Prefeasibility Report on Sea Food Processing

7/30/2019 Prefeasibility Report on Sea Food Processing

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Pre-Feasibility Study

SSeeaa FFoooodd PPrroocceessssiinngg PPllaanntt

Small and Medium Enterprise Development AuthorityGovernment of Pakistan

www.smeda.org.pk

HEAD OFFICE

Waheed Trade Complex, 1st Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA LahoreTel: (042) 111-111-456, Fax: (042) 5896619, 5899756

[email protected]

REGIONAL OFFICE

PUNJABREGIONAL OFFICE

SINDHREGIONAL OFFICE

KPKREGIONAL OFFICE

BALOCHISTANWaheed Trade Complex,

1

st

Floor, 36-Commercial Zone,Phase III, Sector XX,Khayaban-e-Iqbal, DHA Lahore.

Tel: (042) 111-111-456Fax: (042) 5896619, 5899756

[email protected]

5TH

Floor, BahriaComplex II, M.T. Khan Road,Karachi.

Tel: (021) 111-111-456Fax: (021) 5610572

[email protected]

Ground FloorState Life BuildingThe Mall, Peshawar.

Tel: (091) 9213046-47Fax: (091) 286908

[email protected]

Bungalow No. 15-AChaman Housing SchemeAirport Road, Quetta.

Tel: (081) 2831623,2831702

Fax: (081) [email protected]

July, 2013
mailto:[email protected]:[email protected]:[email protected]


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Pre-feasibility Study

ii

DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject

matter and provide a general idea and information on the said area. All the material

included in this document is based on data/information gathered from various sources and

is based on certain assumptions. 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. SMEDA does not assume any liability for any financial or other loss

resulting from this memorandum in consequence of undertaking this activity. Therefore,

the content of this memorandum should not be relied upon for making any decision,

investment or otherwise. The prospective user of this memorandum is encouraged to

carry out his/her own due diligence and gather any information he/she considers

necessary for making an informed decision. The content of the information memorandum

does not bind SMEDA in any legal or other form.

DOCUMENT CONTROLDocument No. PREF-12

Prepared by SMEDA-Balochistan

Approved by Head of Department

Issue Date September, 2008Issued by Library Officer

Revised Date July, 2013


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Contents

1 Introduction to smeda ................................................................................................. 12 Purpose of the document ............................................................................................. 23 Project Profile ............................................................................................................. 2

3.1 Project Brief ......................................................................................................... 23.2 Sea foodA definition ......................................................................................... 33.3 Opportunity Rationale .......................................................................................... 43.4 Market Entry Timing ............................................................................................ 53.5 Proposed Business Legal Status ........................................................................... 53.6 Proposed Product Mix .......................................................................................... 53.7 Project Capacity ................................................................................................... 53.8 Project Investment ................................................................................................ 53.9 Recommended Project Parameters ....................................................................... 63.10 Recommended Locations ................................................................................. 63.11 Key Success Factors ......................................................................................... 83.12 Strategic Recommendations ............................................................................. 8

4 Market ......................................................................................................................... 94.1 Target Customers ................................................................................................. 94.2 World Fisheries Trade and Production: ............................................................... 9

4.2.1 Major Players .............................................................................................. 104.3 Pakistan Market .................................................................................................. 11

4.3.1 Target Markets of Pakistan Fisheries: ......................................................... 114.3.2 Local Sea Food Market ............................................................................... 114.3.3 Supply Chain of Fisheries in Pakistan: ....................................................... 124.3.4 Regional Distribution .................................................................................. 124.3.5 Fish Exports of Pakistan ............................................................................. 134.3.6 Problems faced by the sector ...................................................................... 13

4.4 Balochistan ......................................................................................................... 145 Regulatory Procedures .............................................................................................. 165.1 International Quality Certification, HACCP: ..................................................... 16

5.1.1 HACCP Certification .................................................................................. 165.1.2 FDA Certification: ...................................................................................... 17

5.2 Sea Food Product lines: ...................................................................................... 175.2.1 Quality and Product line: ............................................................................ 175.2.2 Product Grade ............................................................................................. 17

6 TECHNICAL ANALYSIS ....................................................................................... 196.1 Fish Spoilage: ..................................................................................................... 19

6.1.1 Four Phases in Fish Spoilage: ..................................................................... 196.2 Chilling Process.................................................................................................. 196.3 Freezing: ............................................................................................................. 20

6.3.1 Types of Freezers ........................................................................................ 206.4 Packaging of Frozen Fish: .................................................................................. 226.5 Process Flow Chart............................................................................................. 236.6 Raw Material / Marine Fish Catch: .................................................................... 23

7 Project Inputs ............................................................................................................ 247.1 Machinery and Equipment ................................................................................. 247.2 Maintenance Costs ............................................................................................. 24


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7.3 Vehicle ............................................................................................................... 257.4 Other Office Requirements ................................................................................ 257.5 Human Resource Requirement........................................................................... 257.6 Land and Building Requirement ........................................................................ 257.7 Utilities Requirement ......................................................................................... 267.8

Recommended Mode.......................................................................................... 26

8 Project Economics .................................................................................................... 27

8.1 Project Cost ........................................................................................................ 278.2 Project Returns ................................................................................................... 278.3 Project Financing................................................................................................ 27

9 Key Assumptions ...................................................................................................... 31


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BAL-PREF-11/ September, 2008

1

11 IINNTTRROODDUUCCTTIIOONN TTOO SSMMEEDDAAThe Small and Medium Enterprise Development Authority (SMEDA) was set up in Oct,

1998 with the objective to provide impetus to Small &Medium Enterprise (SME)

development in Pakistan.1i

Initially, SMEDA adopted sectoral SME development approach and selected few priority

sectors on the criterion of SME presence. In depth research was conducted and

comprehensive development plans were formulated after identification of impediments

and retardants. The all-encompassing sectoral development strategy involved

recommending changes in the regulatory environment by taking into consideration other

important aspects including finance, niche marketing, technology upgradation and humanresource development.

SMEDA has so far successfully formulated strategies for sectors including, fruits and

vegetables, Marble and Granite, gems and jewelry, marine fisheries, leather and footwear,

textiles, surgical instruments, urban transport and dairy. SMEDA aims at intensive

coverage and enhanced penetration of its areas of operation for SME development.

Along with the sectoral focus of SMEDA, a broad spectrum of business development

services is also offered to the SMEs. These services include identification of viable

business opportunities for potential SME investors. In order to facilitate investors,

SMEDA provides business guidance through its help desk services i.e. Over the Counter

(OTC) as well as development of project specific initiation documents. These documents

consist of information required to make well-researched investment decisions. Pre-

feasibility studies and business plan development are some of the services provided to

enhance the capacity of SMEs to exploit viable business opportunities in a better way.

