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THE PALM KERNEL OIL EXTRACTING


BUSSINESS PLAN
By Godwin Ozor Dated 09:38
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The foregoing is a part of a sample small scale palm kernel oil extracting business plan. A
detailed bankable business plan complete with the quantitative sections that captured the
financials, the production schedules and relevant ratios can be obtained from the author on
request by calling 08037788438, 08028606026, 08181926534 or email ozorprice1@yahoo.com.
The sample goes thus---

1.0 Introduction
This hand book is designed to lead you through the necessary steps in writing your
own business plan.
While there may be some elements of the finished documents that would benefit from
professional inputs from accountants, marking experts e.t.c, you should be able to write
the main elements of this plan you self.
I believe that it is important for the person who will have to carry out the plan to have
ownership of all the ideas to present it in person, which is more difficult if you have not
been closely involved in preparing it. A second reason is that writing the plan helps you
hone its contents. Sitting in front of a business partner or prospective investor is a bad
time to find you are not utterly familiar with the plan or that there is a hole in the logic
you hadn’t thought of.
I have been approached by people who want help with the actual writing of a
business plan. Generally they seen not to be confident in their ability to write compelling
English, it is alright to get someone to help in this regard but the owner of the plan, the
person who will sell it to investors really needs have a good grip of the grand plan.
It is in realization of this problem that I set out to write this handbook as a guide to
prospective entrepreneurs.
The ubiquitous requirement of a business plan and/or a feasibility study by investors and
financing houses in Nigeria as a vital condition of an application for business funding has
been the nightmare of many would be successful entrepreneurs. Many have the ideas of
what to do in their heads but when it comes to putting it down in an acceptable format as
a business plan, the prospects has frightened and frustrated many away from what would
otherwise be a successful business dream.

1.1 EXECUTIVE SUMMARY


The following plan prepared for a hypothetical company XYZ Ltd., is based on 16 years
of cognate experience in the palm kernel oil extracting business, is highly focused and
promises to follow a path of prosperity for its owners and staff. XYZ Ltd. will engage in
the crushing of palm kernel nuts in order to extract palm kernel oil and palm kernel cake.
The purpose of this business plan is to demonstrate to interested parties, investors,
technical partners and financial partners of the high profit making potential of the project.
The plan is also to attract equity partners and secure adequate loan and/or financing for
the implementation of the venture.

The factory will produce palm kernel oil and palm kernel cake as its main product. Palm
kernel oil is a main raw material in the production of edible vegetable oil and palm kernel
cake is a major raw material in the production of assorted animal feeds.

The installed capacity of the factory is 864 metric tones of palm kernel oil per annum and
1164 metric tones of palm kernel cake per annum. About 108 metric tones per annum of
a minor by-product called palm kernel oil sludge will also be produced. Because all
things may never be equal given the Nigerian situation, this consultant will base this plan
on a conservative production estimate of 482 metric tones of palm kernel oil, 650.7
metric tones of palm kernel cake and 60.25 metric tones of palm kernel oil sludge per
annum. A conservative sales revenue of N121 million will be generated in the first year
of operation and will grow steadily at a yearly average of 10% subsequently. The
projections contained herein are authentic and will be used as the budget for the business.

1.2 MISSION AND OBJECTIVE


XYZ Ltd. will produce palm kernel oil and palm kernel cake for the city of its domicile,
the entire state, and the nation in general. The first five years will be used to consolidate
its hold on the raw materials bases while continuing its production process in the state of
domicile and the region as a whole. There after XYZ Ltd. will venture into refining of
palm kernel oil into edible vegetable oil and processing of palm kernel cake into animal
feeds. Palm tree plantations will also be ventured into as a backwards integration project.

1.3 KEYS TO SUCCESS


 To efficiently organize raw materials supply to XYZ Ltd. factory
 To give incentive and high purchasing prices to suppliers who deliver good quality palm
kernel nuts with low moisture content, low shell content, and low impurities content on a
regular basis.
 To produce palm kernel oil and palm kernel cake of high quality matching industry
standards and chemistry expectations
 To deliver to buyers of finished products with punctuality and at competitive and
guaranteed prices.
 To constantly evaluate the strengths, weaknesses, threats and opportunities with deft
adjustments made as warranted.

