Plan Palm Oil

Business Plan on Palm Oil Industry

What is business plan?

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

The business goals being attempted may be for-profit or non-profit. For-profit business plans typically focus on financial goals. Non-profit and government agency business plans tend to focus on service goals, although non-profits may also focus on maximizing profit. Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. A business plan having changes in perception and branding as its primary goals is called a marketing plan.

Externally

Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit’s services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks.

Internally

Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.

Vision:

Sustainable palm oil: challenges, a common vision and the way forward .

Escalating Country demand for palm oil continues to drive rapid expansion of oil palm monocultures across the tropics. Whilst business is booming for the palm oil industry, providing

a major source of employment and foreign exchange for producing nations, success is tainted by the extensive damage being inflicted on some of the richest ecosystems on earth.

This creates a complex challenge for biodiversity conservation. Insatiable demand for vegetable oil combined with high yields and profitability mean that oil palm expansion is set to continue, yet the predicted scale of expansion makes it a strong contender for the single greatest threat to biodiversity on the planet. How can these socio-economic and environmental goals be reconciled?

The focus of this symposium will be to define a common vision for integrating environmental and socio-economic goals for more sustainable palm oil production and to identify and catalyse the stakeholder actions necessary to achieve this. As a first step, key scientists, policy makers, NGOs and private sector representatives will review the science and practicalities of reconciling continued global oil palm expansion with biodiversity conservation and the maintenance of ecosystem functions. The second step will be to explore the processes, decisions and conditions necessary to make this common vision a reality, highlighting the roles of investors, policymakers, the Roundtable on Sustainable Palm Oil, palm oil producers, retailers and NGOs.

Mission:

1. To continue our strategy of controlled growth and through improved management to continue to increase our net margin

2. To increase client satisfaction, through improved reporting, accuracy, timeliness and estimates of cost and value, together with a better understanding of our Client’s needs

3. Whilst maintaining our commitment to core water industry customers, continue to diversify into targeted markets in Energy, Rail & Scotland

4. To learn how to formulate an effective Business Plan.5. To continue our strategy of controlled growth and through improved management to

continue increasing our net margin6. Operating the firm efficiently.7. Funding the firm.8. Seeking financing.9. Arranging strategic alliances.10. Obtaining large contracts.11. Testing the viability of our plans.12. Attracting key employees.13. Business plan can uncover omissions and/or weaknesses in our planning process.14. To organize our thoughts and ambitions for our business venture.

It can be used as a selling tool in dealing with important relationships including our lenders, investors and banks

Methodology

This is a business plan to establish a Palm oil business . Now a day, palm oil is a popular cooking oil in Bangladesh. Palm oil is also a profitable business because people used Palm oil

in every day of his/her life. Our business plan is prepared by the queries of several Palm oil industries. Some surveys have been conducted and some interviews were taken.

Activities

Missions to investigate opportunities in Suriname for sustainable palm oil. Key stakeholders in Suriname will be consulted and information on the business prospects of sustainable palm oil will be collected.

Missions to develop a business plan through a multi stakeholder approach. Consultations and expert meetings will be organized to agree on a draft business plan. This plan will be developed through collective efforts coordinated by KIT.

Sourcing of investment capital in Suriname and the Netherlands. Based on the business plan, investors will be approached for participation as shareholders.

SUMMARY OF THE PROJECT

1. Name of the Project : Fast Forward palm plant (Pvt.) Ltd. 2. Business Type : Palm Oil manufacturing company 3. Form of Business : Partnership 4. Source of Finance : Individual Capital & Bank Loan 5. Product/Service (We sell) : Palm oil & Kernel oil 6. Product/Service (We Buy) : Palm Plant, Fertilizer 7. Brands : 8. Number of Employees : 50-60 9. Main Customers : Local market of Bangladesh Soap Manufacturer in Bangladesh 10. Management Certification : HACCP ISO 9001:2000 11. Location : Our project location is setting in;

Sub Project Area LocationProject 1 Ramu, Cox’s bazaarProject 2 BanderbansProject 3 Rangamati.

