Off Season Vegetables (Low Tunnel)

Pre-Feasibility Study
(Off Season Vegetables Low 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
[email protected]
REGIONAL OFFICE
Punjab
REGIONAL OFFICE
Sindh
REGIONAL OFFICE
Khyber Pakhtunkhwa
REGIONAL OFFICE
Balochistan
3rd Floor, Building No. 3,

Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
[email protected]
5TH Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 35610572
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Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 111-111-456
Fax: (091) 5286908
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Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 2831623, 2831702
Fax: (081) 2831922
[email protected]
Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost
December, 2013
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 ........................................................................ 4
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 .................................................................................................. 6
11.1
11.2
12.
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
LOW TUNNEL STRUCTURE SPECIFICATIONS .................................................................................. 7

SUPPORT STRUCTURE .................................................................................................................... 7
PROJECT COST SUMMARY ......................................................................................................... 8
PROJECT ECONOMICS .................................................................................................................... 8
PROJECT FINANCING....................................................................................................................... 9
PROJECT COST ............................................................................................................................... 9
LAND REQUIREMENT ..................................................................................................................... 10
MACHINERY & EQUIPMENT ........................................................................................................... 10
RAW MATERIAL REQUIREMENTS .................................................................................................. 10
HUMAN RESOURCE REQUIREMENT .............................................................................................. 12
REVENUE GENERATION ................................................................................................................ 12
OTHER COSTS ............................................................................................................................... 13
13.
CONTACT DETAILS OF GOVT. INSTITUTIONS / EXPERTS / CONSULTANTS ............. 13
14.
ANNEXURE ..................................................................................................................................... 15
14.1
14.2
14.3
14.4
14.5
14.6
14.7
15.
INCOME STATEMENT ..................................................................................................................... 15

STATEMENT OF CASH FLOW ......................................................................................................... 16
BALANCE SHEET ........................................................................................................................... 17
RAW MATERIAL CALCULATION SHEETS........................................................................................ 18
SALES REVENUE CALCULATION SHEET ....................................................................................... 19
USEFUL MANAGEMENT TIPS ......................................................................................................... 20
USEFUL LINKS ............................................................................................................................... 20
KEY ASSUMPTIONS ..................................................................................................................... 21
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 contact our website:
www.smeda.org.pk
SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -
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
Farming (Low Tunnel) by providing them a general understanding of the
business with the intention of supporting potential investors in crucial investment
decisions.
The need to come up with pre-feasibility reports for undocumented or minimally
documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error, and certain industrial norms that become a guiding
source regarding various aspects of business set-up and its successful
management.
Apart from carefully studying the whole document, one must consider critical
aspects provided later on, which form basis of any investment decision.
3. INTRODUCTION TO SMEDA
The Small and Medium Enterprises Development Authority (SMEDA) was
established in October 1998 with an objective to provide fresh impetus to the
economy through development of Small and Medium Enterprises (SMEs).
With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase
the number, scale and competitiveness of SMEs" , SMEDA has carried out
sectoral research to identify policy, access to finance, business development
services, strategic initiatives and institutional collaboration and networking
initiatives.
Preparation and dissemination of prefeasibility studies in key areas of investment
has been a hallmark of SME facilitation by SMEDA.
Concurrent to the prefeasibility studies, a broad spectrum of business
development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based
capacity building programs of different types in addition to business guidance
through help desk services.
4. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan scheme, for young entrepreneurs, with
an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidised financing at 8% mark-up per annum for one hundred thousand
(100,000) beneficiaries, through designated financial institutions, initially by
National Bank of Pakistan (NBP) and 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 gaining popularity, and is being practiced in all regions of
Pakistan.
The proposed project is a medium sized off-season vegetable farming unit,
spreading over 7 acres. Off-season vegetables are proposed to be cultivated in
this project using low tunnel technology. The two fruits assumed to be cultivated
in this particular project are watermelon and muskmelon. The total time; from
land preparation to harvesting, is around 8 months.
The estimated yield of the farm varies according to the crop mix selected. The
proposed mix for this feasibility will be cultivated on 7 acres of land. The quantity
of seeds sown each year is 900 grams of watermelon seeds and 1,600 grams of
muskmelon seeds. The estimated produce would be 162 tones of watermelon
and 86.4 tones of muskmelon excluding 10% wastage.
Complete adherence to best agronomic practices as recommended is critical to
the success of this project, therefore technical knowledge & experience of the
entrepreneur is absolutely necessary.
The cost for setting up the proposed low tunnel farm is estimated at Rs. 2.19
million. The project is proposed to be financed through 90% debt and 10%
equity. The project NPV is projected around Rs. 7.47 million, with an IRR of 51%
and a payback period of 2.28 years. The legal business status of this project is
proposed as Sole Proprietorship.
6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

