Seed Oil Extraction Unit Cotton Seed

Pre-Feasibility StudySeed Oil Extraction Unit Cotton seed Small and Medium Enterprise Development Authority Government of Pakistan www.smeda.org.pk HEAD OFFICE 6th Floor, LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456, Fax: (042) , 6304926, 6304927 [email protected] REGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH REGIONAL OFFICE NWFP REGIONAL OFFICE BALOCHISTAN 8TH Floor, LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456 Fax: (042) 6304926, 6304927 [email protected] 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 [email protected] Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 [email protected] Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 2831623, 2831702 Fax: (081) 2831922 [email protected] January, 2012 Prefeasibility Study – Seed oil Extraction Unit DISCLAIMER The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form. DOCUMENT CONTROL Document No. PREF Revision - Prepared by SMEDA-Balochistan Issued by Library Officer Issue Date January 2012 BAL-PREF, Jan 2012 i ................................................. 12 8................................................................... 4 3........................................................................................................................................................................................................................................1 TARGET CUSTOMER ........................................ TECHNICAL PARAMETERS / ASSUMPTIONS ................... 9 7..............................1 EQUIPMENT REQUIREMENT.................................... 1 3..........................................................................................................6 FURNITURE & FIXTURE REQUIREMENT ...................... 5 5.........................................................................1 Demand & Supply....3 DRYING & WARMING ............ 3 3.............................2 GLOBAL MARKET ..3 DEFINING THE PRODUCT ................................ 4 4................ 8 6................................ 7 5.........................................................................2 OFFICE EQUIPMENT REQUIREMENT ........................7 MARKET ENTRY TIMING .................... Jan 2012 ii ............................................................................ 9 6........................................................................................................................................................................................................................................ 3 3.................................................................................................................................... 13 BAL-PREF...... 6 5........................................ INTRODUCTION TO SMEDA ....................................... 12 8................................................................................................................................. 4 4........ 7 5....................................... 2 3.........................................................4 RAW MATERIAL .2 OPPORTUNITIES ........................................................ 11 8................................................................................................................................................................................................. PRODUCTION PROCESS .................3 HUMAN RESOURCE REQUIREMENT .............................................6 PACKAGING & DISPATCHING ........ 9 6....................... PROJECT INPUTS ..................................................................................................................................................2 WASHING ............................ 9 6.................................................................................................................1 Major Producers .......10 PROJECT CAPACITY ....................................................2 HISTORICAL BACKGROUND ..............3.......... PROJECT ECONOMICS ................................................ 2 3.....................................................................................................................................9 PROPOSED BUSINESS STATUS ...........................................4 EXPELLER .................................... 1 3........... 4 3................................................3 NATIONAL MARKET ..................................................................................................................................................................................................................................5 OPPORTUNITY RATIONALE .......2 Major Exporters .................................................................................... MARKET ANALYSIS .... PURPOSE OF THE DOCUMENT ............................................. 8 6.......................................................................................................................................................................Prefeasibility Study – Seed oil Extraction Unit Table of Contents 1.................... 5 5. 11 8.................................................... 5 4.............................3 THREATS ........................................................................................................... 1 3 PROJECT PROFILE ................................................................ 11 8......... 4 4................. 4 3.5 LAND & BUILDING REQUIREMENT ..............2.................................................................... 10 8.......................2...........2.................................................................................................................................................................................................................. 5 5...... 9 6....................................................................... CRITICAL FACTORS IN DECISION MAKING ...................................... 