1.4 CRITICAL SUCCESS FACTORS OF THE BUSINESS


 Location: The location of the business in K state is very critical to success of the venture
because it would ensure easy access to raw materials that is abundant in the region and
also ensure a large and sustainable market of the finished products in the huge industrial
estates in the state and its environs
 Access to capital: The finance houses, banks and other investors would be interested in
tapping into the successes of the young enterprise. Access to more capital would be
needed in order to expand and progress the enterprise.
 Tenured sale contract: The company shall engage and secure long term contracts with the
major edible oil refineries and animal feed companies.
 Professional management of project: The plant shall be managed by experienced and
technically competent professionals who would ensure that the organizations plan, as
well as targets are realized in record time
 Organizational Structure: Controls must be put in place to safe guard the company’s
assets and to maintain and sustain good product quality.
 Innovation: The company must be proactive and react to the needs of its publics
including customers, suppliers, personnel and government authorities and take innovative
steps to position itself to maximize benefits and minimize losses.
 Product Quality and Standardization: A quality control laboratory must be put into place
to ensure quality control.
 Trained Manpower: The human resources of the company must be optimized with
training and re training and hunting for and recruitment of quality personnel where the
need arises.

1.5 VISION AND MISSION STATEMENT


The vision is to become one of the leading palm kernel oil and palm kernel cake
producers in Nigeria.
The mission of the company is ‘to operate a production plant committed to excellence in
the production of high quality products that will be accepted across the industry’.
To fulfill this mission, the company will:
 Utilize local and available abundant resources
 Partner with host community
 Adhere to best practices
 Recruit and retain the right people
 Be goal-oriented
1. The objective is to realize a net profit after tax as follows in the next five years of
operation.
Year one __________________ N11,000,000
Year two __________________ N 12,000,000
Year three _________________ N 13,000,000
Year four _________________ N 14,000,000
Year five _________________ N15,000,000

In order to ensure that success is achieved in meeting the critical requirements the
following steps must be taken.

 Develop a business/market plan for the growth requirements of the company.


 Share the plans and dreams as enumerated and indicated in the business plan
 Implement the plan properly as conceived and develop a strategy to move from “plan” to
“action” by mobilizing all stake holders in the process.
 Review progress regularly with clearly defined milestones to measure performance.

2.0 COMPANY SUMMARY


XYZ Ltd is a company registered under the companies and allied matters act of Nigeria.
The company is dedicated to exploring and developing the vast raw materials basis of
palm kernel nuts in the southern parts of this country. In future collaborations with South
East Asian companies, XYZ LTD intends to return the glory of palm produce to the
southern part of this country. The company is currently starting with palm kernel oil and
palm kernel cake production and will diversify into palm tree plantation, vegetable oil
refining and animal feed compounding.

2.1 THE BUSINESS OPPORTUNITY


The market for palm kernel oil and cake is both national and international. Nigeria with
an estimated population of over 150 million people, a national population growth rate of
5.7% per annum and an average economic growth rate of 3.5% per annum in the past five
years, has a large market for palm kernel oil and cake. The demand for palm kernel oil
and cake is very high in Nigeria. Due to this high demand and subsequent shortages
observed, the federal government under the leadership of former president Olusegun
Obasanjo in 2005 introduced the presidential initiative on the development of edible oil
production over a period not exceeding three years. This measure was aimed at
stimulating the local production and attaining self sufficiency in edible oil production.
Even after seven years of the initiative on edible oil production, the domestic demand of
the product far exceeds the national production. The short fall in supply is estimated at
about 50,000 metric tons per annum. It is clear that there is a large and sustainable market
for palm kernel oil in Nigeria. This project will tap into opportunity.

