Business Plan on Palm Oil Industry

What is business plan?

A business plan is a formal statement of a set of business goals, the reasons why they are
believed attainable, and the plan for reaching those goals. It may also contain background
information about the organization or team attempting to reach those goals.
The business goals being attempted may be for-profit or non-profit. For-profit business plans
typically focus on financial goals. Non-profit and government agency business plans tend to
focus on service goals, although non-profits may also focus on maximizing profit. Business plans
may also target changes in perception and branding by the customer, client, tax-payer, or larger
community. A business plan having changes in perception and branding as its primary goals is
called a marketing plan.
Externally
Externally focused plans target goals that are important to external stakeholders, particularly
financial stakeholders. They typically have detailed information about the organization or team
attempting to reach the goals. With for-profit entities, external stakeholders include investors and
customers. External stake-holders of non-profits include donors and the clients of the non-
profits services. For government agencies, external stakeholders include tax-payers, higher-level
government agencies, and international lending bodies such as the IMF, the World Bank, various
economic agencies of the UN, and development banks.
Internally
Internally focused business plans target intermediate goals required to reach the external goals.
They may cover the development of a new product, a new service, a new IT system, a
restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An
internal business is often developed in conjunction with a balanced scorecard or a list of critical
success factors. This allows success of the plan to be measured using non-financial measures.
Business plans that identify and target internal goals, but provide only general guidance on how
they will be met are called strategic plans.
Vision:
Sustainable palm oil: challenges, a common vision and the way forward .
Escalating Country demand for palm oil continues to drive rapid expansion of oil palm
monocultures across the tropics. Whilst business is booming for the palm oil industry, providing
a major source of employment and foreign exchange for producing nations, success is tainted by
the extensive damage being inflicted on some of the richest ecosystems on earth.
This creates a complex challenge for biodiversity conservation. Insatiable demand for vegetable
oil combined with high yields and profitability mean that oil palm expansion is set to continue,
yet the predicted scale of expansion makes it a strong contender for the single greatest threat to
biodiversity on the planet. How can these socio-economic and environmental goals be
reconciled?
The focus of this symposium will be to define a common vision for integrating environmental
and socio-economic goals for more sustainable palm oil production and to identify and catalyse
the stakeholder actions necessary to achieve this. As a first step, key scientists, policy makers,
NGOs and private sector representatives will review the science and practicalities of reconciling
continued global oil palm expansion with biodiversity conservation and the maintenance of
ecosystem functions. The second step will be to explore the processes, decisions and conditions
necessary to make this common vision a reality, highlighting the roles of investors,
policymakers, the Roundtable on Sustainable Palm Oil, palm oil producers, retailers and NGOs.
Mission:
1. To continue our strategy of controlled growth and through improved management to
continue to increase our net margin
2. To increase client satisfaction, through improved reporting, accuracy, timeliness and
estimates of cost and value, together with a better understanding of our Clients needs
3. Whilst maintaining our commitment to core water industry customers, continue to
diversify into targeted markets in Energy, Rail & Scotland
4. To learn how to formulate an effective Business Plan.
5. To continue our strategy of controlled growth and through improved management to
continue increasing our net margin
6. Operating the firm efficiently.
7. Funding the firm.
8. Seeking financing.
9. Arranging strategic alliances.
10. Obtaining large contracts.
11. Testing the viability of our plans.
12. Attracting key employees.
13. Business plan can uncover omissions and/or weaknesses in our planning process.
14. To organize our thoughts and ambitions for our business venture.
It can be used as a selling tool in dealing with important relationships including our lenders,
investors and banks
Methodology
This is a business plan to establish a Palm oil business . Now a day, palm oil is a popular
cooking oil in Bangladesh. Palm oil is also a profitable business because people used Palm oil
in every day of his/her life. Our business plan is prepared by the queries of several Palm
oil industries. Some surveys have been conducted and some interviews were taken.
Activities
Missions to investigate opportunities in Suriname for sustainable palm oil. Key
stakeholders in Suriname will be consulted and information on the business prospects of
sustainable palm oil will be collected.
Missions to develop a business plan through a multi stakeholder approach. Consultations
and expert meetings will be organized to agree on a draft business plan. This plan will be
developed through collective efforts coordinated by KIT.
Sourcing of investment capital in Suriname and the Netherlands. Based on the business
plan, investors will be approached for participation as shareholders.

