Feasibility Study Oil Palm Apollo Farms Ver 1.0

FEASIBILITY REPORT/BUSINESS PLAN
FOR PALM OIL PROCESSING PLANT

(PLANTATION AND MILL EXPANSION)
PREPARED FOR:
APOLLO FARMS NIGERIA LTD,

23 OYADIRAN ESTATE,
SABO, YABA,
LAGOS STATE,
NIGERIA
Feasibility report/Business Plan for Oil Palm Processing Plant
PREPARED BY:
STEMGART VENTURES,
39 AKINREMI STREET,
IKEJA, LAGOS
NIGERIA
PHONE: +234 (0) 703 327 8516
Email: ebubecster@gmail.com
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© APOLLO FARMS NIGERIA LIMITED

ABSTRACT
At the request of Apollo Farms Nigeria Limited, (AFNL), Stemgart Ventures (SV) was
appointed to prepare a feasibility study for the expansion of AFNL’s Oil palm
Plantation and Modernization of its Palm Oil mill. SV was also based on the
feasibility of the project required to develop a business plan. The Promoters
currently owns about 202 hectares of land. Of this 80-hectares has been cultivated
with Oil Palm, and 20 hectares of the Plantation are already fruiting. It also
currently hires a 0.01 tonnes oil palm fresh fruit bunches/hour oil mill to extract
oil from its harvests. The project will involve cultivation of additional 122 hectares
greenfield Oil palm Plantation. It will also include the acquisition of plant,
machinery & equipment to set up a modern 0.2-ton oil palm fresh fruit bunch/hour
oil mill at Oviri off Asaba – Okunoh road, Ughelli South Local, Government Council
Area of, Delta State.
The plan proposed here includes the development of 122 hectares additional
greenfield Oil palm plantation at a rate of 33 hectare per year at an annual cost of
NGN 102 million naira (including land, development, labor, seedling, fertilizer,
agro chemicals, and maintenance for the first one year). In view of the importance
of Fresh Fruit Bunch (FFB) supply to the success of the project, appropriate
plantation development plans are described in the report. Details of plant and
machinery procurement projected at a total cost of NGN 500,000,000.00 (covering
Plam Oil Mill, Access Road Creation and Operational Vehicles ) are also included in
the report. In addition to details of the proposal, the report contains a discussion
of the market prospects for Crude palm oil and financial and economic analysis of
the proposed developments. The estimated financial and economic percentage rate
of return, in constant 2022 terms, are respectively 18% and 31% for the project.
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As a fallout of the feasibility study, a bankable Business Plan to facilitate the

realization of the project, is herewith presented.
The report has been prepared for the sole purpose of assisting the project Sponsors
to seek finance for the investment program described in the report. It will also
serve as a monitoring tool for the implementation and subsequent operation of the
project.
Although reasonable care was taken to ensure the reliability of the information in
this report, the prospective investor is expected to appraise the project prior to
making investment in it.
This report is confidential.
LIST OF ACRONYMS
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ACGSF Agricultural Credit Guarantee Scheme Fund
ADP Agricultural Development Programme
CBN Central Bank of Nigeria
CIF Carriage, Insurance and Freight
CPKO Crude Palm Kernel Oil
CPO Crude Palm Oil
DCRR Differentiated Cash Reserves Requirement
EFB Empty Fruit Bunches
EWS Extension Work Seeds
FAO Food and Agriculture Organization of the United Nations
FFA Free Fatty Acid
FFB Fresh Fruit Bunches
FOB Free on Board
GDP Gross Domestic Product
MSME Micro, Small and Medium Enterprise
NEEDS National Economic Empowerment Development Strategy
NEPC Nigerian Export Promotion Council
NGN Nigerian Naira
NIFOR Nigerian Institute for Oil Palm Research
NIPC Nigerian Investment Promotion Commission
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OER Oil Extraction Rate PITC Presidential Initiative on Tree Crops
PKC Palm Kernel Cake
PKO Palm Kernel Oil
POS Palm Oil Sludge
QC Quality Control
RBDO Refined Bleached Deodorized Oil
RSSF Real Sector Support Facility
SON Standards Organization of Nigeria
SPO Special Palm Oil
SSPE Small-Scale Processing Equipment
TCU Tree Crops Unit
TPO Technical Palm Oil
UNDP United Nations Development Programme
VEOPAN Vegetable and Edible Oil Producers of Nigeria
VODEP Vegetable Oil Development Programme
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GLOSSARY
Crude Palm oil: A edible oil derived from pulp of oil palms. It is naturally reddish
in colour as it contains high amounts of beta-carotene.
Crude Palm Kernel Oil: A light yellow crude oil, extracted from the palm kernels,
containing mainly lauric acid.
Facilitator/facilitation: An action or individual (or group of individuals) that

temporarily works to develop more inclusive, dynamic, and differentiated markets
without becoming a part of the markets.
Food security: Food security exists when all people, at all times, have physical and
economic access to sufficiently safe and nutritious food that meets their dietary
needs and food preferences for an active and healthy lifestyle.
Market: A set of arrangements by which buyers and sellers are in contact to

exchange goods or services; the interaction of demand and supply.
Market system: The multi-player, multi-function arrangement comprising three

main sets of functions (core, rules and supporting) undertaken by different players
(private sector, government, representative organizations, civil society, etc)
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through which exchange takes place, develops, adapts and grows. A construct
through which both conventionally defined markets and basic services can be
viewed.
Olein: Also referred to as Palm Olein is the light yellow edible oil obtained from
the fractionation of Refined Bleached and Deodorized Palm Oil, which is separated
in two fractions by partial crystallization. The liquid fraction is called Palm Olein.
Out-growers: A group of farmers supported with seedlings and other inputs (out-
growers‟ scheme is usually initiated mainly by government or sometimes by other
non-state stakeholders) to encourage the cultivation of oil palm as increase
production of oil palm products.
Special palm oil (SPO): Premium grade crude palm oil with less than 5% free fatty
acid (FFA) content, extracted from the mesocarp of palm fruits.
Stearin: Also referred to as Palm Stearin is the solid fraction obtained from the
fractionation of Refined Bleached and Deodorized Palm Oil. It is mainly used by the
food industry.
Technical Palm oil (TPO): crude palm oil with greater than 5% free fatty acid (FFA)
Transaction costs: the costs associated with the basic process of exchange
including costs concerned with searching, screening, negotiating, contracting,
monitoring and enforcing transactions.
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Upgrading: In order to respond effectively to market opportunities, upgrading is

the process by which business owners innovate to add value to products or services
and to make production and marketing processes more efficient.
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TABLE OF CONTENTS
ABSTRACT..........................................................................................................................2
LIST OF ACRONYMS...........................................................................................................3
GLOSSARY..........................................................................................................................4
CHAPTER ONE....................................................................................................................9
1.1 THE ASSIGNMENT..................................................................................................9
1.2 EXECUTIVE SUMMARY.........................................................................................10
1.2.1 OVERVIEW OF THE PROJECT....................................................................10
CHAPTER TWO.................................................................................................................15
2.1 THE NIGERIAN ECONOMIC AND INVESTMENT REVIEW..........................................15
2.2 AGRO-ALLIED INDUSTRY IN NIGERIA'S ECONOMY..................................................16
CHAPTER THREE..............................................................................................................18
3.1 COMPANY FORMATION..............................................................................................18
3.2 OWNERSHIP STRUCTURE AND BOARD REPRESENTATION.....................................18
3.3 SHAREHOLDERS..........................................................................................................18
3.3.1 PROFILE OF SHAREHOLDERS.....................................................................18
3.4 MANAGEMENT............................................................................................................18
CHAPTER FOUR...............................................................................................................21
4.1 PROJECT DESCRIPTION.............................................................................................21
4.2 PROJECT LOCATION..................................................................................................21
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4.2.1 INTRODUCTION...........................................................................................21
4.2.2 SITE ANALYSIS.............................................................................................21
4.3 PRODUCTION PROCESS.............................................................................................22
4.3.1 CRUDE PALM OIL........................................................................................22
4.3.2 QUALITY......................................................................................................24
4.4 RAW MATERIALS........................................................................................................25
4.5 PLANTATION EXPANSION AND MANAGEMENT..................................................25
4.4.1 PLANTATION SIZING...................................................................................25
4.5.1 OPERATIONS ANALYSIS FOR PLANTATION DEVELOPMENT....................29
4.6 PACKAGING MATERIALS............................................................................................32
4.7 MANPOWER DEVELOPMENT AND TRAINING...........................................................32
4.8 TECHNICAL MANAGEMENT........................................................................................33
4.9 ENVIRONMENTAL FACTORS......................................................................................33
CHAPTER FIVE.................................................................................................................35
5.1 PROJECT COST...........................................................................................................35
5.2 FINANCING PLAN.......................................................................................................35
5.3 DETAILS OF INVESTMENT COST...............................................................................36
5.3.1 Land Acquisition and Development...............................................................36
5.3.2 Buildings............................................................................................................36
5.3.3 Plant and Machinery........................................................................................36
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5.5 PLANTATION DEVELOPMENT....................................................................................37
5.5 ESSENTIAL SERVICES/UTILITIES...............................................................................37
5.6 VEHICLES....................................................................................................................38
5.7 OFFICE FURNITURE, FITTINGS AND EQUIPMENT...................................................38
5.8 PRELIMINARY AND PRE-OPERATIVE EXPENSES:.....................................................38
5.9 INTEREST DURING CONSTRUCTION.........................................................................39
5.10 WORKING CAPITAL..................................................................................................39
5.11 CONTINGENCIES......................................................................................................39
CHAPTER SIX....................................................................................................................40
6.1 INTRODUCTION..........................................................................................................40
6.2 PRODUCT IDENTIFICATION.......................................................................................40
6.2.1 Introduction................................................................................................40
6.3 THE NIGERIAN PALM OIL INDUSTRY........................................................................41
6.5 SUPPLY ANALYSIS......................................................................................................42
6.5.1 Palm Oil.............................................................................................................42
6.6 PROJECTED SUPPLY..................................................................................................44
6.6.1 Palm Oil.............................................................................................................44
6.7 DEMAND ANALYSIS......................................................................................................45
6.7.1 Demand for Palm Oil.............................................................................................45
6.8 SUPPLY GAP ANALYSIS..............................................................................................46
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6.9 MARKET PROSPECTS..................................................................................................47
6.10 MARKET ACCEPTABILITY.........................................................................................47
6.11 PRICING AND DISTRIBUTION STRATEGIES............................................................47
CHAPTER SEVEN..............................................................................................................49
7.1 PROFITABILITY AND FINANCIAL ANALYSIS..............................................................49
7.2 RAW MATERIALS (FRESH FRUIT BUNCHES).............................................................49
7.3 UTILITIES....................................................................................................................50
7.4 MAINTENANCE............................................................................................................50
7.5 ADVERTISEMENT AND SELLING EXPENSES..............................................................50
7.6 DEPRECIATION...........................................................................................................51
7.7 AMORTIZATION..........................................................................................................51
7.8 FINANCE CHARGES....................................................................................................51
7.9 TAX PROVISION..........................................................................................................51
7.10 PROFITABILITY ANALYSIS.......................................................................................52
7.11 CASH FLOW ANALYSIS.............................................................................................52
7.12 BALANCE SHEET ANALYSIS.....................................................................................53
7.13 SENSITIVITY ANALYSIS............................................................................................53
7.14 INTERNAL RATE OF RETURN..................................................................................53
7.15 BREAK EVEN POINT.................................................................................................54
CHAPTER EIGHT...............................................................................................................55
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8.1 EMPLOYMENT.............................................................................................................55
8.2 GROSS VALUE ADDED................................................................................................55
8.3 LOCAL INPUT/FOREIGN INPUT RATIO.....................................................................55
8.4 FOREIGN EXCHANGE SAVINGS.................................................................................55
8.5 ECONOMIC RATE OF RETURN (ERR)........................................................................55
8.6 SOCIAL BENEFITS.......................................................................................................56
CHAPTER NINE.................................................................................................................57
9.1 RISK ANALYSIS:..........................................................................................................57
9.1.1 INTRODUCTION...........................................................................................57
9.2 SWOT ANALYSIS...................................................................................................57
9.3 INHERENT BUSINESS RISK IN THE PLANTATION INDUSTRY............................59
9.4 FLUCTUATION IN CRUDE PALM OIL PRICES......................................................61
9.5 SUGGESTIONS............................................................................................................61
9.6 RECOMMENDATIONS..................................................................................................62
Revenue – Appendix 2(A)...........................................................................................63
Cost of Revenue – Appendix 2(b)..............................................................................64
Personnel – Appendix 3..............................................................................................65
Projected Income Statement – Appendix 4 (A)......................................................66
Cash Flow Projections – Appendix 4 (B)..................................................................67
Analysis of Plantation and Mill Output – Appendix 5...........................................68
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Cost of Field Establishment (Labour) – Appendix 6 (A)........................................69
Cost of Field Maintenance (Labour) – Appendix 6 (B)...........................................70
Cost of Field Establishment and Maintenance (Fertilizer) – Appendix 6 (C)....71
Cost of Field Establishment and Maintenance (Agro Chemicals) – Appendix 6

