Egg Hatchery Project Report – Business Plan

Introduction to Egg Hatchery Project Report, Business Plan in India: India is a heavily populated nation having a mainly agricultural economy. Almost every region of our country is appropriate for poultry farming. In the modern terminology of the poultry industry, the term hatchery includes the sector which is involved in production and source the one-day-old chicks through the process popular as artificial incubation. A hatchery can be a part of a breeding farm or it can be a franchiser or sub-franchiser for breeding parent and day-old chicks of broilers or layers. The term hatchery can be prolonged to an organization that does not keep any mating stock (breed stocks) but only obtains hatching eggs for supplying day-old chicks. The firms producing day-old chicks only for restocking their supplies of birds are not categorized under the term hatchery.

A Guide to Egg Hatchery Project Report and Business Plan in India

Market potential of Egg Hatchery Business: Rapid urbanization, modifications in lifestyle and food patterns of consumers, enhancement in standards of living, etc. have risen into an upsurge in per capita intake of egg and poultry meats but per capita consumption of these supplies in our nation is still far down than that of developed republics showing huge potential/scope for poultry expansion. The growing number of poultry farms in diverse areas has accentuated that hatcheries should be established as potential places.

Immensely increasing transportation prices and death during transportation of day-old chicks have also stressed that hatcheries should be built on a decentralized basis hereby.

Business plan for starting Egg Hatchery Unit in India

To start the business you need to consider the following points to design a perfect business plan for Egg Hatchery Unit:

• Basis and presumptions
• Implementation schedule
• List of certifications and registrations
• Insurances required for the farm
• List of licenses and permits
• Quality standards

• Project economics

Basis and presumptions of Egg Hatchery Business

The project report has been designed based upon the following beliefs:

• Working hours/shift: 8 hrs.
• No. of shifts per day: 1
• Working days: 300
• Complete working hrs. : 2400 hrs.
• Working efficiency: 75%
• Time duration for attaining maximum capacity utilization: 3 years
• Labor costs: According to the Minimum Wages Act of State Govt.
• Margin income: 25% of capital investment.
• ROI on working capital: 15% P.A.
• ROI on fixed capital: 15% P.A.
• Operative duration of the project: 10 years
• Cost of machinery and equipment: Taken based on a specific dealer of machinery & equipment during project implementation.
• Cost of raw material, packing: As per the local market expenses on whole products and others sale basis.
• Construction expenses: Rs. 75/- per sq. ft.
• Break-even time: Calculated based on full capacity utilization.
• Pay-back duration: 4 years

Implementation schedule of Egg Hatchery Business

The project can be done in 10 months of duration including the time period of sanction of the loan amount. The implementation schedule has been divided as follows:

• Project preparation: 0-1 month
• Land selection and construction: 1-2 months
• Loan Availability: 1-3 months
• Establishment of poultry sheds: 3-4 months
• Electricity connection and phone connection: 3-4 months
• Sourcing parent stock chicks: 4-5 months
• Building of hatchery shed and other constructions: 3-5 months
• Obtaining machinery and equipment: 4-6 months
• Installing machinery and the electrification: 6-7 months
• Appointment of staff and workers: 7-8 months
• Testing for 8-9 months
• Commercial production begins in 9-10 months
• The project will start giving output by the 11th month.

Certification and registrations required for Egg Hatchery Business in India

Before starting the Egg Hatchery Business, you need to acquire the following list of licenses, permits, and registrations: 

• Certificate of company registration
• Pan card 
• Insurance policy
• Poultry farm business permit
• Business license
• Animal care standards
• Aadhar card
• Voter ID
• Driving license
• Ration card
• Business agreement
• Memorandum of association
• Articles of association
• NOC (No Objection Certificate)
• Bank statement

You also need to provide the farm with vaccines as it is essential for the birds to make them healthy from infections. 

Insurance for Egg Hatchery Business

You also need to get the below list of insurances for starting the Egg Hatchery Business in India

• Pollution liability coverage
• Animal protection /cruelty coverage
• Equipment breakdown coverage
• General liability
• Poultry farm insurance
• Worker’s compensation 

List of licenses and approvals required starting Egg Hatchery Business in India

Here is the list of licenses that you need to get from the local establishments or state government of India. These include-

• No objection certificate from the region where you are planning to start the Egg Hatchery Business. 
• Electricity provision by verifying the need for a transformer that is determined based on the farm size. 
• Permissions regarding the water supply should be acquired from the groundwater department. 

