Business Plan for Kamad Industries

Under supervision

Of

Sir Fraz Shafique

Presented by:

Ifzal Ahmed BBA-FA05-09

Sheraz Ashraf BBA-FA05-25

Fehmina Khurshid BBA-FA05-05

Hajrah Fazal BBA-FA05-29

COMSATS Institute of Information technology, Lahore

Executive Summary

We students of BBA batch 4 from COMSATS; under kind supervision of Sir Fraz Shafique started to work on new and innovative ideas that have not been done before in Pakistan before. As a step towards growing entrepreneurship in Pakistan we students of COMSATS have a tradition to present our new and innovative ideas in front of people which could benefit the job situation in Pakistan and so that we could become job givers not job beggars.

Sugarcane Juice industry is a business idea that deals is products. Our product is sugarcane juice in tin pack or pet bottles. Sugarcane juice is widely used in summer season because of its taste and low cost. But the problem with this is that it cannot be preserved for long time. The methodology used in Pakistan is quite old and so people normally don’t go for this sector because of the risk of low shelf life. But increasing technology and research has made it possible and now in many of countries it’s produced on commercial basis and their sales are quite high especially in Middle East countries. This juice is widely used in hot weather conditions. Pakistan is the fifth largest producer of sugarcane still there isn’t any method of preserving this juice.

Only methodology being followed utilisation of aqueous ammonia as a preservative for sugar cane juice the full process is explained in final report. Ammonia (28% NH3 w/v) at levels of 15 or 20 ml per litre of cane juice successfully preserved the juice and also supplied the necessary nitrogen for rumen fermentation of this energy source. Palatability of the treated juice was not apparently affected. Secondly it can be preserved by the use of sodium benzoate and ammonium hydroxide (aqueous -nh3) as preservative for sugar cane. Experiments were carried out with sodium benzoate and aqueous ammonia (28.2%NH3), the objective being to stop spontaneous fermentation of sugarcane juice. It was found that sodium benzoate at a concentration of 0.05% was sufficient to stop fermentation for 2-3 days; 0.1% was necessary to conserve the juice for 6 days. The concentrations of aqueous ammonia necessary for the same periods of preservation were 0.32 and 1.28% (0.08% and 0.32% NH3.

The supply of sugarcane is not a big problem because Pakistan is the fifth largest producer of sugarcane

Our initial product to start is 250ml sugarcane juice cotton pack, 500 ml tin pack and 1 liter pet bottle. Future prospects are of addition in product line and setting out executive distribution channels, and plans are for exporting to KSA market in future.

Industry Environment

Overview of the industry

Our business is the part of fruit & vegetable industry of Pakistan. Agriculture is the largest income and employment-generating sector of Pakistan’s economy. About two third population of the country resides in rural areas and directly or indirectly depend on agriculture for their livelihood. The sector provides raw materials to the industrial sector and is an important source of demand for its products. The past experience shows that periods of high/low agricultural growth have generally coincided with periods of robust/poor performance of the national economy. Currently juice industries are in high profits because of the demand for the products and the climate conditions. However there are areas which has not been catered before such as sugarcane juice this is because generally people perceive that its can not be preserved for long time so they don’t go for the use of technology and research for catering and taking benefits from this wrong perception.

Top Ten Sugarcane Producers — 11 June 2008

Country Production (Tonnes)

 Brazil 514,079,729

 India 355,520,000

 People's Republic of China 106,316,000

 Thailand 64,365,682

 Pakistan 54,752,000

 Mexico 50,680,000

 Colombia 40,000,000

Projected position for the future

Because this potential areas has not been catered before so it will give us a new and distinctive name in the market and similarly we can extend our product line to other existing products once the goodwill and reputation is build in the market. Although optimum level of benefit of these

natural resources has yet to be achieved, the volume of production is growing every year as the area under cultivation has been increased by manifold. The ever growing demand of Pakistani sugarcane juice in summer season suggests that there is a need to further increase productivity, introduction of new varieties of fruit juices to maintain affordable prices at home and to get exportable surplus. Supply of raw material may not be a big problem because there are lots or areas in Pakistan which are the largest producers of sugarcane the only problem we may face is ensuring that shelf life of juice is maintained and a distinctive market position is build in customer’s eyes.

