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.

1

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

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

2

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 Management-

Accounting 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 bachelor’s 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 well-

versed 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.

4

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 Ng’ang’a 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 Ng’ang’a 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: John Waweru

Finance Manager: Benson Huria

Human Resource and Procurement Manager: Grace Moreka

Productions and Operations Manager: Benjamin Mbithi

Deputy Productions and Operations Manager Ruth Mwango

5

Quality Manager and Company Secretary Phoebe Muriithi

Marketing Manager: Rebman Gandani

Deputy Marketing Manager Esther Ng’ang’a

Strategic and Planning Manager: Evalyne Kimanga

ROLES OF MANAGERS

MANAGING DIRECTOR

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

company’s 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.

Management Costs.

Calculating the Profitability Estimates.

Pricing for end products and by products

General Financing procedures.

HUMAN RESOURCE AND PROCUREMENT MANAGER

6

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

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

7

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 Kshs.

John Waweru 2,000,000.00

Benson Huria 2,000,000.00

Evalyne Kimanga 2,000,000.00

Benjamin Mbithi 2,000,000.00

Rebman Gandani 2,000,000.00

Phoebe Muriithi 2,000,000.00

Grace Moreka 2,000,000.00

Esther Ng’ang’a 2,000,000.00

Ruth Mwango 2,000,000.00

Loan from Equity Bank 21,005,590.00

Total 39,005,590.00

8

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.

9

1.5 PRICING

10

2.0 PRODUCTION PROCESS

2.1 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 world’s 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 MONITORING AND MEASUREMENT

Sales

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 master’s market share and Customer satisfaction

11

2.3 PRODUCTION PROCESS

INPUTS

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

12

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.

13

Spin chiller

After washing it’s 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.

14

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.

15

3.0 MARKETING AND DEMAND ANALYSIS

3.1 Main Markets:

Restaurants especially fast foods

Supermarkets and other retail outlets.

Export market

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

Kenya’s 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)

(Source: CIA World Fact Book, 2006 estimates

16

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.

17

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.

18

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.

19

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.

Most religions and cultural groups embrace chicken as a healthy food.

20

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.

Consolidation and rationalization of efficiency throughout the value chain continued

integration is resulting in shifting economies of scale.

21

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.

3.2 SWOT ANALYSIS OF CHICKEN MASTERS

Strength

22

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.

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.

23

Opportunities:

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.

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.

3.3 MARKETING STRATEGY

Target Market.

24

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

certifications and will emphasize the low fat and healthy aspect of the CHICKEN MASTERS

products.

25

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 products.

process chicken meat in a hygienic through a way

offer chicken at market friendly prices

Guarantee supply in good timing to our customers.

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.

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

26

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.

27

4.0 FINANCIAL FORECASTS

CHICKEN MASTERS LTD

PROJECTED PROFIT AND LOSS STATEMENT FOR FIVE YEARS

SalesYear 1 Year 2 Year 3 Year 4 Year 5Kshs. Kshs. Kshs. Kshs. Kshs.

Full broiler 35,000,000.00 36,750,000.00

38,587,500.00

40,516,875.00

42,542,718.75

Chicken part 15,000,000.00 15,750,000.00

16,537,500.00

17,364,375.00

18,232,593.75

Chicken manure

50,000.00 52,500.00 55,125.00 57,881.25 60,775.31

Chicken entrails

750,000.00 787,500.00 826,875.00 868,218.75 911,629.69

Chicken feathers

25,000.00 26,250.00 27,562.50 28,940.63 30,387.66

Chicken gizzards

1,000,000.00 1,050,000.00

1,102,500.00

1,157,625.00 1,215,506.25

Value added products

1,250,000.00

1,312,500.00 1,378,125.00

Total Sales 51,825,000.00 54,416,250.00

58,387,062.50

61,306,415.63

64,371,736.41

ExpensesFixedLand lease 3,000,000.00 3,150,000.0

03,307,500.0

03,472,875.00 3,646,518.7

5Directors Salaries

4,500,000.00 4,725,000.00

4,961,250.00

5,209,312.50 5,469,778.13

Insurance 4,000,000.00 4,200,000.00

4,410,000.00

4,630,500.00 4,862,025.00

Loan interest 380,753.91 380,753.91 380,753.91 380,753.91 380,753.91Depreciation 5,814,573.75 6,105,302.4

