Professional Documents
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PREPARED BY: RASHIDUZZAMAN KHAN DIPTO CELL: +8801680139400 ACA TRAINEE OCTOKHAN
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TABLE OF CONTENT
PRELIMINARY BUSINESS PLAN AND FEASIBILIY ANALYSIS: ADVANCED BUSINESS PLAN: Page: 03 Page: 39
1. INTRODUCTION
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Rice bran oil is a source of vitamin E complex, antioxidants and other micronutrients to help fight free radicals. Rice bran oil has the best balance of saturated, monounsaturated and polyunsaturated fats and recommended by such organs as the American Heart Association and the world health organization. Foods cooked with California rice oil absorb up to 20% less oil! Less oil absorbed results in reduced calories, better, lighter tasting food and enhanced flavor and payability. Less oil absorbed also makes it more economical. Rice bran oil has been a popular cooking oil in Asian Countries for decades, where there is measurably lower level of cancer, diabetes, obesity and heart disease than in the United States. Studies show all of these conditions are promoted from the use of hydrogenated oils containing trans fatty acids that are so predominantly used in the USA. Many studies have also shown the unique cholesterol lowering ability as well as many other health benefits from the use of rice bran oil. 3
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15) To know the marketing strategy adopted by company. 16) To create a full fledged business plan along with a feasibility analysis of the rice bran oil project. 17) To know the people's awareness towards Rice Bran oil and popular product among the consumer (survey).
1.6 Methodology
Primary and secondary data have been collected and used to bring out this project report: 1) Primary data have been collected through: By interviewing employees of Rashid Oil Mills Ltd. and Bangladesh edible oil Primary data are collected. We have also interviewed the staffs of Rice mill owners association. We have created different questionnaire according to the demand and collected information thus. The main purpose of interview with Rashid Oil Mills and Bangladesh Edible Oil Ltd employee was to: a) To know the distributors activities towards the company. b) To know the sales methods adopted by them. 5
c) To get the advice about the better packing and advertisement policies, which the company should adopt. d) To get advice about the marketing strategy adopted. a) Interview with the consumers : To know the consumers attitude towards the products, a questionnaire was prepared and administered to 50 users in person. They were selected at random. a) The facts affecting consumers to buy rice bran oil. b) Opinion about the oil. c) Types of refined oil preferred by respondents. d) To know the purchase method of the consumer. e) To get opinion about the quality and other aspect of the oil. f) To get suggestion for the improvement of the oil.
1) Secondary data has been collected from: The website www.seaofindia.com and other websites. Google websites.
1.7 Limitations
The limitations of the study are as follows : 1. The information provided by these companies is assumed to be authentic. 2. The data and opinion collected are assumed to be objective. 3. This study was done mainly through the secondary data. 4. Also, time limitation of the study. 5. The survey is conducted only on limited respondent.
Solvent extraction industry is the process of extracting crude edible grade oil from materials such as rice bran, sunflower groundnut, soybean etc. Oil is selling at the price of ghee, they say this statement is not far from reality. Hence Bangladesh is a major consumer of rice and a remarkable producer of rice, rice bran oil is potential edible oil in Bangladesh and thus can reap huge benefits. Bangladesh is the fifth consumer of oil after India, United States, China, Brazil and Argentina consuming 1.4 million tones of various oil against the world consumption of about 330 million tones/year. Moreover main agricultural product of Bangladesh is Paddy. And 75% of the agricultural land is used for paddy cultivation. You shall be surprised to know that among this amount 90% is directly imported from other countries. So there is a big trade gap. Rice bran oil will work as a weapon to minimize this gap as well as to make the economy of the country healthier. On the other hand we can say that rice bran oil will ensure good health for its consumers. If we observe carefully we shall notice that, India is the largest producer of rice bran oil and producing about 700,000 tones of rice bran oil and promoting it as 'Heart Friendly Health Oil' in the country thus creating impact in its economy. Bangladesh also has this opportunity to create a impact by introducing Rice bran oil project in Bangladesh. Location of solvent extraction industry: Various geographical and economic factors effect the location they are: 1) Climatic conditions 2) Market condition 3) Labour position 4) Water supply 5) Transport 6) Power supply 7) Capital invest 8) Raw materials Proposed Location of Solvent Extraction Plant: The belt which covers paddy cultivation is very important for Rice Bran Oil Plant. As in this belt Rice Mills will be noticed remarkably. The main raw material for Rice Bran oil is Rice Bran, which is a by product of Auto rice mills only. In Bangladesh there are a lots of semi auto rice 7
mills and also manual rice mills. But the number of Auto rice mill is very few in number. So we need to identify the location near by the Auto rice mills. Not only that, the rice bran from one Auto rice mill is not enough to meet the demand of raw material for the rice bran oil plant. According to the feasibility of the project the project should source from more than 15 auto rice mills. Now, as the rice bran has a life time of only 72 hours, so the rice bran oil project needs to be in a convenient place where rice bran is available. According to a study we have found that, if rice bran is processed within 24 hours than the rice bran oil extracted is of the best quality. Bagura-Naogao-Thakurgao the region covers the major number of Auto Rice Mills. So we need to locate our Rice Bran Oil Project in this location.
1. Name of the Industrial Concern 2. Name of the Brand 3. Address a) Registered office b) Factory 4. Directors 5. Employee Overview: 6. Line of activity: 7. Size of the industry: Project Capacity: Extraction capacity:
: XYZ Oil Mills Ltd. : XYZ Brand Rice Bran Oil : xyyyyxxxxxyyy : same : Bagura-Naogao-Thakurgao region : Local Partnership Edible oil extraction Medium Scale Industry Initial: Extraction of 100 tons per day from 500 tons of rice bran It can be converted to 300 tons per day after 2 years.
