BUSINESS PLAN OF A
PALM OIL AND PALM KERNEL OIL PROJECT BY
EKEDUM EBUKA INNOCENT MAY 2014
1
TABLE OF CONTENTS
Chapter
Page
1.
Executive Summary
1
2.
Market Analysis
6
3.
Company Description
8
4.
Management and Organization
9
5.
Product Line / Process
12
6.
Funding Plan
14
7.
Financials
15
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CHAPTER ONE 1
EXECUTIVE SUMMARY
1.1
GENERAL Name of the Firm: Duca Palm oil mill. Project: Palm oil, Palm kernel oil. Location: Adazi-Enu, Anaocha Local Government Area, Anambra State, Nigeria.
1.2
OWNERSHIP AND NATURE OF REGISTRATION The palm oil processing mill will be privately owned as a sole proprietorship business. Name of Chief Promoter: Ekedum Ebuka Innocent Date of Birth: 20th July, 1987 Place of Birth: Adazi-Enu, Anaocha Local Government Area, Anambra State, Nigeria. Phone No: +2348032823808 E-mail:
[email protected] Contact Address: Adazi-Enu, Anaocha Local Government Area, Anambra State, Nigeria.
1.3
EDUCATIONAL QUALIFICATION OF THE CHIEF PROMOTER Nigerian Certificate In Education: NCE Biology/Mathematics Institution: Umar Suleiman College of Education , Gashua. Year of Graduation: 2010
1.4
SPECIAL TRAINING
Horebson Resources- Human Resources and Skills Acquisition Training: 22 nd March 2014. 3
CEDR University Of
Nigeria Nsukka- Entrepreneurship Skill Training
March 2014. Web development and affiliate marketing Training June 2013. 1.5
WORK EXPERIENCE Organization: Ekedum Motor Spare Parts. Position: Sales Representative. Nature of Work: Sales Duration: Five Years Organization: Umar Suleiman Government Day College Gashua, Bade Local Government Area, Yobe State. Position: Teacher (Teaching Practice) Nature of Work: Teaching Duration: Three Months. Organization: Family Palm Plantation. Position: Assistant Nature of Work: Palm harvesting and Oil Processing. Duration: Five Years
1.6
VISION STATEMENT To be a leading palm oil processing mill, in providing palm products in Nigeria and beyond.
1.7
MISSION STATEMENT To provide palm products in a clean environment, while making use of modern technology with honesty.
1.8
BUSINESS STRATEGY Advertising strategies include local Tv advertisements to initially announce 4
the Grand Opening. Print advertisement will also run in the local newspaper. Affiliate marketing will be introduced to all potential customers, by affiliate marketing a customer (mr. A) will register with the marketing manager and also introduce five more customers (mr. b, mr. c , mr. d, mr e and mr f) to the mill whom the marketing manager will register under the customer (mr. A). The customer (mr. A) earns 1% from each of the customers (mr. b, mr. c , mr. d, mr e and mr f) transactions that is over 100,000.00 naira at the end of the year (December) for a duration of one year. The business will also run online at www.ducapalm.globalvila.net
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CHAPTER TWO 2
MARKET ANALYSIS
2.1
MARKET DESCRIPTION The Nigerian market for palm oil and palm products is promising. With the growing population and the increase in number of eateries being set up and household consumption of palm oil, the market continues to grow. Because of the high demand of these products in the country, they are being imported in some cases. The abundance of palm tree plantation in different Local Government Areas Of Anambra State in Nigeria makes the area a good site for establishing the palm oil mill. The oil mill will focus on the production of palm oil, palm kernel oil and palm kernel proceeds needed for the making of soaps, pomade and even snacks. The products from this oil mill serve as raw material for cosmetic industries, food and snacks making industries. It is also used as a substitute for cocoa and fats found in milk and in cream made from sugar, biscuits, cakes and margarines. Palm kernel oil It is also used when baking cakes, croissants and bread to give the products added volume, a soft texture that make bread last longer. Anambra state which will be the target of the mill has a very big population, which is a good market palm oil processing mill and palm products. Golden Oil Industries Ltd, 15A harbour industrial Estate, Onitsha and Envoy oil Industries Ltd, PokoBros Avenue, Onitsha. are secondary processors of palm kernel oil (pko). 6
2.2 MARKETING PLAN Duca Mills have a team of good marketers and sales forces who will create public awareness of the mill’s products. There would be an integrated marketing communication between the mill and its target market. The mill’s product would be communicated to the public through advertisement, public relations, sale promotion and publicity. There will be proficient marketing professionals recruited for this purpose. Again, the industry will make use of customer based pricing one of its pricing strategy. It will also emphasize on quantity discount as a pricing strategy also. The mill will make use of sales representatives and agents instead of middlemen to avoid hoarding of the products, excessive price hike and low customer’s satisfaction. Affiliate marketing will be introduced to all potential customers, by affiliate marketing a customer (mr. A) will register with the marketing manager and also introduce five more customers (mr. b, mr. c , mr. d, mr e and mr f) to the mill whom the marketing manager will register under the customer (mr. A). The customer (mr. A) earns 1% from each of the customers (mr. b, mr. c , mr. d, mr e and mr f) transactions that is over 100,000.00 naira at the end of the year (December) for a duration of one year.
