Documente Academic
Documente Profesional
Documente Cultură
PAGE
I.
SUMMARY
295 - 3
II.
295 - 3
III.
MARKET STUDY AND PLANT CAPACITY A. MARKET STUDY B. PLANT CAPACITY & PRODUCTION PROGRAMME
IV.
V.
VI.
VII.
FINANCIAL ANLYSIS A. TOTAL INITIAL INVESTMENT COST B. PRODUCTION COST C. FINANCIAL EVALUATION D. ECONOMIC BENEFITS
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I.
SUMMARY
This profile envisages the establishment of a plant for the processing of turmeric with a capacity of 150 tonnes per annum.
The present demand for the proposed product is estimated at 460 tonnes per annum. The demand is expected to reach at 828 tonnes by the year 2022.
The total investment requirement is estimated at about Birr 2.86 million, out of which Birr 1.1 million is required for plant and machinery.
The project is financially viable with an internal rate of return (IRR) of 21 % and a net present value (NPV) of Birr 1.41 million discounted at 8.5%.
II.
Turmeric is an East Indian perennial herb "Curcuma longa" with a large aromatic deep yellow rhizome. Processed turmeric is the cleaned, boiled, sun-dried, and usually pulveized rhizome of the turmeric plant used as a colouring agent, a condiment (as in pickling and in curry powder), or a stimulant.
III.
A.
MARKET STUDY
1.
The country's requirement for turmeric is essentially met through domestic production. However, data on domestic production of the product is not readily available. Therefore, the
295 -4 Revised Report on the 1995/96 Household Income, Consumption and Expenditure Survey is analyzed in estimating the demand for turmeric. Table 3.1 depicts the average amount of turmeric consumed by different expenditure groups in urban and rural areas according to the survey finding.
Number of Income Group Individuals in the Group < 600 600 - 999 1000-1399 1400-1999 2000-2599 2600-3399 3400-4199 17,253 125,904 432,547 580,104 4,217,465 649,8555 784,4772
Average Annual
Total Annual
Consumption Consumption (gram) 10 7 18 21 17 25 26 32 41 44 47 68 57 (kg) 1,259 3,028 10,442 88,567 110,475 196,119 283,026 256,255 361,501 225,058 82,981 45,812 55,445 1719,969
4200-5399 1,088 ,5614 5400-6599 6600-8999 9000-12599 12600-16199 16200-19999 > 20000 Total 800,7978 881,7091 511,4961 1,765,555 673,706 972,722 55,954,227
Source: CSA, Revised Report on the 1995/96 Household Income Consumption and Expenditure Survey, 2001.
295 -5 As can be seen from Table 3.1, the total consumption requirement of households for turmeric is 1,719,969 kg per annum. Given a total population of 55,954,227 at the time the survey was conducted, the per capita consumption of turmeric is computed to be 0.03 kg. Assuming the regional market constitutes the viable market for the product, the present demand of households for turmeric is estimated at 460 tons using the total population of the region for 2007.
2.
Projected
Demand
The consumption of processed turmeric is mainly associated with the urban population. Accordingly, a growth rate of 4% that corresponds to the rate of urbanization in the country is considered in projecting the demand for turmeric. The projected demand for the product is shown in Table 3.2. Table 3.2 PROJECTED DEMAND FOR TURMERIC (TONNES)
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Projected Demand 460.00 478.40 497.54 517.44 538.13 559.66 582.05 605.33 629.54 654.72 680.91 708.15 736.47 765.93 796.57 828.43
The retail price of turmeric is Birr 25 per kg. Allowing margin for wholesale and retail a price of Birr 20 per kg is recommended for the product of the envisaged plant.
The product can get its market outlet through the existing wholesale and retail network, which includes department stores, merchandise shops and supermarkets.
B.
1.
Plant Capacity
The annual production capacity of the project is 150 tonnes of processed turmeric based on 300 working days and single shift ( 8 hours) per day.
2.
Production Program
The production program is indicated in Table 3.2. At the initial stages of production, the project may require some years to penetrate the market. Therefore, in the first and second year of production, the capacity utilization rate will be 70 and 90%, respectively. In the third year and thereafter, full capacity production shall be attained.
Description
1 2
105 70
A.
The annual raw and auxiliary materials requirement and cost are indicated in Table 4.1.
S.No 1 2
Qty
4500
B.
UTILITY
Water and electricity are the utilities of the project. The annual utility requirement and its cost are shown in Table 3.
S.No 1 2
Unit kWh M3
295 -8
V.
A.