Total Market Size of Edible oil in Bangladesh: Total Market Size of Rice Bran oil in Bangladesh:
Export Information:
Of the total market size which is 1.4 million tons/yr 90% is imported from countries like Malaysia, Indonesia, India etc. So there is no question to export as huge demand in local market is available. Market growth: There is a huge market in Bangladesh i.e. local market is more lucrative. Even there is huge opportunity for export due to low cost in labour and raw material. c) Main raw materials: 9. End use of finished products: Forecasting: 1st year (tk) Target 19.2 crore 33.81 % 9 2nd Year (tk) 96 crore 35 % 3rd Year (tk) 192 crore 45% Rice bran, oil cakes & Soya bean seeds Refined edible oils wholesale and retail Consumers
Major 2 competitors: 1. KBC Agro Products Ltd 2. Rashid Oil Mills Ltd
Resource Availability: People: Technology: Management: Financial Fund: Manpower in the Bagura-Naogao-Thakurgao region Experienced personnel in Bangladesh RA Management Equity +Debt Capital Or
Consortium with Rice mill owners Project Cost & Finance: Cost of the Project a) Land b) Building c) Plant & Machinery d) Miscellaneous fixed Assets f) Contingencies & deposits g) Working Capital Margin Total : Tk 47,75,00,000/= : : : : Tk 25,00,000/= Tk 1,25,00,000/= Tk 45,50,00,000/= Tk 25,00,000/= Tk 50,00,000/=
Means of finance:
a) Promoters Contribution b) Term loan c) Grand from Ministry of food Processing Total 9 Financial & Profitability indicators 10
a) Promoters Contribution b) Debt equity ratio (1 year) c) Debt Service Coverage ratio (overage) d) Internal rate of return e) Profit before tax @ Maximum Capacity Utilization f) Break even Point in terms of Sales Employment potential: Power requirement:
2.2 Background:
Two rice bran oil mills were established with the object of establishing the solvent extraction plant & other related activities in field of edible oils. These Companies have Successfully implemented their units of solvent Plant and achieved 95% of capacity utilization within 6 Months from the date of commercial production by achieving a high turnover. With this achievement & considering the increasing demand for oil especially edible oils in Bangladesh and abroad the companies have already successfully expanded to other additional units of a higher capacity, the refinery units are already in the process of completion. Project and Product: {Brief of the project and the product will go here}
Technical & Marketing Process: The new technology enzymatic de-gumming technology which is tested & developed by Indian Institute of Chemical Technology, Hyderabad, and a Government of India organization under enzymatic de-gumming process are adopted their refinery. They are installing the continuous physical refining technique, against the conventional chemical refining, which is batch process this will help us in processing high FFA rice bran oil physical referring of rice bran oil which is 11
having high (Free tatty Acid 9FFA) percentage means 8-12% as against normal range of 3-5%. The plant will be designed to process all kind of vegetable oils; however we are concentrating mainly on RICE BRAN OIL. This is due to the fact that the rice bran oil will play significant role in augmenting edible vegetable oil supply in the country. Refined rice brain oil is taking over other refined edible oils etc. in Counties like Japan, Korea, China, Thailand & U.S.A Rice bran oil is known HEART OIL as the rice bran oil contains CHOLESTROL LOVERING EFFECT due to ORYZANOL & COTRIENOLS in the oil. Also the SCALENE Content in the rice bran oil is good for skins nutrition & maintaining integration of skin.
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Power: - The unit requires 500KVA Power. We need to install 500 KVA D.G.Set to offset load shedding & power failure along with STEAM TURIBINE for generation of power. The steam that is produced for the purpose of in house use will be passed through the turbine to generate power Around 400 KVA Power will be generated & the same will be used for our own power requirements. This will cut down the power cost. Water: - The requirement of water in the processes is for use in the boiler for system generation and also in cooling tower. The set consumption after accounting for re circulation and human consumption is estimated at 100000 liters of water per day. The company need to get permission from the ministry to get abundant water supply. The Company can propose to have its own bore well in the project. Steam:- The steam is Major Cost element in the production of Solvent oils. The company needs to install the boiler with a capacity to produce 14 ton per hour of steam. Boiler is a sophisticated which can run an agro waste like groundnut shells, Paddy help the company to reduce the cost of production and cost of transportation by using the locally available fuel which are emanating from rice mill and oil Mills situated in and around the area. The boiler proposed in the F.B.C boiler (fluidized bed) which will enhance the heat required for generation of steam & reduce the air pollution. Man Power: ADMINISTRATION TECHNICAL 1) General Manager 2) Chief Accounts 3) Clerk 4) Typists 5) Sales-Clerks 6) Store- Keepers 7) Supervisors 8) Attainders 9) Security The Man Power required is two categories Skilled and Unskilled. The Skilled workers like boiler operators, plants operator, electricians etc., and the company needs to have the skilled workers 13 1) Engineer 2) Plant Operators 3) Preparatory Operators 4) Boiler attainders 5) Electronics 6) Others 7) Unskilled labourers
who are working in other existing solvent extraction plants. The additional Manpower required will be recruited & Trained in the our own plant. Some of the above manpower which are already available in the existing setup, and additional people wherever necessary will be recruited & trained in the our plant. Transport: As the plant will be located near the Bagura-Naogao-Thakurgaon, required transport would be available easily. Transportation is vital. Quality Control: Company needs to have full pledged laboratory for testing the raw materials and finished goods for the quality control purpose. Additional equipments are proposed to be purchased & a provision of Tk 15 lakhs also needs to be made in this project. Effluents: 1) Company needs to take the permission of pollution control board, as per their guidance required equipments are already in place to control water and air pollution. 2) For this unit the clearance from local Government authority needs to be obtained. 3) We propose to install effluent treatment plant to avoid water pollution. 4) Above measures along with any other guidelines/ Measures will be undertaken as per the prescribed guidelines of pollution control board.
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Solvent extraction plant is encouraged by the Government & attractive for investor also. Further this will contribute it share to solve unemployment problem by creating an employment to 100 people directly & indirectly. Swot Analysis : Strengths : 1. Consistency in Earning profit. 2. Dipto oil is the only 100 % Heart oil- Rice Bran Edible oil in the market of. Weakness : There are no weaknesses. Opportunities : Growing demand for the health caring oil products. Threatening : As this is the one of the Rice Bran oil in Bangladesh, there is very few Competitor for same products. But there is a competition from other oil company products.
Post-Milling Precautions: To avoid the lipase action rice bran has to be stabilized immediately on Production. Common Name: Rice Paddy (English), Chal (Bangla), Chawal (Hindi), Dhan (Punjabi) Bhatta (Kannada) Bran is a layer b/w husk & endosperm of the paddy grain. There are 18,000 varietes of rice in the world. Name for bran: Rice bran, Chal (Bangla)
The Major Rice producing contents are Asia (Roof mills of the long Himalaya range & its radiating arms in South East Asia). Africa & America.
laterite, coastal aluminum red sandy, Mixed red & black & Medium and black.
form outer brown layer of rice called brain. Currently the industry is processing about huge tones of Rice bran by solvent extraction process producing about 18 lakhs tones of Rice Bran Oil per annum, out of which 16.0 lakhs tones is of edible grade and the balance 2 lakh tones is none edible grade. The research Instates in Bangladesh, India & aboard has found this oil to beHeart friendly Health oil with following unique properties beneficial for maintaining good health. a) It is good for heart, it contain oryzanol which increase HDL (good) Cholesterol and lowers LDL (bad) Cholesterol & triglycerides. b) It has the ideal ratio of saturated Mono unsaturated & polyunsaturated fatly acids & is the closest to world health organization recommendation. c) It is good for skin it contain squares, which improves skin, tone delays wrinkle formation. d) It has hydroxy 3 Methoxy Cinnamic acids which stimulates hormonal secretion & rejuvenates health. e) It has tocotrienol which helps in maintaining balance of nervous system. f) It has tocotrienol which has anti-thrombotic & anti-cancer properties. g) Food tried in refined Rice Bran Oil absorbs 15%.