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CHAPTER THREE 3
COMPANY DESRIPTION
3.1
NATURE OF THE MILL The mill will start as a medium scale palm oil processing mill which will be focused on processing of red palm oil and palm kernel oil at least for its first five years of operation.
3.2
OBJECTIVES The objectives of Duca Palm oil mill for its first three years of operation are: Achieve profitability in the first year. Expand the capacity of the farm. Maximize profit and minimize cost in each subsequent year. Control a reasonable share of the markets in Anambra and Delta state. Have a strong link with government establishments, palm oil dealers and business concerns on the supply of the palm oil products. Others include development works which will start in earnest whenever the mill funds can be able to support it.
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CHAPTER FOUR 4
MANAGEMENT AND ORGANZIATION
4.1
MANAGEMENT
1.
Name: Ekedum Ebuka Innocent Position: Managing Director Qualification: NCE Mathematics Responsibilities: Controlling the marketing of the mill’s products. Taking of major decisions in the mill. Provision of good working conditions for other personnel. Ensuring that the mill operates on a good profit margin.
2.
Position: Accountant / Secretary Qualification: OND Accounting Responsibilities: Keeping the record of all the financial transactions in the mill. Keeping the record of all the assets and liabilities of the mill. Keeping the record of all the palm processing activities in the mill.
9
3.
Position: Marketing Manager Qualification: HND Marketing . Responsibilities:
Takes the role of assistant managing director. Marketing campaigns. Register referrals of all customers in the affiliate marketing. Buying of palm fruits and kernels from the markets. Keeps record of prices of palm products.
4.2
SEMI – SKILLED PERSONNEL
1.
Position: Security Man Responsibilities: Ensuring the general security of the mill. Controlling the movement of persons in and out of the mill. Taking care of the security lights. Operating the electricity generator.
2.
Position: Labourers Responsibilities: Operation of the mill machinery. Processing of palm oil and palm kernel oil. Cleaning the mill. Packaging of palm oil and palm kernel oil. Uploading and downloading of product to and fro the mill van.
3
Position: Driver 10
Responsibilities: Transporting palm fruits and kernel from the markets to the mill. Supplying palm oil and palm kernel oil to the customers. 4.3
ORGANIZATION The Managing Director will be in control of all the activities of the farm. All the farm personnel will be answerable to him. In his absence, all other personnel will be answerable to the Marketing Manager or a senior worker as may be directed.
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CHAPTER FIVE 5
PRODUCT LINE/ PROCESS
5.1
PRODUCT DESRIPTION For the first five years, Duca mill will focus on processing of palm oil And palm kernel oil for the mill and for customers.
