Executive Summary
Maize being the highest yielding cereal crop in the world, is of significant importance for countries like Pakistan, where rapidly increasing population has already out stripped the available food supplies. In Pakistan maize is third important cereal after wheat and rice. Maize accounts for 4.8% of the total cropped area and 3.5% of the value of agricultural output. It is planted on an estimated area of 0.9 million hectare with an annual production of 1.3 million tonnes. The bulk (97%) of the total production come from two major provinces, NWFP, accounting for 57% of the total area and 68% of total production. Punjab contribute 38% acreage with 30% of total maize grain production. Very little maize 2-3% is produced in the province of Sindh and Balochistan. Though not included in Pakistan official statistics maize is an important crop of AJK with about 0.122 million hectare of maize being planted during kharif. One of the important uses of Maize is in local starch industry. Maize contains high proportions of starch (60-70%) and provides a good source of raw material. Starch is used in variety of industries such as textile, paper, poultry feed, wood etc. The current starch production facilities are not fulfilling the local demand because there has been no major investment in this area. The last maize processing plant was erected in 1990 by Faran Maize Products, since then there is no further expansion. Existing suppliers are adding capacity to their plants but that is not enough. The supply side is weak with the user industries like textile and paper are continuously expanding. This provides the rationale to our project of installing a maize processing plant. The structure of the venture is a private limited company which will be later changed to public limited company on completion of project and it is a new venture.
The sponsors don’t have any previous experience but are young and energetic. The sponsors (total 3) are good friends and their skills will provide a synergy effect to the project. The proposed site of the plant is Pakpattan, which is the main maize growing are of Pakistan. The plant will partially imported and partially locally fabricated. The capacity of the plant will be 18000 tons per annum (50 tons/day). The capacity can be increased over a period of time. The equity structure of the company is 67:33, with 67% debt. The 33% equity will be contributed by the sponsors and public equally. The main products of our plant will be starch, protein, oil, fiber and ash. The technical expertise to erect the plant will be provided by our foreign supplier. The plant is targeted to cater the local market but later operations can also be enhanced to exports. The targeted countries will be Saudi Arabia, Yemen, UAE and other countries in the region.
Chapter
Project Summary
Name of the Venture: Status: Sponsors: AFAQ Maize Products (Pvt) Limited New Venture Arshad Iqbal Bhatti Farhan Akhtar Khan Khawaja Abdul Qadir Organizational Structure: Nature of Industry: Proposed Site: Private Limited Company Starch and Allied Products. 11th km. from Pakpattan, Sahiwal Road, Pakpattan. Registered Office: 84, 1st floor, Mall Plaza Mall Road, Multan. Financial Structure: Equity 33% Mode of Financing: Debt 67%
Consortium Financing (lead by Faisal Bank) Faisal Bank Limited Habib Bank Limited
United Bank Limited Union Bank Limited Muslim Commercial Bank Limited. Cost of Project: Fixed Cost: Working Capital: Total Amount of Loan: Long Term: Short Term: Markup: Period of Loan: 200,000,000 186,279,150 10,574,960 167,000,000 Rs 134,000,000 Rs 33,000,000 (Bridge Financing) 14% 11 Years, including one year’s grace period.
Sponsors
Sponsor 1:
Name: Age: Relationship with other sponsors: Educational Qualification: Professional Experience: Khawaja Abdul Qadir 22 Years Friends MBA (BZU Multan) Nil
Particulars of Interest Held
Immovable Assets Cotton Spinning Unit Market Value :Rs. 10,000,000 Residential House Market Value: 5,000,000 Agricultural Land Market Value:8,000,000 Movable Asset: Business and Financial Asset: Borrowings: Guarantees Given: Other Liabilities & Claims: Cash : Rs.2,000,000 None None None None
Sponsor 2
Name: Age: Relationship with other sponsors: Educational Qualification: Professional Experience: Farhan Akhtar Khan 22 Years Friends MBA (BZU Multan) Nil
Particulars of Interest Held
Immovable Assets Residential House
Market Value: 6,000,000 Residential Plot Market Value: 2,500,000 Agricultural Land Market Value:12,000,000 Movable Asset: Business and Financial Asset: Borrowings: Guarantees Given: Other Liabilities & Claims: Cash: Rs.1,500,000 None None None None
Sponsor 3
Name: Age: Relationship with other sponsors: Educational Qualification: Professional Experience: Arshad Iqbal Bhatti 22 Years Friends MBA (BZU Multan) Nil
Particulars of Interest Held
Immovable Assets Residential House Market Value: 3,000,000 Share in Sugar Mill 18,000,000 Movable Asset: Business and Financial Asset: Borrowings: Guarantees Given: Other Liabilities & Claims: Cash: Rs. 900,000 None None None None
Chapter
INDUSTRY ANALYSIS
The maize based industry in Pakistan has been set-up rapidly during 19641974 and the demand and consuming industries of Starch being met by this section. The production of maize in Pakistan in 1974-1975 was 747000 tons, and the last starch based unit since 1974 was Faran Maize Ltd erected in 1990, since then no single unit is erected. But the production of raw maize has been alarmingly increased. Later on some of the old erected units extended their capacity and started manufacturing of value-added items like Glucose, Fructose and Consumer items. They also converted their they also converted their starch production onto value added items. Side by side the consuming industry also developed like food, biscuits, papers,, boards, confectionary, liquid glucose, fructose, jute, laundry, gluing, packaging, beverages, sweets, and various others. The existing installed capacity of the consuming industries has been developed to a considerable extent and the present capacity is not capable to supply starch to rapidly growing industries. The largest and the biggest consuming industries is textile industry. In 1974-1975 the textile units organized (having spinning \& weaving) were about 125, but it has been developed due to bumper cotton production which exceeds 100,00,000 bales (Target 1990-1191) and for the factual position the number of the textile units reached at 337 (1986-1990). New Shuttle less looms /Air Jet are installed besides locally fabricated semi-automatic power looms.
Currently in 2000-2001, there are accumulated 357 units with 8570000 spindles and 10,000 looms. Table 1 is showing the total trend in the textile sector for the last ten years (90-91 to 0001):
The table presented above showing the dynamic growth of textile sector and production of yarn 1291.3 mn kg as compare to 1041.2 mn kg.(90-91) mn cloth 358.9 sq meters as compare to 292.8 sq meters. At present there are 8570,000 spindles and shuttle less looms /air Jet looms. Beside these modern looms, conventional looms are also operating in an unorganized sector. But most of them are being converted or replaced with the new modern looms. The government has allowed incentives for installation local and imported looms. The cotton cloth produced in 2000-2001 exceeds 358.9 meters. The local consumption of yarn is about 60% and similar 60% is consumed in Pakistan.
This the fact that 260 kg of Starch is consumed in one spindle or 11 gram of Starch id needed for one meter of cloth. The textile experts assess the consumption of Starch at 260 kg per spindle and 360 kg per loom in a year. In Textile Industry Starch is utilized both at the timer of warping as well as calendaring. The consumption of Starch in this phase of warping on average reaches 2½ % is processed. The same (2½ %) of starch consumption applies at the same time of calendaring the weaved cloth.
Total Production and Utilization of Maize for industrial and other purposes in Pakistan
Maize is one of the important agricultural crops of Pakistan. As a short duration it can substantially contribute to the agricultural income. More over it clears the land in time to permit the sowing of wheat in same fields. Thus enabling to avoid under utilization of land. The area, production and yield per hector of maize is presented in Table –I II III
Table I
The above table is showing the dynamic trend in maize sector. The major factor behind the massive increase of the maize crop is government active participation in the contact maize farming program. Now a days maize crop is available twice a year.
