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91. PROFILE ON PRODUCTION OF VINEGAR
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TABLE OF CONTENTS
PAG
I.
SUMMARY
91-
II.
PRODUCT DESCRIPTION & APPLICATION
91-3
III.
MARKET STUDY AND PLANT CAPACITY
91-4
A. MARKET STUDY
91-
B. PLANT CAPACITY & PRODUCTION PROGRAMME
91-7
MATERIALS AND INPUTS
91-7
A. RAW MATERIALS
91-
B. UTILITIES
91-
IV.
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V.
VI.
TECHNOLOGY & Unlock ENGINEERING full access with a free trial.
91-8
A. TECHNOLOGY Download With Free Trial B. ENGINEERING
91-
91-1
MANPOWER & TRAINING REQUIREMENT
91-1
A. MANPOWER REQUIREMENT
91-1
B. TRAINING REQUIREMENT Master your semester with Scribd & The NewVII. York FINANCIAL Times ANALYSIS
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A. TOTAL INITIAL INVESTMENT COST
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I.
SUMMARY
This profile envisages the establishment of a plant for the production of vinega with a capacity of 20,000 litters per annum.
The present demand for the proposed product is estimated at 79,645 litters per annum The demand is expected to reach at
132,615 litters by the year 2020.
The plant will create employment opportunities for 10
persons.
The total investment requirement is estimated at about Birr
961,700, out of wh
Birr 500,000 is required for plant and machinery.
The project is financially viable with an internal rate of return (IRR) of 14 % and net present value (NPV) of Birr 147,190 discounted at 8.5%. You're Reading a Preview
II.
PRODUCT DESCRIPTION APPLICATION Unlock fullAND access with a free trial.
Download With Free Trial Vinegar is an important condiment and preservative which is produced through the
action of acetic acid bacteria on dilute solutions of ethyl alcohol derived from previous yeast fermentation in sugar solution or fruit juice.
It may also be produced from fermented agar, fruit juices or other fermented alkal
Master your semester with Scribd solutions derived from barley malt, hydrolyzedRead cereals and starches or othe Free For 30this Days Sign up to vote on title & The Newcarbohydrates. York Times Useful Not useful colouring matter, salts and few It contains about 4 to 5% acetic acid, Special offer for students: Only $4.99/month.
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other fermented products which impart characteristic flavour and aroma to it.
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III.
MARKET STUDY AND PLANT CAPACITY
A.
MARKET STUDY
1.
Past Supply and Present Demand
Vinegar, as an important condiment and preservative, is complementary to vegetables
Its consumption is influenced, among other things, by urbanization and income. The
major consumers of the product are, therefore, high- and middle-income urban
households. Other users of the product include food processing industries, hotels and
restaurants, whose customers are essentially urban households. The demand fo vinegar is, thus, highly associated with urbanization.
The country’s requirement for vinegar has been met through domestic production and
import. The 1993 Report on the Survey of Private Industries in Addis Ababa puts th
average annual domestic production of the product at 30,000 liters. Recent data on You're Reading a Preview
domestic production of the product is, access however, nottrial. readily available, albeit differen Unlock full with a free
local brands of the product are widely exhibited in the shelves of various retail shops Download With Free Trial including small merchandise shops, department stores and all sorts of supermarkets
Previous IPS study, estimated the average annual domestic production of the produc
at 50,000 liters for the period 2001-2010. Following the results of the study, the domestic production of vinegar is set at 50,000 liters for the year 2007.
Master your semester with Scribd Data obtained from the Ethiopian Customs Authority with regard tothis import Read Free Foron 30 Days Sign up to vote title of vinegar & The NewforYork Times Useful Not useful the period covering 1998-2006 is given in Table 3.1. Special offer for students: Only $4.99/month.