Potential customers

Our potential customers will be every kind of individuals however we will segment our market on the basis of their priorities and attitudes towards hygienic products. Initially to minimize our risk we will cater only markets in Lahore then depending upon the demand and our finance capacity we will expand our production and distribution to other major cities of Pakistan. Our customers will be:

Students at every level (from school level to universities)

Employees who work the entire day in hot conditions

Households, Passengers

In summer season every kind of people with no age limit use this juice but because of unhygienic products most of people avoid this. We will specially target those kinds of people. Initially we will only limit our geographical scope to Lahore and then after initial success we will expand our target segments. We expect that we will cover almost 30%-40% of Lahore’s population which could be almost one to two million we expect that out of these 30%-40% we will capture 60-%70% of the market. Which will be a big success for us initially and as time passes and business prosper will we will be able to cover and capture the remaining potential market. Similarly almost every second person that goes to job and have medium salary and maintain good living status will be our potential customer.

Direct competitors

We don’t have direct competitors in our product however in substitute products we have mainly big guns like:

Nestle Shezan Country juice others

Market Share 27.7% 31% 19% 22.3%

Source: google.com

Marketing

Business opportunity

This is a business plan of a partnership firm in the name of sugarcane juice. The plan is to process and market the precious sugarcane juice. First time in Pakistan, juice will be preserved in tin pack keeping them as fresh as at time of extraction. Till now market deals in fresh fruit juices which can be easily preserved however this idea has not been catered yet. Canned sugarcane juice will be sweet as fresh fruit. Firm plans to start a processing plan near. Processed and packed finished fruits juice will be temperature resistant and thus able to be transported to market for sale initially. Firm will hold a warehouse, production plant and office in Lahore.

Company impact

This is quite a new idea which has not been yet commercialized because of the lengthy and risky procedures of preserving this juice. This juice is widely used because of its sweet taste and being a solution to different health problems. The cost of production and raw material is not so much high while sales may be expected to be high because of its greater utilization. It needs not to be marketed so much because it’s a new thing which people will try and love a lot. Simply we can place it on universities cafeterias, gourmet franchises and grocery shops, the only thing we must do is to ensure its shelf life and long preservation time.

Company strategy

In first year, our company, will market in Lahore in the three segments described in the report. Lahore will be the sole market for first year. Then looking through our sales history we will expand our business opportunities to other big cities of Pakistan. More products that will be processed in same way and will be included in product line after making a good repute in the industry. Initially our company production line is based on semi-automatic techniques but hi-tech extension is planned in future.

Benefits matrix

Customer Pain Points Benefits

Already developed distribution system we only need to make a well repute to launch and familiarize our products

Easy distribution

Availability throughout the year No shut down if season is off

Easily available sugarcane in large quantity Low cost of production

Operations

Organizational structure

A Kamad industry is an organization that will be legally formed as partnership firm. The partners will be Ifzal Ahmed, Sheraz Ashraf, Fehmina Khurshid, and Hajrah Fazal. Each partner will contribute 25% as initial investment in business. Land and building will be initially taken on

rent.

Key Management Personnel

4 important departments will be there:

Purchasing and Logistics

Mr. Sheraz Ashraf with one assistant (employee) will be responsible for all operating material purchases at best possible rates and delivering at the appropriate time, use of Just in time inventory.

Production and Financial operations

Mr. Ifzal Ahmed will be responsible for quality production process. He will also be responsible for financial records and accounting. Mr. Ifzal Ahmed needs the following staff at the plant in the process.

Process workers (7)

Marketing

Miss Fehmina is our marketing researcher. She along with assistance of Hajrah is responsible to design promotional campaigns and do art work for advertisement. Their main task is to work in celebration with sales department to create demand opportunities and find out new market segments.

Warehouse Management and sales

A separate employee will be hired which will be responsible for managing finished good inventory in Lahore Warehouse and office and to generate sales as per decided and approved credit terms from financial department.

Core operations

Machinery Required

Sugarcane juice is a very delicious drink during summer, contains many minerals and has nutritive value. It is a major constituent of glucose and sugar. Glucose being a major stamina-enhancer, sugarcane juice is a pure and natural refreshment and is available in every town and city. This juice can be easily preserved with its taste and aroma remaining intact. It can be sealed in container and transported to places where sugarcane is not available or is too costly. Sugarcane juice has good export potential and good marketability as consumption of juice is increasing in various countries. In Pakistan there are no as such units engaged in the preparation of sugarcane juice. A new entrepreneur can enter this field, as there is good potential for market and export.