This document is in the continuation of such effort to enable potential investors to makewell-informed investment decisions.

1 For more information on services offered by SMEDA, please visit our website:www.smeda.org.pk
http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/http://www.smeda.org.pk/


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22 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTTThe scope of the present study is to bench mark the potential entrepreneurs in projectidentification for investment. The project pre-feasibility may form the basis of animportant investment decision and in order to serve this objective, the document/studycovers various aspects of project concept development, start-up, and production, finance

and business management.

33 PPRROOJJEECCTTPPRROOFFIILLEEThe project involves processing of Seafood, including fish, shrimps, lobsters etc. fordomestic and international markets. Processing of fish involves primarily the applicationof preservation techniques in order to retain quality and increase shelf life of the product.It may also deal with value-adding to produce a variety of products. The qualityproduction will ultimately increase the product demand of sea food in Pakistan as well asin international markets. The project also entails particularly to elucidate the strengthsand week areas of fish processing industry which is the major player in exporting fish to

global markets.

The major scope of processing activities will include post fish catch activities i.e. pre-cooling/icing, grading, cutting and cleaning, packing, and freezing. Sea food processingunit can also provide processing services on rental basis to other exporters of sea food interms of provision of processing facility, provision of cold storages and transportationservice up to the port of exit. Beside this, local fish suppliers, dealers, contractors andboat owners will also be the potential rental costumers of the plant, where they can getprocessing services for their catch through paying a service charge as a rent.

33..11 PPrroojjeecctt BBrriieeffThe project is about a Processing Plant which will process / freeze sea food (Fish andshrimps etc.) The final product will be supplied to the food markets of major cities ofPakistan that include Karachi, Quetta, Lahore, Sialkot, Rawalpindi/Islamabad, Peshawar,Gujranwala, Faisalabad. Export quality products will be shipped to the international seafood markets of Middle Eastern Countries, European Union, Japan, USA, and Russia.Beside this, restaurant chains and five star hotels across the country are also one of mainconsumers of the sea food. The processing plant would be used to process the sea foodcatch mainly coming from the Arabian Sea through fishing boats, launches andinternational fishing trawlers.

As a source of white meat, consumption trend and level of fish is very low as comparedwith chicken. The prime reason for this low consumption is the scarce supply, low qualityand less availability of fish in the meat markets of major cities in Pakistan. Effectivesupply chain of fishery products in domestic markets can increase the demand of fish inlocal markets.


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The process would include undertaking value-added activities, which will increase thequality and shelf-life of sea food for the national and international market. The plantshould be located at the coastal area of Pakistan ideally near a fish harbor. Pakistani seafood products have significant demand in the international market; however, the export ofsea food products is far less as compare to the available potential. It has been observed

that in order to increase the international export markets size, good quality sea foodproduction will require adequate physical infrastructure facilities like modern processingunits, cool chain, and other supply related logistics. Attaining international qualitystandards and getting quality certificates is a mandatory requirement in Sea foodprocessing industry

33..22 SSeeaa ffooooddAA ddeeffiinniittiioonnFish represents a valuable source of proteins and has a significant nutrient value in thedaily diet. Fish is an important part of the daily food intake of most of the countries in theworld and its importance in contributing to food security is rising significantly.

The total food supply available from fisheries in live weight terms is estimated to beslightly higher than 16 kilos per year for each of the world's inhabitants .Fisheries andaquaculture make an important contribution to the animal protein supplies of manycommunities in both the industrialized and developing worlds.

Significant supply of fish exists along the Balochistan and Sindh coast. During currentstudies, situation analysis of the growth in the fish processing sector in Balochistan wascarried out and it was found that during the past several years there has been anincreasing tendency of investing into new/branch of fish/shrimp/lobster/ cuttle fishprocessing plants in Balochistan. Some of the species with major production alongPakistan coast are as follows,

Table 1: Fisheries Varieties in Balochistan

Sr.# Name Sr.# Name Sr.# Name

1 Flat fish 14 Travelly 27 Large Grouper

2 Sardinals 15 Dolphin fish 28 Small Guorper

3 Other clupieform 16 Grunter 29 Cobias

4 Wolf hairring 17 Large croaker 30 Scad

5 large makral 18 small croaker 31 Indian mekral

6 Small makral 19 Emperor 32 Quean fish

7 Tuna 20 King soldier (Sea Bream) 33 kiddi

8 Sea cat fish 21 Pomferets 34 Crabs9 Eels 22 Hair tall 35 Ivory shel

10 Barracuda 23 Sharks 36 Lobster

11 Marline 24 Rays 37 Cuttle fish

12 Mullets 25 Guitar fish 38 Jelly fish

13 Thread fin fish 26 Shrimp

Source: Di rectorate F isheri es dept of Balochistan


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Fish is a major component of the sea food that provides a source of vitamin-rich diet.Fish is very perishable food commodity that requires proper handling and preservation toincrease its shelf life and retain its quality and nutritional attributes.

The principal components of the fish muscle - water, fat and protein - must be preservedwith little or no changes. Fish and fishery products represent a very valuable source ofprotein and essential micronutrients for balanced nutrition and good health. In 2009, fishaccounted for 16.6 percent of the world populations intake of animal protein and 6.5

percent of all protein consumed. Globally, fish provides about 3.0 billion people withalmost 20 percent of their intake of animal protein, and 4.3 billion people with about 15percent of such protein. Differences among developed and developing countries areapparent in the contribution of fish to animal protein intake. Whereas the fat contentvaries widely from species to species and from season to season. It can be as low at 0.5percent in lean starved fatty fish and can reach over 20 percent in some species. In leanfish the bulk of the fat is stored in the liver and not in the muscle. Water is the mainconstituent, with considerable variations, typically 80 percent in lean fish and 70 percentin fatty fish. Carbohydrates, minerals, vitamins and some water extractable componentsare examples of other minor substances present2.

33..33 OOppppoorrttuunniittyy RRaattiioonnaalleeSea food is an excellent source of white meat with low-fat, high protein, vitamins andminerals. It is used from traditional to modern variety of dishes all over the world. Cannedfisheries & products are also on the increasing trend and fetching good revenues. Fish arerecommended medically healthy and full of nutrient enriched diet; it is also helpful inimmunity development, disease resistant, and cholesterol control.

Fisheries are the third larges sector in Balochistan, followed by Minerals and Agriculture,due to the vast coastal belt with Arabian Sea. It provides a significant supply of the seafood to the country with a potential to play an important role in international sea-foodmarket especially in China, Japan, US, and EU countries etc. The global demand offishery products is increasing and new markets are emerging; several new fisheryproducts from Pakistan are receiving good response in abroad. Additionally, lifting ofexport Ban of EU Markets for Pakistani products also open a good opportunity forexploring the potential of said sector.