There is a great demand of fruits and vegetables all year round. Prices are at the
highest at the start and end of the season. If modern techniques are applied to
grow off season crops, high prices can be fetched. Vegetable / fruit 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 around the year enables the
technically competent growers to fully utilize their resources and supplement
relatively high income from fruits growing as compared to traditional crops.
The proposed project is designed as a medium sized off-season vegetable / fruit
farming unit on 7 acres of land. These tunnels are suitable for heavy individual
fruit bearing vegetables, i.e. melons, watermelons, pumpkin, bitter gourds,
squashes, etc. The crop yield in this type of tunnel is however low compared to
other types. However, for the purpose of this pre-feasibility two crops are being
proposed, namely: Watermelon and Muskmelon.
The farm will provide employment opportunities to four (04) individuals directly,
while seasonal pickers & packers are also required. The estimated yield potential
of the farm varies according to the selected type of vegetable. With above
mentioned crop mix, yield of 248 tons per season excluding 10% wastage can be
attained.
This Pre-feasibility assumes the legal status of individual as a farmer with less
than 12.5 acres of land.
7. CRITICAL FACTORS
Following principles need to be pursued for the 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.
Selection of profitable vegetables on the basis of best analysis of cost and

revenues for a given season. Cost efficiency through better management.
Timely control of pests, diseases and exercise of all recommended

agronomic measures.
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 CAPACITIES

Following table provides information on the total production, inclusive of 10%
wastage:
Table 1 - Total Production Capacity
Vegetables
Area (acres)
Unit
Qty
Watermelon
Grams of Seeds
900
Muskmelon
Grams of Seeds
1,600
Total Production
(kg)
180,000
96,000
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 locations in Sindh and Balochistan.
10.
POTENTIAL TARGET MARKETS / CITIES
Keeping in view the product price level, demand and purchasing power of
customer; whole sale markets, metropolitan cities / urban area are the potential
markets for off season vegetables.
11.
PRODUCTION PROCESS FLOW
Following is the production process flow of off- season vegetables farming:

NURSERY/
SAPLING
HARVESTING
GRADING &
WASHING
FIELD BED
PREPARATION
TOP DRESS
FERTILIZING
PACKING
SOIL
FERTILIZING
PLANT
PROTECTION
NURSERY
TRANSPLANTATION
MOISTURE
CONDITIONING
TRANSPORTATION
11.1
Low Tunnel Structure Specifications
The specifications of low tunnel are given in the following table:

Material
Specification
Tunnel
Specification
Table 2 - Specifications of Low Tunnel

Material
Plastic pipe (PVC material)
Plastic
pipe Diameter
(PVC material) Length
3/4 inch
9 ft
Plastic
0.04 mm thick and 10 ft wide
Height
3.5 ft, half moon shaped
Width
4 ft
Length
200 ft
No. of tunnels
25 per acre
The cost of such tunnel amount to Rs. 67,750 per acre excluding the cost related
to plastic used as a shield (cover) and mulch.
Figure 1 Low Plastic Tunnel
11.2
Support Structure
Each tunnel will be 200 feet long, 3.5 feet high and 4 feet wide. The tunnel is built
by a 3/4 inch diameter plastic pipe (PVC material) of 9 feet length, in half moon
shape. The plastic pipes are placed at regular intervals of approximately 10-15
feet. Each tunnel structure will then be covered by a 0.04-mm thick and 10 feet
wide plastic sheet. Approximately 25 tunnels can be constructed on an acre of

