CHICKEN MASTERS LTD 1.

0 INTRODUCTION Chicken Masters is a company founded by professionals who feel they have a lot to offer in the poultry market in terms of quality products and quality services. Chicken Masters feel that there are unexplored markets and unclaimed market niches that they can break into. The company will be involved in the breeding, rearing, processing and marketing of broiler chicken in Kenya. Other products include: Whole broiler chicken (baby chicken, spring chicken and capons) Parts and products of broiler e.g. chicken feet, flakes, gizzards Livestock and pet food Feathers for use in pillows Offals for manufacture of animal feeds

The main markets include restaurants particularly fast food joints, supermarkets and other retail outlets, schools, hospitals and international markets. The poultry farming project will have a capacity of processing 200,000 Chicken per month. To realize this capacity, 200,000 eggs will be hatched every month, which translates to 50,000 Chicken on a weekly basis. 1.1 LOCATION The birds will be bred and reared in the outskirts of Thika town, 10km from the town center on a 10 acre piece of land. The processing facility will be located in the same farm but 5 km from the rearing and breeding area. This location was chosen due to a number of reasons which include: Accessibility and proximity to the market The main target market for the poultry products is Nairobi province, which is a few kilometers from Thika town. This location is near the market and has a good

communication and transport network. This reduces the overall cost of communication, transport and accessibility. Availability of chicken feeds Poultry feed is one of the most important inputs for this project, and they are readily available in Thika town. There are numerous animal feeds stores in Thika town that produce their own animal feeds. The cost of feeds will be reduced since we will be getting the feeds from the source and transport costs will also be reduced due to proximity to suppliers. Water and electricity supply These supplies are vital for the success of this project. Water will be obtained from Thika municipal Council, whereas electricity will be provided by Kenya Power and Lightning Company. Labor factor Preliminary surveys indicate that labor in the surrounding areas is affordable and available. Thika is largely an industrial town and with a growing population. This makes labor abundant and cheap. Availability of land Thika is one of the very few locations where we could find a stretch of land ten acres big at an affordable price, and that was close to the market, had a lower cost of operation and is fully serviced with electricity. Ventilation The land is well ventilated to ensure there is no foul smell from the chicken waste. Security The poultry here is safe and protected from wild animals and other predators. 1.2 SPONSORS BIOGRAPHIES JOHN WAWERU- MANAGING DIRECTOR John has a Master of Science degree in Food Science and Technology and is in the process of completing his MBA degree at the United States international university. He has served as 2

production manager at Interchic for 10 years and as operations director for 5 years in the same company. He is currently serving as a food safety consultant in the East African region. John is an executive committee member of the Meat processors association of East Africa. He is also a member of the board of Kenya food safety authority. John is going to lead Interchic as Managing director to realize market penetration and dominance. BENSON HURIA - FINANCE MANAGER Benson graduated from Moi University in 2000 with a degree in Business ManagementAccounting option and an M.B.A in accounting and Finance from the United States International University (USIU). He/she is a Certified Internal Auditor and a Certified Public Accountant). He is a member of .Institute of certified Public Accountant Kenya (ICPAK).He has served as Chief accountant for Farmers Choice, Ministry of Livestock and Nakumatt Supermarkets.He has experience in the following industries: Retail and Distribution, Manufacturing, Food and Consumer Products and Governmental. He has specialization in Financial and SEC Reporting and Internal Control Systems. GRACE MOREKA -HUMAN RESOURCE AND PROCUREMENT MANAGER Miss Grace Moreka, aged 32 years, is a MBA graduate from USIU and has worked in the food industry for some 10 years, principally as Human Resource Director for a number of companies including Kenchick Ltd and Delmonte Kenya the latter included dealing with its successful flotation and full listing on the Nairobi Stock Exchange. During her career to date, she has also gained some three years international experience working in South Africa, Uganda and Tanzania. She joined the Board of Chicken Masters as Group Human Resource Director in January 2010. BENJAMIN MBITHI -PRODUCTIONS AND OPERATIONS MANAGER Benjamin has a Masters in Business administration in Production Management from Moi University. He also holds a bachelors degree in sociology from Nairobi University. He served as a production manager for Alpha- fine for ten years and also has been with farmers choice in operations department for five years. He is a member of Production Association of Kenya 3

RUTH MWANGO - DEPUTY PRODUCTION AND OPERATIONS MANAGER Ruth M. is a graduate of Andrew University, which is in Michigan State in the U.S.A. She holds a bachelors degree in agricultural science from this university. She graduated with honors. Her specialty is poultry keeping. Immediately after graduation she secured a job with Town line poultry farm in Michigan as an assistant production manager. She worked here where the top management commended her for her good work and awarded her a bonus for the improvements she had brought about which saw profits soar to the roof. She worked here till the founding of chicken masters where she is a share holder and works as an assistant production manager. EVALYNE KIMANGA- STRATEGY MANAGER Evalyne holds a Masters degree in Hospitality Planning and Development from Cornell University and a degree in Hotel and Restaurant Management from United States International University. She has held different managerial positions in the Hospitality industry. Currently, she is the Deputy Director of Research and corporate Planning for the Sarova Group of Hotels. She is also a part time lecturer at Kenya Utalii College teaching Strategic Management in Hospitality. Ms. Kimanga brings her vast experience in the hospitality industry spinning over 10 years. She is the Business Strategy Manager overseeing the overall business strategy of chicken masters. PHOEBE MURIITHI - QUALITY MANAGER Phoebe Muriithi graduated with honors from Moi University with a degree in Food and Technology Management. Ms Muriithi is also ISO 9000 and ISO 14000 certified and wellversed with international standards requirements and their conformity. She has worked for Sharma Foods Ltd for ten years in the capacity of a quality control manager. In addition, she also held the post of Quality Director in the food department of Ketepa Tea Exports.She opened her own consultancy firm on quality control called Marshall Quality Controls, and is a consultant with many food companies including Unilever, Alpha foods, Hilton Hotels and

Reef Hotels. Ms Muriithi brings with her invaluable experience to Chicken Masters, and is expected to take the quality of chicken in Chicken Masters to new heights.

