Kurunegala feed mill, crowning glory of Bairaha Farms
Not only the best machinery counts; a clean and efficient building with modern state-of-the-art commercial animal feed manufacturing factory also matters. Bairaha Farms Plc did just that by purchasing machinery from ‘Buhler’ a Switzerland company to set up the new factory in the Kurunegala district as a large scale modern feed mill in the country at a cost of Rs. 1.65 billion on a 36-acre site.
Chief Executive Officer, Managing Director of the company Yakooth Naleem told the Business Times that the new factory will commence production within the next two months following the availability of raw material (adequate stocks of maize) supplied by local farmers.
The government has given an assurance that it will allow Bairaha to import maize if there is a short supply in the local market, he revealed.
The company has made some changes in its plans for its feed-milling project, the company said in a stock exchange filing recently.
It was originally planned that Bairaha and its associate, Farm’s Pride (Pvt.) Ltd. will take 45 per cent each of Fortune Agro Industries (Pvt) Ltd, the joint venture feed milling company while a foreign shareholder will take the balance 10 per cent.It has also been earlier decided that only Stage 1 of the project will be initially undertaken but the need to have additional raw material storage capacity earlier than planned had led to the decision that Stage 2 will also be now undertaken, he added.
Another joint venture company within the group, Windsor Real Estate Ltd, had in October 2012 invested in the 36-acre Kurunegala property. This land has been leased from Windsor by Fortune Agro Industries to set up the feed mill.Changes in the project structure had necessitated cost revisions (excluding land) with modern flat warehouse storage facilities for both raw materials and finished feed requiring working capital of between Rs. 800 million and Rs. 1.6 billion mostly for purchase and storage of raw materials as needed.
This has boosted total funding requirements to between Rs. 1.9 billion and Rs. 2.7 billion.Mr. Naleem said that there was an escalation in the cost of fixed assets due to underestimated cost of civil construction.”Funding for working capital will be undertaken by the joint venture, Fortune Agro Industries (Pvt) Ltd. on guarantees to be given by the joint venture partners, Bairaha Farms PLC and Farm’s Pride (Pvt) Ltd,” he added.
The plans now include the installation of state-of-the-art grain silos for bulk storage of maize and soya bean meal along with raw materials conveying and escalator systems and a maize dryer.
These will expand the feed mill’s maize and soya storage capacity enabling stocking of seasonal raw materials at competitive prices and further automation of the milling operation.This entails a further estimated cost of Rs. 350 million on two maize silos of 6,000 MT each capacity and two soya silos of 485 MT each and a conveying and elevator system. The construction cost and foundation has been estimated at Rs. 128 million, he disclosed. The funding will come from loan or equity investment by Fortune GP Farms Lanka Ltd or reinvestment of future dividends to be received from Fortune by Bairaha and Farm’s Pride. These two companies will also make additional investments of Rs. 25 million each while Fortune Agro Industries will borrow Rs. 100 million.