4 3..11 VIABLE ECONOMICS SIZE . 1 2....................................................................................................................................................................................................................................................................................................................................................................................................................... 5 5................................................. 3 3.. 9 6................................................................................................................................................................................ 11 8...................................................................................................................................................................................1 PROJECT BRIEF ..5 FILTER & SHAKER ........................................................................................................................................ 6 5....................... 12 9......................................................................................................................................3 Major Importers ........................................................................................................................................................4 VEHICLE REQUIREMENT ..................................................8 PROPOSED LOCATIONS .......................6 PROPOSED PRODUCT MIX ..........................1 DE-LINTING ...................................................1 KEY SUCCESS FACTORS .................................... ............................................................ FINANCIAL ANALYSIS ...................................................................... 18 BAL-PREF....................................... KEY ASSUMPTIONS ..................... Jan 2012 iii ..........Prefeasibility Study – Seed oil Extraction Unit 10...... 14 11..................................................... These documents consist of information required to make well-researched investment decisions.Prefeasibility Study – Seed oil Extraction Unit 1. A few priority sectors were selected on the criterion of SME presence. urban transport and dairy. PURPOSE OF THE DOCUMENT The objective of pre-feasibility study is primarily to facilitate entrepreneurs in project identification for investment. Pre-feasibility studies and business plan development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way. finance and business management. In addition. 3 PROJECT PROFILE 3. In order to facilitate these investors. gems and jewelry. the document/study covers various aspects of project. SMEDA had adopted a sectoral SME development approach. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants.1 Project brief The proposed project is about establishing a Seed Oil Extraction Unit. Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by SMEDA. marine fisheries. niche marketing. Since its inception in October 1998. BAL-PREF. surgical instruments. The main theme of the project is to use seeds of different commodities for economical purposes by extracting edible oil. concept development. in order to serve this objective. Jan 2012 1 . 2. This document is in the continuation of this effort to enable potential investors to make wellinformed investment decisions. the project would generate revenues by processing/selling seed residuals for different economical purposes. marble and granite. SMEDA provides business guidance through its help desk services as well as development of project specific documents. The project pre-feasibility may form the bases of an important investment decision. fruits and vegetables. INTRODUCTION TO SMEDA The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program. These services include identification of viable business opportunities for potential SME investors. technology up gradation and human resource development. production. start-up. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation. textiles. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including financial aspects. SMEDA has so far successfully formulated strategies for sectors including. leather and footwear. The first commercial undertaking to crush cottonseed on a large scale was the establishment of a mill at Natchez. Jan 2012 2 . Mississippi in 1834. In ancient times. Cotton fabrics have also been found in the remains of ancient civilizations of Egypt and Red Indian of the Southwestern United States. using the principle of the mortar and pestle.5 grams of saturated fats. Much of the oil was taken up by the very absorbent linters and hulls resulting in low oil production and an oily feed residue. In addition Egyptian cottonseed were begun to crush in Europe at small level in early 19th Century while in America the first cottonseed oil production was attempted in 1768. The selection of input commodity is the sole desire of the proprietor. However. Sunflower. 3.6 g) serves 120 calories and 3. However the commercial use of cottonseed didn’t develop beyond the crude stage. Currently the project is being designed / proposed for major cities having potential cotton production. nut-like taste. it is reported that the Hindus and the Chinese developed crude methods for obtaining oil from cottonseed. Moreover features like low cost & less complexity associated with such establishment make it more attractive project. in 1860 with the invention of modern technology to separate the residuals (linters & hulls). Canola. cost & demand factors cottonseed is proposed for the said unit. Rapeseed/Mustard and Sesame etc. The project would facilitate in employment generation both direct & indirect and result in utilization of seeds for more commercial purposes rather than its typical usage as animal feed.3 Defining the Product Cottonseed oil is also called as Banola oil. One table spoon of cottonseed oil (13. the whole seed was crushed without removing the linters and hulls. Initially project focus would be domestic market. however on its maturity national market would be consider. Several other mills were also established at Raleigh (North Carolina). 