2.2 THE BUSINESS OF PALM KERNEL NUTS CRUSHING.


The Palm kernel oil expelling business is primarily a raw material processing business.
This is because the end product is still a raw material for the refineries that use it to
produce edible vegetable oil. The basic raw material in this industry is palm kernel nuts
(PKN) and the finished products are palm kernel oil (PKO), palm kernel cake (PKC) and
palm kernel sludge PKSL). The business is an all-year round business. The end products
are in hot demand all-year-round. Because of the high demand, producers do not stock
finished products. Buyers always book for the products in advance.

It is also on cash and carry basis. Sometimes, buyers even pay in advance in order to
secure an expected batch of products. Prices of the main products i.e PKO and PKC
fluctuate up and down depending on the season of the year. However, the prices of the
raw materials i.e palm kernel nuts also fluctuate along with the PKO. That is, if the price
of the PKO falls then the price of palm kernel nuts also falls and vice versa. A good
strategist can make a fortune if he takes advantage of these price movements

The major threat to the business is scarcity of palm kernel nuts. If a factory lacks palm
kernel nuts, it may not enjoy periods of rising prices. Another problem is irregular supply
of electricity. However, if an entrepreneur knows the various localities and villages, then
the sourcing of palm kernel will be very easy. If the entrepreneur has sufficient funds in
working capital, the sky will be his limit as he is likely to out compete his colleagues in
the business. The issue of power outage can be arrested if an electric generating plant is
bought. Finally, the business is very rewarding with very little risk or fear of failure.

2.3 THE RAW MATERIAL:


The raw material for this project is palm kernel nuts (PKN). Palm kernel trees which bear
the nuts are indigenous to the Southern part of Nigeria. They are particularly the main
stay of the economies of the people of the old Eastern Nigeria, Mid-Western Nigeria, a
large part of the old Western Nigeria, Benue and Kogi States in the old Middle Belt. Palm
kernel nuts are oil bearing seeds. Normal palm kernel nuts of Nigeria origin contain
between 40% and 55% of oil, 55% and 40% of cake and 5% of sludge and debris. There
are different species of palm kernel nuts. Some yield more oil than the others. The
percentage of oil in any specie depends on the locality in which the tree comes from.
Example, Palm kernel nuts from Oyo town in Oyo State will not yield the same amount
of oil as palm kernel nuts from Abakaliki in Ebonyi state, so also nuts from Ekpoma in
Edo State are different from nuts from Nsukka in Enugu state. Again nuts from Akwa
Ibom and Cross Rivers are different from nuts from Edo States. However, an experienced
buyer will be able to differentiate and classify the nuts and then price them accordingly.
They are normally bagged in 80kg bags.
These nut are plentiful in the various localities from where they are transported to the
factories by suppliers who take a margin for their efforts. A good buyer can enlist these
suppliers for constant supply of palm kernel nuts all year round.
NOTE: In palm kernel nuts crushing business, it is a norm to use 40% oil extraction rate
as bench mark, That is you expect to extract 40% of the oil in a given batch of palm
kernel nuts crushed. You may extract more or less but in pricing your raw materials you
must target this 40% extraction. At 40% extraction rate, 2.5 tons of palm kernel nuts
crushed should give you 1 ton of oil, about 1.25 tons of palm kernel cake and 0.125 of
sludge. This means that if crude palm kernel oil sells for say 190,000 naira per ton you
should strive to buy your raw material at 70,000 naira or less per ton as 2.5 multiply
70,000 naira would give you 175,000 naira. This will allow you a margin of 15,000 naira
from one ton of oil sold then add revenue from the palm kernel cake and sludge to arrive
at a total margin on raw material bought. This will guide you in pricing your raw
materials.
There are factors, which affect the supply of palm kernel nuts in the market.
These factors include
1. Climatic condition: The fruiting of oil palm tree maybe favorable or unfavourable
depending on the climatic condition during the fruiting period. This may translate into
more nuts and more supply of nuts in the markets or ice versa.
2. Festivities: During festivities such as Christmas, New Year, Easter etc. villagers tend to
bring out more palm kernel nuts to the market in order to sell and raise money for their
festive celebrations.
3. School holidays: During holidays school pupils from the villages engage in more picking
and cracking of palm kernel nuts in order to raise money for their school fees and to help
their parents take care of the family financial needs. The supply of raw materials
generally are cast into four broad periods of the year.