Figure-1: Locations of the Business

Develop a business plan for sustainable production of palm oil in Suriname on rehabilitated plantations, integrating principles of corporate social responsibility.

What is Palm oil

Mainly palm oil is the cooking oil. Palm oil is an oil which is extracted from the fruit of the palm oil tree, an African palm which has been cultivated for centuries for its useful oil. In addition to palm oil, the palm oil tree also yields palm-kernel oil, which is extracted from the seeds. Pure

palm oil is widely available in Africa and Southeast Asia, and sometimes in specialty markets in other places, and products which contain palm oil are also very common.

To extract palm oil, the fruit of the palm oil tree is collected and pressed, yielding a rich, dark-red oil which is high in carotene. When the oil is exposed to heat through processing and cooking, it rapidly loses the carotene, turning a pale creamy color. Producers of palm oil can sell the pure oil, or use a fractional distillation process to extract various components of the oil, which have a variety of uses.

Palm oil is high in saturated fat and it is often very close to solid at room temperature, unless it is specially treated. The high saturated fat also makes palm oil a great cooking oil, because it is able to withstand very high heat, and it will not break down or change when heated. However, this also makes palm oil a less than ideal oil, health wise, because saturated fat is generally believed to be harmful when consumed in large amounts.

Cheaply Palm oil

Many processed foods contain palm oil, which is viewed as a cheap, efficient, and highly stable oil by food manufactures. In addition to being used in cooking, palm oil can also be used in a number of industrial processes. Many cosmetics companies utilize palm oil as a cheap replacement for more expensive natural oils in things like soaps and moisturizers. Palm oil creates the desired texture without the expense, although it also lacks many of the beneficial compounds which make these products good for the skin.

View of a palm oil

The world largest suppliers of Palm oil are Malaysia, which produces 45% of the world’s supply and Indonesia (39%) These countries would supply up to 20% of the European Union’s biodiesel needs by 2010.[1][2]

The strong growth in Palm oil consumption over the last six years has resulted in Palm oil being the dominant oil in the global market. As Soybean oil prices began to rise in 2001-02, the spread between Palm oil and Soybean oil began to widen, increasing the competitiveness of Palm oil in the world market. Since 2001-02, Palm oil consumption has increased 13.2 million metric ton, compared to an 8.7 MMT increase in Soybean oil consumption. This lower price, compared to other major oils, primarily Soybean oil, has given Palm oil a competitive advantage in both these large oil consuming countries. The rising trend is attributed also to making Trans Fatty Acid (TFA) label effective in the United States in January, 2006. The association of Palm oil companies (Gapki) predicted the prices of crude Palm oil (CPO) will hover around US$600 per ton this year and will not dive lower than US$550 per ton.

Process advantages Palm oil industry

Our company is used in latest invention in biodiesel production

Our technology employs “hydrodynamic cavitations”, an industrial phenomenon, produced by pressure variations and obtained using the geometry of the system creating velocity variation. Cavitations itself perceived as “a technology of future”[2][9]; use of cavitations in chemical processes reduces reaction time, increases reaction yield and decreases consumption of energy.

The conventional techniques of biodiesel production typically utilize temperatures in the range of 70 to 200°C, pressures in the range of 6 to 10 atm and reaction times of up to 70 hours for achieving conversions in the range of 90 to 95%based on the type of raw material used (usually mixtures of fatty acids obtained as waste). Use of hydrodynamic cavitations decreases reaction time and temperature to 70 min. and 30C respectively. So, use of cavitations reactor for production of biodiesel allows save up to 10 times on electricity

1. 10. Product items : Our Production Item is setting in;

Items Package

(In container)Palm Oil 1,2,5&10kg

Kernel Oil 1000,2000&5000 Kg

Product Price:

1 kg 2kg 5kg 10kg 1000kg 2000kg 5000kgPalm Oil 70tk 140tk 335tk 650tk

Kernel Oil 45000 88,000 220,000

Palm oil 72000Kgs. Kernel oil 20000kgs.

