ice factory

MILLITIANS ICE PLANT

THE COOLS DEPARTMENT OF COMMERCE1


ON



SUPERVISED BY:

SIR. JAVAID IQBAL

GROUP MEMBERS:

SADIA KHAN 05

SEHRISH SABA 14

HUMAIRA SHAHZADI 62

M. SC ACCOUNTING & FINANCE (3rd semester)



OUR PARENTS

AND

TEACHERS

ALL OUR

WELL WISHERS

AND SPECIALY

SIR JAVAID IQBAL

Almighty ALLAH is the entire source of knowledge and wisdom endowed to mankind

and His dearest Nabi, MUHAMMAD (PBUH) is a torch of guidance and knowledge for

humanity as a whole.



Everyone has a long list of individuals to whom he is indebted. We are no exception. We are

firstly, with humble gratitude bow our heads before Almighty ALLAH for giving us strength,

courage, patience and inspiration, and enable us to complete this project. To work for this

project, was a difficult task, because it is about

“Ice Manufacturing”

We acknowledge with thanks and admiration, our dependence on all of our respondents on

their nice co-operation and giving us their loyal time. We feel Great pleasure and honors to

express our gratitude from the citadel of hearts to our respected and dignified instructor

SIR.JAVAID IQBAL

Without whose guidance it would have been difficult for us to achieve

Our objectives He provide us, his in-depth approach of the subject

“Project Management“

And taught us a lot of tell analysis techniques which we have applied during data analysis. His

sympathetic behavior has an ever lasting impression on the page of our memory.

THANKS:



Sr. No Descr ip t i on Page #

1. Executive summary 7-10

2. Introduction 11

3. Market Analysis 11

4. Technical Analysis 12-17

5. Personnel Analysis 18

6. Financial Analysis 19-25

7. SWOT Analysis 25-26

8. Conclusion & Recommendations 26

The Project:

Most of areas of Pakistan have long duration of summer due to which demand for ice is high for more than six months of the year. As Pakistan is a developing country and large portion of the



population cannot afford refrigerators for domestic use. Another growing market for ice plants are industries linked to food products i.e. fish, dairy, bakeries, restaurants etc. With this growing demand a large number of ice plants are operating in the country.

Bahawalpur is a hottest city of Punjab province of Pakistan. Our proposed project is useful and beneficial in this city. Food products industries fish, dairy, bakeries, restaurants are linked to this industry. Mainly it produces for the general use at home. So

we generate the idea to set up a ice plant according to the requirements of the people of this city. Depending on the facts this area of opportunity has not been exploited we primarily focused on developing an idea to set up a ice manufacturing plant for people of this city named or to be known as “MILLITIAN’S ICE PLANT”.

This project is related to setting up an ice plant of 20-tons capacity per day to cater to the needs of the institutions such as hotels, restaurants, bakeries, dairy, fish seller’s etc. The proposed project will manufacture ice blocks varying from 130 kg to 150 kg in weight.

Location:

We set up our ice plant near Baghdad station at main road, Bahawalpur. As ice is not easily available in this area and people of this area bears a lot of transportation expenses to get ice, so we select this area to set up our ice plant.

Product’s Range and Plant Capacity:

We are producing ice blocks only. The proposed project has a capacity of producing 140 ice blocks on the basis of 2 shifts of 12 hours. The maximum capacity of plant is 40,000 per annum. Estimated capacity during:

THE COOLS DEPARTMENT OF COMMERCE

Years 2010 2011 2012 2013capacity 40,000 44000 48400 53240

7


Market Entry Timing:

The ice plant should be started up when the season begins in mid April and closed when it end up in September. The peak season is of four months i.e. from mid April to mid August. The rest of the period i.e. two months is moderate season. The best time to enter into this business is in the month of April.

Raw Material Requirement:

The basic raw material required for producing ice blocks is water, common salt. These raw materials are readily available in the local market. Replenishments needed during maintenance are ammonia gas and compressor oil.

Machinery Requirements:

The main equipment required for running the ice plant is compressor, capacitor, condenser, and electric motors, WAPDA connection power transformer etc.

Name of civil contractors:

CH. NASIR ASSOCITATES

Machinery Suppliers:

AL-KARIM MACHINERY SUPPLIER’S LAHORE.