46,410,567.5

66,731,095.94 7,067,650.7

3Licenses 50,000.00 52,500.00 55,125.00 57,881.25 60,775.31

VariableWages 3,000,000.00 3,150,000.0

03,307,500.0

03,472,875.00 3,646,518.7

5Electiricity 176,000.00 184,800.00 194,040.00 203,742.00 213,929.10Water 45,800.00 48,090.00 50,494.50 53,019.23 55,670.19Communication

120,000.00 126,000.00 132,300.00 138,915.00 145,860.75

Motor Vehicle expenses

3,459,008.00 3,631,958.40

3,813,556.32

4,004,234.14 4,204,445.84

Animal expenses-Feed

9,083,059.00 9,537,211.95

10,014,072.55

10,514,776.17

11,040,514.98

28

and drugsVetenary fees 2,270,764.75 2,384,302.9

92,503,518.1

42,628,694.04 2,760,128.7

5Inspection fees

1,135,382.38 1,192,151.49

1,251,759.07

1,314,347.02 1,380,064.37

Packaging expenses

146,796.00 154,135.80 161,842.59 169,934.72 178,431.46

Office expenses

89,075.00 93,528.75 98,205.19 103,115.45 108,271.22

Audit fees 908,305.90 544,162.50 583,870.63 613,064.16 643,717.36Legal fees 120,350.00 126,367.50 132,685.88 139,320.17 146,286.18Adverting and promotion

956,346.00 1,004,163.30

1,054,371.47

1,107,090.04 1,162,444.54

Repairs and maintance

265,486.00 278,760.30 292,698.32 307,333.23 322,699.89

Total Expenses

39,521,700.69 39,786,265.73

41,769,041.32

43,838,455.69

46,011,340.78

Profit 12,303,299.31

14,629,984.27

16,618,021.18

17,467,959.93

18,360,395.63

Tax expenses 3,690,989.79 4,388,995.28

4,985,406.35

5,240,387.98 5,508,118.69

29

Year 1 Year 2 Year 3 Year 4 Year 5

Inflows Kshs. Kshs. Kshs. Kshs. Kshs.

Cash b/f - 13,276,324.27 55,139,324.14 107,868,369.66 154,169,513.13 Loan 21,005,590.00 - - - - SalesFull broiler 35,000,000.00 36,750,000.00 38,587,500.00 40,516,875.00 42,542,718.75 Chicken part 15,000,000.00 15,750,000.00 16,537,500.00 17,364,375.00 18,232,593.75 Chicken manure 50,000.00 52,500.00 55,125.00 57,881.25 60,775.31 Chicken entrails 750,000.00 787,500.00 826,875.00 868,218.75 911,629.69 Chicken feathers 25,000.00 26,250.00 27,562.50 28,940.63 30,387.66 Chicken gizzards1,000,000.00 1,050,000.00 1,102,500.00 1,157,625.00 1,215,506.25 Value added products - - 1,250,000.00 1,312,500.00 1,378,125.00 Contribution from the directors18,000,000.00 - - - -

Total Inflows 90,830,590.00 54,416,250.00 58,387,062.50 61,306,415.63 64,371,736.41