REBMAN GANDANI - MARKETING MANAGER Rebman Gandani holds a degree in Management Information System from Daystar University and a graduate degree in Business Administration in Marketing from United States International University. He is proficient in Management of Information Systems as an aid in making managerial decisions. With his diverse experience in administration, he has worked as a system analyst at Oserian Flowers Company for three years, between the year 2003 and 2006. He is credited with implementing the enterprise resource planning system which manages the online auction of flowers. This was before moving to Techsoft Company as the Marketing and Creative Design manager. At Techsoft Company, he was in charge of the marketing team, which was responsible for branding and marketing of the various software packages they had for their market target. He served in this position between May 2006 and February 2010, when he joined Chicken Masters as the Marketing Manager. ESTHER NGANGA - DEPUTY MARKETING MANAGER Esther Nganga holds a degree in International Business Administration- Marketing minor from United States International University and a Graduate degree in Business administration in Marketing from the same university. Ms Nganga is also a member of Certified Institute of Marketing (CIM). Before joining Chicken Masters She was working with Kenchic LTD as a Senior Marketing Executive for 2 years. She brings with her vast experience of marketing strategies and market analysis and expected to take the position of Deputy Marketing Director at chicken Masters.

MANAGEMENT SENIOR MANAGEMENT Managing Director: Finance Manager: 5 John Waweru Benson Huria

Human Resource and Procurement Manager: Productions and Operations Manager: Deputy Productions and Operations Manager Quality Manager and Company Secretary Marketing Manager: Deputy Marketing Manager Strategic and Planning Manager: ROLES OF MANAGERS MANAGING DIRECTOR

Grace Moreka Benjamin Mbithi Ruth Mwango Phoebe Muriithi Rebman Gandani Esther Nganga Evalyne Kimanga

The Managing Director is the most senior director who runs the company and takes care of administrative issues. In addition to these roles, he will be responsible for: Ensuring smooth running of the business Liasing with all the other managers to formulate policies, strategies and plan for the companys activities. Lead and chair board meetings. Address any issues that may arise that cannot be handled on a less senior level of management. Advice other members of management on various issues and assist them whenever possible. Give guidance on the long-term and short-term goals of the company. FINANCE MANAGER The finance manager will be in charge of: Costing for : Raw materials, in this case, day old chicken. Equipment necessary for the project. Capital required for the project. Supplies and Utilities needed. 6

Management Costs.

Calculating the Profitability Estimates. Pricing for end products and by products General Financing procedures.

HUMAN RESOURCE AND PROCUREMENT MANAGER This department will be responsible for: Hiring and firing employees. Preparation of work schedule for employees. Preparing reports for finance department on employee work for the purpose of remuneration e.g. based on overtime. Addressing employees social matters and grievances. Procuring materials needed for the success of chicken rearing.

PRODUCTIONS MANAGER The productions manager will be in charge of all operations and production processes. MARKETING MANAGER Marketing department will be involved in: Market analysis Competitor profiling Advertising Establishing a distribution network Receiving feedback from customers and consumers 7

STRATEGIC MANAGER The Strategic manager is charged with the responsibility of: Management of by-products of the entire project Planning for future expansions and policies Dealing with new trends and anticipating any future changes in trends

QAULITY MANAGER The roles of the quality manager include ensuring that: Hygiene is maintained Company and Government specifications have been met Expiry dates are clearly and correctly indicated Storage of products is appropriate Storage in the outlets is appropriate 1.3 EQUITY CONTRIBUTION Founder members agreed to finance the project partly through debt financing and partly through equity contribution. The total initial capital required for the project is Kshs 39,005,590. A long term loan of Kshs 21,005,590 would be acquired from Equity bank, while members would contribute the balance equally. Equity contribution from each member would be as follows:

Member John Waweru Benson Huria Evalyne Kimanga Benjamin Mbithi

Kshs. 2,000,000. 00 2,000,000. 00 2,000,000. 00 2,000,000. 00 8

2,000,000. Rebman Gandani Phoebe Muriithi Grace Moreka Esther Nganga Ruth Mwango Loan from Equity Bank Total 00 2,000,000. 00 2,000,000. 00 2,000,000. 00 2,000,000. 00 21,005,590. 00 39,005,590.00

1.4 PRODUCT Chicken Masters will specialize in high premium poultry meat classified into: a. Whole chicken b. Chicken parts(drum sticks, chicken wings, chicken strips, gizzard) c. Skinless chicken The whole chicken will be packed in varying weights of 1.5 kilograms, 3 kilograms, and 4.5 kilograms. The chicken parts will be packaged as separate entities in small packages of 500 grams and bigger packages of 1000grams. For example, drum sticks will be packed in packs of 1 x 4. The skinless chicken will be packaged uniquely in small packages of 250 grams since it is a relatively new product in the chicken market. The by-products that will be sold include: Offals and feet sold to animal feed manufacturers Manure to be sold to fertilizer manufacturers. Feathers to be sold to textile industries as components of pillows and upholstery.

Disposal Poultry farming is a relatively environmental friendly activity and has minimum negative effects on the environment. As explained above, most of the remnants of the products are sold off as by-products. Any waste remaining after that especially used water and organic poultry remnants will be channeled to lagoons which have enzymes that will facilitate their disposal.

