TITLE OF THE STUDY: ENTREPRENEURIAL PROCESS OF ANANAS JUICE AND BEVERAGES

Course Name: Entrepreneurship and Business Project Development.

Project name: ANANAS A SPECIALTY JUICE & BEVERAGE

DISTRIBUTION COMPANY

Programme: BBA Semester- VI Group No:

Batch: 16th

Submitted to
Tazrina Farah Lecturer Department of Finance University of Dhaka

Submission date:

PART- I

PROFILE OF PROJECT REPORT FOR PROPOSED ANANAS JUICE AND BEVERAGES, MADHUPUR, MYMENSINGH (UNDER THE SCHEME OF SME )

Venture Type: A limited liability partnership (LLP) Strategic Planning: Vision: Expand globally and contribute to GDP Ensure just and equitable price for the farmers Mission: Opportunity: The Farmers are not getting their equitable price and the labor costs are low at the Northern region like Mymensingh. Produce at the lowest cost than all other homogenous products.

Executive Summary
This business plan describes in detail Ananas Juices several important aspects, starting from its production to distribution including Manufacturing process, Recipe, TQM, Plant and Equipment, Market analyses, and Financial Planning. Our total plan is focused on making quality juice for Export Promotion and emphasizes nutritional value, coupled with attractive pricing. An in depth SWOT analysis was performed in determination of major external and internal factors facing the company

Key external factors include seasonal sales, direct competition, tourism, marketing and promotion, location, labor, and social trends. The main internal factors consist of seasonal sales, nutritional value, employee satisfaction, introducing a new concept, healthiness, and reliance on tourism. These core factors were applied into a SWOT matrix to formulate Ananas Juices key strategies. All strategies developed for use in this business plan were ranked according to Net Present Value. The defensive strategy of Labor Cost Reduction resulted in a savings of Tk.200,000. This reduces the greatest threat facing businesses operating in Bangladesh. The most profitable offensive strategy was expansion. This strategy essentially doubles the sales and total assets of Ananas Juice.

Industry Analysis

MARKET POTENTIAL Demand and Supply Fruits provide important proteins as well as minerals and they are being consumed by human beings since many centuries. The major drawback of any agriculture/horticulture produce is seasonal availability. Several techniques to preserve these perishable commodities have been developed during last few decades and canning is one such reliable method. Pineapples are very popular amongst consumers and their availability in the form of juice or slices round the year would enable the consumers to enjoy them whenever they want. Pineapples are grown in large quantity in West Bengal, North Eastern States including Assam. If fresh pineapples are processed and canned, then there is large market scattered throughout the country. There are also very good export prospects if international quality is achieved and sustained. Countries like the USA, UK, Germany, Holland etc. are regular importers of pineapple products.
.

Market Share: Currently there are some fruit juices in the market, about which there has been always doubt in the consumers mind. With the advent of Ananas Juice , all the demands of the consumers will be fulfilled after meeting the demands of the actual farmers, encouraging them in farming more throughout the seasons. As we are targeting the children, especially school going children, and people of marginal income, as our motto implies, our Juice has the most attractive features in terms of Price and Quality. Considering all these aspects there is a vast scope for Ananas to replace other normal smoothies in the market, hence taking over the place of a potential market segment for juice only. Details about Competition: At present, in whole Bangladesh, there is no such plant, which processes pineapples for canning and juice. In fact, even there is no such plant in West Bengal. Hence, competition will be almost nil. Opportunity to go Global: After meeting the local demand Ananas has the opportunity to expand its market in the European markets and serve fresh pineapple smoothie at the western power breakfast.

PART-II PROJECT DETAILS

1.0 INTRODUCTION Pineapple is one of the popular fruits and is liked by majority of the people irrespective of their age group. As is the case with most of the fruits and vegetables, their availability is limited during the year. Many techniques have been developed to make available seasonal fruits as well as vegetables even during off-season. Canned pineapple slices and juice are such products. Pineapple is consumed as dessert, in fruit salads, while making cakes and pastries etc. Thus, there are a large number of consumers who would like to consume pineapple slices or juice. 2.0 PRODUCT 2.1 Applications Pineapple products intended to be processed by Ananas Fruit Processors include pineapple slices and juice. In order to increase the shelf life and to make pineapple juice and slices even during off-season, canning is the most popular method.
Our Projected Products: 1. Ananas Juice Further production: 1. Ananas Cocktail 2. Ananas Morabba 3. Ananas Papaya Morabba 4. Ananas Jam 5. Aananas Jelly 6. Ananas Pineapple Juice Powder 7. Ananas Pineapple Concentrated Syrup 8. Ananas Aloe-Pine (Pineapple with Aloe Vera) 9. Ananas Coco-Pine (Pineapple with Coconut Milk) 10. Ananas Pineapple Cake & Juice Pie 11. Ananas Pineapple Ice Cream