Analysis of Current Maize-Starch Based Units
Competition is very important in any industry for positive growth. Unluckily in our country overall industrial structure is relatively smaller the other developed and developing countries like India, China, Turkey, Taiwan, Korea, USA, UK and Japan etc. Major competition is our country lies in Textile sector. Currently government is focusing upon industrial development that we can say
would lead to positive factor for economic growth for Pakistan. Maize Starch Based industry as told earlier is not developing at a rate by which total industry demand is increasing in both food and non food industries. The current structure of Maize Based Industry in Pakistan with complete details is given below:
S.No
Name
Rafhan Maize Products Faisalabad Fauji Corn Complex Noshera Peshawar Sethi Corn Complex Rawwali Swat Corn Products Shah Kot Mardan Faran Maize Products Manga Mandi, Lahore
Annual Corn Gluten Starch Cake Oil Milling Feed Capacity Capacity Capacity Capacity Capacity Capacity 227500 70000 9555 15600 2925 2925
1.
2.
35000
14000
3395
5400
800
800
3.
35000
12250
2800
3850
750
700
4.
17500
17500
1200
2100
300
300
5.
17500
7850
1313
2450
385
370
332500 121600 18263 TOTAL Source: Federal Bureau of Statistics Pakistan & Survey of Director Industries Punjab (1999) Note: Capacities are shown in tons per annum.
2940
5160
5095
Comparing the installed capacities of the plants mentioned above it important to note that installed capacity of each plant in each product category vary in numbers. At Afaq Maize the directors main concern is two fulfill the local
demand of market. Hence keeping in view the current trend we would fully extract the starch percentage from the corn maize that is almost 60%.
Consumption of Starch and By Products Supply/Demand Position and Supply Gap and Target Market
There are various industries in Pakistan that consume Starch and other Maize based products. As the described in the previous pages of feasibility that there are multiple use of starch and its products and from the last decade there demand is rapidly is increasing due to major change in food and non-food industries. Another key imperative is the development of spring crop (MarchJune). This major shift has given boost to Maize production in Pakistan. Also the contract maize-farming program adopted by various corn industries has helped a lot in meeting the growing demand of starch and allied products from maize. But still there is a huge gap lying in the future, for these products. All the 5 plants mentioned before along with producing starch, also converted there capacity of starch into value-added items like powder glucose, glucose fructose and other consumer items and after 1974 only single unit named as Faran Maize Products installed in 1989-90. Since then in 2001-2002, no single unit is installed. Although government is putting emphasize to explore this sector as well. Recently SMEDA and Ministry of Trade have called meetings to attract the investors to invest in these project lines. The main consuming industries are cotton textiles (yarn size warping and cloth calendaring), Polyester textiles, Jute textiles, Paper board, Packing paper, Food, Feed, Glucose, Fructose, Biscuit, Confectionary, Chinese Food, Custard, Jelly, Gluing.
The textile industry has been the biggest consumer of starch, as at present 357 textile spinning units are established, also hundreds of sick units are being revived by the government, and the planning is being done to further increase and enhance this sector due to global increase in the competition and quality cotton textile products’ demand in the world. It is projected that up to 2005 almost 500 units would start operation. So there would be high demand for starch and allied products of maize. In textile manufacturing, as mentioned earlier that starch is used at the time of warping and sizing of yarn and cloth, thus why the increase in yarn and cloth production is directly proportional to the utilization pf starch in the industry. Currently, 1291.3 mn Kg yarn and 358.9 mn square meter cloth is being produced. Talking about the current number of spindles and looms installed: 8,570,000 spindles and 10, 000 looms are installed. Comparing these figures with the standard utilization of starch i.e. 2kg per spindle a year and 350 kg for a loom. The current demand of starch is mentioned below. 8,570,000 x 260 10,000 x 350 = Total = 2,228,200,000 kg 3,500,000 kg = 2,231,700,000 kg
Export of Starch Glucose
The maize based units have stopped the export of Starch and glucose to the Asian countries for which Pakistan has a potential demand and indicated by the Federal Bureau of Statistics survey1999, and the expected demand of Starch is estimated at 150000 Ton/year with 8% growth rate. Like Textile Sector the food and allied consuming industrial capacity has also been enhanced 4 times more then that was in 1974. Biscuit, Confectionary, Feed, Chinese Food, Glucose, Fructose, manufacturing units have also been rapidly established as government is emphasizing to reshape and restructure the
industrial sector. Worldwide there has been drastic increased in the global demand of maize and its allied products which could be healthy sign. Keeping in view the local market requirement starch maize products, we have decided to only fulfill our local demand only. The decision for launching the exports can possibly taken in the next few years.
PROJECTED DEMAND
The present and future demand of maize starch and allied based industry at annual growth rate basis is presented below in the Table:
Textile Industry @ Years 9% Jute Paper & Dextrose Biscuit & @ 8% Fructose 5% Confectionary Industry @ Safety Matches Industry @ 7% Cosmetics Industry @ 7% Color Carriers, Wood Metal drawings & Coating @ 7% explosive @ 8% Chinese food, Soup & fast food @ 8% Laundry Cleaning & Dhoobies @ 8%
Industry@ 5% Board @ 7% Powder @ 5%
2000- 2001 131226 2001-2002 2002-2003 2003-2004 2004-2005 143036 155909 169941 185236
655 688 722 758 792
33280 35607 38099 40766 43620
17150 18008 18908 19853 20846
30988 33467 36144 39035 42158
142720 149856 157349 165216 173479
5731 6132 6561 7020 7511
955 1022 1093 1170 1252
955 1022 1093 1170 1252
10329 11135 12047 13011 14052
6198 6694 7230 7808 8433
10329 11155 12047 13011 14051
Source: Economic Review of Pakistan & Federal Bureau of Statistics of Pakistan
Note: ‘@’ shows the average expected growth rate of the industry
Existing and Projected Demand of Gluten and Corn Oil
Year 2000-2001 Projected Demand 2001-2002 2002-2003 2003-2004 2004-2005 76658 85857 96160 107700 9876 11061 12388 13875 Gluten 68445 Corn Oil 8818
INSTALLED CAPACITY MAIZE-STARCH BASED IN PAKISTAN
S.No 1. 2. 3. 4. Name Rafhan Maize Products Faisalabad Fauji Corn Complex Noshera Peshawar Sethi Corn Complex Rawwali Swat Corn Products Shah Kot Mardan Faran Maize Products Manga Mandi, Lahore Total Annual Milling Capacity 227500 35000 35000 17500 Starch Capacity 70000 14000 12250 17500 Gluten Capacity 9555 3395 2800 1200 Corn Feed Capacity 15600 5400 3850 2100 Cake Capacity 2925 800 750 300 Oil Capacity 2925 800 700 300
5.