Period A: This period begins in January and last up till the end of March. During this
period activity is rather stepped down in the industry. Kernel nuts suppliers feel reluctant
to supply. Palm kernel oil prices do not move upwards rapidly. Profit margin tends to be
very slim during this period.

Period B: This period starts from April down to July. This is a period characterized by
the lowest price of palm kernel nuts in the year. The mills are at advantages, for they
could stock both palm kernel nuts and palm kernel oil in order to maximize profit in the
next period.

Period C: This period may begin from August or September up to November and
December. Price of kernel nuts and oil move upwards rapidly during this period. Any
kernel nuts bought and crushed during this period is sure to yield huge profits. Both the
price of palm kernel oil and palm kernel cake move rapidly upwards during this period.

Period D: This period between December and January is a risky period. Price of palm
kernel nuts are normally high but palm kernel oil (PKO) buyers do not demand oil as
much. Sharp and sudden fall in oil price is more prevalent during this period. Mills
should be very careful in order to avoid sudden fall in price and consequent looses.
However on a final note, the availability of palm kernel nuts all year round is guaranteed
and plentiful. It only takes an experienced purchasing officer to grade and price them
accordingly.

2.4 STRATEGY AND IMPLEMENTATION SUMMARY


 Build a strong and reliable network of raw materials providers. This will be fairly easy to
accomplish as the factory will be located in the production area of vast palm kernel tree
plantations both organized and wild ones. Villagers knowing that the factory exists, and
in order to make extra money, will take the necessary measures to gather these palm
kernel nuts both from the wild and from the organized plantations. All the management
has to do is to harness this potentials and maximize the opportunity to build a strong and
reliable raw material supply base.
 Produce palm kernel oil and palm kernel cake of acceptable standard both nationally and
internationally. The chemistry and physics must meet international standard. A small R &
D unit will be established to control raw material suitability, process uniformity and
quality of finished product.
 Negotiate and secure firm agreements and contracts with major customer within the
vegetable oil and animal feeds industry. To constantly keep in touch with them in order to
forecast their needs and monitor the movements up and down of prices of finished
products.
 Motivate the whole staff for quality production.
 Reach full production capacity as soon as possible.
 Take, in good time, necessary management decisions to be in the position to increase
production more drastically, if necessity arises, to cope with increase in demands.
 Study the possibility to install an automatic powered bottling system for cooking oil. That
might increase one third more the selling price of cooking oil and consequently improve
cash flow
 Study the possibility of installing a refinery for vegetable oil and animal feeds mill that might
contribute more to profitability and increased cash flow

3.0 ECONOMIC CONTRIBUTION TO LOCAL AND NATIONAL ECONOMY


The proposed project would contribute positively to the local and national economy by
way of employment generation, revenue generation to the governments and overall
increase in the Gross Domestic Product (GDP). Specifically the project would employ 12
persons directly and more than 100 persons indirectly. The village woman who cracks the
kernel, nuts selects the nuts and sells the palm kernel nuts which forms the raw materials
for this project is indirectly employed. She makes money with which she buys other food
items for the family, pay children’s school fees, and takes care of the medical bills of the
immediate family. The youth in the village market square who loads and off loads the
bags of palm kernel nuts are also indirectly employed. The transporter and other auxiliary
workers make their living by involvement in the processes connected to palm kernel oil
extraction business.

The local government revenue department collects fees from palm kernel nuts traders in
the various village markets. The state government “produce-departments” also impose
levies on palm kernel nuts movement at the various state boundaries as traders convey
palm kernel nuts from the source to the factory. In all the gross domestic product (GDP)
of the national economy is positively impacted. The socioeconomic desirability of the
project can never be over emphasized.