Figure-2: Product Item for Business

MANAGEMENT ASPECT

1. 1. Corporate Set – up: 1. 11. Fast Forward palm plant (Pvt.) Ltd is a partnership business. In our project “Fast

Forward palm plant (Pvt.) Ltd.” is a palm oil manufacturing organization. The Managing Director of the proposed project, Mr. X, is a renowned business man and has a lot of experience about consumer psychology. He has completed his PHD degree from Australia. Without these, he is related to different types of business like, manufacturing, construction and other export import related items. And it is also an important matter for us he is one of the large investor of our company.

Name of the Directors Extent of

Shareholding

Status

Mr. X30% Manag

ing Director

Mr. Y 40% Director

Mr. Z 30% Brand Ambassador

Figure-3: Board of Directors

We expected that, we have enough ability to do well in our business. And we are very much hopeful because our Brand Ambassador Mr. Z is a famous cricketer in Bangladesh.

The important duties of the partners are,

i. Justice, Faithfulness: True accounts, Full Information: Partners are bound to carry on the business of the firm to the greatest common advantages, to be just and faithful to each other, and to render true accounts and full information of all things affecting the firm to any partner or his legal representative. Sec-9

ii. Equality of losses: Subject to any contract to the country, partners are bound to pay the losses of the firm equally. Sec- 13(B)

iii. No private benefit: A partner cannot use the partnership properties directly or indirectly for his own benefit.

iv. NO secret profit: If a partner carries on any competing business of the firm, s/he shall account for and pay to the firm all profits made by him on the business. Sec-16 (B)

v. Unlimited liability: Every partner is liable for the acts of the firm done while s/he is a partner. The liability is joint and several. Sec-25

7. Decision making for every possibility will be done by Mr X , Managing Director of Fast forward palm industry. But, every partner has some right to act on behalf of the firm. He has express and implied authority.

8. Each partner has a chance to write down, the name of his authorized nominee (Wife, children, or third party). If anyone become disabling or incase of death, the authorized

people will get the amount of the invested money. As well as this contract will be broken down. The third party will not be treated as a partner.

9. If anyone become accuse of doing a bad situation, he must be punished based on the intensity of the impact. If it is high, he should be expelled from the business and this contract will be isolated.

2. Legal structure of the proposed company:

The managing directors of the company select a structure about the power of selected employee. The structure will follow a chain of commend rules. Here manager will get the supreme power of the company. But every important issue will submit to the board of director. Where Managing director, departmental head and also advisor must have the right to give the opinion.

TECHNICAL ASPECT

1. 1. Project Land & Location:

We try to form a Partnership business, which create a renowned brand. And for proper distribution of our product we will made seven factories in different location of our country. These are:

Types of expenses Taka

Leasing 2,00,00,000

Land preparation cost 10,00,000

Palm plants import and plantation cost 15,00,000

Total 2,26,00,000

Figure-5: Land Cost per Project

2.Buildings:

For this business we need building or factory. That’s why in every project we should make 2 or 3 stories building. What we used for store room, production room, managers room, guest room, garage etc.

Tk: “000”

Sub Project Area Description Total Cost (Tk.)

Project 1 3 Storey 7,000

Project 2 3 Storey 4,000

Total 24,050

Figure-6: Building Cost per Project

3.Machinery & Equipment:

For this project we need foreign and local machinery. We will purchase our foreign machinery from Italy. The machinery purchase from Italy, are:

Tk: “000”

Machine Name Cost Per Machine Quantity Total Cost

Vessel 50000 4 200000

Sterilizer 60000 3 180000

Stripper 55000 3 165000

Deacidification 30000 4 120000

Alkali Refiner 70000 1 70000

Alkali Nevtralizer 50000 1 50000

Earth bleacher 20000 2 40000

Refiner vessel –1 120000 1 120000

Refiner vessel-2 120000 1 120000

Total 1065000

Figure-7: Machinery & Equipment Cost

Types of expenses Taka

Purchasing machines 30,000,000

Setting up machines 500,000

Purchasing delivery vans 1,500,000

Total 32,000,000

The total imported duty is (32000000*9%) 2880000 Tk. We also purchase some local machinery which takes more then 50,000 Tk. The amount of IDCP is 10,40,000 Tk. The total amount ofMachinery & Equipment is 35920000 Tk.