(D).................................................................................................................................72
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CHAPTER ONE
PREAMBLE
1.1 THE ASSIGNMENT
Following initial consultation with the Directors of Apollo Farms Nigeria Limited,
our firm was commissioned to carry out a feasibility study of their proposed
Plantation Expansion Oil Palm Mill procurement with the following terms of
reference:
a) To determine the investment cost of setting up a modern processing plant

for the production of crude palm oil in Oviri, Ughelli South Local,
Government Council Area of, Delta State.
b) , covering both the fixed and floating assets, as well as the working capital
requirement.
c) To propose a suitable financing structure for the project.
d) To investigate the demand and supply structure of the products and justify
the establishment of this project on the basis of the market analysis.
e) To investigate the raw material requirements, their sources and cost

implications as well as the strategies for an uninterrupted supply to
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guarantee optimal capacity utilization, and based on results obtained

develop an Oil Palm plantation expansion plan for the company
f) To analyse and advise on the required plant and machinery, and to ensure
complete configuration, reliable operation and high-quality products.
g) To prepare detailed financial projections and demonstrate the ability of the

company to service its debt obligations and make reasonable returns to
shareholders.
h) To recommend an appropriate Organizational and Management structure,

and to ensure effective management of the company.
i) To prepare Draft and Final Reports on the result of the various

investigations, advising on the feasibility or otherwise of the project.
The study was done based on information collected from the sponsors as well as
from primary and secondary sources.
The information gathered from various sources were analysed and an in-depth
feasibility report was put in place.
The summary of the report is given hereunder.
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1.2 EXECUTIVE SUMMARY
1.2.1 OVERVIEW OF THE PROJECT
Apollo Farms Nigeria Limited (“the Sponsors”) currently owns about 80 hectares of
Oil Palm Plantation at Oviri in Delta State. It has also acquired another 122
hectares of land in the same location with the aim to develop additional greenfield
palm plantations. In line with the company’s vision to become a key player in the
palm produce industry, the company in the short and medium term intends to
engage in the processing and sales of Crude Palm Oil. It also intends in the long
term to process Palm kernel to extract palm kernel oil and palm kernel cake. In
line with this vision Apollo Farms Nigeria Limited (AFNL) intends to embark on
expansion of its palm plantations and the establishment of a modern Oil Palm
processing factory.
The company intends to embark on the leasing of already existing viable oil palm
plantations in the immediate vicinity of its proposed plantation and factory while
developing new Greenfield plantations that will ensure adequate feedstock for the
proposed Oil palm processing plant.
Against this backdrop, Apollo Farms will embark on a two-prong strategy to

position itself for growth. These strategies involve investing in the following areas:
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1. Invest in setting up modern palm oil mill and palm kernel oil crushing plant:
 Between October 2022 and March 2023, Apollo Farms intends to

invest in a modern palm oil mill establish greenfield FFB processing
capacity of 0.2 tons FFB per hour.
2. Develop Oil Palm Acreage through Greenfield projects and acquisitions to

become a major plantation player
 The company currently owns about 80 hectares of existing palm

plantation.
 The company has already acquired 122 hectares of land for
greenfield palm plantation development, and plans to develop this
plantation between 2022 and 2026 at a rate of 33 hectare per year.
 The company also intends to acquire/lease presently mismanaged
plantations (mostly government owned estates) and revamp them.
a) Snapshot
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i. Project cost: Project total costs are estimated at NGN656.8 million Naira,
including already incurred costs of NGN 42 million naira and interest during
construction of NGN 12.5 million (5% per annum for the 6 months required
to construct mill)
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ii. FINANCING ARRANGEMENT: The total project cost of NGN 644.4 million
excluding interest during construction (this will be financed from existing
cash flow) will be financed as follows:
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iii. HIGHLIGHT OF FINANCIAL PROJECTIONS
The company’s Net Sales Revenue is expected to rise from NGN 146.71
million in FY2022 to NGN1.04 billion by FY2026. Similarly, annual Net Profit
is expected to rise from NGN 9.54 million to NGN 534.66 million within the
same period.
Find below highlights of our projections:
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1,200,000,000
1,000,000,000
800,000,000
Sales (NGN)
600,000,000 Gross Profit (NGN)
Net Profit (NGN)
400,000,000
200,000,000
0
2022 2023 2024 2025 2026
iv. Manpower:
 Direct – 16
 Indirect – 30
 Total 46
v. Long Term Loan
 Amount: N500.0 million
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 Payment period: 6 years
 Frequency: Quarterly
 Moratorium: 1 year
 Interest Rates: 5% per annum.
vi. Capacity utilization
Year 1 2 3 4 5
(%) 60 70 80 90 90
vii. Break – even point (1st year): 30 % of installed capacity
viii. Return on Capital (ROC 5-year Average): 18%
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ix. Economic Rate of Return (ERR): 31%
x. Gross Value Added: N448.99 million in the fifth year of operation.
xi. Market prospect:
i. Assured Local Market.
ii. Proposed selling price policy is realistic and reasonable
iii. Good quality products assured
iv. Export market potential exists.
xii. Economic Justification
i. Employment generation
ii. High potential for foreign exchange savings/earnings.
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iii. Gross Value added is very high.
iv. High Economic Rate of Return (ERR)
v. Revenue generation to Government through Tax
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CHAPTER TWO
INTRODUCTION
2.1 THE NIGERIAN ECONOMIC AND INVESTMENT REVIEW
Industrialisation has been acknowledged as the engine of growth for almost all
countries of the world. Over the years, Nigeria has exported all its primary
products to European and other western countries where they are processed into
finished goods. These finished goods are later imported back into the country at
exorbitant amounts of money. The Governments over the years have made
concerted efforts to change Nigeria’s agrarian nature to an industrialized one. To
accomplish this, the Governments embarked on series of plans and visions that
were designed to encourage industrialization.
The various National Development Plans, the Rolling Stock Perspective Plan and the
Vision 2020 embodied the goals, strategies and public investment programmes and
socio-economic policies of the various Governments designed with a view to
accelerate the country's development process.
The democratisation of the polity and the free market economy of the present
government appear to be a good terrain for the growth of the economy in the spirit
of its commitment to achieve overall growth in the Agricultural sector and drive up
its contribution to the National GDP. It is expected that inflow of foreign exchange
will begin to recover, after the conclusion of the 2023 general elections.
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Internally, the Government is expected to regulate the economy, constantly fine-

tuning the monetary and fiscal policies by introducing measures to pacify the
turbulent environment in which investors find themselves. Funds are expected to
be made available to private investors in the form of soft loans for establishing
projects which will utilize available local resources, and promote input-output
linkages within the country's manufacturing and other sectors. Companies that are
foreign exchange earners are considered priority.
Some catalytic structures like the intervention funds for Palm, Sugar, Rice,
Textiles, etc, were established to encourage investors in their desires to get
relatively cheaper funds to invigorate the sectors. The National Food Security
Initiative (NFSI) vested with the development and administration of all agricultural
policies in Nigeria was also established.
The country has the indices, (large population, varied natural resources, and
expertise) for rapid economic growth. This explains why the current Government
policies are skewed in favour of the manufacturing sector.
2.2 AGRO-ALLIED INDUSTRY IN NIGERIA'S ECONOMY
Agriculture was the mainstay of the Nigerian economy before the oil boom, which
began from the early 1970s. It accounted for about 50 per cent of the gross
domestic product (GDP) during the period 1961-1970. The average annual growth
rate was also impressive at 4.5 percent. The sector attracted less attention during
the period of the oil boom in terms of funding and poor articulation of policies.
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Hence its performance deteriorated, as the contribution to the GDP declined to