The firms task is to find the best solution for its marketing decision variable; the settings constitute its marketing mix. According to Mr. Jerome Mc Cathy, an American Expert: Marketing to the pack of four sets of variables namely, product variable, price variables, promotion variables and place variables. In other words, Marketing mix is the blend or the compound of all the marketing efforts around the found ingredients namely product, price, promotion and place. These ingredients are interrelated and all revolve round potential consumer satisfaction as the local point. Nature of marketing Mix Strategy: Marketing mix is a dynamic process. If changes with chance in needs of consumer. Marketing mix is a difficult task as it involves the bleeding id decision in four different area of marketing i.e., the product, price, promotion and place. In fact, effectiveness of marketing efforts depends upon the decision made in cash of these found areas of their proper combinations. Objective of Marketing Mix Strategy: The basic objective of marketing mix is to satisfy the needs of the customer in the most economical manner. The emphasis of marketing mix is to satisfy the needs of the customer effectively. The elements of marketing mix strategy: Precisely, marketing mix is the master mix of sub-mixes namely, product mix, price mix, promotion mix and place mix as a set of good many variables. These elements of marketing decisions are over which the firm has content. Elements Of Marketing Mix Strategy:Product Mix Strategy Price Mix strategy Promotion Mix Strategy Physical distributed Meaning & Objectives of Marketing Mix Strategy 20
Cooking advantages of Rice Bran oils: High nutritional content Longer Shift life Oil is less sticky, saves soap Gives better taste & flavor to food items. Dipto oil is in market low in 3 different type of packing & in different quality Packing: The oil will come in 3 different type of packing that is in pouches and 2nd in the Tin and 3rd it comes in bad debts. Quantity: Our oil comes in 1 /2 liters, 1 liter 5 liters that is in pouch, and 15 kg Tin and 180 kgs in barrels. The pricing will be changing according to market demand and competition.
g) Good advertising & vast coverage h) Catchy Punch line i) Maintaining quality & proper quantity Products often fail because companies dont manufacture adequate quantities of the new product and make them available to prospective customers. Webb Says, He suggest creating a management team with responsibility for, among other things, ensuring that all level of the company are prepared to handle demand for the product and to train staff in its use for customer support. Publicity is the most cost effective way to launch your companys latest product regardless of whether you plan to Market your product on a local, national or international scale, with publicity, you can introduce a product to thousands, even millions of people literally overnight and gain valuable product marketing research in the process. IMA defines publicity as mass communication with potential customers through the media publicity is the process by which your companys new product marketing Sales Pitch is transformed into a editorial format or news. Editorial Coverage of new product marketing launches can take many forms, but the most profitable type usually occurs in print media such as newspaper & magazines. Beat your competition to the market with a professionally launched product. a) Present your product & company with the very best image possible. b) Ensure the alignment of your marketing, sales customer service, & interest, marketing activities for maximum impact. c) Eliminate the perception of risk by the market or your potential customer base. d) Enhance your product knowledge base. e) Ensure that no delays occur that could adversely affect your product in the market. f) Ensure that no critical action fall through the cracks & come back to haunt you late. g) Keep your product on track so you can beat the competition in the market. h) Eliminate the risk & expense of a re-launch i) Structure a product launch that will achieve your market & early sales goals. 24
For your initial product launch, your best reception will be found in the relationship buyers. These are business customers who like your products & services. They have built a relationship with your employers. They think of your company as their primary superior of your category. They do not want to be bothered to have to shop around every time they make a new purchase. They look for quality, good service, helpfulness. Friendship and information, if you can supply these things, they will stick with you when your competition is on sale. If you have a new product, they will be the first to want to hear about it. It is to these good people that we look for our product launch. What does a customer want? Sometimes companies mistakenly conduct interviews with intension of gathering new customers for existing products. If the goal is product development, you shouldnt be sending researches into the field to debit price or performance. Gooze says This should instead be a time for rigorous listening Ask open-ended questions that are designed to reveal genuine needs & feelings among your customers. And then listen to the answers. Ideally, a cross junctional a product development team including representatives from manufacturing, engineering operations, marketing etc- should conduct these interviews this way, critical functional areas arrive at a keener understanding of what the end-user needs & the environment in which they would use the intended product. Of course, not all companies can afford to do this so whether you hire an outside marketing firm or use limited resources to conduct one customer interviews, these are the types of questions you need answered. a) Who are our customers? b) What is their problem or seed? c) How will the proposed new product answer that need or solve that problem? d) Does the new product offer advantages over what the competition has? e) What factors will go into the customers decision to purchase the new product? Execution: 25
How will the product reach customer? Are you established sales channels. Up to the new challenge? When promoting a product, you need to step back & assess its fit with existing channels Gooze says, for example, if the product is a features reduced version of an existing product that is being targeted to a mass market, there are some questions you should ask. a) Do you existing distributors serve mass marketing retail outlet. b) Does our current pricing schedule take factors like mass market competition into consideration? c) If we lower our price, how much can we offer to spend on the sale of each unit at this lower price? d) Can we reach this market with our current sales force? Determining your pricing strategy & reviewing your sales channels should be happening while the product is being positioned, as there factors will have a definite impact on the positioning message.Gooze Says. In situations where one company partners with another to introduce a new product, web advises strict due diligence before the execution phase- thus ensuring that each partner is fully committed to the process & has the necessary financial resources & familiarity with the market place. Whatever the circumstances have clear cut performance objectives in place & be ready to measure than carefully he adds Use launch team to track progress & make it responsible for communicating results to senior management.
5.4 Positioning:
Positioning is not about features & specifications it is the care message that differentiates your product from everything else in the market place. A unique product identifies strong tunes the markets perception of your product and in turn reinforces your companys overall positioning.
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To make sure everyone is working toward the same goal, certain milestones should be established. a) Have we identified all necessary launch channels? b) What number of new product do we plan to sell by a specific date? c) When will the product be ready to launch at rational trade convection? d) Are sufficient Stocking orders placed with key distributors? e) How can we grow the product into a 5-10 percent market entrenchment by a specified date? Break down every conceivable launch component Identify customer data basis where appropriate send now product sample to industry & trade publication reviewers, do everything necessary to create a strong, functioning life support system for that product. Planning for these activities should be as simple as possible, he adds We not talking about writing a so page launch overview document. These tasks should facilitate the most favorable development of the new product- thats all. Approaching the customer with the new product can be the most delicate situation of all, which is why having your ducks in a row, is so important. If existing customers encounter design flaws in the new product, they may forgive and forget, but its unlikely new customers will feel the same way. Also, the new product may not be the right fit with all of your current customers. Prepared reduces the risk that the companys credibility may be managed by missteps at the launch time. In order to establish the new products identity in the market place, the core message must be repeated over and over again this requires consists positioning within all of the companys marketing communications, including. a) New & Current product literature b) Press releases c) Product specifications d) Sales presentations
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Slogan or punch line is the one of the most important aspects of promotion. What is your slogan? Is the slogan consistent with your positioning strategy? This question needs to be asked by the management to see top it that their product is promoted properly. Did you provide any sketches of your creative ideas? Example: newspaper advertisement, T.V advertisement, coupon, radio script. To operate successfully in global economic scenario, along with steady it is very important that the company also develops a brand image for its product & positive corporate identify among its buyer & suppliers. Corporate brand & image building activities are one of the most important activities for the strategic business planning using of a company.