land depending on the type of vegetable, i.e. watermelon, muskmelon or
pumpkin.
Figure 2 - Support structure in low tunnels
12.
PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial

viability of Off Season Farming (Low 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 appendix.
12.1
Project Economics
The proposed crop mix is watermelon and muskmelon cultivated on 3 acres and
4 acres of land, respectively. The estimated produce would be 162 tons of
watermelon and 86.4 tons of muskmelon excluding 10% wastage.
Produce
Watermelon
Muskmelon
Area
(acres)
3
4
Table 3 - Total Production Capacity

Pants /
No. of
Seeds sown
acre
produce /
(grams)
plant
900
1,600
6,000
8,000
2
3
Weight
of
produce
(kg)
5
1
Total
Production
Quantity
(kg)
180,000
96,000
The following table shows internal rate of return, payback period and net present
value:
Table 4 - Project Economics
Description
Internal Rate of Return (IRR)
Payback Period (Yrs)
Net Present Value (NPV)
Details
51%
2.28
7,469,866
Returns on the scheme 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, cultivating the in-demand
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. 219,470
Bank Loan (90%.)
Rs. 1,975,230
Markup to the Borrower (%age/annum)
8%
Tenure of the Loan (Years)
8
Grace Period (Year)
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
55,000
Pre-operating Cost
25,000
Total Capital Costs
80,000
Initial Working Capital
2,114,700
Total Project Cost
2,194,700
12.4
Land Requirement
The area has been calculated on the basis of minimum viable land required for
setting up an Off-Season Vegetable Farm (Low Tunnel). However, the existing
units do not follow any set pattern. Following table shows calculations for project
space requirement.
Vegetable
Table 7 - Land Requirement

Land Utilization Land Lease Cost
(Acres)
per Acre (Rs.)
Watermelon
Muskmelon
3
4
Total
Total Land Lease

Cost (Rs.)
50,000
50,000
150,000
200,000
350,000
As the land will be acquired on lease, hence total land lease cost during 1st year
would be approximately Rs. 350,000.
12.5
Machinery & Equipment
Plant and machinery required for an off-season vegetable farm can be purchased
or leased by paying on hourly basis. In this particular pre-feasibility it has been
assumed that the machinery for hoeing and land preparation would be rented,
whereas, spray machine and some tools would be purchased.
Following table provides a list of machinery and tunnel farm equipment required
for Off-Season Vegetable Farming (Low Tunnel).
Table 8 - List of Machinery
Description
Working Tables
Chairs
Farm Tools (Hand Tools)
Spray Machines
Total
12.6
Replacement
Year
5
5
5
5
Quantity
2
4
1
3
Cost
Rs./unit
5,000
2,500
20,000
5,000
Total
Rs.
10,000
10,000
20,000
15,000
55,000
Raw Material Requirements
The estimated yield potential of the farm varies according to the selected type of
vegetable. The quantity of seeds sown each year on 7 acres of land is 900 grams
10
of watermelon seeds and 1,600 grams of muskmelon seeds. Following table

shows the raw material requirement:
Vegetables
Area
(acres)
Watermelon
3
Muskmelon
4
Total Cost of Seeds Sown
Table 9 Seeds Cost

Seeds sown
900 (grams)
1,600 (grams)
Unit Rate
Rs.
25
37
Total Cost
of Seeds
22,500
59,200
81,700
As mentioned above off-season vegetable cultivation is recommended with the

