BBA 7th - ENTREPRENEUR PROJECT

Presented To:

Mr.Rashid Waseem

Presented By:

Hafiz Muhammad Usman Qayyum

Roll No:

Bsf160-4168

Submission Date: 10-02-2020

Department of Business Administration

Table of Contents

• Introduction

• Executive Summary

• Industry Analysis

• Proposed Business Legal Status

• Market Entry Timing

• Future Outlook and Trends

• Competitive Analysis

• Market Segmentation

• Target Market Segment Strategy

• Description of the Venture

• Products

• Services

• Operational Plan
 • Production Plan

• Marketing Plan

• HR Requirement

• Analysis

• SWOT

• PEST

• Plan of Action

• Marketing Research

• Acquiring Tool Necessary for Business

• Financial Plan

• Strategic Consideration for Marketing

• Recommendation
Introduction

Name

Chawal Chowkar Cooking Oil

Address

Chawal Chowkar Cooking Oil Mill will open its production plant at Vehari road Multan.

Contact

www.cco.com.pk

Nature of the Business

Company

Executive Summary:

Chawal Chowkar Cooking Oil is the oil extracted from the inner husk of rice. It is notable for
its very high smoke point of 490 °F (254 °C) and its mild flavor, making it suitable for high-
temperature cooking methods such as stir frying and deep frying. It is popular as a cooking
oil in several Asian countries i.e India, including Japan and China

Rice bran oil contains a range of fats, with 47 % of its fats monounsaturated, 33 %
polyunsaturated, and 20 % saturated

Fatty acid composition of rice bran oil:

Palmitic15.0 %Stearic1.9%Olei c42. 5 %Linoleic39.1 %Linolenic1.1% Arachidic0.5

%Behenic0.2 %
Vision To make our business as a means to the material and social wellbeing of the
investors, employees and the society at large, leading to accretion of wealth through financial
and moral gains as a part of the process of the human civilization.

Mission Our Mission is to produce and provide quality & innovative healthcare relief for
people, maintain stringently ethical standard in business operation also ensuring benefit to the
society at large.

Business Description:

We have a vested stake and financial commitment in the success of this business. Our intent
is to have a definitive business, financial, and marketing plan that not only serves our need
for capital financing, but is utilized as our daily business roadmap. We have taken all
precautions to validate our business and financial models, focusing on realistic projections.
We have accomplished this as follows:

• Our Financial model is rooted in industry facts, not optimism. We have based costs on
our vast industry and practical experience.

• Our business concept was derived from detailed Market Analysis Instead of building a
business around a preconceived concept, we analyzed the market findings and built a
concept around our customers. In other words, our business is built to service an
unmet consumer ‘want’.

Market Entry Timing

There is no specific timing required to start this business as it is not a seasonal business. But it
certainly does address the need of the Housewives, Cookers for hotel and restaurant, Cookers of
special program like marriage ceremony occasions

Future Outlook and Trends

As seasons change, Chawal chowkar cooking oil Mill will be offering products that will
enhance sales and satisfy its customers' desires. During 1year later Chawal chowkar cooking
oil Mill will proposed poultry feed, and laundry soap.
Competitive Analysis
There is no direct competitors of our business all other oil manufacturing companies are our
indirect competitors like Dalda cooking oilSoyaSupreme,Zaiqa Cooking Oil,Sufi Cooking
Oil,Tullo cooking Oil and Kisan cooking oil.It is pleasure for us that they use traditional
business plan to produce the product and deliver the product. But they have also some
strength side also that are, they are doing business for a long time so they have large number
of regular customer, so it will be more time to take the market favorable to us.

Market Segmentation

Market segmentation is one of the steps that go into defining and targeting specific markets.
It is the process of dividing a market into a distinct group of buyer’s that requires different
products or marketing mixes. Opportunities in marketing increase when segmented groups of
clients and customers with varying needs and wants are recognized.  We segment our
customer different classes on the basis to their level of income. We offer our customer
different size of Chawal chowkar cooking oil likes 500ml, 1000ml, 2000ml, 5000ml,
10000ml bottle and also 16 kg container. Markets can be segmented or targeted using variety
of factor.

Target Market Segment Strategy

After segmentation marketer concentrate on targeting. This is the second step of marketing
strategy, where marketers select a specific segment.

