A feasibility study for the construction of a poultry further processing plant

Abstract

The poultry industry in Malta has undergone major reform in the last years, especially the European Union. The elimination of levies on importation of such products brought about an extensive reduction in the local poultry industry. Smina Poultry Products is one of the four local poultry processing plants remaining. This company has been in operation since May 2001, and was the first poultry processing plant in Malta to renovate its premises and invest in EU-approved machinery and equipment, as necessitated by the law. The company is considering expanding into a new market by providing poultry further processed products. The law stipulates that further processing cannot take place in the same establishment the company holds, so the aim of this feasibility study is to determine if the expansion within a new market for this established poultry processing plant is financially viable. The study begins with an overview of the company and of the industry in which it operates. A literature review of the implications of investment appraisal is given, followed by a description of the research methodology and an industry analysis. The financial data is then gathered, followed by financial projections and a financial evaluation. The Net Present Value and the Internal Rate of Return techniques are among the investment appraisal methods used in order to assess the likelihood success or non-success of the project. The results of these calculations show that the project is feasible and should be realised immediately. These results provide a basis for the directors on which to base their investment decision.