SUMMARY OF THE PROJECT
1. Name of the Project : Fast Forward palm plant (Pvt.) Ltd.
2. Business Type : Palm Oil manufacturing company
3. Form of Business : Partnership
4. Source of Finance : Individual Capital & Bank Loan
5. Product/Service
(We sell) : Palm oil & Kernel oil
6. Product/Service
(We Buy) : Palm Plant, Fertilizer
7. Brands :
8. Number of Employees : 50-60
9. Main Customers : Local market of Bangladesh
Soap Manufacturer in Bangladesh
10. Management Certification : HACCP ISO 9001:2000
11. Location : Our project location is setting in;
Sub Project Area Location
Project 1 Ramu, Coxs bazaar
Project 2 Banderbans
Project 3 Rangamati.
Figure-1: Locations of the Business
Develop a business plan for sustainable production of palm oil in Suriname on rehabilitated
plantations, integrating principles of corporate social responsibility.
What is Palm oil
Mainly palm oil is the cooking oil. Palm oil is an oil which is extracted from the fruit of the palm
oil tree, an African palm which has been cultivated for centuries for its useful oil. In addition to
palm oil, the palm oil tree also yields palm-kernel oil, which is extracted from the seeds. Pure
palm oil is widely available in Africa and Southeast Asia, and sometimes in specialty markets in
other places, and products which contain palm oil are also very common.
To extract palm oil, the fruit of the palm oil tree is collected and pressed, yielding a rich, dark-
red oil which is high in carotene. When the oil is exposed to heat through processing and
cooking, it rapidly loses the carotene, turning a pale creamy color. Producers of palm oil can sell
the pure oil, or use a fractional distillation process to extract various components of the oil,
which have a variety of uses.

Palm oil is high in saturated fat and it is often very close to solid at room temperature, unless it is
specially treated. The high saturated fat also makes palm oil a great cooking oil, because it is
able to withstand very high heat, and it will not break down or change when heated. However,
this also makes palm oil a less than ideal oil, health wise, because saturated fat is generally
believed to be harmful when consumed in large amounts.
Cheaply Palm oil
Many processed foods contain palm oil, which is viewed as a cheap, efficient, and highly stable
oil by food manufactures. In addition to being used in cooking, palm oil can also be used in a
number of industrial processes. Many cosmetics companies utilize palm oil as a cheap
replacement for more expensive natural oils in things like soaps and moisturizers. Palm oil
creates the desired texture without the expense, although it also lacks many of the beneficial
compounds which make these products good for the skin.
View of a palm oil
The world largest suppliers of Palm oil are Malaysia, which produces 45% of the worlds supply
and Indonesia (39%) These countries would supply up to 20% of the European Unions biodiesel
needs by 2010.[1][2]
The strong growth in Palm oil consumption over the last six years has resulted in Palm oil
being the dominant oil in the global market. As Soybean oil prices began to rise in 2001-02, the
spread between Palm oil and Soybean oil began to widen, increasing the competitiveness of
Palm oil in the world market. Since 2001-02, Palm oil consumption has increased 13.2 million
metric ton, compared to an 8.7 MMT increase in Soybean oil consumption. This lower price,
compared to other major oils, primarily Soybean oil, has given Palm oil a competitive advantage
in both these large oil consuming countries. The rising trend is attributed also to making Trans
Fatty Acid (TFA) label effective in the United States in January, 2006. The association of Palm
oil companies (Gapki) predicted the prices of crude Palm oil (CPO) will hover around US$600
per ton this year and will not dive lower than US$550 per ton.
Process advantages Palm oil industry
Our company is used in latest invention in biodiesel production
Our technology employs hydrodynamic cavitations, an industrial phenomenon, produced by
pressure variations and obtained using the geometry of the system creating velocity variation.
Cavitations itself perceived as a technology of future[2][9]; use of cavitations in chemical
processes reduces reaction time, increases reaction yield and decreases consumption of energy.
The conventional techniques of biodiesel production typically utilize temperatures in the range
of 70 to 200C, pressures in the range of 6 to 10 atm and reaction times of up to 70 hours for
achieving conversions in the range of 90 to 95%based on the type of raw material used (usually
mixtures of fatty acids obtained as waste). Use of hydrodynamic cavitations decreases reaction
time and temperature to 70 min. and 30C respectively. So, use of cavitations reactor for
production of biodiesel allows save up to 10 times on electricity
1. 10. Product items : Our Production Item is setting in;
Items Package
(In container)
Palm Oil 1,2,5&10kg
Kernel Oil 1000,2000&5000 Kg