Project Engineering:

The machinery of the proposed project will be purchased from Lahore locally fabricated.

Implementation Stage:

Total time period for the starting of project is estimated to be 1 year from the date of approval of finance.



Sponsors:

The sponsors to this project of Ice Manufacturing Plant are a group of three highly enthusiastic people who are committed to providing ice at reasonable prices with equally perfect services. The sponsors of the project are professionally qualified in their fields namely Sadia Khan resident of Dera-Bakha Bahawalpur, Humaira Shahzadi resident of Baghdad station Bahawalpur, Sehrish Saba resident of One unit chowk, Bahawalpur. The overall management and control of the firm will be actively managed by its partners who will actively participate in management decisions and control the affairs of the firm.

Cost of the Project:

The total cost of the project is estimated to be Rs. 10786178. The fixed cost of the project is Rs. 10511478 which are financed locally. The amount of initial permanent net working capital required is Rs. 274700.

Means of Finance:

Forty (40%) of the estimated cost of the proposed project will be obtained through loan and the remaining 60%will be contributed by the Owners.

Financial Plan:

The total cost of the project is estimated to be Rs (10786178). Forty percent Rs (4314471)of the estimated cost of the proposed project will be obtained through loan from Habib Bank Ltd and the remaining 60% Rs (6471707) will be contributed by the owners.

Implementation Schedule:

THE COOLS DEPARTMENT OF COMMERCE

S.NO ACTI V I T IES MONTH YEAR

1 Order for Local Machinery November 2009

2 Arrival of Local Machinery at site December 2009

3Construction of Building and Civil Works: Start September 2009

Complete October 2009

4 Erection &Installation of Machinery Start December 2009

Complete January 2010

5 Order for Raw Materials February 2010

6 Start of Commercial Production March 2010

9


Financial Ratios:

The Debt Equity ratio (67%),(39%) , (20%), (8%) Net Profit Margin ratio (39%) (34%) (43%) (42%) for the given three years (2010) (2011) (2012) (2013) respectively. Ice manufacturing Plant’s financial position is significantly strong as compared to the industry because it earns a huge profit and short term liquidity position is very good. So ice Plant has no bankruptcy chances.

1) Market AnalysisTarget Customers:

The target customers for ice plant can be divided into two categories:

Domestic users, such as people living in rural areas & suburbs of cities, where access to refrigerators is difficult due to lower purchasing power.

Second category is institutional buyers, who buy in bulk, such as government organizations, factories, hotels, restaurants, bakeries, fish sellers, dairy plants etc.

Description of Market:



Institutional buyers sell the bulk of the ice block production, in institutions related to food industry. Business sectors, which utilize ice in the country, include the following:

For the protection of fish, Meat and also for Dairy Plants.

Other potential institutional buyers of ice are bakeries, confectioners, hotels which buy ice blocks in bulk. There are approximately 70 different leading chain bakeries in different cities of Pakistan, while approximately 145 fish retail outlets are operating in different major cities of Pakistan, while more than 520 motels and hotels are operating in different areas of Pakistan.

Present Demand:

In market our production’s demand is maximum 150 ice blocks per day.

Demand Supply Gap: Our production of ice blocks is 140 ice blocks per day and there is demand of 150 ice blocks per day. So there is demand supply gap of 10 blocks.

Ex-factory price: Our whole sale price is Rs. 180 per ice block

Retail price: Our retail price is Rs. 200 per ice block.

Distribution Channal: Ice blocks are supplied to supplier through vegans.

2) Technical Analysis: Block ice is the most popular type of ice sold for a variety of reasons. It melts more slowly than other types of ice and thus lasts longer. It can be placed in open truck with only a tarpaulin to protect it from the elements and shipped to a location of four hours away. Its rectangular shape makes it easy to stack of up to 15 meters and store large amounts. Block ice has merits of easy to transport and separate as well. Other types of ice have the tendency to freeze into a solid mass, making it difficult to work with.