Target customer:

• Housewives

• Cookers for hotel and restaurant

• Cookers of special program like marriage ceremony occasions

Description of the Venture

Products

Chawal chowkar cooking oil Mill” provides its customers the different size of Chawal
chowkar cooking oil that main raw materials are rice bran (husk). In addition, “Chawal
chowkar cooking oil Mill” will also propose Poultry feed and soap.
Our products will be:

• 500ml bottle

• 1 liter bottle

• 2 liter bottle

• 5 liter bottle

• 10 liter bottle

• 16 kg container.

Services

An activity benefits or satisfaction offered for sale that is essentially intangible and does not
result in the ownership of anything

Our services are

• Home delivery

• Cash on delivery

Operational plan

• Production department.

• Financial department

• Marketing department.

• HRM department etc.

• Research & development

PRODUCTION PLAN

Our product goes into the three different sectors

• Auto rice mill

• Solvent

• Refiner

After collecting the rice bran this goes into the solvent to refiner, this procedure
Names of suppliers of raw materials

The names of the suppliers of Chawal chowkar cooking oil.

• Local agency.

• Whole country

• Imports

• Employee
 Flow of orders for goods

• Company

• Wholesalers

• Retailers

• Customers.

Pricing

Pricing is very important factor in early stage of the production we will use the
skimming strategy to capture the market .we will charge high price of our product
because there is no competitors of our product and we will try to achieve the break
even as soon as possible.

Item Price (20xx) Price (20xx) Price (20xx)

Per unit retail Per unit retail Per unit retail

price price price

500ml bottle
76 80 85
1 liter bottle
148 155 160
2 liter bottle
285 290 300
5 liter bottle
700 710 720
10 liter bottle
1365 1375 1400
16 kg container.
2100 2120 2150
Promotion

• Media TV, FM Radio.

• Newspaper.

• Visiting card.

• Leafleted.

• Facebook etc.

• Market campaign

Packaging

Manufacturing comprises all unit operations necessary to transform perishable raw

materials into finished products, with the aim to make them safe and convenient for
the consumers. The manufacturing activities of the Natural oil

• Respect natural resources by efficient use of raw materials and energy

• Minimize waste generation and emissions

• Ensure environmentally safe disposal of all waste which cannot be recycled.

Regular assessments of processing practices are carried out. These assessments

include:

• Evaluation of individual plant performance with regard to operations which have an

impact on the environment

• Definition of targets for improvement

• Review of plant compliance with local government regulations, company

environmental standards, as well as results achieved in comparison with targets for
improvement.
Human Resource Requirement

In our business the utilization of Human resource is a crucial factor as each employee adds to
the cost of doing business and such small operations cannot take great strains in the monthly
costs.

Staff Rate Qty

Description

Managers 30000 5

Plant 15000 6
manager

Supervisors 10000 10

Workers 8000 50

Security 8000 10
Guard

Analysis

To check the feasibility of our business plan we applied four analysis tools:

SWOT Analysis

Strengths

• Pure+ healthy product(especially for heart)

 • Pure + fresh Product.

• Good Relationship with internal and external employees, customer and

supplier

• Availability of raw material

Weakness

• Need more internal and external supporter.

• Lack of financial support

• Facing strong competition in the market.

• Our quality of bottles is not good enough. They can break so easily. We know
it, but we are avoiding it to avoid higher cost.

Opportunities

• Changing consumer preferences.

• Design product by addressing the need and demand of target market

• Increasing rate of population

• Potential of relatively low operating costs and enjoy economies of scale

• Develop expertise to assess risks.

• New machine from foreign country

Threats

• Entrants the new competitor.

• Continuous price reanalysis due to strong competition.

• Unfavorable government rules and regulation regarding business.

 • Pakistan is economically unstable country. Flood, draught, cyclone and newly
added terrorism have become an identity of our country. So revenue earnings
trend fluctuate huge.

PEST Analysis

Economic Factors

Economic Factors influence our business to change our pricing strategies according to the
economic change. Standard of living, potential market and purchasing power are the major
factors, which will guide our product mix strategies. if economy of our country expands and
people have more demand of organic products, so it may be possible that these economic
changes ,may reflect new opportunities for the expansion of our business but threat may also
be cased due to the poor economic conditions of Pakistan ;increasing inflation and load
shedding and decreasing purchasing power of the consumers.

Social Factors

Social factor of a country also play vital role in our business. Natural oil is a business that
addresses these factors. We not only are serving our economy by providing employments
specially in this non industrial area of Multan but also our target market includes all the
people belonging to all social classes.