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1.5 PRICING

S ALES Un s it Full broile r Chicke part n Chicke m n anure Chicke e n ntrails Chicke fe n athe rs Chicke gizzards n To a s le p r m n h tl a s e ot Kg Kg Kg Kg Sack Pie ce Ac u l Un ta it 1.2 1 1 1 1 1 0 P eP r u it ric e n 25 0 0.0 25 0 0.0 10.0 0 10.0 0 50.0 0 10 0 0.0 Un sS ldinam To a S le it o o tt l a s nh 1 ,00 .00 40 0 6 0,00 0 0.0 5 0.0 ,00 0 7 5,00 0 0.0 50 0.00 1 0,00 0 0.0 35 ,000,0 00.0 0 15 ,000,0 00.0 0 50 00 ,0 .00 7 ,0 .00 50 00 25 00 ,0 .00 1 0,0 .0 ,00 00 0 5,2,0.0 18 50 00

P in - Bro rs ric g ile Dire te p n e c x ess Eg re gs ady for hatching Inspe ction fe s e Utilitie - Wate and Ele s r ctricity Wage s Anim e nse al xpe s-Fe d and drugs e Ve nary fe s te e Inspe ction fe s e Packaging e nse xpe s Othe e nse -contribution pe unit r xpe s r Le fe s gal e Audit fe s e Com unication m Motor Ve hiclee nse xpe s Officee nse xpe s Adve rting and prom otion Re pairs and m aintance To a c s t l ot Marg pe cost at 2 % in r 5 To a c s p r it m t l ot e e Un s it 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 5.0 0 15.0 0 12.0 0 24.0 0 69.5 0 13.0 0 9.0 0 7.5 0 No e ts

Production proce contrib 9 of the ss ute 0% utility consum ption Cost of inspe cting e ach broile r

Theothe e nse contributeonly part r xpe s of total e nse xpe

45.0 0 2 00 0.0 50.0 0 2 00 5.0

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2.0 2.1

PRODUCTION PROCESS RAW MATERIALS

The raw materials and inputs required for this project include eggs, poultry feeds, water, power/source of energy and supplies. Eggs for breeding will be acquired from Aboracres in Israel, which is the worlds leading supplier of eggs for breeding. Poultry feeds are readily available in Thika town, given the large number of animal feeds processing firms and stores. We have selected three of the best companies to participate in competitive bidding to enable us to get the best prices possible for the best quality available. These companies are Chania feeds, May feeds and Unga Feeds. Supplies include antibiotics, drugs, vaccines and veterinary services. Antibiotics will be obtained from Unga Ltd while vaccines and drugs will be procured from MetroVet. Chicken Masters has decided to employ a full-time Veterinarian who will be available whenever needed. This is due to the sensitivity and fragility of the chicken as they are reared. Water will be supplied by Thika municipal council, whereas electricity will be supplied by Kenya Power and Lightning Company. However, in case of emergencies or power blackouts, a generator will be available for use to ensure smooth running of the project.

2.2 Sales

MONITORING AND MEASUREMENT

Sales will be reviewed monthly and if revenue projections do not meet expectations the marketing plan reviewed to bring the business back in track.. Customer Satisfaction Survey In the middle of the year a market survey will be carried out to reevaluate market size, Chicken masters market share and Customer satisfaction

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2.3

PRODUCTION PROCESS 1. Facilities a. Hatchery b. Poultry houses c. Slaughter house d. Cold rooms e. Offices 2. Equipment a. Incubators - 40 b. Feeders 4000 c. waterers - 4000 d. Infrared lamps - 4000 e. Chiller - 2 f. Freezers - 3 g. Scalder - 1 h. Plucker - 1 i. Eviscerator - 1 j. Spin chiller - 2 k. Vacuum packing - 1 l. Trolleys - 4 m. Vehicles 4 lorries, 2 vans 3. Labour Skilled Labour consisting of: a. 2Hatchery operators- 20,000 pm b. 2 poultry specialists- 20,000pm c. 1 technicians-20,000pm d. 4 slaughter house operators-40,000 pm e. 2 drivers 30,000 pm

INPUTS

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2.3 IMPLEMENTATION Receiving of live birds Live birds are received from delivery trucks and hanged on to the shackles of the processing line. Hanging onto conveyor line Live chicken will be hung on the conveyor belt upside down. Stunning The hang birds are conveyed to the stunner where they are stunned via an electric current. Bleeding A muslim practitioner cuts the throat of the chicken to effect bleeding. The product is Halal certified as a result. Scalding The carcasses are then moved into an automatic scalder where they are sprayed with hot water. Plucker From there the carcasses are moved into an auto plucker where the feathers are removed. Auto head remover From the plucker the carcasses are moved into the head remover where the heads are removed. Feet removal After the removal of heads the carcasses are moved into another chamber where feet are removed. Eviscerator After the feet have been removed the carcasses are moved into the eviscerator where the entrails are sucked out. Bird washing After the eviscerator the birds are moved to a washing chamber where they are sprayed with chlorine water.

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Spin chiller After washing its the spin chiller where the chickens are soaked in chlorine water which is at 4o centigrade for ten minutes. packing From the spin chiller the carcasses are then moved to the packing unit where they are wrapped in polythene. Storage After packing we move the carcasses straight to the freezers where the products are stored at negative four degrees centigrade. Dispatch Products will be dispatched at demand.

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Feedback will be sought from quality control and marketing then necessary changes will be implemented in the production process. 2.4 QUALITY CONTROL AND FOOD SAFETY MANAGEMENT

Chicken Masters will implement ISO 9000 Quality management system and ISO 22000 food safety management system. ISO 14000 environment management system will also be implemented To ensure quality and safe products, chicken masters will implement ISO 9000:2008 quality management systems and ISO22000:2005 Food Safety Management System. To safeguard Environmental Integrity ISO 14000 Management Systems will be implemented. External quality and food safety audits will be conducted annually to ensure effectiveness of the system.

