proposal for recycle lubrication

DRAFT PROPOSAL FOR RECYCLE LUBRICATION

PLANT

PROJECT:

CADANGAN MEMBINA JETI PERSENDIRIAN DI

KOMPARTMEN 54, PTD 1367, SUNGAI LEBAM MK

TANJUNG SURAT, KOTA TINGGI, JOHOR

CLIENT : YONGVIC SDN BHD

CONTRACTOR : TEGUH AMANI SDN BHD

Table of Contents

1.0 FEASIBILITY STUDY.....................................................................................................................2

1.1 INTRODUCTION......................................................................................................................2

1.2 MARKET FEASIBILITY STUDY..................................................................................................2

1.2.1 Product and Services......................................................................................................2

1.2.2 Customer & Client..........................................................................................................3

1.2.3 Competitor.....................................................................................................................5

1.3 TECHNICAL FEASIBILITY STUDY..............................................................................................7

1.3.1 Technology And Equipment...........................................................................................7

1.3.1 Manpower.....................................................................................................................8

1.3.3 Location.........................................................................................................................9

1.4 ORGANIZATIONAL FEASIBILITY STUDY.................................................................................12

1.4.1 Organization Structure.................................................................................................12

1.4.2 Compensation..............................................................................................................12

1.5 FINANCIAL FEASIBILITY STUDY.............................................................................................13

1.5.1 Start up Capital............................................................................................................13

1.5.2 Financial Sources..........................................................................................................19

1.5.3 Profitability Analysis.....................................................................................................20

1.5.4 Financial Performance.................................................................................................26

2.0 FINDINGS.................................................................................................................................30

3.0 CONCLUSION...........................................................................................................................32

1

1.0 FEASIBILITY STUDY

1.1 INTRODUCTION

YONGVIC SDN. BHD. proposes to construct and operate an Off-Site Schedule

Waste Recovery Plant located on Kompartmen 54, Ptd 1367, Sungai Lebam Mk Tanjung

Surat, Kota Tinggi, Johor

The construction of the plant is to collect and recover scheduled waste such as of

oily and lubrication from industrial sources.

1.2 MARKET FEASIBILITY STUDY

The market feasibility study is an assessment of the overall appeal of the market for

the product or service being proposed.

1.2.1 Product and Services

The raw material to be utilized is classified as “Scheduled Wastes” under the First

Schedule of the Environmental Quality (Scheduled Wastes) Regulations, 2005 described as

follows:

SW 305 - Spent lubricating oil.

SW 306 - Spent hydraulic oil.

SW 307 - Spent mineral oil-water emulsion.

SW 308 - Oil tanker sludge’s.

SW 309 - Oil-water mixture such as ballast water.

SW 310 - Sludge from mineral oil storage tank.

SW 311 - Waste of oil or oily sludge.

SW 312 - Oily residue from automotive workshop, service station oil or

grease interceptor.

SW 314 - Oil or sludge from oil refinery plant maintenance operation.

This Project requires the approval of the Department of Environment (DOE) prior its

implementation. The EIA report shall be prepared in accordance with the guidelines

prescribed by the Director General and shall contain an assessment of the impact of such

activity will have on the environment and to propose measures shall be undertaken to

prevent, reduce, or control the adverse impact on the environment.

2

Scheduled waste that has undergone a recovery process and meet the Malaysia

standard is allowed to be traded as :

Diesel

Light lubrication

Heavy lubrication

Other than diesel and lubrication that become outgoing product from the recovery process,

waste water and sludge also will be the product but it not for trade.

1.2.2 Customer & Client

The customer for this business is already well know. It can come from personal or

company, private or government and most importantly, the product for this business is

already become the needed for person to survive. This is due to the product is in our daily

life.