3.Prefeasibility Study – Seed oil Extraction Unit The project may be utilize for seeds of different commodities such as Cotton. In appearance. It is classified as vegetable oil that use as popular ingredient in many foods as cooking and salad oil. Coconut. however keeping in view the resource availability. cottonseed oil ranges from clear to a light gold color but the degree of color depends on refining. It has a mild. It also contains significant BAL-PREF. These all attempts were commercially proven as failure due to demand & market factors. The oldest record of cotton textile was found in the Indus River Valley (now Pakistan) about 5000 years ago. Cottonseed oil is a good source of antioxidants and vitamin E. They used the oil in lamps and fed the remainder of the pressed seed to cattle.2 Historical Background Cotton has been grown for its fiber for centuries in both the Eastern and Western Hemispheres. whereas the project could also be proposed for cities where input requirements are available or in whole seller / trading cluster of seeds. Moreover during this phase. Florence (Georgia) and Mobile (Alabama). crushing and ginning machinery a solid foundation of cottonseed mill industry was laid down that has been flourishing since now in all over the world. Cotton is both a food (cottonseed oil) and a fiber (cotton lint) crop. However the different yields can be obtain subject to method and variety/kind of cottonseed use. however the proposed prefeasibility is limited to 1 United States Department of Agriculture 2 www. The oil is used in stir-fry dishes. Rapeseed/Mustard oil and sunflower2 respectively. in batting for upholstered furniture and in high quality paper etc. The remaining seed is used as raw material for oil extraction. It can be used in place of any vegetable oil. It can be used for baked goods as well as for spreads on foods such as bread and muffins. linters and raw soap which are widely demanded in diversified fields. the processing line may be extended in Oil/Ghee mill – Poultry feed mill – Soap factory and Candy factory. Consumers use it widely in commercial as well as in home applications. In refined shape. cottonseed oil is nearly clear and provides very little taste. serving mainly as a catalyst for holding ingredients together. residual cake (hulls–260 kg/t and meal–455 kg/t) and linters (83. snack foods. vegetables and different foods around the globe.4 Raw Material The proposed raw material for the project is cottonseed. The linters are used as a chemical cellulose source in personal care products. cottonseed will yield oil (160 kg/t). Generally it is used to make mayonnaise.cottonseed. In addition. the residues obtain from cottonseed processing in shape of residual cake (hulls & meal) and linters are widely used for diversified commercial purposes around the world. The residual cake is used as protein feed for animals and in organic fertilizers etc. feed or export purposes. In a typical crushing operation. In addition. It is estimated that around five percent (5%) of the seed is set aside to plant the following year's crop. including corn. Additional by products obtain form the process are residual cake (hulls & meal). 3. In addition to above products. its features like low cholesterol and saturated fats classify it as healthy and nutritious diet.5 Opportunity Rationale Cottonseed oil is rank 4th in world seed oil production followed by Soybean. Cottonseed oil ranks high among healthier oils. sunflower and soybean oil.5 kg/t)1. Jan 2012 3 . which is vital for proper blood clotting. Although utilizing the proposed facility for such purposes is the sole desire of the entrepreneur. sauces. 3.6 Proposed Product Mix The proposed final product for the project will be crude seed oil that can sell to solvent oil mills for the purpose for producing edible oil. salad dressing and marinades etc.Prefeasibility Study – Seed oil Extraction Unit quantities of vitamin K. The cotton crop yields around 150kg of cottonseed for each 100 kg of cotton fiber produce. 3.com/publications/facts.asp BAL-PREF. seafood. However. This investment mainly covers capital costs of Rs.090 4. 3.32 millions.046. 3.10 Project Capacity The capacity of the proposed project would be 480 tons of seeds on annual basis.9 Proposed Business Status The proposed legal structure of the business entity is either sole proprietorship or partnership.04 millions and working capital requirement of Rs.Prefeasibility Study – Seed oil Extraction Unit the scope of seedoil extraction only. equipment and staff would be required to run project successfully. assuming 300 working days a year. Continuous efforts should be made for up-gradation of the processing techniques. 3. Rahim yar Khan.37 millions. Sadiqabad and Sibi etc.000 325. 0.8 Proposed Locations The proposed location for the establishment of the unit will primarily be near cotton producing areas such as Multan.371. 4. 4. 3. CRITICAL FACTORS IN DECISION MAKING 4. But keeping in view the harvesting season. however the financial of this prefeasibility study is based on Sole Proprietorship. Table 1: Project Investment Description Total Fixed Cost Working Capital Total Amount (Rs) 4. the project is proposed to establish in any time.11 Viable Economics Size The total investment required for this project is Rs.1 Key Success Factors • • • • • Seed availability of different crops as input. Selection of proper location. Although selection totally depends upon the choice of the entrepreneur. between November to December or bulk purchases of raw material could be made during harvest season to maximize the cost benefit. To attract large number of customers the product must be processed on quality standards.090 4. round the year processing will be done using store raw material. Jan 2012 4 . DG Khan.7 Market Entry Timing The proposed project can be established any time due to the high demand. 