17500 332500
7850 121600
1313 18263
2450 2940
385 5160
370 5095
Source: Federal Bureau of Statistics Pakistan & Survey of Director Industries Punjab (1999)
Note: Capacities are mentioned in tones per annum
Present Existing Demand of Starch & Starch Based Consuming Industries and Projected Demand:
S.No Name Demand 200-2001 131226 655 33280 17150 30988 142720 5731 955 955 10329 Projected Demand 2004-2005 185236 792 43620 20846 42158 173479 7511 1252 1252 14052
1 2 3 4 5 6 7 8 9 10
Textile Industry Jute Industry Paper & Board Packing Paper Dextrose Powder Biscuit, Confectionary & Others Fructose capacity Safety Match Cosmetics Wood, Metal coating Color Carrier imprinting and surgical, dyes and explosives. Chinese, Food Fast food, soups. Dry cleaning, Dhoobies and Army and others Miscellaneous sanctioned
11 12 13
6198 10329 3500 394016
8433 14051 5000 517682
TO0TAL Note: Capacity in Tons
Demand and Supply Gap
Total demand of starch and maize based products consuming industry (Grinding). Upto 2005 517682 Tons
Export Demand TOTAL
150000 Tons 667682 Tons
Total supply position (installed Capacity of maize based products.) 332500 Tons
Demand and supply gap of grinding Capacity of maize items 335182Tons
Economic / Market justification (Viability)
The marketing of the products are days to day becoming easier due to heavy demand of various consuming industries and on account of general growth of the consumption of industry the existing units of maize based are operating at their maximum capacity and most of them doubled & tripled their capacity from the date of operation. Most of these have also their own capacity for value added items like glucose, fructose, and consumer goods. According to the results of t\a private survey it has been inferred that after the boom of erection of maize manufacturing plant in 1974, the latest unit was erected in 1990. Since then no single unit has been erected although hundred of industrial units have been established, like spinning mills, biscuits, bakery, pharmaceutical, feed mills, paper and board. Keeping in view the above summary of demand and supply situation based on board of investment Islamabad the installed capacity is much below than required demand. There is a vast scope of starch, glucose to Asian market, hence the project technically, economically and financially feasible from all points of view.
Chapter
Project Engineering
Manufacturing Process
The manufacturing process can be divided into two parts 1. Starch manufacturing Process 2. Oil refining
Starch Manufacturing Process
The Corn refining is based on a manufacturing process called Wet Milling. There are four principal steps in this process: Steeping, grinding, separation, and product recovery.
Steeping
Corn, either form storage or as received is cleaned and transferred to wooden tanks. There an aqueous solution called steep water is pumped in a counter current manner through the system. During this treatment the kernels imbibe water and swell to their maximum size. The steeping solution removes
soluble components from the kernels and loosens the starch from the protein matrix in which it is embedded. The steep water is then drawn off.
Grinding
The steeped corn is conveyed to germination mills where the swollen kernels are broken and disrupted to free the germ. The germ fraction containing corn oil is removed by a germ separator or hydro-clones and is washed free of starch.
Separation & Product Recovery:
A second grinding step frees the starch from the hull and fiber. A system of screens, filters and washing devices separates the hull and fiber from the starch and gluten. Finally the starch and gluten pass through centrifuge in which the lighter gluten fraction is removed. The underflow form the centrifuge is dilute slurry of cornstarch. This process steam, after additional washing and dewatering, provides starch for the basis carbohydrate product: starch corn syrup and dextrose. The gem fraction separated in the first separation step is further processed to obtain corn oil. The steep water and hulls, fiber and gluten are combined to make animal feeds.
Oil Refining Section:
Extracted Crude Oil is not in large amount, so Batch Process as oil refining only in the daytime will be recommendable. This process consists of the following sections: 1. DAECIDIFYING 2. BLEACHING 3. DEODORIZING
Daecidifying
In this section, Free Acid in Crude Oil coming from Extraction Process is removed. Phosphoric Acid is added to Crude Oil and mixed for Gum Conditioning and then, diluted Caustic Soda (NaOH) is added and Soap Stock is made by reaction with Free Fatty Acid in the oil. After that, Soap Stock and oil are separated by Centrifugal Separator. This separated oil is pumped to Bleaching Section as Refined Crude Oil, after cleaning by hot water.
Bleaching
After Refined Crude Oil is separated, dried, and mixed with Activated Clay, it is fed to Bleacher, where Bleaching is performed under vacuum and high temperature condition. After that, Mixture is pumped to Filter Press where Spent Clay is removed from oil. Filtered Oil is pumped to Deodorizing Section
Deodorizing
A little bit of odorous component contained in Bleached Crude Oil is removed under the high temperature and high vacuum conditions. After cooling, this treated oil is filtrated by Polishing Filter and is pumped to Storage Tank.
Layout
The sponsors are unable to give the final layout of the plant due to the nature of agreement with the foreign suppliers. The agreement with the suppliers has been finalized on following bases: • Supply of machinery • Supply of blue prints for the erection of the plant • Supervision of the erection process
• Supply of drawings for the fabrication of local machinery. Until unless sponsors get the blue prints for the plant the layout can’t be finalized, but the plant will have following major facilities.
Land:
The total area available for the construction of the plant is 25 acres.
Soling
The project includes a soling of 700 meters from the main Sahiwal road till the site.
Staff Colony
Keeping in view the location of plant and continuous nature of the process, staff colony will have to be constructed for both management and non management staff.
Tube Well
The plant will be using the wet milling process. As the name shows, the process requires huge quantities of water. For this purpose a tube well will be installed to provide the water needed for the plant.
Time office
To keep the track of the attendance of the management and nonmanagement staff, time office will be built. The time office will be equipped with automatic time card punching machines.
Security office and Check posts
There will a main security office at the entrance of the plant and seven check posts along the boundary wall of the plant.
Guest room: (Waiting Room)
This will be made close to the main entrance for the guests.
Canteen
To provide the messing facility to the resident staff and the shift workers canteen will be made.
Laboratory
To control the quality of incoming raw material and of the final product, quality control laboratory will be made.
Machine Shop
To handle minor breakdowns in the plant and to do routine maintenance of the plant, a machine shop will be made.
Office Rooms
The office rooms will be made in two blocks. One Administration office will be made for all the staff other than production. The second block will consist of production managers and will be adjacent to plant.
Warehouses
To store the various raw materials and the output warehouses will be made. This also includes storage tank for the oil.
Water tank
To streamline the supply of water to the plant and staff colony, overhead water tanks will be made.
Technology Selected
Three international suppliers showed interest to supply the machinery required for the project. They are following:
1. Pennsylvania Crusher Corporation
600 Abbott Drive PO Box 100 Broomall, PA 19008-0100 USA
2. Stokes
1500 Grundys Lane Bristol, PA 19007-1521 USA
3. Waukesha Cherry Burrell
611 Sugar Creek Rd. Delavan, WI 53115-1337 USA All of the above suppliers have used different technology in their plants. The details are provided.
Technology Selected
After getting advice from experts, sponsors have selected the Granulator 43-6, which will be provided by the Waukesha Cherry Burrell.
The Contract
The supplier has agreed to provide machinery under following conditions: 1. Supplier will provide only those components, which can’t be manufactured locally. 2. Supplier will provide the blue prints and guidance required for the erection of plant. 3. Supplier will train the local staff to operate the plant. 4. Supplier will provide the specifications of the equipment to be manufactured locally. 5. Separate cost will be charged for the items 2,3 and 4.
Details of the Plant:
The detail of the plant equipment is given under.
List of Imported Machinery
1. No. 1 Bend Screen
1. Type 2. Quality of Material 3. Quantity
2. No. 1 Mill Degerunator
1 pass bend screen SUS 304 1 Set Hammer Mill Type 5m3 (2.5 tons material) 7.5 KW SUS 304 1 Set Double Screen Press SUS 304 1 Set Hydro-cyclone Separator 15m3/hr PVC 1 Set 1 Pass Bend Screen SUS 304 1 Set Hammer Mill Type 5M3
1. 2. 3. 4. 5.
Type Capacity Motor Quality of Material Quantity
3. Bend Screen for Germ.
1. Type 2. Quality of material 3. Quantity
4. No. 1 Feed Separator
1. Type 2. Capacity 3. Quality of material 4. Quantity
5. No. 2 Band Screen
1. Type 2. Quality of material 3. Quantity
6. No. 2 Mill
1. Type 2. Capacity
3. Motor 4. Quality of Material 5. Quantity
7. No. 2 Feed Separator
3.75 KW SUS 304 1 Set Hydro Cyclone Separator 1.5m3/hr PVC 1 Set 1 Pass Bend Screen SUS 304 1 Set Hammer Mill Type 5m3 (2.5 tons material) 3.75 KW SUS 304 1 Set 5 Pass Bend Screen 11 KW (5 Sets) SUS 304 1 Set Continuous Self CleaningType 30m3 (at fresh water) 0.4 KW SUS 304 5 Set Washing Type Nozzle Centrifuge SSC-355S
1. 2. 3. 4.