Our potential client is mostly come from workshop that run some maintenance and

servicing on any machines. This is due to machine usually need some some lubrication for

them to operate. Whether engine oil, transmission oil, hydraulic oil, diesel or any

combination of this lubrication, it still can be recycle on our recycle lubrication site. The

responsibility for client is to supply the used oil or scheduled waste to us and operation will

take over to re-refining the lubrication back. Port and jetty also become our target potential

client, there are:

Terminal Jeti Penumpang di Muar, Johor

Jeti Penumpang di Mersing, Johor

Jeti Jabatan Laut di Johor Bahru, Johor

Jeti Jabatan Laut di Tg. Pelepas, Johor

Pelabuhan Tanjung Pelapas Sdn. Bhd.

Johor Port Bhd.

Other than ship that docking in port and jetty that doing loading and unloading activities,

ship building and repairing also become our target client such as :

Cagarbumi Management Services

Furthermore, there are 230 automobile workshop in Johor (Source: Federation Of

Automobile Workshop Owners’ Association Of Malaysia, FAWOAM) and the total number

of vehicle that was registered in Johor is 2,809,390 units for the data first quarter of 2011.

3

Other than vehicle, ships also need to dispose their lubrication after undergoes repairing

process. Thus, it become our potential client with the total number of ships that registered in

Malaysia until 2009 is 4,677 units. Industrial sector also can become our potential client.

Figure 1 : Total Motor Vehicle By Types And State, Malaysia, First Quarter, 2011

4

Figure 2 : Total Of Ship Registered In Malaysia By Type (New Classification) And

Weight, 2009

1.2.3 Competitor

For recycle lubrication plant, in South Malaysia, especially Johor, there are 7

contractor that run this business. There are:

NO

.

CONTRACTOR Waste groups

1 5E Resources Sdn. Bhd.

PLO 317 & 318, Jalan Perak

Kawasan Perindustrian Pasir

Gudang 81700 Pasir Gudang

I. Asid tidak organic terpakai (SW 206)

II. Minyak pelincir, hidraulik dan emulsi terpakai

(SW 305, SW 306 & SW 307)

III. Sisa berminyak (SW 312)

IV. Buangan pelarut organic terhalogen & bukan

terhalogen (SW 322 & SW 323)

V. Bekas, beg atau kelengkapan dicemari BT (SW

5

409)

VI. Kain buruk, enap cemar dakwat, buangan

dakwat cat, pigmen, lakuer, pewarna (SW 410,

SW 416, SW 417 & SW 418)

2 KB Enviro Sdn Bhd (Kotor

Bina Sdn Bhd)

Lot PTD 2288 HS(D)

15332,Telok Kelok, Mukim

Pantai Timur

KOTA TINGGI

I. Slop oil (SW 309)

II. Enapcemar minyak dari kapal (SW 308)

3 OLST Petroleum (M) Sdn.Bhd

Lot 35 PLO 596 Jalan MIEL 1

Kawasan Perindustrian pasir

gudang, 81700 Pasir Gudang.

I. Minyak hidraulic terpakai (SW 306)

II. Minyak atau gris terpakai (SW 305)

III. Emulsi minyak air terpakai (SW 307)

4 Perniagaan Saudara Baru

PTD 1505 jalan sg. Ulu tiram

Batu 151/2 ulu tiram

81800 Johor Bahru

I. Minyak atau gris terpakai (SW 305)

II. Minyak hidraulic terpakai (SW 306)


IV. Penapis minyak terpakai (SW 410)

5 Rengkas Maju Sdn. Bhd.

PLO 416, jalan wawasan 16

Kawasan perindustrian sri

gading, 83300 batu pahat

I. Minyak atau gris terpakai (SW 305)

II. Minyak hidraulic terpakai (SW 306)


6 Techno Indah Sdn Bhd

PLO 3, pasir gudang industrial

estate, 81707 pasir gudang

I. Slop oil (SW 309)

II. Enapcemar minyak dari kapal (SW 308)

7 Yozai (M) Sdn.Bhd

PLO 593 jalan keluli 9 kawasan

perindustrian pasir gudang

81700 pasir gudang

I. Pelarut terhalogen terpakai dari pembersihan

dan penyahgrisan (SW 323)

II. Pelarut organik aromatik terpakai dari proses

pembersihan, pembersihan/penyahgrisan (SW

322)