3. Possible extensions of said plant in diversified fields for commercial purpose. BAL-PREF. Initially the project will be focusing on local market.645 Oil.128 18. 11 million tons and 4 million tons respectively. whole sellers & retailers for by products. 4.210 4.992 Oil.701 11.995 11. Rapeseed/Mustard 17.290 Oil. however opportunity for expansion could be capitalize depending success & demand of product.1 Target Customer The target customers for the proposed product would primarily be solvent mills for oil and individuals. MARKET ANALYSIS 5.527 3.910 38. Soybean is largest oil producing seed in world with 41 million tons of oil production in year 2010-11. Cottonseed 5.2 Opportunities • • • • Escalating demand based on rapidly growing population.491 22.425 20.341 23.Prefeasibility Study – Seed oil Extraction Unit 4. Table 2 describes the world oil production of major seeds as below: Figure 2: World Oil production of Major Seeds Unit: 1000 Tons Commodity 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 Oil. Jan 2012 5 . Availability of labor at low price.695 10. Availability of raw material. Rapeseed/Mustard yields the 2nd largest production of oil followed by sunflower and cotton seed. 5.772 4.3 Threats • • Price fluctuations and macroeconomic instability.623 4. As per statistics provided by United States Department of Agriculture (USDA).025 11. 5.531 3. 23 million tons. Established market & growing demand.134 5. High Competition.867 41. Sunflower seed 10.676 Source: United States Department of Agriculture BAL-PREF. Coconut 3. Soybean 36.615 3.292 Oil.2 Global Market Oilseed is widely used around the world and its consumption has been increasing dramatically fast due to the massive demand and increase in population.217 3.825 35.532 37. 150 3.2. However.2 Major Exporters In relevance to statistical figure provided by USDA.600 1. Australia 0 0 8 9 10 3 Whereas the Official production figure of cottonseed oil is around 352 thousand tons for the year 2010-11 as per Economic Survey of Pakistan 2010-11. United States is the leading exporter of cottonseed oil in year 2010-11.030 1.623 4. Brazil 350 380 318 326 460 5.411 2. Table 4 describes the major exporters as follows. United States 385 389 303 280 379 6. China 1.772 4. India 942 1. Argentina 44 37 33 47 66 World (Top & all) 5. India is the second largest producer with a production of 1. by contributing 0. Pakistan comparatively stands at 3rd Position. Uzbekistan 19 18 20 10 20 4.2.466 1.550 1.1 Major Producers As per statistics provided by United States Department of Agriculture (USDA). Table3: Major Oil Producers of Cottonseed Unit: 1000 Tons Rank Country 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 1.15 million tons recorded in year 2010-11. Table 4: Major Oil Exporters of Cottonseed Unit: 1000 Tons Rank Country 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 1. none of the Asian giants contribute in the world export of cottonseed oil mainly due to the reason of high local demand.992 Source: United States Department of Agriculture 5. Jan 2012 6 .4 million tons out of total world production of 4.045 1.062 1.625 1.134 5. In 2010-11 it produced 1. Turkmenistan 71 75 79 75 85 10. Argentina 0 0 0 5 10 5. BAL-PREF.Prefeasibility Study – Seed oil Extraction Unit 5. Australia 54 43 43 61 87 9. Pakistan 550 520 497 540 530 4. Brazil is the 2nd major exporter of cottonseed oil followed by Uzbekistan.210 4. United States 63 85 87 43 75 2. Turkey 212 166 116 93 110 8. China is the leading producer of Cottonseed oil. Brazil 18 20 7 0 20 3. The world export for the year 2010-11 was stood at 151 thousands tons.530 million tons of cottonseed oil tons in the total world production3. Uzbekistan 310 313 249 224 221 7.99 million tons. Syria 1 1 1 1 1 10. Mexico 9 5 7 7 14 3. Tajikistan 2 2 2 2 2 4 8. Table 5 illustrates the major importers of the world as under: Table 5: Major Oil Importers of Cottonseed Unit: 1000 Tons Rank Country 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 1. South Africa 9. Madagascar 1 1 1 1 1 9. The area and production of oilseed crops during 2009-10 and 2010-11 is given in Table 6 as follows: 4 The Republic of Madagascar (older name Malagasy Republic. canola. South Africa 4 5 1 5 5 5. European 8 3 3 2 3 Union 7. Zimbabwe 0 1 3 1 1 World (Top & all) 87 77 63 65 51 Source: United States Department of Agriculture 5. It accounts for more than 50 percent of domestic seed oil production. the major oilseed crops of Pakistan include sunflower. Canada 23 18 14 16 15 2. rapeseed/mustard and cottonseed. China 8.2.696 millio n tons. Japan 6 6 6 3 5 4.352 million tons of oil was contributed by cottonseed.Prefeasibility Study – Seed oil Extraction Unit 6. Kyrgyzstan 4 3 4 4 4 6. out of which 0.3 National Market As per Economic Survey of Pakistan 2010-11. Mexico is 2nd major importer of cottonseed oil followed by Japan. The total seedo il pro duce in 2010-11 was 0. Cottonseed is the major oilseed crop grown in Pakistan. Syria 10 Turkey World (Top & all) 2 2 0 11 2 131 2 2 1 6 4 5 4 3 1 3 2 2 15 11 8 2 4 2 2 2 155 154 102 151 Source: United States Department of Agriculture 5. Malagasy: Repoblikan'i Madagasikarar) is an island country located in the Indian Ocean off the southeastern coast of Africa BAL-PREF. Turkmenistan 7.3 Major Importers Canada is the leading importer of cottonseed oil in 2010-11. Jan 2012 7 . 