25.7 per cent during 1971-80, while a negative growth rate of 2.6 per cent was
recorded. Although its share in GDP recovered over the years because of the
volatility in oil production and prices, the growth rate remained low till 2001.
As growth slowed down, output became increasingly inadequate to meet rising

demand for food and industrial raw materials. Consequently, the country became
food import dependent, with rising import bills, The total food import bill which
stood at NGN 89.9 million in 1961-1970 period rose phenomenally to NGN 3.3 billion
during 1981-1990, NGN62.7billion in 1991-2000 and NGN 170.2 billion in 2001-2006.
As at December 2021, Nigeria’s total food import bill had risen to NGN 1.97 trillion.
In spite of these negative developments Agriculture continues to play a major role

in Nigeria’s economy. The sector employs about 70% of the country’s labour force
and provides about 22.35% of its GDP. Its recent record for job creation is poor.
The NBS data series shows that it contributed just 34.66% of the total number of
formal jobs created in Q3 2020. As far back as the 1960s, agriculture’s contribution
to GDP was as high as 64%, but fell to 20% in the late 1970s. Thereafter, the ratio
picked up and rose steadily to reach around 40% in the early 2000s but settled at
23% in 2015. Growth-wise, the sector slowed to 3.7% y/y in 2015 from 4.3% the
previous year. This year, the sector grew by 3.1% y/y Q1 2022 and 4.5% y/y in Q2
2022.
The administration of President Muhammadu Buhari has favoured (and developed)

import substitution programmes for agricultural products so as to slash the
country’s food import bill. Furthermore the government has supported the
development of sustainable policies for agricultural products, and tried to invest
more in research and tackling smuggling.
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The government has repeatedly stated that diversification of the economy away
from crude oil is one of its main priorities, with agriculture as a focus sector. In
July 2016, the agriculture ministry released a new roadmap for the sector entitled
the Agriculture Promotion Policy (APP). The target of the APP is to double the
growth rate of agriculture against overall GDP growth on an annual basis from 2016
to 2023.
The new policy aims to build upon the successes of the Agricultural Transformation
Agenda (ATA) under the previous administration. The ATA brought about reforms in
input delivery. The Growth Enhancement Support (GES) Scheme, agricultural
financing, value chain development, including the Staple Crop Processing Zones,
and farm mechanisation yielded abundant gains to farmers and the country at
large. President Buhari has indicated that the GES scheme would be maintained.
According to the ministry of agriculture, national food production grew by 21 mmt
between 2011 and 2014, leading to a sharp reduction in food imports. In addition,
Nigeria’s food import bill declined from N3.19trn in 2011 to N635bn in 2013.
To unlock the sector’s full potential, the APP has prioritised areas such as access to
land, soil fertility, storage, agribusiness investment development and access to
finance amongst others. The FGN aims to partner with private investors to boost
productivity in nine agriculture related products - rice, wheat, maize, fish
(aquaculture), dairy milk, soya beans, poultry, horticulture (fruits and vegetables)
and sugar.
With regards to palm oil specifically, the FG’s long-term goal is to return Nigeria to
being a net exporter of palm oil. PZ Wilmar signed an MoU with the Nigerian
Institute for Oil Palm Research (NIFOR) in 2016. The MOU covers research and
development, capacity building and knowledge sharing on innovative ways of
driving the palm oil industry forward.
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Finally, one of the social intervention programmes launched by the FG involves

feeding primary school children between the ages of 5 and 13 years under the
National School Feeding Programme. To achieve this, it contracted NASCO Foods
Limited to produce biscuits for an estimated 25 million children. Since palm oil is
an ingredient used in making biscuit, we expect this programme to provide a boost
to the domestic palm oil industry.
Apollo Farms Nigeria Limited, which is expected to expand its production by the
year 2023, would enjoy the benefits of the new industrial environment.
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CHAPTER THREE
THE COMPANY
3.1 COMPANY FORMATION
Apoll Farms Nigeria Limited (AFNL) is a private limited liability company

incorporated on the 24th of October, 2019 with an authorized share capital of
N1000,000 divided into 1000,000 ordinary shares of N1.00 each. To provide the
company with adequate capital base for the implementation of the proposed
project, arrangement will be made to increase the authorised share capital to N5.0
million by the creation of additional 4,000,000 ordinary shares of N1.00 each,
ranking pari-passu in all respects with the existing shares. The Memorandum of
Association of the company permits it to go into the business of agriculture and
ancillary services. Both the Certificate of Incorporation and the Memorandum and
Articles of Association are available for inspection. Its registered Office is at Sabo,
Yaba in Lagos. However, the Company’s certificate of Incorporation No.RC.1627386
and the Memorandum and Article of Association will be updated to reflect the new
additions.
The amended certified true copies of the above documents will be submitted to
the funding institution for scrutiny and they should be found satisfactory prior to
disbursement of the loan.
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3.2 OWNERSHIP STRUCTURE AND BOARD REPRESENTATION
The board of Apollo Farms Nigeria Limited consists of four members. The board
representation can be changed, amended and altered after due process has been
followed.
The present shareholders of the company have considerable business experience.

They are on the board of other successful companies.
3.3 SHAREHOLDERS
The seven main shareholders of Apollo Farms Nigeria Limited are Nigerians who
have the means of increasing their share capital in the company whenever the
need arises.
3.3.1 PROFILE OF SHAREHOLDERS
3.4 MANAGEMENT
The New project management team will be made up of the following: The
Managing Director, a General Manager, a Plantation/Farm manager, a Production
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Manager, an Accountant, a Marketing/Sales Manager and a Quality Control

Manager.
While the General Manager reports to the Managing Director the weekly activities
of the company, the Managing Director in turn will report the monthly performance
of the company to the Board of Directors.
The functions of other members of the management team are highlighted below:
General Manager: In addition to assisting the Chief Executive in the day to day
running of the company’s affairs, he or she shall directly be in charge of Production
and Maintenance as well as the Quality Control Departments. He or she will
develop production plans and control to ensure efficient operations of the
production plants. He will liaise with the Plantation/ farm manager for the timely
supply of required Fresh Fruit Bunches (FFB) to ensure uninterrupted production.
He or she will develop standards for the company’s products in co-operation with
the Marketing/Sales Department.
He or she will vet and recommend for approval all maintenance schedules as may
be prepared by the Departmental Heads. He is to see to the general safety of both
men and material through constant review of safety procedures and training. He
will ensure the efficient operation and maintenance of the company’s facilities.
A seasoned Engineer or Technologist with cognate experience in similar ventures

will occupy this position.
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Production Manager: He or she will head the Production Division. He or she shall
be responsible for all production activities of the company.
The incumbent shall be a Nigerian Engineer with not less than 7 years cognate
experience with at least five in a palm processing plant. His or her field of
specialisation should be Food Technology or Chemical Engineering and the
qualification must be registered with Council for the Regulation of Engineering in
Nigeria (COREN).
Plantation/Farm Manager: He or she will head the Plantation Division. He or she

shall be responsible for all plantation development, maintenance and harvesting
activities of the company.
The incumbent shall be an Agricultural Scientist with not less than 7 years cognate
experience with at least five in palm plantation management. His or her field of
specialisation could be Crop production Technology or Climate and Soil Science for
crop production.
Accounts Manager: He or she will ensure the optimal utilisation of the company’s
resources - human, materials and finance. He or she will enforce discipline and
good labour relations. He or she will keep record of all company assets and ensure
maximum returns on the utilisation of the assets.
A qualified Accountant with ICAN or ACCA qualification or B.Sc. Accounting will

hold this position. He or she must have not less than five years cognate experience
in a manufacturing outfit.
Marketing/Sales Manager: He or she will be responsible for the supervision of the

Marketing and Purchasing Departments, which form the Commercial Division. He
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or she must ensure that the right quality of goods are purchased and sold. He or
she will conduct periodic research on market situations as well as on the
availability of good raw materials for management decisions. He or she will advise
management on the current market prices and product distribution dynamics.
The incumbent must be a graduate of Economics or any of the Social Sciences and
must have undergone practical training/experience in Marketing/Purchasing. He or
she must have not less than 5 years relevant experience.
Manager (Quality, Research & Development): He or she shall be responsible for

the control of the quality of the company’s products. He or she shall also be
responsible for the development of new products that will ensure the
competitiveness of the company’s products in the market. The incumbent must
have at least an HND certificate in Food Technology or microbiology with not less
than four years’ experience.
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CHAPTER FOUR
THE PROJECT
4.1 PROJECT DESCRIPTION
Apollo Farms Nigeria Limited (AFNL) is proposing to process, package and market
Crude Palm oil for retail purchasers. AFNL also proposes to further process Palm
Kernel Oil and Cake for sale in the future. The plants to be used will have the
following annual installed capacities based on two shifts of ten hours each per day
and working 300 days in a year.
(a) Palm Oil Mill 1200-ton FFB per annum
The project thus involves the acquisition, installation and operation of facilities,
Plant and equipment for the processing of palm Fresh Fruit Bunches (FFB) to
extract Crude Palm Oil (CPO) and Storage Facilities for the CPO.
The company also intends to develop and manage a total of 202 hectares of Palm
plantation to ensure that by the third year of operation it can source adequate
stock of FFB to feed the plant at optimum capacity utilisation.
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The mill will have capacity to extract 15-18% of oil from the fruit (equivalent to
75% of available oil in the tenera variety), thus using an average of 16.5% will
produce 198 tons of CPO per annum.
4.2 PROJECT LOCATION
4.2.1 INTRODUCTION
The major factors that usually influence the choice of the location of any business
include availability of inputs, market, skilled labor, energy, water and other
infrastructural facilities as well as the owners and the government preferences. This
project will be located at Oviri, Ughelli South Local, Government Council Area of, Delta
State, Nigeria.
4.2.2 SITE ANALYSIS
Apollo Farms Nigeria Limited is located on 202 hectares of land at Oviri, off Asaba –
Okunoh road, Ughelli South Local, Government Council Area of, Delta State.
The factory will be built on 782 square meters of land within the plantation complex.
The location is about 118 kilometres from Asaba, which is the capital of Delta State. It
is about kilometres 28.1 kilometres from Warri in Delta State and about 35 kilometres
from Onisha in Anambra state.
Oviri has all the required infrastructural facilities which Apollo Farms can benefit from.
There are modern means of transporting both raw materials and finished goods to and
from the factory site. Electricity is available in the locality from where the company
will tap its requirements. Oviri is close to Ajagbodudu town which is a major fruit
growing area, as well as being situated in the middle of what arguably one the major
fruit is growing belts of the country.
Ekuku Agbor and Abavo which are major fruit producing areas fall within close vicinity
as the Apollo Farms site. Ihu Ozomor, Alihame Agbor, and Owa which are all
neighbouring towns and cities are also major fruit growing areas of the country. As a
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result of its proximity to Warri town and Sapele labour, both skilled and unskilled is
readily available in abundance. If needed, Fresh Fruit Bunches are available from
neighbouring plantations.
4.3 PRODUCTION PROCESS
4.3.1 CRUDE PALM OIL
Fresh fruit bunches (FFB) from the plantations are offloaded at the factory's
offloading bay. Before offloading, the fruit is weighed at the electronic
weighbridge at the edge of a ramp.
From the offloading bay, the FFB in discharged to a conveyor system. The conveyor
system feeds the FFB into a horizontal sterilizer, where during a 90 minutes
steaming process, the fruits are sterilized to prevent further acidification of the
oil, (inactivates lipase enzymes and kills microorganisms that produce free fatty
acids, reducing oil quality).
The sterilized fruit bunches are emptied in a bunch stripper, here the fruits are
separated from the bunches. Thereafter the loose fruits are conveyed to a digester
and then to a screw press. At the press, the palm oil is pressed out of the fruits.
The oil goes to the de-sanding and decanting tanks, while cake, also containing the
palm nuts, is conveyed to the palm kernel recovery station. The empty fruit
bunches (EFB) are recycled in the plantation and can be used as fuel for firing the
boiler.
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When the oil leaves the screw press it contains water, sand and impurities. During
a process of static de-sanding and decanting, most of the impurities in the oil are
removed in a centrifugal oil purifier. The last traces of oil in the effluent are
recovered in a centrifugal sludge separator.
Now the crude palm oil (CPO) is ready for storage and packaging.
The CPO will stored in storage tanks fixed on load cells. This ensures that real-time
online inventory status can be access from any of the computer systems connected
to the management information system for accountability.
The cake, which was separated in the palm oil mill, goes through a column where
air separates fibres and nuts. The fibres are conveyed to the steam boiler as fuel,
the nuts go to a nutcracker for cracking. Here the shell is separated from the
kernel. Cracked shells and palm kernels are further separated in a clay bath. The
shells also go the steam boiler as fuel.
The palm kernels pass through drying silos and Kernel Storage. The kernel is sold
to companies that extract palm kernel Oil.
Figure 1 Palm Oil Processing Unit Operations
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4.3.2 QUALITY
Acid value of the oil is used as a measure of quality. A too high acid value denotes an
excessively high content of free fatty acids, which causes the oil to turn sour;
discoloration may also occur. Rancidity of the oil is promoted by light, atmospheric
oxygen and moisture and leads to changes in odour and taste.
Harvesting has a critical influence on the yield and quality of palm oil extracted from
oil palm fruits. The methods of fruit collection and the means by which the fruit is
transported to the mill determine the quality of oil to a great extent. As oil palm
bunches produced during the first three years have low oil content, they are removed;
regular harvesting aids commercial production of oil palms commence after the third
year of planting.
Bunches usually ripen in six months after the full opening of flowers. Unripe fruits
contain very little oil, but in the ripening process the oil content in the fruit increase to
80 - 85%. Milling extraction rates are significantly affected by the ripeness of fruits;
over ripped fruits contain more free fatty acids (FFAs), i.e. they have a higher acidity
due to decomposition.
Ripeness of the fruit is determined by the degree of detachment of the fruit from
bunches and their change in colour and texture. Harvesting turns should be made as
frequent as possible to avoid over ripening of bunches; care should be taken as a bunch
which is almost ripe – but not ready for harvest at a given harvesting round could
become over-ripped by next round.
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In fresh, ripped, un-bruised fruits, the oil content is about 50 per cent of mesocarp
weigh and the content of free fatty acids (FFAs) is below 0.3 per cent. However, the
outside skin layer of ripped fruits becomes soft and is more easily attacked by lipolytic
enzymes, resulting in the increase in the FFA of the oil through hydrolysis. Free fatty
acids content in bruised fruits increase up to 60 per cent in one hour; the composition
and quality of bunches is therefore dependent on how much they have been bruised.
One of the many ways to minimise damages of fruits in the process of harvesting,
transportation and handling of bunches is to process them as soon as possible after
harvest to the mill, say within 48 hours.
Harvesting rounds of 7 - 14 days are generally practiced; their frequency being also
determined by the extraction capacity of the mill, transportation facilities, labour
availability and skill of the workers.
All these measures including following production plans will ensure that good quality oil
is produced.
4.4 RAW MATERIALS
The main raw material for Crude Palm Oil are the fresh fruit bunches (FFBs). Apollo
Farms currently owns a 80-hectare Oil Palm plantation and also intends to plant an
additional 122 hectares between 2022 - 2025. It will also embark on
acquisition/lease of already established plantations, and the development of
additional 100 heactres Greenfield Oil Palm plantations to ensure that it can meet
its immediate and future raw materials needs. Also in the short term Apollo Farms
will also buy FFB from already established plantations vicinity.
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The promoter of the project has held series of meetings with the different
plantation owners and has been assured of regular supply of FFB. Apollo Farms can
buy from any of these suppliers.
4.5 PLANTATION EXPANSION AND MANAGEMENT
4.4.1 PLANTATION SIZING
Apollo Farms Nigeria Limited intends to expand its plantation over a five-year
period. The company also intends to set up a modern Palm Oil Mill with a capacity
of 0.2 tons/hr. In other to ensure that the mill can operate at minimum of 100%
capacity in year 1, the following factors were considered to arrive at an estimate
for plantation development.
 Plant Capacity 0.2 FFB tons/hr