III. Pelarut organik bukan aromatik te4rpakai dari

proses pembasuhan,

pembersihan/penyahgrisan (SW 322)

6

IV. Cat terbuang yang tidak mengikuti spesifikasi

dari kilang pengeluar cat (SW 418)

V. Minyak pelicir terpakai (SW 305)

VI. Minyak hidraulic terpakai (SW 306)

VII. Emulsi minyak mineral-air terpakai (SW 307)

VIII. Sisa minyak dari bengkel, stesen servis @

perangkap minyak (SW 312)

IX. Enapcemar daripada operasi penyelenggaraan

loji penapis minyak (SW 314)

X. Sisa bertar dari loji penapisan minyak (SW

315)

XI. Buangan cecair terma (SW 327)

XII. Bekas atau kelengkapan yang dilupuskan yang

dicemari bahan kimia (SW 409)

XIII. Kain buruk yang dicemari dengan buangan

terjadual (SW 410)

XIV. Enapcemar dakwat, cat, pigmen, lakuer,

pewarna atau vernis (SW 416)

XV. Buangan dakwat, cat, pigmen, lakuer, pewarna

atau vernis (SW 417)

1.3 TECHNICAL FEASIBILITY STUDY

A technical feasibility study is concerned with determining whether the business has

the necessary technology and equipment to produce the intended product and service.

1.3.1 Technology And Equipment

The technology and equipment that used in recycle lubrication plant is:

1) Dehydration Stage

The stage will have a dehydration vessel, with Vacuum Pump to create Vacuum in the

vessel, condenser, receivers. Apart from this it will also have circulation pump, valves,

filters, interconnecting piping, transfer pumps, also arrangement of heating as desired by you,

etc. This vessel will be used for removal of water from the oil and for distilling diesel out of

the oil.

7

2) High Vacuum Distillation Stage

This stage will have vessel suitable for High Vacuum Distillation Process, with

floating condensers/ suitable heat ex-changers, Everest Vacuum Pumping System, Vacuum

Gauges, Temperature Gauges, circulation pumps, valves, filters, interconnecting piping,

tranfer pumps, etc. This stage is after dehydration of the oil wherein Light, Medium and

Heavy lube are distilled and collected in different receivers after heating the oil at different

temperatures. With the vessel suitable heating arrangement will be provided as desired by

you to heat the oil at different temperatures

3) Clay Treatment System

The stage will have a clay treatment vessel, with Vacuum Pump to create Vacuum in

the vessel, condenser and receivers. Apart from this the system will also have circulation

pump, valves, filters, interconnecting piping, transfer pumps, also arrangement of heating as

desired by you, etc. Also this will be provided with a Pneumatic System for lifting of

Activated Clay from pit to the clay treatment vessel. This vessel will be used for treatment of

heavy lube with the Activated clay to make the oil for sale to the market after passing through

the Horizontal Leaf Filter press. This arrangement makes the oil free from smell, if any and

also make the oil good in colour.

4) Cooling Tower

This stage is used to transfer waste heat to the atmosphere.

5) Horizontal Leaf Filter Press

This will be provided to filter the oil after the Activated clay treatment of the oil to

remove the traces of clay .

1.3.1 Manpower

The manpower that need to run both business lines is as below:

No

.Manpower Number of position

1 Technician 2

8

http://en.wikipedia.org/wiki/Atmosphere

2 Machine operator 2

1.3.3 Location

The location of ship repair and maintenance workshop and recycle lubrication plant

is located at the JETI PERSENDIRIAN DI KOMPARTMEN 54, PTD 1367, SUNGAI

LEBAM MK TANJUNG SURAT, KOTA TINGGI, JOHOR. Detail location as the Figure 3

& 4 below.

The site location is near the main road and jetty that operate loading and unloading

container. Thus in term of distribution and transportation, there should be no obstacle to do

that. The location also near with the Bandar Penawar town that makes the business operation

easy and reachable. It also will provide the labour force for the operation and provide jobs

opportunities for the residents. The site location is surrounded by oil palm plantation with the

minimum resident at there. Thus, the operation will never disturb human life by the pollution

of air, noise and water.