TECHNOLOGY
1.
Process Description
Turmeric seeds will first be cleaned and washed manually and then sun dried. Solar drying is the cheapest and popular mode of drying agricultural products.
The power is then sifted and tested according to standard procedures depending on the target market. It is then packed for sales.
2.
Source of Technology
Turmeric processing plant can be acquired from different suppliers. The following company could be requested for the offer.
Food and Biotech Engineers Khwaja, Faridabad, Haryana-121003, India Phone +91-129-2510924
B.
ENGINEERING
1.
The list of machinery and equipment required for the project is indicated in Table 5.1. The total cost of machinery and equipment is estimated at Birr 1,100,000 of which Birr 916,700 is in foreign currency.
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S.No 1 2 3 4 5 6 7
Description Chamber solar drier Vibratory screen Disintegrator Micropulverizer Sifting machine Weighing and packing unit Miscellaneous equipments
2.
The total land requirement of the project is estimated at 1000 m2 of which the built-up area is 300 m2. Therefore, the cost of building is Birr 450,000. The lease value of land is about Birr 80,000 at a rate of 1 Birr per m2 per annum for 80 years.
3.
Yadeta town is the best location for the proposed project for its proximity to major raw material sources.
VI.
A.
MANPOWER
Table 6.1 shows the list and cost of manpower. The total annual labour cost is estimated at Birr 201,000.
295 -10
S.No
Manpower
No.
Annual Salary (Birr) 36,000 8,400 24,000 24,000 25,200 36,000 7,200 160,800 40,200
1 2 3 4 5 6 7
General manager Secretary Production head Accountant Operator Labourers Guards Sub total Benefit (25% Basic salary) Total
1 1 1 1 3 10 2 19
16,750
201,000
B.
TRAINING
On-the-job training shall be carried out by the experts of machinery suppliers and its cost is estimated at Birr 15,000. VII. FINANCIAL ANALYSIS project is based on the data presented in
the previous chapters and the following assumptions:Construction period Source of finance 1 year 30 % equity 70 % loan Tax holidays Bank interest 3 years 8%
295 -11 Discount cash flow Accounts receivable Raw material local Work in progress Finished products Cash in hand Accounts payable A. 8.5% 30 days 30days 2 days 30 days 5 days 30 days
The total investment cost of the project including working capital is estimated at Birr 2.86 million, of which 53 per cent will be required in foreign currency. The major breakdown of the total initial investment cost is shown in Table 7.1. Table 7.1 INITIAL INVESTMENT COST Sr. No. 1 2 3 4 5 6 7 Cost Items Land lease value Building and Civil Work Plant Machinery and Equipment Office Furniture and Equipment Vehicle Pre-production Expenditure* Working Capital Total Investment cost Foreign Share Total Cost (000 Birr) 80.0 450.0 1,100.0 100.0 200.0 290.4 644.9 2,865.3 53
* N.B Pre-production expenditure includes interest during construction ( Birr 140.37 thousand ) training (Birr 15 thousand ) and Birr 135 thousand costs of registration, licensing and formation
The annual production cost at full operation capacity is estimated at Birr 4.07 million (see Table 7.2). The material and utility cost accounts for 85.45 per cent, while repair and maintenance take 1.84 per cent of the production cost.
Items Raw Material and Inputs Utilities Maintenance and repair Labour direct Factory overheads Administration Costs Total Operating Costs Depreciation Cost of Finance Total Production Cost
Cost 3,412.50 66.8 75 96.48 32.16 64.32 3,747.26 212.5 111.98 4,071.74
% 83.81 1.64 1.84 2.37 0.79 1.58 92.03 5.22 2.75 100
C.
FINANCIAL EVALUATION
1.
Profitability
According to the projected income statement, the project will start generating profit in the first year of operation. Important ratios such as profit to total sales, net profit to equity total investment (return on total
The income statement and the other indicators of profitability show that the project is viable.
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2.
Break-even Analysis
The break-even point of the project including cost of finance when it starts to operate at full capacity ( year 3) is estimated by using income statement projection.
BE =
36 %
3.
The investment cost and income statement projection are used to project the pay-back period. The projects initial investment will be fully recovered within 5 years.
4.
Based on the cash flow statement, the calculated IRR of the project is 21 % and the net present value at 8.5% discount rate is Birr 1.41 million.
D.
ECONOMIC BENEFITS
needs, the project will generate Birr 1.12 million in terms of tax revenue. The establishment of such factory will have a foreign exchange saving effect to the country by substituting the current imports.