 Working hrs (double shift) 20 hrs
 Working days/Year 300
Total Tonnage Required Per Annum = 0.2 FFB tons/hr x 20 hrs/day x 300 days/yr =
1,200 tons/yr
The Oil palm tree generally begin to produce fruits 30 months after being planted
in the fields with commercial harvest commencing six months later. However, the
yield of an oil palm is relatively low at this stage. As the oil palm continues to
mature, its yield increases and it reaches peak production in years seven to 18.
Yield starts to gradually decrease after 18 years. The typical commercial lifespan
of an oil palm is approximately 25 years.
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Fully mature oil palms produce 18 to 30 metric tonnes of fresh fruit bunches (FFB)
per hectare (A matured improved variety of Tenera produces 27 – 54 MT per
hectare). The yield depends on a variety of factors, including age, seed quality,
soil and climatic conditions, quality of plantation management and the timely
harvesting and processing of FFB.
The ripeness of FFB harvested is critical in maximising the quality and quantity of
palm oil extracted. Harvested fruits must be processed within 24 hours to minimise
the build-up of fatty acids.
The oil palm tree yield is distributed over the entire year. Most of Central and West
Africa experience two rainfall seasons. The oil palm bears fruit in response to the
rainfall pattern and hence there are two peak harvesting periods in these regions.
Southern hemisphere tropical monsoon regions such as Malawi, Zambia and South-
East Asia experience only one long rainy season and therefore tend to have a single
peak-harvesting season.
For Central and West Africa the annual monthly distribution pattern for produce is
expected to show the following variations:
Table 1: Monthly Yield per Hectare FFB
Seasonal
Month Percent Yield
Contribution
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March 9%
April 15%
54%
May 15%
June 15%
July 8%
August 8%
29%
September 7%
October 6%
November 5%
17%
December 3%
January 4%
February 5%
In the peak harvesting month, it is estimated that 12 to 16 percent of the annual

yield is generally available for processing. The peak month output, which is
generally estimated, as 15 percent of the annual output should be equivalent to
the plant installed capacity.
Conservatively, it is estimated that the plant will work two shifts during the peak
season.
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Table 2 below shows that at maturity and peak production a 202-ha palm oil
plantation will supply approximately 2000 % of the raw material requirement of a
0.2 ton per hr palm oil mill. It is thus projected that by year 5, the Palm Oil mill
will be expanded to accommodate the additional FFBs.
Figure 2: Palm value Chain
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Table 2: Projected Plantation Output
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4.5.1 OPERATIONS ANALYSIS FOR PLANTATION DEVELOPMENT
4.5.1.1 Introduction
Oil palm is the most efficient, higher yielding oil crop processed to vegetable oils.
On commercial plantations, productivity depends on agro-climatic conditions - in
particular the climatic conditions and eventual tree stress intervened two and a half
years before fruit ripening, as well as on the yield potential of the genetic material
planted, the efficiency of cultural methods and of the plantation management. At
country level, palm oil yields are directly dependent on the ratio between
smallholders and large plantations; smallholders’ productivity is generally lower
because of inadequate inputs, cultural practices and crop management skills.
Yields and the corresponding annual production of oil palms reach generally a single
peak in seasonal climates, the time of the peak depending on the age of trees. In
non-seasonal climates, oil palms have often two peaks, one of them being much
higher than the other one. Oil palms reach maturity and give a first output three
years after plantation. The FFB yield increases gradually from about eight tonnes/
ha/ year after the third year, to 30 tonnes/ ha/ year at oil palm age of 13. This peak
production continues for about four years, then decreases slowly and remains around
16 tonnes/ ha/ year until the end of oil palm economic life, at about 20 years of
age.
Yield of oil palms is expressed either in kg of fruit per hectare per year, or as the
amount of crude palm oil obtained per hectare per year. The yield can be
considered in terms two major factors: the yield of fruit bunches and the palm
oil/bunch weight ratio (or extraction ratio).
Oil Palm produces two distinct oils viz., palm oil (extracted from meso carp of fresh
fruits) and palm kernel oil (from kernel). Palm oil has excellent health attributes. It
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is rich in vitamins A and E and is cholesterol free. Palm oil can be used in
formulation of margarine and cooking fat such as vanaspathi. It can be used in
manufacture of biscuits, ice creams, soaps, detergents, and shampoos and also as
frying fat. Palm kernel oil has variety of industrial uses.
Broadly, there are three varieties viz., Dura, Piscifera and Tenera. Tenera, a hybrid
of Dura and Piscifera is characterized by a thin shell and medium to high mesocarp
(65-90%) and high oil content (16-20%). It is a commercially cultivated variety.
4.5.1.2 Soil and Rainfall Requirements
Deep well-drained medium loam soil, rich in humus is the most suitable for oil palm
cultivation. Oil palm requires a well distributed rainfall of 2500 to 4000 mm per
annum and a temperature range of 19-33°C. It is a water-loving crop and it requires
adequate irrigation. The crop responds well to drip irrigation and yields are reported
to increase by at least 20%.
4.5.1.3 Planting
Oil palm is planted in triangular system at a spacing of 9 X 9 X 9 m accommodating

150 plants in a hectare. Planting can be done in any season. However, the best
period is June to December. Seedlings of 10-14 months age are best suited for
planting. Oil palm requires adequate irrigation, as it is a fast growing crop with high
productivity and biomass production. For yielding palms of above three years age, a
minimum of 150 litres per day is required. In older plantations the requirement goes
up to 20 litres per day.
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Care must be taken not to plant the palm too deep, as palms planted that way never
grow well. After planting, the young palms must be protected from grass cutters and
other animals that love eating the cabbage of the young palms. This is done by
placing a collar of wire netting around each seedling, and pegging it down, thereby
covering the seedling just above the ground.
To ensure early and sustained return on the capital invested in establishing an oil
palm plantation, it is essential that the young palms are well maintained. This will
enable them to grow faster and stronger thus start fruiting early between 2 – 3 years
after transplanting into the field and at maturity attain the yield potentials of 18 to
30 tons ffb/ha/yr. It is therefore necessary to carry out the following operations in
the plantation:
1. Cutlassing of the inter-rows (inter-line)
2. Weeding of the fields including ring weeding of individual palms
3. Supplying of vacancies/replacement resulting from death/non-survival of

seedlings
4. Pruning of the palm leaves
5. Mulching of the palm field
6. Application of fertilizers
7. Control of diseases
8. Control of pests
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Table 3 below give a breakdown of the man-hours required for planting and
maintenance per hectare.
Table 3: Manpower Requirement for Plantation Development and Maintenance (Per Hectare)
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Oil Palm Establishment Resources per Hectare
Description Unit Unit Value

Land Preparation and Planting Man Days 105.4
Material Components Seedlings 150
Wire Netting Bundle 2
Seeds of Cover Crop Kg 6
Fertilizer 50kg Bag 3
Miscellaneous Costs
Maintenance of Immature Palms
(Yr 1,2 and 3)
Ringweed for 3 years Man Days 36
Interrow weeding for 3 years Man Days 45
Supplying Vacancies Man Days 6
Fertilizer (3 yrs) 50kg Bag 9
Total yrs (0 - 3)
Year 4 & Above Expenditure
Cutlassing and Ring Weeding Operation 6
Pruning 150 palms Operation per Palm 150
Fertilizer 50kg Bag 4
The crop responds well to drip or micro sprinkler irrigation particularly when water
is limited. If drip is installed four drippers have to be placed for each palm. If each
dripper discharges 8 litre per hour, 4-5 hour of irrigation is sufficient to discharge
160 litre per day. Drip irrigation increases the productivity by 15-20 per cent,
reduces wastage of water, and requires less power/fuel per irrigation compared to
conventional irrigation methods. It is important to note that any physiological stress
shifts sex ratio in favor of male flowers and consequently the productivity is
reduced.
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4.5.1.4 Nutrition
Fertilizers and Agro Chemicals are normally required for the palm to thrive properly.
Table 4 & 5 below give a breakdown of the required Fertilizer and Agro Chemicals
per hectare.
Table 4: Fertilizer Requirement for Plantation Development and Maintenance (Per Hectare)
REQUIREMENT PER HECTARE (KG)

