detailed feasibility report3.3 pricing & marketing strategies 13 3.4 technological changes that...
TRANSCRIPT
DETAILED FEASIBILITY REPORT
Animal Feed Unit
in conformity with
The Royal Government of Bhutan’s Vision of Achieving
Economic Self-Reliance
June 2015
Ministry of Economic Affairs
Royal Government of Bhutan
DETAILED FEASIBILITY REPORT - Animal Feed Unit
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CONTENT
Section Topic Page
Abbreviations and Definitions 4
1.0 Executive Summary 6
2.0 Justification of the project 8
2.1 The need for the project 8
2.2 Competition Analysis 11
3.0 Market Analysis 12
3.1 Structure of the industry 12
3.2 Demand vs. Supply 13
3.3 Pricing & Marketing Strategies 13
3.4 Technological changes that could impact costing 15
3.5 Competitiveness of the project 15
3.6 Special attributes desired by target customers 15
3.7Terms & conditions and product specifications desired by target customers
15
3.8 Packaging & Transportation 16
3.9 Assessment of Comparative Advantage 17
3.10 Potential for Marketing Collaboration 17
4.0 Resource 18
4.1 Sources of Inputs Including Water 18
4.2 Comparative Analysis of Critical Inputs 18
4.3 Sources of Raw Material 18
4.4 Availability of Manpower &Skills 22
4.5 Need for Skill Development 22
5.0 The Plant 23
5.1 Choice of Technology 23
5.2 Source 24
5.3 Rate of Consumption of Power, Fuel, Utilities &Consumables 26
5.4 Raw Material Consumption 26
5.5 Manpower Requirement and Organization Chart 27
5.6 Specification of Product and Byproduct 27
5.7 Extent of Technical Assistance NeededIncluding Training 28
6.0 Plant Location & Infrastructure 29
6.1 Raw Material Availability 29
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
6.2 Availability of Electricity 29
6.3 Topography, Hydrology &Seismology Data Requirement 30
6.4 Availability of Land 31
6.5 Availability of Transportation Facilities 31
6.6 Availability of Ancillary Facilities 31
6.7 Availability of Housing, Schooling and Hospital Facilities 31
6.8 Communication Facilities 33
6.9 Presence of Approach Road 33
6.10 Factory layout plan 33
7.0 Environmental Aspects 34
8.0 Project Implementation Schedule 41
9.0 Cost Presentation 43
9.1 Capital Costs 44
9.2 Operating Costs 46
10.0 Financial Analysis 51
10.1 Profitability 51
10.2 Calculation of Interest on Term Loan 52
10.3 DSCR Calculation 52
10.4 Break Even Point 53
10.5 NPR & RI 54
10.6 Cash Flow Statement 54
Reference 56
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ABBREVIATIONS AND DEFINITIONS
BEP Break Even Point
BHU Basic Health Units
BTL Bhutan Telecom Limited
CP Crude Protein
CUSP Caltech-USGS Seismic Processing
DCP Digestible Crude Protein
DE Digestible Energy
DSCR Debt Service Coverage Ratio
EA Environment Assessment
EI Environmental Information
EMP Environment Management Plan
EPI Expanded Program on Immunization
ETP Effluent Treatment Plant
IMNCI Integrated Management of Neonatal and Childhood Illness
IRR Internal Rate of Return
ISPs Internet Service Providers
MT Metric Ton
NACP National HIV/AIDS & STIs Control Program
NEC National Environment Commission
NPV Net Present Value
NTCP National Tuberculosis Control Program
OHS Occupational Health & Safety
ORC Out Reach Clinics
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
RH Reproductive Health
RPM Revolutions Per Minute
RWSS Rural Water Supply and Sanitation Program
SPM Suspended Particulate Matter
TICL Tashi Info Comm Limited
TSPM Total Suspended Particulate Matter
TSS Total Suspended Solids
VDCP Vector Borne Disease Control Program
VHW Village Health Workers Program
WFP World Food Program
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1.0 EXECUTIVE SUMMARYThis report is a detailed feasibility study on setting up an animal feed manufacturing unit in Bhutan conducted by
the Department of Industry under the Ministry of Economic Affairs, Royal Government of Bhutan.
It is proposed that the unit will have a capacity of processing 16,000 tons of animal feed per annum. With the
increased demand for livestock products primarily for domestic consumption, farmers realise the importance of
ensuring that their cattle stays healthy and productive during their life time. This has necessitated higher demand
for balanced feed.
The report presents in detail the justification of the project, market analysis of the service, resources required,
technology used in the plant, plant location, environmental aspects, implementation of the project, cost presenta-
tion and financial analysis.
(i) Justification of the Project: About 90 percent [Source: Investment Opportunity in Bhutan_2006] of
the rural households own livestock, which forms an integral part of the Bhutanese farming system.
Yet there is a drastic shortage of fodder during winter months and there is a demand for cattle feed
(ii) Market Analysis: Currently there is only one large animal feed manufacturing unit in Bhutan and it
is difficult for a single manufacturer to meet the total demand of cattle feed. So, there is a scope for
new entrants.
(iii) Resources required: Some of the raw materials like maize, wheat, limestone are readily available
within the country and the rest needs to be imported. Apart from this the unit requires electricity,
water and manpower which are also available in Bhutan.
(iv) Technology required: A mechanized plant using state of the art technology has been proposed for
this purpose. The plant has the capacity to process not only cattle feed but fish feed and poultry feed
as well.
(v) Plant Location: Considering the availability of raw materials and other infrastructure Phuentsholing
has been proposed as the ideal location for the plant.
(vi) Environmental Aspects: The production of animal feed may cause air and water pollution but this
may be reduced up to a great extent by by following the recommended measures.
(vii) Implementation of the Project: The implementation of the project will take more than 12 months
including pre-project activities.
(viii) Cost Presentation and Financial Analysis:
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Table 1: Project Summary
Plant Capacity: 50 Tons per day (16,000 Tons per annum)
No. of Shift: One ( 8 hours per shift ) per day
Working Days in Year: 320
D.S.C.R. : 1.97
B.E.P. : 19.18%
IRR : 22.97
NPV : Nu. 12.29 millions
Internal Rate of Return of the project is 22.97%, which is much higher than the bank rate of 13%.Hence the
project is financially viable. The NPV of the project is positive (Nu. 12.29 millions) at a discount factor of 13%
during the first 10 years of operation. This implies that the project is financially viable.
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2.0 JUSTIFICATION OF THE PROJECT2.1 The Need for the Project
General Scenario: About 90 percent[Source: Investment Opportunity in Bhutan_2006] of rural households in
Bhutan own livestock, which forms an integral part of the Bhutanese farming system, providing support to agri-
culture through draught power and the providing manure. Livestock also provides increasingly greater value by
generating cash incomes from butter, cheese and meat. Cattle, yak, buffalo, sheep & goats are the major livestock
owned and reared by farmers. Accordingly, the Royal Government is preparing a Livestock Breeding Policy in
every Dzongkhag. Projects have already been identified for Dairy Development.
In Bhutan, a major source of food for livestock is fodder. Main fodder resources in summer are:
Serial Number Fodder Resource for Large Ruminants
1 Forest Grazing
2 Grazing Crop Land/Fallow Land
3 Crop Residues
4 Improved Pasture
5 Native Pasture
6 Hay and Silage
7 Fodder Species grown on cropland
8 Fodder trees
Lack of animal feed during the winter months is an acute problem for almost all Bhutanese cattle farmers.
Cattle Population
The table below shows the cattle population in Bhutan as per figures released by Department of Livestock,
Ministry of Agriculture and Forests, Thimphu, Bhutan for 2013
Table 2: Cattle Population_2013
Dzongkhag Cattle
Bumthang 11,023
Chukha 21,633
Dagana 16,619
Gasa 804
Haa 97,02
Lhuentse 14,133
Mongar 25,316
Paro 13,052
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Pemagatshel 7,825
Punakha 11,042
Samdrup Jongkhar 18,139
Samtse 33,411
Sarpang 19,813
Thimpu 3,908
Trashigang 26,908
Trashiyangtse 10,422
Trongsa 11,093
Tsirang 10,912
Wangdue 25,534
Zhemgang 11,237
Total 302,526
Benefits of Commercially Manufactured Feed
The primary purpose of commercial feeds is to provide concentrated sources of necessary nutrients for livestock.
These nutrients include not only macro-nutrients of energy and protein but also important specific nutrients such
as amino acids, fatty acids, enzymes, vitamins, minerals and others.
With the increased demand for livestock products for domestic consumption as well as export, farmers realise
the importance of maintaining the health of their animals with proper feeding and management. The proportion
of crossbred animals increased over the years. This has necessitated higher demand for balanced feed. The feed
supply could not keep pace with the growth in various species of cattle.
To meet the growing demand of processed and complete feeds for different class of animals there is a good scope
for setting up feed processing plants of different capacities for production of various quality feeds in Bhutan.