Type Capacity Quality of Material Quantity
8. No. 3 Bend Screen
1. Type 2. Quality of Material 3. Quantity
9. Fine Mill
1. 2. 3. 4. 5. 1. 2. 3. 4. 1. 2. 3. 4. 5.
Type Capacity Motor Quality of Material Quantity Type Motor (Pump) Quality of Material Quantity Type Capacity Motor Quality of Material Quantity
10. Fine Bend Screen
11. Auto-brush Strainer for Starch Separator
12. No. 1 Starch Separator
1. Type 2. Model No.
3. 4. 5. 6. 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. 6.
Capacity Motor Quality of Material Quantity Type Model No. Capacity Motor Quality of Material Quantity Type Model No. Capacity Motor Quality of Material Quantity Type Model No. Capacity Motor Quality of Material Quantity Type Model No. Capacity Motor Quality of Material Quantity
15m3/hr 18.5 KW SUS 431, SUS 304 1 Set Washing Type Nozzle Centrifuge SSC-355.S 15m3/hr 18.5 KW SUS 431, SUS 304 1 Set Washing Type Nozzle Centrifuge SSC-355-S 15m3/hr 18.5 KW SUS 431, SUS 304 1 Set Concentrating Type Nozzle Centrifuge SSC-355-S 15m3/hr 18.5 KW SUS 431 1 Set Concentrating Type Nozzle Centrifuge SSC-355-S 15m3/hr 18.5 KW SUS 431, SUS 304 1 Set
13. No. 2 Starch Separator
14. No. 3 Starch Separator
15. No. 1 Midlling Separator
16. No. 2 Middling Separator
Local Machinery:
To reduce the cost of the project, locally fabricated equipment is also used. For this purpose three local suppliers have been identified.
1. The Star Mughal Industries Ltd.
G.T. Road Gujranwala.
2. Design Development Fabrication Co. Ltd.
Shaikh Manzil, 20-Shah Rah-e-Quaid-e-Azam, Lahore
3. National Engineering works
Main Sheikhupura Road, Gujranwala. Machinery will be acquired by all of the above suppliers.
Detail of Local Machinery
The specifications of the local machinery are given in the following lines:
1. Materials corn feed conveyor for shifter and steeping tank
1. 2. 3. 4. 5. 1. 2. 3. 4. 5. 1. 2. 3. 4.
Type Capacity Motor Quality of Material Quantity Type Capacity Motor Quality of Material Quantity Type Capacity Motor Quality of material
Bucket Conveyor 5.7 tons/hr 3.75 KW x 4P x 400V SS41 2 Sets 2 Pass Flat Vibrating Screen 8 tons/hr 3.75 KW x 4P x 400V SS41 1 Sets Screw Conveyor 8 tons/hr 3.75 KW x 4P x 400V SS41
2. Shifter
3. Feed Conveyor for Scale Tank
5. Quantity
4. Scale Tank
1 Sets 3m3 SS41 1 Set Hopper & Screw 15m3 3.75 KW x 4P x 400V SS41 1 Set Screw Conveyor 7.5 tons/hr 3.75 KW x 4P x 400V SS41 1 Set Liquid Circulating Steam Heating System 50m2 (25 tons materials) SS304, SUS316 5 Sets SS304 1 Set Screen Strainer SUS304 1 Set 3m3
1. Capacity 2. Quality of material 3. Quantity
5. Screw Feeder
1. 2. 3. 4. 5. 1. 2. 3. 4. 5.
Type Capacity Motor Quality of material Quantity Type Capacity Motor Quality of Material Quantity
6. Screw Conveyor for Steep Tank
7. Steep Tank
1. Type 2. Capacity 3. Quality of Material 4. Quantity
8. Shuttle for Steeping Maize
1. Quality of Material 2. Quantity
9. Sand Catcher
1. Type 2. Quality of Material 3. Quantity
10. Service Tank for No. 1 Mill
1. Capacity
2. Quality of Material 3. Quantity
11. Receive Tank for No. 1 Mill
SUS304 1 Set 3m3 SUS304 1 Set With Agitator 1m3 SUS304 12 Sets Hydro-cyclone Separator 15m3/hr PVC 2 Sets Double Screw Press 3.75 KW SUS304 1 Set SAITO System Tube Type w/jacket 65-70% (W.B) 10% (W.B) 125-130 Kg/hr 550-600 Kg/hr 5-7 Kg/Cm3 7.5 KW V. Sincs
1. Capacity 2. Quality of Material 3. Quantity 1. 2. 3. 4. 1. 2. 3. 4. 1. 2. 3. 4. Type Capacity Quality of Material Quantity Type Capacity Quality of Material Quantity Type Motor Quality of Material Quantity
12. Receive Tank for Starch Milk and Gluten Liquid
13. Germ Separator
14. Dehydrator for Germ
15. Germ Dryer
1. Type 2. Moisture Contents of Raw Material 3. Moisture Contents of Products 4. Capacity 5. Steam Consumption 6. Steam Pressure 7. Total Electric Power
16. Dehydrator for Feed
1. Type
2. Motor 3. Quality of Material 4. Quantity
17. Dryer for Feed
7.5 KW SS304 1 Set SAITO System Flash Dryer 1KC-650SW (with Heating Furnace) 62% (W.B) 10% (W.B) 350-360 Kg/hr (Products) Kerosene 80-85 Kg/hr 90 KW • Screw type Pre dryer mixing and regulating supplier return cyclone separator blower type mill. • Heat exchange for blower mill 1st and 2nd fan. • 1st and 2nd heating cyclone separator. • 1st and 2nd heating duct. • Screw converter for1st and 2nd heating. • 1st and 2nd heating duct. • Cyclone separator. • 1st and 2nd auxiliary cyclone separator. • Product conveying fan. • Final (products) cyclone separator. • Rotary valve for final cyclone separator. • Conveying duct for products and mixing powder. • Return duct for products and mixing powder. • Sink duct for 2nd fan and conveying
1. Type 2. Model No. 3. Moisture Contents of Raw Material 4. Moisture Contents of Products 5. Capacity 6. Fuel 7. Fuel Consumption 8. Total Electric Power 9. Principal Parts
fan exhaust duct. • Heating exchanger for 2nd fan and conveying fan. 10. Quality of material 11. Quantity
18. Receive Tank for Starch Milk
• Heating furnace. SS41, S35C, S.G.P. 1 Set With Agitator 3m3 SS304 12 Set Automatic Unloader 3.75 KW Cast Iron 1 Set Foaming Separate System Air mixing pipe, pressure tank, separating tank. 15m3/hr 1.5 KW SS304 1 Set With Agitator 5m3 SS304 1 Set Foaming Separate System Air mixing pipe, pressure tank, separating tank.
1. 2. 3. 4.
Type Capacity Quality of Material Quantity
19. Air Compressor
1. Type 2. Motor 3. Quality of material 4. Quantity
20. No. 1 Flotation System
1. Type 2. Principal Machines 3. 4. 5. 6. 1. 2. 3. 4. Capacity Motor Quality of material Quantity Type Capacity Quality of material Quantity
21. Service Tank for Starch Separator
22. No. 2 Flotation System
1. Type 2. Principal Machines
3. 4. 5. 6.