9

Figure 3 : Satellite View

10

Main road

Jetty loading & unloading operation

Site locationBandar Penawar

Oil palm plantation

Figure 4: Site Location

11

Recycle Lubrication Plant

1.4 ORGANIZATIONAL FEASIBILITY STUDY

An organizational feasibility study is concerned with determining whether the

business has the necessary and sufficient human resource to bring a particular product/service

idea to market successfully.

1.4.1 Organization Structure

Figure 5: Organization Chart

1.4.2 Compensation

1) Salary

No. Position Salary* (RM)

2 Technician 1600

3 Machine operator 900

*Not include EPF and SOCSO

2) Employee Provident Fund (EPF) Contribution

The Company’s and your contributions towards EPF shall be 12% and 11%

respectively or at such prevailing statutory provisions gazetted from time to time.

12

Director

Finance & Administration

Manager

Finance Administration

Operation Manager

Technician

Machine Operator

3) SOCSO

Contribution is based on prevailing SOCSO’s statutory provisions 5%.

1.5 FINANCIAL FEASIBILITY STUDY

The financial feasibility study is an assessment of the financial aspect of the

business.

1.5.1 Start up Capital

Start-up capital refers to the total cash required to start the business which include

the cost for the purchase of non current assets, working capital, development costs and other

expenses.

1) Operation Expenditure

OPERATIONS EXPENDITURE

Fixed Assets RM

Machinaries 2,592,960

Equipment

Tools 13,900

Working Capital

Raw Materials & Packaging 25,566

Carriage Inward & Duty

Salaries, EPF & SOCSO 5,800

Others 1,964

Other Expenditure

Other Expenditure

Pre-Operations Expenditure

Deposit (rent, utilities, etc.) -

Business Registration & Licences 3,500

Insurance & Road Tax for Motor Vehicle 2,400

Other Expenditure 1,314

TOTAL 2,647,403

13

OPERATIONS BUDGET

Particulars F.Assets

Monthly

Exp. Others Total

Fixed Assets

Machinaries 2592960 2,592,960

Equipment -

Tools 13900 13,900

-

Working Capital

Raw Materials & Packaging 25,566 25,566

Carriage Inward & Duty - -

Salaries, EPF & SOCSO 5,800

5,800

Others 1,964

1,964

- -

- -

- -

Pre-Operations & Other Expenditure

Other Expenditure -

Deposit (rent, utilities, etc.) - -

Business Registration & Licences

3,500

3,500

Insurance & Road Tax for Motor Vehicle

2,400

2,400

Other Pre-Operations Expenditure

1,314

1,314

Total

2,606,860 33,329

7,214 2,647,403

14

Fixed Assets

Machineries

No. Module Price per quantity Quantity Total (RM)

1 Dehydration system 152250 2 304500

2High vacuum oil

distillation system780890.27 2 1561780.54

3 Clay treatment system 155715.21 2 311430.42

4Recommended spares

for continuous duty201907.87 1 201907.87

5

Central control room

for electric control

panel

37231.22 1 37231.22

6Horizontal pressure

leaf filter press76125 2 152250

7 Water jet pump 260 1 260

8Second hand lorry 1

ton19000 1 19000

9 Storage tank 2500 ltr. 2300 2 4600

Total (RM) 2592960.05

Tool

No. Items Price per unit (RM) Quantity Total (RM)

1 Workshop tool kit set 13800 1 13800

2 Pipe wrench 25 1 25

3 Oil Filter wrench 75 1 75

TOTAL (RM) 13900

15

Working Capital

Raw Materials

No

. Purchase

Capaci

ty

Price per capacity

(RM)

Quanti

ty

Batc

h

Day of

work

Total

(RM)

1 Diesel 55 1.8 2 3 30 17820

2mechanical spare

part- - - - - 2000

3 electricity 120 0.266 2 3 30 5745.6

Total (RM) 25565.6

Salaries, EPF & SOCSO

No. Position. Salary (RM) EPF (11%)

