Download - A BUSINESS PROPOSAL ON THE palm oil.docx
BUSINESS PLAN
OF A
PALM OIL AND PALM KERNEL OIL PROJECT
BY
EKEDUM EBUKA INNOCENT
MAY 2014
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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: 22nd
March 2014.
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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
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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).
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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.
3. Position: Marketing Manager
Qualification: HND Marketing .
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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
Responsibilities:
Transporting palm fruits and kernel from the markets to the mill.
Supplying palm oil and palm kernel oil to the customers.
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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
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
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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.
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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 /
furniture
N1,500,000
Payment of workers for first year N300,000
Acquisition of machines and
equipment
N1,500,000
20 Metric Tones Storage Tank N150,00
10 Metric Tones Filter Press Machine N350,000
Miscellaneous N500,000
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Total Capital Expenditure needs N4,300,000
Estimated Working Capital Requirement for the month
Raw Materials- Palm Kernel nuts-one months estimate
N1,800,000
Salaries -two months estimate N300,000Other operating expenses-two months estimate N80,000 Miscellaneous N300,000Total working capital N2,480,000Total capital required N6,780,000
7.2 PROJECTED INCOME STATEMENT PROFIT AND LOSS ACCOUNT
YEAR ONE (N) YEAR TWO (N) YEAR THREE (N)
INCOME
Gross sales 224,219,000 303,269,000 303,269,000
Discount on
affiliate
marketing
2,242,190 3,032,690 3,032,690
Net sales 221,976,810 300,236,310 300,236,310
Cost of
sales
186,830,000 241,605,000 333,345,000
Gross profit 35,146,810 58,631,310 58,631,310
Operating
Expenses
Rent - - -
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Maintenanc
e
1,732,000 2,791,000 2,791,000
Salaries 1,800,000 2,880,000 2,880,000Buildings/
Furniture
1,500,000 - -
Equipments/
Machines
1,850,000 3,500,000 -
Advertisemen
ts
250,000 - -
Company
Name
Registration
45,000 - -
Insurance 150,000 150,000 150,000
Mitsubushi
Canter Truck
800,000 - -
Accumulated
Depreciation
360,000 790,000 1,350,000
Loan
servicing
1,500,000 2,000,000 2,000,000
20 Mt
Storage
Tank
150,000 - -
Total
Expenses
10,137,000 12,111,000 9,171,000
Net Income 25,009,810 46,520,310 49,460,310
Tax 2,500,981 4,652,031 4,946,031
Net income
After Tax
22,508,829 41,868,279 44,514,279
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7.3 Projected cash flow statement
YEAR ONE (N) YEAR TWO (N) YEAR THREE (N)
Cash at the Beginning
of Year
- 30,003,639 80,252,918
Operating Activities:
Cash Receipts from
Cash Sales 221,976,810 303,269,000 303,269,000
Cash Paid for
Inventory Purchases 186,830,000 241,605,000 241,605,000
Salaries 1,800,000 2,880,000 2,880,000
General Administrative Expenses Tax 2,500,981 4,652,031 4,946,031
Affiliate bonus 2,242,190 3,032,690 3,032,690
Net Cash Flow from Operations
28603639 51,099,279 51,099,279
Investing Activities:
Cash Paid for
Fixed Assets 4,300,000 7,800,000 0.00000
Net Cash Flow from Investing Activities
4,300,000 3,500,000 0.0000
Financing Activities:
Cash Receipts from
Loan 8,000,000 - -
Cash Paid for
Repayment of Loan 1,500,000 2,000,000 2,000,000
Interest on Loan 800,000 650,000 450,000
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Net Cash Flow from Financing Activities
5,700,000 2,650,000 2,450,000
Net Increase in Cash 30,003,639 50,249,279 133,802,197
Cash at End of Year 30,003,639 80,252,918 214,055,115
7.4 BALANCE SHEET
Assets YEAR ONE (N) YEAR TWO (N) YEAR THREE (N)
Current Assets:
Cash 30,003,639 80,252,918 214,055,115
Stock - - -
Total Current Assets 30,003,639 80,252,918 214,055,115
Fixed Assets:
Property, machinery and Equipment
4,300,000 3,500,000 0.0000
Accumulated Depreciation
360,000 790,000 1,350,000
Total Fixed Assets 3,940,000 2,710,000 -1,350,000
Total Assets 33,943,639 82,962,918 212,705,115
Liabilities
Long Term Debt 6,500,000 4,500,000 2,500,000
Net Worth 27,443,639 78,462918 210,205,115
7.4 PRICES OF PALM PRODUCTS
MONTH PRICE OF PALM KERNEL OIL /TONNE
PRICE OF PALM OIL/TONNE
PRICE OF PALM KERNEL CAKE/TONNE
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January 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
September
150,000 150,000 16,000
October 150,000 150,000 16,000
November
160,000 150,000 16,000
December 195,000 175,000 16,000
7.5 LOAN AMORTIZATION SCHEDULE
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Year Principal Owing (N)
Interest @ 10% (N)
Annual Installment Payment (N)
Principal Repayment(N)
Balance c/d (N)
1 8,000,000 800,000 2050000 1,500,000 6,500,000
2 6,500,000 650,000 2050000 2,000,000 4,500,000
3 4,500,000 450,000 2050000 2,000,000 2,500,000
4 2,500,000 250,000 2050000 1,500,000 1,000,000
5 1,000,000 100,000 2050000 1,000,000 -
7.6 MONTHLY ANALYSIS OF WORKERS SALARIES (PAYROLL)
POSITION YEAR ONE (N)
YEAR TWO (N) YEAR THREE (N)
1 Marketing manager 40,000 40,000 40,000
2 Accountant/Secretary 15,000 15,000 15,000
3 Driver 20,000 20,000 20,000
4 Four laborers 60,000 60,000 60,000
5 Security Man 15,000 15,000 25,000
6 Truck conductor 15,000 15,000 15,000
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