The proposed business would positively affect the socio-economic development of the
host community and the country at large.
Some of the benefits include
 Employment generation: The business would generate employment both directly and
indirectly. About 12 persons will be directly employed at the inception and numerous
others that would be indirectly employed from the activities of the enterprise
 Sources of government revenue: The proposed business would generate revenue to the
government through payment of various taxes, levies and permits to the local, state and
federal governments.
 Increase in gross domestic product (GDP): The gross domestic product of the country would
receive an added boost as a result of the activities and operation of the business
enterprise.
The above makes the business socio-economically desirable

3.1 ENVIRONMENTAL FACTORS


The environmental impact assessment of the operations of the palm kernel oil expelling
factory shows that there are no adverse effect of any of the outputs to the environment.
We do not need to incur any costs in the treatment or disposal of any effluents, and waste
material disposal cost in minimal.

4.0 THE MACHINES AND EQUIPMENTS


Although there are many fabricators of palm kernel oil expelling machines and
equipment, Zenaika Nig Ltd and Hogis Engineering Ltd are among the best fabricators.
In short this study is based on machines and equipment made by Hogis Engineering Ltd.

The main kernel crushing machine in this project is Hogis model EK200-K which can
each crush 7.5 metric tons of palm kernel nuts in a 24- hour operation. The machine is a
simple machine made up of a 45- Killowatts electric motor, a gear box/main drive, a
main shaft/worms arrangement and a cage and bars compartment. All these are mounted
on a rectangular main frame solidly supported by three iron blocks. On top of the
machine is a hopper through which the palm kernel nuts are fed into the machine. At the
back end is the electric motor and at the front end is the cage and bars arrangement.

The main cage is where the crushing activities take place. The main cage is lined with
specially designed strong iron bars laid side by side, and nut spacers in between them.
These form open slots from where the expelled oil drains out. The bars are very well laid
so that there would be no clogging of oil or loss of solids in the main cage.

The extra heavy duty main expeller shaft in the cage is made of ringed worms that are
assembled sequentially such that the worms snake round the shaft from back end to the
tip. The thrust of the pressure worm is taken upon a large thrust ball bearing which makes
for smooth crushing operation.

An adjustable cone is mounted at the front end of the main shaft. For maximum oil yield
and to obtain the desired thickness of the cake, the cone point is adjusted to the desired
pressure region. For maximum performance during press operation the adjustment should
be three and half threads-in of the main shaft.

Another important part of the factory is the Filter press machine. This is the machine that
separates sludge, dirts and debris from the clean oil. It is a rectangular structure with
filtration chambers arranged within the rectangular structure. The filtration chambers are
separated by filtration mediums made of polyester untreated tarpaulin. These filtration
mediums trap the sludge, dirts and debris and allow clear golden clean oil to pass and
collect through piping into a trough through which it descends by gravity into the
secondary tank underground. The filter press machine is made in Nigerians and they are
equally very good and durable.
There is also an array of automation of processes by elevators, conveyors, pump,
gearboxes, sprocket and electric motors if complete automation is desired.
Another vital machine is the Kernel shaker, which is a machine that separates shells,
debris and unwanted materials from the palm kernel nuts. This machine is important
because unscrupulous suppliers of raw materials wickedly mix shells and debris with the
main raw kernel nuts in order to gain more weight. The kernel shaker helps to remove all
the shells in a given batch of kernel nuts before that batch is crushed.

The factory should be equipped with a good welding machine of 200 amperes and above.
There should be an electric filling machine, an electric drilling machine, a wench, a tool
box of spanners and screw drivers, an oxygen acetylene welding equipment and other
sundry tools. Other optional equipment should be:
(1) A serviceable electric generating plant of between 500 and 1000 KVA capacity. (2)
Be a good weighing equipment preferably 500 kg weigh scale. (3) goods trucks for
sourcing of raw materials. An oil tanker of 10 metric tones capacity is also desirable but
can be done without.
4.1 THE PRODUCT
The palm kernel oil is the main output of any palm kernel oil expelling factory. The palm
kernel cake (PKC) is a major by-product and palm kernel sludge (PKSL) is a minor-by
product. Palm kernel oil (PKO) is the major raw material for the production of edible
vegetable oil. Ninety percent of what is called “groundnut oil” in our market by ordinary
housewife today is in fact vegetable oil made from palm kernel oil (PKO). Original
groundnut oil which is three times more costly than refined vegetable oil made from palm
kernel oil, cannot be afforded by a majority of Nigerian housewives. Again PKO is a
major raw material of soap making companies. It is also used by food and confectionery
industry.