Images of Some Projected Products:

ANANAS JUICE

ANANAS PIE

ANANAS CAKE

ANANAS UPSIDE-DOWN CAKE

ANANAS JAM & JELLY

ANANAS MORABBA

Production and Manufacturing 2.3 Manufacturing Process CFTRI, Mysore has developed technology for these products. The manufacturing process of the proposed pineapple products viz. Slices and Juice involves many steps and different sub-processes. The average yield is around 80%. The Process Flow Chart is as under:

WASHING , GRADING AND PEELING OF PINEAPPLES

FOR JUICE

FOR CANNED SLICES

CRUSHING

SLICING

BOILING WITH PRESERVATIVES

DIPPING IN SUGAR SYRUP (3-4 HRS)

COOLING AND BOTTLING

CANNING AND STERILIZATION

SEALING AND LABELING

2.2 Availability of technology and compliances CFTRI, Mysore, have developed the process know-how. Certification under FPO and compliances with various provisions therein is compulsory.

Value addition and processing of Pineapple Pineapple (Ananas comosus) is non-climacteric fruit grown widely in Meghalaya. It is rich in vitamin C, magnesium calcium, potassium, iron and the protein digesting enzyme, bromelin. Kew and Queen are the two promising cultivars of pineapple In North East India. Kew variety is characterized by the big sized fruits (1.5-2.5 kg) which are oblong and tapering slightly towards the crown. The flesh is light yellow and very juicy when ripe. Queen variety fruits are of the weight 0.9-1.3 kg in general. The flesh is deep golden-yellow less juicy than Kew, crisp textured with a pleasant aroma and flavour. Pineapple plants flower 10-12 months after planting and fruits become ready 16-18 months after planting. In natural condition it is harvested during May-August. Fruits which mature in the winter are acidic. The fruits with crown can be kept for 10-15 days after harvesting. Pineapple juice It is the juice extracted from pineapple that can be marketed by bottling in to sterilized bottles or can. By adding preservative at a specified level (KMS <70ppm or Benzoic acid < 120 ppm), the shelf life of the juice can be extended to 6-7 months. Flow chart for preparation of pineapple juice is shown below:

3.3 Marketing Strategy The first generation entrepreneur has to be extra careful while approaching export markets and ideally he should have excellent contacts either with foreign buyers or some intermediaries. India itself is a very large and growing market and once quality of the product is established in the domestic market, efforts can be made to branch out to foreign markets.

Production and Operational Plan

1) INVESTMENT: A) Land and Building (Rented/Month) B) Plant and Machinery i. Peeling & Processing ii. Bottling Machine (Purchased from China via www.alibaba.com) C) Power, gas, and water (Utility/Month) D) Misc. Assets Total Fixed Assets : Tk.15000 350000 200000 15000 90000 Tk. 670000

E) Preliminary and Pre-operative Expenses (BSTI) F) Working Capital for Commencement of the business in 1st year (promoters margin) (60% utilization of capacity) Total Project Cost :

5000 125000

Tk.800000

2.0 DETAILS OF THE INVESTMENT 2.1 Land and Buildings We will take rent of two buildings one (tin-shed) is adjacent to the Pineapple field, Madhupur and the other one will be our projected market place Tongi Bazar. A plot of land, of 1000 sq.mts., with built up area of 600 sq.mts., would be required. The main factory operations would need around 350 sq.mtrs. of built up area whereas balance area will be needed for washing, storage of raw materials and finished goods and packing. 5000 ltrs. capacity water storage tank shall also be needed. Cost of land is estimated for the rent at Madhupur Tk.5,000 and at Tongi Tk.10,000.