934 643 157 352 244 50 27 233 131 50 662 8.091 P: Provisional (July – March) 3.591 Sunflower 872 Rapeseed/ 486 Mustard Canola 142 Total 9.March).3.7 million tons edible oil/oilseeds worth US$ 1.983 2010-11 (P) Production Seed Oil (000 Tons) (000 Tons) 6. A glimpse over process is depicted as under: Figure 1: Process flow EXTRACTION PROCESS 5 Delinting Washing Drying & Warming Packaging & Dispatching Filter & Shaker Expeller Pakistan Oilseed and products Annual 2011. however the overall operation based on simple crushing principal. while the remaining is ensured through imports. 6. During the year 2010-11 (July. Total oilseed crush in 2011/12 is anticipated 20 percent higher than in 2010/11 because of anticipated higher production5. Pakistan is a net importer of oilseeds and edible oils.450 1.240 513 160 389 195 51 70 3.865 696 Source: Pakistan Oil Seed Development Board 5.1 Demand & Supply In 2005. GAIN report # PK11003 BAL-PREF.108 439 2. a quantity of 1. Jan 2012 8 .230 3.65 billion has been imported to fulfill the domestic demand. PRODUCTION PROCESS The process of seedoil extraction is primarily subjected to seed used.696 million tons that is limited to only 23 to 25 percent of total demand. Domestic production of edible oils in year 2010-11 was 0. the Government of Pakistan (GoP) liberalized the import of oilseeds. Oilseed consumption is likely to be increase in coming years due to Pakistan’s high population growth rate.Prefeasibility Study – Seed oil Extraction Unit Table 6: Area and Production of Major Oilseed Crops Crops 2009-10 Area Production Area (000 Seed Oil (000 Acres) (000 Tons) (000 Tons) Acres) Cottonseed 7. since then the crushing industry has been progressing remarkably. 6.e. Jan 2012 9 . however powerdriven commercialize line are suggested for the plant. seeds are normally dried in sheds under natural sunlight and hence proposed for the said unit. 6.5 Filter & Shaker The extracted seed oil is filter and shake to improve its quality and appearance. chaff and other impurities.2 Washing Washing of seeds is done initially to remove dust particles. 6. BAL-PREF.6 Packaging & Dispatching The final product is packed using hygienically cleaned barrels and sold to solvent plants. Or delinted seeds can be purchase directly from the market for seedoil extraction. 6. Traditionally small hand made Presses/Expellers are used. The remaining i.4 Expeller Oil is extracted mechanically using expeller but ram press or even mortar & pestle can be used for the same purpose. Internationally delinting of seeds is done using specialized cutter. Mechanical drying is practice internationally using oven or double boiler etc. Caustic soda & Bleach are normally used in Pakistan for the said purpose.Prefeasibility Study – Seed oil Extraction Unit A brief summary of the general operations is detailed under the following heads: 6. residual cake and left over raw ingredient (used in soap & paints etc.) are separated and sold in market for different purposes.1 De-Linting Delinting is done to remove the hairs/linters from the seed. A thumb rule is that the moisture content of the seed should be close to 10 percent whereas optimum heat range for seed oil extraction is from 100 to 160 degrees.3 Drying & Warming Seeds are dry & warm in the second phase. The impurities as Chaff left in the seed can absorb some of the oil and keep it from getting squeezed out of the expeller while dust and stone particle can damage the oil press screw or piston. cage or a part of the press. However acid delinting is normally practice in Pakistan due to cost saving and technological constraints. Water tubs will be use for the said purpose where washing is done manually however mechanical lines are also available in the market. For the purpose of acid delinting 1kg of Sulphuric acid is used for around 10kg of seeds. stones. 6. Moist seed leads to low yields and can clog the screw. However in Pakistan. In addition. and flies.Prefeasibility Study – Seed oil Extraction Unit 7. Ø In case of utilizing different seeds. 11. 113/kg and Rs.50 of Residual Cake o Rs. Ø The seedoil should be in accordance with quality health standards especially in case of using Bt cottonseeds. For the purpose of de linting Acid and Heat may be utilize or de linted seeds can be purchase directly from the market.25/kg (including all costs) whereas the Selling Price is assumed as Rs. Oil/ghee industry.) is also produce during the process. Ø The Per KG. 21. It is assumed that selling price for oil and residual cake is Rs.50 of Soap Ø The Buying price for cottonseed is assumed at Rs. Soap factory and Sweet/candy factory. Jan 2012 10 .e. i.e. TECHNICAL PARAMETERS / ASSUMPTIONS Technical parameters and assumptions are described as follows: Ø It is assumed that 4kg oil and 34kg residual cake is yield from 40kg of cottonseed. It naturally produces a chemical harmful only to a small fraction of insects such as larvae. the raw ingredient (used in soap & paints etc. the processing line must be clean hygienically and used as per international industry standards. Ø Careful processing techniques must be use to avoid any damages to oil. 2. The Bt (Bacillus thuringiensis) is a genetically modified cotton seed and was developed to reduce the heavy reliance on pesticides. Poultry feed mills. butterflies. 35/Kg explain as follows: o Rs. worms. beetles. 100grams oil and 850grams residual cake is extracted from 1kg cottonseed. Ø The project infrastructure must be design keeping in view the possible extension i. Ø It is crucial for the plant to use de linted and clean seeds for maximum yield. 25/kg respectively. CoGS (Cost of Good Sold) is assumed as Rs. Ø The total output of line is directly subjected to input commodity. 