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3.0

MARKETING AND DEMAND ANALYSIS Restaurants especially fast foods Supermarkets and other retail outlets. Export market

3.1 Main Markets:

3.1.1 Size of Target Markets Nearby schools (private 10) dd per month 10,000 kilos Nearby private hospitals 2 dd per month 500 kilos Retailers in 3 provinces 30 dd per month 30,000 kilos Whole sellers 3 provinces 25 dd per month 15,000 kilos Local indigenous people 200 per month 300 kilos

Assumed growth rate per month 2% cause of expansion into other regions 3.1.2 Demographics Kenyas population is estimated at 40 million and an estimated 41% of the population is in urban areas according to data from CIA world fact book, 2006 estimates. This is CHICKEN MASTERS main target market. 55.1% of the population is aged between 15-64 years of age as seen below in data from CIA world fact book. This forms a big part of the chicken market table Population distribution in Kenya between urban and rural areas: Urban: 41% Rural: 59% Population distribution by age: 0-14 years: 42.6% (female 7,322,130; male 7,454,765) 15-64 years: 55.1% (female 9,508,068; male 9,631,488) 65 years and over: 2.3% (female 432,012; male 359,354)

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(Source: CIA World Fact Book, 2006 estimates 3.1.3 ECONOMICS GDP growth has been steady for the last seven years. Figure 1. Movement of seasonally adjusted and unadjusted GDP (Kenya national Bureau of statistics third quarter GDP release 2009).

Income distribution favors urban areas hence the target of urban towns. GDP growth has been positive and is projected to be 3.7% in 2010 and 4.8% in 2011 (World bank economic outlook report 2010). Inflation in Kenya has led to a general rise in prices and ultimately, negatively affects CHICKEN MASTERS revenues. However, lately, inflation has been declining, which has caused people to have more discretionary income. This presents improved market prospects for Kenchic.

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Figure 2. Overall Month on Month and underlying inflation rates (Kenya National Bureau of statistics).

High interest rates discourage expansion of the business and restrict growth of the food service sector. However it is noteworthy that they have been relatively stable for the last twelve months shown in Figure 3 below.

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Figure 3. Interest rates (Kenya National bureau of statistics)

Exchange rates of the Kenya shilling remains fairly stable providing a favorable environment as far as cost management of imported inputs is concerned.

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Figure 4.

Liberalization of the poultry market has presented stiff competition to CHICKEN MASTERS in form of organized industries and small scale farmers. Infrastructure is well developed favouring efficient movement of products and by-products. 3.1.4 SOCIO-CULTURAL FACTORS Change in eating habits where people prefer to eat out. Enhanced health consciousness especially of the working class, who believe chicken is better than red meat which has been associated with many health issues. Changing lifestyles where most people have no time to cook and prefer to eat ready made food- Leads to fast food culture. All these factors combined have changed the chicken market, and presented CHICKEN MASTERS with an opportunity to cash in. 21

Most religions and cultural groups embrace chicken as a healthy food. 3.1.5 POLITICAL LEGAL STRUCTURES Kenya is fairly stable with little interference of politicians in business. The government has a policy of pulling out of business leaving it to private entities which augurs well for the sector. However Corruption and governance issues remain a challenge increasing cost of doing business e.g. maize import/export scandal led to increase in animal feeds, eventually making chicken expensive to consumers and farmers. There is increased Social and political pressure on corruption to be eliminated coming from civil societies and KACC. In terms of legal structures, Laws that protect unfair competition are upheld and protect CHICKEN MASTERS from malicious people. Laws governing quality (KEBS), labor relations, the environment (NEMA) and the Public Health Act have to be adhered to by all industry players. These impact the business positively as they give confidence to consumers that the chicken meat is safe and of the right quality. 3.1.6 TECHNOLOGICAL CHICKEN MASTERS has access to good technology which increases the quality of chicken and hybrid eggs. For example incubators, hybrid eggs, computerized systems that enhance quality management. 3.1.7 OTHER MARKET FACTORS: Community concerns over role of GMOs in food stuffs and supplements. Rising over use of antibiotics in the production process. Environmental concerns about dust, litter, ammonia, odor and waste streams management. Consumer concerns regarding food safety and animal welfare. Growing domestic demand for poultry especially the urban areas. Availability of food grains at cost competitive prices.

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Consolidation and rationalization of efficiency throughout the value chain continued integration is resulting in shifting economies of scale. Increase in government regulation particularly in regards to protection of environment and food safety. Increase prevalence of regional trade agreements and policies leading to an increasingly complicated world trade. Consumers demanding products with integrity (safe, reliable, meet with expectations and have limited impact on the environment). Increased recognition of environmental and social responsibilities. Consumer eating preferences driven by lifestyle choices, product suitability and price. Increase bio-security concerns particularly the break out of disease such as the avian influenza thus affecting world trade. Increasing sophistication of product distribution and retail markets. Emerging technologies influencing the dynamics of the value chain. Lobby and political groups having a direct effect on the dynamics of the value chain. Constant competition for share consumer diet particularly protein.

3.1.8 COMPETITORS AND INDUSTRY ANALYSIS Primary Competitors The primary competitors for CHICKEN MASTERS include: Kenchic, Alpha-fine foods, Farmers Choice, Small scale farmers majoring in the production of chicken. Substitutes Since our chicken is consumed by people who prefer white meat over red meat our main competition in this category would be the fish industry and breeders of organic (traditional chicken). Low fat red meat would be considered a substitute too. The main competing companies in this category include Kenya meat commission, Farmers choice and Alpha fine foods. Our key suppliers are the Egg providers, the feed suppliers, local vets and general office supplies. The government through the KEBS is the regulatory authority. Our customers include schools, hospitals, hotels, retailers and wholesalers. The company is a new entrant in the industry. 23

3.2 SWOT ANALYSIS OF CHICKEN MASTERS

Strength Weaknesses: High infrastructure costs (initial capital outlay and ongoing costs) are likely influence the ability to compete in industry. Competition from existing players. Competition from substitutes. Escalating costs in introducing new technologies. Achievement of profitability in each of the sectors within the value chain. Risks associated with feed costs such as drought, quality and price. Sourcing well trained and qualified labour to manage the grown out facilities. Retention of qualified man power. Developing technical capabilities to manage food safety in the food chain. Developing and introducing new genetics. International disease threats such as avian flu. Responsible disposal of mortalities in case of disease outbreaks. Minimizing dust, odour, and noise incidents. Managing water and energy efficiencies. New player with a superior product at a low cost Cheap Labour Cheap Factors of Production(raw materials) Strategic Location( Thika Town) Adequate operation space to ensure that hygienic conditions are easily observed. Skilled labor from the directors to the meat processing operators, this will ensure professionalism and profitability Sufficient capital base to ensure our production is with the contemporary trends in the market.