Average Nutritive Values of common feed ingredients (Dry Matter basis)
Table 3: Average Nutritive Values of Common Feed Ingredients
No. Botanical NameCommon
Name
CP
(%)
DCP
(%)
TDN
(%)
DE
MCal
ME
MCal
A Cereal Grains
1 Avena Sativa Oats, Jai 10 7.5 80 3.5 2.8
2 Eleusine coracana Finger millet 10 7.0 70 3.1 2.5
3 Hordeum vulgare Barley, Jav 11 7.7 85 3.7 3.1
4 Oryza sativaRice, Cha-
wal8 6.0 85 3.7 3.2
5 Panicum millaceum Proso millet 6 4.0 70 3.1 2.5
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6Pennisetum ty-
phoidesPearl millet 12 6.0 65 2.8 2.3
7 Sorghum bicolorsorghum,
Jowar12 6.6 85 3.7 3.2
8 Triticum aestivum Wheat 13 9.0 87 3.8 3.4
9 Zea maysMaize, Makka
10 7.0 85 3.7 3.3
B Leguminous Seeds
1 Cajanus cajan Pigeonpea 20 14.5 75 3.3 2.7
2 Cicer arietinumChickpea,
Gram20 14.0 85 3.7 3.2
3Cyamopsis
tetragonoloboCluster bean 30 22.5 79 3.5 2.8
4 Dolichos lablabHyacinth
bean17 10.2 70 3.1 2.5
5 Gossypium spp. Cotton seed 18 12.5 88 3.8 3.3
6 Glycine max. Soyabean 40 37.0 90 4.0 3.4
7 Lathyrus sativus Khesari 29 22.0 85 3.7 3.2
8 Lens esculentaLentil, Masoor
25 20.0 80 3.5 2.9
9Phaseolus aconiti-
foliusMoth bean 27 22.0 82 3.6 2.9
10 Paureus Green gram 26 20.0 82 3.6 2.9
11 P.radiatus Black gram 19 14.0 78 3.4 2.9
12 P.calcaratus Rice bean 21 15.0 73 3.2 2.7
13 Vigna sinensisCowpea,
Lobia26 20.0 75 3.3 2
C Oil Seeds
1 Arachis hypohaeaGroundnut
seed30 23.0 130 5.8 5.0
No. Botanical NameCommon
Name
CP
(%)
DCP
(%)
TDN
(%)
DE
MCal
ME
MCal
3 Lunium usitatissiumLinseed,
Flex19 15.5 118 5.2 4.3
4 Sesamum indicum Sesame, Til 24 19.5 125 5.5 5.0
DNon Conventional
Seeds
1 Acacia niloticaBabul seed/
pod14 10.2 65 3.0 2.6
2 Cannabina Seeds 33 --- --- --- ---
3 Cassia tora Chakunda 18 12.5 88 3.9 3.2
4 Crotalaria juncea Sunhemp 36 31.0 70 3.1 2.5
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E Protein Supple-ment’s (Vegetable
Source)1 Arachis hypogaea Expeller 47 32.0 85 3.7 3.3
Solvent ext. 49 43.2 70 3.1 2.6
2 Brassica spp. Expeller 34 28.5 80 3.5 2.9
Solvent ext. 38 30.5 68 3.0 2.4
3 Carthamus tinctorius Expeller 42 32.0 69 3.0 2.5
4 Cocos nucifera Coconut 23 18.0 85 3.7 3.2
5 Glycine max. Expeller 41 35.7 86 3.7 3.3
Solvent ext. 46 41.4 80 3.5 3.0
No. Botanical NameCommon
Name
CP
(%)
DCP
(%)
TDN
(%)
DE
MCal
ME
MCal
6 Gossypium spp. Expeller 28 20.0 80 3.5 2.9
7 Linum Usitatissium Expeller 30 25.5 80 3.5 3.0
8 Sesamum inidcum Expeller 40 35.0 85 3.7 3.3
9 Zea mays cake 20 15.0 82 3.6 3.1
10 Helianthus spp Sunflower 26 22.0 70 3.1 2.7
11 Guizotia abyssinica Niger cake 45 25.5 55 2.4 2.0
Animal Protein Source
1 Blood Meal 87 62.0 90 4.0 3.4
2 Meat Meal 65 52.5 85 4.2 3.6
3 Fish Meal 50 45.0 70 3.4 2.7
[Source: http://www.keralaagriculture.gov.in/htmle/bankableagriprojects/ah/feed.htm]
CP: Crude Protein
DCP: Digestible Crude Protein
TDN: Total Digestible Nutrients
DE: Digestible Energy
ME: Metabolizable Energy
2.2 Competition Analysis
One of the leading manufacturers in Bhutan is Karma Feeds, Phuentsholing which provides similar products.
They have different agents located in east, west, south and central zones of Bhutan. Karma Feeds has an installed
capacity of about 16,000 tons per annum to produce all types of feeds (cattle, poultry, fish and pig).
Shab Feed is another known supplier of animal feed in Bhutan.
Per the Department of Livestock, the cattle population in 2013 in Bhutan was 302,526]. On a pessimistic count,
if one looks at an average consumption of 2kg per animal per day as a dietary supplement during the winter
months only, the market is estimated to be as big as 54,454 tons. Therefore, there is definitely viable space for
new entrants in this market.
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3.0 MARKET ANALYSIS3.1 Structure of the Industry
The Key Stakeholders
For Bhutan, the animal feed marketing systems can be said to comprise of following stakeholders
Manufacturers/Importers: Persons or firms that manufacture or import cattle feed.
Wholesalers: Intermediaries in the distribution channel that buy large quantity of animal feed from the manu-
facturers and resells it to retailers.
Retailers: Persons or entities who buy the feed from the wholesalers and sell it to the end users.
End Users: End users are those who buy the feed from retailers. They are cattle farmers.
MANUFACTURERS/
IMPORTERS
WHOLESALERS
RETAILERS
END USERS
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3.2 Demand vs. Supply
Livestock are raised as a source of milk, meat, manure, draught power and therefore they are reared as assets.
Dairy products, especially butter and cheese, form an important component of the Bhutanese diet. About six cattle
breeds are used for milk production in Bhutan. In Bhutan, a major source of animal feed is forest grazing, fodder
trees, native pasture and crop residues. But to improve the quality and quantity of milk, one has to overcome the
scarcity of animal feed in winter months. According to Department of Livestock, Ministry of Agriculture and
Forests, Thimphu, Bhutan for 2013 total cattle population of Bhutan was 302,526. It has been estimated that in
a day a cattle can have 2 kg of feed. So, for the 302,526 animals, average demand for feed will be 605,052 kg
per day or about 220,825 tons per year. To meet the above demand of composite animal feed adequate amount
of supply is required. Out of 220,825 tons required annually or about 18,402 tons/month, Karma feeds supplies
about 1,300 tons/month.
3.3 Pricing & Marketing Strategies
This marketing effort will call for a strategy based on segmenting, targeting & positioning.
Segmenting: Segmenting is the act of dividing the market into distinct groups of buyers who might require
separate offerings in terms of product attributes, pricing, promotion and distribution. Broadly speaking the
animal feed market in Bhutan is primarily a rural phenomenon. It can be classified in to 1. Individuals 2.
Institutional buyers
For animal feed individual consumers would be lower income group generally the farmers. In 2012, 90% of the
farmers in Bhutan owned an average of two to three cattle.
Institutional buyers can be split into following groups:
1. Dairy Farms
2. Cattle Farms
Targeting: This is the act of choosing some of the segments identified from considerations of commercial
attractiveness. The company will try to focus much in winters to serve the farmers as there will be scarcity
of natural feed during this period.
But for institutional side, the company has to focus meeting up the demand all throughout the year. Accord-
ingly, the Sales team should have clearly spelt out responsibilities for team members to address the above
segment with a properly devised sales plan.
Positioning: This is the act of providing a viable competitive positioning of the firm and its offer in each
target market. It should ideally communicate uniqueness that adds value.
Some viable positioning statements could be:
Nutritional value of the feed which would help to make the cattle healthy and increase their productivity
A quality product
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Affordably priced
Readily available round the year – even in winter
The marketing mix should accordingly be defined encompassing aspects like the product attributes includ-
ing quality and packaging, pricing strategy, promotion and distribution and logistics all carefully designed
to ensure a high level of consumer satisfaction.
Product: By ensuring proper quality of raw material and strict adherence to manufacturing process guide-
lines, the company can ensure that their products are better than prevalent standards in the market. The units
can then even thinking of branding their products through an appropriate logo that communicates value.
Price: To gain an entry in the market a competitive pricing strategy would be used. As there is only one large
manufacturer of animal feed the price will be compared with theirs and therefore the price cannot be very
different. Similarly there should be attractive margins for the trade – in keeping with or ahead of the market.
Promotion: The promotional strategy for individual buyers could be as follows. For individual consumers,
the company would target dealers, wholesalers and consumers to convey to them the benefits of the products
through proper media channels like radio, television and outdoors. There should be attractive performance
recognition schemes and contests for dealers – particularly for the first year of operation.
The promotional strategy could also induce trial through free sampling of the product. For institutional
buyers, the sales team would ensure that the segment is well covered by initiating cold calls and staging
product presentations to spread awareness and generate interest. For customers who already are in a higher
state of readiness and floating enquiries, the Sales team would respond to them by sending in quotations
followed by a discussion and negotiation leading to closures.
The table below shows the promotional activities that must be undertaken
Table 4: Promotional Activity
Serial Number Promotional Activity
01 The product must be launched with coverage on the radio, TV and newspaper.
02 Occasional TV and radio advertisements to make farmers aware about the benefits of
the product.
03 Distribution of leaflets, pamphlets, stickers wherever possible
04 Promotional & discounted sales campaigns to farmers and retailers
05 Regular liaisoning with Diary & cattle farms
Place: Superior Distribution & Logistics would be the key to success in a geographical area where rural
roads as well as transportation facilities are in a state of evolution so that the product can be easily trans-
ported. The right place for the sales offices would be rural areas. Company can hire local people who can
operate from their home offices.
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3.4 Technological Changes that could Impact Costing
One of the biggest technological changes that can impact the way the unit would conduct business in the future
would be the progress of information technology in shaping e-commerce and its adaption in the Bhutanese econ-
omy.
It may be used to find out the customers on line. Similarly it may be possible to generate and respond to custom-
er’s enquiries on line and transact business with those who stay outside the country.
It has been found that most of the raw materials are imported. So, if these things are produced within the country
it would make the product more cost effective.
The basic impact of all this would help to reduce the cost and therefore the price of the product.
3.5 Competitiveness of the Project
The project advocates setting up a manufacturing plant of cattle feed.
This would compete against some of the manufacturers of cattle feed and would reduce the import rate of
cattle feed.
The unit aspires to deliver quality products which would be beneficial for the health of the cattle and improve
their longevity and productivity.. It is expected that there would be a demand pull at the customer end which can
be further strengthened through innovative promotional strategies. The demand pull is estimated to be significant
thereby ensuring lowering of costs through economies of scale.
It is expected that some of the competition would eventually get eliminated.
3.6 Special Attributes Desired By Target Customers
In general customers would prefer :
1. High Quality Graded Feed
2. They would prefer an affordable price: some may prefer to have a credit period
3. Some would look forward to promotional offer
4. Timely delivery in good condition
However the customer needs and wants may vary from one customer segment onto the other. For example, the
requirements of feed type of Holstein Friesian cattle farmers would be different from requirements of feed type
of Beefalo cattle farmers.