Marketing Analysis

1. Justification of setting up the business:

We are living in the world of business. Business is the root of the economy activity and everything is encompassing it. Thinking about a business is like leading an adventure. However, we are going to take an adventure with palm oil. Every year we have to import huge quality of edible oil in which more then 40% is palm oil .Every year Bangladeshi government imports 1.2 million tones of edible oil costing gap proximately 5000croretk.Despite the convenient weather support and huge potentiality to grow palm tree here. We import because we lack initiative to grow palm tree locally. Considering the need, we are planning to grow palm tree, manufacture palm oil, kernel oil and market them.

2. PEST Analysis

Political Analysis:

The political situation of Bangladesh is not enough good. The rules and regulations are always changed by changing a political leader. Moreover, Hortal, hindrance, procession and meeting in the road are also a big threat for the organization. As a result, it will very tough for the organization to predict the actual yearly revenue. But it is a matter of hope that, now a days political restless situation is decreasing day by day. And also government takes some initiative against Hortal, procession and meeting.

Economical Analysis:

The economical situation of Bangladesh is not so good. There is huge economical discrimination. In the upper class people of city area, the per capita income is very much high where our average per capita income is below 700$. In the rural area people have a very few knowledge about technology. Moreover their income level is very much low. And that is why they are our main target consumer. For those people we offer economy size of oil pack. And we first invent the brand low price palm oil for the rural people.

Social Analysis:

Bangladeshi people are very much voluptuous. So Palm Oil is not a segmented product in Bangladesh. All classes of people have the ability to purchase on our product. So we segmented our product price by depending on consumer expenditure level. As a result we think that consumer will like our product. Again in winter season the sales revenue of palm oil is very much high. Because, people always preference to purchase palm oil for removing the thirstiness in this season..

Technological Analysis:

Bangladesh is a developing country. So it is very tough for us to get all kind of technological support from Bangladesh. Moreover there have some shortage of skilled engineer for solving the technical problem. As a result we are bound to purchase our machinery from abroad.

4.Demand & Supply Analysis of palm oil industry:

The demand of Palm oil in Rural area is very much high then the people of urban area. Urban areas people are very much concern about brand. 33% rural people can not aware about a brand Cooking oil where more then 92% people in urban areas people are very much concern about the brand of a cooking oil . So we can say that, in urban area we have Fixed 8% and in rural area 33% consumer can divert into our product, if we can full fill their demand easily. Without these in many area of Bangladesh people can not purchase an Soybeans because of the high price. So decided that we will provide a economy price for the people of rural area.

Area/Location

Cooking oil Brand Market Share

Natural

Meizan

Pure

Others

Urban Area 56% 24% 12% 8%

Rural Area 40% 22% 5% 33%

Figure-10: Market Share of Different Brand

5.Detail Information on Local Supply:

In Bangladesh the raw materials of Palm Oil is not available. And the supplier company also ensures the quality of the raw material. The dealer of sub contract organization also ensured the quality of the product. But the availability of machinery of Palm Oil is not available in Bangladesh. So for setting up an Palm Oil factory it is necessary to purchase machinery from abroad.

Supply Gap:

In the below we mentioned about the demand, supply and supply gap palm oil in Bangladesh. Last year the demand of cooking oil was 31,025,000 litters, where the supply was only 17,680,000 litters. As a result were 13345. And the gap is increasing day by day.

