The present business plan is established with a view a to a major expansion

anticipated by NileJam. Its objective is twofold: to be used as a basis for

developing cooperation with a new business partner in Europe and to seek bank

loans to finance investments planned within the foreseeable future. This

summary highlights the key points of the business plan.

NileJam specializes in the production and marketing of jams and marmalades.

The main products are 250 gram glass jars containing processed fruit of the

region (oranges, strawberries, figs, mangoes, apricots etc.).

The company is located in a small town called El Amriya. This town is situated

on the western edge of the Nile Delta and about 30 kilometres south of

Alexandria along the desert road to Cairo. The infrastructure consists of four

connected buildings constructed on a piece of land of two hectares owned by the

company. These house the following facilities:

• A cool storage unit of 4,000 cubic metres capacity;

• Fruit processing lines (sorting, peeling, washing, crushing, evaporators,

sterilizers, filling machines, etc.);

• The main storage building for keeping the empty jars, sugar and the final

product & Offices and canteen.

The company employs 220 full-time and 180 part-time (seasonal) staff. Its

mission is to add value to fruits of the region by producing superior-quality jams

and marmalades and sell these to national and international markets at

competitive prices.

Hassan Machfus established NileJam in 1974. Together with his wife and three

relatives he started producing orange jam. The fruit was bought from
neighbouring farms. He delivered the product in 5 or 10 kilogram plastic

containers to pastry shops and hotels in Alexandria. After his retirement in 1999,

his daughter Fatima Machfus and his son Ahmed Machfus took over the

business. Today, NileJam is a joint-stock company with a share capital of 5

million Egyptian pounds. Fatima and Ahmed each hold 50 per cent of the shares.

They are jointly responsible for the executive management of the firm. Fatima

supervises the finance, administration and sales/marketing functions, while

Ahmed is in charge of product development and production.

About two thirds of the total production is supplied to the Egyptian market and

distributed through five chains of food supermarkets. The other one third is

exported to surrounding Arab countries, particularly Saudi Arabia, Kuwait and

Libyan Arab Jamahioiya. For each of these countries, NileJam has an exclusive

agreement with a single distributor.

Last year’s total sales were 18 million Egyptian pounds. Revenues over the past

three years have grown steadily at about 25 per cent per year, mainly as a result

of the company's gaining market share from competitors thanks to faster

delivery service and better quality. The corresponding net profit margin was 9.0,

10.0 and 10.5 per cent respectively. The company now has about 10 per cent of

the Egyptian market, which is estimated to be worth about 120 million Egyptian

pounds. The total market for exports in the above-mentioned countries is

roughly 90 million Egyptian pounds and the share of NileJam is on average

about 6 to 7 per cent.

A recent major success of the company is its agreement with Delicia Foods Inc.

of Denmark, which specializes in the supply of food products to hotels and

restaurants in the European Union. Under the agreement NileJam is to produce,

under the brand name and, according to the recipe of Delicia, individual portions

of jam (30 gram containers). Also, Delicia was given the option of a 20 per cent

participation in the equity of NileJam. A decision on this option will be made

within two years.This new cooperation is expected to contribute substantially to the growth of
revenues and profitability. Financial projections are showing Nilejam´s a

sustainable growth of 30 per cent over the next three years. Net profits are

expected to increase gradually to 15 per cent by the end of the third year.

However, the new cooperation requires the following investments:

• Construction of two new production lines according to the quality standards

and specifications of Delicia (mainly evaporators/concentrators and

filling/packaging equipment);

• Expansion of the existing cool storage capacity by another 2,000 cubic m.

The total investment to be made in the first quarter of next year is estimated to

be 2 million euro plus 5 million Egyptian pounds. Delicia has agreed to provide

a loan of 0.5 million euro. The owners of NileJam are prepared to contribute

with a shareholders' loan of 2 million Egyptian pounds. Therefore, the external

financing required is 1.5 million euro and 3 million Egyptian pounds. These

funds are to be available on 1 January of the coming year. The repayment of the

loan to the external lender can be made in two instalments: the first half to be

paid one year after and the rest two years after the loan disbursement. The

interest rate assumed in the financial projections is 8 per cent for the euro and 12

per cent for the Egyptian pound loan. The assets of NileJam are unencumbered

and the company has no debts at the present time. The fixed assets of NileJam,

with an estimated value of 9 million Egyptian pounds (including land, buildings

and equipment), are offered as collateral for the loan.