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Pre-Feasibility Study
(SUPPLY OF LIQUID HUMIC ACID PRODUCT)

Pakistan Council of Scientific and Industrial Research
Head Office
Constitution Avenue Sector G 5/2
Islamabad.
Ph: 051-9225393

Fuel Research Centre-PCSIR,
Off University Road, Karachi-75280
Tel: 021-34641937; 021-34641738
Fax: 021-34641754
E-mail: info@pcsir-frc.gov.pk; frc_pcsir@hotmail.com www.pcsir-frc.gov.pk Note: All services / information related to PMs Youth Business Loan are Free of Cost

April, 2014

1. DISCLAIMER
This information memorandum is to introduce the subject matter and to provide a general idea and information on the subject. Although, the material included in this document is based on data / information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on ‘as is where is’ basis without any warranties or assertions as to the correctness or soundness thereof. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. Fuel
Research Centre PCSIR, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity.
The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision, including taking professional advice from a qualified consultant / technical expert before taking any decision to act upon the information. For more information on service Fuel Research Centre, please contact our website:

2. PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project prefeasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, marketing, finance and business management.

The purpose of this document is to facilitate potential investors in Execution of Pilot Plant
Facility for Production of Liquid Humic Acid Fertilizer (Sabzazar Regd.) by providing them a general understanding of the business with the intention of supporting potential investors in crucial investment decisions. The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and it’s successful management. Apart from carefully studying the whole document one must consider critical aspects provided later on, which form basis of any Investment Decision.

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3. INTRODUCTION TO FUEL RESEARCH CENTRE, KARACHI.
Fuel Research Centre (FRC) Pakistan Council of Scientific and Industrial Research (PCSIR) is the premier research and development (R&D) organization first of its kind in Pakistan for coal, energy and environmental research. FRC has over several years developed the capability to undertake comprehensive analyses and testing of not only solid fuels like coal and coke but also liquids like gasoline, diesel and gaseous products obtained from coal and petroleum refineries. Thus FRC has served a number of industries in helping the evaluation of their fuels.

The centre is actively engaged in scientific research and technological research work pertaining to coal, coke, bio-mass, liquid, gaseous fuels and especially on different aspects of power generation from coal and biomass not only to reduce power crises but also to enhance self sufficiency in this regard. As Pakistan is facing crucial problem of energy crises in the form of electricity for house-hold as well as industrial and also for fuel for transportation, it is necessary to adopt new technologies to resolve the issue. FRC has gone through a series of experiments with encouraging results in this regard and further work is in progress.

The centre has achieved enough experience to conduct research and offer technical assistance and services to all Government departments, autonomous bodies, educational institutes as well as many private and public sector organizations. Our mission is also to promote basic and applied research, analytical testing and improve fundamental understanding of solid and liquid fuel as well as address critical issues and barriers for utilization of coal as an alternate energy source.

4. EXECUTIVE SUMMARY
Natural Fertilizer Industry of Pakistanis contributing significantly to the national exchequer, saving billion of dollars by reducing foreign imports of synthetic fertilizers. International demand for Pakistan’s Agri products, low investment as compared to other sectors, easy availability of raw material and availability of skilled labor are some of the encouraging factors that provide a potent opportunity for a new entrant to venture into Natural Fertilizer
Industry business. The business project entail involves a total investment of about Rs. 2.0 million. The project will generate direct employment opportunity at least for 25 persons.
Higher return on investment and a steady growth of business is expected with the industrialist having some prior experience or education in the related field of business. This pre-feasibility encompasses essential information regarding various aspects of starting a Natural Fertilizer processing unit.
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5. INTRODUCTION TO SCHEME
Prime Minister’s ‘Youth Business Loan’, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially by the National Bank of Pakistan (NBP) and the First Women
Bank Ltd. (FWBL). Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan,
Gilgit Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

6. BRIEF DESCRIPTION OF PROJECT & PRODUCT
Fuel Research Centre (FRC) is conducting research and development in the areas of special significance to industry, government agencies and other organizations. FRC is committed to develop, innovate, analyze and apply technology for products and processes concerning coal.

The conversion of lignitic coal into humic acid fertilizer is the R&D of FRC-PCSIR, Karachi.
FRC worked on the liquid form of Humic Acid to suit the conditions and demand of farmers.
The products has been registered as “Sabzazar Humic Acid”, it has been marketed in the interiors of Sindh, Baluchistan, Khyber Pakhtunkhawa and Punjab also. Humic Acid is now the Future of Pakistan replacing Synthetic Fertilizers i.e. Urea and DAP etc, having properties 100% suitable to soils.