25/kg (including all tax/tariffs). BAL-PREF.3 of Oil o Rs. 000 12.000 84.Prefeasibility Study – Seed oil Extraction Unit 8.3 Human Resource Requirement Table 8. the investor may set different pay scales.000 160. BAL-PREF.000 2.000 1000X2=2.000 96. however.092.2: Office Equipment Details Other Equipment Details Computer Printer Fax Telephone Sets Qty 1 1 1 2 Cost/Unit 25.000 84.000 15.000 10.000 49.000 10.000 8.000 12.2 Office Equipment Requirement Table 8.000 8.000 Total Total Cost (PKR) 25.1: Equipment & Machinery Details Description No Seed oil Extraction Line* 1 Electrification.000 8.000 7.000 8.000 288.000 Total *For details please check annexure 700. Jan 2012 11 .000 180.000 1.000 Salary per year 360.000 Note: The staff salaries are estimated according to the market trends.000 100. PROJECT INPUTS 8. Installation & Transportation etc Other accessories Total Price (PKR) 440.000 7.1 Equipment Requirement Table 8.3: Human Resource Requirement Details Description – HR Requirements Manager Plant Operator Helpers Guard Sweeper Driver Total Nos 1 1 3 1 1 1 Salary per month 30. 000 8.Shehzor Registration Total Cost Nos 1 3% Cost 900.000 700.4: Vehicle Requirement Details Vehicle Vehicle .200.000 700.5 Land & Building Requirement Table 8.5: Land & Building Requirement Details Description – Land & Building Land Office Building Warehouse Factory Total Cost/Sq. Ft 300 1.4 Vehicle Requirement Table 8.000 Area in Sq.000 2.000 .000 200.000 1.Prefeasibility Study – Seed oil Extraction Unit 8.000 927. ft 2.6 Furniture & Fixture Requirement Table 8.000 1.000 Total Cost 600.6: Furniture & Fixture Details Description Furniture & Carpeting Requirement Total Cost BAL-PREF.000 200 700 700 8. Jan 2012 12 80.000 27. 000 90.Prefeasibility Study – Seed oil Extraction Unit 9.545 2.000 1.000 Rs.600. in actual 1.185.000 325.046. Jan 2012 13 Rs.500 81.545 .000 700.185.240 42. in actual 600. PROJECT ECONOMICS Capital Investment Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office vehicles Office equipment Pre-operating costs Total Capital Costs Working Capital Equipment spare part inventory Raw material inventory Upfront insurance payment Cash Total Working Capital TOTAL INVESTMENT Initial Financing Debt Equity BAL-PREF.090 Rs. in actual 2.371.000 80.000 49.350 200.000 4.000 927.090 4. 245.90 Year 2 598.268.816.962 5% 49% 720.477.587 1.284 14 Year 5 (253.433 Year 4 816.243.269.130.Prefeasibility Study – Seed oil Extraction Unit 10. FINANCIAL ANALYSIS Financial Evaluation Key Variables Type of Machinery Cost of One Machine Number of Machines Total Investment in Project Equity Debt Lease Export-refinance Interest Rate Debt Tenure Debt Payments per year Total Number of Employees Free Cash Flow to Equity (FCFE) Free Cash Flow to Firm (FCFF) Profit margin on sales ROE Times interest earned SMEDA … … … 4.110) 205.105.95 Year 7 1.48 2.674 5% 45% 344.378 @ 18% *Re-investment rate has been taken to be the interest on cash in bank.643.37 Equity Internal Rate of Return (IRR) 37% Modified Internal Rate of Return (MIRR)* 24% Payback Period (yrs) 3.685.185.963 3% 19% 3.28 Rs.090 2.20 Year 9 2.610 2.827 1.736 6% 30% 20.315.667 1.371.666 2% 10% 1.294 5% 30% 116.041.750 5% 41% 218.33 Net Present Value (NPV) @ 25% 1.545 20% 5 1 50% 50% 0% 0% … Year 1 561.107 1.30 4% 31% 8. in actuals Year 10 2.157 5% 36% 154.89 .039 4.25 Year 3 755.046 2.743 4% 27% 5.185. Jan 2012 Project 29% 19% 3.665.037 1.545 2.839.018.69 Year 8 2.52 Year 6 1.407. which in this case is 10% BAL-PREF.853 1. 380 934.212 36.415 1.953 4.404.600 16.577 2.578 180.371 461.632.Prefeasibility Study – Seed oil Extraction Unit Statement Summaries SMEDA Income Statement Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs.831 55.632 68.552.741 259.012.221 1.205 2.981 198.216 1.280 81.358 702.852 3.543 23.508 461.288 155.742 381.147 376.415 1.074.793 1.223 130.513.740 22. etc.934 1.763 465.000 106.014.774 2.355 37.606.810 96.411 289.785.590 761.017 323.760 18.648.586.125 1.794.447 109.465.460.519.367 30.190 506.716 702.774 3.312 55.209.000 12.472 1.346 1.970 27.986 1.017 112.098.977 3.089 2.835 2.242.896 108.) Depreciation expense Amortization expense Property tax expense Miscellaneous expense Subtotal Operating Income BAL-PREF.417 4.299 218.062 1.172 301.200 14.004.829 Tax NET PROFIT/(LOSS) AFTER TAX 156.300 18.358 702.580 83.000 71.774 2.319 Balance brought forward Total profit available for appropriation Dividend Balance carried forward 225.544 3.028.958.000.146 413.835 348.563.379 1.489 171.400 1.384 33.523 453. Jan 2012 15 .034 80.305 1.700 25.059.603.007 1.195 598.150 37.987.639.811 1.509 112.279.206 1.280.389 73.558 348.742 2.) Office vehicles running expense Office expenses (stationary.367.400 92.062 Revenue Cost of goods sold Gross Profit General administration & selling expenses Administration expense Rental expense Utilities expense Travelling & Comm.346 19.619 119.509 578.377 96.371 1.668.711 52.358 2.834.009 164.681.897 3.835 1.311.430.232.760.102 55.350 71.646 48.700 2.845 32.437.530 28.200.718 206.774 497.274.127 80.994 228.704 92.666 284.110 19.085 135. expense (phone.582 58.890 2.544 723.758.604 Interest expense Earnings Before Tax 422.506.572 34.300 21.716 3.012.400 348.722 36.437 23.633.313.160 2.489 155.988 1.501 370.000 116.509 112.138 1.931.633 18.416 814.322 4.058 461.519 1.) Promotional expense Insurance expense Professional fees (legal.484.005.100 25.000.601 123.485.800 2.806 1.834.621.058 1.323 2.926 112.289 31.164.465.595.889 Other income Gain / (loss) on sale of assets Earnings Before Interest & Taxes 42.516 312. audit.368 225.492 25.729. etc.290.506.660 284.206 289.345.164 461.071 2.164 1.139.275.300 18.167 30.160 348.280.885.300 18.863 173.894.859 171.489 128.632 3.778.897 1.250 16.230 789.140.400 898.142.160 1.101.705 1.506.104 5.718 141.294.196 1. etc.114 24.594 1.654 16.519 461.704 126.298.560 50.036 20.897 2.026.000 96.190 506.802 105.300 18.526 902.243 43.563 60.789 545.467 804.005 28.465.201 149.586.211.147 128.942 116.032.692 112.750 1.224 44.577 1.558 1.639.639.586.087.000.991 34.784 2.776 3.806 1.703 21.677 29.154 1.040 106. in actuals Year 10 14.402.307 101.994 66.510 2.831 1.210 3.705 17.522.546.225.214 348.632.173.028 12.823.000 14.703. fax.206 289.172.147.174 624.429 188.897 1.398 342.268.306 1.812.248 88.290 1.489 188.806 3.274 73.755 3.190 1.415 3.000 83.693 1.489 141.922 8.481 31.413.525 26.300 18.294 40.508 1.611 1.085 14.707 2.270 116.409.379 506.510.577 1.289 1.385 350.773.442.903 502.214 1.150. 