use of low tunnels. It is the cheapest among the available options and quite
similar to conventional method. The specifications of low tunnel are given in the
following table:
Table 10 Structure expense for low tunnel
Description
Unit /
Units for Unit Cost
Acre
7 acres
(Rs.)
PVC pipe material (No.)
500
3,500
75
Total
Amount
(Rs.)
262,500
Plastic String (Kg)
10
70
125
8,750
Plastic Sheet - White (Kg)
100
700
230
161,000
Plastic Mulch Black (Kg)
25
175
240
42,000
Total Cost
474,250
Apart from high yield seeds following other raw material will also be required for
cultivating off-season vegetables:
Table 11 Other Raw Material requirement
Farm Inputs
CAN
Nitrophos
DAP
SOP
Total
Unit
Qty/Acre
Bags
Bags
Bags
Bags
2
4
2
2
Unit Rate
(Rs./Bag)
Total Fertilizer
Cost (Rs.)
2,250
3,500
4,250
4,250
31,500
98,000
59,500
59,500
248,500
11
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 Employees
Salary per
employee per
month (Rs.)
Owner / Farm Manager
1
25,000
Permanent Labor
3
12,000
Total Staff
4
Part time workers would be required during the picking season of three months.
Five pickings per month are assumed with an average rate of Rs. 250 per picking
per person. Following table shows the calculations for temporary labor wages:
Table 13 - Human Resource Requirement (Temporary)
Description
Number
Wages (Rs. per
Total Seasonal
picking per person)
Wages (Rs)
Temporary
11
Male: 250
288,750
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 the proposed produce 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 Revenue
(Acres)
Wastage (Kg)
(Rs)
Watermelon
3
15
162,000
2,430,000
Muskmelon
4
20
86,400
1,728,000
Sale of empty
700
bags of fertilizer
Total Sales Revenue
4,158,700
The prices of vegetables in normal season are around one-third of the prices of
produce grown in off-seasons.
Table 15 - Revenue Assumptions
Sales price growth rate
Percentage wastage
Production capacity utilization year 1 - 10
10%
10%
100%
12
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 aprox. Rs. 110 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. 388,125. Similarly,
electricity expense is estimated to be around Rs. 5,000 per month.
Table 16 Other Cost Assumptions
Transportation of farm produce
Cost per kilometer (Rs.)
Farm to market distance (km)
Per trip cost (Rs.)
Load per trip (tons)
No. of trips
25
125
3,125
2
124
Pesticides expense per Acre per season (Rs.)
20,000
Water expense
Number of months for irrigation
Total number of irrigations per season
Cost per irrigation per acre (Rs.)
Total cost of green manuring, land prep and sowing per acre
Total cost of Mechanical Hoeing twice per season per acre
Average packing expense per kg (Rs.)
8
10
450
12,500
1,750
0.46
13.
Contact Details of Govt. Institutions / 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. Muhammad Anjum Ali
Director General (Extension)
Agriculture Department, Govt. of
Punjab
21-Davis Road, Lahore
Phone No: 92-42-99200732
Fax No: 92-42-99200743
Dr. Ghulam Jellani,

PSO/ P.L (Vegetable)
Programme on Vegetable Crop
Horticulture Research Institute
National Agricultural Research Centre
Park Road, Islamabad
Tel: +92-51 9255061, +92-51 9255012
Fax: +92-51 9255034
CEO
Pakistan Horticulture Development and
Export Company
30 N, Model Town Extension, Lahore
(54700), Pakistan.
Tel: +92-42-99232210-17
Fax: +92-42-99232220
13
14.
ANNEXURE
14.1
Income Statement
Income Statement
Revenue
Year 1
4,158,700
Year 2
4,574,570
Year 3
5,032,027
Year 4
5,535,230
Year 5
6,088,753
Year 6
6,697,628
Year 7
7,367,391
Year 8
8,104,130
Year 9
8,914,543
Year 10
9,805,997
Cost of sales
Plastic Sheet (white)
Plastic Mulch
Plastic Rope
Structure (PVC pipe material)
Seeds expense
Fertilizer expense
Pesticide expense
Green Manuring and Land Preparation
Mechanical Hoeing
Irrigation expense
Direct labor
Transportation Cost from Farm to Market
Packing expense
Total cost of sales
Gross Profit
161,000
42,000
8,750
262,500
81,700
248,500
140,000
87,500
24,500
31,500
576,750
388,125
115,200
2,168,025
1,990,675
177,100
46,200
9,625
288,750
89,870
273,350
154,000
96,250
26,950
32,130
594,825
426,938
120,960
2,336,948
2,237,623
194,810
50,820
10,588
317,625
98,857
300,685
169,400
105,875
29,645
32,773
654,308
469,631
127,008
2,562,024
2,470,003
214,291
55,902
11,646
349,388
108,743
330,754
186,340
116,463
32,610
33,428
719,738
516,594
133,358
2,809,254
2,725,976
235,720
61,492
12,811
384,326
119,617
363,829
204,974
128,109
35,870
34,097
791,712
568,254
140,026
3,080,837
3,007,915
259,292
67,641
14,092
422,759
131,579
400,212
225,471
140,920
39,457
34,779
870,883
625,079
147,028
3,379,192
3,318,436
285,221
74,406
15,501
465,035
144,737
440,233
248,019
155,012
43,403
35,474
957,972
687,587
154,379
3,706,977
3,660,413
313,743
81,846
17,051
511,538
159,210
484,256
272,820
170,513
47,744
36,184
1,053,769
756,346
162,098
4,067,118
4,037,011
345,118
90,031
18,756
562,692
175,131
532,682
300,102
187,564
52,518
36,907
1,159,146
831,980
170,203
4,462,831
4,451,712
379,630
99,034
20,632
618,961
192,644
585,950
330,113
206,320
57,770
37,645
1,275,060
915,178
178,713
4,897,651
4,908,346
General administration & selling expenses