Manufacturing Process: Production Process Flow


Cleaning of SheetSteel Ice Containers

Placing of Containersin Water Tankcontaining Nacl

Filling of Sheet SteelIce Containers withwater while verticallyfloating in Nacl Tank

Extracting of Ice Blocksfrom Sheet SteelContainersMovement of Ice Blocksby hooks


Flow Chart:


Delivery of Ice Blocks

Temp Reduced to –17°C to –20°C


　Ice cans are placed in can grids and moved to beneath the filling tank which automatically fills each can with proper level of pre-cooled water and then stop. Potable water must be used to make ice intended for human consumption. The cans are then hoisted and carried to the brine tank and immersed inside. The brine, which is a calcium chloride solution kept at a temperature of -10℃, is constantly circulated by agitator in order to keep the temperature consistent throughout the tank. Air is blown into the center of the can to induce a swirling motion. This causes any impurities and air bubbles in the water to be collected in the center of cans. Prior to finish freezing, this core is removed by a suction pump and replaced with fresh pre-cooled water. The time required for the water to be frozen varies according to the size of cans being used, 150lbs. block requires 24 hours, 300 lbs. Takes 48 hours. When the ice has completely formed, the grids are lifted up from the brine tank and moved to place in the thawing tank. Using the warm water heats the can, until the ice allowed to be slid out. The block ice is then removed from the can by a can dumper. The empty cans are returned to filling tank for next ice making cycle. The ice is moved to ice storage and stacked by an ice stacker, or it can be delivered to customer right away upon



requested.

List of Machinery:

DescriptionQuantity Cost/Unit TOTAL

Ammonia Compressor (8x8) , Driven Wheel 1 300,000 300,000Ammonia Condensor Atmosphere type with 2" pipe 1200 ft 8 56,400 451,200Electric Motor 100 H.P.1450 RPM 1 95,000 95,000Brine Tank for 720 Ice cans, 4mm local made 1 25,000 25,000Cooling Coil V-type 4" pipe & 1800 ft 1 318,000 318,000Brine Agitator 18" Fan Metal 1 20,000 20,000Accumulator for parallel supply of ammonia 1 10,000 10,000Crane & Trolley with Railing Channel & Girder 1 40,000 40,000Ammonia Valves for Complete Plant 1 16,000 16,000Ammonia Pipes for Complete Plant 1 40,000 40,000Oil Separator Buffer Type 1 16,000 16,0004 gauge Suction, Discharge, Oil Pressure 4 1,000 4,000Wood work for Ice Cans, Tank Cover 400 750 300,000'Ice Cans of 1.5 mm British Gauge 400 2,600 1,040,000Nuts, Bolt etc. 1 15,000 15,000Receiver Fittings with all Safety Measure Ammonia Inspection 1 45,000 45,000Bends, Union, Nipples, Tee & flange etc. 1 6,550 6,550Rubber pipes, Brass Valves 1 18,000 18,000Water Fitting Complete 1 30,000 30,000Electric Motor 7.5" 2 16,000 32,000Switch Gins Starters & Switch board with local Cable 1 95,000 95,000Centrifugal Pump 2.5"x3" 1 25,000 25,000Erection Charges of the Plant 1 60,000 60,000 Grand Total 3,001,750



Cooling coil Gas transfer pipe

Receiver Cool water pump



Condenser Raw water pump

Other Equipment

Other Equipment Details Quantity Cost/Unit TOTALGenerator 100 KVA (Engine Bus) 1 175,000 175,000Transformer 100 KVA 1 400,000 400,000Water Bore Diameter 3” – 4” 1 200,000 200,000Total Equipment Cost 775,000

Furniture & Fixture

Description Qty Cost/Unit Total CostTables 3 5,000 15,000Chairs 12 1,500 18,000Fans 4 1,800 7,200Lights 12 350 4,200Computer 1 20,000 20,000Telephone 1 2,500 2,500 Total Furniture & Fixtures 66,900

Office Vehicle

Description Qty Cost/Unit Total CostSuzuki Pick-up 1 500,000 500,000Motorcycle (Honda 70) 1 58,000 58,000Bicycle (Chinese) 1 4,000 4,000 Total Vehicle Cost 562,000



LAND & BUILDING REQUIREMENT

Description Land CostLand Price Per Kanal 4,000,000Total Land Requirement (Sq . ft) 4,500Total Land Required in Kanals 1 Total Land Cost 4,000,000

Input Requirement:

The basic raw material required for producing ice blocks is water, common salt. These raw materials are readily available in the local market. Replenishments needed during maintenance are ammonia gas and compressor oil.