206 2.000 1.849 1.488 112.580 1.842.147 2.011.589 4.358.604 2.235 1.000 370.236 3.321.400.883 738.521.897 3.884.200 39.520 5.259.863 1.142.322.466 600.674.532 30.206 5.185.280.000 56.284 1.358 2.190 2.000 80.200.721.334 173.000 1.380 2.000 3.000 140.509 2.500 1.052 3.257 97.371.725 Assets Current assets Cash & Bank Accounts receivable Finished goods inventory Equipment spare part inventory Raw material inventory Pre-paid annual land lease Pre-paid building rent Pre-paid lease interest Pre-paid insurance Total Current Assets Liabilities & Shareholders' Equity Current liabilities Accounts payable Export re-finance facility Short term debt Other liabilities Total Current Liabilities Other liabilities Lease payable Deferred tax Long term debt Total Long Term Liabilities - Note: Total assets value will differ from project cost due to first installment of leases paid at the start of year 0 - BAL-PREF.567 1.902 (0) .558.500 1.100 600.545 289.090 72.272.878 52.041 5.834.842.714.350 325.247 55.000 210.400 29.354 19.674.987 1.568.500 3.857.100 60.235 1.129.424.600 44.000 72.820 1.318.195 958.130 1.734 5.000 880.562.233 1.271.429 4.235 2.047 84.000 90.645 1.000 4.360.380 1.111 5.000 1.415 3.591.894.213.691.008.900 1.371.000 280.000 64.192 845.175 188.185.000 5.700 23.000 1. licensing.718 2.064.492.037.090 649.000 700.521.383.185.000 1.545 Retained earnings Total Equity 2.188 43.635 92.000 960.206 2.534 1.213.100 3.966 143.322.768 73.435 36.466 1.000 927.975 68.503 1.000 185.000 1. & training costs Total Intangible Assets TOTAL ASSETS 90.000 800.000 4.000 298.235 1.859 3.245 635.037.000 1.000 1.684 63.934 1.207.776 101.577 3.271.177 9.120.911.000 741.040 2.000 1.568.990.245.440.895 2.684 36.452 916.604 2.000 5.750 5.457 57.342.271.177.810 1.257 4.109.430 143.800 2.011.000.489 600.374 1.111 2.298.304 2.558.707.573 2.271.000 556.357 146.068.684 2.954 600.176 28.192 984.271.708 707.545 TOTAL CAPITAL AND LIABILITIES 4.690 229.000 895.720 1.476.024 150.800 34.Prefeasibility Study – Seed oil Extraction Unit Statement Summaries SMEDA Balance Sheet Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs.977 600.000 24.142.408 1.774 4.000 1.465.298 6.027.857 73.634 18.271.257.000 1.220.600 3.185.178 1.800 600.000 54.185.543 1.520.956.668 1.520 2.884.500 85.027.033.887.975 86.374 1.903 4.408 1.000 18.751.640 2.500 1.503 984.318.644 1.185.895 54.852.812 5.545 2.943 24.545 143.047 3.774 2.773.990. in actuals Year 10 200.027.806 3.000 597.309 2.902 Fixed assets Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office vehicles Office equipment Total Fixed Assets 600.105.300 2.651 5.500 563.235 1.106 2.777.400 600.000 1.090 2.150 1.208 143.911.902 845.288 2.639.737.753 18.257.271.650 143.000 70.987.725 6.000 40.506.521 1.106 2.000 5.400 2.176.700 2.000 490.000 420.443 600.398.474.545 112.800 74.442.934 1.000 49.784.607.500 81.700 600.586.132 5.000 630.200 3.721.562 833.229 2.000 8.573 5.000 560. Jan 2012 - - - 16 - 0 - 0 (0) 0 - 2.766 14.568.930 1.027.545 506.400 43.190 114.185.521 1.344 586.987 1.000 Intangible assets Pre-operation costs Legal.185.447 51.861.000 350.774 5.053 5.000 16.383.062 4.366 55.134 2.476.743 130.600.000 48.634 2.000 72.125.270 2.918.000 32.852.000 600.240 42.040.194.000 36.578 Shareholders' equity Paid-up capital 2.545 702.235 1.009 5. 034.476.492.508 2.311 924.643.358 1.858 2.018.465. in actuals Year 10 Year 0 1.240) (42.770 139.300 18.714.276.639.344 649.577 1.610 2.757) (469.192 996.000 200.667 1.429 184.046.492.120 1.429 186.172.279 1.613 1.431 1.562 BAL-PREF.161 1.452 2.291 898.489 (28.371.543 2.028.712.344) 12.345.452 Year 6 Year 7 Year 8 Year 9 Rs.562 1.046.000 (48.587 2.489 (28.334 173.380 461.863 4.395) (326.464) (469.700) (100.479) 18.183 1.005) (310) (23.494.000 143.742) (190) (11.174 348.898) (23.216 461.185.943) (1.391) 12.188) 18.586.442.000 761.207.147.708.591.545 Purchase of (treasury) shares Cash provided by / (used for) financing activities 4.883 1.068.107 755.822) 12.263.773.757) (478.834.017 348.515) (13.515) (11.987.125.591.474 1.506.883 2.920 702.196 461.644 .582) (19.220) (391. Jan 2012 17 Year 5 (1.509 649.770 114.987.849) (207) (9.917 (434.000 561.770 158.243.685.220) (326.190 1.700) (134.489 (28.329) (237) (11.853 598.298.350) (125.546.300 18.327 723.429 167.794 1.476.248 465.046 2.125.934 461.452 1.Prefeasibility Study – Seed oil Extraction Unit - - - - - 0 - 0 (0) 0 Statement Summaries (0) SMEDA Cash Flow Statement Operating activities Net profit Add: depreciation expense amortization expense Deferred income tax Accounts receivable Finished good inventory Equipment inventory Raw material inventory Pre-paid building rent Pre-paid lease interest Advance insurance premium Accounts payable Other liabilities Cash provided by operations Year 1 Year 2 (1.133) 18.068.018) 85.816.475) 12.207.247.500) (81.331) (210) (13.023.110) 1.897 1.451 289.655.415 1.000 (94.632.205) 3.942.818) (16.700) (91.300 18.389) (173) (9.526 348.489 (28.818) (13.429 152.690 (392.878) (23.878) - - - - - Financing activities Change in long term debt 2.285.072 506.102) (61.903 348.473 1.489 (28.827 816.129 1.328) (11.000) Acquisitions Cash (used for) / provided by investing activities (4.543 1.206 958.668 5.877) 125.726 2.770 845.000 200.429 138.300 18.898) (19.806 2.395) (434.000 (83.500 (586.321.405 1.753 18.707 1.185.965 1.535 1.863 1.913) (281) (20.830) (255) (17.231.300 18.464) (391.700) (110.068.582) (16.245 958.233 3.498 2.668 2.039 1.321.037 Cash balance brought forward Cash available for appropriation Dividend Cash carried forward 200.317) 18.000 (103.943) (253.090) 225.664) (231) (15.000) - - Year 3 Year 4 - - NET CASH 200.853 112.090 Investing activities Capital expenditure (4.628 1.700) (122.830.545 Change in short term debt Change in export re-finance facility Add: land lease expense Land lease payment Change in lease financing Issuance of shares 2.344 1.319 461.062 3.233 1.416 348.245 1. Prefeasibility Study – Seed oil Extraction Unit 11. KEY ASSUMPTIONS Table 11-1 Cost of Goods Sold per Unit of Production COGS 1 (Raw material per unit) COGS growth rate per annum Table 11-2 Rs.1 5% 5% 0. 