Source: Survey data Table: 1 Reveals that among the 25 respondents who are interviewed 07 (28%) are male and the reaming 18 (32%) are female. Source : Table 1 AGE 28
Table 2: The age groups of the consumers interviewed is presented. Age group in years 20-30 30-40 40-50 50 & above Total Source: Survey data About 24% of the respondents are in the age of 20-30, 20% in the age group of 30-40, 36% are in the age group of 40-50& 20% in the age group of 50 and above. Source : Table 2 MARITAL STATUS Table 3: The marital status of the consumers interviewed is presented Marital status Number Married Unmarried Total Source: Survey data The above Table 3, shows the No. of Married and unmarried consumers among the 25 interviewed 20 members are married (80%) & 05 members are unmarried (20%). By seeing the above 3 tables it can be interpreted that a large No. of respondents are of middle aged, married female members. As refined oil is a product involved in cooking. As cooking is more done by the females? This trend can be seen. 29 20 05 25 Percentage 80 20 100 Number 6 5 9 5 25 Percentage 24 20 36 20 100
Source : Table 3 INCOME Table 4: Showing the incomes of respondents INCOME (in Tk.) 10000-15000 15000-30000 30000&above Total Source: Survey data About 40% of the respondents are having the income around tk.10000-15000, 36% are having the income around the Tk.15000-30000, and 24% are having the income around 30000 & above. TYPES OF REFINED OIL Number 10 09 06 25 Percentage 40 36 24 100
Type of refined oil Sun flower oil Soybean oil Mustard Oil Rice Bran Oil Total Source: Survey data
Number 12 3 8 2 25
Percentage 48 12 32 8 100
The above table reveals that the large No. of consumers use sun flower based refined oil. As lot of different types of oils are available in market. Rice bran is holding at the fourth place in the above table according to survey. 30
BRANDS OF OIL Table 6: Showing brand preferred Brand Pran Sun Flower Meizan Total Number 8 1 4 25 Percentage 32 4 40 16 8 100
Source: Survey data By there above table we can come to know that sunflower based refined oils are most commonly used type. And as a lots of brand products are available. Not one single brand has a significant market share. The Rupchada holds the 1st place in the table. Source : Table 6
MOTIVATING FACTORS Table 7 : Showing factors motivating consumers Factors Health Price Quality Advertising Dealers influence Quantity Brand Source: Survey data 31 Number (25) Percentage 14 13 05 08 07 02 01 56 52 20 32 28 8 4
The table no.6 shows us that the people first give preference to there and there familys health & they look at price before purchasing & the advertisements & dealers influence also motivate the consumers to buy the product. About 56% of health factor motivated the consumers & about 52% of price factor motivated the consumers and advertising 32%, Dealers influence 28%, quality 20% motivated the consumers & about 12% factor covers quality and brand Source : Table 7 QUANTITY Table 8 : Showing Quantity Needed by the consumers Liters Half Liters One Liters Five Liters 10 Liters Total Number 14 5 13 8 25 Percentage 56 20 52 32 100
Source : Survey data Most of the people during the survey about 56% of people prefer half liters, 20% people prefer 1 liters, 52% prefer 5 liters & 32% prefer 10 liters. OPINION Table 9 : Showing opinions of the consumers towards 5 point Likrd scale. Opinion Excellent Good Satisfied Number 4 11 9 Percentage 16% 44% 36% 32
1 0 25
4% 0% 100
This 5 point Likrd scale table shows us the opinions of the customer and most of the consumers opinion about there refined oil is good 11(44%) and satisfactory 9(36%). On the basis of survey findings some suggestions are provided to the Rice Bran Oil companies are: Advertising: In the present world of technology, advertising plays the major role in marketing of a product. Advertising is a social and business process responsible for the mass communication of the information. If the product is the lack. Advertising is the key to open the product to the market. It is only one mediator between producer and ultimate consumer, which makes the consumer to see, to think and to feel about the product and it also, tempts the consumer to buy the product. Advertisement can popularize and establish an image on the product and build up reputation and good will for the producer. This show that in present world advertising can create wonders in the market advertising may be by means of television or by using board cast media or by using magazines as the media. By survey it has been seen that most of the consumers prefer television advertising as they spend most of their free times in watching television. So the company gives more advertisement in Television and also through magazines, newspapers, internet etc., to attract the new customers from the corner and corner of the country. Sales promotion: Sales promotion has been the fastest growing segment a promotion mix and has become a major factor in success of marketing in recent years, "sales-promotion are the achievements of 33
short-terms marketing objectives by schematic means". Sales-promotion is a direct and immediate inducement that adds an extra value to the product. So it prompts the sale force, dealers and consumers to buy the product sales. Promotion carried along with advertising and publicity creates effectiveness in the selling activity the company has not undertaken the sales promotion at the expected level. The company should give importance to the following sales promotion. i. Free offers should be given such as if your buy one nail enamel you will get another free ii. By providing special discount during festival times iii. By providing special price off on buying multi packs iv. Providing special bonus offers, free gifts, free coupons to wholesale dealers and retailers because they are the people who actually sell the product and they must be mentioned to sell more specially. v. Sales contest to the sales force to double or multiples their selling interest and efforts. By this the hidden competitive spirit is boosted and the overall performance of the sales-force is improved. Attractive packing: Packing plays the most vital role in marketing the cosmetics successfully packaging is an activity which is concerned with the protection, economy, and convenience with the promotional considerations. An attractive package maintains the brand image and creates an interest in minds of the customers and an impulse to by. So the packaging should be done in such a way that the contents can be stored for long time and convenient for transportation. The company must also consider change of package to 1. Attract new customers and expand the market 2. Create stimuli for demand 3. Cope with new innovation in the field of packaging 34
Innovation: Product innovations have become an important part of the companies marketing strategy today. Both establishing and established firms are inventing new products of brining about changes in their original products to increase and maintain the consumers. Now a days people expect something new. They purchase such products, which have something special in them. Therefore innovations are must. Distribution: The distribution network of the company is good, but rather than this the company should make quickly flew of products the distributors. If in case of delay in supply, people will start moving to next best alternative. The company should take steps to supply its products to distributors with 3 to 4 days. The company should appoint effective sales person in rural and district area to boost the sales. Periodical survey of the market is necessary by the company to know changing attitudes regarding to products. Suggestions of the users: 1) They have to give lot of advertising in different kinds of media, sales promotion which is helpful in boosting the sales. 2) They must inform the customers and retailers about new product by visiting door to door & by distribution of free samples. 3) They must survey about there products to know other refined oil. 4) The colour should be changed in order to attract the consumers. 5) They must concentrate more on the packing of 5 & 10 liters can. Suggestions of dealers:
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1) They must note down any complaints about the product or any defect and lodges with the companys sales man. 2) They must supply the product, whenever there is demand because it may lead to diversion of mind to other product. 3) They must also study the strategy of other products i.e. its competitors. 4) They must be very alert to changing situation. 5) They must provide special gift offers for selling a targeted amount of boxes. Own suggestions: 1) They must give adds in different media but not to stick on to the single type. 2) Cooking competitions should be arranged in the cities to attract the customers. 3) Price should be less than the other products. 4) By the survey most of the consumers suggested to change the colour.
