BUSINESS PLAN

OF A

PALM OIL AND PALM KERNEL

OIL PROJECT
BY

EKEDUM EBUKA INNOCENT

MAY 2014

TABLE OF CONTENTS

Chapter

Page

1.

Executive Summary

2.

Market Analysis

3.

Company Description

4.

Management and Organization

5.

Product Line / Process

12

6.

Funding Plan

14

7.

Financials

15

CHAPTER ONE
1

EXECUTIVE SUMMARY

1.1

GENERAL
Name of the Firm: Duca Palm oil mill.
Project: Palm oil, Palm kernel oil.
Location: Adazi-Enu, Anaocha Local Government Area,
Anambra State, Nigeria.

1.2

OWNERSHIP AND NATURE OF REGISTRATION

The palm oil processing mill will be privately owned as a sole proprietorship
business.
Name of Chief Promoter: Ekedum Ebuka Innocent
Date of Birth: 20th July, 1987
Place of Birth: Adazi-Enu, Anaocha Local Government Area,
Anambra State, Nigeria.
Phone No: +2348032823808
E-mail: michealbukason@yahoo.com
Contact Address: Adazi-Enu, Anaocha Local Government Area,
Anambra State, Nigeria.

1.3

EDUCATIONAL QUALIFICATION OF THE CHIEF PROMOTER

Nigerian Certificate In Education: NCE Biology/Mathematics
Institution: Umar Suleiman College of Education , Gashua.
Year of Graduation: 2010

1.4

SPECIAL TRAINING

Horebson Resources- Human Resources and Skills Acquisition Training: 22 nd

March 2014.
3

 CEDR University Of

Nigeria Nsukka- Entrepreneurship Skill Training

March 2014.
Web development and affiliate marketing Training June 2013.
1.5

WORK EXPERIENCE
Organization: Ekedum Motor Spare Parts.
Position: Sales Representative.
Nature of Work: Sales
Duration: Five Years
Organization: Umar Suleiman Government Day College Gashua, Bade
Local Government Area, Yobe State.
Position: Teacher (Teaching Practice)
Nature of Work: Teaching
Duration: Three Months.
Organization: Family Palm Plantation.
Position: Assistant
Nature of Work: Palm harvesting and Oil Processing.
Duration: Five Years

1.6

VISION STATEMENT
To be a leading palm oil processing mill, in providing palm products in
Nigeria and beyond.

1.7

MISSION STATEMENT
To provide palm products in a clean environment, while making use of
modern technology with honesty.

1.8

BUSINESS STRATEGY
Advertising strategies include local Tv advertisements to initially announce
4

the Grand Opening. Print advertisement will also run in the local newspaper.
Affiliate marketing will be introduced to all potential customers, by affiliate
marketing a customer (mr. A) will register with the marketing manager and also
introduce five more customers (mr. b, mr. c , mr. d, mr e and mr f) to the mill
whom the marketing manager will register under the customer (mr. A). The
customer (mr. A) earns 1% from each of the customers (mr. b, mr. c , mr. d, mr e
and mr f) transactions that is over 100,000.00 naira at the end of the year
(December) for a duration of one year. The business will also run online at
www.ducapalm.globalvila.net

CHAPTER TWO
2

MARKET ANALYSIS

2.1

MARKET DESCRIPTION
The Nigerian market for palm oil and palm products is promising. With the
growing population and the increase in number of eateries being set up and
household consumption of palm oil, the market continues to grow. Because
of the high demand of these products in the country, they are being imported
in some cases.
The abundance of palm tree plantation in different Local Government Areas
Of Anambra State in Nigeria makes the area a good site for establishing the
palm oil mill. The oil mill will focus on the production of palm oil, palm
kernel oil and palm kernel proceeds needed for the making of soaps,
pomade and even snacks. The products from this oil mill serve as raw
material for cosmetic industries, food and snacks making industries.
It is also used as a substitute for cocoa and fats found in milk and in cream
made from sugar, biscuits, cakes and margarines. Palm kernel oil It is also
used when baking cakes, croissants and bread to give the products added
volume, a soft texture that make bread last longer. Anambra state which will
be the target of the mill has a very big population, which is a good market
palm oil processing mill and palm products. Golden Oil Industries Ltd, 15A
harbour industrial Estate, Onitsha and Envoy oil Industries Ltd, PokoBros
Avenue, Onitsha. are secondary processors of palm kernel oil (pko).
6