The palm kernel cake (PKC) is a major by-product of a palm kernel oil expelling factory.
Palm kernel cake (PKC) is consumed by animal feeds production companies. Most of the
animal feeds such as chicken feed, pig feeds, etc are all made with PKC.

Solvent extraction plants are another major consumers of palm kernel cake (PKC) these
days. These solvent extraction plants buy the palm kernel cake and further extract oil
from it using a chemical process. What remains after the chemical extraction is called de-
oiled cake (DOC). The increasing demand of de-oiled cake (DOC) by Chinese and Indian
Companies has even made PKC to be in such high demand that its contribution to profit
is most of the time more than the main product oil. Another byproducts is the palm kernel
sludge (PKSL). This is used by people who produce black soap for medicinal purposes.

4.2 THE MARKET


The market for palm kernel oil (PKO) is very large. About 80% of all the edible
vegetable oil consumed in Nigeria is made from refined palm kernel oil. What we call
“groundnut oil” in the ordinary market place is in fact refined palm kernel oil. Currently
refined palm kernel oil is now being exported to some West African Countries. The
major buyers of palm kernel oil are vegetable oil refineries and soap making companies.

The focus will be on vegetable oil refineries and soap making companies. We shall
narrow down to vegetable oil refineries since their demand is far above the currents
supply by a very large margin.

That is to say that these refineries demand more than 1000 metric tons per day while all
the local producers cannot met up to this demand per day. In short, these vegetable oil
refineries do not depend on local producers for their daily needs of PKO. They import
from abroad from time to time to augment the short fall. However, they book up all the
outputs from the available local producers even before they are produced.

These refineries include Ohms Oil, Golden Oil Plc, BUA Group, Hallmark Oil Ltd, Ray
Oils Ltd, Shell Oil Mills Ltd, all in Lagos state, Rom Oil Mills, Ibadan , General Agro
Industries Portharcourt, Willson Nig. Ltd., Nsukka. Aniuzo International Ltd., Emene,
Enugu, Planet Oils Ltd., Aba. Udeagbala Holdings, Aba, Nifex Vegetable Oil Ltd., Aba,
Envoy Vegetable Oil, Onitsha, Star Arrival Oils, Onitsha, Chickason Group, Nnewi,
Camella Vegetable Oil, Owerri, Jilnas Vegetable Oil, Umuahia, to mention but a few.
The above mentioned refineries go about daily to search for palm kernel oil wherever
they can find any. These refineries are all located within the southern states of Nigeria.

4.3 MARKETING PLAN


The plan is to start by selling to these established refineries based at Enugu, Nsukka,
Nnewi, Onitsha, Aba, Owerri, Umuahia Portharcourt, before heading to Lagos, Ibadan
and Abeokuta and other refineries based in the western part of this country. We have
already engaged their purchasing managers and they are hopeful that we will sell to them
when we start operation. They normally send their oil tankers down to scout for palm
kernel oil. We need not incur advert costs in marketing our products since demand out
weigh supply by more than 1000%. Our task will normally be to keep to production level
as planned in order not to disappoint the customers when they come to lift their oil.

Our proposed capacity at present is 72 metric tones per month and the estimated demand
per day is more than 1000 metric tones. Our task is to ensure that we meet up with our
production target of 72 metric tones per months in order not to disappoint our selected
customer who may have paid in advance. Again we need to ensure that we maintain a
standard quality for our products.

It is conventional in the crude palm kernel oil market that buyer’s bear most of the burden
and cost of distribution since due to the high demand they elect to come with their oil
tankers and even wait for the oil to be produced. This helps to eliminate the marketing
and distribution headache for the producer.