Raw Material

Description 2,010 2,011 2,012 2,013Ammonia consumption @ Rs. 26 21,840 24,960 28,080 31,200Nacl consumption @ Rs. 85 5,950 6,800 7,650 8,500Compressor oil for Rs. 19,600 22,400 25,200 28,000 TOTAL 47,390 54,160 60,930 67,700

Factory overhead:

a) FIXED COSTS -Power KW 600 10 72,000-Insurance @ 0.50% on Fixed Assets 32,557-Repairs &Maintenance: - Machinery @ 2.34% installed cost 70,241- Building @ 1% construction cost 16,720- Vehicles @ 5% of cost 28,100 Total Fixed cost 219,618 b) VARIABLE COST



Power KW 25000 10 KW/Month 1,500,000GAS 6 40000 Rs. 240,000 Total 1,740,000

Water and Gas:

Equipment detail unit Cost/unit Total costWater Bore Diameter 3” – 4” 1 200,000 200,000GAS 6 40000 240,000

Electricity:

10% PER ANNUM. 2010 2011 2012 2013Direct Electricity 1,500,000 1,650,000 1,815,000 1,996,500Fixed Electricity Expense 72,000 79,200 87,120 95,832

Technology involved:

Technology/Process Options

The machinery used for the ice plant is local. It includes compressor, condenser, water tanksuitable for 250-300 ice cans, brine agitator, accumulator for parallel supply of ammonia, craneand trolley, oil separator, ice cans of size 11” x 22” x 48”, electric motor 75 HP etc.

Merits & demerits of a particular technology

The local machinery is readily available in the market at a very reasonable price. One of theBenefits of using locally manufactured machinery is availability of spare parts and it’s easier toFind operators to operate these machines.

Machine Maintenance

The maintenance process starts after mid of October. Normally, it takes one month for theoverhauling of plant, during which the plant is closed for one month.



3) Personnel analysis:

Factory staff:

S.NO Type of Staff Number required

Basic salary per Person, per month

Total salaries per year

1 Tank man 6 5,000 180,000

2 Machine Operator

1 6000 36,000

ADMINISTRATION AND GENERAL STAFF

Description Qty Salary Monthly Annual Salary CostAccounts Officer 1 7,000 7,000 42,000Security Guard 1 6,000 6,000 36,000Driver 2 5,000 10,000 60,000Office Boy 1 3,000 3,000 18,000Total Administrative Expenses 156,000



4) Financial analysis:

Cost of Project

Description LOCAL FRGN TOTAL Land Cost 4,000,000 0 4,000,000Building/Infrastructure 1,672,000 0 1,672,000Machinery & Equipment 3,001,750 0 3,001,750Office Equipment 775,000 0 775,000Furniture & Fixture 66,900 0 66,900Vehicle 562,000 0 562,000Pre-operating Costs 433,828 0 433,828

Total Capital Expenditure 10,511,478 010,511,47

8Working Capital Cash 200,000 0 200,000Raw Material Inventory 67,700 0 67,700Equipment Spare parts Inventory 7,000 0 7,000 Total Working Capital 274,700 0 274,700 TOATL COST OF THE PROJECT: 0

10,786,178

====== ====== ======



Means of Finance:

Description Percentage Amount in Rs

D e b t 40% 4,314,471E q u i t y 60% 6,471,707 TOTAL DEBT & EQUITY 10,786,178 ======

Sponsors stake:60%

Requirement of Initial Working Capital

A) CURRENT ASSETS AmountCash in Bank 200,000Raw Material Inventory 67,700Machine Spare parts Inventory 7,000Accounts Receivable 0 Total Assets 274,700 B) Current Liabilities Accounts Payable 0Total Current Liabilities: 0 INITIAL NET WORKING CAPITAL (A -B) 274,700

Assumptions underlying financial statements:

ESTIMATED INCOME STATEMENTS



For the year ending Sept. 30, 2011 2012 2013Efficiency Assumed : 80% 90% 100% SALES 6,400,000 7,200,000 8,000,000COST OF GOODS SOLD : Raw Material Cost 54,160 60,930 67,700Direct Labor (Production Staff) 237,600 261,360 287,496Direct Electricity 1,650,000 1,815,000 1,996,500GAS 264,000 290,400 319,440

Total 2,205,76

02,427,69

02,671,13

6

G R O S S P R O F I T 4,194,24

04,772,31

05,328,86

4OPERATING EXPENSES Administration Staff 171,600 188,760 207,636Machine Maintenance Cost 70,000 70,000 70,000Fixed Electricity Expense 79,200 87,120 95,832Communication Expense (Telephone, Fax, Internet etc.) 33,000 36,300 39,930Depreciation expense 711,798 711,798 711,798Amortization of pre-operating costs 43,383 43,383 43,383Selling Expenses 66,000 72,600 79,860 Total Operating Expenses 237,600 261,360 287,496 Operating Income (Earning Before Interest & Taxes)

3,956,640

4,510,950

5,041,368

Interest expense on long term debt 604,026 604,026 604,026

Earning Before Taxes 3,352,61

43,906,92

44,437,34

2Taxes 25% 838,154 976,731 1,109,336

Net Profit After Taxes 2,514,46

12,930,19

33,328,00

7

ESTIMATED BALANCE SHEETS

As on Sept. 30, 2010 2011 2012 2013



CURRENT ASSETS Cash in Bank 274700 2419639 4619084 7395168Raw Material Inventory 54160 60930 67700Machine Spareparts Inventory 7000 7000 7000Accounts Recievable 0 0 0

Total Current Assets 274700 2480799 4687014 7469868

FIXED ASSETS Land Cost 4000000 4000000 4000000 4000000Building & Infrastructure 1672000 1504800 1337600 1170400Machinery & Equipment 3001750 2551488 2101225 1650963Other Equipment 775000 713840 707070 700300Furniture & Fixtures 66900 56865 46830 36795Vehicle 562000 477700 393400 309100

Total Fixed Assets 10077650 9304693 8586125 7867558

INTANGIBLE ASSETS Pre-Operational Costs 433828 390445 347063 303680Total Intangible Assets 433828 390445 347063 303680 Total Assets: 10786178.3 12175937 13620202 15641105

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======

======

======

LIABILITIES & EQUITY Current Liabilities Accounts Payable 0 0 Current maturity of long term loan 539309 539309 539309Total Current Liabilities: 0 539309 539309 539309 OTHER LIABILITIES Long-term Liabilities 4314471 3235853 2157236 1078618Total Long-term Liab.: 4314471 3235853 2157236 1078618 SHAREHOLDER'S EQUITY Paid-up Capital 6471706.98 6471707 6471707 6471707Retained Earnings 1929067 4451950 7551471Total Equity: 6471706.98 8400774 10923657 14023178 Total Liab. & Equity: 10786178.3 12175937 13620202 15641105

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ESTIMATED CASH FLOWS

For the year ending Sept. 30, 2010 2011 2012 2013 Operating activities Net profit 2572090 3363843 4132695Add: Depreciation expense 711798 711798 711798 Amortization of pre-operating costs 43383 43383 43383Other Resources 0 0 0Accounts payable 0 0 0equity 4314471 Long term Loan 6471707 Total 10786178 3327270 4119024 4887875 Uses Fixed Asset 10077650 Priliminary Exp. 433828 Long term Loan 539309 1078618 1078618Repayment of:. Financial Exp. 643022.4738 840961 1033173.745Profit Distribute Inc/(dec) in A/R 0 Total 10511478 1182331 1919579 2111792Cash inflow / Outflow 274700 2144939 2199445 2776084Balance Opening 274700 2419639 4619084Balance Closing 274700 2419639 4619084 7395168



Loan Repayment Schedule

Name of the Bank Habib Bank Limited

Amount of loan 4,314,471Date of sanction of loan 1/1/2009Date of disbursement of loan 3/31/2009Payment of mark up/profit/interest