Establishment of Sea Food Processing Plant on modernize standards will not only help inthe economic uplift of the area but will also help in exploring the food markets at both

National and International level. Furthermore development of fishery can also play animportant role in provision of employment and growth opportunities to many small andmiddle sized communities along the coastlines.

2 The State of World Fisheries and Aquaculture-FAO 2012


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33..44 MMaarrkkeett EEnnttrryy TTiimmiinnggFish processing operations continues through out the year however it is recommendedthat plant should be ready for operation during the months of July to March so that it canavail full fish catch of the sea. As the peak fishing season starts from the months ofSeptember.

33..55 PPrrooppoosseedd BBuussiinneessss LLeeggaall SSttaattuussThe business can be started as sole proprietorship or partnership. Comparatively fewercomplications are involved in forming, administering and running the sole proprietorshipor partnership businesses.

33..66 PPrrooppoosseedd PPrroodduucctt MMiixxThe sea food processing plant is designed to house and process the fish catch for exportmarket. In order to facilitate the fish suppliers on regional and national level, the plant

also has the capacity to provide processing facility on rental basis.

Major operations of this processing plant will be grading, washing, cutting, blast freezingand packaging of fish catch from Balochistan and Sindh coastal areas. The final productwill be supplied through a cool chain to national and international markets.

Rental value of the plant is one of the main contributing factors to the revenue. The plantcan offer its production and processing services to the local fishermen and investors onrental basis. The plant can charge production charges on per kilogram of the finalproduct.

Project will also be facilitated through an internet website. The website of the companywill facilitate the national and international buyers in selecting the fisheries product oftheir choice and will enable them to streamline the supply of consistent product to the endusers/exporters in a given time frame.

33..77 PPrroojjeecctt CCaappaacciittyyThe plant will store the fish catch and process the same in the same cycle. The plant willbe able to handle approximately 60 tones of fish catch of varying varieties in 24 hours. Itwill have a wider cold storage facility. Cold store of the project will be 10 times the sizeof the processing plant i-e it should have the capacity to store the product order of 10days as such the cold storage of the plant will be of 600 tons capacity.

33..88 PPrroojjeecctt IInnvveessttmmeennttThe total project investment is Rs. 120,521,267 which includes capital cost of Rs.91,416,722 and working capital of Rs. 29,104,545. It is assumed that the project would bepartially equity financed (50%) and partially debt financed (50%).


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33..99 RReeccoommmmeennddeedd PPrroojjeecctt PPaarraammeetteerrssTable 2: Project Parameters

CapacityHuman

ResourceTechnology/Machinery Locations

60,000 tons/year 15 Imported / Local MadeGwadar, Pasni , Ormara,Jiwani, Damb, Karachi,Korangi,Gharo.

Financial SummaryProject Cost IRR Pay Back Period NPV

Rs. 88 m 41% 4.1 Years Rs 100 m

33..1100 RReeccoommmmeennddeedd LLooccaattiioonnssThe proposed location for the establishment of such a facility could be the areas with inthe proximity of Balochistan and Sindh coastal belt. If the project is closer to a fishharbor it will have an added advantage of being nearer to the raw material supply. Theharbors and main landing points with their provincial location and relative importance areas follows:


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Table 3: Harbors in Pakistan

NAME PROVINCE Relative Importance

Karachi Sindh **** H

2 Korangi Sindh **

3 Ibrahim Haidery Sindh *

4 Shams peer Sindh *5 Hawks Bay Coast Sindh *

6 Lath Basti Sindh *

7 Manjhar Sindh *

8 Sonari Sindh *

9 Mubarrak Village Sindh *

10 Kaitee Bandar Sindh **

11 Shah Bandar Sindh **

12 Kharo Chaan Sindh **

13 Jatthi Sindh **

14 Jhungi Sur Sindh **

15 Badeen Sindh **16 Gwadar Balochistan *** H

17 Pasni Balochistan *** H

18 Ormara Balochistan ***

19 Gaddani Balochistan **

20 Bunda Wari Balochistan *

21 Beroo Balochistan *

22 Sonmiani Daam Balochistan **

23 Surbandar Balochistan *

24 Pishukan Balochistan *

Legends: * meets local users requirements** Important*** Very important**** Most important

H = Fishing Harbor

There are four fish harbors which are under different administrative control. However,recommendation can also be made on the basis of availability of the nearest sea port.

Gwadar Port :

With the operation of Gwadar port. The locations associated with Gwadar port arerecommended for establishing sea food processing plant. These areas are Pasni,Ormara and Surbendar.

Karachi Port and Port Qasim:

The locations associated with Port Qasim and Karachi Port is recommended forestablishing sea food processing plant in Sindh. The areas are Korangi FishHarbour (Ibrahim Haydery) and Gaddani. The investor should determine before


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hand that the port is heavily congested and the cost to establish plant will be veryhigh because of already established market. Another factor is that of a goodlocation to build the processing plant.

33..1111 KKeeyy SSuucccceessss FFaaccttoorrss

Availability of vast range and variety of fish and marine food in Arabian Seawaters along the Pakistan coast.

Proposed areas for the processing plant have quite considerable number ofskilled fishermen and boat owners.

Significant number of suppliers exists for the production.

Large and established world markets

Growing trend in sea food consumption nationally and internationally.

Rehabilitation in Afghanistan.

5-Stars hotels and restaurant chains are in continuous need of quality seafood supply.

Improved technological changes available.

Ample opportunity for exports. International recognition of the plant will boost the export orders.

33..1122 SSttrraatteeggiicc RReeccoommmmeennddaattiioonnss The location plays an important role, as the facility should easily be

accessible to the nearest port and towns.

Effective supply and cool chain will increase the market accessibility.

International quality certifications i-e HACCP, ISO can increase the productcredibility internationally.

Emphasizing on excellent quality standards and producing quality assured

products and timely order fulfillment. New machinery should be purchased in order to increase the efficiency and

lower the maintenance cost.

Adapt to the rapid, social, economic and technological changes.

Well-trained/experienced staff adding in the efficiency of the facility.


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44 MMAARRKKEETT44..11 TTaarrggeett CCuussttoommeerrss

The target customers for a Sea food processing Plant mainly include:

International Export Markets of European Union, USA and Japan.

The processing plant can also exploit the growing consumer market ofAfghanistan.

Sea food supply market of Pakistan.

44..22 WWoorrlldd FFiisshheerriieess TTrraaddee aanndd PPrroodduuccttiioonn::Inline with data provided in FAO publication3, the world total capture is 154.0 milliontons inclusive of 90.4 mt of capture and 63.6 mt of aquaculture for year 2011 as compareto its human consumption of 130.8 mt.