Option 1:Plant capacity: 4000 Ltrs/Day

Plant & machinery: Rs. 20.30 Lakhs

Working capital: Rs. 23.31 Lakhs T.C.I: Rs. 70.11 Lakhs

Return: 47.22% Breakeven: 49.12%

Option 2:

Capacity: 100,000 x 200 ml packs/year

Total investment: Rs. 1.50 lakh

Basic Methodology

The utilization of aqueous ammonia as a preservative for sugar cane juice

Materials and Methods

Aqueous ammonia (28% NH3 w/v) was mixed with 500 ml batches of freshly extracted sugar cane juice at levels of 0, 0.5, 1.0, 1.5, 2.0, 2.5 and 3.0% (w/v). The mixtures were left at room temperature in sealed glass containers for a 7 day period to measure changes in pH and Brix of the juice.Results for pH and Brix during the 7 days after treatment are shown in Table 1. It gives the trends in these measurements for aqueous ammonia levels of 0, 0.5, 1.0, 1.5 and 2%. Results for higher concentrations were identical to those for 2% aqueous ammonia. It is obvious that ammonia works well as a preservative, especially if fairly highLevels are used. At levels above 2.0% w/v, the juice becomes less palatable for cattle and in such situations it should bereft to stand until the excess ammonia dissipates. It has been suggested by Leng and Preston (1976) that the optimum level of available nitrogen in the rumen to ensure

optimum synthesis of microbial protein is 3 g N/100 g of fermentable organic matter. Taking the case of cane juice at 14 Brix, then this would require about 1.5% (w/v) of aqueous ammonia (28 % NH3 w/v) in order to provide the required amount of available nitrogen for microbial protein synthesis. Cane juice of higher Brix content would need proportionally more ammonia - N. In the experiment reported here, the inclusion of from 1.5 to 2.0% aqueous ammonia in the sugar cane juice, thus provided the necessary amount of N for rumen synthesis of protein and also preserved the juice for over 6 days.

Use of Sodium Benzoate and Ammonium Hydroxide (Aqueous -Nh3) As Preservative For Sugar Cane

Materials and Methods

Additives: Two experiments were carried out with sodium benzoate under aerobic and anaerobic conditions respectively. The levels of sodium benzoate used were 0, .01, .02, .03, .04 and .05% (v/v) in Experiment 1 and 0, .05, .075 and .10% in A third experiment was carried out with

aqueous ammonia (28.2% NH3) using levels of 0, .32, ,64, .96, 1,28 and 1.6% (w/v). 346 Trop Anim Prod 1981 6:4Procedure: The sugar cane juice was extracted from freshly harvested sugar cane stalks using a 3-roller sugar cane press (McKinnon, Aberdeen, Scotland). The juice was immediately sampled and these samples taken to the laboratory and distributed among flasks of 100 ml. Two replicates per treatment were used and flasks were maintained sealed at an ambient temperature for 6 consecutive days. pH and Brix were recorded every 24 hours ( Brix was taken as a measure of the concentration of total soluble solids in a sample).

It appears that a concentration of 0.05% sodium benzoate in the juice was sufficient to conserve the sugars in the juice for 2 or 3 days; however preservation for up to 6 days required a higher concentration of 0.1%. The concentration of aqueous ammonia necessary to preserve the juice for up to 2 days was 0.32 %( 0.08% NH3) and in order to preserve the juice for up to 6 days 1.28 %( 0.32% NH3) was necessary. Even at the higher concentration there was some degradation of the sugars (approximately 10-15%). The pH of the juice dropped slightly from 4.5 to 3.5 during the first 24 hr, independent of the concentration of sodium benzoate. The pattern was quite different when aqueous ammonia was used; in this case the pH rose to between 8 and 9 when the preservative was added, afterwards falling to around 3.5 after 3 days. There was a slight indication that fermentation proceeded more slowly under anaerobic conditions.Sodium benzoate was a more economic preservative than aqueous ammonia, the prices at present in Dominican Republic being US$ 4.4/kg and US$7.2/ liter respectively (equivalent to US$ 4.40 and US$ 112.00 per 1000 liters of juice preserved). The concentration needed will depend on the storage time required, that is, 0.05% for 48 hr, 0.075% for 72 hr end 0.10% for a longer period. It is suggested that containers used for juice storage should be sealed to stop the entrance of air. This methodology is already been used in Dominican Republic, Middle East and India and has been successful because of the weather and climate conditions. However we haven’t seen a big brand in this area so it can be a big potential for us. We can also export it to the neighboring countries.