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Table 3.1 IMPORTS OF VINEGAR (LITERS)
Year
Import
1998
5,224
1999
2,277
2000
4,451
2001
22,142
2002
28,761
2003
130,108
2004
19,140
2005
2,845
2006
24,287
Average
26,582
You're Reading Preview As can be seen from Table 3.1, the trend of a imports is quite erratic. Accordingly, i
Unlock full access withaverage a free trial.annual imports for the period was found more appropriate to consider the
under reference (i.e. 26,582 liters) as the amount of the product imported in the yea Download With Free Trial 2006. Assuming supply was driven by demand, the supply data, which constitute
imports and domestic production, is considered as a proxy for demand in estimating the demand for the product.
Thus, the demand for the product adding loca
production and import stands at 76,582 liters for the year 2006. Further assuming th
demand for vinegar grows at a rate of 4 per cent that corresponds to the rate of urban Master your semester with Scribd Read Free Foron 30this Days Signthe up toyear vote title population growth, the demand for the product for 2007 is estimated & The New79,645 Yorkliters, Times Useful Not useful of which 52,000 liters are estimated to be met through domestic Special offer for students: Only $4.99/month.
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production and the remaining 27,645 liters through imports. Thus, domestic producer
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maintain their market share (i.e. 65 %) of the projected demand, the market share o the envisaged plant (i.e. the demand gap for the product) is shown in Table 3.2.
Table 3.2 PROJECTED DEMAND FOR VINEGAR (LITERS)
Year
Projected Demand
Existing
Envisaged
Factories
Plant
2008
82831
53840
28991
2009
86144
55994
30151
2010
89590
58234
31357
2011
93174
60563
32611
2012
96901
62985
33915
2013
100777
65505
35272
2014
You're a Preview 36683 104808Reading 68125
2015
Unlock full access70850 with a free trial. 38150 109000
2016 2017
113360 73684 39676 Download With Free Trial 117894 76631 41263
2018
122610
79697
42914
2019
127515
82885
44630
2020
132615
86200
46415
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Market Share
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Currently, the average retail price of domestically produced vinegar is Birr 22 pe
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B.
PLANT CAPACITY AND PRODUCTION PROGRAMME
1.
Plant Capacity
The plant is proposed to have a capacity of 20,000 lts. per annum basing on the
market study, availability of the major raw material (fruit) and minimum economie of scale.
2.
Production Programme
The plant is expected to start its operation with a capacity of 70% and progressive
increment of 15% reaching full capacity at the third year and then after due to th problem in market penetration and skill development.
The plant will operate
days in a year and single shift of 8 hours each day. If the demand rises, it can b satisfied by increasing the number of shifts. You're Reading a Preview
IV.
MATERIALS AND INPUTS Unlock full access with a free trial.
A.
RAW MATERIALS
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The major raw material for the production of vinegar is fruit. Yeast, sugar, colourant
and other chemicals such as phosphates, ammonium and potassium salts, potassium meta- bisulphate, etc. are also used as raw materials in small amount. The plant
Master your semester with Scribd use bottles, labels and cartons for packing of the finished product. Read Free For 30this Days Sign up to vote on title The annua & The Newrequirement York Times Useful Not useful plant operates of raw materials and their cost when the at full capacity i Special offer for students: Only $4.99/month.
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depicted in Table 4.1. The total cost of raw materials is estimated at Birr 78.193.
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Table 4.1 ANNUAL REQUIREMENT OF RAW MATERIALS AND COST
Sr.
Description
No.
Unit of
Qty.
Measure
Cost ('000) FC
LC
1
Fruits
tonnes
17.92
-
35.84
2
Yeast, sugar colorant
-
Lump-
4.2
2.5
and chemicals
35.
sum
3
Bottles
Pcs.
27,000
-
20.252
20.2
4
Labels
Pcs.
27,540
-
7.711
7.7
5
Carton box
Pcs.
1550
-
7.69
4.2
73.993
Grand Total
B.
78.1
UTILITIES
You're Reading a Preview The utilities required for the production of vinegar from fruit are electricity, water an
Unlock access a free trial. kWh of electric energy are fuel oil. 2000 m3 water, 2000 lts.full fuel oilwith and 22,400
required by the plant, annually when it operates at full capacity. Download With Free Trial utilities is estimated to be Birr 20,617.
V.