3.7 Terms & Conditions and Product Specifications desired by target customers
Types of Cattle Feed
a) Calf Starter: Specially formulated feed for calves to be started from the 42nd day till 8 months.
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b) Cattle Concentrate: Feed formulated for milking cows to maintain health, ensure milk production and
reproductive health.
c) Milk Ration: Milk ration is a high energy feed to ensure higher milk production and maintenance of the
cattle and is recommended for milking cow producing more than 10 liters of milk per day.
Nutrient Content of Cattle Feeds
The table below shows the nutrient content of different types of Cattle Feeds:
Table 5: Nutrient Content
Types of Feeds ME(kcal/g) Moisture% CP% Ca% P%
Calf Starter 3,000 13% 19% 0.6% 0.5%
Cattle Concentrate 2,500 13% 18% 0.8% 0.7%
Milk Ration 2,890 13% 18% 0.85% 0.75%
3.8 Packaging & Transportation
Large loads of premixed feed stuffs are packed into bulk bags. If the ingre-
dients have to travel greater distances Q bags are used to assist in stability
and maximize the load. All types of Polythene Sacks are used, depending
on the size of the business you could have Automated Form Fill and Seal
Machines and the market is filled with printed Open Mouth Bottom Weld,
Block Bottom and Valve Sacks printed to the individual requirements of
the product and company. Paper Sacks are used where dry foods stuffs
and powders are used within industry and through to the end user in over
the counter sales.
Woven Polypropylene Sacks have a significant role within this sec-
tor predominantly because of their inherent strength.
It needs to satisfy the following objectives:
1. Protects the quality of the product.
2. Provide information to buyers, such as variety, weight, specification of the product, quality grade,
producer’s name, country, area of origin, etc.
Figure 1: Q Bag
Figure 2: Polythene Sack
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3.9 Assessment of Comparative Advantage
a) Abundance of Hydroelectric Power
Bhutan is an energy surplus state. 97% of its energy is obtained from hydro power. During the summer months
Bhutan exports quite a bit of electricity to India. Total exports to India were Nu. 10,633.639 million for 2013 – 14.
The cost of electricity is lower than many power deficient economies.
b) Availability of Water
Bhutan is endowed with rich perennial water resources fed with permanent glaciers, glacier lakes and recurrent
monsoons. The per capita mean flow availability is as high as 109,000 m3. This compares very favourably with a
developing economy like India which has per capita mean flow availability as low as 1,588 m3.
c) Ready availability of Limestone, Maize, Bran of Cereals & Other Grains (Rice & Wheat)
Limestone, maize, bran of cereals and other grains (rice, wheat) are some of the raw materials that are used for
manufacturing of cattle feed and these raw materials are readily available in Bhutan.
3. 10 Potential for Marketing Collaboration
There is a tremendous potential for marketing collaborations at the customer end of the supply chain. The unit can
think of appointing independent sales agents or exclusive tie ups with certain stores or outlets.
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4.0 RESOURCE
4.1 Sources of Inputs
Utilities required by the plant consist of electricity, water and furnace oil.
Electricity is required to run the production machinery and to provide lighting for the plant. So except for very
remote areas availability of electricity is not a handicap.
Water is required for general purposes and for supplying to the boiler, where steam is produced to be supplied
to the molasses tank. Bhutan is drained by many rivers flowing south between these ranges and for the most part
ultimately emptying into the Brahmaputra River in India. The river basins are oriented north-south and are, from
west to east, the Jadalkha, Torsa, Raidak, Sankosh, Mao Khola/Aie, Manas and eastern river basins, this last basin
being composed of the Bada and Dhansiri rivers. Two wastewater treatment projects are being implemented in
the cities of Thimphu and Phuntsoling. More are expected to come up shortly. Bhutan with a population of only
7 lakhs is a water surplus country.
Furnace oil: Furnace oil is used to fire the boilers. Steam from the boiler is pumped into the molasses tank as a
part of the production process. This oil is not manufactured in Bhutan and would have to be imported.
4.2 Comparative Analysis of Critical Inputs
Electricity: It may be possible to set up one’s own generator set and produce electricity. Theoretically it may
also be possible to set up one’s own solar panels and be self sufficient on electricity. But it would certainly be
more cost effective to source power from the grid. Keeping a small generator as a part of redundancy may be
considered to take care of the lighting load.
Water: The most cost effective manner of catering to the requirements of water would be to locate the plant near
a river. This is because deep tube wells may not be feasible owing to the mountainous terrain and from the point
of view of cost. It is recommended however a hard water treatment plant be set up as the water is likely to be hard
and unsuitable for boiler operation.
Furnace oil: Would have to be imported from the neighboring countries namely India or China. In case of
inability to source importing from other countries can be explored. There need to be a means for checking the
quality of furnace oil as the high price often encourages intermediaries to pilfer and contaminate the oil.
4.3 Sources of Raw Materials for Cattle Feed
Major raw materials required for the manufacture of cattle feed are oil cake, bran of cereals, molasses, maize,
salt, limestone (ground), other grains (wheat, barley, etc), meal (bone or flesh or blood). The feed consists of
three major groups of substances: carbohydrates, oils and proteins together with smaller amounts of minerals and
vitamins.
Oil Cake: Oil-cake is the residue obtained after the greater part of the oil has been extracted from an oilseed. Oil-
cakes are rich in protein and are valuable for cattle feed. Oil-cakes are great source of fiber and energy.
Bran of Cereals: Different bran of cereals such as rice bran, wheat bran is used in the manufacturing process of
cattle feed. Bran is used widely as the energy portion. Bran contains fiber and protein.
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Molasses: Molasses is a source of quick energy and a rich source of minerals. Molasses in cattle feed increasE
milk solid production, improving milk let-down, promoting animal health, improving digestion of fiber, helping
to reduce heat related stress, helping in growth and development of young stock.
Maize: Maize is the most common grain used for cattle feed. The energy value of maize is commonly used as
a standard with which other energy sources are compared. Thus, if the relative energy value of maize is taken
as 100, the energy value of other grain sources is generally lower. The efficient utilization of the gross energy is
mainly due to the low fiber content of the maize kernel and the high digestibility of its starch. The crude protein
content of maize is relatively low, ranging from 8–11%.
Meat & Bone Meal: It is typically about 48–52% protein, 33–35% ash, 8–12% fat, and 4–7% moisture. It is
primarily used in the formulation of cattle feed to improve the amino acid profile.
Limestone (ground): Calcium plays essential roles in cattle nutrition. It is required for proper development of
bones and teeth, regulation of heartbeat and blood clotting, muscle contraction, nerve impulses, enzyme activa-
tion, hormone secretion and milk production.
Other Grains (wheat, barley, etc): Wheat is low in fiber and high in energy and compares favorably
with other grains in energy content. The protein content of wheat from the world collection was shown
to vary from 6 to 22% but the wheat most commonly used contains 13–15% crude protein. The protein
content of oats (Avena sativa L) is relatively high (11–14%) and the amino acid distribution is more
favorable than that of maize. Recent studies with cattle of different age groups indicate that steers and
non-lactating cows digest completely the starch of rolled oats and that steers digested more of the starch
of the whole grain than did cows. Barley has a feeding value of 91% that of maize.
From the view of ease of sourcing and cost of sourcing, it is recommended that the following category of products
be sourced from within Bhutan. In case it is not possible to source from within the country then import option
may be exercised.
1. Bran of Cereals – locally available
2. Maize – locally available
3. Limestone (ground) –locally available
4. Other Grains (wheat, barley) –locally available
The following items would necessarily have to be imported preferably from a neighboring country like India or
China to keep costs low. In case the requirement could not be met, options to import from other countries can
also be explored.
1. Oil Cake – to be imported
2. Molasses – to be imported
3. Meal (Bone/Flesh/Blood) – to be imported
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20
Suppliers of Imported Raw Materials
1. Oil Cake
Shree Ganpati Enterprises
No. 2647, 1st Floor Street
Raghunandan, Naya Bazar
New Delhi-110006, India
Contact Number: +91-9811077100, 011-43536445
Marudhar Foods Private Limited
B-108, Asthivinayak Complex
2nd Floor, Outside Dariiyapur Darwaja
Ahmedabad-380004
Gujarat, India
Contact Number: +91 7965437111
2. Molasses
Canny Overseas Private Limited
B-170, Priyadarshini Vihar
New Delhi - 110092
Delhi, India
Contact Number: 08045359140
Atlas
No.55, K.J.Building
34/A Khadak Street, Near Snow White Hotel
Masjid Bunder (W)
Mumbai: 400009
Maharastra, India
Contact Number: 08046035474
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Shiva Transport
No.5, Manorath Complex, Behind Mother School, Gotri
Near Jalaram Nagar Bus Stand,
Vadodara-390021, Gujarat
India
Contact Number: 08046046377
3. Bone Meal
Global Enterprise
No. 10, Green Park Society, Opposite M.S. Public School, Near Pirkamal Masjid, Danilimada
Ahmedabad: 380028, Gujarat
India
Contact Number: 08376809573
Sri Sai Sagar Traders
No. 206, Ellora, Sant Muktabai Marg, Vile Parle East
Mumbai: 400057, Maharastra
India
Contact Number: 08045136604
Giriraj Chemicals
No. 201-A, IInd Floor, Sumedha Market Complex, RDC Raj Nagar
Ghaziabad: 201002, Uttar Pradesh
India
Contact Number: 09643203160
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4.4 Availability of Manpower and Skills
The Labour Force Survey Report 2013 finds that the agriculture sector employs over 55 percent of total employed
persons, while 17 percent are employed in public administration & defense, education, electricity, gas & water
supply sectors, and the remaining 28% in real estate, construction, hotels & restaurants, and mining & quarrying
sectors.
The survey finds that a total of 335,870 individuals were employed and 9,916 were found to be unemployed out
of a total projected population of 745,939 in 2013, making unemployment rate at the national level by 2.9%.