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8. Conclusion:
We have discussed the business plan of Rice Bran Oil throughout the report, my main concern was to analyses the current market situation and give suggestion to the firm so that they can initiate Rice Bran Oil Project with better promotion strategy. The result of the survey proves that Bangladesh although being price conscious people now are concentrating on the health and quality factor as well. To have a dominant product in the market, sales promotion is very crucial. The survey conducted in Dhaka that is one of the fastest growing cities, well known for educational institution and famous in business field and recognized as a business and finance hub, has proved a very good market for refined oil. In the present competitive market the consumers are described as the king. Thus it is very essential that the trading co., should manufacture products and services that satisfy consumer needs. Consumer orientation is importance for creating the brand image in the minds of the consumer thus it is very important for creating brand image in the minds of the consumer.
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ADVANCED BUSINESS PLAN FOR PREMIERE GROUP RICE MILLING AND BY-PRODUCT MANUFACTURING FACILITY
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Executive Summary Our initial statement to financial lenders, this rice milling and by product producing business plan, is a candid disclosure of the Premiere Group business proposal our intent is to set realistic business expectations, and eliminate any questions about the profitability of the business venture. We have a vested stake and financial commitment in the success of this business. Our intent is to have a definitive business, financial, and marketing plan that not only serves our need for capital financing, but is utilized as our daily business roadmap. We have taken all precautions to validate our business and financial models, focusing on realistic projections. We have accomplished this as follows: 1. 2. Our Financial model is rooted in industry facts, not optimism. We have based costs on our vast industry and practical experience. Our business concept was derived from detailed Market Analyses. Instead of building a business around a preconceived concept, we analyzed the market findings and built a concept around our customers. In other words, our business is built to service an unmet consumer want. 3. Deep Management Experience. Our management has 14 years of experience in the rice milling business.
Premiere Group proposes to acquire and take over an existing rice mill business in Sylhet, Bangladesh and build upon the business model by introducing new business and marketing strategies, increasing the production by investing in new and additional machinery and equipment, and increasing the turnover and profitability by producing a wide range of byproducts such as cooking oil, polish (rice bran), broken rice as well as milling rice. The primary business will involve establishing new and managing existing strong long-term relationships with local farmers (with whom we are already in negotiations) to purchase grain for milling on a regular basis, milling the grain to produce rice and other by-products, and then sell the products at a wholesale level to traders in and around a 100 mile radius of the Sylhet area. In addition, we will be setting up a drying facility to offer local farmers and traders a service where by we will dry their grain for them at a cost, as from our experience, we recognize wet and moist grain as being a large problem in the area which businesses dont seem to have the ability to overcome. We already have access to a strong network of traders with whom our management team has been doing business with over the past 14 years. We aim to build on these existing relationships with traders and also work towards acquiring new customers in line with our marketing strategies. 39
Mission Premiere Group will be an inspiring and interesting rice milling and by-product manufacturing business. The mission is to not only offer high quality products but also an efficient and superior service - customer satisfaction is our paramount objective. Employee welfare, participation, and training are equally important to our success. Everyone is treated fairly and with the utmost respect. Our employees will feel a part of the success of Premiere Group. We will aim to offer fair profits for the owners, and a rewarding place to work for the employees. Premiere Group seeks to serve rice traders by exceeding minimum acceptable quality standards and by providing the highest quality product at the lowest possible price. We value our relationships with current and future customers and hope to communicate our appreciation to them through our outstanding, guaranteed product quality, personal service, and efficient delivery. Our commitment to our customers and the country of Bangladesh will be reflected through honest and responsible business.
Keys to Success 1. Product Quality: Producing and offering all products at a consistently high level of quality. 2. By-products: Satisfying all of our customers (traders) needs by offering all required products under one roof and giving them the opportunity to expand their businesses and increase turnover & profitability by offering their customers other by-products, such as cooking oil. 3. Cost Control Focus: We will enforce strong cost control standards and control costs at all times. Cost Control will be an integrated function of the business from the outset. Cost Control is about managing the numbers - interpreting and comparing the numbers that impact the bottom line. 4. Strong working relationships with local businesses: Establishing and maintaining strong working relationships with local farmers, wholesalers, and traders. 5. New Machinery and Equipment: Bringing the new facility to maximum production within 3 months of purchasing and installing the production facilities. 6. Additional Services: Offering additional services such as grain drying (which our market research tells us that no other businesses currently offer, but which there is a huge demand for because of the quantities of moist grain in the area). We believe this will differentiate us from our competitors massively, and result in increased turnover & profitability. Objectives 40
Premiere Group will increase production from milling 100 x 40kg bags of grain per day to 500 x 40kg of grain per day for the first 3 months and then 900-1000 x 40kg bags of grain per day there afterwards by investing in new and additional machinery and introducing new quality control and production standards. Premiere Group will maximise production (and profitability) and utilize all aspects of the grain by producing by-products such as rice, cooking oil, polish (rice bran), husk, and broken rice. Sell all stock of milled rice and by-products within 2-3 days of production. Increase sales substantially within the first year of operation. Look to open a second and third site in the second and third years, respectively.
Company Summary Premiere Group will enter into contractual agreements with local farmers (some of which we already have long-term business relationships with) to purchase grain at very competitive rates at the times of harvest (June/July and November/December) and also continue to purchase more grain throughout the other months of the year from farmers and storage facilities with whom we will have agreements with. We will then mill the grain to produce rice and other byproducts: cooking oil, polish (rice bran), husk, husk coil, and broken rice. All of these products will then be sold at a wholesale level within 2-3 days of being produced via local traders with whom we will also have agreements and contracts.
Company Ownership Premiere Group is a UK based Limited Company that is made up of a management team that has 17 years of Rice Milling and Trading experience in Bangladesh, 21 years of Food Wholesaling and Restaurant experience in the UK, and 10 years of Sales, Marketing and Accounting experience in the UK, Europe, and Dubai.
Company History The Rice Mill that Premiere Group proposes to take over and develop has been successfully operating as a family-run business for over 14 years, milling around 100 x 40kg bags of grain per day. Premiere Groups plan is to acquire the Rice Mill and upgrade the machinery and equipment to increase productivity and profitability. With the new technology installed Premiere Group will have the capacity to mill 500 x 40kg bags of grain per day plus by-products for the first 3 months, and then approximately 900-1000 x 40kg bags of grain per day plus by-products there afterwards. Start-up Capital Premiere Group's Start-Up costs consist mainly of the purchase of new machinery & equipment, a small building extension, and also a goodwill sum to acquire the business from its current owners. 41
We will purchase the following Current Assets on acquisition of the business: Stock: Tk. 1,350,000 worth of grain from local farmers to begin milling. We will purchase the following Long-Term Assets: New Machinery & Equipment: An investment of Tk 4,550,000 is required to upgrade existing and introduce additional machinery and equipment in order to increase the productivity and also to allow the manufacture of by-products. A detailed breakdown of the particulars of the machinery and equipment can be found later in the Business Plan. Building Extension: An investment of Tk 3,375,000 is required for a building extension to allow for storage facilities.