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Opportunities: Threats Live stock diseases such as Bird Flu which can adversely affect demand. Government regulation through KEBS imposing higher quality standards Rapid changes in consumers tastes and preferences e.g. going healthy. To focus on end users of poultry meat products. Attract investment into the company through sale of shares or partnership such as merges, acquisitions. Export into regional and international market. Capitalize on industry structuring to ensure economies of scale and updated production technologies. Explore international market (high value niches) Increase secondary processing and continue providing innovative end user solutions. Economic utilization of litters and mortalities. Water use efficiency and recycling. Further satisfy customer demand through product innovation. Seek to improve industry internal and external relationships. Adopt new technologies to increase cost competitiveness and labour efficiency. Initiate food safety programmes to ensure ongoing community well being. Institute formal training and staff development opportunities to develop competence in workforce. Become among the leading Poultry farming companies in technology. Expand into feed grain production to support developments. Diversify range of markets and alternative uses of various waste streams.

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3.3 MARKETING STRATEGY Target Market. CHICKEN MASTERS targets the middle and upper class segments of the market in urban settings. All ages, gender, religion and cultural backgrounds are targeted. Market Size The target market size is 10% of the Kenya population equivalent to 4 million people. Price. The price of CHICKEN MASTERS Chicken is going to depend on the market price of live chicken and the cost of chicken feed. The set retail price will be tied to the prices of our competitors. A pre-cut, vacuum-packed 1.2 kg will be sold for Ksh.250 to the retailer. This price will provide a profit that will be acceptable to Kenchic. After cutting and wrapping the price will be within a range that a consumer is willing to pay. The price will also be competitive. Place The Kitchen chicken will be availed to the consumer through various channels namely; i) Franchised outlets i.e. 33 CHICKEN MASTERS Inns ii) Supermarkets e.g Nakumat, Tuskies, uchumi iii) Hotels and other fast food restaurants e.g. Galitos, steers, Java iv) Institutions e.g Hospitals, Universities and colleges. Product positioning The marketing for CHICKEN MASTERS positions the product among the other lower fat alternative meats such as traditional chicken and fish. Over the past 20 years consumer demand has shifted towards lower fat chicken. The goal of this plan is to capitalize on this trend to encourage more consumption of chicken and grow our market share versus beef which still controls over 70% of the market. CHICKEN MASTERS products will be positioned as a healthy low fat alternative to beef and as a safe high quality alternative to traditional chicken. In-store posters will show that CHICKEN MASTERS has high quality 26

certifications and will emphasize the low fat and healthy aspect of the CHICKEN MASTERS products. Promotion CHICKEN MASTERS products will be promoted via 1. Branding of the CHICKEN MASTERS Inns and other fast food restaurants 2. Using branded refrigerators and displays in supermarkets 3. Seasonal media advertisements for value added products e.g. sausages 4. Branding of delivery and sales vehicles The marketing challenge Chicken master is a new entrant in the poultry business. The operation approach is vertical integration where we rear the chicken through to the meat processing stage. The market has player that are controlling huge market share and have a broad portfolio. The marketing challenge is to capture the potential in the market as well as getting a share of the market through establishing a niche in the market. SITUATIONAL ANALYSIS Company analysis The main goal of the company is to be a provider of choice for chicken meat; this is to be an achieved by ensuring the following:

Rearing the best broiler breeds to ensure the quality of our process chicken meat in a hygienic through a way offer chicken at market friendly prices Guarantee supply in good timing to our customers.

products.

Company Focus Chicken masters core business will be in the processing of chicken meat, packaging it as whole and as chicken parts. We will also sell manure to fertilizer manufacturers, the entrails to animal feed manufacturers and the feathers to textile companies for pillow production. 27

However, all this will be done as minor operation aimed at helping the company meet some of the operation costs and as a way to taking care of the companies waste. Company culture Although chicken masters in a new company, most of the organizations structure have been put in place. The team or direct has a broad and dynamic range or skilled personnel, with traits that complement each other. The directors double up as company managers, a fact that contributes to commitment to the company. Customer analysis: Customer concentration and type The company hopes to operate with an output of about 10,000 chickens a day. Our market target is mostly hotels, institutions, first food restaurant and chain stores all over urban Kenya. The main reason for our customer concentration is because of the consistency in demand to our product and the magnitude of orders they have. We also have urban Kenya as a targeted are due to the availability of infrastructure to support the nature of products we are dealing in. Value Drivers The following are some of the main value drivers that will attract customers to our products:

Top quality chicken meat Hygienic processing, packaging and presentation of the products Competitive prices that will be customer friendly Consistency in our supplies to our customers.