The palm kernel cake (PKC) is a major by-product and sometimes contributes to a great
extent to the overall profit. The animal feed industry is constantly demanding palm kernel
cake as raw material for their products. The feed millers also book for the PKC in
advance. Thereby eliminating the need for any elaborate marketing plan.

4.4 THE PRODUCT PACKAGING AND DELIVERY:


The products from this project include the palm kernel oil, the palm kernel cake and the
palm kernel sludge. These products are basically raw materials by their nature because
they are all further processed for one finished product or the other. The palm kernel oil is
further processed into edible vegetable oil, bathing and laundry soap by our major
customers who are vegetable oil refineries and soap/ detergent makers. Palm kernel oil
could be used in other chemical industries but our marketing efforts would concentrate on
the vegetable oil and soap companies.
The palm kernel cake is a major raw material in the animal feeds compounding industry
and also is a raw material for solvent extraction factories who use a chemical process to
further extract crude palm kernel oil from the mechanically expelled cake and to further
reduce the cake to what we call de-oiled palm kernel cake with less than 3% oil content
there in.

The palm kernel sludge is further reprocessed in order to extract crude oil used mainly in
black soap making.

The palm kernel oil is normally sold in drums and tanks. The middle men and end users
usually come with their haulage tanker vehicles and drums for collection at the mill. The
product could also be delivered to them by the producing company depending on agreed
terms. The palm kernel oil will be stored in tanks ready for pick up by the customers or
from where it could be delivered to the customers as agreed.
The palm kernel cake is normally packaged in 50kg bags and the customers have them
delivered in lorry load of bags or they come with their own vehicle for pick up from the
mill.

The plan is to customize the empty bags with the company name and logo properly
printed on the empty bags to differentiate the product from those of competitors the
others. This is a good strategy as most of the palm kernel cake in the market today are all
packaged in plain bags or second hand empty bags used by other companies for their own
goods. It is easy to adulterate palm kernel cake with sand, sawdust or rice husk etc. but
the plan is to differentiate the pure and high quality palm kernel cake by branding and
printing company’s own bags.

The palm kernel sludge are stored in open tanks and drums and the customers come to the
mill for pick up. They inspect the quality right there at the mill before they would trans
load to their own containers after purchase.

5.0 ORGANIZATIONAL AND MANAGEMENT PLAN:


Ownership of the business: The ownership of the business would be a sole proprietorship
and this is because the sole proprietor has acquired the necessary training required to run
and operate a palm kernel oil extracting plant.

5.1 KEY PERSONNEL OF THE ORGANIZATION


The promoter of the business Mr. Joseph Okeke will oversell the management and
operation of the business. He will act as the manager of the plant. Mr. Joseph Okeke is an
economist with a Bsc degree and many years of experience in the palm kernel oil
extracting industry.
Mr. Joseph Okeke has two partners who would help him in running the business although
they are not on the payroll as their duties are advisory. They are Mr. Bolaji Fajenyo an
experienced stock broker and Mr. Kazeem Usman a professional accountant.

Below Mr. Joseph Okeke in the structure are the maintenance/ factory manager, a
welder/factory supervisor, two machine operators, four factory hands/labourers, one
cashier/accountant and two security guards.

5.2 MANPOWER REQUIREMENT


The estimated manpower requirements and their remunerations are as follows:
Category No Needed Each Amt/Month Total
Manager 1 50,000 50,000.00
Maintenance man/welder 2 30,000 60,000.00
Machine operator 2 25,000 50,000.00
Factory hands/labourers 4 15,000 60,000.00
Cashier/accounts clerk 1 20,000 20,000.00
Security 2 15,000 30,000.00
12
Total monthly wage bill 270,000.00

5.3 MANAGEMENT TEAM


XYZ Ltd, personnel are trail blazers in the palm kernel oil Industry with over ten years
experience in the kitty.
The Chief executive and Managing Director, Mr Joseph Okeke is a successful
businessman who started with a vision of setting up of the best vegetable oil companies
east of the Niger. The company has moved from strength to strength and his management
style has been paying off.

