Pre-Feasibility Study

(Production of Mango Nectar)

Pakistan Council of Scientific and Industrial Research. PCSIR.

HEAD OFFICE Constitution

Avenue, Sector G-5/2,
051-9225393
Islamabad.

Food Technology Centre

PCSIR Labs Complex,
Jamrud Road, P.O. University of Peshawar
Tel. # 091-9216240-2
Fax # 091-9216232

Note: All Services / information related to PM's Youth Business Loan are Free of Cost

March, 2014

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1 DISCLAIMER

In this document, we provide the information regarding the subject matter. The material
of whole the document is based upon the data and information collected from various
reliable sources which may differ from case to case. The information has been provided
on ‘as is where is’ basis without any warranties or assertions as to the correctness or
soundness thereof. Food Technology Centre PCSIR Labs Complex Peshawar, its
employees do not assume any liability for any financial or other loss resulting from this
memorandum in consequence of undertaking this activity. The contained information does
not preclude any further professional advice. The prospective user of this memorandum is
encouraged to carry out additional diligence and gather any information which is necessary
for making an informed decision, including taking professional advice from a qualified
consultant / technical expert before taking any decision to act upon the information.

2 PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs

in project identification for investment. The project pre-feasibility may form the basis of
an important investment decision and in order to serve this objective, the document/study
covers various aspects of project concept development, start-up, and production,
marketing, finance and business management. The purpose of this document is to
facilitate potential investors in production of mango Nectar by providing them a general
understanding of the business with the intention of supporting potential investors in crucial
investment decisions. The need to come up with pre-feasibility reports for undocumented
or minimally documented sectors attains greater imminence as the research that precedes
such reports reveal certain thumb rules; best practices developed by existing enterprises by
trial and error, and certain industrial norms that become a guiding source regarding
various aspects of business set-up and it’s successful management. Apart from carefully
studying the whole document one must consider critical aspects provided later on, which
form basis of any Investment Decision.

3 Introduction to Food Technology Centre PCSIR Labs Complex Peshawar

The Food Technology Center was established in1959 with the following objectives in view
(i) development of processes for the economic utilization of indigenous food raw materials
and the utilization of wastes of the food processing industry. (ii) providing technical
assistance and advisory services to the food industry (iii) providing ad hoc analyses
facilities to the industry as well as private sector and (iv) furnishing scientific and
technological support for the development of food industries based on indigenous food raw
materials. The Center consists of (i) Food Microbiology Section (ii) Fruit process
Development Section (iii) Food processing and Quality Control Section ( iv)Food
Biochemistry/Analytical Section (v) Food and Nutrition Section, (vi) Mycotoxin Section
(vii) Food Pilot Plant Section (viii) Environmental Research Section.

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4. EXECUTIVE SUMMARY

PCSIR is a premier R&D Organization of the Country under the Ministry of

Science and Technology, Government of Pakistan, established in 1953 with the
objective to develop technologies for industrial utilization of indigenous resources,
export enhancement and import substitution. The beverage industry including the
fruit juice industry is considered to be one of the largest industrial sectors in
Pakistan. Common people especially young generation is inclined to have ready to
consume drinks and nectars. Nectars are relatively new fruit products in which
whole fruit is made into beverage, with addition of sugar water and acid. It varies
from fruit juice because of the presence of added water and suspended solids, but
resembles with it in flavour. As the nectars are prepared from the whole fruit, so
there are some advantages in the utilization of the peel in the product. The peel adds
essential oils present in it to the pulp. It imparts aroma and flavour stability in the
product during storage. Inclusion of the peel also increases nutritive value of the
nectar as it is rich in many nutrients. Keeping in view the popularity of nectars,
Food Technology Center of PCSIR Laboratories Complex, Peshawar has developed
processes for the production of mango nectar. The primary objective of this study is
to preserve the perishable mango fruits in a stable form that can be stored and
supplied to local and distant markets during all month of the year. The product is
delicious and refreshing. All the vitamins, minerals and aroma are fully preserved
in the nectar.

5 INTRODUCTION TO SCHEME

Prime Minister’s ‘Youth Business Loan’, for young entrepreneurs, with an allocated
budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide
subsidized financing at 8% mark-up per annum for one hundred thousand (100,000)
beneficiaries, through designated financial institutions, initially by the National
Bank of Pakistan (NBP) and the First Women Bank Ltd. (FWBL). Loans from Rs.
0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace
period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across
Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit Baltistan,
Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

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6 BRIEF DESCRIPTION OF PROJECT & PRODUCT

The Mango (Mangifera indica L.) member of family Anacardiaceae, is one of the most
important tropical fruits of the world. Pakistan is standing at 5th place by contributing 916.4
MT mangos, which is 3.9% in the total world production. It is a rich source of vitamin A
and vitamin C. Ripe pulp of mangoes provides 74 Kcal of energy per 100 grams of edible
portion. Its general composition is, moisture (79.2 - 82%) total soluble solids (12.9 - 20.8%)
total sugars (10-17.3%), non-reducing sugars (7.27 - 12.35%), ash content (0.49 - 0.58%)
and crude protein (0.38 - 0.62%) on fresh weight basis. Mango is mostly consumed as fresh
fruit, but due to its perishable nature it cannot be stored for long time. In order to make the
mango fruit available during the off season it is processed to make juices, squashes and
nectars.

7 CRITICAL FACTORS
• Electricity crises.
• Lack of marketing and advertising of the products in public sector.
• Regular training and capacity building of the entrepreneur and employees are required.
• Higher prices make the quality products less reachable as compare to cheap and low grade
products.
• Prior experience and related /education in the related field.
8. INSTALLED & OPERATIONAL CAPACITIES
See the number 12 (PROJECT COST SUMMARY)
9. GEOGRAPHICAL POTENTIAL FOR INVESTMEN
Sindh and Southern areas of Punjab Pakistan are the key growing areas of mango fruits during
peak season huge amount of the fruits are destroyed processing areas. Production unit can be
established in these areas.