Administration expense
Land rental expense
Electricity expense
Travelling expense
Communications expense (phone, fax, mail, internet, etc.)
Misc. expenses
Vegetable Market expense
Depreciation expense
Subtotal
Operating Income
200,000
350,000
30,000
30,000
18,000
12,000
291,109
5,500
941,609
1,049,066
192,500
385,000
33,000
31,500
18,900
11,550
320,220
5,500
1,003,170
1,234,453
211,750
423,500
36,300
33,075
19,845
12,705
352,242
5,500
1,099,917
1,370,086
232,925
465,850
39,930
34,729
20,837
13,976
387,466
5,500
1,206,213
1,519,763
256,218
512,435
43,923
36,465
21,879
15,373
426,213
5,500
1,323,006
1,684,910
281,839
563,679
48,315
38,288
22,973
16,910
468,834
12,520
1,453,358
1,865,078
310,023
620,046
53,147
40,203
24,122
18,601
515,717
12,520
1,594,379
2,066,034
341,025
682,051
58,462
42,213
25,328
20,462
567,289
12,520
1,749,349
2,287,662
375,128
750,256
64,308
44,324
26,594
22,508
624,018
12,520
1,919,655
2,532,057
412,641
825,282
70,738
46,540
27,924
24,758
686,420
12,520
2,106,823
2,801,524
Other income (interest on cash)

Earnings Before Interest & Taxes
1,049,066
1,234,453
1,370,086
1,519,763
1,684,910
1,865,078
2,066,034
2,287,662
2,532,057
2,801,524
Interest expense on long term debt (Project Loan)

Interest expense on long term debt (Working Capital Loan)
Subtotal
Earnings Before Tax
163,943
163,943
885,123
150,092
150,092
1,084,361
131,886
131,886
1,238,200
112,169
112,169
1,407,594
90,816
90,816
1,594,093
67,691
67,691
1,797,386
42,646
42,646
2,023,388
15,523
15,523
2,272,139
2,532,057
2,801,524
Tax
NET PROFIT/(LOSS) AFTER TAX
110,268
774,855
140,154
944,207
163,230
1,074,970
188,639
1,218,955
216,614
1,377,480
247,108
1,550,279
281,008
1,742,380
318,321
1,953,819
357,308
2,174,749
397,728
2,403,795
15
14.2
Statement of Cash Flow
Cash Flow Statement