FERTILIZER YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4
SULPHATE OF AMMONIA 16.50 16.50 34.50 51.00 51.00
ROCK PHOSPHATE 34.50 67.50 136.50 171.00 171.00
POTTASIUM CHLORIDE 16.50 34.50 85.50 45.00 45.00
KIESERITE 90.00 27.00 51.00 51.00 51.00
Table 5: Agro Chemical Requirement for Plantation Development and Maintenance (Per Hectare)
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AGRO CHEMICALS
REQUIREMENT/HECTARE(L)
YEAR 0 1 2 3 4
DELTAMETHRIN 2.25 2.25 2.25 2.25 2.25
DIMETHOATE - - - - -
PROPICONAZOLE 1.95 - 1.95 - 1.95
BENDAZIM - 0.10 - 0.10 -
GLYPHOSATE 3.00 3.00 3.00 3.00 3.00
4.6 PACKAGING MATERIALS
Apollo Farms products will be packed in PET containers of different size; 25, 50 and
200 litre containers.
The raw material for the PET containers pre-forms can be imported. However, the
material can be obtained on the open local market from companies that sell plastic
raw materials and plastic machinery. Although indications from some of the sources
give the cost of a Jerry cans as follows, 25 litres; N3000.00, 50 litres; N4,500.00, and
200 litres drum at N15,000.00, the following costs have been adopted 25 litres;
N3,500.00, 50 litres; N5,000.00, and 200 litres drum at N16,000.00, in the analysis of
the report so as to be on the safe side.
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4.7 MANPOWER DEVELOPMENT AND TRAINING
(a) Staffing:
The estimated manpower to operate and maintain the plant facilities at the initial
stage, including the technical and general administration of the factory, and
plantation management is about 46. This estimate covers the top management;
middle and junior level executives and other supporting staff.
The breakdown of the manpower requirement for the factory is as follows:
S/N Category Direct Indirect Total
1 Top Management 1 1
2 Other Managers 3 1 4
3 Senior Staff 2 1 3
4 Other Staff 10 28 38
Total 16 30 46
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4.8 TECHNICAL MANAGEMENT
Although proposals for the supply of plant and machinery for this project are being
obtained from some suppliers, it is advisable to ensure the reliability of the suppliers
through the preparation of Plant and Machinery Supply Agreement, incorporating
guarantees and Spare parts back up. In view of the need for good quality product
and the potential to develop new ones, an experienced General Manager would be
appointed, and training will be arranged with the assistance of the Machinery
Suppliers.
4.9 ENVIRONMENTAL FACTORS
It is planned that the proposed plant will be run in an environmentally friendly and
sustainable manner. All factory waste of the oil mills will be recycled into the
plantation or used as fuel to generate green process steam.
4.9.1 TREATMENT OF SOLID WASTE PRODUCTS
The palm oil mill yields 20 to 24 tonnes of crude palm oil and about 4 tonnes of palm
kernels for each 100 tonnes of FFB processed, thus between 72 to 76 percent of the
FFB comes out at various stages of the process as waste.
The solid wastes that result from the milling operations are:
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 Empty fruit bunches,
 Palm fibre, and
 Palm kernel shell.
At the proposed mill the above-mentioned waste products will all be put to
economically useful purpose. They are therefore referred to as by-products rather
than waste products.
Wet, empty bunches will be partly dried in the sun and later used as fuel. Another
economic use for the empty bunches is to return them to the plantation as a mulch
to enhance moisture retention and organic matter in the soil.
The palm kernel shell will also be used as a source of fuel for the boilers.
Unfortunately, the shell contains silicates that form a scale in the boilers if too
much shell is fed to the furnace, thus limiting the amount of shell that can be
utilised in the boilers. Residual shell will be disposed of as gravel for plantation
roads maintenance.
The fibre recovered from the nut/fibre separation stage is a good combustible
material and finds ready use as fuel for the boiler. The fibre will constitute the bulk
of material used to fire the boilers used to generate steam to sterilize the palm
fruits.
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Boiler ash will also be recycled as fertilizer and factory floor cleaning agent. The
potash in the ashes reacts with the oil to form a weak potash soap that can be
washed away with water.
4.9.2 TREATMENT OF AQUEOUS EFFLUENT
Liquid waste treatment involves anaerobic fermentation followed by aerobic

fermentation in large ponds until the effluent quality is suitable for discharge. Some
of the treated effluent can be used on the farm as manure. The sludge accumulating
in the fermentation ponds will periodically be removed and fed to the land.
Sludge from the clarifying tanks will be discharged into gutters, which channel it to
the sludge pits. When the sludge pit begins to give off a bad odour the pit is filled in
and another one dug for the purpose.
Charcoal from the cooking fires is dumped into the pits to absorb some of the odour.
Table 6: Current and potential utilisation of oil palm plantation and palm oil mill by-products
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CHAPTER FIVE
THE PROJECT COST
5.1 PROJECT COST
The total (Initial) project cost is estimated at N500 million, including a working
capital provision of N102.00 million. The estimated value of existing facilities, which
is stated as cost already incurred, as at April 30, 2016 is N42.4 million only.
The breakdown of the project cost is summarized below:
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5.2 FINANCING PLAN
The estimated total project cost of N644.36 million (less interest during the
construction period of 6 months which will be paid from existing cash flow) is
proposed to be financed as follows:
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5.3 DETAILS OF INVESTMENT COST
5.3.1 Land Acquisition and Development
The Promoters of the project owns about 80 hectares of palm plantation land at
Oviri in Delta State. They have also acquired another 122 hectares of land with the
aim to develop a greenfield palm plantation at the same location. Total investment
in Land and development at Oviri till date is approximately N 42.36 million. It is
estimated that an additional N80.0 million will be spent on development of
additional Plantations.
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5.3.2 Buildings
There is and already existing building, housing the old mill, however for mill
expansion new buildings would be required. Till date approximately 3.8 million has
been spent on buildings. The new factory complex will be developed with two
distinct and functional structures. The buildings should be strong, well-built
structures suitable for the purpose of manufacturing. The production factory will
cover 375.0 m². The other building will accommodate the administrative block (79.0
m²), Main store (38.4 m²) and Toilet/washrooms (4.2 m²). It is estimated that about
N40.1 million will be expended on the buildings.
5.3.3 Plant and Machinery
The complete plant and machinery could be supplied by any of the three machinery
suppliers listed below:
a) RENTEC NV, Belgium.

b) ZHENGZHOU Qi’E GRAIN AND OIL MACHINERY CO. LTD, China.
c) UNITED OIL MILL MACHINERY & SPARES PRIVATE LTD, India.
The a portion of the long–term loan amounting to N101.89 million will be used
towards procuring the machines as well as cover other expenses.
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A list of all plant and machinery required for the Plant is included in the appendix.
5.5 PLANTATION DEVELOPMENT
Apollo farms intends to develop 122 hectares of greenfield plantation between 2022
to 2026. For best results, approximately 150 palms are planted per hectare. A total
budget of N 267.55 million is required to develop 122 hectares and maintain from
year 1 to year 4 when the plantation begins to fruit properly. Cost to be incurred is
broken down below:
5.5 ESSENTIAL SERVICES/UTILITIES
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Water: Water is an essential raw material for the production of palm oil. Water is
also used to generate process steam required for production, and is also needed for
the general cleaning of the production plants as well as for general use on the
factory complex. It is estimated that it will cost the company N1.4 million to sink a
borehole
Electricity: Given the epileptic supply of electricity in the country, provision has
been made for the purchase of one (1) standby Generator of 50 KVA rating each, to
ensure an uninterrupted electricity supply. These are planned to be acquired at a
cost of about N5.2 million, including the switchgear and cables. The company will
also need to purchase a 100 KVA Transformer and connect directly to the National
High Tension (11,000 or 33,000 V) line.
Others: Other utility requirements are, fire-fighting equipment, Fuel storage tanks
for Diesel and Fuel Oils. This will be procured locally.
5.6 VEHICLES
The following provisions are made:
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5.7 OFFICE FURNITURE, FITTINGS AND EQUIPMENT
A provision of N15 million has been made to cover the cost of buying computers,
photo copiers, Air conditioners, Tables, Chairs, Filling Cabinets, electrical fittings,
carpets, etc. The amount is to be apportioned as follows:
5.8 PRELIMINARY AND PRE-OPERATIVE EXPENSES:
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These Preliminary expenses would be on; Company Formation, Feasibility Study,

Travelling/ Hotel Expenses, Administrative Expenses, Consultancy Expenses and
Miscellaneous activities. Breakdown as follows:
5.9 INTEREST DURING CONSTRUCTION
The total financial charges payable before the commercial operation of the plant is
capitalized as Interest during Construction. The estimated sum of N12.5 million is
based on the planned disbursement of 100% of the capital costs.
5.10 WORKING CAPITAL
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A working capital requirement of N102.0 million is estimated for the first year of
operation. This is broken down as follows:
5.11 CONTINGENCIES
Three types of contingencies are provided for in our estimates. These are:
 Physical - This is to make provisions for the cost of items that may have been
inadvertently omitted in the course of estimating the machines.
 Price - This is to provide for possible cost escalation arising from increased
price of goods due to inflationary pressure.
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 Currency Fluctuations - It is assumed that the exchange rate of the Naira to

other foreign currencies will remain at about to N560 for US Dollars and this
has been used in the conversions.
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CHAPTER SIX
MARKET ANALYSIS
6.1 INTRODUCTION
Apollo Farms Nigeria Limited is proposing to set up facilities for the production of
300 tons of Crude Palm Oil per annum which will be processed from the oil palm
fruit. It will Also crack and separated Palm Kernel which will be a bye products of
the process, and this will be sold to vegetable oil manufacturers in the first phase of
the project. It also intends in the long term to extract and sell Palm Kernel Oil, using
the kernel feedstock from its palm oil mill.
All its products will be produced in conformity with the international Standard
Organization and the National Agency for Food Drugs Administration and Control
(NAFDAC) specifications.
6.2 PRODUCT IDENTIFICATION
6.2.1 Introduction
Palm Oil is an edible vegetable oil derived from the mesocrap (reddish pulp) of the
oil palm. Palm oil is rich in carotenoids, (pigments found in plants and animals) from
which it derives its deep red colour, and the major component of its glycerides is
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the saturated fatty acid palmitic; hence it is a viscous semi-solid, even at tropical
ambients, and a solid fat in temperate climates.
Palm oil is the second most traded Vegetable oil crop in the world, after Soya.
Traditionally used in the manufacture of food products, it is an increasingly
important ingredient in cosmetics and health products, and is now found in > 50% of
packaged consumer goods. Palm oil is also the most productive vegetable oil,
producing about 10 times more oil per hectare than its nearest competitor, Soya
Beans.
The World Bank forecasts that by 2020 an additional 6.3 million hectares of Oil Palm
plantations will be required to meet global demand.
There are 17 characteristics which are used to define and grade palm oil in order for
it to be internationally traded. Dominant among them are the levels of free fatty
acid (FFA), followed by dirt, iodine value, and other contaminants. The minimum
requirement for SPO is an FFA of less than 5%, which can be consumed or used in
products such as creams or further refined for soaps and bleaches. Oil which does
not meet the quality grades of those characteristics is qualified as TPO, with an
FFA>5%, and is mainly used for food consumption.
In Nigeria, there has been limited transformation and uses of the primary or
secondary products oil palm for either food or non-food applications. In developed
economies, however, palm oil is used in the manufacturing of many foodstuffs
including many industrial applications as can be seen in the table below
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Food uses Non – food uses