TECHNOLOGY AND ENGINEERING
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In order to get good vinegar it is essential to destroy all these naturally occurring
yeasts and other micro organisms by pasteurization and then to inculcate the sterilized
juices thus obtained with pure yeast. Pure wine is sold in the market in a compresse form. A starter is prepared from this by adding to the fruit and sugar solution to fermented.
Alcoholic fermentation occurs in two stages. The first is preliminary or the vigorous
fermentation and the second is slow fermentation. During the first 3-6 days most o
the sugar is converted into alcohol and carbonates. The second fermentation is muc slower and usually takes 2-3 weeks.
Under favorable condition, the fermentatio
complete in a period ranging from 72 to 96 hours, completely fermented juice usually exhibit a reading of about zero or less.
When fermentation is complete, the yeast and the fruit pulp settle to form a compac mass at the bottom of the cask. sedimentation by siphoning.
The fermented liquid is separated from
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b)
Acetic acid Fermentation Download With Free Trial
Acetic acid fermentation is brought about by acetic acid bacteria (Acetobacter)
Acetic acid fermentation should be carried in dark rooms fitted with orange and red
glass pans. For acetic acid fermentation, the alcohol content of the fermented liquid i
adjusted to 7-8% alcohol because acetic acid bacteria do not function properly at high
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c)
Aging
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2.
Source of Technology
The suppliers' address that can be considered as source of technology is given below.
1.
Uchibori Vinegar, Inc. (Uchibori Jozo k.k) 437, Igitsurhi, yaotsu - cho, kamo-gun, Gifu 505-0303 Phone: 0574-43-1185 Fax: 0574-43-1781 Email:
[email protected]
2.
Kates sp.J. Bulscy igrabinscy ul. sprzetowa 3b 10-347 015ztyn Poland Phone: +48895333924 + 4889533530 You're Reading a Preview Fax: +4889533544Unlock full access with a free trial. Download With Free Trial
B.
ENGINEERING
1.
Machinery and Equipment
The list of machinery and equipment and their quantity is shown in Table 5.1. Th
Master your semester with Scribd total cost of machinery and equipment is estimated Read to beupFree Birr 500,000; out ofthis Bir For 30this Days Sign to vote on title & The New400,000 Yorkis Times Useful Not useful required in foreign currency. Special offer for students: Only $4.99/month.
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Table 5.1 LIST OF MACHINERY AND EQUIPMENT
Sr.
Description
Qty.
No.
1
Boiler
1
2
Screw type juice extractor
1
3
Fermentation tanks with stirring
2
arrangement 4
Air compressor
1
5
Generator for acetic fermentation
2
6
Blending tanks and utensils
2
7
Filling, capping and sealing machine
1
8
Pasteurization tanks
2
9
Bottle washing machine motorized
1
10
You're Reading a Preview Filter press
1
11
Pumps
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4
12
Lab equipment Download With Free Trial Weighing scale
13
2.
set 1
Land, Building and Civil Works
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2
The overall land requirement by the envisaged project is about 300 m , of which 200 2 Read Free For 30 Days Sign up to vote on this title m is built-up area. The buildings for the production line and offices will b
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cost, at a rate of Birr 1,200 per m
2
is estimated to be Birr 240,000.
The total lan
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3.
Proposed Location
The plant should be located near the major raw material (fruit) source with a view t
minimize transportation cost as well as the difficulty and wastage caused by longe transportation.
The site should also have access to basic infrastructure facilities
Therefore, the proposed location for the vinegar plant shall be at Arba Minch.
VI.
MANPOWER AND TRAINING REQUIREMENT
A.
MANPOWER REQUIREMENT
The detailed manpower requirement for the plant is shown in Table 6.1 below together with the monthly and annual salary cost.
The plant is small scale an
requires a total of 10 employees. The total annual labour cost is estimated to be Bir 57,000. You're Reading a Preview
6.1a free trial. Unlock fullTable access with MANPOWER REQUIREMENT AND ANNUAL LABOUR COST (BIRR) Download With Free Trial Sr.
Description
No.
Req.
Monthly
Annual
No.
Salary
Salary
1
General manager
1
1000
12,000
2
Secretary
1
500
6,000
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5
Operator (technician)
1 Read 800 Free For 30this Days Sign up to vote on title9,600 1 1
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3,600 5,400
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B.