(RM)

SOCSO (5%)

(RM)

Quantity Total (RM)

1 Technician 1600 176 80 2 3712

2 Machine Operator 900 99 45 2 2088

TOTAL (RM) 5800

Others

No. Items Unit Price per Unit Total (RM)

1 Water bill 100 2.96 296

2 Electricity bill 3600 0.266 957.6

3 Internet bill 1 120 120

4 Digi 2 70 140

5 Phone Bill 1 200 200

6 Stationary & paper 1 250 250

Total (RM) 1963.6

Pre-Operations Expenditure

16

Business Registration & Licences

No. Items Total (RM)

1 Business registration 2500

2 Business license 1000

Total (RM) 3500

Insurance & Road Tax for Motor Vehicle


1 Insurance 1200

2 Road tax 500

3 Tax fee 700

Total (RM) 2400

Other Expenditure


1 Printing 1000

2 Bank charge 314

Total (RM) 1314

17

2) Projected Sales And Purchases

SALES PROJECTION PURCHASE PROJECTION

Month 1 2,229,013 Month 1 25,566

Month 2 2,229,013 Month 2 23,566

Month 3 2,229,013 Month 3 23,566

Month 4 2,229,013 Month 4 23,566

Month 5 2,229,013 Month 5 23,566

Month 6 2,229,013 Month 6 24,566

Month 7 2,229,013 Month 7 23,566

Month 8 2,229,013 Month 8 23,566

Month 9 2,229,013 Month 9 23,566

Month 10 2,229,013 Month 10 23,566

Month 11 2,229,013 Month 11 23,566

Month 12 2,229,013 Month 12 23,566

Total Year 1 26,748,161 Total Year 1 285,790

ToTal Year 2 26,748,161 ToTal Year 2 285,790

Total Year 3 26,748,161 Total Year 3 285,790

Sales Projection

No. SalesCapacity

(litre)

Price per capacity

(RM)

Quanti

ty

Batc

h

Day of

work

Total

(RM)

1 Diesel 645.81 1.8 2 3 30209242.4

4

2Light

lubrication1130.168 2.5 2 3 30 508575.6

3Heavy

lubrication2798.51 3 2 3 30

1511195.

4

Total (RM)2229013.

44

18

Purchase Projection

No. Month Purchases Price per purchases (RM) Total (RM)

1 January

Diesel 17820

25565.6Electricity 5745.6

Mechanical spare part 2000

2 FebruaryDiesel 17820


3 MarchDiesel 17820


4 AprilDiesel 17820


5 MayDiesel 17820


6 June

Diesel 17820


Mechanical spare part 1000

7 JulyDiesel 17820


8 AugustDiesel 17820


9 SeptemberDiesel 17820


10 OctoberDiesel 17820


11 NovemberDiesel 17820


12 DecemberDiesel 17820


Total (RM) 285787.2

1.5.2 Financial Sources

After determining the start up capital, the next stage is for the business to identify

the sources of fund to finance the start up capital. The business has two options either to

19

utilize internal financing or external financing to finance the proposed venture. For this

business, the source of financing is utilize the external financing that get from the loan of

banks which maybe comes from SME banks, or others local banks.


PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE

Project Implementation Cost Sources of Finance

Requirements Cost LoanHire-

PurchaseOwn Contribution

Fixed Assets

Cas

h

Existing F.