Product Price:
1 kg 2kg 5kg 10kg 1000kg 2000kg 5000kg
Palm Oil 70tk 140tk 335tk 650tk
Kernel Oil 45000 88,000 220,000

Palm oil 72000Kgs. Kernel oil 20000kgs.

Figure-2: Product Item for Business
MANAGEMENT ASPECT
1. 1. Corporate Set up:
1. 11. Fast Forward palm plant (Pvt.) Ltd is a partnership business. In our project Fast
Forward palm plant (Pvt.) Ltd. is a palm oil manufacturing organization. The Managing
Director of the proposed project, Mr. X, is a renowned business man and has a lot of
experience about consumer psychology. He has completed his PHD degree from
Australia. Without these, he is related to different types of business like, manufacturing,
construction and other export import related items. And it is also an important matter
for us he is one of the large investor of our company.
Name of the Directors Extent of
Sharehol
ding
Status
Mr.
X

30% Managin
g
Director
Mr. Y 40% Director
Mr. Z 30% Brand
Ambassa
dor
Figure-3: Board of Directors
We expected that, we have enough ability to do well in our business. And we are very much
hopeful because our Brand Ambassador Mr. Z is a famous cricketer in Bangladesh.
The important duties of the partners are,
i. Justice, Faithfulness: True accounts, Full Information: Partners are bound to carry
on the business of the firm to the greatest common advantages, to be just and faithful to each
other, and to render true accounts and full information of all things affecting the firm to any
partner or his legal representative. Sec-9
ii. Equality of losses: Subject to any contract to the country, partners are bound to pay
the losses of the firm equally. Sec- 13(B)
iii. No private benefit: A partner cannot use the partnership properties directly or
indirectly for his own benefit.
iv. NO secret profit: If a partner carries on any competing business of the firm, s/he
shall account for and pay to the firm all profits made by him on the business. Sec-16 (B)
v. Unlimited liability: Every partner is liable for the acts of the firm done while s/he is
a partner. The liability is joint and several. Sec-25
7. Decision making for every possibility will be done by Mr X , Managing Director of Fast
forward palm industry. But, every partner has some right to act on behalf of the firm. He has
express and implied authority.
8. Each partner has a chance to write down, the name of his authorized nominee (Wife, children,
or third party). If anyone become disabling or incase of death, the authorized
people will get the amount of the invested money. As well as this contract will be broken down.
The third party will not be treated as a partner.
9. If anyone become accuse of doing a bad situation, he must be punished based on the intensity
of the impact. If it is high, he should be expelled from the business and this contract will be
isolated.
2. Legal structure of the proposed company:
The managing directors of the company select a structure about the power of selected employee.
The structure will follow a chain of commend rules. Here manager will get the supreme power of
the company. But every important issue will submit to the board of director. Where Managing
director, departmental head and also advisor must have the right to give the opinion.

TECHNICAL ASPECT

1. 1. Project Land & Location:
We try to form a Partnership business, which create a renowned brand. And for proper
distribution of our product we will made seven factories in different location of our country.
These are:

Types of expenses Taka
Leasing 2,00,00,000
Land preparation cost 10,00,000
Palm plants import and plantation cost 15,00,000
Total 2,26,00,000

Figure-5: Land Cost per Project
2.Buildings:
For this business we need building or factory. Thats why in every project we should make 2 or 3
stories building. What we used for store room, production room, managers room, guest room,
garage etc.
Tk: 000
Sub Project Area Description Total Cost (Tk.)
Project 1 3 Storey 7,000
Project 2 3 Storey 4,000
Total 24,050
Figure-6: Building Cost per Project