5.2
PRODUCTION PROCESS FOR PALM KERNEL OIL (PKO) The following processes are involved in expelling Palm Kernel oil (PKO). The raw Palm Kernel nut is an oil yielding seed which contains between 40% to 48% of oil, 55% to 47% of cake and 5% of sludge. The raw Kernel is bought from the village markers and transported to the factory. On arrival, the bags of Kernel are measured and packed ready for processing. They are fed into the palm kernel oil expelling machine through a hopper for crushing. The machine propels the nuts through a tight iron age which then squeezes and extracts the oil from the crushed nuts. The oil funnels into an oil tank under the machine and subsequently tunnels into the primary tank from where it is picked up by the fitter press machine for filtration. The filtered oil descends into the secondary tank by gravity from where it is pumped to the storage tank. After the crushing and extraction process in the iron cage, the cake comes out at the front end of the cage and is conveyed from there by a conveyor to the bagging section and 12
thereafter packed ready for sale. The filter press machine removes all the debris and dirts from the crude thereby leaving us with a clear golden coloured clean oil in the storage tank ready for sale. The sludge and debris are trapped in the filter press chambers. They also sediment at the bottom of the primary tank. Periodically sludge and debris are removed from the filter press machine and scooped from the bottom of the primary tank and stored in open drums ready for sale. 5.3 PRODUCTION PROCESS FOR PALM OIL Fresh fruit arrives from the field/markets as loose fruit. The fresh fruit is normally emptied into wooden boxes suitable for weighing on a scale so that quantities of fruit arriving at the processing site may be checked. Digestion is the process of releasing the palm oil in the fruit through the rupture or breaking down of the oil-bearing cells. The digester commonly used consists of a steam-heated cylindrical vessel fitted with a central rotating shaft carrying a number of beater (stirring) arms. Through the action of the rotating beater arms the fruit is pounded. Pounding, or digesting the fruit at high temperature, helps to reduce the viscosity of the oil, destroys the fruits’ outer covering (exocarp), and completes the disruption of the oil cells already begun in the sterilization phase. There are two distinct methods of extracting oil from the digested material. One system uses mechanical presses and is called the ‘dry’ method. The other called the ‘wet’ method uses hot water to leach out the oil. In the ‘dry’ method the objective of the extraction stage is to squeeze the oil out of a mixture of oil, moisture, fibre and nuts by applying mechanical pressure on the digested mash. There are a large number of different types of presses but the principle of operation is similar for each. 13
CHAPTER SIX 6
FUNDING PLAN The duca mill project is expected to be financed with a loan of eight million Naira (N8,000,000) which will be amortized over its first five years of operation starting in the first year as the case may be.
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CHAPTER SEVEN 7
FINANCIALS The financial plan for the mill for its first three years of its operation includes the: Profit and Loss Account Cash Flow Statement Balance Sheet Depreciation Schedule The financial plan will only consider Palm kernel oil, palm kernel cake and palm oil. Sludge will be assumed neutral so that its profit will take care of any imperfection with the financial projections.
7.1 ESTIMATED CAPITAL EXPENDITURE NEEDS
Errection of industrial buildings /
N1,500,000
furniture Payment of workers for first year N300,000 Acquisition of machines and N1,500,000 equipment 20 Metric Tones Storage Tank N150,00 10 Metric Tones Filter Press Machine N350,000 15