FSSAI licenses required for starting Egg Hatchery Business in India

For the Egg Hatchery business, you need to register with FSSAI for a food license and is effective for a tenure of five years: 

• FSSAI Registration license is obtained, if the turnover is less than 12 lakhs
• FSSAI State license is availed if the turnover is greater than 12 lakhs
• FSSAI Central license is procured, if the turnover is greater than 20 crores

Quality standards required for starting Egg Hatchery Business

The BIS (Bureau of Indian Standards) has laid down particulars for day-old chicks (layer/broiler) under the following ISI Specification: IS 9800:1981: Common requisites for day-old chicks (layer/broiler). 

Procedure to establish the Egg Hatchery Unit in India

In case if you miss this: Feed Mill Proeject Report and Business Plan.

One day old parent stock chicks of better-quality species of broiler or layers are obtained from the consistent parent stock dealers. Procured chicks are moved to poultry sheds. These poultry birds are provided balanced nutrition using poultry feed, even medicines, feed mixes, etc., based upon their age and variety till the laying stage. The laid eggs are gathered and transported to the hatchery department. The eggs are washed thoroughly to avoid foreign matters and tested for their suitability for hatching, eggs having cracked shells and unfertile eggs are categorized and disposed of by selling at subsidized costs. Thoroughly cleaned eggs are placed in the AC room to sustain a normal and suitable temperature. The conditioned eggs are moved to setter incubators and nurtured for about 18 days. Around 99.9ºF temperature and relative humidity of 82% should be sustained in the setter incubators.

On the 18th day, eggs are moved to holder incubators preserved at a temperature of 98.9ºF and relative humidity of around 87% and nurtured for 3 days. On the 21st day, chicks arrive by breaking eggshells. Eggshells and membranes are cleaned and each chick is examined for its sex and separated. Every chick will get vaccinated by Marex-D vaccine and packed in chick baskets and will be sent to the poultry farms for selling.

For producing healthy day-old chicks of high potential and to get economical benefits, proper planning of hatchery is required which includes application of sound scientific and business principles.

Energy conservation in Egg Hatchery Business

The main energy source for the hatchery is power and to some extent, diesel is necessary to run a generator during power cuts. Electric bulbs of only appropriate wattage must be installed in poultry sheds where these are needed otherwise tube lights of enhanced design having electronic choke must be added and lighted only when needed. It is recommended to have natural light as much as possible during the daytime at least.

The generator should be in good condition and maintained by proper servicing at regular periods and should be run during any power failure/load shedding. Only essential machinery should be linked with the generator and the load must be maintained to its optimum. Proper aeration and cooling should be sustained in the generator place.

Egg Hatchery Project Report/ Economics of Egg Hatchery Business in India

A. Fixed Capital

i) Land 20000 sq. ft. Value Rs. 1,50,000

• Land Development Rs. 25,000
• Sub Total Rs. 1,75,000 
• Built–up Area and other Civil Works
• Hatchery-cum-office building (60’×120′) 7200 sq.ft.: Rs. 5,40,000
• Store (30’×60′) 1800 sq.ft: Rs. 1,35,000
• Layer/Breeder House/Sheds (100’×30′) 3000 sq.ft.: Rs. 2,25,000
• Disposal pits: Rs. 10,000
• Water storage tank: Rs. 30,000
• Boundary wall/barbed wire fencing, etc.: Rs. 35,000

Sub Total: Rs. 9,75,000

Total costs for land and building construction: Rs. 11,50,000.

ii) Machinery and Equipments

• Egg Hatcher (Automatic)(capacity 4500 eggs): Rs. 1,40,000
• Egg setter (capacity 13500 eggs) (Automatic): Rs. 2,00,000
• Electric egg tester: Rs. 600
• Electric Deb-eaker: Rs. 1250
• Egg weighing scale (1-100 gram cap.): Rs. 750
• Feeder, waterer and brooder LS: Rs. 35,000
• Misc. items like buckets, trays, baskets etc. LS: Rs. 10,000
• Weighing balance 1 No.: Rs. 5,000
• Generator (10 KVA): Rs. 90,000
• Air conditioner (1.5 TR): Rs. 25,000
• Veterinary clinic instruments/equipment LS: Rs. 6,000
• Office equipments/furniture LS: Rs. 20,000
• Refrigerator 1 No.: Rs. 25,000
• Electrification and installation LS: Rs. 25,000

Total: Rs. 5,83,600.