In addition, we have agreed to pay the current owners of the Rice Mill a goodwill fee for acquiring the business and taking over the premises, the Goodwill fee is to be calculated. Plus, a monthly rent of Tk 67,500 for the premises and land. Location & Operations Location The site that Premiere Group will be taking over is currently located at: Sheikh Abas, Vill: Joihirpur, District Jaganathpur, City: Sylhet, Bangladesh. This area and market has been carefully selected and tested for the necessary demographics and access to farmers & markets necessary to meet the goals laid down for profitability. Operating Criteria The new and improved site will operate for 16 hours per day, rotating staff shift patterns. Products With the new machinery and equipment installed, Premiere Group will produce the following products from the processing of purchased grain: Rice Polish (Rice Bran) Cooking Oil 42
Husk (Coil) Broken Rice Services In order to differentiate us from our competitors we will also offer the following services: Delivery (we will offer customers the option of having their orders delivered to them with our delivery truck) Drying (with our new state of the art drying facility we will offer a grain drying service whereby farmers and traders will be able to bring their own grain to be dried) Storage (depending on our own stock levels, we will also offer storage services within our secure 5,000 square foot storage facility) Products & Services Summary Competitive Comparison In order to differentiate ourselves from our competitors, we have utilized our resources to give us the following Unique Selling Points: Consistent Supply/Stock: We will be setting up agreements and contracts with local farmers for the supply of grain to ensure that we have a consistent supply all year round. Competitive Pricing: Having contractual agreements with our farmers will ensure that we are purchasing the grain at competitive rates, and also maximizing production and utilizing every aspect of the grain to produce by products will also result in the products costing us less, allowing us to pass savings onto the traders. Grain Drying Facility: Our state of the art grain drying facility will ensure that all grain is totally dry before being processed and thus of a high quality. Also, we will offer the drying service to other farmers and traders where we will dry their grain at a cost. By-products: Satisfying all of our customers (traders) needs by offering all required products 'under one roof' and giving them the opportunity to expand their businesses and increase turnover & profitability by offering their customers other by-products. We have approximately 15 other rice mills in the area whom are competitors, however, our research tells us that they do not have the production facilities that we are proposing and are not able to offer services such as grain drying which we believe gives us a big competitive edge. Sales Literature 43
Unlike traditional rice mill businesses that rely purely on word-of-mouth marketing, Premiere Group proposes to conduct many marketing activities to bring new business on board. These will include leaflet drops in the neighboring towns, an advertising campaign, and sales agents visiting local farmers and traders to present the Premiere Group concept to them. Sourcing The Premiere Group site is ideally situated in an area where we already have strong relationships with local farmers and traders with whom we will be signing contracts to purchase their grain at competitive rates, and also to support them with labor and financial issues when needed. All contracts will be secured six months in advance of harvest. Technology Improvements in technology are vital to the Premiere Group business model. New machinery and equipment will allow Premiere Group to have an edge over its competitors, maximise production, reduce costs, increase profitability, and expand the business in terms of products, services, sales and turnover. As part of our extension of plant, we propose to invest in the following machinery and equipment: Machineries Rice Mill Diesel Generators Transmitter/ Transformer Oil press Bottle Capping Machine Briquette Machine Total Cost 1,550,000 1,400,000 300,000 800,000 200,000 300,000 4,550,000
Market Analysis Summary Bangladesh has a primary agrarian economy. Agriculture is the single largest producing sector of the economy and comprises about (data released in November 2010) of the country's GOP and employs around 45% of the total labor force. With 35.8 million metric tones produced in 2000, rice is Bangladesh's principal crop. However, despite this, our extensive market research shows that there is still a large shortage of rice and rice based by-products in Bangladesh most of which is likely to be linked with increases in the population. We believe that there is definitely room in the market for our business because of our competitive pricing, extensive range of by-products and offering of services that appear to be rare to come by. Instead of building a business around a preconceived concept, we conducted market research and built a concept around the needs of the market. Market Segmentation 44
The potential customer groups for Premiere Group are: Rice Traders within a 100 mile radius Local Farmers that require the use of our grain drying facility Local Farmers that require the use of our storage facilities Cooking Oil Traders within a 100 mile radius Polish (Rice Bran) Traders within a 100 mile radius Broken Rice Markets Local Coil fuel consumers
Competition and Buying Patterns Premiere Group plans to stay one step ahead of its competitors by continually meeting customer's need through the consistent supply of rice all year round. We recognize that the main months for the purchase of grain are the harvest months of June/July and November/December and whilst most mills tend to be low on stock for the rest of the year, we plan on tackling this issue by having contractual agreements with local farmers whereby we are able to purchase surplus grain which can either be stored by the farmers for a cost, or which can be stored in our in-house storage facilities. This allows us to have a constant supply of rice and by-products consistently right the way through the year, and not just at periods of harvest. Main Competitors There are around 15 other major rice milling businesses in the area that we intend to cover. They are: Koilash Auto Rice Mill, Gotatikor, Alompur BISIC Daily Rice Milling Average in Peak Season: 600 x 40kg bags Shuvo Auto Rice Mill, Gotatikor, Alompur BISIC Daily Rice Milling Average in Peak Season: 400 x 40kg bags Jedda Auto Rice Mill, Gotatikor, Alompur BISIC Daily Rice Milling Average in Peak Season: 300 x 40kg bags Shajalal Auto Rice Mill, Gotatikor, Alompur BISIC Daily Rice Milling Average in Peak Season: 500 x 40kg bags Meghna Auto Rice Mill, Gotatikor, Alompur BISIC 45
Daily Rice Milling Average in Peak Season: 600 x 40kg bags Sonar Bangia Auto Rice Mill, Gotatikor, Alompur BISIC Daily Rice Milling Average in Peak Season: 600 x 40kg bags
Khaja Auto Rice Mill, Technical Road, South Surma, Sylhet Daily Rice Milling Average in Peak Season: 400 x 40kg bags Oly Auto Rice Mill, Technical Road, South Surma, Sylhet Daily Rice Milling Average in Peak Season: 500 x 40kg bags Adorsho Auto Rice Mill, Technical Road, South Surma, Sylhet Daily Rice Milling Average in Peak Season: 500 x 40kg bags Halima Auto Rice Mill, West Kajir Bazar, Sylhet Daily Rice Milling Average in Peak Season: 300 x 40kg bags Ahmed Auto Rice Mill, West Kajir Bazar, Sylhet Daily Rice Milling Average in Peak Season: 400 x 40kg bags Sahin Auto Rice Mill, Sheikh-Ghat, Sylhet Daily Rice Milling Average in Peak Season: 700 x 40kg bags Bengal Auto Rice Mill, Sheikh-Ghat, Sylhet Daily Rice Milling Average in Peak Season: 700 x 40kg bags S. L. Auto Rice Mill, Sheikh-Ghat, Sylhet Daily Rice Milling Average in Peak Season: 600 x 40kg bags Surma Auto Rice Mill, Sheikh-Ghat, Sylhet Daily Rice Milling Average in Peak Season: 500 x 40kg bags
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Competitor Analysis Our research shows us that the competitors listed above only mill these amounts throughout the peak seasons i.e. for approximately 5-8 weeks after harvest which typically takes place in June/July and November/December. For the rest of the year their production output runs at only a fraction of what they produce during peak seasons. Premiere Group; however, propose to consistently mill 800-1000 x 40kg bags of Rice, plus byproducts every single day of the year. We will accomplish this by having a constant supply of grain from local farmers whom we will have contractual agreements with. Also, our new state of the art machinery and equipment will have the capacity to produce these large amounts with ease. We believe this gives us a huge advantage over our competitors. Distribution Patterns We will be using our newly acquired truck to transport our rice and other by-products to markets to allow traders to purchase it, as well as offering our customers the option of collecting it from our premises, or getting it delivered by us at an additional cost. Strategy and Implementation Summary Our strategy is to increase production output capabilities through investment in new technology to allow us to service the need for more rice and by-products, and also to collaborate with local farmers to ensure that we are able to offer a consistent supply right the way through the year. We will focus on establishing strong, long-term business relationships with local farmers and traders, and ensure we operate in a totally ethical manner. Competitive Edge As already mentioned, Premiere Group has a combination of factors that help give them a competitive edge. These are as follows: 1. Established relationships with local farmers and traders & wholesalers. 2. Contractual agreements with local farmers to ensure a consistent supply of grain to produce rice and by-products throughout the year. 3. 17 years management experience in the rice milling industry. 4. Competitive pricing due to maximising production, reduced costs, and utilising all elements of the grain to produce by-products and therefore allow final products to be sold at a more competitive price.