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4.0

FINANCIAL FORECASTS

CHICKEN MASTERS LTD PROJECTED PROFIT AND LOSS STATEMENT FOR FIVE YEARS Sales Full broiler Chicken part Chicken manure Chicken entrails Chicken feathers Chicken gizzards Value added products Total Sales Year 1 Kshs. 35,000,000.00 15,000,000.00 50,000.00 750,000.00 25,000.00 1,000,000.00 Year 2 Kshs. 36,750,000. 00 15,750,000. 00 52,500.00 787,500.00 26,250.00 1,050,000.0 0 54,416,250. 00 Year 3 Kshs. 38,587,500. 00 16,537,500. 00 55,125.00 826,875.00 27,562.50 1,102,500.0 0 1,250,000.0 0 58,387,062. 50 Year 4 Kshs. 40,516,875.0 0 17,364,375.0 0 57,881.25 868,218.75 28,940.63 1,157,625.00 1,312,500.00 61,306,415.6 3 Year 5 Kshs. 42,542,718. 75 18,232,593. 75 60,775.31 911,629.69 30,387.66 1,215,506.2 5 1,378,125.0 0 64,371,736. 41

51,825,000.00

Expenses Fixed Land lease Directors Salaries Insurance Loan interest Depreciation Licenses Variable Wages Electiricity Water Communicatio n Motor Vehicle expenses Animal expenses-Feed

3,000,000.00 4,500,000.00 4,000,000.00 380,753.91 5,814,573.75 50,000.00

3,150,000.0 0 4,725,000.0 0 4,200,000.0 0 380,753.91 6,105,302.4 4 52,500.00

3,307,500.0 0 4,961,250.0 0 4,410,000.0 0 380,753.91 6,410,567.5 6 55,125.00

3,472,875.00 5,209,312.50 4,630,500.00 380,753.91 6,731,095.94 57,881.25

3,646,518.7 5 5,469,778.1 3 4,862,025.0 0 380,753.91 7,067,650.7 3 60,775.31

3,000,000.00 176,000.00 45,800.00 120,000.00 3,459,008.00 9,083,059.00

3,150,000.0 0 184,800.00 48,090.00 126,000.00 3,631,958.4 0 9,537,211.9 5

3,307,500.0 0 194,040.00 50,494.50 132,300.00 3,813,556.3 2 10,014,072. 55

3,472,875.00 203,742.00 53,019.23 138,915.00 4,004,234.14 10,514,776.1 7

3,646,518.7 5 213,929.10 55,670.19 145,860.75 4,204,445.8 4 11,040,514. 98

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and drugs Vetenary fees Inspection fees Packaging expenses Office expenses Audit fees Legal fees Adverting and promotion Repairs and maintance Total Expenses Profit Tax expenses

2,270,764.75 1,135,382.38 146,796.00 89,075.00 908,305.90 120,350.00 956,346.00 265,486.00 39,521,700.69 12,303,299.3 1 3,690,989.79

2,384,302.9 9 1,192,151.4 9 154,135.80 93,528.75 544,162.50 126,367.50 1,004,163.3 0 278,760.30 39,786,265. 73 14,629,98 4.27 4,388,995.2 8

2,503,518.1 4 1,251,759.0 7 161,842.59 98,205.19 583,870.63 132,685.88 1,054,371.4 7 292,698.32 41,769,041. 32 16,618,02 1.18 4,985,406.3 5

2,628,694.04 1,314,347.02 169,934.72 103,115.45 613,064.16 139,320.17 1,107,090.04 307,333.23 43,838,455.6 9 17,467,959. 93 5,240,387.98

2,760,128.7 5 1,380,064.3 7 178,431.46 108,271.22 643,717.36 146,286.18 1,162,444.5 4 322,699.89 46,011,340. 78 18,360,39 5.63 5,508,118.6 9

30

CHICKEN MASTERS LTD PROJECTED CASHFLOW PROJECTIONS FOR FIVE YEARS

Year 1

Year 2 Kshs.

Year 3 Kshs.

Year 4 Kshs.

Year 5 Kshs.

Inflows

Kshs.

Cash b/f Loan 21,005,590.00 Sales Full broiler 35,000,000.00 Chicken part 15,000,000.00 Chicken manure 50,000.00 Chicken entrails 750,000.00 Chicken feathers 25,000.00 Chicken gizzards 1,000,000.00 Value added products Contribution from the directors 18,000,000.00 Total Inflows 90,830,590.00

13,276,324.27 36,750,000.00 15,750,000.00 52,500.00 787,500.00 26,250.00 1,050,000.00 54,416,250.00

55,139,324.14 38,587,500.00 16,537,500.00 55,125.00 826,875.00 27,562.50 1,102,500.00 1,250,000.00 58,387,062.50

107,868,369.66 40,516,875.00 17,364,375.00 57,881.25 868,218.75 28,940.63 1,157,625.00 1,312,500.00 61,306,415.63

154,169,513.13 42,542,718.75 18,232,593.75 60,775.31 911,629.69 30,387.66 1,215,506.25 1,378,125.00 64,371,736.41

Outflows Land lease 3,000,000.00 3,150,000.00 Directors Salaries4,500,000.00 4,725,000.00 Insurance 4,000,000.00 4,200,000.00 Loan repayment and interest 2,481,312.91 2,481,312.91 Licenses 50,000.00 52,500.00 Tax expense 3,690,989.79 4,388,995.28 Wages 3,000,000.00 3,150,000.00 Electiricity 176,000.00 184,800.00 Water 45,800.00 48,090.00 Communication 120,000.00 126,000.00 Motor Vehicle expenses 3,459,008.00 3,631,958.40 Animal expenses-Feed and drugs 9,537,211.95 9,083,059.00 Vetenary fees 2,270,764.75 2,384,302.99 Inspection fees 1,135,382.38 1,192,151.49 Packaging expenses 46,796.00 1 154,135.80 Office expenses 89,075.00 93,528.75 Audit fees 908,305.90 953,721.20 Legal fees 120,350.00 126,367.50 Adverting and promotion 956,346.00 1,004,163.30 Repairs and maintance 265,486.00 278,760.30 Purchase of new 37,085,590.00 and machinery plant,property Deposits payments 935,000.00 Business start up expenes 35,000.00 Total outflow Net cash flow Cash b/d 77,554,265.73 13,276,324.27 77,554,265.73 41,862,999.87