(iii) Preliminary and Pre-operative Expenses like Legal Expenses, Establishment Cost, Travelling, Startup Expenses, Consultancy Fees, Interest during Construction.

Trial Run Expenses etc.: Rs. 30,000.

(iv) Other Fixed Expenses for Purchase of About 1500 Nos. Day-old Parent Stock chicks and Feeding Charge up to Laying Stage: Rs. 1,50,000.

Total Fixed Capital (i + ii + iii + iv): Rs. 19,13,600.

B. Working Capital (per month)

(i) Personnel

• Hatchery Manager: Rs. 4000
• Supervisor: Rs. 2,000
• Operator: Rs. 1,800
• Sexer: Rs. 1,600
• Accountant-cum-clerk: Rs. 1,600
• Skilled worker (Stockman): Rs. 1,300
• Unskilled workers: Rs. 6,000
• Watchman-cum-peon: Rs. 1,000
• Perquisites @ 15%: Rs. 2,895

Total: Rs. 22,195

Say: Rs. 22,000.

ii) Raw Materials and Packaging Materials

• Parent stock 225 Nos. chicks 75: Rs. 16,875
• Poultry feed 8 Tonnes 6000: Rs. 48,000
• Feed Mix LS: Rs. 5,000
• Medicine/vaccines/antibiotics LS: Rs. 20,000
• Chemicals/ LS sanitisers/ lime etc.: Rs. 10,000
• Chick baskets 175 Nos. 35: Rs. 6,125

Total: Rs. 1,06,000

iii) Utilities

• Power 3000 KWH units: Rs. 2.5 7,500
• Water 400 K.Lt.: Rs. 3 1,200
• Fuel like Diesel, K/oil etc. LS: Rs. 1,850

Total: Rs. 10,550.

iv) Other Contingent Expenses

• Postage and Stationery: Rs. 1,000
• Telephone: Rs. 500
• Consumable stores: Rs. 1,000
• Repairs and maintenance: Rs. 1,000
• Transport charges: Rs. 5,000
• Advertisement and publicity: Rs. 5,000
• Insurance: Rs. 650
• Taxes: Rs. 500
• Sales expenses: Rs. 2,000
• Misc. expenditure: Rs. 8,000

Total: Rs. 24,650.

v) Total Recurring Expenditure (i + ii + iii + iv): Rs. 1,63,200

vi) Working Capital

Recurring expenditure (for one month): Rs. 1,63,200.

C. Total Capital Investment

Fixed Capital: Rs. 19,13,600

Working Capital (For 1 month): Rs. 1,63,200

Total: Rs. 20,76,800.

1. Cost of Production (per year)

a) Total recurring expenditure: Rs. 19,58,400

b) Depreciation on building and other civil construction @ 5%: Rs. 48,750

c) Depreciation on machinery and equipments @ 10%: Rs. 50,000

d) Depreciation on hand tools and misc. equipments and poultry equipments @ 25%: Rs. 7,000

e) Depreciation on office equipments and furniture @ 20%: Rs. 4,000

f) Interest on Total capital @ 15%: Rs. 3,12,000

Total: Rs. 23,80,150

Say: Rs. 23,80,000.

2. Turnover (per year)

a) By sale of 200000 Nos. of day old chicks @ Rs 13.75: Rs. 27,50,000

b) By sale of 2500 Nos. of unfertile eggs @ Rs. 2: Rs. 5,000

c) By sale of 2500 Nos. of culled birds @ Rs. 45: Rs. 1,12,500

d) By sale of 500 bags litter @ Rs. 10 5,000

Total: Rs. 28,72,500

3. Net Profit (per year) (before Income Tax): Rs. 4,92,500

4. Net Profit Ratio: 17%

5. Rate of Return: 24%

6. Break-even Point

i) Fixed Cost

a) Depreciation on machinery and equipment: Rs. 50,000

b) Depreciation on hand tools: Rs. 7,000

c) Depreciation on office equipment and furniture: Rs. 4,000

d) Depreciation on building and other civil works: Rs. 48,750

Fixed Cost

e) Interest on Total investment: Rs.3,12,000

f) Insurance: Rs.7,800

g) 40% of salary and wages: Rs.1,05,600

h) 40% of other contingent expenses: Rs.1,15,200

Total: Rs.6,50,350.

2. Net Profit (per year): Rs. 4,92,500

B.E.P. = Fixed cost × 100 / Fixed cost + profit = 650350 × 100 / 1142850 = 57%.

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