Year 0
Operating activities
Net profit
Add: depreciation expense
Deferred income tax
Accounts receivable
Raw material inventory
Pre-paid building rent
Cash provided by operations
Financing activities
Project Loan - principal repayment
Working Capital Loan - principal repayment
Additions to Project Loan
Additions to Working Capital Loan
Issuance of shares
Cash provided by / (used for) financing activ
(944,450)
(350,000)
(1,294,450)
1,975,230
219,470
2,194,700
Investing activities
Capital expenditure
Cash (used for) / provided by investing activ
(80,000)
(80,000)
NET CASH
820,250
Year 1
774,855
5,500
110,268
(170,905)
(94,445)
(35,000)
595,272
595,272
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
944,207
5,500
140,154
(8,545)
(103,890)
(38,500)
943,926
1,074,970
5,500
163,230
(17,945)
(114,278)
(42,350)
1,074,127
1,218,955
5,500
188,639
(19,740)
(125,706)
(46,585)
1,226,063
1,377,480
5,500
216,614
(21,714)
(138,277)
(51,244)
1,393,359
1,550,279
12,520
247,108
(23,885)
(152,105)
(56,368)
1,577,549
1,742,380
12,520
281,008
(26,273)
(167,315)
(62,005)
1,780,314
1,953,819
12,520
318,321
(28,901)
(184,047)
(68,205)
2,003,507
(219,345)
(219,345)
(237,550)
(237,550)
(257,267)
(257,267)
(278,620)
(278,620)
(301,745)
(301,745)
(326,790)
(326,790)
(353,913)
(353,913)
724,582
836,576
968,796
(70,195)
(70,195)
1,044,544
1,275,803
16
1,453,524
1,649,593
Year 9
2,174,749
12,520
357,308
(31,791)
(202,451)
(75,026)
2,235,309
Year 10
2,403,795
12,520
397,728
(34,970)
2,226,964
825,282
5,831,319
2,235,309
5,831,319
14.3
Off-Season Farming (Low Tunnel)
Balance Sheet
Balance Sheet
Assets
Current assets
Cash & Bank
Accounts receivable
Raw material inventory
Pre-paid building rent
Total Current Assets
Fixed assets
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets
Intangible assets
Total Intangible Assets
TOTAL ASSETS
Liabilities & Shareholders' Equity
Current liabilities
Total Current Liabilities
Other liabilities
Deferred tax
Long term debt (Project Loan)
Long term debt (Working Capital Loan)
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
820,250
944,450
350,000
2,114,700
1,415,522
170,905
1,038,895
385,000
3,010,323
2,140,104
179,451
1,142,785
423,500
3,885,839
2,976,680
197,396
1,257,063
465,850
4,896,989
3,945,476
217,135
1,382,769
512,435
6,057,816
4,990,020
238,849
1,521,046
563,679
7,313,594
6,265,824
262,734
1,673,151
620,046
8,821,755
7,719,348
289,007
1,840,466
682,051
10,530,872
9,368,941
317,908
2,024,512
750,256
12,461,618
11,604,251
349,699
2,226,964
825,282
15,006,195
17,435,569
384,669
17,820,238
55,000
55,000
49,500
49,500
44,000
44,000
38,500
38,500
33,000
33,000
97,695
97,695
85,176
85,176
72,656
72,656
60,137
60,137
47,617
47,617
35,098
35,098
25,000
2,194,700
20,000
3,079,823
15,000
3,944,839
10,000
4,945,489
5,000
6,095,816
7,411,290
8,906,931
10,603,528
12,521,755
15,053,812
17,855,336
1,975,230
1,975,230
219,470
219,470
2,194,700
110,268
1,975,230
2,085,498
250,422
1,755,885
2,006,308
413,652
1,518,335
1,931,987
602,291
1,261,068
1,863,359
818,905
982,448
1,801,353
1,066,013
680,703
1,746,716
1,347,021
353,913
1,700,934
1,665,342
1,665,342
2,022,650
2,022,650
2,420,378
2,420,378
219,470
774,855
994,325
3,079,823
219,470
1,719,062
1,938,532
3,944,839
219,470
2,794,032
3,013,502
4,945,489
219,470
4,012,987
4,232,457
6,095,816
219,470
5,390,466
5,609,936
7,411,290
219,470
6,940,745
7,160,215
8,906,931
219,470
8,683,125
8,902,595
10,603,528
219,470
10,636,943
10,856,413
12,521,755
219,470
12,811,692
13,031,162
15,053,812
219,470
15,215,487
15,434,957
17,855,336
17
14.4
Raw Material Calculation Sheets
Raw material costs

