Individual Quick Freezing (IQF) Plant Individual Quick Freezing (IQF) Plant for Selected Bangladeshi Fishfor Selected Bangladeshi Fish – – A Viable Business PlanA Viable Business Plan

Dr. Sreekanta Sheel

B.Sc. Agril. Engg - with major in Food TechnologyM.Sc. (Agril. Engg) in Food Technology, Ph.D in Food Technology

Logistics (Transportation and Storage) ExpertSCDC, NATP, Hortex Foundation

IQF (Individually Quick Frozen) Food•IQF (Individually Quick Frozen) equipment is used to rapidly freeze individual pieces of fish before packaging.

•This process helps to preserve taste, texture and nutritional value in food. •The reasons for availability of effective demand

i) hygienically processed and packaged ii) properly retention of quality parameters

in the packaged product iii) recent advancement of technology in this field.

Land and Location of the ProjectTo be established where all the infrastructural facilities like power, water, gas and related other facilities are available.

Raw materials availability and good communication to the sea port

Building and Other Civil CostThe civil construction, 15000 sqft built area with prefab, high quality roofing with adequate civil-structure.

The construction includes main production plant, raw materials store, finished goods store, packaging materials store, R&D, QC laboratory, office rooms, guard room, conference room, toilet, boundary wall etc

Production Capacity

•The total production capacity of the plant is 4777 MT per year at 100% capacity utilization with working 12 hours per day and 300 days per year.

•It is assumed that the plant will increasingly operate at 50, 55, 60, 70 and 80 percent capacity in its 1st , 2nd , 3rd , 4th and 5th . year and beyond respectively.

The unit price and annual production capacity of the plant at 100% capacity utilization:

Annual Production Capacity

Item of Product Quantity

(MT)

No. of Package(No. in '000')

Pack Size (gm)

Average Factory Sale

Price/kg (Tk.)

Total Factory sale Price (Tk. In “000”)

1. Frozen Pangus 1404 140 10000 400561600

2. By-product of pangus (scrap & vicera) 1807

45 4000050

90344

3. Frozen Tilapia 216 22 10000 400 86400

4. By-product of tilapia (scrap & vicera) 278

7 40000 50 13899

5. Frozen Barramndue (Coral) 432 43 10000 1120 483840

6. By-product of Barramndue (scrap & vicera) 432

11 40000 50 21600

7. Frozen Mud Crab 108 11 10000 400 43200

Total Revenue 4677 279 130,08,83

Sources of Raw Materials All the quality fish (Pangas, Tilapia) and Mud crab are available in the country. Also, there is a good catch of coral fish.Production plan for the demanded frozen fish and crab will be prepared on the basis of monthly availability of the commodities.The project shall not purchase any fish or crab from abroad.

A. Local Raw Materials Requirement (at 100% capacity level) 

Raw Materials Description

Total annual

quantity (MT)

Unit cost per MT

(Tk."000")

Total amount

(in Tk. "000")

1.Pangus 3663 120 4395132.Tilapia 563 120 676173. Barramndue (Coral) 972 400 3888004. Mud Crab 135 160 216005. Cartoons L.S.   500

Total (Local Raw Materials) 5333  918030

Requirement of raw materials

Requirement of Machinery and Equipments

Name Amount (Tk. In "000")1. IQF machinery, 1No. 320962. De-skinning machine, 2 no. 36403. Flake ice machine, 2 no. 22754. Scrap recovery unit (fish meat) 22755. Conveyor system 11836. Vacuum pack machine-twin chamber (Vac Pack) 60067. Utility materials: 45508. Water treatment plant (R/O Water Purify System), 1 No. 25489. Diesel generator (for back up) 455010. Transformer 136511. Blast freezer 273012. Refigerator 136511. Laboratory equipment 2275 0

Total for Imported Machinery (A) 66858

A. Imported Machinery :

Requirement of Machinery and Equipments

NameAmount

(Tk. In "000")1. Deep Tube Well, 2 No. 2275

2. Cold Storage 3822

3. Air conditioning system 5460

Total for Local Machinery (B) 11557

Grand Total for Machinery and Equipments (A+B) 7,8415

B. Local Machinery :

Requirement of Transports

Transport: No. Unit Price

Total Price ('000')

1. Sedan car 2 2300 46002. Normal Container Van

(Cap. 5 Ton) 2 3500 7000

3 Refer Van 2 5700 11400

TotalTotal 2,30002,3000

Manpower i). General, Administrative, Marketing and Sales Personnel, 35 persons ii) Technical, 24 persons

iii) Worker 55 persons

Total Manpower , 114 persons

Flowchart for frozen fishPurchasing of Fish

Factory Gate Inspection

Washing

Pre-washing

Preparation(Peeling, De-

scrapping, Filleting)

Bulk Storage

Packaging

Freezing

Distribution

Froz

en F

ish

Line

Good Aquaculture Practice (GAP)

Good Manufacturing Practices (GMP)

Quality Management Principles (ISO 9000:2000)

Hazards Analysis and Critical Control Point (HACCP)

Quality Assurance

Organization Chart of the Enterprise

Technical Coordination & Monitoring

Deptt. Manag

er

Export Marketing

GM

Section

Manager

Top Managem

ent

Plant Manager Plant Manager

Board of Directors

General Manager

Food Technology Consultant

CEO/Managing Director

Chairman

Manager (Marketing)

Manager (Admin)