2.2 MARKETING PLAN

Duca Mills have a team of good marketers and sales forces who will create
public awareness of the mills products. There would be an integrated
marketing communication between the mill and its target market. The mills
product would be communicated to the public through advertisement, public
relations, sale promotion and publicity.
There will be proficient marketing professionals recruited for this purpose.
Again, the industry will make use of customer based pricing one of its
pricing strategy. It will also emphasize on quantity discount as a pricing
strategy also. The mill will make use of sales representatives and agents
instead of middlemen to avoid hoarding of the products, excessive price hike
and low customers satisfaction.
Affiliate marketing will be introduced to all potential customers, by affiliate
marketing a customer (mr. A) will register with the marketing manager and
also introduce five more customers (mr. b, mr. c , mr. d, mr e and mr f) to the
mill whom the marketing manager will register under the customer (mr. A).
The customer (mr. A) earns 1% from each of the customers (mr. b, mr. c ,
mr. d, mr e and mr f) transactions that is over 100,000.00 naira at the end of
the year (December) for a duration of one year.

CHAPTER THREE
3

COMPANY DESRIPTION

3.1

NATURE OF THE MILL

The mill will start as a medium scale palm oil processing mill which will be
focused on processing of red palm oil and palm kernel oil at least for its first
five years of operation.

3.2

OBJECTIVES
The objectives of Duca Palm oil mill for its first three years of operation
are:
Achieve profitability in the first year.
Expand the capacity of the farm.
Maximize profit and minimize cost in each subsequent year.
Control a reasonable share of the markets in Anambra and Delta state.
Have a strong link with government establishments, palm oil dealers and
business concerns on the supply of the palm oil products.
Others include development works which will start in earnest whenever the
mill funds can be able to support it.

CHAPTER FOUR
4

MANAGEMENT AND ORGANZIATION

4.1

MANAGEMENT

1.

Name: Ekedum Ebuka Innocent

Position: Managing Director
Qualification: NCE Mathematics
Responsibilities:
Controlling the marketing of the mills products.
Taking of major decisions in the mill.
Provision of good working conditions for other personnel.
Ensuring that the mill operates on a good profit margin.

2.

Position: Accountant / Secretary

Qualification: OND Accounting
Responsibilities:
Keeping the record of all the financial transactions in the mill.
Keeping the record of all the assets and liabilities of the mill.
Keeping the record of all the palm processing activities in the mill.

3.

Position: Marketing Manager

Qualification: HND Marketing .
Responsibilities:

Takes the role of assistant managing director.

Marketing campaigns.
Register referrals of all customers in the affiliate marketing.
Buying of palm fruits and kernels from the markets.
Keeps record of prices of palm products.

4.2

SEMI SKILLED PERSONNEL

1.

Position: Security Man

Responsibilities:
Ensuring the general security of the mill.
Controlling the movement of persons in and out of the mill.
Taking care of the security lights.
Operating the electricity generator.

2.

Position: Labourers
Responsibilities:
Operation of the mill machinery.
Processing of palm oil and palm kernel oil.
Cleaning the mill.
Packaging of palm oil and palm kernel oil.
Uploading and downloading of product to and fro the mill van.

Position: Driver
10

Responsibilities:
Transporting palm fruits and kernel from the markets to the mill.
Supplying palm oil and palm kernel oil to the customers.
4.3

ORGANIZATION
The Managing Director will be in control of all the activities of the farm. All
the farm personnel will be answerable to him. In his absence, all other
personnel will be answerable to the Marketing Manager or a senior worker as
may be directed.

11

CHAPTER FIVE
5

PRODUCT LINE/ PROCESS

5.1

PRODUCT DESRIPTION
For the first five years, Duca mill will focus on processing of palm oil
And palm kernel oil for the mill and for customers.