Total cost of Tunnel Structure
Plastic Sheet (white)
Plastic Mulch
Plastic Rope
Structure (PVC pipe material)
Total
Total cost of seeds
Watermelon Seed
Muskmelon Seed
Total
Total cost of fertilizer
Calcium Amonium Nitrate
Nitrophos
DAP
SOP
Total
Year-1
161,000
42,000
8,750
262,500
474,250
Year-2
177,100
46,200
9,625
288,750
521,675
Year-3
194,810
50,820
10,588
317,625
573,843
Year-4
214,291
55,902
11,646
349,388
631,227
Year-5
235,720
61,492
12,811
384,326
694,349
Year-6
259,292
67,641
14,092
422,759
763,784
Year-7
285,221
74,406
15,501
465,035
840,163
Year-8
313,743
81,846
17,051
511,538
924,179
Year-9
345,118
90,031
18,756
562,692
1,016,597
Year-10
379,630
99,034
20,632
618,961
1,118,257
Year-1
22,500
59,200
81,700
Year-2
24,750
65,120
89,870
Year-3
27,225
71,632
98,857
Year-4
29,948
78,795
108,743
Year-5
32,942
86,675
119,617
Year-6
36,236
95,342
131,579
Year-7
39,860
104,876
144,737
Year-8
43,846
115,364
159,210
Year-9
48,231
126,900
175,131
Year-10
53,054
139,591
192,644
Year-1
31,500
98,000
59,500
59,500
248,500
Year-2
34,650
107,800
65,450
65,450
273,350
Year-3
38,115
118,580
71,995
71,995
300,685
Year-4
41,927
130,438
79,195
79,195
330,754
Year-5
46,119
143,482
87,114
87,114
363,829
Year-6
50,731
157,830
95,825
95,825
400,212
Year-7
55,804
173,613
105,408
105,408
440,233
Year-8
61,385
190,974
115,949
115,949
484,256
Year-9
67,523
210,072
127,544
127,544
532,682
Year-10
74,275
231,079
140,298
140,298
585,950
Packing Expense
Watermelon
Muskmelon
Total Packing expense
Year-1
115,200
115,200
Year-2
120,960
120,960
Year-3
127,008
127,008
Year-4
133,358
133,358
Year-5
140,026
140,026
18
Year-6
147,028
147,028
Year-7
154,379
154,379
Year-8
162,098
162,098
Year-9
170,203
170,203
Year-10
178,713
178,713
14.5
Sales Revenue Calculation Sheet
Sales Revenue
No. of Kgs per acre
Watermelon
Muskmelon
Total Production in Kgs (excl. wastege)
Watermelon
Muskmelon
Sales Price per kg

Watermelon
Muskmelon
Sales Revenue
Watermelon
Muskmelon
Sale of empty bags of fertilizer
Total sales Revenue
Year-1
Year-2
Year-3
Year-4
Year-5
Year-6
Year-7
Year-8
Year-9
Year-10
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
60,000
24,000
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
162,000
86,400
248,400
15.00
20.00
16.50
22.00
18.15
24.20
19.97
26.62
21.96
29.28
24.16
32.21
26.57
35.43
29.23
38.97
32.15
42.87
35.37
47.16
2,430,000
1,728,000
700
4,158,700
2,673,000
1,900,800
770
4,574,570
2,940,300
2,090,880
847
5,032,027
3,234,330
2,299,968
932
5,535,230
3,557,763
2,529,965
1,025
6,088,753
3,913,539
2,782,961
1,127
6,697,628
4,304,893
3,061,257
1,240
7,367,391
4,735,383
3,367,383
1,364
8,104,130
5,208,921
3,704,121
1,501
8,914,543
5,729,813
4,074,534
1,651
9,805,997
19
14.6
Useful Management Tips
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
Machinery Suppliers: Should be asked for training and on-job maintenance

under the contract with the machinery suppliers
Quality Assurance Equipment & Standards: Whatever means required