Quarterly Installments

Payment of participle amount

Half Yearly six months after the commercial

productionRate of mark up/profit/interest 20%Period/Tenor of loan 4Date of Commercial production 3/31/2010 Date of Repayment of Principal 6/30/2010Due No. of Amount Principle Total Outstanding Dates Days of mark up Installment Installment Principle

6/30/2009 0 4,314,4719/30/2009 92 217,497 217,497 4,314,471

12/31/2009 92 217,497 217,497 4,314,4713/31/2010 90 212,768 212,768 4,314,4716/30/2010 91 215,133 539,309 754,441 3,775,1629/30/2010 92 190,310 190,310 3,775,162

12/31/2010 92 190,310 539,309 729,618 3,235,8533/31/2011 90 159,576 159,576 3,235,8536/30/2011 91 161,349 539,309 700,658 2,696,5459/30/2011 92 135,935 135,935 2,696,545

12/31/2011 92 135,935 539,309 675,244 2,157,2363/31/2012 91 107,566 107,566 2,157,236



6/30/2012 91 107,566 539,309 646,875 1,617,9279/30/2012 92 81,561 81,561 1,617,927

12/31/2012 92 81,561 539,309 620,870 1,078,6183/31/2013 90 53,192 53,192 1,078,6186/30/2013 91 53,783 539,309 593,092 539,3099/30/2013 92 27,187 27,187 539,309

12/31/2013 92 27,187 539,309 566,496 0

Financial Ratios:

R A T I O S 2010 2011 2012 2013Debt Equity Ratio 67% 39% 20% 8%Net Margin (%) 34% 39% 43% 42%

Project Returns

Description IRR 28%Pay Back Period 1.143516173Sponsors stake

Commentary:Our Debt Equity Ratio is decreasing yearly and our Net Profit Margin is

increasing yearly. Which shows the company financially strong?



5) SWOT Analysis

Strengths:

The labor to manufacture ice is easily available we can reach easily to low cost labor. Moreover the location for our project is very attractive. We can avail maximum advantage from this market.

Weaknesses:

Our weakness is that we are not producing ice up to the present demand of the consumer. Because we have one unit to produced ice if we increase the plant in to 2 then we increase the production.

Opportunities:

Most of areas of Pakistan have long duration of summer due to which demand for ice is high for more than six months of the year. As Pakistan is a developing country and large portion of the population cannot afford refrigerators for domestic use. Another growing market for ice plants are industries linked to food products i.e. fish, dairy, bakeries, restaurants etc. With this growing demand a large number of ice plants are operating in the country.

There are approximately 1,300 ice plants operating in the Punjab, catering to the needs ofdifferent institutional and domestic buyers. The total installed capacity of ice plants in Punjab is approximately 432,669-tons of ice blocks per day2. The need of ice blocks is increasing due to economic growth, as major buyers are institutional buyers (dairy, bakery, hotel, etc.), who buy in bulk.

Threats:

Competitive Structure of the marketThe market of the ice plant is highly competitive; therefore if the entrepreneur isnot well responsive and fulfilling the demand of the consumer he/she may not be able to capitalize the opportunity properly.



Selection of the wrong venueSelection of the wrong venue can be a major hurdle in achieving the desired business objectives. the clientele taste should be properly tracked.

Conclusion & Recommendation: The location plays an important role, as finished ice blocks should be easily accessible

to dealers . It is important that solid ice blocks are produced through proper freezing time

utilization as solid ice blocks are much heavier, more transparent and provides higher price in the market.

Weather factor plays an important role, due to seasonal nature of the business i.e. In summers the demand for ice blocks increases, while after mid September the temperature starts changing & demand starts to fall, which means the entrepreneur should reduce the production according to the demand of ice.

One of the most important aspects for success of any business is minimizing the cost of production, in case of ice plant this can be achieved by proper training of workers,

which would ensure reduction in raw material wastage and better maintenance of machinery etc.

It is advisable to run the plant on natural gas, rather than electricity, as the major expense in production of ice is electricity. The use of natural gas instead of electricity will reduce the electricity expense approximately by half.

In order to sell the ice blocks, it is recommended to develop a chain of dealers who buy the iceBlocks on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in view the number of blocks to be purchased on daily basis. In case the dealer is unable to pick the agreed number of blocks on a particular day, the amount is deducted from his security.


ice factory

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