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5. Additional services and revenue streams i.e. grain drying facility, storage facility, and optional delivery facility. 6. High quality products due to the use of new, state of the art machinery & equipment. 7. Giving traders/customers a wider choice of products by offering them by-products to help them grow and expand their businesses by offering their customers more choice. 8. Well trained, experienced and skilled staff. 9. A strong, customer service focus with the aim to continually build strong, long-term relationships with farmers and traders. 10. Targeted Marketing campaigns and a team of dedicated sales agents to deal with farmers and traders. Marketing Strategy Typically in the rice milling industry, very little or no marketing and advertising is done at all other than word-of-mouth. We at Premiere Group however, have vast knowledge and experience in Sales & Marketing. Our management team has over 10 years experience in Global Marketing, and we believe that despite the success of any business, Marketing is essential. We will be setting up a dedicated team of Sales Agents whose job it will be to constantly be out on the road visiting farmers, traders, and wholesalers, and building new and managing existing relationships with them, and continually looking for new clients and business opportunities. We believe that this will strengthen our relationships with our customers and also with the farmers that we have contractual agreements with because they each get regular communication and visits from dedicated sales agents to ensure their needs are catered for and that everything is running smoothly. In addition to this, we will be doing leaflet drops within a 100 mile radius of our base, and doing targeted advertising campaigns in the form of eye-catching boards. Promotion Strategy We will also be promoting our business and products by holding occasional open days at our premises where by we will invite local traders and potential customers to come and sample our products. We believe such activities will aid in building and strengthening our relationships with our customers.
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As well as this, we will also be running promotional campaigns through our team of sales agents to get our brand well-known and become established. Marketing Program In line with our Marketing strategy, we will employ three different marketing tactics to increase customer awareness of Premiere Group: In-house Marketing, Public Relations Marketing, and Media Marketing. Although, we still believe that our most important tactic will be word-ofmouth/in-house marketing. This will be by far the cheapest and most effective of our marketing programs. We strive to build a well known and trustworthy reputation and brand that will be easily recognized. Pricing Strategy & Sales Forecast We plan on entering the market with a very competitive pricing strategy. We will be able to do this because our initial investment in new machinery & equipment will not only let us produce maximum output and reduced costs, but also allow us to ensure that all elements of the grain are utilized by producing by-products and therefore producing extra revenue streams - and thus allowing us to be able charge less for our Rice products. We aim to produce high quality rice and by-products and sell them at a low price to increase and establish our market share. A detailed breakdown of our Pricing is as follows: Please note: that the purchase price of grain i.e. what we will be paying for the grain to local farmers fluctuates throughout the year (usually between 500-750 Taka's per 40kg bag), depending on the Season, so for the purposes of these calculations we have based the workings on an average rate of 600 Taka's per 40kg bag when purchasing grain from farmers, before milling. These working are based on revenue produced from 100 x 40kg bags of grain: Cost of purchasing 100 x 40kg bags of grain from local farmers at 675 Taka's per bag: 67,500 Taka's After milling and processing, the following products are produced from these initial 100 x 40kg bags of grain:
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Total
Revenue
of
initial cost of an average of 67,500 Taka's, resulting in a Gross Profit of approximately 21,412.18 Taka's per 100 bags of grain milled. We forecast that we will be milling and processing 500 bags of grain per day for the first 3 months of having installed the new machinery & equipment, and then 800-1000 bags per day 50
(an average of 900 bags per day) there afterwards and consistently going forward. This will mean: Forecast Turnover for first 3 months (approximately): 12,003,144.55 Taka's per month (approx. 88,912.18 per month) 2,890,644.55 Taka's per month (approx. 21412.18 per month) 21,605,660.18 Taka's per month (approx. 160,041.93 per month) 5,203,160.18 Taka's per month (approx. 38,541.93 per month)
Gross Profit for first 3 months (approximately): Forecast Turnover after first 3 months (approximately): Gross Profit after first 3 months (approximately):
So, to conclude, we forecast that (from milling and processing): First Year Turnover to be: First Year Gross Profit to be: Second Year Turnover to be: Second Year Gross Profit to be: Third Year Turnover to be: Third Year Gross Profit to be: Tk 230,460,375 Tk 55,500,375 Tk 259,267,922 Tk 62,437,214 Tk 259,267,922 Tk 62,437,214
In addition to this, we will be offering grain drying, grain storage, and delivery services which will also bring in revenue streams. We forecast these to be an additional Tk 675,000 ( 5,000) per month. So, final Turnover and Gross Profit forecast: First Year Turnover to be: First Year Gross Profit to be: Second Year Turnover to be: Second Year Gross Profit to be: Third Year Turnover to be: Third Year Gross Profit to be: Tk 238,560,375 Tk 63,600,375 Tk 267,367,922 Tk 70,537,922 Tk 267,367,922 Tk 70,537,922
Strategic Alliances As already mentioned, Premiere Group will be forming a number of strategic alliances with other businesses in order to operate successfully. These will include local farmers with whom we will have contractual agreements to purchase grain and also to dry their grain, and traders and wholesalers to whom we will sell our products and offer our services.