The world Capture fisheries and aquaculture supplied the world with about 148 million

tonnes of fish in 2010 (with a total value of US$217.5 billion), of which about 128million tonnes was utilized as food for people, and data for 2011 indicated increasedproduction of 154 million tonnes, of which 131 million tonnes was destined as food. Withsustained growth in fish production and improved distribution channels, world fish foodsupply has grown dramatically in the last five decades, with an average growth rate of 3.2percent per year in the period 19612009, outpacing the increase of 1.7 percent per yearin the worlds population.

Of the 126 million tonnes available for human consumption in 2009, fish consumptionwas lowest in Africa (9.1 million tonnes, with 9.1 kg per capita), while Asia accountedfor two-thirds of total consumption, with 85.4 million tonnes (20.7 kg per capita), of

which 42.8 million tonnes was consumed outside China (15.4 kg per capita). Thecorresponding per capita fish consumption figures for Oceania, North America, Europe,and Latin America and the Caribbean were 24.6 kg, 24.1 kg, 22.0 kg and 9.9 kg,respectively. Although annual per capita consumption of fishery products has grownsteadily in developing regions (from 5.2 kg in 1961 to 17.0 kg in 2009) and in low-income food-deficit countries (LIFDCs, from 4.9 kg in 1961 to 10.1 kg in 2009), it is stillconsiderably lower than in more developed regions, although the gap is narrowing. Asizeable share of fish consumed in developed countries consists of imports, and, owing tosteady demand and declining domestic fishery production, their dependence on imports,in particular from developing countries, is projected to grow in coming years.

3 The State of World Fisheries and Aquaculture-FAO 2012


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Table 4: World Fisheries Production & Consumption

Description 2006 2007 2008 2009 2010 2011

Production (Million Tonnes)

CaptureInland 9.8 10.0 10.2 10.4 11.2 11.5

Marine 80.2 80.4 79.5 72.2 77.4 78.9

Total Capture 90.0 90.3 89.7 89.6 88.6 90.4

Aquaculture

Inland 31.3 33.4 36.0 38.1 41.7 44.3

Marine 16.0 16.6 16.9 17.6 18.1 19.3

Total Aquaculture 47.3 49.9 52.9 55.7 59.9 63.6

Total World Production 137.3 140.2 142.6 145.3 148.5 154.0

Utilization

Human Consumption (Million Tonnes) 114.3 117.3 119.7 123.6 128.3 130.8

Non-food Uses (Million Tonnes) 23.0 23.0 22.9 21.8 20.2 23.2Population (billion) 6.6 6.7 6.7 6.8 6.9 7.0

Per Capita Food Fish Supply (kg) 17.4 17.6 17.8 18.1 18.6 18.8

44..22..11 MMaajjoorrPPllaayyeerrssAs per USDA, the table below describes all major producers, importers, exporters for theyear 2011-12 and 2012-13. Peru and Chile stands as the major producer and exporter ofMeal fish Whereas, China and EU stands as the major importers in the world. The detailsare depicted in table as follows:

Table 5: Major PlayersProducers 2011-

12

2012-

13

Importers 2011-

12

2012-

13

Exporters 2011-

12

2012-

13

Peru 1,400 1,400 China 1,249 1,220 Peru 1,375 1,400

Chile 523 520 EuropeanUnion

466 450 Chile 335 340

Thailand 455 465 Japan 255 260 EuropeanUnion

195 185

EuropeanUnion

400 420 Norway 250 245 UnitedStates

142 135

United States 330 330 Taiwan 183 180 Iceland 126 125

Japan 305 305 Indonesia 102 102 Mexico 107 100China 220 220 Chile 62 62 Ecuador 88 90

Iceland 130 150 Turkey 61 55 Thailand 55 65

Russia 135 140 Russia 49 52 South Africa 61 55

Norway 130 130 Canada 50 52 Russia 42 50

Other 611 617 Other 184 185 Other 141 141

Source: United States dept of Agri cultur e


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44..33 PPaakkiissttaann MMaarrkkeettPakistan has a total coastline of 1,090 km. Pakistans fishing waters are termed as highlyrich in marine life with a vast variety of species having commercial value. However, thispotential is not reflected in the export earning from fisheries sector.

Fishery plays an important role in Pakistans economy and is considered to be a source oflivelihood for the coastal inhabitants. A part from marine fisheries, inland fisheries (basedin rivers, lakes, ponds, dams etc.) is also very important activity throughout the country.Fisheries share in the GDP although very little but it adds substantially to the nationalincome through export earnings. During (July-March), 2012-13 a total of 103,822 mt offish and fishery products were exported earning US $232.4 million against a total of90,087 mt of fish and fishery products were exported earning US $222.6 millioncorresponding period last year showing an increase of 15.3 percent and 4.4 percentrespectively4.

44..33..11 TTaarrggeettMMaarrkkeettss ooffPPaakkiissttaann FFiisshheerriieess::European Union countries, Japan and U.S.A are some of the big export market for seafood. Pakistan fisheries exports ultimate aim will be to capture a bigger percentage in

EU and US markets. However, the quality standard and restrictions for these markets arevery stiff. In order to meet EU and US quality standards, processing plants and supplychain management of Pakistan sea food products should be up to these standards.

44..33..22 LLooccaallSSeeaa FFooooddMMaarrkkeettPakistans domestic consumption is termed as one of the lowest in the world, at 1.6 kg

per person per year (compared to world average of 16.2 kg per person per year). Thisfigure indicates a huge potential for sea food sector in Pakistan. Quantity of processed seafood consumption in Pakistan is negligible. Frozen sea food supply to local markets ofPakistan cannot only increase consumption trends but also have the potential to bringnew business ventures in the supply chain.

Karachi, Lahore, Islamabad, Quetta and Peshawar are some of the markets which show apotential for sea food supply. At present, only the Karachi markets have availability offresh sea food in terms of variety and quality because of existing supply chain andproduction. Lahore, Quetta, Peshawar and Islamabad can be target market if a cool chainsystem is attained.

5-Star Hotels and restaurant chain owners in the said cities are also a potential market forlocal sea food supply. The supply can be increased through an effective cool chain andconsistent production of variety of sea food product.

4 Economic Survey of Pakistan 2012-13


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44..33..33 SSuuppppllyy CChhaaiinn ooffFFiisshheerriieess iinn PPaakkiissttaann::Focusing on Sea Fishing Supply Chain, Pakistan Sea Food distribution is similar to othercountries or Sea Ports in which following stakeholders are involved:

Sea Food Supply Chain can be categorized into three different types:

1. Sea Food distribution to different areas of Balochistan and Sindh from Harbor.2. Sea Food processing in Gwadar and Karachi for Export Market.3. Sea Food exports from Gwadar and Karachi port.