3.Machinery & Equipment:
For this project we need foreign and local machinery. We will purchase our foreign
machinery from Italy. The machinery purchase from Italy, are:
Tk: 000
Machine Name Cost Per Machine Quantity Total Cost
Vessel

50000 4 200000
Sterilizer

60000 3 180000
Stripper

55000 3 165000
Deacidification

30000 4 120000
Alkali Refiner

70000 1 70000
Alkali Nevtralizer 50000 1 50000

Earth bleacher 20000 2 40000
Refiner vessel 1

120000 1 120000
Refiner vessel-2 120000 1 120000
Total 1065000
Figure-7: Machinery & Equipment Cost
Types of expenses Taka
Purchasing machines 30,000,000
Setting up machines 500,000
Purchasing delivery vans 1,500,000
Total 32,000,000

The total imported duty is (32000000*9%) 2880000 Tk.
We also purchase some local machinery which takes more then 50,000 Tk.
The amount of IDCP is 10,40,000 Tk.
The total amount ofMachinery & Equipment is 35920000 Tk.
Marketing Analysis
1. Justification of setting up the business:
We are living in the world of business. Business is the root of the economy activity and
everything is encompassing it. Thinking about a business is like leading an adventure. However,
we are going to take an adventure with palm oil. Every year we have to import huge quality of
edible oil in which more then 40% is palm oil .Every year Bangladeshi government imports 1.2
million tones of edible oil costing gap proximately 5000croretk.Despite the convenient
weather support and huge potentiality to grow palm tree here. We import because we lack
initiative to grow palm tree locally. Considering the need, we are planning to grow palm tree,
manufacture palm oil, kernel oil and market them.
2. PEST Analysis
Political Analysis:
The political situation of Bangladesh is not enough good. The rules and regulations are always
changed by changing a political leader. Moreover, Hortal, hindrance, procession and meeting in
the road are also a big threat for the organization. As a result, it will very tough for the
organization to predict the actual yearly revenue. But it is a matter of hope that, now a days
political restless situation is decreasing day by day. And also government takes some initiative
against Hortal, procession and meeting.
Economical Analysis:
The economical situation of Bangladesh is not so good. There is huge economical
discrimination. In the upper class people of city area, the per capita income is very much high
where our average per capita income is below 700$. In the rural area people have a very few
knowledge about technology. Moreover their income level is very much low. And that is why
they are our main target consumer. For those people we offer economy size of oil pack. And we
first invent the brand low price palm oil for the rural people.
Social Analysis:
Bangladeshi people are very much voluptuous. So Palm Oil is not a segmented product in
Bangladesh. All classes of people have the ability to purchase on our product. So we segmented
our product price by depending on consumer expenditure level. As a result we think that
consumer will like our product. Again in winter season the sales revenue of palm oil is very
much high. Because, people always preference to purchase palm oil for removing the thirstiness
in this season..
Technological Analysis:
Bangladesh is a developing country. So it is very tough for us to get all kind of technological
support from Bangladesh. Moreover there have some shortage of skilled engineer for solving the
technical problem. As a result we are bound to purchase our machinery from abroad.

4.Demand & Supply Analysis of palm oil industry:
The demand of Palm oil in Rural area is very much high then the people of urban area. Urban
areas people are very much concern about brand. 33% rural people can not aware about a brand
Cooking oil where more then 92% people in urban areas people are very much concern about
the brand of a cooking oil . So we can say that, in urban area we have Fixed 8% and in rural area
33% consumer can divert into our product, if we can full fill their demand easily. Without these
in many area of Bangladesh people can not purchase an Soybeans because of the high price. So
decided that we will provide a economy price for the people of rural area.
Cooking oil Brand Market Share
Area/Location
Natural Meizan Pure
Others
Urban Area 56% 24% 12% 8%
Rural Area 40% 22% 5% 33%
Figure-10: Market Share of Different Brand

5.Detail Information on Local Supply:
In Bangladesh the raw materials of Palm Oil is not available. And the supplier company also
ensures the quality of the raw material. The dealer of sub contract organization also ensured the
quality of the product. But the availability of machinery of Palm Oil is not available in
Bangladesh. So for setting up an Palm Oil factory it is necessary to purchase machinery from
abroad.
Supply Gap:
In the below we mentioned about the demand, supply and supply gap palm oil in Bangladesh.
Last year the demand of cooking oil was 31,025,000 litters, where the supply was only
17,680,000 litters. As a result were 13345. And the gap is increasing day by day.