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Milestones/ Action Plan Our milestones that we aim to hit are as follows: Secure financing Purchase new machinery & equipment Carry out building extension on premises Install new machinery & equipment Purchase grain and purchasing of grain sign contractual agreements with local farmers for
Begin milling and processing Hit maximum production within 3 months of installing new equipment Operate at full production output consistently there afterwards Look to acquire a second and third premises in the second and third years respectively machinery &
Management Summary The strength of our management positions us for success. We have a team that embraces different disciplines, accomplished professionals with expertise in all areas of the business, including marketing, accounting and rice mill management. Premiere Group, with more than 17 years of experience in the rice milling industry, understands the importance of strong management. We are a UK based Limited Company that is made up of a management team of 3 Directors that have expertise in different areas of business that consist of 17 years of Rice Milling and Trading experience in Bangladesh, 21 years of Food Wholesaling and Restaurant experience in the UK, and 10 years of Sales, Marketing and Accounting experience in the UK, Europe, and Dubai.
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Personnel Plan Our Personnel/ staffing plan consist of the following (all of which are well-trained, experienced, and skilled individuals): Position General Manager Mill Manager Second Mill Manager Maintenance Engineer Operator- Mill Operator- Oil Press and Machinery Operator - Briquette Machine Operator- Briquette Machine Labourer Labourer Labourer Labourer Truck Driver Total Monthly Salary (Taka's) 40,000 30,000 30,000 20,000 12,000 10,000 10,000 10,000 6,000 6,000 6,000 6,000 6,000 192,000
Other
Based on a rate of 135 Taka's to 1 GBP- 192,000 Taka's is approximately 1,422.22 per month on staff wages/salary. In addition, we will employ 3 Sales Agents at a total cost of approximately 350 per month and a UK based Professional Engineering Advisor who has over 50 years of experience globally.
Financial Plan
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The financial plan is to borrow Tk 80 lac now as a long-term loan from UCB Bank, at an interest rate of 18% along with a capital of Tk 15 lac to buy machineries and extend building which is suitable to our needs. We will repay this loan within five years from the cash flow of the business. We expect to have a cash flow from the very 1st month of the business operation. This investment will allow us to start our business which include producing: rice, rice bran, rice bran oil, briquette and broken rice along with additional service of providing dryer service, which will give us a further edge over the local competition and enabling us to further expand into our target market, while increasing recognition of our name and services. As there is a lack of edible oil in Bangladesh market, the sales is related to production assuming that 100% of production will be sold. As we shall expand our capacity on the 4th month of our business operation we expect to gain more revenue afterward. So we can say that revenue is related to production capacity. So the revenue is expected to jump high on the 4th month and remain stable afterward. From the very start, management will start building the business and taking it to the highest level. There is a huge demand of edible oil in Bangladesh, and other than that the export opportunity is huge, so it is expected that the management will experience good time in the recent years. The management aim to be a leader in the rice bran oil market.
Important Assumptions
This business plan was developed for Premiere Group assuming the following:
Steady growth from good management, barring any unforeseen local or national disasters such as the economic slowdown seen by most of the country following the September 11th, 2001 tragedies. An adequate loan amount to allow for initial implementation of plans. Competition and buying patterns remain similar to those used for forecasting. Existing customer base maintained. Market research is on target and current (received from different state organizations). New customers will be gained through direct sales and advertising. Long-term interest rate will be no more than 18%. Income tax rate is 35%. Sales tax rate is 15%.
projected to be stable as the capacity of the mill is stable. But if the management again on the 2nd or 3rd year expand their capacity, then fuel along with all other costs will go up. Assuming that 100% of production will be sold immediately and capacity being stable all other expenses are kept stable, but with the sales percentage fluctuating and capacity increasing or utilization not being 100% of capacity, the scenario will differ. The scenario analysis is explained later on. (Where we have seen that the company makes good profit and balance sheet is healthy enough).
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FY 2013-14
Tk 259,267,922 Tk 8,100,000 Tk 267,367,922 Tk 196,830,000 Tk 70,537,922
FY 2014-15
Tk 259,267,922 Tk 8,100,000 Tk 267,367,922 Tk 196,830,000 Tk 70,537,922
The cash flow projection for Premiere Group shows that provisions for ongoing expenses are adequate to meet the needs of the company, as the business generates sufficient cash flow to support operations and future expansions. Cash flow projections are critical to our success. The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month and the other representing the monthly balance. The annual cash flow figures are included here and in our Cash Flow table. Detailed monthly numbers are included in the Appendix. Cash Flow shows the purchase of long-term assets as follows: Machineries
Rice Mill Diesel Generators Transmitter/ Transformer Oil press Bottle Capping Machine Briquette Machine Total
Cost
1,550,000.00 1,400,000.00 300,000.00 800,000.00 200,000.00 300,000.00 4,550,000.00
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FY 2013-14
FY 2014-15
The Balance Sheet shows healthy growth of net worth, and strong financial position. The monthly estimates are included in the Appendix. The balance sheet for Premiere Group is quite solid. We do not project any trouble meeting our debt obligations. Our management is strong enough and more than capable of keeping the business on track for total repayment of any obligations (loans). Our major capital asset (the property and affixed buildings and other mill equipments) is valued at about Tk 7,267,500. Our current assets include Raw Material which is to be purchased at the beginning of business amounting to Tk 2,430,000. These items will be purchased upon funding of the requested loan, for the amount of Tk 80 lac. We will have a solid starting balance in the company account. This will allow us to start the business with a security nest and will allow us to grow our cash balance at a steadier pace. Our projected balance sheet is presented in the table below.
FY 2013-14
FY 2014-15
Business Ratios
Premiere projected business ratios are provided in the table below. 59
Ratio Analysis
FY 2012-13
Sales Growth Percent of Total Assets Inventory Total Current Assets Long-term Assets Total Assets Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Operating Expense Cost of Goods sold Profit Before Interest and Taxes Main Ratios ROCE Net Profit Margin ROI Inventory Turnover Inventory Turnover Period Total Asset Turnover Debt to Net Worth Assets to Sales Sales/Net Worth 81.49% 26.66% 81.49% 72 5.07 5.25 18% 19% 6.19 49.46% 26.38% 49.46% 81 4.51 3.06 7% 33% 3.27 33.53% 26.38% 33.53% 81 4.51 2.07 3% 48% 2.14 100.00% 26.66% 11.13% 73.34% 15.53% 100.00% 26.38% 10.21% 73.62% 16.17% 100.00% 26.38% 10.18% 73.62% 16.20% 5.34% 84.02% 15.98% 100.00% 15.21% 15.21% 84.79% 2.78% 92.52% 7.48% 100.00% 6.43% 6.43% 93.57% 1.88% 95.44% 4.56% 100.00% 3.15% 3.15% 96.85%
FY 2013-14
FY 2014-15
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APPENDIX
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