Chart 1: Unemployment Rate in Bhutan (2009-13)
(Source: Statistical Yearbook of Bhutan 2014)
The Labour Force Survey Report 2012 indicates that by 2020 there will be 267,000 students seeking jobs. A
variety of skills are available from the various training institutions to support any service enterprise. However,
higher technical courses for engineering & technology, international law and finance are required to meet the
requirements of the imminent future.
4.5 Need for Skill Development
As the workforce is mostly unskilled, there is a need to develop their skills according to the need of the industry.
Workshops or on-site short term trainings may be organized by the suppliers of machineries on how to control the
temperature, operate machineries etc. The training should be a combination of theory sessions, on the job coach-
ing sessions and on the job supervision. For people joining with no relevant experience training in their respective
functional area would be mandatory. There should be a periodic skill assessment done by the management on the
basis of observation of on the job performance. Based on the findings, a training calendar needs to be drawn up.
.
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5.0 THE PLANT
5.1 Choice of Technology for Cattle Feed Manufacturing Process
The major operations involved in the production of animal feed are: raw materials preparation, primary
crushing, assorting and measuring, molasses mixing, fine crushing, pellet making, and packaging. Raw
and auxiliary materials are first charged into silos and tanks where they are made ready for further pro-
cessing. They are then processed by primary crusher. Crushed materials are further separated by means
of a sifter, and then stored in the assorting tanks according to the kind of raw materials. In assorting and
measuring operation, small amounts of additives are charged into the bins containing different assort-
ments of raw materials. The raw materials stored in the assorting tanks are used in accordance with the
desired proportion.
The raw materials are then mixed by means of a mixer. In this process, fatty ingredients are added to the
materials in order to raise the nutritional value of the feed. The feed obtained from the mixer is blended
with molasses. After the feed is blended with molasses, it is further crushed by means of the second
crusher. Assorted animal feed that is crushed into fine particles is further formed into pellets. The pellets,
which are cylindrical type and size, 6mm in diameter and 2cm in length, are then dried. The product is
next stored in the product tanks, weighed and packaged in jute bags.
Manufacturing Process Diagram of Animal Feed
Figure 3: Manufacturing Process
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Machinery & Equipment Required By Cattle Feed Producing Plant
The table below shows the machinery required by Cattle Feed Producing Plant. While the project is about man-
ufacturing animal feed, the manufacturing system proposed would have the capacity to process fish feed and
poultry feed as well.
Table 6: Machinery Requirement
S. No. Description Quantity
1 Tank & Silos for raw and auxiliary materials storage 5
2 Metal Screen & Shaker 1
3 Hammer Mill 2
4 Blender 1
5 Weighing Scale (5 tons) 4
6 Bagging Machine 1
7 Dust Collector 2
8 Product Tank 2
9 Pellet Producing Machine 1
10 Tanks for oil cakes and molasses 2
11 Boiler 1
5.2 Source
Grain Storage Silos
Capacity: 10 tons
Dimension: 3.6m*3.6m*3.19m
Weight: 1.7 ton
Volume: 14 cubic meters
Material: Steel
Brand Name: TSE
Model Number: TCZK03601
Supplier’s Details: Shelly Engineering Company Limited, China
Hammer Mill
Capacity (ton/hour): 2-220
Power: 11-220 KW
Brand Name: Hongii
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Model Number: PC Series, PCH Series
Supplier’s Details: Henan Hongii Mine Machinery Company Limited, China
Fully Automatic Bagging Machine
Voltage: 220V
Power (W): 3 KW
Dimension (L*W*H): 2.5*1.5*1.8m
Model Number: Namdhari FABM
Supplier’s Details: Namdhari Industrial Works, D-26 Focal Point,
Khanna-141401,Punjab, India
Pellet Machine
Brand Name: GOYUM
Model Number: 142
Voltage:220V
Supplier’s Details: Goyum Screw Press, India
Dust Collector
Brand Name: Casen/Hexie
Model Number: BLMB Series
Minimum Particle Size: 3-15g/cubic meters
Dimension (L*W*H): 1350*960*1320
Supplier’s Details: Xinxiang Casen Industrial Commerce Corporation, China
Weighing Machine
Brand Name: Hualitai
Model Number: hlt-208
Battery: 4V or 6V
Power Supply: AC/DC
Voltage: 220 V
Features: Rechargeable Battery, overload and low voltage indication, automatic standby mode
DETAILED FEASIBILITY REPORT - Animal Feed Unit
26
Boiler
Brand Name: YANO
Model Number: LSS
Dimension (L*W*H): 1480*1480*3100mm
Weight: 1500kg
Capacity: 1000kg/hr
Supplier’s Details: Shangai YANO Boiler,China
Product Tank
Brand Name: Huabo
Model Number: HBS
Capacity: 2.9 tons to 27 tons
Supplier’s Details: Huabo Technology Company Limited, China
5.3 Rate of Consumption of power, fuel, utilities & consumables
A plant with annual capacity of 16,000 tones is envisaged considering the market study and minimum economies
of scale. The plant will operate a single shift of 8 hours a day, and 320 days a year.
The table below shows the annual requirement of utilities:
Table 7: Annual Requirement of Utilities
Sl. No. Item Annual Requirement1 Electricity 175 kw
2 Water 10,000 cubic meter
3 Fuel Oil 50,000 liter
5.4 Raw Material Consumption
The table below shows the annual requirement of raw materials:
Table 8: Annual Requirement of Raw Materials
Sl. No. Description Quantity (Tons)
1 Oil Cake 3,450
2 Bran of Cereals 3,705
3 Molasses 750
4 Maize 6,000
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5 Salt 21
6 Limestone (ground) 24
7 Other grains (wheat, barley, etc) 450
8 Meal (bone/flesh/blood) 600
5.5 Manpower Requirement & Organization Chart
The table below shows the manpower requirement:
Table 9: Manpower Requirement
Serial Number Job Title Required No.
1 Plant Manager 1
2 Secretary 1
3 Accountant 1
4 Personnel Officer 1
5 Salesperson/purchaser 1
6 Cashier 1
7 Clerks 2
8 Store Keeper 2
9 Production Supervisor 1
10 Maintenance Engineer 1
11 Technician Operators 6
12 Laborers 6
13 Cleaner 2
14 Driver 2
15 Guard 4
5.6 Specification of Product & Byproduct
Types of Cattle Feed
a) Calf Starter: Specially formulated feed for
calves to be started from the 42nd day till 8
months.
Figure 4: Calf Starter
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b) Cattle Concentrate: Feed formulated for milking cows to
maintain health, ensure milk production and reproductive hea
lth.
c) Milk Ration: Milk ration is a high energy feed which ensures
higher milk production and maintenance of the cattle and is
recommended for milking cow producing more than 10 liters
of milk per day.
Nutrient Content of Cattle Feeds
Table 10: Nutrient Content
Types of Feeds ME(kcal/g) Moisture% CP% Ca% P%
Calf Starter 3,000 13% 19% 0.6% 0.5%
Cattle Concentrate 2,500 13% 18% 0.8% 0.7%
Milk Ration 2,890 13% 18% 0.85% 0.75%
5.7 Extent of Technical Assistance Needed Including Training
As the workforce is not so much skilled there is a need to develop their skills according to the need of the industry.
Workshops or on-site short term trainings may be organized by the suppliers of machineries on how to control
the temperature, operate machineries etc. The training should be a combination of theory sessions, on the job
coaching sessions and after that on the job supervision. The duration of training will be of 2 weeks, 1 week for
the theory and on the job training and 1 week for the supervision at a pre-fixed rate. The duration of training may
be extended later on if required.
Figure 5: Cattle Concentrate
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6.0 PLANT LOCATION & INFRASTRUCTUREThe location of a plant is determined on the basis of proximity to raw materials, availability of infrastructure and
distance to market outlets. It is proposed that this plant be located in Phuentsholing so that access to raw materials
is easy. Plus, Phuentsholing is a major commercial hub making the logistics of sale and distribution easy. The
other possible location is Samtse which provides easy access to the Indian border and has a rich source of home-
grown raw materials and a demand for the end product thanks to its large cattle population. Maize & wheat are the
major raw materials for the production of animal feed. Samtse, which is 81.4 km from Phuentsholing produced
13,647.15 metric tons and 167
metric tons of maize and wheat re-
spectively in 2005 [Source: Invest-
ment Opportunity Study-2006,
Bhutan]. In addition, Samtse’s
cattle population of 33,411 is the
highest in the region [Source: De-
partment of Livestock, Ministry of
Agriculture and Forests, Thimphu,
Bhutan].
Phuentsholing, under Chhukha
Dzongkhag, is the main gateway
to Bhutan and as a result, it has
become the biggest commercial
and industrial hub of the country.
6.1 Raw Material Availability
Maize & wheat are the major raw materials for the production of animal feed. Limestone, another raw material
required for production of animal feed is readily available in Chhukha Dzongkhag. Import of other raw materials
from India would be easy as Phuentsholing has close proximity to the Indian towns of Siliguri and Jaigaon.
6.2 Availability of Electricity
As of 2013, Bhutan has 5,021.27 km & 104.41 km of over-
head and underground high tension lines respectively [Source:
Statistical Yearbook of Bhutan, 2014]. This dzongkhag has
Chhukha Hydropower Plant which is the major source of elec-
tricity. Construction of three new mega hydroelectricity proj-
ects viz. 180 MW Bunakha Hydroelectric project, 540 MW
Ammochhu Hydroelectric project, and 570 MW Wangchu Hy-
droelectric project have been proposed.
Figure 6: Map of Bhutan
Figure 7: Chhukha Hydropower Plant
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6.3 Topography, Hydrology & Seismology Data Requirement
Topography, Hydrology & Seismology of the location must be checked before setting up the manufacturing plant.
Topography: Topography is a detailed map of the surface features of the land. It represents a particular area in
detail, including everything natural and manmade - hills, valleys, roads or lakes.
An objective of topography is to determine the position of any feature or more generally any point in terms of
both a horizontal coordinate system such as latitude, longitude, and altitude. Identifying (naming) features and
recognizing typical landform patterns are also part of the field. A topographic study may be made for detailed
information about terrain (vertical & horizontal dimension of land surface) and surface features is essential for
the planning and construction of any major civil engineering, public works, or reclamation projects.