Capacity Motor Quality of Material Quantity
10m3/hr 1.5 KW SS304 1 Set Foaming Separate System Air mixing pipe, pressure tank, separating tank. 10m3/hr 1.5 KW SS304 1 Set Foaming Separate System Air mixing pipe, pressure tank, separating tank. 10m3/hr 1.5 KW SS304 1 Set
23. No. 3 Flotation System
1. Type 2. Principal Machines 3. Capacity 4. Motor 5. Quality of Material 6. Quantity
24. No 4 Flotation System
1. Type 2. Principal Machines 3. 4. 5. 6. Capacity Motor Quality of Material Quantity
25. Gluten Settler. (Local Made) Masonry work concrete pit type with resin finishing 26. Dehydrator for Gluten
1. Type 2. Capacity 3. Quality of Material 4. Quantity
27. Dryer for Gluten
Filter Press (manual) (single and center feed type) 230 1/1 charge FC25 resin coating 1 Set SAITO system low temperature flash dryer IC-650S 13% (W.B)
1. Type 2. Model No. 3. Moisture Contents of Raw
4. 5. 6. 7. 8. 9.
Material Moisture Contents of Raw Products Capacity Steam Consumption Steam Pressure Total Electric Power Principal Parts
70% (W.B) 140/600 Kg/hr 550-600 Kg/hr 1-1.5 Kg/Cm2 & 5-7 Kg/Cm2 50 KW • Mixing & regulating supplier. • Return cyclone separator. • Blower type mill. • Heat exchanger for blower mill. • Heat exchanger for blower mill. • 1st & 2nd fan. • 1st & 2nd heating cyclone separator. • 1st & 2nd heating duct. • Screw conveyor for 1st and 2nd heating cyclone. • Separator. • 1st and 2nd auxiliary cyclone separator. • Product conveying fan. • Final (products) cyclone separator. • Rotary valve for final cyclone separator. • Conveying duct for products and mixing powder. • Sink duct for 2nd fan and conveying fan. • Exhaust duct • Heat exchanger for 2nd fan and conveying fan.
Civil Engineering Works:
Civil engineering of the project will be performed by Aijaz Construction Company, Multan. The company will provide the services at the cost of Rs 425 per square foot. The details of the building are given under. 1. Boundary Wall with gate and internal road. 2. Soling 700 meter 3. Tube well 4. Time Office 5. Security Office and Check Posts 6. Office Rooms 7. Staff Colony 8. Overhead Water tank 9. Laboratory 10. Machine Shop 11. Canteen 12. Warehouses (2) 13. Toilets 14. Guest Room Total area under construction = 45000 square foot Constrution cost per squre foot = Rs425 Total Construction cost = Rs19125000
Chapter
Organizational Structure
The proposed project will have the following structure.
Departments:
In the proposed project following department will comprise the structure. 1. 2. 3. 4. 5. 6. Production Department Engineering Department Commercial Department Quality Assurance Department Human Resource Department Planning and Distribution Department
Production Department:
Production Manager:
This department will be responsible for the actual production process. The department will be headed by a production manager. A number of maize
processing plants already exists in the industry so the manager will be easily available locally.
Shift Incharge:
There will be three shift in charges, one for each shift.
Operators:
The shift in charge will supervise a team of five operators to operate the plant. This number may appear to be very small but our proposed plant will be fully automatic and controlled by PLC (process Logistic Control) software. This will enable the management to reduce the number of operators required. Out of five, two will be in the control room and three will be on the floor.
Engineering Department
This department will be responsible for the maintenance of the plant. It will headed by a Factory engineer.
Shift In Charge
There will be three shifts in charges, one for each shift.
Technicians
There will be two technicians in each shift under the shift in charge.
Commercial Department
This will be headed by an Accounts manager or Controller. This department will handle the accounts of the company. Two Assistant Account managers will assist the controller.
Quality Assurance Department
This department will comprise of one QA manager and two laboratory assistants. The function of this department is crucial in maintaining the quality of the output. It will keep an eye on the process right from the procurement of raw material till the completion of finished goods.
Human Resource Department
This is the main service department, which will enable the production process to continue. At the top in this department will be Human Resource
Manager. This department will oversee the labor related problems and the following • Canteen • Security • Time office • Dispensary • Stationary • Staff Colony
Canteen
To provide messing facility to the staff and labour on plant and in the staff colony canteen will be made. There will two cooks in each shift in the canteen.
Security
To protect the multi million-rupee equipment installed and the raw material and finished products security arrangements are necessary. This will be done through signing a contract with local security company. The security staff will comprise of 10 personnel. One will be security chief and three in each of the three shifts.
Dispensary:
To provide medical treatment in case of any emergency to workers on the plant and in the staff colony dispensary will be made. This will be headed by a MBBS doctor. Three members of paramedical staff, one in each shift will assist the medical officer.
Janitorial Staff:
To provide the janitorial services to the plant, offices and the staff colony janitorial staff will be hired. They will be total 5 in number.
Sales and Distribution Department
This department will perform the functions of procurement, production planning and distribution. Only two managers will work under this department.
Size of Labor Force:
The composition of labor force employed will be following: Production Departments ......................................19 Engineering Departments ....................................10 Commercial Departments....................................3 Quality Assurance Departments ..........................3 Human Resource Departments ............................26 Sales and Distribution Departments ....................2 Factory Manager..................................................1 Total ....................................................................64 Almost all the labor required is skilled except the janitorial staff.
Type of Labor Force:
Job Title Factory Manger Human Resource Manager Quality Assurance Manager Quality Assurance Assistants Factory Engineer Shift In charge Technicians Sales & Distribution Managers Chief Accountant Assistant Accountants Production Manager Shift In charge Operators Doctor Medical Staff Security In charge Shift Security In charge Qualification MBA+ 4 years experience MBA+ 3 years experience Chemical Eng. Diploma holders Mechanical Eng. Diploma holder Semi skilled MBA MBA Finance B Commerce Chemical Eng 5 year exp Diploma Eng. Inter+ Diploma in Computer MBBS Diploma 3 year experience 3 year experience
Security staff Canteen Staff Janitorial Staff
3 year experience Semi skilled Unskilled
Chapter
Location and Site
Site of the Plant
The proposed site of the plant is 11th km from Pakpattan, Sahiwal road Pakpattan. This particular site has been selected due to following reasons:
Raw Material Availability:
This factor has the greatest weight in site selection process. The main maize growing area of Punjab is around Lahore and Faisalabad. Due to the presence of major competitors in Lahore and Faisalabad sponsors have selected the area of Pakpattan to install the plant.
Proximity to the Market:
The plant is near the textile sector located in Faisalabad and Multan region. These industries are our biggest customers. Proximity to them will enable the sponsors to cater the demand in a better way.
Proximity to Distributors:
The proposed site of plant is near the two big industrial cities of Lahore and Faisalabad. Our proximity will enable us to secure the distributors in a better way because all the major distributors have their setups there.
Expansion:
The land purchased for the project is cheap and more than the requirements of the project. The surplus land will be used to expand the plant in future.