Investments and Projected Financials

Initial Investments

Business will be started with total capital of Rs 5,000,000. Each of the four partners will contribute 25%. Land and building will be taken on rent initially. Ifzal Ahmed will manage all major activities and financial aspects as team leader.

CAPITAL INVETMENTS

Investments Rupees

Security payment for 10 Marla building 100, 000

Plant & machinery 2,030,000

Labeling Machine 45, 000

Can lid sealing machine 55, 000

Working capital 2,331,000

Total 4,561,000

Miscellaneous 5, 000

Total 4,567,000

OPERATING INVESTMENT BEFOR EARNINGS

4 months rent of plant building 80, 000

Wages for approx 2.5 months 50, 000

Approximate initial recruitment cost 10, 000

Initial utility bills 20, 000

Total 160,000

Surplus (5,000,000 – 4,727,000) 267,000

Surplus will be used to purchase operating material supplies for starting production.

Projected Financials

Initial capacity of the firm is to process approx 2000 litres in a day. And 4000 cans in a day. One can (550 grams) costs Rs 20 including all operation costs and will be sold at price of Rs 35 with profit of Rs10. Capital investment will be recovered in one year operations on sale of 137,140 units. First year expected sale revenues will be 150,000 units. This means first peak season can recover our initial capital investments to some extent.

Cost of Goods Sold

CGS contains costs for following material

Bottles or tin whichever is low

Label

300 gram apricot

Sodium benzoate US $ 4.4/kg, 9000 per 1000 litres of juice preserved

HR Cost Calculation:

6 seasonal workers hired for 4 months will be paid Rs. 6000 per month.Total HR cost

This all will cost as follow:

6000*4*12= 288, 000

Rent and Administrative Expense:

Rs 25, 000 per month for 10 Marla building near Iqbal Town

Rs 2, 000 per month is approximation of administration expenses including utility costs

Projected 1st year end compressed Income Statement (amounts in thousands)

Sales 5,250

Less: Cost of Sales 3,000

Gross Profit 1,750

Less Operating Expenses:

Rent expense 300

Distribution expense 100

HR expense 288

Administrative expense 24

Net Profit before taxes 1138

* In projected financials we ignored effect of by-product (kernel) income.

Costing per unit

Tin and lid or bottles 8(may vary)

Sugarcane 5

Label 2.5

Sodium benzoate 4.5

Total Cost per Unit 20

Cost-based pricing will be adopted and we will set a price of Rs. 30

Retail price will be Rs 35. (Rs 5 will be margin of retailer)

References

A NOTE ON THE UTILISATION OF AQUEOUS AMMONIA AS A PRESERVATIVEFOR SUGAR CANE JUICE IN RUMINANT DIETSF Duarte, A Mena, R Elliott y T R PrestonFacultad de Medicina Veterinaria y Zootecnia, Un Universidad de Yucatan, Apdo.116-D, Merida, Yucatan, Mexico

THE USE OF SODIUM BENZOATE AND AMMONIUM HYDROXIDE (AQUEOUS -NH3) AS PRESERVATIVE FOR SUGAR CANEMilagros Bobadilla and T R Preston2

CEDIPCA, CEAGANA, Aptd 1256/8, Santo Domingo, Dominican Republic

Sanchez M & Preston T R 1980 Sugar cane juice as cattle feed: Comparison with molasses in the presence or absence of a protein supplement Tropical Animal Production 5:117-124

NIIR PROJECT CONSULTANCY SERVICES (NPCS), 106-E, Kamla Nagar, Delhi-110007, India.Email: npcs.india@Gmail.com • Website: NIIR.org • Tel: +91-11-23843955, 23845654, 23845886 • Mobile: +91-9811043595 • Fax: +91-11-23841561

Agha khan rural support program

Electronic References

www.Break-Day.com/Crusher_Machine www.freshpatents.com www.Patentstrom.com