Ton: “000”

Year Demand Supply Supply Gap

2007 – 2008 202800 90000 112800

2008 – 2009 1500000 520000 980000

2009 – 2010 36498 20060 16438

2010 – 2011 42454 22178 20276

Figure-11: Supply Gap of palm oil

Present & projected market demand of the project ‘Fast forward palm industries :

Litter: “000”

Year Demand2007 – 2008 25550

2008 – 2009 31025

2009 – 2010 36498

2010 – 2011 42454

Figure-12: Present & projected market demand

Present & projected Supply of the project ‘Fast forward company:

Litter: “000”

Year Supply2007 – 2008 15300

2008 – 2009 17680

2009 – 2010 20060

2010 – 2011 22178

Figure-13: Present & projected Supply

Present & projected Supply Gap of the project ‘Fast forward palm industries

Litter: “000”

Year Demand Supply Supply Gap Our Contribution

Real Gap

2007– 2008 25550 15300 10250 —- 10250

2008 – 2009 31025 17680 13345 —- 13345

2009 – 2010 36498 20060 16438 —- 16438

2010– 2011 42454 22178 20276 15000 5276

Figure-14: Present & projected Supply Gap

1. 4. Who is the target customer of Palm oil ?

We segment our market by depending on income level. These are:

1. Rural people and2. Urban people

And in rural and urban area our main consumer will be the Middle & lower class people . Because we are trying to get there Cheaply cooking oil . In our research we found that the lower class people are very much crazy about our product . So it is our confidant that Middle & lower classes people take our product as there first preference. So our target area is the Rural area in Bangladesh.

1. 5. Who are competitions for us?

In the local market, there are 5 brands of palm oil in consumer packs namely, Natural, Meizan, Pure, Family and Dada Super. Because of increasing demand, two more brands will appear in the market in coming months and hence there would be seven brands of consumer packs of palm oil by the year end.

.

1. Pricing Strategy: (TK.)

1 kg 2kg 5kg 10kg 1000kg 2000kg 5000kgPalm Oil 70tk 140tk 335tk 650tk

Kernel Oil 45000 88,000 220,000

Figure-15: Price List for Different Item

Network Technique

In our project we have a lot of small work. And some works dependent works and some are independent works. Our project work is given below by network diagram.

Task Time (days)

A1- making lease document 10

B1- making cultivating 30

B2- field cultivating 30

B3- machinery import 30

B4- building Construction 60

C1- seeding & watering 30

D1- crops cultivation 1100

E1- oil refining 30

E2- oil packaging 10

Financial Analysi

Fixed Cost of the Business:

Item Local Cost Foreign Cost TotalLand(7 project: Table 4) 22600000 22600000

Building 3000000 3000000

Imported Machinery — 31,500,000 31,500,000

Imported Duty 2880000 2880000

Installation Fee 500,000 500,000

IDCP 1040000 1040000

Local Machinery 50000 50000

Furniture 50000 50000

Computer 50000 50000

Office Equipment 20000 20000

Safety Equipment 15000 15000

Deposit to PDB 40000 40000

Pre-operating Expense 15000 15000

Consultancy Fee (1% of the Project Cost)

— 617600

Initial Investment of the Business: 62377600

Figure-17: Fixed Cost of the Business

Deposit to PDB:

Tk: “000”

Sector CostGas 6

Water 2

Electricity 14

Telephone 12

Internet Line 6

Total: 40

Figure-18: Cost of PDB

Financial Plan for Business:

Tk: “000”

Item

Bank’s Investment Client’s Equity TotalAmount % Amount % Amount %

Land 22600000 100 22600000 100

Building 2100000 70 900000 30 3000000 100

Imported Machinery 28736000 80 7184000 20 35920000 100

Local Machinery 25000 50 25000 50 50000 100

Others 807600 100 807600 100

Total 30861000 31516600 62377600

Figure-19: Financial Plan for Business

1. 3. Means of Finance:

Bank’s Investment - 30861000 (49.47%)

Client’s Equity - 31516600 (50.53%)

Total: 62377600 (100%)

1. 4. Debt Equity Ratio:

Debt-Equity Ratio = Bank’s Investment / Client’s Equity = 49.47: 50.53

1. 5. Syndicate Finance:

AB Bank is going to participate 55% of total loan amount. It hires UCBL and Duch Bangla Bank to for a syndicate for sanctioning the loan. The Co-arranger banks will partcipate the loan amount by using ratio 6:4.