Chapter
Estimated Cost of the Project
Detail Land and its development Building & Other Civil Works Plant & equipment Imported Technology Transfer Local Custom Duty & L/C Charges Erection & Installation Furniture & Fixture Pre-operational Expenses Total Fixed Cost Working Capital Total Project Cost 25 Acres of Land @ Rs. 400,000 Per Acre Cost In Rs. 10,000,000 45.000 Sq Feet & Rs. 425 per Sq. 19,125,000 Feet 68,510,200 3,605,800 63,174,000 25% of Plant Cost 4 % of Plant Cost 135,290,000 17,127,550 4,211,600 150,000 375,000 186,279,150 10,574,960 196,854,110
Chapter
Construction Schedule
Events Land Acquisition Establishment of L/C Construction of Building Started Construction of Building Completed Arrival of Imported Machinery Arrival of Local Machinery Machinery Installation Contingencies Trial Run Normal Production Started Schedule Jan 2002 Jan 2002 Jan 2002 April 2002 July 2002 July 2002 Sept. 2002 Oct 2002 Nov 2002 Dec 2002
Chapter
Project Financing
Loan (Debt) Capital (Equity) Rs.134 million Rs.66 million (Sponsors) - 33 million (Sponsors) - 33 million (Public)
1. Loan
Negotiations are made with the Consortium of Banks led by FAYSAL BANK LIMITED. Consortium includes: • Faysal Bank Limited • Habib Bank Limited • United Bank Limited • Union Bank Limited • Muslim Commercial Limited Faysal Bank the leader, promised to lend Rs. 53.6 million as a leader while the remaining 4 bank assured to lend Rs. 20.1 million each, thus the total loan, will be of Rs 134 million on the following terms and conditions: Nature AmountTenor Installments Mark up rate Payment of Mark up Securities Long Term Finance Rs. 134 million 11 years inclusive 1year grace period 20 half yearly installments 14% per annum Half Yearly 1st charge on project, land, building and machinery (Leader)
Loan Amortization Schedule (Rs. 134,000,000 14 % Interest, 20 payment periods) (Semi Annually Payment) END OF YEAR LOAN PAYMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 BEG PRINCIPAL 134,000,000 130,731,331 127,233,855 123,491,556 119,487,296 115,202,737 110,618,260 105,712,869 100,464,101 94,847,919 88,838,604 82,408,637 75,528,573 68,166,904 60,289,918 51,861,543 42,843,182 33,193,536 22,868,414 11,820,534 INTEREST PRINCIPAL END PRINCIPAL 9,380,000 9,151,193 8,906,370 8,644,409 8,364,111 8,064,192 7,743,278 7,399,901 7,032,487 6,639,354 6,218,702 5,768,605 5,287,000 4,771,683 4,220,294 3,630,308 2,999,023 2,323,548 1,600,789 828,135 3,268,669 3,497,476 3,742,299 4,004,260 4,284,558 4,584,477 4,905,391 5,248,768 5,616,182 6,009,315 6,429,967 6,880,064 7,361,669 7,876,986 8,428,375 9,018,361 9,649,646 10,325,122 11,047,880 11,820,534 130,731,331 127,233,855 123,491,556 119,487,296 115,202,737 110,618,260 105,712,869 100,464,101 94,847,919 88,838,604 82,408,637 75,528,573 68,166,904 60,289,918 51,861,543 42,843,182 33,193,536 22,868,414 11,820,534 0
2. Bridge Finance:
As the public offering of the shares will be carried out, when the project will start functioning, a bridge finance is required for the period of one year to met the project requirements. Bridge finance will also be arranged by Consortium of banks lead by Faysal Bank Limited and includes:
• Faysal Bank Ltd (Leader) • Habib Baank Ltd • United Bank Ltd • Union Bank Ltd • Muslim Commercial Ltd Faysal Bank will be provide Rs. 12 million while other four banks will provide Rs. 5.25 million each on following terms and conditions: Nature Amount Tenor Mark up Adjustment Bridge Finance 33 million 1½ year 14 % By subscriptions received of the 3.3 million shares of Rs.10 each, offered to public at par.
Chapter
`
Chapter
Sales and Marketing Activities
This section of industry has emerged to be a strong tool to enhance the sale of those companies making products that are used in the production of other goods and services that are sold, rented and or supplied to other. Marketing is no longer the activity of the makers of the consumer products. Industrial marketing is the need of the manufacturing firms. In this regard this section of industry assumes a key importance. AFAQ Maize Products being an industrial raw material manufacturer will allocate a separate sales and marketing department for this purpose. The company will like to maintain direct relations with its customer means that personal selling will be the main tool for promotion of its products. The company will produce products of
high quality that not only highly demanded in local market but will be also very popular among various foreign markets. With in the proposed sales department of AFAQ Maize Product the company will built a section for industrial marketing activities with in the sales and distribution department.
Area-Wise Division of Marketing Zones
AFAQ Maize will divided the total market of Pakistan into three major zones. Each zone has got further sub-zones. The details of these zones is presented below:
1. Central Zone. Central Zone 1 Central Zone 2 2. Northern Zone. Northern Zone 1 Northern Zone 2
3. Southern Zone. Central Zone
Central Zone 1: Major cities in this zone are Faisalabad, Chinyot and Jhang, besides these this zone also covers other main and small cities and towns.
Central Zone 2: The cities lying in this zone are Multan, Bahawalpur, Khanewal, Kabirwala and Vehari etc.
Northern Zone
Northern Zone 1: This zone covers the cities like Lahore, Okara, Sahiwal and Renala Khurd etc
Northern Zone 2: The details of the major cities of this zone are Rawalpindi, Islamabad, Peshawar and surroundings.
Southern Zone:
Karachi, Hyderabad, Khaipur and Sukkar and surroundings is covered by this zone.
Exports Section
AFAQ Maize Products will design a separate export section where only export related transactions and issues are handled. This section is also the part of the sales $ distribution department department, but its nature of work will be totally independent from the sales department. The respective manager will overlook the overall activities of this section
Products Detail
Ø Modified Starches. Ø Unmodified Starches. Ø Specialty Starches. Ø Dry Glucose
Export Markets
The international markets covered by AFAQ Maize Products will be:
Ø Bahrain. Ø Saudi Arabia.
Ø Qattar. Ø U.A.E. Ø Sharjah. Ø Kuwait Ø Sri Lanka
Sales Promotion
The major way of promoting the sales is personal selling. Free samples are provided to the customers. Different delegations are moved to the countries to see and discuss the problems with the customers and to rectify the problem. Also most probably sometimes the company uses print media as a secondary source of sales promotion. Many articles and advertisements are forwarded in various world famous magazines and journals.
Marketing Mix
The Marketing Mix of AFAQ Maize Products is discussed in the following topics:
Product:
The detail of product items and different product lines offered by AFAQ Maize Products is given below:-
i.
Starches § Modified Starches § Unmodified starches
ii.
Sweeteners § Liquid Glucose § Specialty Glucose
iii.
Co-Products § Maize Gluten Meals § Maize Steeping Liquor § Maize Oil cake
The detail of the planned and proposed product mix of AFAQ Maize Products is given as follows
Product Brand (Category) Globe Coragum AFAQ Maize Starches Snow Flake Globe Corn Starches Snow Flake Penetrose Amisol Oxidized Starches Q-TAC Tex-O-Film Tex-O-Film Coratex- Wall's Coratex-P
Product Line Corn Starches Unmodified Starches Unmodified Starches Unmodified Starches Unmodified Starches Modified Starches Modified Starches Modified Starches Modified Starches Unmodified Starches Modified Starches Specialty Starches Specialty Starches
Cerelose Dextrose Monohydrate AFAQ Liquid Glucose Mor-Sweet High Maltose Syrup NU-BRU High Maltose Syrup AFAQ Golden Syrup AFAQ Liquid Caramel Colour Enzose Hydrol AFAQ Maize Gluten Meals Prairie Gold Maize Gluten Meals Snow Flake Corn Flour AFAQ Corn Germ Meals Buffalo Maize Bran AFAQ Maize Oil Cake Mazoferm Maize steeping Liquor AFAQ Dextrins Coragum Dextrins Glugel Powder Glues. Coragum Powder Globe Glucose (Corn Syrup)
Specialty Glucose Liquid Glucose Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Product Co-Products Co-Products Co-Products Co-Products Co-Products
Pricing
Since the industrial products vary in nature to a great extent so there is no fixed price for any product. In AFAQ Maize Products prices charged will be quite high due to their good quality and standards. The Sales and planning Department will set prices for each of the product separately.
