Waqar b Assign

7/31/2019 Waqar b Assign

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Project Brief All fruits and vegetables require specialized post harvest treatment, appropriate

temperature and relative humidity for their storage. Establishment of cold storage

provides refrigerated storage and preservation facilities for several fruits, vegetables

& flowers. Because of technology advancements and logistic strategies, the cold

storage of perishable items has become an important stage in the distribution

between manufacturers/processors and retail locations. The cold storage will ensure

the increased availability and improved quality of high value perishable fruits and

vegetables for both export and local sale, which would otherwise perish or

deteriorate.

This project is designed for storing of potatoes and apples/ kinnu but it can be used to

store multiple products, stored in different compartments of the unit, where relative

temperatures for respective products can be maintained. The major clientele of this

business will be the export houses and the local trading and marketing units of potatoand apple/ kinnu. The project will further aim at storing fruits & vegetables even

during off-seasons. The project will ultimately assist the clientele in maintaining

market price equilibrium throughout the year for potatoes.

Storage of Potato

The purpose of potato storage is to maintain tuber quality and provide a uniform flow

of tubers to fresh market and processing plants round the year. Good storage should

prevent excessive dehydration, decay and sprouting. It should also prevent high

sugar concentrations which result in dark colored fried products. Following are the

requisites for efficient potato storage:


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x Adequate insulation

x Outside waterproofing

x Inside vapor proofing

x Ventilation

x Air distribution

x Adequate humidification

x Properly designed controls for precisely maintaining the storage

atmosphere.

Temperature, humidity, and air movement are the most important environmental

factors affecting storability. Temperature requirements are determined by the

intended use of the potatoes. Tubers should always be kept in the dark since very

small amounts of light will gradually cause greening. Lights should not be used more

than absolutely necessary. Surface greening is due to chlorophyll formation and is

harmless. However, its presence in potatoes is undesirable because of marketing

restrictions and the fact that at times an alkaloid called solanine increases with the

chlorophyll. Solanine and other glycoalkaloids cause potatoes to have a bitter,

undesirable flavor. Greening develops slowly in the light at 40qF or below but

develops rapidly at 68qF.

Potatoes are usually held in bulk piles 8 to 20 feet deep. Some are stored in pallet

boxes for short periods. Pressure bruise and internal black spot are substantially


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lower with pallet storage but decay is often increased because of poor air circulation

within boxes/bags.

The proposed project contains racking system build up by using good quality steel

and wooden logs. These racks provide space for placing the potato bags & apple/

kinnu crates with sufficient intra spaces for air circulation.

Opportunity Rationale

Securing an adequate food supply has been the fundamental concern of mankind and

so has been the preservation of food. The loss of food in the post-harvest system is

not new; it has always been a problem for man, even in the highly scientific and

technological world of today. Among all the major problems persistent in the world

regarding the fulfillment of the basic needs of people, food requirement stands at the

top, as without ensuring satisfactory diets, people cannot lead healthy and productive

lives.

In these present times of high population growth rates, food supply has become

diminutive. For filling this gap between demand and supply, there is a need to

conserve the food supply, in order to meet the growing and existing food

requirements, especially fruits and vegetables, as these are more perishable.

The problem related with food loss is more prevalent in the less developed world as

compared to the developed world. The developed countries have curbed the loss of


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food to a great extent by adopting new technologies and ways of storing food. Some

examples of such measures are adoption and development of better harvesting

equipment; establishment of collection centers at strategic points in major crop

producing areas; remodeling of containers to add more protection to the produce;

and more importantly the development of commercial storage plants/cold storages.

As far as the scenario of food losses in Pakistan is concerned, Pakistan produces a

variety of fruits and vegetables like potato, apple, mangoes, dates, banana, cherries,

apricots, pomegranates, peas, carrots, etc. Pakistan's total annual production of fruits

amounts to nearly 6 million tons and that of vegetables to approximately 5.3 million

tons. However, it is estimated that in Pakistan 25% of fruits & vegetables produced

each year are lost because of poor harvest conditions. This loss if calculated

approximately amounts to 2.7 million metric tons and its estimated local market

value reaches somewhere near US $ 522 million. The major reasons for this loss are

careless harvesting, rough handling, inadequate transportation, and storage facilities.

If we only look at the losses due to lack of storage facilities, it alone reaches 1.24

million metric tons, which values to nearly US $ 239 million.