Technological Factors

If you have unique technology then it become your comparative advantage but if you don’t
have then it becomes a threat for you especially in nowadays quickly succeeding economy
where technology is updated within every millisecond. We have ordered the best plants
operated with modern operating methods and techniques. As an entrepreneur we want of
establish relationships with our customers and suppliers and we have to find out our loyal
customers and how to create value for them. This requires information and for that purpose
we are using different software(s) in our business that help us to handle our accounts as well
as analysis about customers.

Political factors

Looking at the great wide gaps between the industrial sector and government; Natural oil
shall focus on building long term profitable alliances amongst. Due to the political instability
no business is able to flourish properly, so a collective approach of joining hands with the
government and assisting in raising the standards of the people of Pakistan will be the major
focus.

Plan of Action

To achieve our proposed business plan we have divided the tasks to be performed in three
wide categories:

Marketing Research
Market research was conducted to develop prior understanding of the market place from
where our working would be started For this market survey was designed using the tools of a
questionnaire. Once the market’s known, our target market is defined and the need is
identified.

The capacity of the plant installed to produce per day will be as follows:

Initial raw materials:

Main raw material is rice bran but we also use phosphoric acid, Citric acid, caustic soda,
common salt etc to develop our product.

Rice husk5000 tons per day

The business is mainly a partnership venture with a startup amount of 4billion Pakistan rupee.

Acquiring Tools Necessary for Business

Where to locate our land and factory, how to purchase it or on what terms we will rent it out
are the terms crucial in turning the business dream into an ultimate reality. Along with that
the distributors whom we will provide the products to further distribute etc. will be the core
concerns of putting up our business too. Establishing close ties with distributors and suppliers
and also spreading a word of mouth and arising an anxiety factor in the public of what’s
going on around .the hiring of the human resource will also be ensured in this period along
with their training with all necessary skills and knowledge, making sure they understand the
business fully. The major technical requirements for our business are:

• Land

• Imported machinery

• Building

• Cargo

• Laboratory Instrument

• Local machinery

• Website development

• Electric motor

• Identity logo/furniture

• Electric Generators

• Boiler

• Computer
 • Rice Bran

• Spender

• Extractor

• Hexing

• Elevator

• DT (Dalding toaster)

• Heater

Collection of raw material

Rice Husk

Easily available around the area of Multan

Cost

Rice Husk Rs. 350/40kg =8.75 per kg 5kg rice husk is used to manufactured 2.5
kg oil.

Financial Plan:

Project Cost Following fixed and working capital requirements have been identified for operations of
the

Proposed business
Description Amount in RS

Cost of capital

Land 8,000,000

Building / Infrastructure 41,913,600

Machinery & Equipment 14,795,045

Furniture & Fixtures 322,500

Office Vehicles 1,836,000

Office Equipment 354,500

Pre-operating Costs 4,140,290

Training Costs 50,000

Total capital cost 71,411,935

Working Capital

18,681,936
Raw Material Inventory
123,292
Equipment Spare Part Inventory
Cash 3,152,991

Total Working Capital 21,958,219

Total Project Cost 93,370,154

Operating Cost Assumptions

 Description Details
Machinery Maintenance 5%ofMachinery Cost
Raw Material Transportation Cost Rs.500perTon
Office Expenses (Janitorial Services, 15%ofAdministration
Stationery, Entertainment etc.) Expenses
Communication Expenses 5%ofAdministrationCost
Office Vehicle Repairand Maintenance 180,000 Per Year
Promotional Expenses 2%ofRevenues
Water Expenses Rs.72,000 Per Annum
Gas Expenses Rs.60,000 Per Annum
Operating Expense Growth Rate 5%
Depreciation Method Straight Line
10%on Plant &Machinery
Depreciation Rate 5%on Building &Infrastructure

Production and Revenue Assumptions

Description Details
Cost of Goods Sold Growth Rate 10%
Growth in Sales Price 10%
Days Operational/Year 312
Days Operational for Husking /Year 182
Days Operational Polishing/ Year 312
Per Day Husking Capacity 48Tons
Per Day Polishing Capacity 32Tons
Sale Price per Uniting Year1 73
Hours Operational / Day 16
No of Shifts 2
Production Capacity Utilization in First Year 65%
Percentage Increase in Production Capacity every 5%
Year
Maximum Production Capacity Utilization 100%
 FinancialAssumptions

Details
Description
Debt 50%
Equity 50%

Interest RateonDebt 14%

Debt Tenure 7Years
DebtPayments/ Year 12
Inflation Growth Rate 10%
Electricity PriceGrowth Rate 10%
Salaries GrowthRate 10%