R & D , Training, Monitoring

and Promotional Publication

Manager (Quality

Assurance)

Manager (Engineering)

Manager (Production)

Domestic Marketin

g

Admin & Personnel

Ware House and Cold Storage

Fish Freezing Factory

MachineryUtility

Services

Manager (Materials Purchasing & Contract

Growing)

Manager (Finance &

Accounting)

Materials Purchasing

Contract Production

Incen-tives

Figure 3. Organization Chart of the Enterprise

Market Feasibility

A number of competitive advantages like

Quality and flexibility

Ability to sale at lower prices due to enjoying facility of opportunity of incentives from Government of Bangladesh,

Financial Analysis

Item (Tk. in "000")Land and Land development 26500Civil & Other Works 20000Imported Machinery 73543Local Machinery 11557Erection & Installation 3600Internal Freight 200Transport 45600Furniture & Fixture 3000Preliminary expenses with power deposit 6850Contingencies 3943Interest During Construction Period (IDCP) 7935Total Fixed Cost 20,2729Initial Working Capital 4,1751

Total Project Cost 24,44,79

Cost of the Project

Repayment Considerations

i). Rate of Interest for Term Loan 16.00%

i). Rate of Interest for and Working Capital 16.00%

iii) Rate of Interest during construction period 16.00%

iv) Construction period (Months) 6v). Grace period including construction

period (Months) 12

vi). Repayment period of loan (Years) 5

vii) Debt-Equity Ratio for Term Loan 50:50

Means of FinanceItem Existing Proposed Total

  L/C L/C F/C

Term Loan 0

52,411 60774

113,185

IDCP 0 9,055 0

9,055

Total Loan 0 61466 60774

122,240 Equity Capital-Sponsor's Investment 25000

93,863 3376

122,240

Total Cost of the project 25000 151953 67526 24,44,79

Earning Forecast (at 70% Capacity Utilization in the 4th Year)Item (Tk. in "000")

Annual Sales Revenue 908455VAT Applicable Annual Sales revenue 0Less: VAT Adjustment - a) Net Sales Revenue 908455b) Cost of goods sold 701906c) Gross profit (a-b) 206549d) Administrative and General Expenses 33061e) Distribution and selling expenses 72676f) Operating Profit {c-(d+e)} 100812g) Financial expenses (Interest) 8,001

h) Net profit/ (loss) before tax (f-g) 92,810 i) Income tax ( tax holiday) 0

j) Net profit 9, 2810

Profitability Ratios Profitability Ratios (at 70% Capacity Utilization in the 4th Year)(at 70% Capacity Utilization in the 4th Year)

Gross profit to sales (%)Gross profit to sales (%) 22.74

Operating profit to sales (%)Operating profit to sales (%) 11.10

Net profit to sales (%)Net profit to sales (%) 10.22

Return on equity (%)Return on equity (%) 82.47

Return on Total Investment (%)Return on Total Investment (%) 41.24

Break Even Point (BEP) Percent in Capacity (at 60% capacity utilization in the 3rd year

Break-even Sales (Tk. in '000') 424,814

Break-even capacity (Rated)32.66%

Break-even capacity (Proposed Capacity Level) 54.50%

Margin of Safety45.50%

Pay Back Period (Years) 3.03

Fixed Assets Coverage Ratio 1.66

Debt Service Coverage Ratio (At 60% capacity utilization in the 3rd year) 2.31

Internal Rate of Return (IRR) 40.55%

Net Present Value of the Annuity (Tk. in "000") 30,80,18

Employment Generation (No. of Person) 114

Annual Contribution to GDP (At 60% capacity level in the 3rd year) (Tk. in "000") 13,48,79

SWOT analysis

StrengthsHigh-quality product offerings that exceed competitor’s

offerings of price, quality, and service. Improved product quality will be ensured with the

sophisticated machinery, skilled manpower and monitoring production and quality control aspects

The fish commodity will be produced through contract growing system while the quality of the produces will be ensured as well as production cost will be reduced as a result more commission can be provided to the retailer.

Promotional activities will be performed to a great extent

WeaknessesCountry image

OpportunitiesCheap and availability of raw material and labourDue to maintenance of proper quality, the

products will gain popularity.To sale at lower prices due to enjoying facility of

incentives from Government of Bangladesh. Government has liberalized the industrial and investment policies in recent years.

Tax Exemptions : Generally 5 to 7 years. Duty : No import duty for export oriented industry.

The ability to develop long-term commercial contracts which should lower costs associated with production. Hence, retailers’ demand will be increased due to provision of higher commission

ThreatsWell established brand name of the othersNatural calamities for crops during production

Conclusion and RecommendationConclusion and RecommendationFrom the market analysis, it was found that there is huge

demand gap in the foreign market and hence, the whole products may easily be consumed.

A frozen fish line does not require very heavy investment. Except for an IQF tunnel freezer, all other equipments can be made locally.

With some modification, the same production line can also be used to make fresh-cut produce, quick frozen vegt5ables, frozen fruits, cooked/semi cooked hamburger, patties or chicken nuggets.

Local market is developing rapidly and demand for processed food is increasing due to growing per capita income, and increasing number of two-income families.

The pre-feasibility study indicates that the project is technically feasible, financially profitable, economically desirable and rewarding from a marketing aspect.

Consequently, prospective and potential entrepreneurs may come forward to invest in this potential industry. The project is financially desirable, therefore may be considered suitable for bank financing