3,307,500.00 4,961,250.00 4,410,000.00 2,481,312.91 55,125.00 4,985,406.35 3,307,500.00 194,040.00 50,494.50 132,300.00 3,813,556.32 10,014,072.55 2,503,518.14 1,251,759.07 161,842.59 98,205.19 1,001,407.25 132,685.88 1,054,371.47 292,698.32 8,520,000.00 52,729,045.53 5,658,016.97 107,868,369.66

3,472,875.00 5,209,312.50 4,630,500.00 2,481,312.91 57,881.25 5,240,387.98 3,472,875.00 203,742.00 53,019.23 138,915.00 4,004,234.14 10,514,776.17 2,628,694.04 1,314,347.02 169,934.72 103,115.45 1,051,477.62 139,320.17 1,107,090.04 307,333.23 46,301,143.46 15,005,272.16 154,169,513.13

3,646,518.75 5,469,778.13 4,862,025.00 2,481,312.91 60,775.31 5,508,118.69 3,646,518.75 213,929.10 55,670.19 145,860.75 4,204,445.84 11,040,514.98 2,760,128.75 1,380,064.37 178,431.46 108,271.22 1,104,051.50 146,286.18 1,162,444.54 322,699.89 48,497,846.30 15,873,890.11 202,667,359.43

31 12,553,250.13
55,139,324.14

CHICKEN MASTERS LTD PROJECTED BALANCE SHEET FOR FIVE YEARS Year 1 Ksh. Non current assests Heavy Machinery Less Depreciation Net Heavy Machinery Motor Vehicle Less Depreciation Net Motor Vehicle Building Less Depreciation Net Building Furniture and equipment Less Depreciation Net Furniture and equipment Computer and Accessories Less Depreciation Net Computer and accessories Total non current assets Current Assets Accounts Receiveible Cash at Hand and Bank Inventory Deposits Total currents assets Assets Year 2 Ksh. Year 3 Ksh. Year 4 Ksh. Year 5 Ksh.

6,000,000.00 (2,250,000.00) 3,750,000.00 4,800,000.00 (1,200,000.00) 3,600,000.00 10,200,000.00 (255,000.00) 9,945,000.00

6,000,000.00 (3,656,250.00) 2,343,750.00 4,800,000.00 (2,100,000.00) 2,700,000.00 10,200,000.00 (503,625.00) 9,696,375.00

8,500,000.00 (5,472,656.25) 3,027,343.75 6,000,000.00 (3,075,000.00) 2,925,000.00 13,950,000.00 (839,784.38) 13,110,215.63

8,500,000.00 (6,607,910.16) 1,892,089.84 6,000,000.00 (4,031,250.00) 1,968,750.00 13,950,000.00 (1,086,380.39) 12,863,619.61

8,500,000.00 (7,317,443.85) 1,182,556.15 6,000,000.00 (4,523,437.50) 1,476,562.50 13,950,000.00 (1,407,970.88) 12,542,029.12

15,520,590.00 (1,940,073.75) 13,580,516.25

15,520,590.00 (3,637,638.28) 11,882,951.72

16,470,590.00 (5,241,757.25) 11,228,832.75

16,470,590.00 (6,981,316.13) 9,489,273.87

16,470,590.00 (8,167,475.36) 8,303,114.64

565,000.00 (169,500.00) 395,500.00 31,271,016.25

565,000.00 (288,150.00) 276,850.00 26,899,926.72

685,000.00 (407,205.00) 277,795.00 30,569,187.13

685,000.00 (540,988.50) 144,011.50 26,357,744.83

685,000.00 (584,191.95) 100,808.05 23,605,070.46

77,554,265.73 585,000.00 78,139,265.73 109,410,281.98

55,139,324.14 585,000.00 55,724,324.14 82,624,250.86

107,868,369.66 585,000.00 108,453,369.66 139,022,556.79

154,169,513.13 585,000.00 154,754,513.13 181,112,257.96

202,667,359.43 585,000.00 203,252,359.43 226,857,429.89

Current Liabilities

32

Tax Accounts payable Total currents liabilites Long-Term Liabilities Lon term loan Total Long-Term Liabilities Total Liabilites Capital Share Capital Retained Earnings Current Earnings Total Earnings Total Capital Total capital and liabilities

3,690,989.79 56,510,961.97 60,201,951.76

4,388,995.28 16,497,499.99 20,886,495.27

4,985,406.35 57,781,932.68 62,767,339.03

5,240,387.98 84,249,251.26 89,489,639.24

5,508,118.69 113,466,855.88 118,974,974.57

18,905,031.00 18,905,031.00 79,106,982.76

16,804,472.00 16,804,472.00 37,690,967.27

14,703,913.00 14,703,913.00 77,471,252.03

12,603,354.00 12,603,354.00 102,092,993.24

10,502,795.00 10,502,795.00 129,477,769.57

18,000,000.00 12,303,29 9.31 12,303,29 9.31 30,303,29 9.31 109,410,2 82.08

18,000,000.00 12,303, 299.31 14,629, 984.27 26,933, 283.58 44,933, 283.58 82,62 4,250.85

18,000,000.00 26,933,2 83.58 16,618,0 21.18 43,551,3 04.76 61,551,3 04.76 139,022,5 56.80

18,000,000.00 43,551,3 04.76 17,467,9 59.93 61,019,2 64.70 79,019,2 64.70 181,112, 257.94

18,000,000.00 61,019,2 64.70 18,360,3 95.63 79,379,6 60.32 97,379,6 60.32 226,857, 429.89