OutflowsLand lease 3,000,000.00 3,150,000.00 3,307,500.00 3,472,875.00 3,646,518.75 Directors Salaries4,500,000.00 4,725,000.00 4,961,250.00 5,209,312.50 5,469,778.13 Insurance 4,000,000.00 4,200,000.00 4,410,000.00 4,630,500.00 4,862,025.00 Loan repayment and interest2,481,312.91 2,481,312.91 2,481,312.91 2,481,312.91 2,481,312.91 Licenses 50,000.00 52,500.00 55,125.00 57,881.25 60,775.31 Tax expense 3,690,989.79 4,388,995.28 4,985,406.35 5,240,387.98 5,508,118.69 Wages 3,000,000.00 3,150,000.00 3,307,500.00 3,472,875.00 3,646,518.75 Electiricity 176,000.00 184,800.00 194,040.00 203,742.00 213,929.10 Water 45,800.00 48,090.00 50,494.50 53,019.23 55,670.19 Communication 120,000.00 126,000.00 132,300.00 138,915.00 145,860.75 Motor Vehicle expenses3,459,008.00 3,631,958.40 3,813,556.32 4,004,234.14 4,204,445.84 Animal expenses-Feed and drugs9,083,059.00 9,537,211.95 10,014,072.55 10,514,776.17 11,040,514.98 Vetenary fees 2,270,764.75 2,384,302.99 2,503,518.14 2,628,694.04 2,760,128.75 Inspection fees 1,135,382.38 1,192,151.49 1,251,759.07 1,314,347.02 1,380,064.37 Packaging expenses146,796.00 154,135.80 161,842.59 169,934.72 178,431.46 Office expenses 89,075.00 93,528.75 98,205.19 103,115.45 108,271.22 Audit fees 908,305.90 953,721.20 1,001,407.25 1,051,477.62 1,104,051.50 Legal fees 120,350.00 126,367.50 132,685.88 139,320.17 146,286.18 Adverting and promotion956,346.00 1,004,163.30 1,054,371.47 1,107,090.04 1,162,444.54 Repairs and maintance265,486.00 278,760.30 292,698.32 307,333.23 322,699.89 Purchase of new plant,property and machinery37,085,590.00 - 8,520,000.00 - - Deposits payments935,000.00 - - - - Business start up expenes35,000.00 - - - -

Total outflow 77,554,265.73 41,862,999.87 52,729,045.53 46,301,143.46 48,497,846.30

Net cash flow 13,276,324.27 12,553,250.13 5,658,016.97 15,005,272.16 15,873,890.11

Cash b/d 77,554,265.73 55,139,324.14 107,868,369.66 154,169,513.13 202,667,359.43

CHICKEN MASTERS LTDPROJECTED CASHFLOW PROJECTIONS FOR FIVE YEARS

30

CHICKEN MASTERS LTD

31

PROJECTED BALANCE SHEET FOR FIVE YEARS

Year 1 Year 2 Year 3 Year 4 Year 5

Ksh. Ksh. Ksh. Ksh. Ksh.Non current assestsHeavy Machinery 6,000,000.00 6,000,000.00 8,500,000.00 8,500,000.00 8,500,000.00Less Depreciation (2,250,000.00) (3,656,250.00) (5,472,656.25) (6,607,910.16) (7,317,443.85)Net Heavy Machinery 3,750,000.00 2,343,750.00 3,027,343.75 1,892,089.84 1,182,556.15

Motor Vehicle 4,800,000.00 4,800,000.00 6,000,000.00 6,000,000.00 6,000,000.00Less Depreciation (1,200,000.00) (2,100,000.00) (3,075,000.00) (4,031,250.00) (4,523,437.50)Net Motor Vehicle 3,600,000.00 2,700,000.00 2,925,000.00 1,968,750.00 1,476,562.50

Building 10,200,000.00 10,200,000.00 13,950,000.00 13,950,000.00 13,950,000.00Less Depreciation (255,000.00) (503,625.00) (839,784.38) (1,086,380.39) (1,407,970.88)Net Building 9,945,000.00 9,696,375.00 13,110,215.63 12,863,619.61 12,542,029.12

Furniture and equipment 15,520,590.00 15,520,590.00 16,470,590.00 16,470,590.00 16,470,590.00Less Depreciation (1,940,073.75) (3,637,638.28) (5,241,757.25) (6,981,316.13) (8,167,475.36)Net Furniture and equipment 13,580,516.25 11,882,951.72 11,228,832.75 9,489,273.87 8,303,114.64

Computer and Accessories 565,000.00 565,000.00 685,000.00 685,000.00 685,000.00Less Depreciation (169,500.00) (288,150.00) (407,205.00) (540,988.50) (584,191.95)Net Computer and accessories 395,500.00 276,850.00 277,795.00 144,011.50 100,808.05Total non current assets 31,271,016.25 26,899,926.72 30,569,187.13 26,357,744.83 23,605,070.46

Current AssetsAccounts ReceiveibleCash at Hand and Bank 77,554,265.73 55,139,324.14 107,868,369.66 154,169,513.13 202,667,359.43InventoryDeposits 585,000.00 585,000.00 585,000.00 585,000.00 585,000.00Total currents assets 78,139,265.73 55,724,324.14 108,453,369.66 154,754,513.13 203,252,359.43