Cooking Oil Deep Frying Oils Cosmetics and personal care Soaps
Candles Pharmaceuticals Lubrications and
Margarines and spreads Bakery fats Grease Surfactants
Cocoa butter alternative fats Confectionary Industrial Chemicals Agrochemicals
fats Coatings
Ice cream fats Infants nutrition fats Paints and lacquers Electronics
Other food applications Leather Biodiesel
In the food industry, palm oil is used as a cooking oil and shortening, and in the
manufacture of margarine, non-dairy creamers and ice cream. It is also used in
products where animal fats are unacceptable on religious grounds.
Palm oil has a high resistance to oxidation and therefore a long shelf life. These
properties make it particularly suitable for use in hot climates and as a frying fat in
the snack and fast food industry.
The main non-food uses for palm oil are in the manufacture of soaps and detergents.
It is also used in the production of greases, lubricants and candles. The fatty acid
derivatives of palm oil are used in the production of bactericides, cosmetics,
pharmaceuticals and water-treatment products. More recently, palm oil is finding
use in the production of biodiesel and in power stations as an alternative to mineral
oils.
6.3 THE NIGERIAN PALM OIL INDUSTRY
The oil palm is native to West Africa and has from time immemorial been exploited
in Nigeria and, in particular, the Niger Delta region. Palm oil is a major part of the
diet of the people of the region and is the major source of cooking oil. It is
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intertwined with the economy of the people of the region. Along with other cash
crops such as cocoa, groundnut, palm oil was a major source of export revenue for
Nigeria before the ascendance crude petroleum as the major foreign exchange
revenue for the government of Nigeria in the 1970s.
Nigeria was before 1965, the largest producer and exporter of palm produce. The
country effectively lost this position following the civil war of 1967 – 1970, such that
by 1974, Nigeria went out of the export market and became a net importer of palm
oil. The bulk of palm produce in Nigeria during Nigeria’s dominance of world
production and trade, came from exploitation of the country’s vast natural groves
which abound in the Niger Delta. With the rapid expansion of the cultivation of the
crop in estate plantations in South East Asia, notably, Malaysia, Indonesia and
Thailand as against the low levels of investments at industrial scale as well as small
and medium scale, Nigeria now ranks fifth in global production.
Although the oil palm industry in Nigeria has expanded significantly away from wild
grove exploitation to small medium and industrial scale plantations since the 1970s,
the country today contributes less than 2% of global palm oil production and has
remained a net importer of cooking oils. Despite the country’s ranking as one of the
world leading producers of palm oil, Nigeria has since 1974 ceased to be an exporter
of the product, except for the small quantities which is exported to Nigerians in the
diaspora.
The dominant small producers are inefficient and are often not able to produce palm
oil of the quality required for refining and industrial uses. Nonetheless they occupy a
significant segment of producers of domestic cooking oil.
In a recent effort to stimulate the local oil palm industry in Nigeria, the Central
Bank of Nigeria in 2015, as an incentive to local producers, included palm kernel,
palm oil products and vegetable oils among the exclusion list of items not valid for
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foreign exchange at the Nigerian Foreign Exchange window (Emefiele, 2015). By this
policy, importers of palm oil and its derivatives are required to independently source
their foreign exchange for the purpose. This is in addition to the tariff of 35% on
imported crude palm oil (CPO) in complement to the policy on prohibition of
importation of refined palm oil and other vegetable oils.
Nigeria’s local demand for palm oil (mostly for domestic use) far out strips
production. Thus, the foreign market is no longer an incentive for growth of the
industry. On the other hand, Nigeria imports significant amount of its demand for
palm oil as shown in Table 7 Below:
Table 7
6.5 SUPPLY ANALYSIS
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6.5.1 Palm Oil
The supply of palm oil to the Nigerian market used to be met from two principal
sources, the domestic production and imports. The Federal Government of Nigeria
in the past had allowed importers of palm oil to enjoy a seventy-five (75%) duty
waiver, however the government as part of its new economic policy on agriculture
has abolished this waiver and currently encourages larger investment in the Oil Palm
sector.
The Palm Oil manufacturing sub-sector is still in its infancy in spite of the abundance
of plantations in the country. This has been attributed to the fact that most of the
existing plantations, which are mostly government, owned are either abandoned or
poorly maintained. A few companies have tried to develop their own palm plantation
estates, however because of the long gestation period (Planting to revenue
generation 4 yrs), only companies with strong financial bases have been able to
succeed in developing Plantations Large enough to sustain their operations. Apollo
Farms in the near future intends to take advantage of its location to develop new
plantations to feed its mill and mill expansion plans in the future.
The major companies producing palm oil are shown in Table 8 below.
Table 8: OIL PALM MANUFACTURERS IN NIGERIA WITH THEIR INSTALLED CAPACITY
S/N COMPANIES PLANTATION INST.CAP REMARKS

SIZE (HECTARES) (TONS/ANNUM)
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Okitipupa Oil Palm Company

1 Plc, Irele, Ondo State 3,206 20,000 Operating
Okomu Oil Palm Company

2 Plc, Edo State 8,800 75,000 Operating
3 Presco Plc, Benin Edo, State 9,000 22,000 Operating
4 Obasanjo Farms Ltd 30,000 20,000 Operating
Oil Pal Co. Ltd, Ajagbodudu,

5 Delta State 1,600 6,000 Operating
Adapalm Nigeria Ltd. Imo

6 State 5,000 8,000 Operating
J. B. Farms Ltd, Odogbolu,

7 Ogun State 1,525 5,000 Operating
8 Risonpalm Ltd. Rivers State 10,000 4,000 Operating
9 PZ-Wilmar Limited 26,000 Operating
10 Others 992,000 Operating
Sub-Total 1,152,000
Sources: (1) Nigeria Industrial directory- A publication of Manufacturers Association of Nigeria. MAN
(2) Stemgart Ventures.- Market Investigation, April 2022
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6.6 PROJECTED SUPPLY
6.6.1 Palm Oil
There are strong indications that the yearly increase in supply of palm oil will persist
into the future for several reasons.
The present government of President Mohammadu Buhari is working towards

creating and more conducive economic environment, that will attract investments
into the Nigerian economy. Also the energy sector is expected to improve
significantly to minimize the logistic problems; while capital inflow may encourage
new entrants or existing producers to modernize their machinery. These would
enhance capacity utilization of the existing installed capacity and increase the
national installed capacity thereafter. Also with the emerging Nigerian middle class
getting used to the culture of packaged foods, the demand for vegetable oil for use
in the manufacture of such goods will continue to rise.
In projecting the supply of palm oil, the following assumptions were made;
(1) That the present known and unknown manufacturers will operate at 60.0% of
installed capacity i.e., 691,200 tons of Crude Palm Oil (CPO) per annum.
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(2) This is thereafter projected at 3%, which is the estimated growth rate of the
Nigerian population.
The resultant projection is shown in Table 9 below.
Table 9: PROJECTED SUPPLY OF PALM OIL (TONS)
Sources: From assumptions
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6.7 DEMAND ANALYSIS
6.7.1 Demand for Palm Oil
The demand for palm oil in Nigeria is influenced by a number of factors amongst
which are; population, income, education, urbanization and price of substitutes.
In Nigeria, palm oil is widely used as a cooking oil, as an ingredient in margarine,

and is a component of many processed foods (most notably noodles; indomee, O
noodles, Tummy Tummy etc.) It is also an important component of many soaps,
washing powders and personal care products, is used to treat wounds.
Local demand for crude palm oil (CPO) is also driven by the huge refining capacities
in the country (Table 10), which is not met by the quality of palm oil produced by
the small and medium holders.
Table 10:Some Functioning Local Refining Capacity in Nigeria
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The growing noodle industry in the country has also greatly driven the demand. The
much of local production capacities of CPO that can meet the quality demanded for
refining is produced by the large industrial estates such as Okomu Oil Palm Plc,
Precso in Edo State, SIAT Nigeria Ltd in Rivers State, PZ Wilmar in Cross River State,
Agri-Palm (FMN) in Edo State, IMC in Delta State, JB Farms in Ogun and Cross River
State and Araromi-Aiyesan Estate in Ondo State. Given this scenario, most of the
local refiners often resort to importation of CPO from Indonesia and Malaysia and
sometimes along the land borders from neighbouring West African countries, which
is thought to be trans-shipments from Indonesia and Malaysia. The Plantations
Owners Forum of Nigeria (POFON) has been in the vanguard of fighting these
importations which sometimes come from land borders as disguised trans-shipments.
Some of these refineries such as Golden Oil Industries have capacities for refining
other oils such as Soyabean Oil, and palm kernel Oil as well as margarine plants.
Generally speaking, the higher the population, the greater the demand for consumer
goods such as edible oil and other products for which palm oil forms a basic raw
material.
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The total consumption of palm oil in 2021 was 2,420,144 1metric tons (MT), this was
made up of 691,200 MT local supply and 1,728,944 MT imports. Distribution of
consumption was as follows: 1,315,748 MT industrial uses and 1,107,000 MT food use
(edible oil consumption).
For our projections this figure is projected at 3.0% growth rate as shown in Table 11
below. Also, a breakdown of industrial users is included in the appendix:
Table 11: PROJECTED DEMAND FOR PALM OIL IN NIGERIA
Source: SVL, Market Investigation, April 2022
1
Source FAO and CBN Data, Stemgart Ventures Market Research
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6.8 SUPPLY GAP ANALYSIS
With a current production estimated at 980,000 – 1,250,000 MT per annum, Nigeria’s