Assets

Land & Building

Computer

Office furniture

Machinaries

2,592,96

0

2,592,96

0

Equipment

Tools 13,900 13,900

Working Capital 1 months

Administrative

Marketing

Operations 33,329 33,329

Pre-Operations & Other

Expenditure 7,214 7,214

Contingencies 10% 264,740 264,740

TOTAL

2,912,14

4

2,912,14

4

20

1.5.3 Profitability Analysis

Profitability analysis involve determining whether the proposed venture is

generating enough profit to make the proposed venture feasible. Thus, in order to conduct a

profitability analysis, the business should prepare a 3 years financial projection which will

include the following financial statements:

• Cash flow statement

• Income Statement and

• Balance Sheet Statement

21

1.5.3.1 Cash Flow Statement


CASH FLOW PRO FORMA STATEMENT

MONTHPre-

Operations1 2 3 4 5 6 7 8 9 10 11 12

TOTAL

YR 1 YEAR 2 YEAR 3

CASH INFLOW

Capital (Cash)

Loan 2,912,144 2,912,144

Cash Sales

2,229,0

13

2,229,0

13

2,229,0

13

2,229,0

13

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3 26,748,161

26,748,1

61

26,748,1

61

Collection of Accounts Receivable

TOTAL CASH INFLOW 2,912,144 2,229,0

13

2,229,0

13

2,229,0

13

2,229,0

13

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3

2,229,01

3 29,660,305

26,748,1

61

26,748,1

61

CASH OUTFLOW

Administrative Expenditure

Top management team salary

Administrator

Marketing Expenditure

Television

Internet

Newspaper

Bus

22

Operations Expenditure

Cash Purchase 7,670 7,070 7,070 7,070 7,070 7,370 7,070 7,070 7,070 7,070 7,070 7,070 85,737 85,737 85,737

Payment of Account Payable 17,896 16,496 16,496 16,496 16,496 17,196 16,496 16,496 16,496 16,496 16,496 183,557 200,053 200,053

Carriage Inward & Duty

Salaries, EPF & SOCSO 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 5,800 69,600 69,600 69,600

Others 1,964 1,964 1,964 1,964 1,964 1,964 1,964 1,964 1,964 1,964 1,964 1,964 23,563 23,563 23,563

Other Expenditure

Pre-Operations

Deposit (rent, utilities, etc.)

Business Registration & Licences 3,500 3,500

Insurance & Road Tax for Motor

Vehicle 2,400 2,400 2,400 2,400

Other Pre-Operations Expenditure 1,314 1,314

Fixed Assets

Purchase of Fixed Assets - Land &

Building

Purchase of Fixed Assets - Others 2,606,860 2,606,860

Hire-Purchase Down Payment

Hire-Purchase Repayment:

Principal

Interest

Loan Repayment:

Principal 48,536 48,536 48,536 48,536 48,536 48,536 48,536 48,536 48,536 48,536 48,536 48,536 582,429 582,429 582,429

Interest 12,134 12,134 12,134 12,134 12,134 12,134 12,134 12,134 12,134 12,134 12,134 12,134 145,607 145,607 145,607

Tax Payable

3,597,30

2 3,597,302

3,597,97

6

3,597,97

6

TOTAL CASH OUTFLOW 2,614,074 76,103 93,399 91,999 91,999 91,999 92,299 92,699 91,999 91,999 91,999 91,999 3,689,30

1 7,301,869

4,707,36

5

4,707,36

5

CASH SURPLUS (DEFICIT) 298,070 2,152,9

11

2,135,6

15

2,137,0

15

2,137,0

15

2,137,01

5

2,136,71

5

2,136,31

4

2,137,01

4

2,137,01

4

2,137,01

4

2,137,01

4

(1,460,28

8)22,358,436

22,040,7

96

22,040,7

96

BEGINNING CASH BALANCE 298,070 2,450,9 4,586,5 6,723,6 8,860,62 10,997,6 13,134,3 15,270,6 17,407,6 19,544,6 21,681,7 23,818,7 22,358,4 44,399,2