Role of StakeholderFollowing are the stakeholders in the seafood supply:

Fishermen

Middlemen

Local Mandi/ Market

Processing Plant owners Transporters

Middlemen Karachi

Exporters

Retail Shop keepers

End User

44..33..44 RReeggiioonnaallDDiissttrriibbuuttiioonnMore then 30,000 people are associated directly with fisheries sector employing about6200 fishing boats. All boats are wooden with inboard mechanized engines. Gwadardistrict annual production of fishery is more than 107,568 metric tons. The province wisedistribution of fisheries is described in the table as follows:

Table 6: Provincial Fish Production:

Description

2009

(000) Tonnes

2010

(000) Tonnes

2011

(000) Tonnes

Inland Marine Inland Marine Inland Marine

Punjab* 85.5 0.0 86.2 0.0 85.4 0.0

Sindh 125.0 340.0 128.0 342.0 131.0 343.0

KPK** 4.0 0.0 5.0 0.0 6.0 0.0

Balochistan 0.0 140.0 0.0 143.0 0.0 145.0Pakistan 214.5 480.0 219.2 485.0 225.4 487.0

*Includes Mangla Dam

**Includes Gilgit Baltistan

Source: Agr icul tur e Statistics of Pakistan 2010-11


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44..33..55 FFiisshh EExxppoorrttss ooffPPaakkiissttaannIn accordance with Trade Development Authority of Pakistan, the total exports of fishand fish preparation stood at $0.32 billions for the year 2011-12, with a value change of8.04% as compared to 2010-11.

Table 7: Fish Exports of Pakistan

44..33..66 PPrroobblleemmss ffaacceeddbbyy tthhee sseeccttoorr Lack of Processing Plants and technology:

There are quite few processing plants in the Balochistan and Sindh coastal belt. The

existing processing plants also face problems of attaining quality production certificatesand technological up gradation. Most of the processing units in the country are equippedwith local versions of the processing machinery with little or no calibration, highelectricity consumption and low quality production. These plants are most of the timesincapable to process large fish catch and cannot facilitate large orders placed by theimporting firms. This situation was mainly attributed to unorganized nature of privatesector, lack of focus in Government policies and little institutional investment (in publicand private sector projects) in this sector.

I ncapabil ity of meeting cool chain system:As there is no proper cool chain established, therefore, there exists a parallel distribution

system for the fresh fish reaching the processing plants. As an industry practice, theprocessing units acquire fish catch supplies either, directly from the boat owners in smalllots, or from the auction hall. This results in spoilage and degradation of fresh fish: a lossin value chain activities. As a result, the final product fails to attain its target price.

I nternational Certi fi cations:As part of the food product, export of sea food to international market is subject to therules and international certifications. Most of the sea food processors in Pakistan eitherdo not have the knowledge to get international certification or do not comply meeting thecertification requirements. Therefore the final export product is sold at lower than themarket rate.

Extensive Costs related to Value ChainValue Chain processes if delayed can add costs in the final price of the product. ValueChain Analysis (VCA) shows that many identified improvements are too minor to reversethe fortunes of the industry, in the face of high overhead costs and declining fishstocks. In this way, the value chain losses amount from fish-catch to the final product tobe sold in markets.

DescriptionJuly-June Change July-June

2011-12 2010-11 VALUE % 2011-12 2010-11

Fish & Fish Preparation 320,008 296,182 23,826 8.04 1.35 1.19

Source: TDAP


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Lack of Train ing and Development for F isheri es Sector:Fishing practices and processing is an interdependent process. The processing plantcannot convert a fish catch of low quality into acceptable quality grade. The processingindustry suffers as a whole due to lack of training and development for the fisheries

sector. Product hygiene training for fishermen is a must for good quality processing. Lackof skilled work force for sea food processing plant is also another issue that poseproblems for the processing industry.

Organi zational Chall enges due to Structur eSPS (Sanitary and Phytosanitary) related authorities are divided across severalgovernment agencies, including the Ministry of Agriculture, the Ministry ofLivestock and Dairy Development at the Federal level and provincial fisheriesdepartments of Sindh and Balochistan at provincial level. Other agencies are involvedwith trade related aspects of SPS issues as well. In order to manage the complexities ofaddressing import requirements of trading partners, the present organizational structure of

the government, particularly within and in between various ministries need to beevaluated and may be back mergence of the two federal ministries of MINFA (Ministryof Food and Agriculture) and MoLDD (Ministry of Livestock and Dairy Development,would help to improve efficiency in expanding market access opportunities. Likewise theefficiency of Fisheries departments in Sindh and Balochistan can be bifurcated intotwo ministries each with a clear mandate fore focused approach in fisheriesdevelopment.

I nstituti onal CapacityPakistan needs more assistance to strengthen Sanitary and Phytosanitary (SPS)regulatory systems, in particular to provide or strengthen the institutional capacity tosupport exports. These needs include quarantine, eradication, surveillance, diagnostics(including laboratory infrastructure and training), and risk analysis. Another particulararea of concern is the national ability to stay up to date with the importrequirements of importing countries. These capacities are needed to help reduce thethreat of pest and disease establishment in the country and to provide thegovernment with the capacity to manage pests and diseases to address requirementsof importing countries, and to enable competent authorities /other authorities toengage with their counterparts in negotiations over market access issues.

44..44 BBaalloocchhiissttaannA glimpse over the fish industry of Balochistan is detailed by the table 8 as under:


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Table 8: Glimpse Over Balochistan Fisheries

Local consumption and exportable surplus of fish for the year of 2011

Year Total

Production

Total Consumption Exportable

Surplus

Quantity

% Ave of

total

productionQuantity % Aveof Ton

2011 135115.638 10645.141 7.87 124470.494 92.12

Number of fishing craft of Balochistan coast for the year of 2011

Year Mechnized

Boats

with inboard

Engine

Motorrized Boats

with outboard

Engine

Life Boats

with inboard

Engine

Total

2011 1831 5144 211 7186

Fishermen Population of Balochistan coast for the Year 2011

Year Full timeFishermen

Part timeFishermen

OccasionalFishermen

Total

2011 33255 13144 6413 52812


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55 RREEGGUULLAATTOORRYYPPRROOCCEEDDUURREESS55..11 IInntteerrnnaattiioonnaall QQuuaalliittyy CCeerrttiiffiiccaattiioonn,, HHAACCCCPP::

Export to international market is dependent on the Quality and safety assurancecertifications. These certifications legitimize the export process of the processing plant.

The certifications will help in getting market share to the EU, US and Japanese sea foodmarket. These certifications are issued after thorough inspection of the processesinvolved in the sea food processing plant. These will help in assuring product hygiene i-ethe final product is free from all Becterias and viruses.