5.2

PRODUCTION PROCESS FOR PALM KERNEL OIL (PKO)

The following processes are involved in expelling Palm Kernel oil
(PKO). The raw Palm Kernel nut is an oil yielding seed which contains
between 40% to 48% of oil, 55% to 47% of cake and 5% of sludge. The raw
Kernel is bought from the village markers and transported to the factory. On
arrival, the bags of Kernel are measured and packed ready for processing.
They are fed into the palm kernel oil expelling machine through a hopper for
crushing. The machine propels the nuts through a tight iron age which then
squeezes and extracts the oil from the crushed nuts.
The oil funnels into an oil tank under the machine and subsequently tunnels
into the primary tank from where it is picked up by the fitter press machine
for filtration. The filtered oil descends into the secondary tank by gravity
from where it is pumped to the storage tank. After the crushing and
extraction process in the iron cage, the cake comes out at the front end of the
cage and is conveyed from there by a conveyor to the bagging section and
12

thereafter packed ready for sale. The filter press machine removes all the
debris and dirts from the crude thereby leaving us with a clear golden
coloured clean oil in the storage tank ready for sale. The sludge and debris
are trapped in the filter press chambers. They also sediment at the bottom of
the primary tank. Periodically sludge and debris are removed from the filter
press machine and scooped from the bottom of the primary tank and stored
in open drums ready for sale.
5.3 PRODUCTION PROCESS FOR PALM OIL
Fresh fruit arrives from the field/markets as loose fruit. The fresh fruit is
normally emptied into wooden boxes suitable for weighing on a scale so that
quantities of fruit arriving at the processing site may be checked.
Digestion is the process of releasing the palm oil in the fruit through the
rupture or breaking down of the oil-bearing cells. The digester commonly
used consists of a steam-heated cylindrical vessel fitted with a central
rotating shaft carrying a number of beater (stirring) arms. Through the action
of the rotating beater arms the fruit is pounded. Pounding, or digesting the
fruit at high temperature, helps to reduce the viscosity of the oil, destroys the
fruits outer covering (exocarp), and completes the disruption of the oil cells
already begun in the sterilization phase.
There are two distinct methods of extracting oil from the digested
material. One system uses mechanical presses and is called the dry method.
The other called the wet method uses hot water to leach out the oil.
In the dry method the objective of the extraction stage is to squeeze the oil
out of a mixture of oil, moisture, fibre and nuts by applying mechanical
pressure on the digested mash. There are a large number of different types of
presses but the principle of operation is similar for each.
13

CHAPTER SIX
6

FUNDING PLAN
The duca mill project is expected to be financed with a loan of eight million
Naira (N8,000,000) which will be amortized over its first five years of
operation starting in the first year as the case may be.

14

CHAPTER SEVEN
7

FINANCIALS
The financial plan for the mill for its first three years of its operation
includes the:
Profit and Loss Account
Cash Flow Statement
Balance Sheet
Depreciation Schedule
The financial plan will only consider Palm kernel oil, palm kernel cake and
palm oil. Sludge will be assumed neutral so that its profit will take care of
any imperfection with the financial projections.

7.1 ESTIMATED CAPITAL EXPENDITURE NEEDS

Errection of industrial buildings /

N1,500,000

furniture
Payment of workers for first year
N300,000
Acquisition of machines and N1,500,000
equipment
20 Metric Tones Storage Tank
N150,00
10 Metric Tones Filter Press Machine N350,000
15

Miscellaneous
N500,000
Total Capital Expenditure needs
N4,300,000
Estimated Working Capital Requirement for the month
Raw Materials- Palm Kernel nuts-one months
estimate
Salaries -two months estimate
Other operating expenses-two months estimate
Miscellaneous
Total working capital
Total capital required

N1,800,000
N300,000
N80,000
N300,000
N2,480,000
N6,780,000

7.2 PROJECTED INCOME STATEMENT

PROFIT AND LOSS ACCOUNT
YEAR ONE (N)
INCOME
Gross sales
Discount on

YEAR TWO (N)

YEAR THREE (N)

224,219,000
2,242,190

303,269,000
3,032,690

303,269,000
3,032,690

221,976,810
186,830,000

300,236,310
241,605,000

300,236,310
333,345,000

35,146,810

58,631,310

58,631,310

1,732,000

2,791,000

2,880,000

2,880,000

affiliate
marketing
Net sales
Cost of
sales
Gross profit
Operating
Expenses
Rent
Maintenanc