Hydrology: Hydrology is the scientific study of the movement, distribution and quality of water on Earth includ-
ing the hydrologic science, water resources and environmental watershed sustainability. Hydrology is subdivided
into surface water hydrology, groundwater hydrology (hydrogeology), and marine hydrology.
Application of Hydrology
Determining the water balance of a region.
Determining the agricultural water balance.
Mitigating and predicting flood, landslide and drought risk.
Real-time flood forecasting and flood warning.
Assessing the impacts of natural and anthropogenic environmental change on water resources.
Assessing contaminant transport risk and establishing environmental policy guidelines.
Seismology: Seismology is the scientific study of earthquakes and the propagation of elastic waves through the
Earth or through other planet-like bodies. The field also includes studies of earthquake environmental effects,
such as tsunamis as well as diverse seismic sources such as volcanic, tectonic, oceanic, atmospheric, and artificial
processes (such as explosions).Seismic waves are elastic waves that propagate in solid or fluid materials.
They can be divided into body waves that travel through the interior of the materials; surface waves that travel
along surfaces or interfaces between materials; and normal modes, a form of standing wave.
Seismological instruments can generate large amounts of data. Systems for processing such data include:
• CUSP (Caltech-USGS Seismic Processing)
• RadExPro seismic software
• SeisCom
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6.4 Availability of Land
There are two industrial estates in Phuentsholing. The Phuentsholing Industrial Estate has an area of 61 acres,
including one acre near Doti khola, and houses more than 15 industrial sheds. The Pasakha Industrial Estate is
located 16 km east of Phuentsholing in an area of 267 acres [Source: Eleventh Five Year Plan].
6.5 Availability of Transportation Facilities
Apart from national highways, the Dzongkhag have good network of roads and bridges:
Table11: Types of Road
S. No. Road Type Km
1 National Highway 272.00
2 Dzongkhag Road 58.6
3 Urban Road 28.6
4 Farm Road 334.6
5Access Road (Forest Road & Power
Tiller Road)231.5
(Source: Statistical Yearbook of Bhutan 2014)
6.6 Availability of Ancillary Facilities
An industrial unit which manufactures parts or intermediaries, or provides services is ancillary unit. A large
chunk of its production or services is used by another industrial taking. An ancillary unit is typically small -
whose investment in fixed assets in plant and machinery, does not exceed Nu. 7.5 million. So a farmer’s cooper-
ative growing maize could be an ancillary unit for animal feed.
6.7 Availability of Housing, Schooling and Hospital Facilities
Housing
The amount of land suitable and available for urban development is extremely constrained on the Bhutanese side
of the border in Phuentsholing.
The administration is seeking to extend
the municipal area beyond the present ju-
risdiction of the City Corporation. Parcels
of land available in surrounding vicini-
ty have been analyzed for incorporation
into new development area –known as the
Phuentsholing Urban Area (PUA).
Housing in Phuentsholing has received a Figure 8: Housing of Phuentsholing
DETAILED FEASIBILITY REPORT - Animal Feed Unit
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major boost by the delineation of the PUA. It is important to recognize that private developments are coming up
in these surrounding areas and the city is expanding. The PUA delineated for urban use is 1968.0 ha. (19.68 sq.
kms.).
The City Corporation area comprises of multi-storeyed (newly built G+4, mainly private buildings), low rise and
detached housing units. The multi-storeyed
structures (60%-90% ground coverage)
have increased in number.
Schooling
There are four renowned schools in Phuent-
sholing. These are:
1. Tenzin School
2. Phuentsholing Higher Secondary
School
3. Phuentsholing Lower Secondary
School
4. Reldri Higher Secondary School
The table given below shows the number and type of schools in Chhukha Dzongkhag as of 2013:
S. No. Type of School Number of School
1 Extended Classroom 8
2 Primary School 26
3 Lower Secondary School 3
4 Middle Secondary School 6
5 Higher Secondary School 2
(Source: Statistical Yearbook of Bhutan, 2014)
Hospital Facilities
There are healthcare facilities in Chhukha dzongkhag
in general and Phuentsholing in particular.
While a general hospital already exists, residents of
Phuentsholing also have easy access to India where
private medical institutes offer a range of health
care solutions.
In all, Chhukha dzongkhag has three hospitals and
Table 12: Number & Type of Schools
Figure 9: District Hospital at Phuentsholing
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other healthcare facilities.
Table 13: Number & Type of Hospitals
S. No. Type of Hospital Number of Hospitals
1 Hospital 3
2 Basic Health Units 19
3 Out Reach Clinics with shed 24
4 Out Reach Clinics without shed 15
Total 61
(Source: Statistical Yearbook of Bhutan, 2014)
6.8 Communication Facilities
Bhutan Telecom Limited, Tashi InfoComm Limited, Samden Tech and Drukcom are the four Internet Service
Providers (ISPs) in the country. Bhutan Telecom Limited is the sole provider of fixed-line telecommunication
services while cellular mobile services are provided by Bhutan Telecom Limited and Tashi InfoComm Limited.
With the exception of Bhutan Telecom, all other ISPs are private sector ventures.
Road connections and quality of roads are reasonably good.
With a series of new road constructions and widening along
the Thimphu-Phuentsholing highway, travel time to the
capital is expected to be shortened to less than five hours.
6.9 Presence of Approach Road
Presence of approach road from and to the plant must be
taken into consideration before zeroing down on the plot.
6.10 Factory layout plan
Figure 10: Road Connectivity from
Phuentsholing to other Dzongkhags
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7.0 ENVIRONMENTAL ASPECTSThe following environmental aspects need to be considered.
Air Quality
Animal feeding operations produce several types
of air emissions, including gaseous and particulate
substances, and concentrated animal feeding oper-
ations (CAFOs) produce even more emissions due
to their size. The primary cause of gaseous emis-
sions is the decomposition of animal manure, while
particulate substances are caused by the movement
of animals.
The most typical pollutants found in air surround-
ing CAFOs are ammonia, hydrogen sulfide, meth-
ane, and particulate matter, all of which have varying human health risks. Most manure produced by CAFOs is
applied to land eventually and this land application can result in air emissions.
Odors
One of the most common complaints associated with CAFOs are the odors produced. The odors that CAFOs emit
are a complex mixture of ammonia, hydrogen sulfide, and carbon dioxide, as well as volatile and semi-volatile
organic compounds (Heederik et al., 2007). These odors are worse than smells formerly associated with smaller
livestock farms. The anaerobic reaction that occurs when manure is stored in pits or lagoons for long amounts of
time is the primary cause of the smells. Odors from waste are carried away from farm areas on dust and other air
particles.
Insect Vectors
CAFOs and their waste can be breeding grounds for insect vectors. Houseflies, stable flies, and mosquitoes are
the most common insects associated with CAFOs. Houseflies breed in manure, while stable and other flies breed
in decaying organic material, such as livestock bedding. Mosquitoes breed in standing water, and water on the
edges of manure lagoons can cause mosquito infestations to rise. Flies can change from eggs to adults in only 10
days, which means that substances in which flies breed need to be cleaned up regularly.
Antibiotics
Antibiotics are commonly administered in animal feed in the United States. Antibiotics are included at low levels
in animal feed to reduce the chance for infection and to eliminate the need for animals to expand energy fighting
off bacteria, with the assumption that saved energy will be translated into growth. The main purposes of using
non-therapeutic doses of antimicrobials in animal feed is so that animals will grow faster, produce more meat,
and avoid illnesses. Supporters of antibiotic use say that it allows animals to digest their food more efficiently,
get the most benefit from it, and grow into strong and healthy animals. The trend of using antibiotics in feed has
increased with the greater numbers of animals held in confinement. The more animals that are kept in close quar-
ters, the more likely it is that infection or bacteria can spread among the animals. Seventy percent of all antibiotics
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and related drugs used in the U.S. each year are given to beef cattle, hogs, and chickens as feed additives. Nearly
half of the antibiotics used are nearly identical to ones given to humans (Kaufman, 2000). There is strong evi-
dence that the use of antibiotics in animal feed is contributing to an increase in antibiotic-resistant microbes and
causing antibiotics to be less effective for humans (Kaufman, 2000). Resistant strains of pathogenic bacteria in
animals, which can be transferred to humans thought the handling or eating of meat, have increased recently. This
is a serious threat to human health because fewer options exist to help people overcome disease when infected
with antibiotic-resistant pathogens. The antibiotics often are not fully metabolized by animals, and can be present
in their manure. If manure pollutes a water supply, antibiotics can also leech into groundwater or surface water.
Other Effects – Property Values
Most landowners fear that when CAFOs move into their community their property values will drop significant-
ly. There is evidence that CAFOs do affect property values. The reasons for this are many: the fear of loss of
amenities, the risk of air or water pollution, and the increased possibility of nuisances related to odors or insects.
CAFOs are typically viewed as a negative externality that can’t be solved or cured. There may be stigma that is
attached to living by a CAFO. The most certain fact regarding CAFOs and property values are that the closer a
property is to a CAFO, the more likely it will be that the value of the property will drop. The exact impact of CA-
FOs fluctuates depending on location and local specifics. Studies have found differing results of rates of property
value decrease. One study shows that property value declines can range from a decrease of 6.6% within a 3-mile
radius of a CAFO to an 88% decrease within 1/10 of a mile from a CAFO (Dakota Rural Action, 2006). Another
study found that property value decreases are negligible beyond 2 miles away from a CAFO (Purdue Extension,
2008). A third study found that negative effects are largest for properties that are downwind and closest to live-
stock (Herriges, Secchi, & Babcock, 2005). The size and type of the feeding operation can affect property value
as well. Decreases in property values can also cause property tax rates to drop, which can place stress on local
government budgets.