HACCP certification is the most important certificate for the sea food processing plant. Inorder to get a share in EU, US and Japanese markets following are some of the importantquality certifications that help in attaining a product share in the said markets.

55..11..11 HHAACCCCPPCCeerrttiiffiiccaattiioonnThe HACCP system was introduced in the United States in 1971 by the PillsburyCompany in collaboration with the National Aeronautics and Space Administration(NASA) and the US Army Natick Research and Development Laboratories. Theseagencies had the initial responsibility for designing and manufacturing food products andhardware which were to provide 100 percent assurance that either the food productswould not be contaminated with pathogens, bacteria or viruses which could cause illnessor that the equipment would function with zero defects. The HACCP system has becomethe internationally recognized system for the management of food safety for allcompanies involved in the production, transformation, storage and distribution of foodfor human consumption. It has been adopted by the European Union (EU) for all foodprocessors and the Codex Alimentarius Commission as the principal food safety system(EU Directive 93/43/EEC; Codex AlimentariusAlinorm 93/131, 1993)

The HACCP process involves the identification of specific hazards throughout the entireprocess involved in the production of a food product and focuses on the preventativemeasures for their control to assure the quality and safety of the food. This includesanalysis of raw material sources and usage, processing equipment, operating practices,packaging and storage, together with marketing and conditions for intended use. There isless reliance on the traditional system of end product testing and food safety is built intothe product from conception through design and distribution.HACCP shifts the responsibility to the food producer to ensure that the product is safelyconsumable.The following is a list that is included (at a minimum) in the hazard analysis:

Ingredients and raw materials: source, composition, handling, transportation, andstorage

Activities conducted in the process and handling system: steps identified on theflow diagram

Equipment used in manufacture and processing: specific parameters important tocontrolling, reducing, or preventing hazards


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Equipment and facility sanitation Food product distribution: transportation, delivery, wholesale/retail practices, and

intended use

Documentation of the hazard analysis includes a written summary providing relevant

scientific references. In addition, the information should be summarized in a narrativestatement and listed on appropriate forms.

Annexure I of the report gives the addresses of the HACCP certification issuing authorityand associated certifications for HACCP qualification.

55..11..22 FFDDAA CCeerrttiiffiiccaattiioonn::The U.S. national regulatory authority for public protection and seafood regulation isvested in the Food and Drug Administration (FDA). The FDA operates an oversightcompliance program for fishery products under which responsibility for the product'ssafety, wholesomeness, identity and economic integrity rests with the processor orimporter, who must comply with regulations promulgated under the Federal Food, Drugand Cosmetic (FD&C) Act, as amended, and the Fair Packaging and Labeling Act(FPLA).

55..22 SSeeaa FFoooodd PPrroodduucctt lliinneess::Sea food product lines mainly include frozen fish and shrimp products. Shrimps arecategorized as headless and head-on according to the market demand. Frozen shrimps aremostly packed into paper boxes and weight ranges from 2- 4 kg packs.

Frozen fish is packaged according to the international requirements. Mainly the fishproduct is packed into 10kg cotton boxes with names and company brand on it, whereas

for national supply fish is packed into bags of weight ranging from 2 kg to 10 kg packs.

55..22..11 QQuuaalliittyy aannddPPrroodduuccttlliinnee::Sea food is a delicate and perishable food item. The quality of the product is defined byits

Appearance.

Freshness.

Packaging.

55..22..22 PPrroodduuccttGGrraaddeeTable: 5.5.2.1 Market Segmentation According to Grade and Quality Preference

Grade Description Target Market

AA The products in this grade signify thebest sea food in terms of its Size,quality, packaging and freshness.The species in this Grade are marked to

AA grade products are marketed and geteasy accessibility to EU, USA, Japanesemarkets with good price.


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get highest product price.

A The products in this grade are termed asthe best in terms of quality andfreshness.The species in this Grade are marked to

get an acceptable export product price.

A grade products are exported to the saidmarkets with comparatively lower pricesthose AA products. However goodpackaging and timely order delivery can

increase the final price.B The buyer of the product makes some

compromise on the quality. The fishcatch with a change in color or lackingsome freshness comes in grade.The final price of this product iscomparatively low; therefore the plantowner makes effort to save the catchfrom turning into B Grade.

Export market will be focused for the Bgrade products however rates competitiveto the exports market also exists locally forthe B grade products.

H Improper handling of the fish catch atsea or mismanagement in keeping thecool chain makes the fish turning into Hgrade. This grade has less chances ofgetting accessibility for the export.Whereas local fish markets of Pakistanis supplied mostly with H grade fish.Most of the H grade is also converted tothe fish meal that is treated as awastage.

An effective cool chain after the processingcan make an H grade product highlyacceptable to the local market. Local retailmarkets will be the target market for the Hgrade.

(Source: Industry analysis and experts opinion)


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66 TTEECCHHNNIICCAALLAANNAALLYYSSIISS66..11 FFiisshh SSppooiillaaggee::

As soon as a fish dies, spoilage begins. Spoilage of fresh fish is a complex process and iscaused by a number of inter-related systems, some of which are suppressed by others.

The factors which principally contribute to the spoilage are the degradation of proteinwith a subsequent formation of various products like hypoxanthine, trim ethylamine,development of oxidative rancidity and the action of micro-organisms.

The first obvious way to avoid spoilage and loss of quality is to keep caught fish aliveuntil cooking and consumption. Fish begins to spoil immediately after death. This isreflected in gradual developments of undesirable flavors, softening of the flesh andeventually substantial losses of fluid containing protein and fat. By lowering thetemperature of the dead fish, spoilage can be retarded and, if the temperature is kept lowenough, spoilage can be almost stopped.

66..11..11

FFoouurrPPhhaasseess iinn FFiisshh SSppooiillaaggee::The four phases of fish spoilage are as follows,

Phase I(Autolytic changes,caused mainly byenzymes)

Fish just caught is very fresh and has a sweet, seaweedy and

delicate taste. There is very little deterioration, with slight

loss of the characteristic odour and flavour. In some

tropical species this period can last for about 1 to 2 days or

more after catching.

Phase II(Autolytic changes,caused mainly by

enzymes)

There is a significant loss of the natural flavour and odour offish. The flesh becomes neutral but has no off-flavours, thetexture is still pleasant.

Phase III(Bacteriologicalchanges, causedmainly by bacteria)

The fish begins to show signs of spoilage. There are strong off-flavours and stale to unpleasant smells. Texture changes aresignificant, flesh becoming either soft and watery or tough anddry.

Phase IV(Bacteriologicalchanges, causedmainly by bacteria)

Fish is spoiled and putrid, becoming inedible.

66..22 CChhiilllliinngg PPrroocceessssChilling is the process of cooling fish or fish products to a temperature approaching thatof melting ice.