Assets 109,410,281.98 82,624,250.86 139,022,556.79 181,112,257.96 226,857,429.89

Current LiabilitiesTax 3,690,989.79 4,388,995.28 4,985,406.35 5,240,387.98 5,508,118.69

32

Accounts payable 56,510,961.97 16,497,499.99 57,781,932.68 84,249,251.26 113,466,855.88Total currents liabilites 60,201,951.76 20,886,495.27 62,767,339.03 89,489,639.24 118,974,974.57

Long-Term LiabilitiesLon term loan 18,905,031.00 16,804,472.00 14,703,913.00 12,603,354.00 10,502,795.00Total Long-Term Liabilities 18,905,031.00 16,804,472.00 14,703,913.00 12,603,354.00 10,502,795.00

Total Liabilites 79,106,982.76 37,690,967.27 77,471,252.03 102,092,993.24 129,477,769.57

Capital

Share Capital 18,000,000.00 18,000,000.00 18,000,000.00 18,000,000.00 18,000,000.00

Retained Earnings

-

12,303,299.31

26,933,283.58

43,551,304.76

61,019,264.70

Current Earnings

12,303,299.31

14,629,984.27

16,618,021.18

17,467,959.93

18,360,395.63

Total Earnings

12,303,299.31

26,933,283.58

43,551,304.76

61,019,264.70

79,379,660.32

Total Capital

30,303,299.31

44,933,283.58

61,551,304.76

79,019,264.70

97,379,660.32

             

Total capital and liabilities  

109,410,282.08

82,624,250.85

139,022,556.80

181,112,257.94

226,857,429.89

33

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

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.

5.1 PROPOSED STRUCURE DEVELOPMENT 2010-2015

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

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.

5.2 PLANNING FOR THE FUTURE – TOWARDS 2015

AIMS STRATEGIES KEY RESULTS- indicators

- Triple revenues by 2015.

-Capture 50% of domestic

market share

- Export into niche international

markets.

- Ensure economies of scale and

productivity improvements.

- Increase value addition in

products through secondary

processing.

-Implement and maintain bio

security plans.

-Involve government and

industry in expansion of

infrastructure.

-Expand into the export

market

- Effectively plan energy,

water requirements

- Implement cost

effectiveness in the inputs

i.e. feeds, water, power.

- use bio security plans

- Expand the grow out

facilities.

-Invest in expansion of

- Gross and Net revenues

- value of domestic market

sales.

-Value of export sales

- Efficiency scores

- value addition through

value chain

- bio security plans in place

35

the processing facilities.

- Create 1,200 direct jobs and

more than 2400 jobs in

supporting industries

- Engage communities and

industry in meeting welfare and

food safety standards through

the value chain.

- Institute an employment

policy to attract and

retain talented labour

within the industry

- Have a work safety plan

- Facilitate relationships

between industry sectors,

key stakeholders,

community, government

and support industries.

- Direct employment

- On going learning

- Community concerns i.e.

welfare and environment

- Increase water efficiency

through waste minimization and

re use technologies.

-Increase the value of waste

streams such as feathers

- Create competitive markets for

the wastes (litter, mortality)

products.

- Ensure community standards

are met for odour, noise and dust

issues

- develop industry wide

environment indicators

and monitor over time.

- implement new

technologies

- build working

relationship with NEMA.

- investigate alternative

opportunities for

increasing water use

efficiency.

- investigate alternative

opportunities and markets

for waste e.g. litter,

offals, feathers

- Water – growing and

processing

- Waste Streams –mortalities,

processed waste and offal.

- Litter – bedding in the grow

out facilities.

- Dust and Odour – impact of

odour

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.

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

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

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) Chicken Masters maybe unable to demonstrate competitive advantage in

production and processing facilities.

ii) The company may face limitations in accessing competitive land for expansion.

iii) If the domestic consumption has no growth.

iv) If environmental issues are not adequately addressed and managed.

v) Capital, planning and infrastructure limit competitive advantage.

vi) Inability to attract investment into the company.

vii) The impact of of rising costs and availability of food stuffs, especially during

drought.

viii) Unsuccessful food safety mechanism leading to reduced consumption.

ix) 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