palm oil production fall far short of its demand estimated at 2,500,000 MT (given a
population of 194 million and consumption of 12.5 kg per caput, FAO STAT). This
thus implies a deficit of about 1,250,000 MT.
Table 12 below compares the projected supply with the projected demand for both
palm oil and palm kernel oil to determine the supply gap
Table 12: PROJECTED SUPPLY GAP (TONS)
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Source: Calculated from Tables 9 and 11
6.9 MARKET PROSPECTS
From our analysis as shown in Table 12, the supply gap for palm oil averaged 1.9
million tons per annum over a five year period.
Another prospect for palm oil producers is that the Nigerian population has grown
steadily over the years. More importantly, is the increasing awareness for packaged
and processed foods.
The present drive by the Federal Government to ban the importation of vegetables
oils will further widen the supply gap for palm oil and palm kernel oil. This will
create opportunities for the Nigerian producers of palm oil and palm kernel oil.
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6.10 MARKET ACCEPTABILITY
For Apollo to quickly gain market acceptance, it plans to produce high quality,
products. It also plans to make itself a one stop shop with product availability all
year round even during the oil palm off peak season. This will be achieved with its
tank farm which will store palm oil during the peak season and sell during off peak
season.
6.11 PRICING AND DISTRIBUTION STRATEGIES
(a) Market Prices of Palm Oil
As can be observed from the Table below, the average wholesale price per ton for
palm oil has risen consistently over the past three years ranging from between
N650,000 and N965,000 over the said period. The strong price trend and steady
increase in price has been as a result of the growing demand by industrial end users
of palm oil. It is expected that the local market will enjoy more monopoly as the
Presidential Vegetable Oil Development Program (VODEP) reaches set out targets for
self-sufficiency in Vegetable oil production. However, with the recent drop in the
naira, the local price of palm oil has experienced a corresponding increase.
Table 13: MARKETING PRICES OF PALM OIL IN NIGERIA
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Source: SVL, Market Investigation, April 2022
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CHAPTER SEVEN
7.1 PROFITABILITY AND FINANCIAL ANALYSIS
In estimating the operating expenses during the operational years, the following
assumptions and provisions are made:
a) Capacity utilization is expected to start from 60% in the first year and grow
steadily to 90% in the fourth year when it is expected to stabilize.
b) The machines annual installed capacities operating on a double shift of 10

hours each are given as follows:
i. Palm Oil Mill 1,440 MT of FFB, per Annum
c) Average Factory prices are assumed as follows:
i. Palm Oil N 965,000.00 per MT

ii. Palm Kernel N 265,000.00 per MT
7.2 RAW MATERIALS (FRESH FRUIT BUNCHES)
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Costs involved in the production of FFB differ according to the type of plantation,
that is whether the area is undergoing replanting (the use of land that was formerly
developed with other crops) or new planting (establishing a cultivation area formerly
under jungle). The cost of establishment of a new plantation would be 20–30% higher
than that for replanting, because new plantings would require more intensive land
preparations, including the setup of new terraces, drainage systems, roads and
pathways.
For our projections, we have considered that all plantations will be greenfield
plantations. Costs incurred during the first three years of oil palms development are
different from these after this period, when the palms became mature and fresh
fruit bunches could be harvested monthly and economically for the following 16 to
25 years.
Estimates of FFB production cost rendered at the mill are derived here and the table
below presents an estimation of FFB production costs.
Description NGN/Ton FFB %

Plantation upkeep and cultivation (palm seedlings, weeding, pruning,
pollination, pest/disease control, infrastructural maintenance) ₦ 2,880.00 8.00%
Fertiliser and Agrochemicals Application ₦ 7,920.00 22.00%
Harvest and Collection ₦ 5,400.00 15.00%
Depreciation (plantation, machinery/equipment ₦ 5,400.00 15.00%
Labour (workers and management) ₦ 9,000.00 25.00%
Transport FFB to milling ₦ 2,880.00 8.00%
Overheads (utilities, insurances, communication, other services, administration,
security, etc.) ₦ 1,800.00 5.00%
Miscellaneous ₦ 720.00 2.00%
Total ₦ 36,000.00 100.00%
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Direct production costs comprise expenses for plantation up keep (roads, harvesting paths,
bridges, drainage), agricultural inputs (fertilisers, products for controlling pests, weeds, and
diseases), pollination, labour (oil palms pruning, harvesting, collection, in-field transport of
FFBs, maintenance, management and office staff), and agricultural equipment. Indirect costs
comprise the depreciation of plantation and equipment, overheads (utilities, insurances,
communication, other services, administration, security, etc.) and miscellaneous issues.
For our projections we have used a cost of NGN 40,000.00 (forty thousand naira only)
7.3 UTILITIES
Utility costs include cost of electricity consumed by the production plants, fuel oils
consumed by the boiler/machinery, diesel consumed by the generators, petrol,
lubricants and other related costs. Due to the erratic nature of grid power supply
the company will rely 70% of its operations on Generators. Thus, a provision of 0.6%
of Net Sales revenue will be made available for utility costs.
7.4 MAINTENANCE
The proposed plant and machinery will be easily maintained at a relatively

reasonable cost since they are being purchased newly. However, the machines must
be adequately maintained for optimum performance. Hence, for the maintenance
of the plant and other fixed assets, a provision of 1.7% of the fixed assets cost has
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been made in the first year of operation. This is expected to increase in consonance
with capacity utilization of the plant in subsequent years.
7.5 ADVERTISEMENT AND SELLING EXPENSES
Since Apollo Farm’s products will get to the market via direct sales, and it is
assumed that the company will spend a minimal amount on sales drives. In this
regard, an estimate of 0.5% of Net Sales revenue is expected to cover the cost of
sales and distribution cost.
7.6 DEPRECIATION
Depreciation is computed on a straight-line basis using the following rates:
i. Building 5%
ii. Plant and Machinery 10%
iii. Generators 10%
iv. Other Utilities 10%
v. Vehicles 20%
vi. Office Furniture and Equipment 20%
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7.7 AMORTIZATION
An amortization rate of 20% is applied on the following;
o Preliminary and Pre-operative Expenses
o Interest during Construction
o Legal documentation Fees
7.8 FINANCE CHARGES
It is assumed that the long-term loan would attract 5% per annum interest rates. The
tenor of the long-term loan is taken as 6 years, with two-year moratorium.
The short-term loan or overdraft facility, which will be used to finance the working
capital, is expected to be obtained at an interest rate of 5% per annum. This short-
term loan is expected to have tenure of three years, and a monthly repayment
without any moratorium.
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Provision is made for Bank charges, which may depend on the turnover of accounts
in the Banks.
7.9 TAX PROVISION
Tax provision of 30% and 2% on assessable profit have been assumed in the
computation of Company and Education Taxes respectively after provision has been
made for capital allowance.
7.10 PROFITABILITY ANALYSIS
The company’s Net Sales Revenue, after making provision for 5% VAT, is expected to
rise from N146.71 million in the first year to N1.04 billion in the fifth year. Similarly,
annual Net Profit is expected to improve from N9.54 million in the first year to a
profit of N534.66 million in the fifth year. Excise duty is not expected to be paid by
this company in the immediate future.
Return on Sales is expected to rise from 6 % in the second year to 51% in the fifth
year. The projected Profit and Loss Account is summarized below:
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These indicators show reasonable and satisfactory returns.
7.11 CASH FLOW ANALYSIS
The cash flow projection after financing is summarized below. The projections show
that the company will be able to generate sufficient funds to service its debt as well
as meet other operational requirements without difficulty. It is proposed that a
current ratio of 1.5, for the period of repayment, is considered good, noting that the
minimum during the period is 1.5
The Cash Balance for the period is as follows:
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7.12 BALANCE SHEET ANALYSIS
The projected Balance Sheet is shown in Appendix 7. Retained Earnings are expected
rise from N 9.54 in the first year to N670.26 million in the fifth.
The summary of the projected Balance Sheet is given below:
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The liquidity positions, as well as the financial leverage, over the projected period
are quite satisfactory.
7.13 SENSITIVITY ANALYSIS
The sensitivity of the project is tested on Sales and the cost of raw/packaging
materials, using the Opportunity Cost of Capital as 5.0%. The analysis shows that a
56.0% drop in revenue or 315.0% rise in the cost of raw and packaging materials will
render the project unviable. The projections have assumed very conservative
estimates such that selling prices are not likely to drop by such a rate, while
increases in raw material cost is most unlikely to be unnecessarily high. The
proposed prices are less than the current ex- factory prices in the industry.
The project is therefore not sensitive to changes in any of the variables.
7.14 INTERNAL RATE OF RETURN
Appendix 6c shows the Internal Rate of Return Before and After Financing of 113%
and 156% respectively, which are very satisfactory, as they are much higher than the
highest borrowing rate of 30%. The high IRR value is considered good, attractive and
attainable.
Assumptions used in the calculations are:
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- Projected life span of the project taken as 10 years
- 2022/2023 is taken as implementation period.
- Salvage value taken at 5% of Plant and Machinery, 10% of buildings, 100% for
Land and Land Development, 5% for utilities, 2.5% for Office
Equipment/Furniture and 100% for Raw Materials.
7.15 BREAK EVEN POINT
With the envisaged production schedule, the company is expected to break even
with production at 22% of the installed capacity, with sales revenue of N97.26
million. This capacity utilization is achievable in the first year of operation and is
considered very satisfactory.
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CHAPTER EIGHT
ECONOMIC ANALYSIS
The project is desirable to the Nigerian economy when analysed by the following
parameters.
8.1 EMPLOYMENT
At a time when the rate of unemployment is soaring, with attendant social vices, the
provision of employment to at least 40 Nigerians is a good indicator. This is expected
to have a positive multiplier effect on the Nigerian economy in general and the
environment in particular.
8.2 GROSS VALUE ADDED
The company’s contribution to the national income in terms of Gross Value Added is
N1.76 billion by the fifth year of operation. This is equivalent to N44.6 million per
person employed in the company and about 20.02% of sales revenue in the first year.
This is considered very satisfactory especially with the number of employed people.
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8.3 LOCAL INPUT/FOREIGN INPUT RATIO
The local input/foreign input ratio which shows the extent to which the project
relies on local sources for the inputs stands at 99:1. This implies that 99% of the
project’s inputs would be sourced locally.
8.4 FOREIGN EXCHANGE SAVINGS
The project will generate an annual net foreign exchange savings of US $500,000
(N300.0 million) which is considered very good.
8.5 ECONOMIC RATE OF RETURN (ERR)
The project has an Economic Rate of Return of 91%, which is quite adequate when
compared with the opportunity cost of capital of 22.5%. The analysis assumes a
Foreign Exchange Premium of 1.5 for the adjustment of sales revenue.
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8.6 SOCIAL BENEFITS
The company would offer far reaching social benefits to the people around the
project location in particular and other states in general. The financial returns to
this company are such that the government would benefit in the form of Company
and Educational Tax, Employees P.A.Y.E, etc. the average tax returns to government
over the first five years of operation is N63.0 million per annum. The project will
also contribute directly to the government policy of rural development and
industrialization.
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CHAPTER NINE
RISK ANALYSIS AND CONCLUSION
9.1 RISK ANALYSIS:
9.1.1 INTRODUCTION
Apollo Farms Nigeria Limited does not foresee any extraordinary or material risk
factors pertaining to the proposed mill and plantation development save for the
business/operating risks normally associated with the palm oil industry.
There are two main categories of risk that are associated with the palm oil industry;
business risk and price fluctuation risk.
In this section we give a SWOT analysis of Apollo Farms Nigeria Limited and also
analyze the various risks.
9.2 SWOT ANALYSIS
The Strength, Weaknesses, Opportunities and Threats (SWOT) of the proposed

project have been analysed as follows:
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Strengths Weaknesses
 Key location of Apollo Farms  Relatively new as a big