Environmental aspects are of high importance during setting up any plant. These aspects play a vital role in the
ecological balance.This chapter covers the environment management aspects for the project. The degree of detail
is based on the Reference Document, Environment Assessment Act, 2000 and the Regulation for the Environ-
mental Clearance of Projects, 2002. Reference has also been made to the Procedures for Project Review in the
NEC guidelines, rules and regulations for establishment and operation of Industrial and commercial ventures
in Bhutan, 1995. In accordance to these, for this project an Environment Assessment (EA) document including
Environment Management Plan (EMP) and a monitoring plan shall be required. Since the impacts of the project
are known, an Initial Environmental Evaluation is not required.
This report includes characterization of environmental consequences due to various project activities,
both during the construction phase as well as the operational phase and measures to mitigate them. The
elaboration of these features shall meet the requirements of EA document. The environmental elements
considered for this purpose are shown in the following table.
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Table 14: Elements considered for environmental impacts
Element Element Element1 Land Use 2 Soil 3 Ecology
4 Subsidence and Landslide 5Noise Quality and Ground Vibration
6 Vehicular Movement
7 Water Resources 8 Hydrology 9 Water Quality 10 Air Quality 11 Solid Waste 12 Human Settlement
13S o c i o - e c o n o m i c Conditions
14 Aesthetics 15Site of Cultural Heritage and Scenic Importance
Mitigation measures based on the systems & practices foreseen in plant design, for addressing each
environmental component has been described.
It is to be understood that this report meets the requirements of initial Environmental Information (EI),
as per the prevalent norms in Bhutan.
Environmental Impacts
The environmental impacts that are likely to arise out of the proposed project, during their construction
and operation phases, are summarized in the sub-sections that follow.
During Construction Phase
Table15: Environmental impacts during construction phase
S. No
Attributes Problem Impacts due to Plant
1 Land UseDegradation in land values due to construction waste & construction silt runoff.
2 SoilLoss of soil due to clearing, excavation, soil removal, road construction, etc.
3 Ecology Encroachment in ecology; loss of flora and fauna.
4 Water Resources Depletion of ground water resources, if used.
5 Water Quality A sewage treatment plant will be installed
6 Air Quality Fugitive emission and dust impair air quality.
7 Noise QualityIncrease in noise levels.
8 Vehicular MovementTraffic congestion/accidents and adverse effects on air
quality & noise levels.
9 Solid wasteIncreased excavated soil, debris, garbage, etc., at the
construction site.
10 Aesthetics Aesthetics marred by project structures.
11Site of Cultural, Historical and Sce-
nic Importance
Impact on the site of Cultural, Historical and Scenic
Importance, if available
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During Operation Phase
Table16: Environmental impacts during operation phase
S. No
Attributes Problem Impacts due to Plant
1 Land Use Area is industrial/agricultural land.
2 Soil Positive impact due to horticulture and plantation.
3 EcologyNo major impact due to vegetation and plantation in
the surrounding area.
4 Subsidence and Landslide Problems No impact.
5 Water ResourcesDepletion of water resources due to water
withdrawal.
6 Water QualityDischarge of sewage and storm water run-off may
cause deterioration of water quality.
7 Air QualityIncrease in TSPM and RPM levels and impairment of
ambient air quality.
8 Noise Quality Increase in noise level in the surrounding area.
9 Vehicular MovementTraffic congestion/accidents in conjunction with loss
in air quality.
10 Solid WasteInappropriate disposal of garbage/ sewage could be
hazardous.
11 Aesthetics Loss in environ-aesthetics to some extent.
12Site of Cultural, Historical and
Scenic ImportanceImpact on the site of Cultural, Historical and Scenic
Importance, if available
13 Human SettlementNo impact as no relocation/resettlement required if
industrial area.
14 Socio-Economic conditionIncreased economic activities in the region resulting
in new jobs and better quality of life of people.
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Environmental Management
The mitigation measures including prevention and control for each environmental component have
been delineated in the sub-sections that follow.
During Construction Phase
Table 17: Mitigation measures during construction phase
S. No
Attributes Problem Impacts due to Plant
1 Land Use Plantation and green belt development shall commence.
2 Ecology Plantation and vegetation shall commence
3 Water Resources Controlled use of water resources
4 Water QualityDebris shall be isolated from waste water and disposed off sepa-
rately. All waste shall be treated in septic tanks and ETP.
5 Air QualityRegular water sprinkling at the construction site. Construction ma-
terials shall be totally covered during transportation.
6 Noise Quality
Use of silencers, noise isolators etc. in machines. Use of equip-
ment, which keep noise levels within limits prescribed by regula-
tory agencies.
7 Solid WasteSewage treatment plant will be installed in the colony as well as
at the plant.
8 Vehicular Movement Proper metallic access road will be constructed upto the site.
9 AestheticsConstruction activities commensurate with landscaping in the area.
During Operation Phase
Table18: Mitigation measures during operation phase
S. No Attributes Problem Impacts due to Plant
1 Land Use Development of green belt in and around the plant.
2 Soil Tree plantation all around the plant.
3 Ecology Development of green belt in and around the plant.
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4 Water Resources
There shall be a perpetual demand on water resources. The water
requirement in the plant will have no adverse effect on the water
source and the water required at the plant can be adequately met
from the current allocation to the plant from the community.
5 HydrologyThe plant shall take into consideration the local geological, geomor-
phological and hydro-geological settings.
6 Water Quality
There will be substantive generation of waste water at the plant
premises besides the use at the staff quarters for sanitation purpos-
es. This waste water will be collected in septic tanks.
7Air Quality
Provision of suitable bag filters for dust control. Provision of leak
proof and properly covered transport equipment to prevent dust
from being airborne. Adequate dust suppression and extraction
facilities at material handling and transfer points. Provision of green
belt around the plant. Provision of a well-equipped workshop for
regular maintenance of vehicles in order to control emissions
8Noise Quality and
Ground Vibration
Noise abatement at source by choosing machinery and equipment
suitably. Proper mounting of equipment and ventilation systems.
Provision of noise insulating enclosures or padding, wherever
possible. Provision of personal protective equipment for workers.
Dense belt of trees to act as acoustic barriers.
9 Vehicular Movement
Provision of wide tar/concrete road. Provision of a well-equipped
workshop for regular maintenance of vehicles in order to control
emissions.
10 Solid Waste
No solid waste will be generated besides from the staff quarters.
Proper disposal of the waste based on terrain, landscaping, drainage
& aeration. Septic tanks will be constructed at the staff quarters.
11 Aesthetics Landscaping and use of vegetation.
12 Human Settlement Not applicable.
13Socio-Economic
Conditions
Maintaining good communication with local communities before,
during and after construction. Training of local personnel for specif-
ic (skilled) positions. Welfare measures for local populace.
DETAILED FEASIBILITY REPORT - Animal Feed Unit
40
Solutions Adopted in the Technical Concept
The guidelines for various industrial units, stipulate “limiting values” for water quality, air quality and
noise quality.
For the project, adequate pollution control equipment has to be considered. The general requirement and
measures to be considered for arresting the pollutants is tabulated in the following table.
Table 19: Estimated release of pollutants
S.No. General Requirement Measure Considered1 Water Quality
a
For plantTreated Effluent discharges should have a pH
in the range of 6-9.
Sewage treatment plant of adequate capac-
ity to control the pH and TSS. 2 Air Quality
a
For Plant The air quality should conform to the limiting
values of SPM.
Bag Filters & modern burner with precise
fuel dosing system should be considered
for the air quality.3 Noise Quality
a
For Plant A maximum increase in background levels of
3 dB (A) or the following levels:
The plant should be designed not to gen-
erate more than 60 dB (A) maximum. All
high noise emitting machinery such as the
roller mills will be enclosed in a housing
(lined with a 2 inch glass wool) so as to
minimize sound emissions outside the
plant. The walls of the structure housing
the machinery will be made of mud bricks
to absorb the sound
Residential 55/45 dB (A) Industrial 75/70 dB (A) Commercial 65/55 dB (A)
Occupational Health and Safety
All workers in the plant, crusher and mine locations will be provided with and shall be mandated to use protective
gear and equipment to ensure their personal safety. Safety boots, gloves, eye goggles, helmets, nose masks
(wherever necessary), ear plugs, reflective jackets and other protective equipment will be provided by the
company. Trainings on safety for all new recruits as well as refresher courses on safety for the regular staff will
be conducted regularly from time to time in order to ensure that safety procedures are followed at all times.
A safety inspector shall be appointed (plant manager) and an OHS committee comprising of employees shall be
formed to monitor and ensure compliance to safety norms and procedures.
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
8.0 PROJECT IMPLEMENTATION & SCHEDULEThe key factors that would facilitate successful and timely project implementation are:
• Proper choice of technology and machinery suppliers.
• Adequate diligence in formulating the technical concept and system design.
• Proper choice of contractors for civil construction and erection of equipment.
• Formulation of an effective project team led by an experienced Project Manager.
• Establishment of an efficient system for project planning & monitoring including reporting procedures
for progress review & co-ordination.
Implementation Strategy
Typically any project has four core dimensions which are as follows –
• Engineering: this directly impacts the smooth operations of the plant over its entire life.
• Procurement: is critical on account of the impact that it has on investment and performance benchmarks
and also in ensuring the choice of appropriate technology.
• Construction: is critical in terms of its impact on completion quality and the duration of the project phase.
• Project Management: other than its obvious impact on project timeliness it also contributes to risk
minimization for the promoter.
Implementation Schedule
It is suggested that the project implementation will not take more than 12 months out of which six months will be
allotted for pre project activities. And the rest should be done within the next six months from the date the project
is approved by the Ministry of Economic Affairs.