2,791,000

e
Salaries
Buildings/Fur

1,800,000
1,500,000
16

niture
Equipments/

1,850,000

3,500,000

250,000

45,000

Registration
Insurance
Mitsubushi

150,000
800,000

150,000
-

150,000
-

Canter Truck
Accumulated

360,000

790,000

1,350,000

Depreciation
Loan

1,500,000

2,000,000

2,000,000

150,000

Total

10,137,000

12,111,000

9,171,000

Expenses
Net Income
Tax
Net income

25,009,810
2,500,981
22,508,829

46,520,310
4,652,031
41,868,279

49,460,310
4,946,031
44,514,279

Machines
Advertisemen
ts
Company
Name

servicing

20 Mt
Storage
Tank

After Tax

7.3 Projected cash flow statement

Cash at the Beginning

of Year
Operating Activities:
Cash Receipts from
Cash Sales

YEAR ONE (N) YEAR TWO (N) YEAR THREE

(N)
30,003,639
80,252,918

221,976,810
17

303,269,000

303,269,000

Cash Paid for

Inventory Purchases
Salaries
General Administrative
Expenses
Tax
Affiliate bonus
Net Cash Flow from
Operations
Investing Activities:
Cash Paid for
Fixed Assets
Net Cash Flow from
Investing Activities
Financing Activities:
Cash Receipts from
Loan
Cash Paid for
Repayment of Loan
Interest on Loan
Net Cash Flow from
Financing Activities
Net Increase in Cash
Cash at End of Year

7.4

186,830,000
1,800,000

241,605,000
2,880,000

241,605,000
2,880,000

2,500,981

4,652,031

4,946,031

2,242,190
28603639

3,032,690
51,099,279

3,032,690
51,099,279

4,300,000
4,300,000

7,800,000
3,500,000

0.00000
0.0000

8,000,000

1,500,000
800,000
5,700,000

2,000,000
650,000
2,650,000

2,000,000
450,000
2,450,000

30,003,639
30,003,639

50,249,279
80,252,918

133,802,197
214,055,115

BALANCE SHEET

Assets
Current Assets:
Cash
Stock
Total Current Assets
Fixed Assets:
Property, machinery
and Equipment
Accumulated
Depreciation

YEAR ONE (N)

YEAR TWO (N)

YEAR THREE (N)

30,003,639
30,003,639

80,252,918
80,252,918

214,055,115
214,055,115

4,300,000

3,500,000

0.0000

360,000

790,000

1,350,000

18

Total Fixed Assets

Total Assets
Liabilities
Long Term Debt
Net Worth

3,940,000
33,943,639

2,710,000
82,962,918

-1,350,000
212,705,115

6,500,000
27,443,639

4,500,000
78,462918

2,500,000
210,205,115

7.4 PRICES OF PALM PRODUCTS

MONTH

PRICE OF PALM PRICE OF PALM

OIL/TONNE
KERNEL CAKE/
TONNE

January

PRICE OF
PALM
KERNEL
OIL /TONNE
195,000

160,000

16,000

February

195,000

140,000

16,000

March

180,000

110,000

16,000

April

160,000

110,000

16,000

May

150,000

130,000

16,000

June

150,000

130,000

16,000

July

155,000

150,000

16,000

August

155,000

150,000

16,000

19

Septembe 150,000
r

150,000

16,000

October

150,000

150,000

16,000

Novembe
r

160,000

150,000

16,000

December 195,000

175,000

16,000

7.5
Year

1
2
3
4
5

LOAN AMORTIZATION SCHEDULE

Principal
Owing (N)
8,000,000
6,500,000
4,500,000
2,500,000
1,000,000

7.6

Interest @ Annual
Principal
Balance c/d (N)
10% (N)
Installment Repayment(N)
Payment
(N)
800,000
2050000
1,500,000
6,500,000
650,000
2050000
2,000,000
4,500,000
450,000
2050000
2,000,000
2,500,000
250,000
2050000
1,500,000
1,000,000
100,000
2050000
1,000,000
-

MONTHLY ANALYSIS OF WORKERS SALARIES (PAYROLL)

POSITION
1
2
3
4
5
6

Marketing manager
Accountant/Secretary
Driver
Four laborers
Security Man
Truck conductor

YEAR ONE
YEAR TWO (N) YEAR THREE
(N)
(N)
40,000
40,000
40,000
15,000
15,000
15,000
20,000
20,000
20,000
60,000
60,000
60,000
15,000
15,000
25,000
15,000
15,000
15,000

20

21