Pricing Method
The pricing method being adopted by the AFAQ Maize Products will be:
Cost Plus Profit Method = Price
Beside this the company will have four types of pricing: • Dealers Price on Cash Basis • Customers (Direct) Price on Cash Basis • Dealers Price on Credit Basis • Customer Price on Credit Basis
Pricing Objective
The pricing objective of the company is to “Maximize Profits”. But some prices will be decreased in the benefit of the company. The basic objective will be to reap up the long-term gains. The prices of the company’s products depend largely on the pricing objective.
Place (Distribution)
AFAQ Maize Products being an industrial products manufacturer, its distribution will consists of direct selling as well as through traders and dealers selling are conducted. The distribution system of the company would be categorized in the following three classes:
(1) AFAQ
(2) AFAQ
(3) AFAQ
Dealer
Dealer Consumer
Consumer
Trader
Consumer
Distribution Policy
AFAQ being a big industrial raw material manufacturer wants to have such a well-connected distribution network that even company’s products will be available at the doorstep of the customers.
Promotion
The major way of promoting the sales will be personal selling. Free samples will be provided to the customers. Different delegations will be moved to the countries to see and discuss the problems with the customers and to rectify the problem. Also most probably sometimes the Company will use print media as a secondary source of sales promotion.
Technology Offered by Waukesha Cherry Burrell
Performance Specifications Product Names Applications Scale Feed Type Operation Feed Size Product Size Mill Size / Feed Opening 13 3/4" x 16 1/4" Capacity Batch / Continuous 1200 lbs./hr. Power / Rotor Speed 1 HP, 3 phase, 60Hz, 230/460 V, 1800 RPM Additional Features Notes
Granulator 43-6
Chemicals Food Metal Foundry
Production
Dry Wet Continuous Tray dried product or wet mixes
Granulator
Fine Granulating
Portable DustTight* Classifier Discharge* Corrosion 0
Designed for reduction of wet & dry materials to specific size distribution
Technology Offered by Stokes
` Product Names Applications indicates an exact match Chemicals Food Construction Power Dry Wet Continuous Scale Feed Type Operation Feed Size Performance Specifications Mill Size / Feed Opening Capacity Batch / Continuous Power / Rotor Speed Additional Features
Product Size
Notes
Granulator Model JRK
Production
Granulator
PrimarySecondary
up to 6"
8.75" X 10.75" thru 34.75"
75 HP
Fixed Classifier Handles frozen coal Fixed Classifier Handles frozen coal
Obtains a relatively fine output size Single-point cage adjustment, TKB model has internal bypass chute
Granulator Models TK and TKB
Food Construction Power
Production
Dry Wet Continuous
Granulator
PrimarySecondary
up to 42"
1'6.125" X 2'4" thru 6'7.75" X 12'0.375"
40 thru 1,250 HP
Detail of technology Offered by Pennsylvania Crusher Corporation
Performance Specifications Product Names Applications indicates an exact match Chemicals MACSA 900 Series Food Waste Other Abattoir 450 Production Dry Wet Continuous Hammermill Scale Feed Type Operation Feed Size Product Size Mill Size / Capacity - Power / Batch / Rotor Feed Opening Continuous Speed Additional Features
Notes
CoarseMilling 18 x 11 Fine* Inches
104 x 52 x 60 Inches
9.6 30-55 Fixed Tons/Hour of KW, Classifier Maize 1,450 to Discharge* 3,000 RPM
1/4 inch thick hammers, easily removable beater pins and screens
Chemicals MACSA 900 Series Food Waste Other Abattoir 600
Production
Dry Wet Continuous
Hammermill
CoarseMilling 24 x 13 Fine* Inches
108 x 52 18 Tons/Hour 45-90 Fixed x 60 of Maize KW, Classifier Inches 1,450 to Discharge* 3,000 RPM 108 x 52 26 Tons/Hour 75-132 Fixed x 60 of Maize KW, Classifier Inches 1,450 to Discharge* 3,000 RPM 8 x 43 x 2-3 55 Inches Tons/Hour of Coal 30 KW Fixed Classifier
1/4 inch thick hammers, easily removable beater pins and screens
Chemicals MACSA 900 Series Food Waste Other Abattoir 900
Production
Dry Wet Continuous
Hammermill
CoarseMilling 36 x 13 Fine* Inches
1/4 inch thick hammers, easily removable beater pins and screens
SENIOR
Chemicals Food Construction Power Waste
Production
Dry Wet Continuous Friable Materials
Hammermill
CoarseMilling
6x9 Inches
Three blade rotor that grinds product and elevates to a silo or cyclone
Chapter
Financial Analysis
Once all the elements of a feasibility study are prepared the next step is to compute the total investment costs.
Total investment cost
The total cost outlay will include the total investment in fixed assets and preliminary expenses. As the detail of all fixed assets have been given earlier their costs will be depicted here.
ESTIMATED COST OF THE PROJECT Details Cost In Rs. land and its development 25 Acres of Land @ Rs. 400,000 Per Acre 10,000,000 Building & Other Civil Works 45.000 Sq Feet & Rs. 425 per Sq. Feet 19,125,000 plant & equipment Imported 68,510,200 Technology Transfer 3,605,800 Local 63,174,000 135,290,000 Custom Duty & L/C Charges 25% of Plant Cost 17,127,550 Erection & Installation 4 % of Plant Cost 4,211,600 Furniture & Fixture 150,000 Pre-operational Expenses 375,000 Total Fixed Cost 186,279,150 Working Capital 10,574,960 Total Project Cost 196,854,110
Working Capital Requirements
Year of Operation Operational Effeciency Cash Expenses Raw Material Stock Tied Up Period 15 Days 1st Year 80% Amount 5,472,000
Wages & Salaries Water Power & Fuel Spaires & Stores Selling Expenses Maintenance Office Expenses Insurance Other Miscellaneous Total
30 Days 30 Days 30 Days 30 Days 30 Days 30 Days 30 Days 30 Days
267,800 2,553,600 425,600 1,702,400 42,560 36,000 45,000 30,000 10,574,960
Loan Amount
The loan is negotiated with a consortium of banks that includes, • Faysal Bank Limited • Habib Bank Limited • United Bank Limited • Union Bank Limited • Muslim Commercial Limited The loan is repayable in 11 years, which includes grace period of one year. Interest rate will charged at 14 % annually, and the half yearly payments will be made. Loan amortization schedule is given below which show the payment of loan including interest in 10 payable years.
Loan Amortization Schedule (Rs. 134,000,000 14 % Interest, 20 payment periods) (SemiAnnually Payment) end of year 1 2 3 4 5 6 7 8 9 loan payment 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 beg principal 134,000,000 130,731,331 127,233,855 123,491,556 119,487,296 115,202,737 110,618,260 105,712,869 100,464,101 interest 9,380,000 9,151,193 8,906,370 8,644,409 8,364,111 8,064,192 7,743,278 7,399,901 7,032,487 principal 3,268,669 3,497,476 3,742,299 4,004,260 4,284,558 4,584,477 4,905,391 5,248,768 5,616,182 End principal 130,731,331 127,233,855 123,491,556 119,487,296 115,202,737 110,618,260 105,712,869 100,464,101 94,847,919
(Leader)
10 11 12 13 14 15 16 17 18 19 20
12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669 12,648,669
94,847,919 88,838,604 82,408,637 75,528,573 68,166,904 60,289,918 51,861,543 42,843,182 33,193,536 22,868,414 11,820,534
6,639,354 6,218,702 5,768,605 5,287,000 4,771,683 4,220,294 3,630,308 2,999,023 2,323,548 1,600,789 828,135
6,009,315 6,429,967 6,880,064 7,361,669 7,876,986 8,428,375 9,018,361 9,649,646 10,325,122 11,047,880 11,820,534
88,838,604 82,408,637 75,528,573 68,166,904 60,289,918 51,861,543 42,843,182 33,193,536 22,868,414 11,820,534 0
Capacity Utilization
The plant is having an installed capacity 50 tons per day. The annual capacity will be at 350 working days 17500 Tons. The company will be utilizing 80 % of installed capacity in the first year of operation which will be gradually increased up-to 100 % of its installed capacity. The following table shows the annual production at utilization rates which the company will be following. The production of four core products which the company will be producing in the first few year of its operation are mentioned according to the yield mentioned in the table. The company will be extending its product range as per the time period.