Pre-project Activities Include:
1. Hydrological investigations for ensuring the availability of the requisite quantum of water.
2. Receipt of requisite clearances from competent authorities with respect to :
• Environmental clearance
• Sanction and supply of power
• Sanction and supply of water
• Tying up sources of funds for the project to achieve financial closure
• Procurement of land
• Topographic & Seismologic survey for plant area
• Floating tender inquiries and evaluation of order
DETAILED FEASIBILITY REPORT - Animal Feed Unit
42
3. Site Preparation & Levelling of land.
The table given below shows the project schedule:
Table20: Project Schedule
Sl.No. ActivityMonths
1 2 3 4 5 6 7 8 9 10 11 12
1 Site Preparation & Levelling of Land
2Construction of factory shed & Civil Infrastructure
3 Hiring of People (Phase 1)
4 Installation of Machineries
5 Hiring of people (Phase 2)
6 Training & Commissioning of People
7 Trial Production Runs
Table 21: Colour Coding
Colour Coding
Site Preparation
Construction & Civil Infrastructure
Manpower Hiring (Phase 1)
Installation of Machineries
Manpower Hiring (Phase 2)
Training & Commissioning
Trial Production Runs
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
9.0 COST PRESENTATIONProject cost/ Total Investment
Summary:
Table 22: Project Summary
Plant Capacity: 50 tons per day, 16000 tons per annum
No. of Shift: One ( 8 hours per shift ) per day
Working Days in Year: 320
D.S.C.R. : 1.97
B.E.P. : 19.18%
IRR : 22.97
NPV : Nu. 12.29 millions
Cost of Project:
The total cost of the project is estimated at Nu. 33.24 millions as per the particulars given in the following table
Table 23: Project Cost
S. No. ParticularsValue
(Nu. In Millions)
1 Land 1,000 sq. meters (On lease)
2 Building & Civil Construction 7.8
3 Plant and Machinery 9.05
4 Misc. Fixed Assets 5
5 Preliminary Expenses 0.1
6 Pre Operative Expenses 4.85
7 Margin Money for Working Capital 4.25
8 Contingencies 10% of Fixed Assets 2.19
Total 33.24
Means of Finance
The table given below shows the means of finance:
Table 24: Means of Finance
S. No. Particulars Value (Nu. In Millions)
1 Promoters’ Equity 13.30
2 Term loan from FIs 19.94
Total 33.24
DETAILED FEASIBILITY REPORT - Animal Feed Unit
44
The term loan has been arrived based on the breakup of individual investment item and bank’s financing pattern
as given in table.
9.1 Capital Costs
Land, Building & Civil Works
The total land area of the plant including the open space for future expansion is 1,000 square meters. The built-up
area required by the plant is estimated at 600 square meters. The cost for Building & Civil Works for a covered
area of 600 square meter is estimated at Nu. 7.8 millions taking construction cost per square meter to be Nu.
13,000.
Machinery
The table given below shows the cost of machinery:
Table 26: Cost of Machinery
S. No. Description QuantityTotal Cost
(Nu. In Millions)
1Tank & Silos for raw and auxiliary ma-
terials storage5 1.00
2 Metal Screen & Shaker 1 0.50
3 Hammer Mill 2 1.00
4 Blender 1 0.25
5 Weighing Scale (5 tons) 4 .08
6 Bagging Machine 1 0.7
7 Dust Collector 2 0.3
8 Product Tank 2 0.2
9 Pellet Producing Machine 1 3
10 Tanks for oil cakes and molasses 2 0.2
11 Boiler 1 1.00
12Installation & commissioning charges
(10%)1 0.82
Total Cost 9.05
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
Other Fixed Assets
The table given below shows the cost of other fixed assets:
Table 27: Cost of other fixed assets
S. No. Particulars Qty. (Nos)Rate (Nu. In Mil-
lions)
Amount
(Nu. In Millions)
1 Office Equipment - 0.1
2 Furniture and Fixture 0.5
3 Electrical Accessories 0.5
4Electrical cabling, ducting &
earthing1.00
5 Computer System 1.00
6Water Treatment Plant – 5,000
liters per hour0.25
7 Fire Fighting 10 0.005 0.05
8 Utility Vehicles 02 0.8 1.6
Total 5.00
Pre Operating Expenses
Preliminary Expenses
The table given shows the preliminary expenses:
Table 28: Preliminary Expenses
S. No. Particulars Estimated Amount ( Nu. in millions)
1 Company Formation Expenses, Legal & Liaisoning 0.1
Total 0.1
Preoperative Expenses
Expenses incurred prior to commencement of commercial production are covered under this head that total Nu.
4.85 millions
Pre-operative expenses include establishment cost, rent, taxes, traveling expenses, interest during construction
insurance during construction and other miscellaneous expenses. Based on the financing pattern envisaged,
interest during construction has been estimated considering the phasing of in the cash requirements and the
norms prevalent for various sources of funds. It has been assumed that the funds from various sources shall be
available, as required.
Based on the project implementation schedule, the expected completion dates of various activities and the
DETAILED FEASIBILITY REPORT - Animal Feed Unit
46
estimated phasing of cash requirements, interest during construction has been computed. Other expenses, under
this head have been estimated on a block basis, based on information available for similar projects.
Table 29: Preoperative Expenses
S. No. ParticularsEstimation
(Nu. In millions)
Amount
(Nu. In millions)
1 Interest up to Production @ 13% on term loan for 1 year on term
loan2.59
2 Insurance during Construction Period0.25% of fixed
assets0.05
3Electricity Charges during Construction Peri-
od(estimated)0.1
4 Marketing Launch Expenses 0.3
5 Technology Know-how and Consultancy Fees 0.8
6 Training Expenses 0.5
7 Traveling Expenses 0.5
Total 4.85
9.2 Operating Cost
Cost of Raw Materials
The table given below shows the costing of raw materials:
Table 30: Cost of Raw Materials
S. No. Description Quantity (Tones) Unit PriceTotal Cost (Nu. in
millions)
1 Oil Cake 3,450 15823.5 54.59
2 Bran of Cereals 3,705 16008.3 59.31
3 Molasses 750 9114 6.84
4 Maize 6,000 13700.4 82.20
5 Salt 21 12583.2 0.26
6 Limestone (ground) 24 2604 0.06
7Other grains (wheat, barley,
etc)450 173686 78.16
8 Meal (bone/flesh/blood) 600 22870.1 13.72
Grand
Total295.15
Note: The cost for packing material (sack) is excluded from the annual cost of raw materials. It is included in distribution expenses
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
Land Lease Charge
Land Lease Rate: The land having an area of 1,000 square meters (10,758 square feet) has been considered on
lease @ Nu.4.00 per sq. ft. per annum for first three years and @ Nu. 6.00 per sq feet for the fourth year and
subsequently @ 3% increase every year.
The table given below shows the rate of land lease:
Table 31: Land Lease Charges
S. No. YearLease Rate
Per Sq. Ft Per Year (Nu.)
Lease Charges
Per Annum
(Nu. In Millions)
1 1st Year 4.00 0.043
2 2nd Year 4.00 0.043
3 3rd Year 4.00 0.043
4 4th Year 6.00 0.065
5 5th Year 6.20 0.067
6 6th Year 6.40 0.069
7 7th Year 6.60 0.071
8 8th Year 6.80 0.073
9 9th Year 7.00 0.075
10 10th Year 7.21 0.078
Cost of Utilities
The table below shows the costing of utilities:
Table 32: Cost of Utilities
S. No. Item Annual Requirement Unit CostCost
(Nu. in Millions)
1 Electricity 450,000 kilo watt hour1.81
Nu./kWh0.82
2 Water 10,000 cubic meter3.49 Nu./cubic
meter0.04
3 Furnace Oil 50,000 liters 1.49
Grand
Total2.35
DETAILED FEASIBILITY REPORT - Animal Feed Unit
48
Manpower Costing
The table below shows the costing of manpower:
Table 33: Manpower Costing
S.No. Job Title Required No. Annual Salary (Nu. In Millions)
1 Plant Manager 1 0.25
2 Secretary 1 0.20
3 Accountant 1 0.14
4 Personnel Officer 1 0.25
5 Salesperson/purchaser 1 0.14
6 Cashier 1 0.08
7 Clerks 2 0.18
8 Store Keeper 2 0.12
9 Production Supervisor 1 0.15
10 Maintenance Engineer 1 0.2
11 Technician Operators 6 0.72
12 Laborers 6 0.43
13 Cleaner 2 0.11
14 Driver 2 0.18
15 Guard 4 0.24
Total 3.39
Sales Realization
It is assumed that 60% capacity utilization will be achieved during first year of operation, 70% in the second
year and 80% from the third year onwards. The average selling price is calculated on the basis of the retail prices
prevalent in Bhutan at the time of making this report. This has worked out to 450 USD per ton = Nu. 28.35 per kg.
The price realizable by the company after allowing for transportation and dealer margin (totally 15%) is 24.10.
Accordingly the revenues are:
Table 34: Sales Realisation
Nu. in Millions
Total sales realization at 100% 385.56
First year 60% 231.34
Second Year 70 % 269.89
Third Year 80% 308.45
Term Loan Requirement from Financial Institutions
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
The table below shows the term loan requirement:
Table 35: Term Loan Requirement
S. No. ParticularsAmount (Nu.
In millions)
Promoters
Contribution
(Nu. In
millions)
Bank Loan
(Nu. In mil-
lions)
1 Land 1,000 sq meters 0.00
2 Building & Civil Construction 7.8
3 Plant & Machinery 9.05
4 Other Fixed assets 5
5 Preliminary Expenses 0.1
6 Pre-operative Expenses 4.85
7Margin Money for Working
Capital4.25
8 Contingencies 2.19
Total 34.24 13.30 19.94
Working Capital Requirement
The table below shows the working capital requirement:
Table 36: Working Capital Requirement
S. No.
Particulars Period Margin Amount (Nu. In Mil-
lions)
Promoters Contribution
(Nu. In Millions)
Bank Loan (Nu. In
Millions)
1 Raw Material 15 days 25% 7.38 1.84 5.53
2 Receivables 15 days 25% 9.64 2.41 7.23
Total 17.02 4.25 12.76
Estimated Cost of Production & Profitability
The profitability projections have been worked out for 10 years; at 60% capacity utilization during first year of
operation, 70% in second year and 80% from third year onwards and following assumptions and basis as relevant
and applicable to Bhutan have been considered while preparing the profitability.
• Repairs & maintenance have been taken as @4% p.a. on fixed assets.
• Bank interest rate has been calculated @13% p.a. on term loan & working capital loan.
• Insurance charges @0.25% on all assets in first year, then @5% decrease every year.
• Power & water charges are increased @5% every year.
• Administrative expenses have been increased @5% every year.
• Debt equity ratio has been taken to be 60:40 for term loan.