Miscellaneous N500,000 Total Capital Expenditure needs N4,300,000 Estimated Working Capital Requirement for the month Raw Materials- Palm Kernel nuts-one months estimate Salaries -two months estimate Other operating expenses-two months estimate Miscellaneous Total working capital Total capital required
N1,800,000 N300,000 N80,000 N300,000 N2,480,000 N6,780,000
7.2 PROJECTED INCOME STATEMENT PROFIT AND LOSS ACCOUNT YEAR ONE (N) INCOME Gross sales Discount on
YEAR TWO (N)
YEAR THREE (N)
224,219,000 2,242,190
303,269,000 3,032,690
303,269,000 3,032,690
221,976,810 186,830,000
300,236,310 241,605,000
300,236,310 333,345,000
35,146,810
58,631,310
58,631,310
1,732,000
-
2,791,000
2,880,000
2,880,000
-
-
affiliate marketing Net sales Cost of sales Gross profit Operating Expenses Rent Maintenanc
2,791,000
e Salaries Buildings/Fur
1,800,000 1,500,000 16
niture Equipments/
1,850,000
3,500,000
-
250,000
-
-
45,000
-
-
Registration Insurance Mitsubushi
150,000 800,000
150,000 -
150,000 -
Canter Truck Accumulated
360,000
790,000
1,350,000
Depreciation Loan
1,500,000
2,000,000
2,000,000
150,000
-
-
Total
10,137,000
12,111,000
9,171,000
Expenses Net Income Tax Net income
25,009,810 2,500,981 22,508,829
46,520,310 4,652,031 41,868,279
49,460,310 4,946,031 44,514,279
Machines Advertisemen ts Company Name
servicing
20 Mt Storage Tank
After Tax
7.3 Projected cash flow statement
Cash at the Beginning of Year Operating Activities: Cash Receipts from Cash Sales
YEAR ONE (N) YEAR TWO (N) YEAR THREE (N) 30,003,639 80,252,918
221,976,810 17
303,269,000
303,269,000
Cash Paid for Inventory Purchases Salaries General Administrative Expenses Tax Affiliate bonus Net Cash Flow from Operations Investing Activities: Cash Paid for Fixed Assets Net Cash Flow from Investing Activities Financing Activities: Cash Receipts from Loan Cash Paid for Repayment of Loan Interest on Loan Net Cash Flow from Financing Activities Net Increase in Cash Cash at End of Year
7.4
186,830,000 1,800,000
241,605,000 2,880,000
241,605,000 2,880,000
2,500,981
4,652,031
4,946,031
2,242,190 28603639
3,032,690 51,099,279
3,032,690 51,099,279
4,300,000 4,300,000
7,800,000 3,500,000
0.00000 0.0000
8,000,000
-
-
1,500,000 800,000 5,700,000
2,000,000 650,000 2,650,000
2,000,000 450,000 2,450,000
30,003,639 30,003,639
50,249,279 80,252,918
133,802,197 214,055,115
BALANCE SHEET
Assets Current Assets: Cash Stock Total Current Assets Fixed Assets: Property, machinery and Equipment Accumulated Depreciation
YEAR ONE (N)
YEAR TWO (N)
YEAR THREE (N)
30,003,639 30,003,639
80,252,918 80,252,918
214,055,115 214,055,115
4,300,000
3,500,000
0.0000
360,000
790,000
1,350,000
18
Total Fixed Assets Total Assets Liabilities Long Term Debt Net Worth
3,940,000 33,943,639
2,710,000 82,962,918
-1,350,000 212,705,115
6,500,000 27,443,639
4,500,000 78,462918
2,500,000 210,205,115
7.4 PRICES OF PALM PRODUCTS MONTH
PRICE OF PALM PRICE OF PALM OIL/TONNE KERNEL CAKE/ TONNE
January
PRICE OF PALM KERNEL OIL /TONNE 195,000
160,000
16,000
February
195,000
140,000
16,000
March
180,000
110,000
16,000
April
160,000
110,000
16,000
May
150,000
130,000
16,000
June
150,000
130,000
16,000
July
155,000
150,000
16,000
August
155,000
150,000
16,000
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Septembe 150,000 r
150,000
16,000
October
150,000
150,000
16,000
Novembe r
160,000
150,000
16,000
December 195,000
175,000
16,000
7.5 Year
1 2 3 4 5
LOAN AMORTIZATION SCHEDULE Principal Owing (N) 8,000,000 6,500,000 4,500,000 2,500,000 1,000,000
7.6
Interest @ Annual Principal Balance c/d (N) 10% (N) Installment Repayment(N) Payment (N) 800,000 2050000 1,500,000 6,500,000 650,000 2050000 2,000,000 4,500,000 450,000 2050000 2,000,000 2,500,000 250,000 2050000 1,500,000 1,000,000 100,000 2050000 1,000,000 -
MONTHLY ANALYSIS OF WORKERS SALARIES (PAYROLL)
POSITION 1 2 3 4 5 6
Marketing manager Accountant/Secretary Driver Four laborers Security Man Truck conductor
YEAR ONE YEAR TWO (N) YEAR THREE (N) (N) 40,000 40,000 40,000 15,000 15,000 15,000 20,000 20,000 20,000 60,000 60,000 60,000 15,000 15,000 25,000 15,000 15,000 15,000
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