AB BankDBBLUCBL

Figure-20: Lead arranger & Co-arranger

Syndicate Finance in Percentage:

Tk: “000”

Bank Name% in Syndicate

Finance Amount

AB Bank 55% 16973550

UCBL 27% 10184130

Duch Bangla Bank 18% 6789420

Total 100% 30861000

Figure-21: Bank Investment in Syndicate

5.Cost of Goods Sold:

Tk: “000”

Item TotalRaw material cost 1500000

Wages 8000000

Depreciation 21,721

Total 89,218

Figure-22: Cost of Goods Sold

6. Sales Estimate:

Palm oil 72000Kgs. Kernel oil 20000kgs.

Tk: “000”Items Production Unit

Palm oil 144000Kgs 75 10800000Kernel oil 40000kgs 55 2200000

Total 13000000

Figure-23: Revenue from Sales

1. 7. Raw Material Cost:

Palm plants import and plantation cost 1500000

Figure-24: Total Cost of Raw Materials

Subcontract:

Tk: “000”

Sl. No. Subcontract Total Cost

1 Palm oil box 9,120

2 Packet of palm oil 2,250

3 Sticker or paper cover 3,795

4 Carton for packet 5,500

5 Dresses of employee 360

Total: 21,025

Figure-25: Purchasing Price from Subcontract

1. 8. Salaries:

Description Persons Salary (individual)

Salary (annually)

Managing Director 1 35000 4,20,000

Manager 5 25000 15,00,000

Operator10 12000 14,40,000

Driver 3 8000 2,88,000

Lower level employee 5 5000 3,00,000

Total26,340,000

Figure-27: Wages & Salaries Expenses

9.Depreciation Schedule:

Tk: “000”

Item Cost % TotalLand 77,075 — —

Building 24,050 5% 1,202

Machinery 108,012 8% 8,641

Vehicle 77,000 15% 11,550

Furniture 2,200 12% 264

Computer 320 20% 64

Total 21,721

Figure-28: Depreciation from Fixed Asset

9. Administrative Expenses:

Tk: “000”

Item AmountWages 21025

Salary 48732

Bill of PDB 4500

Others 500

Total 74757

Figure-29: Administrative Expenses

10.Financial Expense:

Tk: “000”

Item Amount % of rate Interest

Bank loan 163,340 12% 19,600

11.Earning Forecast:

Tk: “000”

Description Amount

Revenue earning 13000000

(-) C.O.G.S 1500000

Gross Profit 116,357

(-) Adm. Expense 74,757

Operating Profit 41,600

(-) Financial Expense 19,600

Net Profit Before Tax 22,000

Tax Holiday 00.00

Net Profit After Tax 22,000

Figure-30: Net Profit Analysis

Social Cost Benefit Analysis

1. 1. Social Cost: Tk: “000”

Items Private Sector Economic Sector

Imported Machinery 92,412 92,412

Local Machinery 15,600 15,600

Vehicles 77,000 77,000

Furniture 2,200 2,200

Computer 9,800 9,800

Office Equipment 700 700

Safety Equipment 350 350

Palm oil cost 41,157 90,150

Subcontract 21,025 21,025

Salary and Wages 26,340 25,000

Others 550 550

Total 260,794 309,787

Figure-31: Social Cost Analysis

1. 2. Social Benefit: Tk: “000”

Items Private Sector Economic Sector

Foreign Currency 92,412 92,412

Backward Linkage 127,225 21,025

Contribution to GDP ——- 26,340

Local Demand 205,575 205,575

Total 425,212 345,352

Figure-32: Social Benefit Analysis

1. 3. Net Benefit: Tk. “000”

Private Sector : 425,212 – 260,794 = 164,418

Economic Sector : 345,352 – 309,787 = 35,565

Plan Palm Oil

Documents

Transcript of Plan Palm Oil