23

80 95 09 4 38 53 67 82 96 10 24 36 32

ENDING CASH BALANCE 298,070 2,450,9

80

4,586,5

95

6,723,6

09

8,860,6

24

10,997,6

38

13,134,3

53

15,270,6

67

17,407,6

82

19,544,6

96

21,681,7

10

23,818,7

24

22,358,4

36 22,358,436

44,399,2

32

66,440,0

28

24

1.5.3.2 Income Statement


PRO-FORMA INCOME STATEMENT

Year 1 Year 2 Year 3

Sales 26,748,161 26,748,161 26,748,161

Less: Cost of Sales

Opening stock

Purchases 285,790 285,790 285,790

tolak: Ending Stock

Pengangkutan Masuk & Duti

Gross Profit

Less: Enpenditure

Administrative Expenditure

Marketing Expenditure

Other Expenditure

Business Registration & Licences 3,500

Insurance & Road Tax for Motor

Vehicle2,400 2,400 2,400

Other Pre-Operations Expenditure 1,314

Interest on Hire-Purchase

Interest on Loan 145,607 145,607 145,607

Depreciation of Fixed Assets 521,372 521,372 521,372

Belanja Operasi 93,163 93,163 93,163

Total Expenditure 1,053,146 1,048,332 1,048,332

Net Profit Before Tax 25,695,015 25,699,829 25,699,829

Tax 3,597,302 3,597,976 3,597,976

Net Profit After Tax 22,097,713 22,101,853 22,101,853

Accumulated Net Profit 22,097,713 44,199,566 66,301,418

25

1.5.3.3 Balance Sheet Statements


PRO-FORMA BALANCE SHEET


ASSETS

Fixed Assets (Book Value)

Land & Building

Computer

Office furniture

Machinaries 2,074,368 1,555,776 1,037,184

Equipment

Tools 11,120 8,340 5,560

2,085,488 1,564,116 1,042,744

Current Assets

Stock of Raw Materials 0 0 0

Stock of Finished Goods 0 0 0

Accounts Receivable

Cash Balance 22,358,436 44,399,232 66,440,028

22,358,436 44,399,232 66,440,028

Other Assets

Deposit

TOTAL ASSETS 24,443,924 45,963,348 67,482,772

Owners' Equity

Capital

Accumulated Profit 22,097,713 44,199,566 66,301,418

22,097,713 44,199,566 66,301,418

Long Term Liabilities

Loan Balance 2,329,715 1,747,286 1,164,857

Hire-Purchase Balance

2,329,715 1,747,286 1,164,857

26

Current Liabilities

Accounts Payable 16,496 16,496 16,496

TOTAL EQUITY & LIABILITIES 24,443,924 45,963,348 67,482,772

27

1.5.4 Financial Performance


FINANCIAL PERFORMANCE


PROFITABILITY

Sales 26,748,161 26,748,161 26,748,161

Gross Profit

Profit Before Tax 25,695,015 25,699,829 25,699,829

Profit After Tax 22,097,713 22,101,853 22,101,853

Accumulated Profit 22,097,713 44,199,566 66,301,418

LIQUIDITY

Total Cash Inflow 29,660,305 26,748,161 26,748,161

Total Cash Outflow 7,301,869 4,707,365 4,707,365

Surplus (Deficit) 22,358,436 22,040,796 22,040,796

Accumulated Cash 22,358,436 44,399,232 66,440,028

SAFETY

Owners' Equity 22,097,713 44,199,566 66,301,418

Fixed Assets 2,085,488 1,564,116 1,042,744

Current Assets 22,358,436 44,399,232 66,440,028

Long Term Liabilities 2,329,715 1,747,286 1,164,857

Current Liabilities 16,496 16,496 16,496

FINANCIAL RATIOS

Profitability

Return on Sales 83% 83% 83%

Return on Equity 100% 50% 33%

Return on Investment 90% 48% 33%

Liquidity

Current Ratio 1355.4 2691.4 4027.5

Quick Ratio (Acid Test) 1355.4 2691.4 4027.5

Safety

Debt to Equity Ratio 0.1 0.0 0.0

BREAK-EVEN ANALYSIS

Break-Even Point (Sales) 681,474 676,608 676,608

28

Break-Even Point (%) 3% 3% 3%

29

30

1 2 30.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

3500.0

4000.0

4500.0

Current Ratio

Year

Rat

io

31

1 2 30.0

500.01000.01500.02000.02500.03000.03500.04000.04500.0

Quick Ratio (Acid-Test)

Year

Rat

io

1 2 30.0

0.1

0.2

Debt to Equity Ratio

Year

Rat

io

32

1 2 30.0

0.1

0.2

Debt to Equity Ratio

YearR

atio

2.0 FINDINGS

After review the feasibility study, even thought the start up capital to open this

business is very high, about RM 2,647,403 and the cost maybe can increase to RM 3 million,

but, the potential customer and market for this business lines is very high. This business lines

also supported by government due to it help the pollution issues.