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5.0

STRATEGIC PLAN

Chicken Masters (K) has the exciting prospect of become a key player in meeting the demand for poultry meat in Kenya, the regional market and the International market. Poultry meat in Kenya provides an important role of meeting consumer need as a source of protein. Poultry meat and products are regarded as an acceptable meat on religious, health and culinary purpose. There is a heightened awareness in customers on making health conscious decisions when it comes to choices for meat products, this will presents a ready market for Chicken Masters (K). Chicken Masters has formulated a 5 Year strategic plan to help the company to help the company realize its market potential and take advantage of its opportunities. Chicken Masters intends to capture greater than 50% of the anticipated domestic market share over the next five years. Chicken masters anticipates to generate revenues of half a billion Kenya Shillings per annum in the next five years. The company anticipates achieving 5-10% growth per annum. To achieve growth of this scale the company has identified specific aims, targets and strategies to realize these goals as well as manage its community industry interactions. The 5 year Strategic plan has outlines some aims to guide the activities undertaken by Chicken Masters to guarantee its growth and expansion. They are: a) Competitive Business Environment Achieve revenues of 600 Million per annum by 2015. Capture 50% of market share Make imports of between valued at 70-100 million per month Ensure adequate economies of scale and productivity improvements to increase cost competitiveness. b) Industry and Community relationships Create 1,200 direct jobs Attract and retain labour within the industry. Engage communities and industry in meeting welfare and food safety standards through the value chain. c) Industry and Environment 34

 5.1

Increase water efficiency through waste minimization and re use technologies. Increase the value of waste streams such as feathers Establish and create competitive markets for the wastes (litter, mortality) products. Ensure community standards are met for odour, noise and dust issues.

PROPOSED STRUCURE DEVELOPMENT 2010-2015 1. Ten grow out facilities (contract to processors) Mwingi and Maguguni Area. 2. Two feed mills (one in Thika and one in Mwingi). 3. Two rendering plants 4. Two Hatcheries 5. Three processing plants 6. A secondary processing plant.

Chicken Masters Ltd proposes to have the following structure to achieve its goals;

5.2

PLANNING FOR THE FUTURE TOWARDS 2015 STRATEGIES KEY RESULTS- indicators -Involve government and - Gross and Net revenues infrastructure. market water requirements Implement cost value addition through sales.

AIMS - Triple revenues by 2015. -Capture 50% of market share markets. productivity improvements. products processing. security plans. through

domestic industry in expansion of - value of domestic market

- Export into niche international -Expand into the export -Value of export sales - Ensure economies of scale and - Effectively plan energy, - Efficiency scores - Increase value addition in -

secondary effectiveness in the inputs value chain i.e. feeds, water, power. - bio security plans in place - Expand the grow out facilities. -Invest in expansion of 35

-Implement and maintain bio - use bio security plans

the processing facilities. - Create 1,200 direct jobs and - Institute an employment - Direct employment more than 2400 jobs in policy to attract and - On going learning supporting industries retain talented within the industry - Have a work safety plan Engage communities and - Facilitate relationships - Community concerns i.e. stakeholders, industry in meeting welfare and between industry sectors, welfare and environment food safety standards through key the value chain. Increase water community, government and support industries. efficiency - develop industry wide - Water growing and indicators processing - Waste Streams mortalities, - Litter bedding in the grow working out facilities. new processed waste and offal. and monitor over time. implement build technologies labour

through waste minimization and environment re use technologies. streams such as feathers the wastes (litter, products. -Increase the value of waste - Create competitive markets for -

mortality) relationship with NEMA. - investigate alternative - Dust and Odour impact of for odour water use

- Ensure community standards opportunities are met for odour, noise and dust increasing issues efficiency.

- investigate alternative opportunities and markets for waste e.g. litter, offals, feathers 5.3 REQUIREMENTS TO ACHIEVE TARGETS i) Need to expand the grow-out facilities over the next 5 years to accommodate capacity to processing 10 million birds per annum. ii) Continued customer focus by developing new products and new markets.

36

iii) over 300 million in capital investment to be sourced from private or public investors. This will enable development of 2 new breeder farms 2 new hatcheries 8 new grow out facilities with capacity to handle 300,000 birds. Additional 3,000 tonnes of feed per week Additional energy, water and transport facilities. the government, suppliers and investors v)Hire more employees over the next 5 years as capacity increases. vi)Develop strong alliances with industry. vii)Introduce on going innovation so as to add value to products and utilize product waste. viii)Have policy on waste management. ix)Continuous monitoring of strategic plan. 5.4 RISKS ANALYSIS

iv) A coordinated plan to secure the investment such as a good working relationship with

The Strategic direction identifies the preferred future of Chicken Masters that entails substantial growth and value adding activities. The risks associated with these strategies include: i) ii) iii) iv) v) vi) vii) viii) ix) Chicken Masters maybe unable to demonstrate competitive advantage in production and processing facilities. The company may face limitations in accessing competitive land for expansion. If the domestic consumption has no growth. If environmental issues are not adequately addressed and managed. Capital, planning and infrastructure limit competitive advantage. Inability to attract investment into the company. The impact of of rising costs and availability of food stuffs, especially during drought. Unsuccessful food safety mechanism leading to reduced consumption. Biosecurity incidents leading to significant impact on production and industry.

37

5.5

IMPLEMENTATION OF STRATEGY

The critical next steps in implementation include: Ongoing communication within the company on the strategic direction of Chicken Masters. Communicate the value of poultry meat to the community at large. Create a strong, committed leadership group responsible for overseeing the implementation of the strategic direction of Chicken Masters. Develop a detailed implantation plan that: Delivers appropriate actions strategies and aims Identifies appropriate responsibilities for action Details resource requirements to achieve targets Attracts investment to implement the strategy.

Initiate partnership approach with stakeholders to implement the strategy. Clearly define the roles and responsibilities of the industry and determine appropriate relationships. Monitor, evaluate and review progress and achievement towards strategic targets. Regularly review the strategic directions to ensure they are actively adapted to the changing external environment.

38

6.0

CONCLUSION AND RECOMMENDATIONS

The feasibility study has proved that the Chicken Masters project in the outskirts of Thika town is economically viable to be implemented .We therefore recommend that Equity Bank provide a loan of Kshs 21,005,590 for the implementation of the project in Thika.

39