Capacity Utilization Annual Production (Tons) at Capacity Utilization Products Starch (Unmodified) Germ (Oil) Protien ( Glutin & Cakes) Fibre ( Miaze Brain & Poultry Feed) Year 1 80% 14000 Production 8400 1400 2800 1400 Year 2 90% 15750 Production 9450 1575 3150 1575 Year 3 100% 17500 Production 10500 1750 3500 1750 Year 4 100% 17500 Production 10500 1750 3500 1750
Yield 60% 10% 20% 10%
Estimated Income Statement
To check the project viability it is necessary to calculate the cash inflows, which will be used to calculate the payback period, internal rate of return and the net present value of the investment and which are related with the net profit on after tax basis. The estimated income statement is calculated below with different heads, which forms the income statement. These heads includes the cost of goods sold, operating expenses and the interest and taxation The calculation is given below.
Estimated sales
Estimated sales according to the production of each product category are given below.
Years Capacity Utilization Products Starch (Unmodified) Germ (Oil) Protien ( Glutin & Cakes) Fibre ( Miaze Brain & Poultry Feed) Total Revenues Estimated Sales Figures in Rs. Year 1 Year 2 80% 90% Price per Ton 22,400 188,160,000 211,680,000 30,000 42,000,000 47,250,000 7,000 19,600,000 22,050,000 4,000 5,600,000 255,360,000 6,300,000 287,280,000 Year 3 100% 235,200,000 52,500,000 24,500,000 7,000,000 319,200,000 Year 4 100% 235,200,000 52,500,000 24,500,000 7,000,000 319,200,000
Cost of goods sold
Cost of good sold statement is given as below.
Year 1 Raw Material Corn Chemicals Stores Consumed Packing Material Factory Expenses Salaries Spares 165984000 25536 5107200 5107200 Year 2 186732000 28728 5745600 5745600 Year 3 207480000 31920 6384000 6384000 Year 4 207480000 31920 6384000 6384000
6732000 5,107,200
6732000 5,745,600
6761760 6,384,000
6761760 6,384,000
Fuel & Power Repaires and Maintenance Depreciation Insurance Total CGS
30,643,200 34,473,600 38,304,000 38,304,000 510,720 574,560 638,400 638,400 9,565,762 9,565,762 9,565,762 9,565,762 540,000 540,000 540,000 540,000 229,322,818 255,883,450 282,473,842 282,473,842
The Administrative and General Expenses
Year 1 Salaries Electricity Depreciation Telephone Insurance Miscellaneous 3633600 12768 229824 102144 25536 4003872 Year 2 3633600 14364 258552 114912 28728 4050156 Year 3 3664680 15960 287280 127680 31920 4127520 Year 4 3664680 15960 287280 127680 31920 4127520
Distribution and Selling Expenses
Distribution & Selling Expenses Year 1 Year 2 Year 3 Year 4 2 % of Sales 12,768,000 5,745,600 6,384,000 6,384,000 8,618,400 9,576,000 9,576,000 3 % of Sales 7,660,800 20,428,800 14,364,000 15,960,000 15,960,000
Selling Expenses Promotional Expenses Total
Depreciation for the years
Depreciation Expenses Building Plant & Equipment Year 1 Year 2 Year 3 Year 4 Method Life of the Asset Straight Line 35 Years 546428.57 546428.5714 546428.5714 546428.6 Straight Line 15 Years 9019333.3 9019333.333 9019333.333 9019333
Work Force for Proposed Plant Job Nanture Factory Manger Quantity 1 Salary Per Annual Month Increment 25,000 5%
Year 1
Year 2
Year 3 5% Increment on Basic
Year 4
300,000
300,000
315,000
315,000
Human Resource Manager Quality Assurance Manager Quality Assurance Assistants Factory Engineer Shift Incharge Technitions Planning & Distribution Managers Chief Accountant Assistant Accountants Production Manager Shift Incharge Operators Doctor Medical Staff Security Incharge Shift Security Incharge Security staff Canteen Staff Janitorial Staff Total
1 1 2 1 3 6 2 1 2 1 3 15 1 3 1 3 6 6 5 64
15,000 15,000 10,000 20,000 10,000 5,000 10,000 12,000 80,000 15,000 8,000 5,000 12,000 5,000 7,000 5,000 4,000 3,000 1,800 267,800
3% 3% 0% 3% 0% 0% 3% 2% 0% 1% 0% 0% 2% 0% 0% 0% 0% 0% 0%
180,000 180,000 240,000 240,000 360,000 360,000 240,000 144,000 1,920,000 180,000 288,000 900,000 144,000 180,000 84,000 180,000 288,000 216,000 108,000 6,732,000
180,000 180,000 240,000 240,000 360,000 360,000 240,000 144,000 1,920,000 180,000 288,000 900,000 144,000 180,000 84,000 180,000 288,000 216,000 108,000 6,732,000
185,400 185,400 240,000 247,200 360,000 360,000 247,200 146,880 1,920,000 181,800 288,000 900,000 146,880 180,000 84,000 180,000 288,000 216,000 90,000 6,761,760
185,400 185,400 240,000 247,200 360,000 360,000 247,200 146,880 1,920,000 181,800 288,000 900,000 146,880 180,000 84,000 180,000 288,000 216,000 90,000 6,761,760
Afaq Maize Products Estimated Income Statement Year 1 Sales Cost of Sales/Cost of Goods Sold Gross Profit Operating Expenses Administrative & General Expences Selling & Distribution Expences Total Expenses Earning before Interest and Taxes Financial & all Other Charges Earning Before Taxes Taxation Profit/Loss After taxation 255,360,000 229,322,818 26,037,182 Year 2 287,280,000 255,883,450 31,396,550 Year 3 319,200,000 282,473,842 36,726,158 Year 4 319,200,000 282,473,842 36,726,158
4,003,872
20,428,800 24,432,672 1,604,510 11,386,145 -9,781,635 -4,401,736 -5,379,899
4,050,156
14,364,000 18,414,156 12,982,394 12,366,559 615,835 277,126 338,709
4,127,520
15,960,000 20,087,520 16,638,638 13,489,036 3,149,602 1,417,321 1,732,281
4,127,520
15,960,000 20,087,520 16,638,638 13,489,036 3,149,602 1,417,321 1,732,281
Filename: Project Management AFAQ Maize Plant Directory: D:\Users\Arshad\Word Template: D:\Documents and Settings\Family.HANSVITD3ZA6HF\Application Data\Microsoft\Templates\Normal.dot Title: Chapter Subject: Author: Arshad Iqbal Bhatti Keywords: Comments: Creation Date: 4/10/2002 5:42 PM Change Number: 112 Last Saved On: 8/4/2002 5:59 PM Last Saved By: Arshad Iqbal Bhatti Total Editing Time: 78 Minutes Last Printed On: 8/4/2002 5:59 PM As of Last Complete Printing Number of Pages: 71 Number of Words: 8,812 (approx.) Number of Characters: 54,817 (approx.)