Furthermore, this business lines also have very huge potential to growth and the

profitability is also high. By looking at the financial feasibility study, the estimate profit after

tax for year one is RM 22,097,713 and RM 22,101,853 for year 2 and 3. This profitability

also show the growth from year 1 to year 2 and it can expand more by opening a new site at

new market. Other than that, the company also can think to expand the existing site from just

have two re-refining tank to maybe 26 tank. This is due to the total tonnage of scheduled

waste received by the Kualiti Alam Sdn. Bhd. is 120,000 tons in 1998 compared with 30,000

tons in 1996 (Law Hieng Ding, 1998). The existing site can occupied until 4,320 tons of

scheduled waste for one year operation. Thus, it still have 115,680 tons of scheduled waste

that can re-refining by this company and it show the potential for this company to growth and

expand their market for future planning.

In term of competitors, in Johor state, there are 7 contractor of scheduled waste

treatment. The advantages of this company compared to others competitor is this company is

running a complete treatment for scheduled waste from SW 305 until SW 314 except SW

313. Mostly, competitors just collect the scheduled waste for SW 305, SW 306, and SW 312

due to it source is easy to reach. For this company, due to its location is near to the Jetty of

import and export, and ship repair and maintenance workshop, it have advantages to collect

the used oil from ship; SW 308 and SW 309.

The financial analysis for this company has been summaries in table below. The

financial for the three years of operation was compared with Waste Management, Inc. (WM),

the same business lines but operate in North America. The purpose of comparing with WM is

want to make a benchmarking on this business due to WM is already establish on waste

management.

33

No

. Items Year 1 Year 2 Year 3

Waste Management,

Inc. (WM)Comments

Management

Effectiveness

1 Return on Assets 90% 48% 33% 6.05%

This is a measurement of the efficiency of a company in utilizing its assets. Thus, the

company is highly utilize the assets by from year to year, it decrease, it maybe due to

the depreciation of the assets.

2 Return On Equity 100% 50% 33% 15.27%Measures the rate of return on common stockholders’ investment. Thus, the company

shows a very high return for their stockholders'.

Income Statement

3 Revenue26,748,16

1

26,748,16

1

26,748,16

112,680,000,000

This measure the sales of this company. By looking at Waste Management, Inc

revenue, company revenue is small maybe due to it capacity.

Balance Sheet

4 Total Cash24,443,92

4

45,963,34

8

67,482,77

2676,000,000

Measures the cash payment for the operation. The total cash for company is lower

compare to WM but, for time to time, the total cash is increase.

5 Total Liabilities 2,346,211 1,763,782 1,181,354 9,170,000,000Measure the debt to run the operation. The decreasing value from year 1 to year 3

show a good performance on debt for the company.

6 Current Ratio 1,355 2,691 4,028 1

Current ratio is a measurement of a company’s ability to use current assets to pay for

its current liabilities. Thus, highest current ratio will reduce the risk that the

company’s assets will fail to cover liabilities.

Cash Flow Statement

34

7 Operating Cash Flow 7,301,869 4,707,356 4,707,365 2,380,000,000This show the cash flow out for the operation. The decreasing value of cash flow out

from year 1 to year 2 show a efficiency on managing cash flow.

35

3.0 CONCLUSION

As the conclusion, after review all the feasibility study and the financial, this dream

can become reality due to the convenience profitability after one year operation. The profit

maybe can go more higher if the oil price in world is increase. This business lines also have

potential to growth with the minimum risk. Thus, this convincing feasibility study should be

continue with the further steps of make the dreams comes true.

36

proposal for recycle lubrication

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