PRIME MINISTER'S YOUTH BUSINESSLOAN Pri me Minister s Youth Business Loan Pre-Feasibility Study (Citrus Pectin) Pakistan Council of Scientific and Industrial Research. PCSIR. HEAD OFFICE Constitution Avenue, Sector G-5/2, 051-9225393 Islamabad. Food and Biotechnology Research Centre, PCSIR Laboratories Complex, Ferozepur Road, Lahore-54600. Tel.# 042-99230709 Note: All Services / information related to PM's Youth Business Loan are Free of Cost May, 2014 1
1. BRIEF DESCRIPTION OF PROJECT & PRODUCT Citrus pectin is a plant dietary fiber found in the white part of the rind of citrus fruits. It is a complex carbohydrate rich in galactosyl residues proven to have wondrous health benefits. It has numerous applications in pharmaceutical and food industry. From the medicinal standpoint, pectin supplement is used as a hypercholesterolemic that not only cleans blood from bad cholesterol but also reduces risk of heart attack. Pectin as a dietary supplement plays effective role for reducing/controlling body weight and lowering blood glucose level in diabetic patients. Other promising aspects of pectin supplement include fight against cancer, prolonged radiation therapy, and removal of toxins such as heavy metals from the body. Pectin intake is highly recommended for people suffering from gastrointestinal problems like constipation and diarrhea. Citrus pectin is also used in food industry in manufacturing jams, jellies, marmalades and as a natural thickening agent in preparation of sauces, ketchups, flavoured syrups, and texturising agent in flavored milks. Currently citrus pectin available in the local market is imported from different countries and is therefore, expensive. PCSIR has developed a process for the isolation of pharmaceutical grade pectin from the peels of citrus fruits that is easily accessible and cost effective for the consumers thus saving huge amount of foreign exchange. Total fixed investment (approx) except building and land Rs. 19,50,000/-. 2. CRITICAL FACTORS â Energy electricity factors. â Lack of marketing and advertising of the products in public sector. â Higher return on investment and a steady growth of business is closely associated with regular training and capacity building of the entrepreneur and employees. â Higher prices make the quality products less reachable as compare to cheap and low grade products. Prior experience and related /education in the related field of business. Strict compliance regarding local and international environmental regulations and 2
compliance requirements. 3. INSTALLED & OPERATIONAL CAPACITIES See the 12 (PROJECT COST SUMMARY) 4. GEOGRAPHICAL POTENTIAL FOR INVESTMENT Throughout the province of Punjab. 5. POTENTIAL TARGET MARKETS â Pharmaceutical industry r Food industry Y Cosmetic manufacturing 6. PRODUCTION PROCESS FLOW CITRUS PEEL W.ATE (_GRINDING AND DRYING OF CITRUS PEEL 1I ASTE I HOT WATER WASHING F IL I RATIO N AND PRESSING 1 ^ 1 ^ 1 COOLING JACKET 1 1 I t F IL I RAT ION RE A CT O R VESSEL II SO Ll'ENT RECOVER 7 ZONE SOLVE N T EXTRACTION ZONE P.i CK I1G II_ SIEV1-G GRIBDIYG I I PECTIA QUALITY n^^i` REC OV ERS' A SSURAICL I Z O^
7. PROJECT COST SUMMARY A detailed financial model has been developed to analyze the commercial viability of citrus pectin under the `Prime Minister's Youth Business Loan' scheme the project. Various cost and revenue related assumptions along with results of the analysis are outlined in this section. Name of product/activity: Citrus Pectin Capacity: 5 Kg/hour Production time per batch: Two hour Estimation of annual production: 12,000 Kg/300 working days Capacity: 40 Kg/day Packing size: one Kg 7.1 Project Economics Production capacity 12,000 Kg (200 Kg/week) per year. The following table shows internal rate of return, payback period and Net Present Value; Table 1: Project Economics Description Details Details Internal Rate of Return (IRR) 80% Payback Period (yrs) --- Net Present Value (NPV) --- 7.2. Project Financing Following table provides details of the equity required and variables related to bank loan; Table 2: Project Financing Description Details Details Total Equity (10%) Rs. 177080 Bank Loan (90%) Rs. 15,03,720 Markup to the Borrower 8% (%age/annum) 4
Tenure of the Loan (Years) 8 Grace Period (Year) 1 7.3. Project Cost Following requirements have been identified for the operation of the proposed business. A personal premise has been recommended for this project. Table 3: Project Cost A. Raw Material per Batch Sr. No. Description Total Cost 1. Cost of raw material including chemicals x3,00,000/ - B. Operating Cost/Labour Cost per Batch Sr. No. Description Employees Charges per Batch Total Cost Required /Month 1. Scientists/Technologist 1 100/- 20,000/- 2. Unskilled persons 2 100/- 20,000/- C. Utilities/Consumables per Batch Sr. No. Description Total cost 1. Electricity/gas/water 3,0001- D. Indirect Production Cost per Batch Sr. No. Description Depreciation Cost per Annum Depreciation Cost per Batch (Depreciation per annum/total number of batches per annum) 2400 1. Depreciation of machineries (10% of total cost) 1,95,000/- 81.251- E. Packaging Charges per Batch
Sr. No. Description Cost of 5 Packs Total Cost per Day 1. Cost of packing materials 100/- 800/- TOTAL COST OF PRODUCTION Sr. No. Description Cost per Day Total Cost per Month 1. Raw material as in "A" *3,00,000/- 75,00,0001-2. Operating cost as in `B" 1,600/- 40,0001-3. Utilities as in "C" 3,000/- 75,0001-4. Indirect production cost as in "D" 650/- 16,2501-5. Packaging charges as in "E" 800/- 20,0001- Total Cost in Rupees 3,06,050/- 7,65,250/- 7.4. Space Requirement The area has been calculated on the basis of space requirement for production, management and storage. However, the units operating in the industry do not follow any set pattern. Following table shows calculations for project space requirement. Table 4: Space Requirement Capital Investment Total Cost Land (area)/size of building (1 Kanal) 20,00,000/- (clean and hygienic area as per food laws and regulations) Cost of furniture and fixtures 50,0001- EquipmentlMachineries 18,00,000/- (reaction vessels, mechanical stirring for mixing, filtration, drier, recovery vessel, all items are of S.S. Food grade) 6
Others (transportation) 1,00,000/- Total Fixed Investment (approx) Except Building and Land 19,50,0001-7.5. Revenue Generation Product Sales Price First Year First Year Sales (Rs./Unit) production Revenue Quantity (Rs) Citrus Pectin 901.25/ 12000 Kg Approx 1.5 Million