Nigeria Limited: Palm oil player in the downstream
that is used in Asaba, Warri end of the palm produce
and Sapele is primarily market, i.e. palm oil
sourced from the Edo/Delta expelling, palm kernel sales.
belt and environs, Apollo
Limited is strategically  The industry is vulnerable to
located to contribute to that uncontrollable affective
supply since it is located in factors. Aside from economic
Delta State. issues, changes in the
weather patterns worldwide
 Brand new and state of the can affect palm oil
art Palm oil mill with high plantation and production
processing efficiency
Opportunities Threats
 The higher CPO prices appear  Inconsistent government policy,

sustainable, supported by an the lifting of the ban on palm oil
anticipated supply tightness of imports can affect the
17 global oils and fats (including competitiveness of locally
CPO) in the coming months produced palm oil.
arising from an increase in
global biofuel demand,  The oil palm industry in Nigeria
faces significantly growing
 Renewable energy objectives. competition with other foreign
The Kyoto Protocol 1997 producers. Among its great
members generally agree to contenders are Malaysia and
Page | 103

reduce greenhouse effect and Indonesia, which are considered

the release of harmful gases into the first and second largest
the environment. Hence, the producers in the world for palm
need for renewable energy like oil respectively. Both Nation’s
palm biodiesel. Globally, world competitiveness within the palm
consumption of diesel was about oil industry is also indicated by
561m tonnes in 2001. If a 5% their well-managed plantation
replacement is required, the and low cost of production. The
demand for biodiesel could Nigeria’s palm oil industry is also
reach 28m tonnes. threatened by the presence of
other oil producers that
 Net oil importing countries like distribute oils and fats at a lower
EU, Korea and Japan are price.Low purchasing power of
potential markets. It is however the mass market may also affect
worthy of note here that the rate of adoption
local market which is hardly
saturated offers competitive
pricing when compared to the
export market.
 Forward integration of products,

the Oil palm is a plant with
negligible waste, often referred
to as by products, Apollo Farms
in the future can graduate from
an oil processor to manufacture
of consumer goods including but
not limited to; soap, vegetable
oil, baking fats etc, which palm
oil and palm kernel oil are the
base raw materials.
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9.3 INHERENT BUSINESS RISK IN THE PLANTATION INDUSTRY
As with other palm oil producers, Apollo Farms Nigeria Limited is subject to risks
inherent to the plantation industry, which include but not limited to changes in
global, regional and national economy, competition from existing and new
producers, changes in weather conditions, fluctuation in commodity prices, changes
in consumer tastes, outbreak of pest and crop diseases, changes in technology,
increase in production, labour and storage costs, and changes in business and credit
conditions
Apollo Farm’s financial risk management policy seeks to ensure that adequate
financial resources are available for the development of the company’s business
whilst managing its credit, liquidity, interest rate, foreign currency and commodity
price risks. The company’s overall risk management strategy seeks to minimise
adverse effects from the unpredictability of financial markets on its financial
performance.
The mitigants against the key risks of the project include
Key Risks Mitigants
Weather conditions  Zero burning of debris to improve the

soil health with emphasis on
microbial diversity.
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 Construction of contour terraces in

undulating to hilly terrain.
 Establishment of legume covers for

soil protection and for building up of
organic matter and soil N.
 Draining of low lying areas, to

maintain the water level in peat and
acid sulphate soils.
Outbreak of pest and crop diseases  Apollo Farms Nigeria limited will work
towards developing an Integrated
Pest Management (IPM) plan, which
is documented and updated,
quarterly.
 Such Plans will cover techniques such

as owls to control rats, Metarhizium
and virus for rhinoceros beetle, Bt
formulation for leaf-eating pests like
the bagworm and nettle caterpillar
etc.
The risk associated with competition  A Key factor for success in the palm
produce industry is the ownership of
plantations. Apollo Farms has in
place a plantation development plan
that will ensure that it is self
sufficient in the supply of its raw
materials within the first five years
of operation, therefore enabling it
to operate more effectively and
efficiently than competitors in its
Page | 106

catchment area.
 This risk is considered low as the

demand for palm oil in Nigeria is
more than sufficient to
accommodate the
product from the plants. It is
expected that the demand will
continue
to grow in the medium to long term
driven by the strong growth in
population and increased in the
manufacture of consumer goods: i.e.
noodles, vegetable oil, soap etc.
Buyers Default  Big buyers/distributors may default

and consequently revenues and
margins may be pressured. This is
considered low as majority of the
sales will be on cash and carry basis
given that
palm oil is a seller market both in
the local and International markets.
Increase in cost of operations  Sensitivity test carried out on our

projections show that the business
will be profitable and service all its
obligations with a 40% increase in
cost of operations. Also it is planned
that the plant will generate about
60% of the thermal energy require at
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the mill using bye products from the

palm fruit, this will ensure that the
company is not adversely affected by
price fluctuation in cost of fuel
9.4 FLUCTUATION IN CRUDE PALM OIL PRICES
The performance Apollo Farms Nigeria Limited is dependent on the crude palm oil
(“CPO”) and Palm Kernel (“PK”) prices in the oil palm industry at a particular time.
As a globally traded commodity, the fluctuation in palm oil prices correlates with
the demand and supply of the vegetable oil and fats market thereby giving rise to
volatile price movements.
Apollo Farms intends to develop and manage its own plantations that can supply
adequate feedstock to its palm oil mill within the first 5 years. This will ensure that
price fluctuations do not affect medium term projections, since major expenditure
in terms of raw materials supply has already been borne in the development years of
the plantation estates.
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9.5 SUGGESTIONS
The following suggestions should be noted for successful implementation and

operation of the project.
In view of the state of the economy, prompt provision of funds must be made to
avoid unnecessary time and cost overruns.
The management of the company as proposed should be given free hand in running
the affairs of the company. In this regard, the management by a General Manager as
proposed should be put in place to ensure stability and growth.
There must be Machinery Supplier Agreement to ensure reliable performance of the

suppliers.
Strong Research Department should be put in place to ensure the production of High
Quality and innovative products.
Adequate training of the technical staff, both within and outside the country, is
essential to maintain international standard of the products so as to be able to
effectively compete in the market.
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Regular and adequate maintenance system should be adopted to avoid frequent

machines breakdowns. This will ensure uninterrupted production so that the desired
profitability level would be achieved.
There should be job description for all the positions in line with what has already
been done for management. The format of the job description should be standard
design describing basic job functions to be performed, academic/ technical
requirements, reporting structure etc.
9.6 RECOMMENDATIONS
Based on information gathered from our fieldwork and other researches on this
project and going by the analysis articulated in the preceding chapters of the report,
we are convinced that this proposal is worthwhile.
With a break-even point of 22% of installed capacity, the project will achieve
profitability right from the first year of operation when the plant would be operated
on only one shift per day. This implies that the project will break even if it operates
only a shift.
The proposed plants are to be sourced from a reliable company, with adequate spare
parts and technical services back up. The proposed machinery suppliers are known
all over the world and all their components are sourced from reputable companies.
Page | 110

The analysis has shown that the project is technically feasible. Economic analysis
shows it is desirable, while the established market and financial returns show it is
viable.
We therefore, recommend the proposal for financial assistance and implementation

for the benefits of the generality of Nigerians.
In reviewing the financials below, calculated in Naira, the exchange rate of the
Naira to US dollars is N600/$1 (That is, six hundred nairas exchange for one dollar).
Page | 111

Revenue – Appendix 2(A)
Page | 112

Page | 113

Cost of Revenue – Appendix 2(b)
Page | 114

Page | 115

Personnel – Appendix 3
Page | 116

Page | 117

Projected Income Statement – Appendix 4 (A)
Page | 118

Page | 119

Page | 120

Cash Flow Projections – Appendix 4 (B)
Page | 121

Page | 122

Analysis of Plantation and Mill Output – Appendix 5
Page | 123

Page | 124

Page | 125

Cost of Field Establishment (Labour) – Appendix 6 (A)
Page | 126

Page | 127

Cost of Field Maintenance (Labour) – Appendix 6 (B)
Page | 128

Page | 129

Page | 130

Cost of Field Establishment and Maintenance (Fertilizer) – Appendix 6 (C)
Page | 131

Page | 132

Cost of Field Establishment and Maintenance (Agro Chemicals) – Appendix 6 (D)
Page | 133

Page | 134

Feasibility Study Oil Palm Apollo Farms Ver 1.0

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Feasibility Study Oil Palm Apollo Farms Ver 1.0

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FEASIBILITY REPORT/BUSINESS PLAN

FOR PALM OIL PROCESSING PLANT

APOLLO FARMS NIGERIA LTD,

PHONE: +234 (0) 703 327 8516

© APOLLO FARMS NIGERIA LIMITED

© APOLLO FARMS NIGERIA LIMITED

As a fallout of the feasibility study, a bankable Business Plan to facilitate the

This report is confidential.

© APOLLO FARMS NIGERIA LIMITED

ACGSF Agricultural Credit Guarantee Scheme Fund

ADP Agricultural Development Programme

CBN Central Bank of Nigeria

CIF Carriage, Insurance and Freight

CPKO Crude Palm Kernel Oil

CPO Crude Palm Oil

DCRR Differentiated Cash Reserves Requirement

EFB Empty Fruit Bunches

EWS Extension Work Seeds

FAO Food and Agriculture Organization of the United Nations

FFA Free Fatty Acid

FFB Fresh Fruit Bunches

FOB Free on Board

GDP Gross Domestic Product

MSME Micro, Small and Medium Enterprise

NEEDS National Economic Empowerment Development Strategy

NEPC Nigerian Export Promotion Council

NGN Nigerian Naira

NIFOR Nigerian Institute for Oil Palm Research

NIPC Nigerian Investment Promotion Commission

© APOLLO FARMS NIGERIA LIMITED

OER Oil Extraction Rate PITC Presidential Initiative on Tree Crops

PKC Palm Kernel Cake

PKO Palm Kernel Oil

POS Palm Oil Sludge

RBDO Refined Bleached Deodorized Oil

RSSF Real Sector Support Facility

SON Standards Organization of Nigeria

SPO Special Palm Oil

SSPE Small-Scale Processing Equipment

TCU Tree Crops Unit

TPO Technical Palm Oil

UNDP United Nations Development Programme

VEOPAN Vegetable and Edible Oil Producers of Nigeria

VODEP Vegetable Oil Development Programme

© APOLLO FARMS NIGERIA LIMITED

Facilitator/facilitation: An action or individual (or group of individuals) that

Market: A set of arrangements by which buyers and sellers are in contact to

Market system: The multi-player, multi-function arrangement comprising three

© APOLLO FARMS NIGERIA LIMITED

© APOLLO FARMS NIGERIA LIMITED

Upgrading: In order to respond effectively to market opportunities, upgrading is

© APOLLO FARMS NIGERIA LIMITED

1.2 EXECUTIVE SUMMARY.........................................................................................10

1.2.1 OVERVIEW OF THE PROJECT....................................................................10

2.2 AGRO-ALLIED INDUSTRY IN NIGERIA'S ECONOMY..................................................16

3.2 OWNERSHIP STRUCTURE AND BOARD REPRESENTATION.....................................18

3.3.1 PROFILE OF SHAREHOLDERS.....................................................................18

4.2 PROJECT LOCATION..................................................................................................21

© APOLLO FARMS NIGERIA LIMITED

4.2.2 SITE ANALYSIS.............................................................................................21

4.3 PRODUCTION PROCESS.............................................................................................22

4.3.1 CRUDE PALM OIL........................................................................................22

4.4 RAW MATERIALS........................................................................................................25