TRAINING REQUIREMENT
An operator and a chemist need to be given training on processing, operation and
maintenance of machinery during the machinery erection and commissioning period for about two weeks by the expert of machinery supplier.
The training cost i
estimated at Birr 20,000.
VII.
FINANCIAL ANALYSIS
The financial analysis of the vinegar
project is based on the data presented in
previous chapters and the following assumptions:-
Construction period
1 year
Source of finance
30 % equity 70 % loan
Tax holidays
years a Preview You're 3 Reading
Bank interest
Unlock full 8% access with a free trial.
Discount cash flow
8.5% Download With Free Trial 30 days
Accounts receivable Raw material local
30 days
Work in progress
2 days
Finished products
30 days
Cash in hand
5 days
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A.
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TOTAL INITIAL INVESTMENT COST
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Table 7.1 INITIAL INVESTMENT COST
Sr. No.
Total Cost Cost Items
(‘000 Birr)
1
Land lease value
16.8
2
Building and Civil Work
240.0
3
Plant Machinery and
500.0
Equipment 4
Office Furniture and
75.0
Equipment 6
Pre-production Expenditure*
7
Working Capital
112.7 17.2
Total Investment Cost
961.7
Foreign Share
23
You're Reading a Preview *
N.B
Pre-production expenditure interest during construction ( Birr 37.6 Unlock fullincludes access with a free trial.
thousand ) training (Birr 20 thousand ) and Birr 55 thousand costs of registration, licensing
Download With Free Trial formation of the company including legal fees, commissioning expenses, etc.
B.
PRODUCTION COST
The annual production cost at full operation capacity is estimated at Birr 361,780
Master your with Scribd (see semester Table 7.2). The material and utility cost accounts for 27.31 per cent, whil Read Free Foron 30this Days Sign up to vote title and Times maintenance take 22.11 per cent of theproduction & The Newrepair York Useful cost. Not useful Special offer for students: Only $4.99/month.
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Table 7.2 ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR)
Items
%
Raw Material and Inputs
78.19
21.61
Utilities
20.62
5.70
80
22.11
Labour direct
34.2
9.45
Factory overheads
11.4
3.15
Administration Costs
22.8
6.30
247.21
68.33
84.5
23.36
30.07
8.31
361.78
100
Maintenance and repair
Total Operating Costs Depreciation Cost of Finance Total Production Cost
C.
Cost
You're Reading a Preview FINANCIAL EVALUATION Unlock full access with a free trial.
1.
Profitability
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According to the projected income statement, the project will start generating profit i
the first year of operation. Important ratios such as profit to total sales, net prof
to equity (Return on equity) and net profit plus interest on total investment (return o
total investment) show an increasing trend during the life-time of the project. Master your semester with Scribd Read Free Foron 30this Days Sign up to vote title & The NewTheYork Times Useful Not useful income statement and the other indicators of profitability show that the project i Special offer for students: Only $4.99/month.
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Apple Cider Vinegar
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2.
Break-even Analysis
The break-even point of the project including cost of finance when it starts to operat at full capacity (year 3) is estimated by using income statement projection.
BE =
Fixed Cost
= 34 %
Sales – Variable Cost
3.
Pay Back Period
The investment cost and income statement projection are used to project the pay-back period. The project’s initial investment will be fully recovered within 6 years.
4.
Internal Rate of Return and Net Present Value You're Reading a Preview
Based on the cash flow statement, calculated IRR Unlock the full access with a free trial.of the project is 14 % and the net present value at 8.5% discount rate is Birr 147,190. Download With Free Trial D.
ECONOMIC BENEFITS
The project can create employment for 10 persons. In addition to supply of the
domestic needs, the project will generate Birr 218,400 in terms of tax revenue. Th
Master your semester with Scribd establishment of such factory will have a & The Newcountry YorkbyTimes substituting the current imports. Special offer for students: Only $4.99/month.
foreign saving Read Free Foron 30this Days Signexchange up to vote titleeffect to th
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Not useful
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