Ton: 000
Year Demand Supply Supply Gap
2007 2008 202800 90000 112800
2008 2009 1500000 520000 980000
2009 2010 36498 20060 16438
2010 2011 42454 22178 20276
Figure-11: Supply Gap of palm oil
Present & projected market demand of the project Fast forward palm industries :
Litter: 000
Year Demand
2007 2008 25550
2008 2009 31025
2009 2010 36498
2010 2011 42454
Figure-12: Present & projected market demand
Present & projected Supply of the project Fast forward company:
Litter: 000
Year Supply
2007 2008 15300
2008 2009 17680
2009 2010 20060
2010 2011 22178
Figure-13: Present & projected Supply
Present & projected Supply Gap of the project Fast forward palm industries
Litter: 000
Year Demand Supply Supply Gap Our
Contribution
Real Gap
2007 2008 25550 15300 10250 - 10250
2008 2009 31025 17680 13345 - 13345
2009 2010 36498 20060 16438 - 16438
2010 2011 42454 22178 20276 15000 5276
Figure-14: Present & projected Supply Gap
1. 4. Who is the target customer of Palm oil ?
We segment our market by depending on income level. These are:
1. Rural people and
2. Urban people
And in rural and urban area our main consumer will be the Middle & lower class people .
Because we are trying to get there Cheaply cooking oil . In our research we found that the lower
class people are very much crazy about our product . So it is our confidant that Middle & lower
classes people take our product as there first preference. So our target area is the Rural area in
Bangladesh.
1. 5. Who are competitions for us?
In the local market, there are 5 brands of palm oil in consumer packs namely, Natural, Meizan,
Pure, Family and Dada Super. Because of increasing demand, two more brands will appear in the
market in coming months and hence there would be seven brands of consumer packs of palm oil
by the year end.
.
1. Pricing Strategy: (TK.)
1 kg 2kg 5kg 10kg 1000kg 2000kg 5000kg
Palm Oil 70tk 140tk 335tk 650tk
Kernel Oil 45000 88,000 220,000
Figure-15: Price List for Different Item
Network Technique
In our project we have a lot of small work. And some works dependent works and some are
independent works. Our project work is given below by network diagram.
Task Time (days)
A1- making lease document 10
B1- making cultivating 30
B2- field cultivating 30
B3- machinery import 30
B4- building Construction 60
C1- seeding & watering 30
D1- crops cultivation 1100
E1- oil refining 30
E2- oil packaging 10
Financial Analysi
Fixed Cost of the Business:
Item Local Cost Foreign Cost Total
Land(7 project: Table 4) 22600000 22600000
Building 3000000 3000000
Imported Machinery 31,500,000 31,500,000
Imported Duty 2880000 2880000
Installation Fee 500,000 500,000
IDCP 1040000 1040000
Local Machinery 50000 50000
Furniture 50000 50000
Computer 50000 50000
Office Equipment 20000 20000
Safety Equipment 15000 15000
Deposit to PDB 40000 40000
Pre-operating Expense 15000 15000
Consultancy Fee (1% of the Project
Cost)
617600
Initial Investment of the Business: 62377600
Figure-17: Fixed Cost of the Business

Deposit to PDB:
Tk: 000
Sector Cost
Gas 6
Water 2
Electricity 14
Telephone 12
Internet Line 6
Total: 40
Figure-18: Cost of PDB
Financial Plan for Business:
Tk: 000

I tem
Banks Investment Clients Equity Total
Amount % Amount % Amount %
Land 22600000 100 22600000 100
Building 2100000 70 900000 30 3000000 100
Imported Machinery 28736000 80 7184000 20 35920000 100
Local Machinery 25000 50 25000 50 50000 100
Others 807600 100 807600 100
Total 30861000

31516600

62377600
Figure-19: Financial Plan for Business
1. 3. Means of Finance:
Banks Investment - 30861000 (49.47%)
Clients Equity - 31516600 (50.53%)
Total: 62377600 (100%)

