (302,467) (327,572) (354,760) - -
Investing activities
Capital expenditure (578,950) - - (566,021) - (82,958) (655,240) - - (758,522) -
Cash (used for) / provided by investing activities (578,950) - - (566,021) - (82,958) (655,240) - - (758,522) -
NET CASH 699,352 495,690 512,923 40,390 716,749 755,756 318,259 1,122,413 1,286,904 1,080,359 4,392,576
Pre-Feasibility Study Off-Season Vegetables (High Tunnel)
14.4. Raw Material Calculation Sheets

Raw material 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) 201,250 221,375 243,513 267,864 294,650 324,115 356,527 392,179 431,397 474,537
Plastic Mulch 25,200 27,720 30,492 33,541 36,895 40,585 44,643 49,108 54,018 59,420
Total 226,450 249,095 274,005 301,405 331,545 364,700 401,170 441,287 485,416 533,957
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 55,125 60,638 66,701 73,371 80,709 88,779 97,657 107,423 118,165 129,982
Sweet Pepper Plant 25,200 27,720 30,492 33,541 36,895 40,585 44,643 49,108 54,018 59,420
Cucumber Plant 54,000 59,400 65,340 71,874 79,061 86,968 95,664 105,231 115,754 127,329
Total 134,325 147,758 162,533 178,787 196,665 216,332 237,965 261,761 287,938 316,731
Total cost of fertilizer Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
Calcium Amonium Nitrate 23,625 25,988 28,586 31,445 34,589 38,048 41,853 46,038 50,642 55,707
Nitrophos 61,250 67,375 74,113 81,524 89,676 98,644 108,508 119,359 131,295 144,424
DAP 44,625 49,088 53,996 59,396 65,335 71,869 79,056 86,962 95,658 105,223
SOP 44,625 49,088 53,996 59,396 65,335 71,869 79,056 86,962 95,658 105,223
Total 174,125 191,538 210,691 231,760 254,936 280,430 308,473 339,320 373,252 410,578
Packing Expense
Year-1 Year-2 Year-3 Year-4 Year-5 Year-6 Year-7 Year-8 Year-9 Year-10
Tomato 108,000 113,400 119,070 125,024 131,275 137,838 144,730 151,967 159,565 167,543
Sweet pepper 22,500 23,625 24,806 26,047 27,349 28,716 30,152 31,660 33,243 34,905
Cucumber 27,000 28,350 29,768 31,256 32,819 34,460 36,183 37,992 39,891 41,886
Total Packing expense 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699 244,334
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 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Sweet pepper 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
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 81,000 81,000 81,000 81,000 81,000 81,000 81,000 81,000 81,000 81,000
Sweet pepper 22,500 22,500 22,500 22,500 22,500 22,500 22,500 22,500 22,500 22,500
Cucumber 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000
148,500 148,500 148,500 148,500 148,500 148,500 148,500 148,500 148,500 148,500
Sales Price per kg

Tomato 25.00 27.50 30.25 33.28 36.60 40.26 44.29 48.72 53.59 58.95
Sweet pepper 30.00 33.00 36.30 39.93 43.92 48.32 53.15 58.46 64.31 70.74
Cucumber 15.00 16.50 18.15 19.97 21.96 24.16 26.57 29.23 32.15 35.37
Sales Revenue
Tomato 2,025,000 2,227,500 2,450,250 2,695,275 2,964,803 3,261,283 3,587,411 3,946,152 4,340,767 4,774,844
Sweet pepper 675,000 742,500 816,750 898,425 988,268 1,087,094 1,195,804 1,315,384 1,446,922 1,591,615
Cucumber 675,000 742,500 816,750 898,425 988,268 1,087,094 1,195,804 1,315,384 1,446,922 1,591,615
Sale of empty bags of fertilizer 490 539 593 652 717 789 868 955 1,050 1,155
Total sales Revenue 3,375,490 3,713,039 4,084,343 4,492,777 4,942,055 5,436,260 5,979,886 6,577,875 7,235,663 7,959,229
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 Minister’s 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 Jammu 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 17 - Expense Assumptions
CoGS growth rate 10%
Operating costs growth rate 5%
Vegetable market expense 7% % of revenue
Travelling expense Rs. 30,000 per annum
Communication expense Rs. 18,000 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 18 - Economy Related Assumptions

Inflation rate 10%
Electricity growth rate 10%
Water price growth rate 2%
Wage growth rate 10%
Table 19 - Cash Flow Assumptions

Time period per season (months) 7
Accounts receivable in days 15
Accounts payable in days 0
Raw material inventory (months) 6
Table 20 - 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 12
Grace Period (Years) 1

Off Season Vegetables - High Tunnel Rs. 2.20 Million

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Off Season Vegetables - High Tunnel Rs. 2.20 Million

Uploaded by

Copyright:

Available Formats

Prime Minister's Youth Business Loan

Small and Medium Enterprises Development Authority

2. PURPOSE OF THE DOCUMENT

capacity building programs of different types in addition to business guidance

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

 Timely control of pests, diseases and implementation of all recommended

8. INSTALLED & OPERATIONAL CAPACITY

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

10. POTENTIAL TARGET MARKETS / CITIES

11. PRODUCTION PROCESS FLOW

11.1. High Tunnel Structure Specification

Figure 1 - High Plastic Tunnel

11.2. Support Structure

12. PROJECT COST SUMMARY

12.1. Project Economics

Table 3 - Total Production Capacity

Returns on investment and its profitability are highly dependent on the

12.2. Project Financing

12.3. Project Cost

12.4. Land Requirement

12.5. Machinery and Tunnel Farm Structure

Table 8 - List of Machinery

As mentioned above, off-season vegetable cultivation is recommended with the

Table 9 - Structure Requirement for High Tunnel

12.6. Raw Material Requirements

Table 11 – Other Raw Material Requirement

Unit Rate Total Fertilizer

12.7. Human Resource Requirement

Table 13 - Human Resource Requirement (Temporary)

Salaries of all employees / workers are estimated to increase at 10% annually.

12.8. Revenue Generation

Table 14 - Expected Production and Land Utilization

12.9. Other Costs

13. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS

 Dr. Ghulam Jellani,

 Dr. Muhammad Anjum Ali

 Chief Executive Officer

General administration & selling expenses

Other income (interest on cash) - - - - - - - - - -

14.2. Balance Sheet

Liabilities & Shareholders' Equity

14.3. Statement of Cash Flow

14.4. Raw Material Calculation Sheets

14.5. Revenue Calculation Sheet

Total Production in Kgs (excl. wastege)

Sales Price per kg

14.6. Useful Management Tips

14.7. Useful Links

 Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

15. KEY ASSUMPTIONS

Table 18 - Economy Related Assumptions

Table 19 - Cash Flow Assumptions

Table 20 - Financial Assumptions

You might also like