2.2 Plant and Machinery The requirement of plant and machinery for the project could be divided into five lines as under. 1. Washing and preparation 2. Slice line 3. Juice line. 4. Syrup line. 5. Packing line. It is suggested to have installed processing capacity of 675 tons per year considering double shift working and 300 working days. This would require following machinery.
No. 1 Particulars Quantity/ Washing and preparation (a) (b) (c) (d) (e) (f) 2 Slice Line (a) (b) (c) (d) (e) (f) (g) (i) (j) (k) No

Channel system for unloading and washing pineapples Discharge Elevator Graders Belt Conveyors Chutes Pineapple Peelers

1 No. 1 No. 1 No. 2 No. 2 No. 2 No.

Single Knife Slicers Corner and Can Loaders Resizer/Corners Can Loaders Pieces Cutting Machines Vaccum Filling Machine Seaming Machine Tunnel Pasteurizer/Cooler Can Dryer Belt Conveyors

1 No. 2 No. 2 No. 1 No. 2 No. 1 No. 1 No. 1 No. 1 No. 2 No.

Juice Line (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Syrup Line Labeling and Packing Line Miscellaneous Equipment and Accessories Disintegrator 1 Vessels Pumps Packing Press Tubular Preheater Separator Vacuum Filling Machine Seaming Machine Tunnel Pasteurizer/cooler Can Dryer Belt Conveyors 1 No. 2 No. 2 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No. 1 No -

4. 5 6

The total cost of machinery and equipments would be Rs.100.00 lacs. 2.3 Miscellaneous Assets: Other assets like belts, pulleys, pumps, furniture and fixtures, storage racks and bins, plastic crates and tubs, etc would cost Rs.8.00 lacs. 2.4 Utilities The power requirement shall be 100 HP whereas water requirement will be 10,000 litres every day. The total cost of power and water would be Rs.12.00 lacs per year. 2.5 Raw and Packing Materials Yearly requirement of pineapples will be 3600 tonnes. West Bengal alone grows more than 75,000 tonnes of pineapple every year and availability of 300 tonnes every month will not be a problem. Other materials like preservatives, sugar etc. shall be available locally. Packing materials shall be lacquered tins, labels, corrugated boxes, BOPP tape etc. for which it is advisable to have confirmed prior arrangements.

2.6 Miscellaneous Assets The provision for miscellaneous assets has been made to the extent of Rs. 8.00 lacs. These include assets like belts, pulleys, pumps, furniture and fixtures, storage racks and bins, plastic crates and tubs, etc The details are furnished earlier. 2.7 Preliminary and Pre-operative Expenses: The registration charges, establishment expenses, trial run expenses, interest during implementation etc would be around Rs. 10.00 lacs. 2.8 Working Capital Requirement At 60% utilization in the first year, the total working capital needs shall be as under:
Particulars Stock of Raw and Packing Materials Stock of Finished Goods Receivables Working Expenses Period Month Month Month 1 Month Margin 3,000.% 2,500.% 2,500.% 10,000.% Total Total 6.3 7.4 9. 2. 24.7 Bank 4.4 5.55 6.75 -16.7 Promoters 1.9 1.85 2.25 2. 8.

3.0 MANPOWER REQUIREMENTS

No. 1 2. 3. 4. 5. 6. Particulars No Plant Operators Skilled Workers Semi-skilled Workers Helpers Clerk Salesman 4 6 4 6 1 2 Monthly Salary (Rs.) 3500 2500 1750 1250 2500 2500 Total Total Monthly 14000 15000 7000 7500 2500 5000 51000

4.0 TENTATIVE SCHEDULE

Activity

Period (in months) 2 2 6 2

Application and sanction of loan Site selection and commencement of civil work Completion of civil work and placement of orders for machinery Erection, installation and trial runs

5.0 FINAL COST OF PROJECT AND MEANS OF FINANCE SHEET

Items Land and Building Plant and Machinery Miscellaneous Assets Preliminary and Pre-operative Expenses Contingencies @ 10% on land and building and machinery Working Capital Margin Total Means of Finance Promoter's Contribution Bank Loan/ Financial Institutions Total Debt Equity Ratio Promoters Contribution 47.5 110 157.5 2.37 : 1 30% Amount 19.5 100 8 10 12 8 157.5

Financial assistance in the form of grant is available from the Ministry of Food Processing Industries, Govt. of India, towards expenditure on technical civil works and plant and machinery for eligible projects subject to certain terms and conditions.