35 10% 85% 5% 95% Economic Related Assumptions Inflation rate Wage growth rate Electricity Growth Rate Water Price Growth Rate GAS Price Growth Rate Table 11-4 10% 10% 10% 10% 10% Financing Assumptions Interest rate on long term debt Project Debt Component Project Equity Component Required rate of return on equity WACC Table 11-5 20% 50% 50% 25% 17% Expense Assumptions Administrative benefit expense Traveling expense Communication expense Office vehicle running expense Office expense Promotional Expense Machinery & equipment insurance rate Office vehicle insurance rate Professional Fee (Legal. Audit etc) Bad debt expense BAL-PREF.000 Rs. 25 10% Production Related Assumptions Production capacity per year (kg) Sale price per unit in year 1 Sale price growth rate per annum Production capacity utilization in first year Production capacity utilization growth rate Maximum production capacity utilization Table 11-3 480. Jan 2012 3% 10% 10% 10% 10% 0.5 2% 18 . Prefeasibility Study – Seed oil Extraction Unit Table 11-6 Depreciation Rates Building & Infrastructure Furniture & fixtures Machinery Office equipment Office Vehicle Table 11-7 5% 10% 10% 10% 20% Cash Flow Assumptions Accounts Receivables Cycle (In Days) Accounts Payable Cycle (In Days) Initial cash on hand 15 30 Rs.000 Raw material Inventory Purchase Cycle (In Days) BAL-PREF. Jan 2012 30 19 . 200. Jan 2012 20 .Prefeasibility Study – Seed oil Extraction Unit Annexure BROCHURE & QUOTATION BAL-PREF. This reduces the noise in the machine and increase the lift of the gears changing of gears and pinions has also become an easier in this design. The kettle shaft is derived with a pair of V-belts with special tightening arrangement. Its chamber is fitted with the worms which are made of the most durable material. Filter Presses. Multan Road. Solvent Plants. It is very easy for operate and control the machine. KETTLE: The design of cooking kettle has also been changed for better cooking of the seed.com ©Al-Ramay Industries.alramayindustries. Al-Ramay Small Size Gear System Oil Expeller is being used. Seed Worms. Pakistan . GEAR BOX: Al-Ramay Small Size Single Gear system model have been established to get minimum electricity usage. The chances of variations in thickness of cake are reduced to a minimum. This ensures better alignment of the machine and the variations are reduced to a minimum. Oil Shaker and Oil Store Tanks. Seed Cleaners. This prevents seepage of V-belts and this increases its life. Burewala (61010) Tel: +92-300 699 7798 For further details please write us at: info@alramayindustires. Pumps. Conveyors. Al-Ramay Industries. The reduction gear to run the kettle has also been provided with an oil bath to increase its life.Quotation SMALL SIZE OIL EXPELLER PLANT INTRODUCTION: Al-Ramay Small Size Gear System Oil Expeller is specially designed to obtain the highest possible level of production and oil yield at the lowest possible cost. all over the Pakistan and many foreign countries. We are manufacturing all kinds of Oil Expellers. for crushing of all type seed in single pressing and for all other oil bearing seeds in the final pressing. DESIGN: The two stands have been replaced by a steel fabricated structure.com or Pakistan: visit:www. com ©Al-Ramay Industries.OUR SOLUTION TO EXCELLENCE: Before final painting of the machines. MANUFACTURING PROCESS Bold varieties of ground nut kernels and gingelly seeds are taken and dried in the sun tore move excess moisture. gingelly and coconut can be used for incorporation into cattle feed. Pakistan . Multan Road. The seeds are crushed in the expeller. Alternatively de oiled gingelly or sesame and ground nut can be used in the manufacture candies in combination with sugar or jellies.000/= Note: This cost is excluding of electric motors and fitting expense* Al-Ramay Industries.com or Pakistan: visit:www. The copra obtained is subjected to oil extraction and filtration in the expeller and filter press. filtered through the filter press and packed in tins or drums for sale. PRODCUTION CAPACITY: Feed Capacity (Approx) 160-200 KG/Hour Note: Depend on the seed temperament and dryness. The deoiled cakes obtained after oil extraction of ground nut. All our machines are guaranteed against manufacturing defect to give a trouble free service.alramayindustries. the nuts are first cracked in to two halves and dried preferably in a solar drier. For coconut. the same are given a trial run by our expert engineers to ensure fool proof alignment and smooth running. Burewala (61010) Tel: +92-300 699 7798 For further details please write us at: info@alramayindustires. MARKET: Edible oils have always a readymade market because the production of oil seeds and oil is lower than the market demands of the consumer. The filtered oil obtained is packed in tins or drums for sale. PROJECT COST/ MACHNIARY & EQUIPMENT: SR # 1 2 3 4 5 DESCRIPTION OIL EXPELLER OIL FILTER OIL SHAKER OIL TANK OTHER EQUPIMENT TOTAL MACHINARY COST: QTY 01 01 01 01 01 RATE 160000 145000 55000 28000 52000 AMOUNT 160000 145000 55000 28000 52000 PKR 440. com ©Al-Ramay Industries. Multan Road.com or Pakistan: visit:www.OIL SEED: These are the oil seed types that can be crushed with this machine. POSSIBLE EXTENSION LINE: ü O i l /ghee industry ü Poultry feed mills ü Soap factory ü Sweet/candy factory Al-Ramay Industries. Pakistan .alramayindustries. Burewala (61010) Tel: +92-300 699 7798 For further details please write us at: info@alramayindustires. Rape Mustard Maize Ger Peanut Canola Sesame Sunflower Cotton Coconut Castor Etc.