products quality & service standards need to be defined on the packaging and
a system to check them instituted, this improves credibility
Human Resources
Adequacy & Competencies: Skilled and experienced staff should be

considered an investment and should be retained on long term basis to ensure
the smooth operations and growth.
14.7
Useful Links
Prime Ministers Office, www.pmo.gov.pk
Small and Medium Enterprise 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 & Exchange Commission of Pakistan (SECP), www.secp.gov.pk
20
Federation of Pakistan Chambers of Commerce and Industry (FPCCI),

www.fpcci.com.pk
State Bank of Pakistan (SBP), www.sbp.org.pk
15.
KEY ASSUMPTIONS
Table 17 - Expense Assumptions
10%
CoGS growth rate
Operating costs growth rate

Vegetable market expense
Travelling expense
Communication expense
Misc. expenses
Tools and machinery depreciation
Tunnel equipment depreciation rate
Furniture & Fixtures depreciation rate
5%
7%
% of revenue
Rs. 30,000 per annum
Rs. 18,000 per annum
6%
% of admin expense
10%
% of machinery & equip.
100% % of tunnel equipment cost
10%
% of furniture & fixture cost
Table 18 - Economy Related Assumptions

Inflation rate
10%
Electricity growth rate

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

Time period per season (months)
Accounts receivable in days
Accounts payable in days
Raw material inventory (months)
8
15
0
6
Table 20 - Financial Assumptions

Project life (Years)
Debt
Equity
Interest rate on long-term debt
Debt tenure (Years)
Debt payments per year
Grace Period (Year)
10
90%
10%
8%
8
12
1
21

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Pre-Feasibility Study

(Off Season Vegetables Low Tunnel)

Small and Medium Enterprises Development Authority

3rd Floor, Building No. 3,

5TH Floor, Bahria

Bungalow No. 15-A

POTENTIAL TARGET MARKETS / CITIES ............................................................................... 6

PRODUCTION PROCESS FLOW .................................................................................................. 6

LOW TUNNEL STRUCTURE SPECIFICATIONS .................................................................................. 7

CONTACT DETAILS OF GOVT. INSTITUTIONS / EXPERTS / CONSULTANTS ............. 13

INCOME STATEMENT ..................................................................................................................... 15

2. PURPOSE OF THE DOCUMENT

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT

cultivated in off-season, with introduction of techniques like tunnel technology, in

Proper soil analysis for determining soil nutritional level.

Use of high quality hybrid seeds.

Selection of profitable vegetables on the basis of best analysis of cost and

Timely control of pests, diseases and exercise of all recommended

Maintenance and control of internal temperature and humidity of the

Timely irrigation, fertilization, training and grading of plantation.

Fertilization as per expert(s) recommendation.

Appropriate post harvest arrangement for washing, grading, packing, and

8. INSTALLED & OPERATIONAL CAPACITIES

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

POTENTIAL TARGET MARKETS / CITIES

PRODUCTION PROCESS FLOW

Following is the production process flow of off- season vegetables farming:

Low Tunnel Structure Specifications

The specifications of low tunnel are given in the following table:

Table 2 - Specifications of Low Tunnel

0.04 mm thick and 10 ft wide

3.5 ft, half moon shaped

wide plastic sheet. Approximately 25 tunnels can be constructed on an acre of

PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial

Table 3 - Total Production Capacity

Following requirements have been identified for operations of the proposed

Table 7 - Land Requirement

Total Land Lease

Machinery & Equipment

Raw Material Requirements

of watermelon seeds and 1,600 grams of muskmelon seeds. Following table

Table 9 Seeds Cost

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

Plastic String (Kg)

Plastic Sheet - White (Kg)

Plastic Mulch Black (Kg)

Human Resource Requirement

An essential cost to be borne by the farm is the transportation cost incurred

Pesticides expense per Acre per season (Rs.)

Dr. Ghulam Jellani,

General administration & selling expenses

Other income (interest on cash)

Interest expense on long term debt (Project Loan)

Statement of Cash Flow

Cash Flow Statement

Off-Season Farming (Low Tunnel)

Off-Season Farming (Low Tunnel)