Humic Acids have vast application fields but it is still anonymous in Pakistan, whereas it is best known plant growth hormone utilizing all over the world besides its other applications in veterinary, poultry and fish farming as good feed stock. The development of such technology and necessary adaptations for the processing / purification of the said product will be beneficial for national economics. It will also meet the future challenges to Pakistan and remain to be seen whether we accept the alternative to switch over to use our indigenous, less expensive, natural resources to develop the concept of organic agriculture. FRC-PCSIR has published 16 publications in national and international journals and 04 patents have been filed. Being an agrarian country the primary object of the proposed Pilot plant is to provide our farmers a more effective, cheaper source for enhancement of crop yield.

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The earning of FRC may be increased by proper marketing of the product to interior areas of different provinces. The job opportunities may be increased.

Use of synthetic fertilizers on the long run accelerate the rate of soil erosion and run off, therefore attention of researchers as well agriculturists / farmers is diverting towards organic farming. The use of organic fertilizers makes farming sustainable over the longer period.

Humic acid also acts as soil conditioner, bio-fertilizer and enhance biological activity and makes available trace elements which is not possible by the use of synthetic fertilizers.
Thus multiplicity of direct as well as indirect benefits of organic fertilizers that include financial, economical, social, environmental, ecological and other benefits, can be met by the use of humic acid derivatives hence strongly justify the production of liquid humic acid and its utilization in local fields.

Demonstrable results by use of humates are overall, a direct increase of harvest of all agricultural products. Practical experience of humate usage in Russia and other former USSR republics has confirmed the following significance of harvest increase yield.

7. CRITICAL FACTORS


Humic acids have a wide range of application, not only in agriculture but also in pharmaceutical, textile and environmental fields.



Its capability to interact with metal and complexation with heavy metals is a subject of constant interest for the coal scientists in most of the modern research laboratories.



As the structure and composition of humic acids is dependent upon parent coal structures and regeneration procedure. This project / research study would be highly helpful in elaboration of standardized procedure for production of humic acids on pilot plant scale from lignite coal deposits and its utilization in various industrial sectors.



Humic acids play a vital role for plant growth in a number of ways. Both plant root and top growth have been stimulated. Humic acid can have a direct positive effect on plant growth in a number of ways.



Both plant root and top growth have been stimulated by humates, but the effect is usually more prominent in the root. A proliferation in root growth, resulting in an increased efficiency of the root system, is a likely cause of higher plant yields seen in response to humic acid treatment.

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Humic matter has been shown to increase the uptake of nitrogen by plants, and to increase soil nitrogen utilization efficiency. It can also enhance the uptake of potassium, calcium, magnesium and phosphorus.



One of the valuable characteristics of humic substances is the ability to absorb and retain quite large amounts of water. In addition fulvic acid helps water penetrate and permeate plant cells, assisting nutrient uptake and water storage during drought conditions.

8. INSTALLED & OPERATIONAL CAPACITIES
Presently, we have a semi-pilot scale humic acid production facility, having capacity 1000 litres / week.

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Being an agrarian country the product can be used all over the country.

10. POTENTIAL TARGET MARKETS
Natural Fertilizer will primarily be used within the country and further expansion can enable us to export our product.

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11. PRODUCTION SUPPLY FLOW CHART

12. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of Natural
Fertilizer processing Unit – 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.






Purchase of Packed Product
Transportation
Storage
Marketing
Field Application

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12.1 Project Economics
The installed product supply capacity of the project is 50,000 bottles per year. However during first year of operations, it will operate at 80% of the installed product supply capacity as 40,000 bottles of Natural Fertilizer (Humic Acid).

The following table shows internal rate of return, payback period and Net Present Value:
Table 1: Project Economics
Description
Internal Rate of Return (IRR)
Payback Period
Net Present Value (NPV)

Details
80%
---

12.2 Project Financing
Following table provides details of the equity required and variables related to bank loan;

Table 2: Project Financing
Description
Total Equity (10%)
Bank Loan (90%)
Markup to the Borrower (%age/annum)
Tenure of the Loan (Years)
Grace Period (Year)

Details
0.2 million
1.8million
8%
8
1

12.3. Project Cost
Following requirements have been identified for operations of the proposed business. A rented premise has been recommended for this project.

Table 3: Capital Investment for the Project
Capital Investment Amount (Rs.)
Description
Product cost (4,445 bottles)
Rent
Establishment Charges / Manpower Hiring
Furniture
Fixture
Training/Conferences/Workshops
Transport/POL /Traveling
Contingencies
Total

Details
10,00,000
25,000
350,000
168,000
247,000
75,000
110,000
25,000
20,00,000

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12.4. Space Requirement
The area has been calculated on the basis of space requirement for management and storage.

Table 4: Space Requirement Sq. Ft.
Facilities
One hall R.C.C. Structure (40’x30’) for storage of coal having 20000 liters capacity and (50’x13’) for office.