The purpose of chilling is to prolong the shelf-life of fish, which it does by slowing theaction of enzymes and bacteria, and the chemical and physical processes that can affect


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quality. Reducing the temperature at which the fish is kept lowers the rate ofdeterioration. During chilling the temperature is reduced to that of melting ice, 0 C/32 .

All species of fish, when properly chilled, will stay fresh for longer periods than thosethat are not preserved in any way. The use of chilling techniques such as ice, therefore,

effectively prolongs the length of time of the catch. Products brought to market in a well-preserved condition will generally command higher prices, both at wholesale and retaillevels, and thus give better returns to the fishing operation.

Most effective method employed for chilling process is a combination of ice and water.Ice is widely used for the purpose. For the purpose of fish handling, flake icerecommended for chilling process as the physical shape of the flake ice favors fish.

66..33 FFrreeeezziinngg::Freezing and frozen storage of fish can give a storage life of more than one year. It hasenabled fish processing plants to keep the product for long periods. Freezing allowed thestockpiling of fish during periods of low demand and high catching rates, as well aswidened the market for fish products of high quality.

66..33..11 TTyyppeess ooffFFrreeeezzeerrssThe three basic methods of freezing fish are:

Blowing a continuous stream of cold air over the fish - air blast freezers.

Direct contact between the fish and a refrigerated surface - contact or platefreezers.

Immersion in or spraying with a refrigerated liquid - immersion or spray freezers

66..33..11..11 BBllaasstt FFrreeeezzeerrssThis is the most efficient and effective method of freezing. The method recommended inthis pre feasibility is Blast freezers. In this method, the use of air to transfer heat from theproduct being frozen to the refrigeration system is probably the most common methodused in commercial refrigeration. The natural convection of the air alone would not givea good heat transfer rate, therefore, forced convection by means of fans has to beintroduced. To enable the product to be frozen in a reasonable time the air flow rateshould be fairly high.

Batch air blast freezers. Batch air blast freezers use pallets, trolleys or shelfarrangements for loading the product. The freezer is fully loaded, and when freezing iscomplete, the freezer is emptied and reloaded for a further batch freeze. Apart from thisdifference in mode of operation, the batch freezer gives rise to bigger fluctuations in therefrigeration load than continuous or batch-continuous freezers.

Because of compatibility and efficiency in the present industry structure, freezingtechnology recommended for the proposed project will be batch air blast Freezers.


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66..33..11..22 PPllaattee FFrreeeezzeerrss::Plate freezers and air blast freezers are the types of freezer most commonly used for

freezing fish in industrial countries. Plate freezers do not have the versatility of air blastfreezers and can only be used to freeze regularly shaped blocks and packages.

Plate freezers can be arranged with the plates horizontal to form a series of shelves and,as the arrangement suggests, they are called horizontal plate freezers (HPF). When theplates are arranged in a vertical plane they form a series of bins and in this form they arecalled vertical plate freezers (VPF).

66..33..11..33 SSpprraayyiinngg wwiitthh aa rreeffrriiggeerraatteedd lliiqquuiidd (( LLiiqquuiidd NNiirrttooggeenn // ccaarrbboonnddiiooxxiiddee))::In this freezer, the product is brought into direct contact with the refrigerant.

The fish on the stainless steel conveyor belt initially come into contact with the countercurrent flow of nitrogen gas at a temperature of about -50C. Alternatively liquidcarbondioxide can also be sparyed on the fish as refrigerant at a temperature of about -50C. As the fish progress through the precooling stage of the freezer, the gaseous nitrogenpartially freezes the fish and up to 50 percent of the product heat is extracted. Theproduct then passes below the liquid spray where freezing is completed by the boilingliquid. The last stage in the freezer provides a few minutes for the fish temperature toreach equilibrium before the fish are discharged.


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This method is considered the most advance and expensive practice in freezingtechnology. This method is employed in those countries which have regular supply ofliquid nitrogen or liquid carbon dioxide

66..44 PPaacckkaaggiinngg ooffFFrroozzeenn FFiisshh::After fish has been frozen, it can be subjected to many forms of deterioration betweenproduction and eventual consumption. Contamination from humans, animals, insect andatmospheric sources are possible. To prevent or reduce losses in product quality, it isessential that the frozen product is packaged in such a way as to provide an effectivebarrier with sufficient impact and compression strength to prevent damage. Thepackaging material must have adequate barrier properties to reduce losses due todehydration and pick-up of taints.The range of packaging material for frozen fish is verywide and is dependant on the form of the product being packed.

For the export market in fisheries sector, primarily plastics and Cartons are employed forpackaging frozen fish products. However for local supply across Pakistan, the fishproduct can be packages in Bags as well. A brief of the packaging material is as follows,

66..44..11..11 PPllaassttiiccss::The primary package in contact with the frozen product is generally a plastic derivedfrom a natural hydrocarbon source. The choice of which plastic wrapper is dependant onthe type of barrier required, and if the product is to be cooked or heated in the container

66..44..11..22 CCaarrttoonnss::Cartons are also regarded as primary packages when used as a protective sleeve to theproduct. The boards for the cartons can be made of :

Kraft boards. These are frequently used for packaging frozen foods and areusually made from fully bleached materials. They are strong, of good appearanceand are suitable for direct contact with food.

Folding box boards. These usually have one fully bleached side which is suitablefor direct contact with food.

66..44..11..33 BBaaggss::Due to its availability and cost effectiveness, frozen fish and shrimps can be packeddirectly into bags made from materials with good gas vapor and moisture barrierproperties. The level of sophistication can range from manual weighing and loading to ahighly sophisticated form-fill-seal technology where a specified weight, volume or countof product is filled into a formed bag which is heat sealed. Such equipment can be usedfor packing peeled shrimp and fish fingered.


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Fish Catch

from

Auction Hall

/Boats

Receiving

and

Weighing in

Plant

Icing /washing

and

Segregating

into AA,A,B

Packaged

Product Lots

into Cold Store

Processing

Hall.

Grading and

Packaging

Processing Hall

Re-Packaging

and GradingTransportation

66..55 PPrroocceessss FFllooww CChhaarrttThe process flow chart for the Sea Food Processing Plant is given below

66..66 RRaaww MMaatteerriiaall // MMaarriinnee FFiisshh CCaattcchh::Fresh fish of the sea can be termed as the raw material for the processing plant. The seafood processing starts from the fishing boats. Fresh fish catch from small boats operatingon daily basis along the sea are one of the major suppliers of the fresh fish for processingplants. Whereas deep water fishing vessels and trawlers also supply considerable amountof fresh fish for the processing plant.

B

L

A

S

T

FR

E

E

Z

I

N

G


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77 PPRROOJJEECCTTIINNPPUUTTSSFollowing are the basic machinery requirements for Sea food processing plant.