Marketing Plan

Organizational Plan

SWOT AND RISK ANALYSES

Financial Planning

6) Sources of Finance: Partners Capital (40% of Total) 400000

Bank Term Loan (60% of Total) Total Project Cast : 7.0 PROFITABILITY CALCULATIONS 7.1 Production Capacity and Build-up

600000 1000000

The installed production capacity of canned pineapple products would be 3600 MTA. The capacity utilization of 60% and 70% is planned during the first two years. 7.2 Sales Revenue at 100%
Product Qty Selling (Tonnes) 1350 1550 Price Per Ton. 11000 14000 Total Value

Pineapple Slices Pineapple Juice

148.5 217 365.5

7.3 Raw and Packing Materials Required at 100%

Products Quantity (Tonnes) Pineapples Sugar Preservatives, essence, etc. Packing materials@Rs.3000/Ton 3600 ---Total Rate per ton 2000 72 45 6 87 210 Value

7.4 Utilities The annual cost of utilities at 100% capacity level would be Rs. 12 lacs.

7.5 Interest Interest on term loan of Rs. 110.00 lacs is calculated @ 14% per annum assuming repayment in 6 years including a moratorium period of one year, whereas on bank finance for working capital, it is taken @ 14% per annum. 6.6 Depreciation It is calculated on WDV method and rates considered are 10% on buildings and 20% on plant and machinery and other assets. 8.0 PROJECTED PROFITABILITY
No. A Particulars Installed Capacity Capacity Utilization % Sales Realization (Rs.Lacs) Cost of Production B Raw and Packing Materials Utilities Salaries Stores and Spares Repairs and Maintenance Selling Expenses @ 10% Administrative Expenses Total Profit before Interest & Depreciation Interest on Term Loan Interest on Working Capital C Depreciation Net Profit Income Tax @ 20% Profit after Tax Cash Accruals Repayment of Term Loan 126 7.2 6.12 2.4 3.6 21.9 3.6 170.82 48.48 14 2.35 17.85 14.28 2.25 12.03 29.88 -147 8.4 7.25 3.6 4.8 25.6 4.8 201.45 54.4 11.9 2.95 15.25 24.3 4.85 19.45 34.7 20 60% 219.3 1st Year ------ 3600 MTA----70% 255.85 2nd Year

9.0 BREAK EVEN POINT ANALYSIS

No. A B Particulars Sales Variable Cost Raw and Packing Materials Utilities (70%) Salaries (70%) Stores and Spares Administrative Expenses (50%) Selling Expenses (70%) Interest on Working Capital Total C D E Contribution Fixed Cost Break Even Point (D/ C) 126 5.04 4.28 2.4 1.8 15.33 2.35 157.2 62.1 37.82 61% Amount 219.3

10. Debt Service Coverage Ratio (DSCR)

Particulars Cash Accruals Interest on Term Loan Total (A) Interest on Term Loan Repayment of Term Loan Total (B) DSCR (A) (B) Av. DSCR 1st Yr 29.88 14 43.88 14 -14 2nd Yr 34.7 11.9 46.6 11.9 22 33.9 3rd Yr 38.64 9.1 47.74 9.1 22 31.1 4th Yr 43.19 6.3 49.49 6.3 22 28.3 5th Yr 47.02 3.5 50.52 3.5 22 25.5 6th Yr 50.28 1.9 52.18 1.9 22 23.9

3.13 1.37 1.53 1.74 2.02 2.18 -----------------------------------2.00----------------------------------------------------

11. IRR
Year 1 2 3 4 5 6 7 Cash Accruals 29.88 34.7 38.64 43.19 47.02 50.28 52.73 296.44 16% 25.76 25.78 24.77 23.84 22.38 20.61 18.67 161.81 18% 25.31 24.91 23.53 22.29 20.55 18.6 16.56 151.75 20% 24.89 24.08 22.37 20.82 18.9 16.84 14.71 142.61

The IRR is around 17%.

TOTAL QUALITY MANAGEMENT

IV) CONCLUSIONS: 1. The business is related with basic market segmentation, i.e. Food in the premium (canned pineapple slices) and middle (pineapple juice) class category. A health conscious target market thus ensures sustainability of the business. 2. This business is using standardized processing procedures; it will provide high quality of processed pineapple slices and juice. 3. Partners of this business have agriculture and operations background, which is an essential aspect for smooth functioning of the business. 4. Gross Profit is reasonably high, as compared with other businesses to cover increasing administrative costs in future. 7. Partners are ready to offer security for loan as per the terms and conditions of the Bank.

After studying all above financial analysis and practical aspects of this project, it is feasible and profitable for the partners and is very secure and beneficial for financial institutions for offering term loan. -------//////------

APPENDIX