Estimated Rent
Rs. 25,000

12.5 Furniture & Fixture
Following furniture and fixture will be required for the unit:
Details
Office / Visitor Chairs
Office Tables
Fans
Air Conditioner

Quantity
10
04
06
01

Cost
2,000
15,000
3,000
70,000
Total 90,000

Amount
20,000
60,000
18,000
70,000
168,000

12.7. Office Equipment / Fixture
Office equipment comprises of necessary IT equipment and furniture items.
Details
Computer Laptop
Computer Desktop
Computer Printer
Flat bed Scanner
Networking
Telephone
Fax
Miscellaneous

12.8

Quantity
01
02
02
01
01
01

Cost
70,000
25,000
15,000
10,000
10,000
2,000
65,000
10000
Total 207,000

Amount
70,000
50,000
30,000
10,000
10,000
2,000
65,000
10000
247,000

Material Requirements

Packed bottles of Liquid Humic Acid are available at FRC, PCSIR Karachi.
Technology for natural Fertilizer from Raw Coal available at Fuel Research CentrePCSIR though TBIC
Table 8: Cost of Materials
Unit
Packed bottles of the product (3liters) (4,445 bottles / month)

Rate (Rs.)
225 / bottle

Amount
10,00,125 / month

Cost per Unit Rs. 225.00/=
4,445 bottles of 3 liters each per month

8

12.9 Human Resource Requirement
Following table provides details of human resource required for this venture:

Table 9: Human Resource Requirement
Description
No. of Employees
Salary per month (Rs.)
Project Technocrat
01
60,000
Marketing Manager
01
30,000
Sales Officer
10
125,000
Computer Operator
01
15,000
Driver
01
10,000
Labor
11
110,000
25
TOTAL
350,000
Salaries of all employees are estimated to increase at 10% annually.

12.10 Revenue Generation
Product
Liquid Humic Acid
N.B:

Sales Price
First Year
(Rs./Unit) Sales (Bottles)
500
50,000

1st year Sales Revenue in (Rs)
250,00,000

The sale prices are the approximate value. Product cost and sale price of the product may be enhanced by 10% yearly or by mutual understanding.

12.11 Other Costs
Other essential costs to be borne by the company are; promotional and communication expenses due to the export nature orientation of the business.

13. CONTACT DETAILS
Director,
Fuel Research Centre-PCSIR, Off University Road, Karachi-75280
Tel #:

021-34641937; 021-34641738

Fax #:

021-34641754

E-mail :

info@pcsir-frc.gov.pk; frc_pcsir@hotmail.com

Website:

www.pcsir-frc.gov.pk

9…...

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...Introduction The history of Starbucks started in Seattle in 1971. Three friends, Jerry Baldwin, Zev Siegl, and Gordon Bowker, who all had a passion for fresh coffee, opened a small shop and began selling fresh-roasted, gourmet coffee beans and brewing and roasting accessories. In 1987, they sold the Starbucks chain to Howard Schultz, which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois, that same year. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and panini, pastries, snacks, and items such as mugs and tumblers. . Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores. Starbucks' position its Starbucks outlets as a place where consumers can spend time other than that of their home or work. Their mission statement is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time”. This was done by making each of its stores as comfortable and relaxing as possible. The coffee giant achieved these through its comfortable furniture and relaxing music. Starbucks first......

Words: 3605 - Pages: 15

Premium Essay

Starbucks

...Case: Starbucks Questions for Discussion 1. What factors accounted or the extraordinary success of Starbucks in the early 1990s? What was so compelling about the Starbucks value proposition? What brand image did Starbucks develop during this period? • Factors: It is own value, creating an uplifting experience every time customers walk through the door; located in high traffic, high visibility, retail centre. Innovation e.g. set up an espresso bar in their downtown Seattle shop. Specialty coffee, premium, 50% sales of beans. Relax consumer – intimacy – baristas, knowing customer’s name and drink  hard skills & soft skill; atmosphere  furnishing, music, aroma. • Value proposition: 1) coffee  offering highest quality, lots of control over supply chain; 2) service  customer intimacy, loyalty of customers, customizing drink in their way; 3) atmosphere providing an upscale yet inviting environment. • Tight value proposition for well defined market: customer patterns  stay for a while (linger/ hangout), rituals: read magazine/ do puzzle, chat; established customers  coffee fanatics, 24-44, white collar, well educated, affluent, female; brand perceptions/ image  escape: a 3rd place, premium coffee, affordable luxury. • Brand image: sense of community, everywhere – the brand, good coffee on the run, place to meeting and move on, convenience oriented - on the way to work, accessible and consistent. 2. Why have Starbucks’......

Words: 805 - Pages: 4