5.4 PRODUCTION PROCESS


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 55%. of oil, 55% to
40% of cake and 5% of sludge. The raw kernel nuts are bought from the village markets
and transported to the factory. On arrival, the bags of kernel nuts are measured and
packed ready for processing.
They are fed into the palm kernel oil expelling machine through a hopper in readiness for
crushing. The machine propels the nuts through a tight iron cage where it then squeezes
and extracts the oil from the crushed nuts. The oil funnels into an oil tank at the under-
belly of the machine and subsequently tunnels into the underground primary tank from
where it is picked up by the fitter press machine for filtration. The filtered oil descends
into another underground 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 transferred from there by a conveyor to the
bagging section and 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.

6.0 MILESTONES:
The milestones describes what is hoped to be achieved in the next five years.
The table below describes the milestones.
s/n Activity Funding Time line
1 Feasibility Personal January 2015
study/business fund
plan

Loan negotiation - February – March


2
2015

Site acquisition and Personal March 2015


3
development fund
April 2015
Equipment Loan
4
fabrication and
installation

5 Staff recruitment Loan


April 2015

6 Trial production Loan April-May 2015

Production proper - April 2015


7

Production proper - May2015 – May 2016


8 continues
Production proper May2016 – May 2017
-
9 continues
- May2017 – May 2018

10 Production proper
continues May2018 – May 2019

11 Production proper
continues
May2019 – May 2020
12 Production proper
continues
6.2 FINANCING PLAN
1. Equity contribution 1,000,000
2. Term loan 5,000,000

6.3 FINANCING REQUIREMENTS


Application for a term loan of N5,000,000 would be made to the Bank of
Industry/Central Bank of Nigeria in order to meet up with the funding needs of the young
enterprise. The N5,000,000 five million loan would be Machines and equipment
2,600,000
2. Working capital (30 metric tones of kernel nuts)
at N80,000 per ton 2,400,000
Total loan requested
N5,000,000

7.0 BUSINESS RISK AND MITIGATION FACTORS


A number of risks have been identified in the production of palm kernel oil. We would
attempt to proffer mitigation strategies to the identified risks.
 Lack of raw material: Palm kernel nuts production in Nigeria is largely controlled by small
holders who use crude method in their production process. As a result adequate
availability of raw materials cannot be said to be guaranteed. To mitigate this factor the
company shall work closely with the village producers and map out fund to stock up
available palm kernel nuts against future uses.
 Government policies: Instability in government policy affects most businesses in the third
world country like Nigeria. The issue of allowing importation of vegetable oil and some
times palm kernel nuts disorganize the plans of local producers. To mitigate this factor
we shall be conducting proactive investigation of proposed imports by spying on the
activities of these known importers.
 Transportation risk: Due to bad roads network in the country businesses face untold
hardships and increased costs. To mitigate this factor we shall have a policy of making
suppliers of raw materials to deliver to the factory before payment and the buyers of the
finished products to lift their purchases from our factory gate.
7.1 SWOT ANALYSIS
 Strength: There is a ready market for palm kernel oil and palm kernel cake in Nigeria all year
round.
 There is available and cheap labour
 The equipment can be fabricated and supplied by local companies and partners
 Professional input through professional managers and consultants
Weaknesses
 Unavailability of raw materials
 Lack of adherence to business plan and recommendations
 Instability of government policies.

Opportunities
 Proximity to the busiest markets
 Competitive pricing
 Government incentive supports agricultural and agro-related businesses
 There is a large demand for palm kernel oil and palm kernel cake
 Potential to create employment opportunities
 Possible business expansion into oil palm plantation and palm oil processing
 Improving national economic environment
 High prospects due to continuing economic stability

Godwin Ozor

Author & Editor

Has laoreet percipitur ad. Vide interesset in mei, no his legimus verterem. Et nostrum imperdiet
appellantur usu, mnesarchum referrentur id vim.

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