1. 4. Debt Equity Ratio:
Debt-Equity Ratio = Banks Investment / Clients Equity = 49.47: 50.53
1. 5. Syndicate Finance:
AB Bank is going to participate 55% of total loan amount. It hires UCBL and Duch Bangla
Bank to for a syndicate for sanctioning the loan. The Co-arranger banks will partcipate the loan
amount by using ratio 6:4.
AB Bank
DBBL
UCBL
Figure-20: Lead arranger & Co-arranger
Syndicate Finance in Percentage:
Tk: 000
Bank Name
% in Syndicate
Finance
Amount
AB Bank 55% 16973550
UCBL 27% 10184130
Duch Bangla Bank 18% 6789420
Total 100% 30861000
Figure-21: Bank Investment in Syndicate
5.Cost of Goods Sold:
Tk: 000
Item Total
Raw material cost 1500000
Wages 8000000
Depreciation 21,721
Total 89,218

Figure-22: Cost of Goods Sold
6. Sales Estimate:
Palm oil 72000Kgs. Kernel oil 20000kgs.
Tk: 000
Items Production Unit
Palm oil 144000Kgs 75 10800000
Kernel oil 40000kgs 55 2200000
Total 13000000
Figure-23: Revenue from Sales

1. 7. Raw Material Cost:

Palm plants import and plantation cost 1500000
Figure-24: Total Cost of Raw Materials

Subcontract:
Tk: 000
Sl. No. Subcontract Total Cost
1 Palm oil box 9,120
2 Packet of palm oil 2,250
3 Sticker or paper cover 3,795
4 Carton for packet 5,500
5 Dresses of employee 360
Total: 21,025
Figure-25: Purchasing Price from Subcontract
1. 8. Salaries:

Description Persons Salary
(individual)
Salary
(annually)
Managing Director 1 35000 4,20,000
Manager 5 25000 15,00,000
Operator
10 12000 14,40,000
Driver 3 8000 2,88,000
Lower level employee 5 5000 3,00,000
Total
26,340,000
Figure-27: Wages & Salaries Expenses
9.Depreciation Schedule:
Tk: 000
Item Cost % Total
Land 77,075
Building 24,050 5% 1,202
Machinery 108,012 8% 8,641
Vehicle 77,000 15% 11,550
Furniture 2,200 12% 264
Computer 320 20% 64
Total 21,721
Figure-28: Depreciation from Fixed Asset
9. Administrative Expenses:
Tk: 000
Item Amount
Wages 21025
Salary 48732
Bill of PDB 4500
Others 500
Total 74757
Figure-29: Administrative Expenses

10.Financial Expense:
Tk: 000
Item Amount % of rate Interest
Bank loan 163,340 12% 19,600
11.Earning Forecast:
Tk: 000
Description Amount
Revenue earning 13000000
(-) C.O.G.S 1500000
Gross Profit 116,357
(-) Adm. Expense 74,757
Operating Profit 41,600
(-) Financial Expense 19,600
Net Profit Before Tax 22,000
Tax Holiday 00.00
Net Profit After Tax 22,000
Figure-30: Net Profit Analysis
Social Cost Benefit Analysis
1. 1. Social Cost: Tk: 000
Items Private Sector Economic
Sector
Imported Machinery 92,412 92,412
Local Machinery 15,600 15,600
Vehicles 77,000 77,000
Furniture 2,200 2,200
Computer 9,800 9,800
Office Equipment 700 700
Safety Equipment 350 350
Palm oil cost 41,157 90,150
Subcontract 21,025 21,025
Salary and Wages 26,340 25,000
Others 550 550
Total 260,794 309,787
Figure-31: Social Cost Analysis
1. 2. Social Benefit: Tk: 000
Items Private Sector Economic
Sector
Foreign Currency 92,412 92,412
Backward Linkage 127,225 21,025
Contribution to GDP - 26,340
Local Demand 205,575 205,575
Total 425,212 345,352
Figure-32: Social Benefit Analysis
1. 3. Net Benefit: Tk. 000
Private Sector : 425,212 260,794 = 164,418
Economic Sector : 345,352 309,787 = 35,565