Furthermore, the purpose of storage of vegetables and fruits is to preserve and

maintain the edible quality characteristics until they are consumed in the fresh state,

which the cold storage serves

Market Entry Timings The harvest season for potato is from December to February and of apple is from July

to November so the best time to enter in the cold storage business is December.

Proposed Location


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For retail sales, location of the cold storage must be near a major road, and the area

must have adequate parking space. Proposed locations for cold storage could be

from Kasur to Depalpur as potatoes are grown on this belt, apples are brought from

Quetta & Kinnus are brought from Sargodha. Location of the cold storage should be

done by keeping in view the following factors:

x A cold storage facility must be in a well-drained area. It requires

drains to remove water from condensation, and cleaning and sanitation

operations. Providing good drainage is essential.

x Availability of water

x Availability of Electricity

x Three phase of electricity is necessary when more than 10 tons of

refrigeration is needed.

x Wastewater disposal facility

x Appropriate sewage collection and disposal system must be considered.

If any of above facility is not available the arrangement for the same must be done

prior to construction of cold store.

Proposed Capacity The proposed cold storage facility has a maximum storage capacity of storing

60,000 bags of potato or 180,000 crates of apple at any given time. It will be

operational for potato storing period from February to July and will be available for


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apple/ kinnu storage in December & January. It is also proposed that owner should

maintain a stock of 7,200 bags of potato (15% of total capacity and keep on

increasing the capacity by 5% uptil 30%) of his own that will earn extra profits in

peak season and remaining 85% capacity will be utilized on rental basis.

Project Investment The proposed project of potato cold storage needs a capital investment of about

Rs. 75,214,920, which includes Building (civil work), machinery, Insulation of

Expanded Polystyrene (EPS) with Plaster layer, Racking and pre-operational

expenses of Rs. 2,908,000. Rs. 7,136,000 would be required as working capital

and cash requirement for purchase of 7,200 potato bags. The total project cost

amounts to Rs. 82,350,920.

Proposed Product Mix

In the proposed cold storage there would be a capacity to store 60,000 bags of

potato from February to July and 180,000 apple/kinnu crates would be stored in

December & January.

Key Success FactorsFollowing are some of the major factors, which contribute towards the success of

the potato cold storage.


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Better insulation technology and compartmentalization of cold

storage as compared to the rest of the cold storages in Pakistan.

Energy efficient construction hence low operating/fuel costs due to

efficient insulation.

Compartmentalization i.e. compartments has the provision of storing different

commodities at their respective temperatures

Strategic Recommendations It is recommended to develop a chain of dealers who put potato bags and

apple/ kinnu crates on regular basis. The dealer deposits a guarantee in the

shape of cash security, keeping in view the number of bags/ crates taken

out from cold storage on agreed terms. In case the dealer is unable to pick

the agreed number of bags/ crates on a particular day, the amount is

deducted from his security.

For earning higher profits it is recommended to the seller that he should

send fruit & vegetable to Karachi, Lahore & Islamabad for sale.

CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR

INVESTMENT

SWOT Analysis


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A SWOT Analysis is a strategic planning tool used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or business venture.

Strengths and weaknesses are internal to the company whereas the opportunities

and threats originate from the external environment. A SWOT analysis is usually

performed early in the project development process, and helps organizations

evaluate the environmental factors and internal situation facing a project.

Strengths and Opportunities

Fairly good price.

Use of machinery that is durable and feasible.

Low operational cost because of energy efficient construction.

Compartmentalization provides opportunity to store different commodities at

their respective temperatures.

Extend product range.

By using effective marketing strategies cold storage business can attract more

growers and traders.

The establishment of wholesale market and cold storage facilities would

enhance the pace and volumes of business by providing market place for

commercial transactions for the domestic and international trade.

Sufficient quality control and reduction of waste will directly enhance

availability of the produce. Further, the cold storage facilities would result in

supplies during off-season which otherwise may not be possible.


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Timely placement of products in the cold storage will help preserve their

quality and improve shelf life. It will also avoid food contamination caused by

microbial activity thus assuring availability of quality food products.

Weaknesses and Threats

Irregular government policies e.g., abnormal tax increase. x Fluctuation or

unexpected increase in electricity tariff

Failure of potato crops due to natural calamity.

Ruthless competition by other business adversaries.