Income Statement
CHAWAL CHOWKAR COOKING OIL
  Year 1 Year 2 Year 3 Year 4 Year 5

Revenue 56,469,143 66,894,215 78,839,611 92,505,144 108,115,387

Cost of Sale  

Rice Husk 18,398,016 21,794,573 25,686,461 30,138,781 35,224,700

Raw Metrial
Transpotaion Expense 283,920 336,336 396,396 465,105 543,591

Direct Labour 5,366,400 6,357,120 7,492,320 8,790,989 10,274,468

Machinery Maintence 739,752 776,740 815,577 856,356 899,173

Direct Electricity
 3,785,600 4,484,480 5,285,280 6,201,395 7,247,881

Generator Disel Expense 2,197,000 2,602,600 3,067,350 3,599,024 4,206,359

Total Cost of Sale 30,770,688 36,351,849 42,743,384 50,051,650 58,396,172

Gross Profit 25,698,455 30,542,366 36,096,227 42,453,494 49,719,215

   
Administration &
Selling Expense  

Administration Salaries 4,176,000 4,593,600 5,052,960 5,558,256 6,114,082

Electricity Expense 274,560 302,016 332,218 365,439 401,983

Water Expense 72,000 79,200 87,120 95,832 105,415

Gas Expense 60,000 66,000 72,600 79,860 87,846

Travelling Expense 417,600 459,360 505,296 555,826 611,408

Communication Expense 156,000 171,600 188,760 207,636 228,400

Office Vehicles Rapier and
Maintenance 180,000 198,000 217,800 239,580 263,538

Office Expense 626,400 689,040 757,944 833,738 917,112

Promotional Expense 1,129,383 1,016,445 914,800 823,320 740,988

Depreciation Expense 4,092,801 4,648,227 4,648,227 4,687,340 4,687,340

Amortization pre
Operating Cost 828,058 828,058 828,058 828,058 828,058
Amortization of Licensing &
Traning Cost 10,000 10,000 10,000 10,000 10,000

Subtotal 12,022,802 13,061,546 13,615,783 14,284,885 14,996,170

Operating Income 13,675,653 17,480,820 22,480,444 28,168,609 34,723,045

   
Other Income (Interest on
Cash) 300,853 694,072 1,614,292 2,985,726 4,837,738
Gain / (Loss) on Sale Office
Equipment - - 212,700 - -
Gain / (Loss) on Sale Office
Vehicle - - - - 734,400
Earning before Interest &
Taxes 13,976,506 18,174,892 24,307,436 31,154,335 40,295,183
   
Interest on Short Term
Debt - - - - -
Interest on Long Terms Debt
(Project Loan) - 5,698,672 5,031,030 4,269,918 3,402,250
Interest on Long Terms Debt
(Working Capital) 850,282 - - - -

Subtotal 850,282 5,698,672 5,031,030 4,269,918 3,402,250

Earning before Taxes 13,126,224 12,476,220 19,276,406 26,884,417 36,892,933

   

Tax 3,816,678 3,589,176 5,969,242 8,632,045 12,135,025

Net Profit/(Loss) After
Tax 9,309,546 8,887,044 13,307,164 18,252,372 24,757,908

Financial Justification:

Financial Justification for Chawal chowkar cooking oil

Project
Description Start Up Year 1 Year 2 Year 3 Year 4 Year 5

Initial
Investment 93,370,154          

Terminal
Value           31920023
Net income
After Tax   9,309,546 8,887,044 13,307,165 18,252,371 24,757,906

Depreciation   4092801 4,648,227 4,648,227 4,687,340 4,687,340

Discount
Factor
@15%

Present
Value 93,370,154 11654214.78 10234609.45 11805961.7 13115854.22 14639491.28

Net Present
Value 61450131          

Strategic Consideration for Marketing:

Once the research is complete, the suppliers are sought; plant installed and equipped with all
essentials, procurement is complete, and then comes the stage of planning about the
marketing of the business before and after the launch. We will use certain marketing tools
and techniques to launch our product. Marketing through print media, posters, flexors etc
shall be carried on.

Recommendation

• Capture potential and existing customer by giving some benefits that the customer
will interest to buy the product.

• Make good relationship with customer and supplier

• Doing good relationship with bank or other financial institution that it is very easy to
collect loan.

• Training facility should be provided by employer and employee that make them
efficient.

• Adjust the update technology.

• Analyze the customer because their choice change every day and we also adjust this
change.

• Govt. should give more conscious about new industry set up in country and giving
facility to influence new entrepreneur.