Happy New Year!
It's the beginning of year, time to think about our future and reset the clock. I believe every Company has a destiny. The good manager is the one able to visualize and control that destiny. Everything is always already planned. Myself, I keep a clear image of the plan for next 365 days of the Company in my mind so we know that destiny.
Planning and budgeting is a continuous process that dictates our short-term goals. We are always planning the company's activities that lead us to our goal, based on the balance of our accessible resources. Our planning takes into account no certainties, only probabilities. In this sense, we see planning as a Bayesian process in which the probabilities evolve and change in real time. Our plans are updated every time these probabilities change.
We all know the timeline for our Company in terms of financial goals. From these targets, we work backwards to today and we will find out the resources and time required for each individual short-term goal in each of the roads that lead to our main objective. Yes, there are many ways of achieving our objective and we take the one we believe is the best. As probabilities change, we may even choose to move to the other plan.
Now that you understand our so called "planning process", I think you want to know the result of the planning process in terms of what we are doing now and how things are moving forward.
Things you should know about the Company:
1. Land Acquisition Progress:
As you know, our main asset is the land. The more land we have, the bigger we can grow. The only limiting factor of our profit evolution is the size of our land. We are working hard to get the permits and social issues solved in order to grow our ranch. By the end of this year, our carrying capacity should reach 4,000 heads of cattle. If you want to know exact details, we can talk in person or in a video call.
2. Strong Balance Sheet:
Currently we are holding around USD 600,000 in cash and cash equivalents. Short-term receivables is USD 350,000. This means we have enough fuel to run in a good speed. In order to increase this speed, we need to decide which strategic or financial investor to close the deal with. We have a good offer at the table for completing the USD 5m investment round. From September 2017 to today, we used USD 300,000 of cash in investment and working capital. We are not going full throttle yet because we need to move at a safe speed. As the probabilities of having met the capital we need has increased, we can go full throttle and speed up the processes of land acquisition and cow purchases that ultimately determine when we will start having the returns we are all waiting for.
This season the rain came one month earlier than we predicted based on the previous years' reports. The positive thing is that the dry season was really short and we almost didn't face a dry season, since we had a good rain in the middle of the draught. Everyone is saying that the world climate is changing, so if this continues to happen in Sumba, it's great news for us. The bad thing about the wrong weather forecast is that it is affecting the planting of the Brazilian grass. We had planned for planting at least 350 hectares of land, but the soil is to muddy for us to plant. It is raining every day and so far, we have completed 60 hectares out of the 350. This delay affects our carrying capacity, but it is not a big issue. As long as we get the new land soon, we can catch up with the planting next season. We will purchase more tractors for increasing our work speed for the new land and to catch up with the planting. It's all included in our financial plan already.
4. Current Activities:
We are finishing the road inside our ranch that will connect to the new land we are acquiring. We have built 4.2km of road with crushed stones. It took a while and hundreds of truck loads, but we are almost done. The rain is keeping us from finishing it.
We are planting the grass whenever we can and our employees are fabricating the concrete posts for the fences, since it's impossible to make fences during this season. The terrain is too muddy, so it's hard to fixate the posts in the ground. The result will not be good.
We replaced our Ranch Manager and hired a Brazilian veterinarian to lead the breeding process in our ranch. We need at least a 70% calving rate and this is how the promise will be delivered. I just hope the Indonesian government can issue his Kitas (working permit and visa) as soon as possible.