DETAILED FEASIBILITY REPORT - Animal Feed Unit
50
• Margin money on bank loan has been considered @ 25% on working capital
• Bank loan has been considered for repayment in 8 years with one year moratorium
• Preliminary exp. will be written off @10% every year in next 10 years.
• Pre operative exp. will be written off from II year @10% every year in next 10 years.
• Straight Line Depreciation has been charged taking useful life for buildings to be 30 years with a residual
value of 10%; 7 years on other fixed assets and 6 years on machinery with no residual value.
• Insurance, lease rent & interest has been taken as fixed cost for calculating B.E.P.
• Income tax has been charged @30% every year as per Bhutan’s tax rates.
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
10.0 FINANCIAL ANALYSIS10.1 ProfitabilityThe table below shows the profitability:
Table 37: Profitability
Heads Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
RM 177.08 206.60 236.11 236.11 236.11 236.11 236.11 236.11 236.11 236.11
Utilities 2.35 2.47 2.59 2.72 2.86 3.00 3.15 3.31 3.47 3.65
Salary 3.39 3.56 3.74 3.92 4.12 4.33 4.54 4.77 5.01 5.26
Fringe benefits
0.51 0.53 0.56 0.59 0.62 0.65 0.68 0.72 0.75 0.79
Insurance 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 0.04 0.03
Repair & maintenance
0.87 0.92 0.96 1.01 1.06 1.12 1.17 1.23 1.29 1.36
Land Lease Rate
0.04 0.04 0.04 0.06 0.06 0.06 0.07 0.07 0.07 0.07
Other Admin expenses
0.14 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 0.21
Production Cost
184.44 214.31 244.20 244.62 245.04 245.48 245.94 246.43 246.94 247.48
Sales 231.34 269.89 308.45 308.45 308.45 308.45 308.45 308.45 308.45 308.45
S&D Cost 34.70 40.48 46.27 46.27 46.27 46.27 46.27 46.27 46.27 46.27
Cost of Sales 219.14 254.79 290.47 290.89 291.31 291.75 292.21 292.70 293.21 293.74
PBIDT 12.20 15.10 17.98 17.56 17.14 16.70 16.24 15.75 15.24 14.70
Interest on TL
2.59 2.43 2.11 1.78 1.46 1.13 0.81 0.49 0.16 0
Interest on Loan for
WC1.66 1.66 1.66 1.66 1.66 1.66 1.66 1.66 1.66 1.66
Total Interest 4.25 4.09 3.76 3.44 3.12 2.79 2.47 2.14 1.82 1.66
Deprecia-
tion2.36 2.36 2.36 2.36 2.36 2.36 1.53 0.23 0.23 0.23
PAD 5.59 8.65 11.85 11.76 11.66 11.55 12.24 13.37 13.18 12.81
Write off POE
0 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48 0.48
Write off PE 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10
DETAILED FEASIBILITY REPORT - Animal Feed Unit
52
PBT 5.49 8.06 11.27 11.17 11.08 10.96 11.66 12.79 12.60 12.23
Tax @ 30% 1.65 2.42 3.38 3.35 3.32 3.29 3.50 3.84 3.78 3.67
PAT 3.84 5.64 7.89 7.82 7.76 7.67 8.16 8.95 8.82 8.56
Accumulated Profit
3.84 9.49 17.37 25.20 32.95 40.63 48.79 57.74 66.56 75.12
NPR 1.66 2.09 2.56 2.54 2.51 2.49 2.65 2.90 2.86 2.77
ROI 2.40 3.75 5.24 5.20 5.16 5.10 5.42 5.95 5.86 5.69
10.2 Calculation of Interest on Term Loan The table below table shows the interest on term loan:
Table 38: Interest on Term Loan (Figures in Nu. millions)
Year Opening Balance Repayment Closing Balance Interest
1 19.94 0.00 19.94 2.59
2 19.94 2.49 17.45 2.43
3 17.45 2.49 14.96 2.11
4 14.96 2.49 12.46 1.78
5 12.46 2.49 9.97 1.46
6 9.97 2.49 7.48 1.13
7 7.48 2.49 4.99 0.81
8 4.99 2.49 2.49 0.49
9 2.49 2.49 0.00 0.16
10.3 DSCR Calculation
The table below shows the computation of Net Operating Income:
Table 39: Net Operating Income
Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10
PAT 3.84 5.64 7.89 7.82 7.76 7.67 8.16 8.95 8.82 8.56
Dep. 2.36 2.36 2.36 2.36 2.36 2.36 1.53 0.23 0.23 0.23
Int 4.25 4.09 3.76 3.44 3.12 2.79 2.47 2.14 1.82 1.66
NOI 10.45 12.09 14.01 13.62 13.23 12.83 12.16 11.33 10.88 10.45
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
The table below shows the computation of Debt Services:
Table 40: Debt Services
Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10
Repayment 0.00 2.49 2.49 2.49 2.49 2.49 2.49 2.49 2.49
Lease 0.04 0.04 0.04 0.06 0.06 0.06 0.07 0.07 0.07 0.07
Int 4.25 4.09 3.76 3.44 3.12 2.79 2.47 2.14 1.82 1.66
DS 4.29 6.62 6.29 5.99 5.67 5.35 5.02 4.70 17.76 13.23
The table below shows the computation of DSCR (Net Operating Income/Debt Services):
Table 41: DSCR
Year1 Year2 Year3 Year4 Year5 Year6 Year7 Year8 Year9 Year10
DSCR 2.44 1.83 2.23 2.27 2.33 2.40 2.42 2.41 0.61 0.79
10.4 Break Even Point
The table below shows the calculation of Break Even Point:
Table 42: Break Even Point
Calculation of B.E.P 1st Year 2nd Year 3rd Year
Sales 231.34 269.89 308.45
Variable Cost 219.04 254.70 290.38
Fixed Cost 4.35 4.18 3.85
Break Even Point
(B.E.P)21.21% 19.27% 17.07%
Average B.E.P 19.18%
Note on unit Costing & Pricing
Table 39: Unit Costing and Pricing
Heads Average %
Raw Material Costs 76.55
Sales & Distribution Costs 15.00
Overheads 6.08
Margin 2.37
Total 100.00
DETAILED FEASIBILITY REPORT - Animal Feed Unit
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10.5 NPR and RI
The table below shows the Net Profit Ratio & Return on Investment:
Table 43: NPR and RI
Ratio 1st Year2nd
Year
3rd
Year
4th
Year
5th
Year
6th
Year
7th
Year
8th
Year
9th
Year
10th
YearNet Profit
Ratio1.66 2.09 2.56 2.54 2.51 2.49 2.65 2.90 2.86 2.77
Return on
Investment2.40 3.75 5.24 5.20 5.16 5.10 5.42 5.95 5.86 5.69
10.6 Cash Flow Statement (Nu. In Millions)
The table below shows the cash flow statement:
Table 44: Cash Flow
S.
No.Years 0 1 2 3 4 5 6 7 8 9 10
1 Inflows
1.1Net Profit
After Tax0.00 3.84 5.64 7.89 7.82 7.76 7.67 8.16 8.95 8.82 8.56
1.2 Depreciation 0 2.36 2.36 2.36 2.36 2.36 2.36 1.53 0.23 0.23 0.23
1.3
Preliminary
Expenses
Write Off
0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
1.4
Pre Operative
Expenses
Write off
0 0 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95
1.5Total Cash
Inflows0 6.30 9.05 11.30 11.23 11.16 11.08 10.74 10.23 10.10 9.84
2 Outflows
2.1Investment in
Fixed Assets21.85
2.2
Investment
in Working
Capital
1.63
2.3
Interest on
Term Loan
and WC
4.25 4.09 3.76 3.44 3.12 2.79 2.47 2.14 1.82 1.66
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DETAILED FEASIBILITY REPORT - Animal Feed Unit
2.4Total Out-
flows23.48 4.25 4.09 3.76 3.44 3.12 2.79 2.47 2.14 1.82 1.66
3 Net Cashflow -23.48 2.05 4.96 7.53 7.79 8.05 8.29 8.27 8.09 8.28 8.18
4Net Present
Value-23.48 1.81 3.89 5.22 4.78 4.37 3.98 3.51 3.04 2.76 2.41
Internal Rate of Return (IRR) 22.97%
Net Present Value (NPV) at 13% Nu.12.29 Millions
Project Viability: The Internal Rate of Return of the project is 22.97%, which is significantly higher than the
bank return rate of 13%.Hence, the project is financially viable. The NPV of the project is positive (Nu. 12.29
millions) at a discount factor of 13% during the first 10 years of operation considered. This implies that the project
generates sufficient funds to cover all its cost, including loan repayments and interest payments during the period.
DETAILED FEASIBILITY REPORT - Animal Feed Unit
56
REFERENCE
Bhutan Trade Statistics 2014, Department of Revenue and Customs, Ministry of Finance, Royal Government of
Bhutan (2014)
Dzongkhag-wise Inventory of Resources, Ministry of Economic Affairs, Royal Government of Bhutan (2005)
Environmental Assessment Act, 2000, National Environment Commission, Royal Government of Bhutan
(2000)
Investment Opportunity Study, Department of Industry, Ministry of Trade & Industry, Royal Government of
Bhutan – Volume I (2006)
Investment Opportunity Study, Department of Industry, Ministry of Trade & Industry, Royal Government of
Bhutan – Volume II (2006)
Labour Force Survey Report 2012, Department of Employment, Ministry of Labour and Human Resources,
Royal Government of Bhutan (2012)
Labour Force Survey Report 2013, Department of Employment, Ministry of Labour and Human Resources,
Royal Government of Bhutan (2013)
Livestock Statistics 2013, Department of Livestock, Ministry of Agriculture and Forests, Royal Government of
Bhutan (2013)
Regulation for the Environmental Clearance of Projects, 2002, National Environment Commission, Royal
Government of Bhutan (2002)
Statistical Yearbook of Bhutan, National Statistics Bureau, Royal Government of Bhutan (2014)
www.alibaba.com
www.indiamart.com
www.keralaagriculture.gov.in/htmle/bankableagriprojects/ah%5Cfeed.htm