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SECTOR & INDUSTRIAL ANALYSIS

Global Perspective

Worldwide average food grain losses have been put at 5 percent. In the developedcountries, losses have been generally at 1 percent while 10 to 30 percent losses have

been reported for developing countries. Increase need for potato cold storages is

because of increase in the demand of potatoes through out the world. It is caused by

following factors:

Increase in purchasing power

Increase in population.

Mishandling and wastage of fruits & vegetables.

Local perspective

Although potato was grown on the Indian subcontinent from the late 16th or early

17th centuries, at Pakistan's foundation in 1947 cultivation was restricted to a few

thousand hectares and total annual output was less than 30,000 tones.

In the decades since independence, the aalu has become the country's fastest

growing staple food crop. Thanks to strong gains in cultivated area and average

yields - both made possible mainly by irrigation - output rose between 1995 and

2010 from one million to a record of more than 2.6 million tones. The lion's share of

potato production comes from the Punjab, where spring and autumn crops account

for 85 percent of the national harvest.


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There are total 533 cold storages in Pakistan which have installed capacity of 892,000

tons13 out of which 104 units of cold storage/ ice factory having installed capacity of

1,905,907 bags/ crates, 25,208 blocks/ day are in proposed location Okara.

MARKET INFORMATION

Market potential Most of the existing local Cold Storages are constructed on locally developed

methods, which maintain a uniform temperature for all commodities stored. The

goods are not stored at their recommended relative storage temperatures and life,

and because of this the quality of stored commodity is badly affected. Potatoes

require specialized post harvest treatment, appropriate temperature and relative

humidity control for their proper & optimum storage, which most of the existing

local cold stores lack.

Target customer

Following are the potential customers of cold storage:

Growers


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Traders


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COLD STORAGE TYPES AND

INFRASTRUCTURE

There are two types of cold storages being used in Pakistan

1. Traditional type cold storage (Insulated brick walls)2. Pre-fabricated cold storage (Walk in type)

Insulation The insulating material that is traditionally used is Expanded Poly-Styrene

(Thermopore) having a thickness of 4-6 inches. A recent development in insulating

material is Poly-Urethane. The later is 4-6 times efficient than the former.

Refrigeration system

Two types of refrigeration systems are used depending on product type and cold

storage area.

Ammonia Based System This type of system is manufactured locally. After sale services and spare parts

are readily available. This also contributes low capital investment. No need of

highly skilled operators.

Freeon Based System


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This system normally utilizes imported compressors. High initial cost and require

highly skilled operator for smooth operation.

Racking This includes combination of steel racks and wood logs etc. for storing of potato or

any other products.

Pre-Fabricated Cold Storage This type of cold storage is being used for delicate products that are mainly focused

for export purposes. Polyurethane injected panels are manufactured at factory and

are fixed together at project site using panel locking system. This type of clod storage

requires less civil work (only roof for low heights). The initial cost is higher than the

traditional cold storage (more than double). This cold storage provides better hygienic

environment for delicate food products and have easy future expansion feature. The

cold storage building consists of Pre-fabricated refrigerated (Walk-in type) structure.

This type of structure is highly superior to any form of refrigerated storage

construction previously available in Pakistan due to its better technology and energy

efficiency. Polyurethane insulated panels are used to erect the building because these

panels are metal clad and can be easily dismantled for relocating the cold storage

site. The cold storage building has a roof of insulated corrugated sheet of galvanized

mild steel to protect it from direct sun and rain. The floor has a surface of

polyurethane insulated galvanized steel material. The floor is strong enough to


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withstand the distributed load. An automatic monitoring system is installed in the

storage compartments for maintaining relative humidity and temperature and to

eliminate any chances of human error during the refrigeration period


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HUMAN RESOURCE REQUIREMENTS


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MACHINERY AND EQUIPMENT DETAILS


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LAND AND BUILDING

Land It is recommended that the new storage facility site be located as close to the fields

as possible, minimizing handling, preserving product quality and limiting transport

costs. The site for proposed business place could be on Kasur to Depalpur belt.

Approximately 1 Acre of land would be required for this cold storage

Infrastructure requirements


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The project will have the following infrastructure components


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PROJECT ECONIMICS

Project Costs The cost of the project will be as follows:

Estimated time frame for project Completion The estimated time frame for the completion of the project is eight months.


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PROJECTED INCOME STATEMENT


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PROJECTED BALANCE SHEET


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PROJECTED CASH FLOW STATEMENT


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Documents

Waqar b Assign