10. POTENTIAL TARGET MARKETS:

Local Food manufacturing firms

Neutraceuticals and Beverages
Utility and super markets

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11. PRODUCTION PROCESS FLOW

Fruit reception

Washing

Sorting

Pulping

Batch
Preparation
Pulp+ Sugar
Syrup+ water
+other additives

Homogenization

De-aeration

Bottle filling

Capping

Labeling

Packing

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 12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of mango
nectar under the ‘Prime Minister’s Youth Business Loan’ scheme the project. Various cost
and revenue related assumptions along with results of the analysis are outlined in this section.
Name of product/ Activity: Mango Nectar
Capacity: 1600 bottles /day
Production time per batch: 08 hrs
Packing Size 250ml PET bottle

12.1 Project Economics

Production capacity 1600 bottle of 250 ml each/day.
The following table shows internal rate of return, payback period and Net Present Value;
Table 1: Project Economics
Description Details
Internal Rate of Return (IRR) 80%
Payback Period (yrs) ---
Net Present Value (NPV) ---
12.2 Project Financing
Following table provides details of the equity required and variables related to bank loan;
Table 2: Project Financing
Description Details
Total Equity (10%) Rs. 20,00,000
Bank Loan (90%) Rs. 18,00,000
Markup to the Borrower 8%
(%age/annum)
Tenure of the Loan (Years) 8
Grace Period (Year) 1
12.3 Project Cost
Following requirements have been identified for the operation of the proposed business. A rental
premise has been recommended for this project.
Table 3: Project Cost
Capital Investment Amount (in Million )
Machinery 1.20
Furniture and Fixture 0.05
Office Equipment 0.05
Technology Charged TBIC 0.20
Preoperational expenses 0.20
Total Capital Cost 1.75
Initial Working Capital 0.30
Total Project Cost 2.0
12.4. Space Requirement
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 The area has been calculated on the basis of space requirement for production, management and
storage. However, the units operating in the industry do not follow any set pattern. Following
table shows calculations for project space requirement.

Table 4: Space Requirement

Space Requirement Sq. ft.
Management building 1500
Processing area 2000
Open area 1940
Total Area 5440 Sq.ft (01 kanal)
Premises will be obtained on rent @ Rs. 50,000/- per month.

12.5 Machinery and Equipment

Following table provides list of machinery and equipment required for an average mango nectar
processing unit raw to finish.
Table 5: Machinery & Equipments
S. Items Qty Cost (Million Rs.)
No Specification
1 Weighing balance 1- 500 Kg One 0.03
2 Pulper 500 Kg/hr. One 0.20
Batch Preparation Tank with
3 400 liters Two 0.05
Agitator with scale moderator
4 Homogenizer 7 bar air compressor One 0.25
5 Pasteurizer(Double Jacketed) 250 Liters One 0.05
Bottle Filling & capping
6 - One 0.33
Machine
7 Syrup Preparation Tank 4000 liters Three 0.03
8 Water Treatment Plant 1000 liters/hr. One 0.20
9 Hand referectometer 0-92 degree brix One 0.05
10 Weighing balance 1g – 1000g One 0.01
Total 1.20

Note: The cost may vary at the time of purchase

12.6 Furniture & Fixture
Following furniture and fixture will be required for the unit:

Table 6: Furniture & Fixture

Details Quantity Quantity Cost Amount (Rs.)
Office / Visitor Chairs 5 2,000 10,000.0
Office Tables 2 10,000 20,000.0
Fans (Pedestal and Ceiling) 5 3,000 1,5000.0
Cupboards 1 5000 5,000

Total Rs. 50,000.0

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12.7. Office Equipment
Office equipment comprises the following items.
Table 7: Office Equipment
Details Quantity Cost Amount
Computer desktop (used) 2 50,000 30,000.0
Computer printer 2 5,000 10,000.0
Flat bed scanner 1 5,000 5,000.0
Telephone 2 2500 5,000.0
Total 7 Rs. 50,000.0

12.8 Raw Material Requirements

The raw materials are easily available in local market.

Table 8: Cost of Materials

Description Cost/batch
S. #
1 Raw material Rs.16000/batch
2 Operating cost (Labor) Rs.3200/batch
3 Utilities Rs.2500/batch

4 Depreciation charges Rs.700/batch

Total Cost Rs.22400/ batch

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 12.9 Human Resource Requirement
Following table provides details of human resource required for this venture:
Table 9: Human Resource Requirement

Employees
S. # Description Wages/ month
required
1 Processing / Production Supervisor One Rs.20,000
2 Skilled/Unskilled workers Four Rs.48,000
3 Storekeeper-cum-Purchase Officer One Rs.15,000
six Rs.83,000/-
Total

Salaries of all employees are estimated to increase at 10% annually.

12.10 Revenue Generation

Table 10: Revenue Generation

Product Sales Price First Year First Year Sales Revenue

(Rs./Unit) production (Rs)
Quantity
Mango Nectat Rs.25\- - 30\- 499200/- Bottles Approx 5.5 Million*
* As per demand

Technical data

 Proposed capacity: 400liters/ batch or (1600 pet bottles of 250ml/ batch)

 Production time per batch: 8 hr
 Packing size: 250 ml each
 Price per pack Rs.14.00
 Market price Rs.25.00

13. CONTACT DETAILS

The Director General,
PCSIR Laboratories Complex ,
Jamrud Road, University of Peshawar
Tel# 091-9216230

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