77..11 MMaacchhiinneerryy aanndd EEqquuiippmmeennttMachinery / Description /

Specifications

Quantity Unit

Price/Rupees

Total

Flake Ice Machine Capacity (25 T / 24Hours)Storage Bin , Capacity ( 12 Tons)

22

6,800,000525,000

13,600,000.001,050,000.00

Blast Freezers , Capacity (2T / 8 Hours) -30 C

Bitzer 2 Stage Condensing Units.

2 Low Temperature Cooling Coils withControl Panels

4 1,800,000 7,200,000.00

Cold Store , Capacity ( 250 T , 50x 50x

15) -30 CUnit Capacity 4 x 2 Stage CondensingUnit.

4 Cooling Coils with Control Panels.

4 2,240,000 8,960,000.00

Individual Quick Freezing Machine (IQFPlant), Per Hours Capacity, 500kgShrimp/Fish @ -35 C

1 14,000,000 14,000,000.00

Central Air conditioning System

Processing Hall

1 800,000 800,000

Tables and Racks 8,000,000

Tube Well, Transformer & water pump

etc.

1 1,800,000

Generator 1 1,400,000 1,400,000

Machinery Installation Cost 2,500,000

Total Cost55,510,000

77..22 MMaaiinntteennaannccee CCoossttssMachine maintenance would be an on going process and is calculated to be Rs 50 per tonprocessed. Since the machine is locally manufactured therefore availability of spare partsis not an issue.


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77..33 VVeehhiicclleeDetail Quantity Unit Price Total

Truck 2 4,000,000 8,000,000

Refer container 2 1,500,000 3,000,000

Hyundai Shehzore 1 965,000 965,000

Office vehicles cost 11,965,000

Registration fee 1% 119,650

Total Office Vehicles cost 12,084,650

77..44 OOtthheerr OOffffiiccee RReeqquuiirreemmeennttssOffice furniture cost Rs. 1,216,500 and Office Equipment costs Rs. 800,000 and would include acomputer, a fax, a telephone, and the intercom system.

77..55 HHuummaann RReessoouurrccee RReeqquuiirreemmeennttThe manpower required for operating the Warehouse is as follows:

Description No. Salary Total Monthly Salary

Manager 1 40,000 40,000

Accountant 1 20,000 20,000

Office Assitant 1 12,000 12,000

Store Keeper 1 15,000 15,000

Generator Operator /Oiler 2 10,000 20,000

Compressor Operator 2 10,000 20,000

Helper 5 8,000 16,000

Drivers 3 8,000 24,000

Watchman 2 10,000 20,000

Production Hall Supervisor 2 12,000 24,000

Packaging / Loading Foreman 3 12,000 36,000

Cold Store In charge 2 12,000 24,000

Janitors 2

77..66 LLaanndd aanndd BBuuiillddiinngg RReeqquuiirreemmeennttDetail Area in Sq.Ft. Rate/Sq.ft. Total Cost

Land

Management building 1,000 800 800,000

Factory 8,000 800 6,400,000

Godown 2,000 800 1,600,000


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Labour Quarters 900 800 720,000

Boundry Wall 300 350 105,000

Water Tank - - 120,000

Cold Store 4,000 1,200 4,800,000

Cafeteria 600 800 480,000

Pavement/driveway 2,500 350 875,000Grounds 3,800 150 570,000

Total 16,470,000

77..77 UUttiilliittiieess RReeqquuiirreemmeennttThe machinery setup will require electricity and ample water supply. A transformer and atube well with a water pump and water tank is already mentioned in the capital costdetails.

77..88 RReeccoommmmeennddeedd MMooddeeIt is recommended to acquire/buy the total land required as most of the machineryrequired needs fixed installation and cannot be moved easily once installed.


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88 PPRROOJJEECCTTEECCOONNOOMMIICCSS88..11 PPrroojjeecctt CCoosstt

Capital Investment

Land 2,460,000

Building/Infrastructure 16,470,000

Machinery & equipment 800,000

Furniture & fixtures 1,216,500

Office vehicles 12,084,650

Office equipment 57,310,000

Pre-operating costs 1,083,519

Total Capital Costs 91,424,669

Working Capital

Equipment spare part inventory 79,063

Raw material inventory 26,881,250

Upfront insurance payment 644,233

Cash 1,500,000

Total Working Capital 29,104,545

88..22 PPrroojjeecctt RReettuurrnnssEquity Project

IRR 46% 38%

Payback Period (yrs) 4.37 4.19

Total Project Investment 120,529,214

88..33 PPrroojjeecctt FFiinnaanncciinnggInitial Financing Rs.

Debt 60,260,633

Equity 60,260,633


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Pre-feasibility Study Sea Food Processing Plant


28


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29


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Pre-feasibility Study Marble &Granite Warehouse

BAL-PREF-06/January, 2005

31

99 KKEEYYAASSSSUUMMPPTTIIOONNSSTTaabbllee 1133--11 DDiirreecctt CCoossttss// TToonn

Description Cost/Ton in Rs.

Direct Labor Cost

Machine Maintenance Cost

Direct Electricity Cost

Direct Water Cost

Direct Fuel (Tractor Diesel) Cost

Total Direct Cost/Ton

TTaabbllee 1133--22 RReevveennuuee AAssssuummppttiioonnss

Facility capacity

Price charged per Ton in year 1 (from Exports) 60,000Price charged per Ton in year 1 (Local market) 40,000

Weighted average sale price 46,000

TTaabbllee 1133--33 PPrroodduuccttiioonn RReellaatteedd AAssssuummppttiioonnss

Production capacity utilization 50%

Production capacity utilization growth rate 8%

Maximum capacity utilization 95%

Cost of goods sold 1 34,000

Cost of goods sold growth rate 8.0%

Operating costs 2 (machinery maintenance) 100

TTaabbllee 1133--44 EEccoonnoommiicc RReellaatteedd AAssssuummppttiioonnss

Inflation rate 6%

Wage Growth rate 10%

Electricity Growth Rate 6%

Water Price Growth Rate 6%

Vehicle Price Growth Rate 6%Office Equipment Price Growth Rate 6%

TTaabbllee 1133--55 EExxppeennssee AAssssuummppttiioonnss

Administration Benefit Expense 10% of Admin Expense

Traveling Expense 30% of Admin Expense


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Pre-feasibility Study Marble &Granite Warehouse

Communication Expense 40% of Admin Expense

Office Expense 20% of Admin Expense

Promotional Expense 2% of revenue

Machinery Insurance Rate 5%

Vehicle Insurance Rate 5%

Professional Fee (Legal, Audit etc) 1.5% of revenue

Bad Debt Expense 5% of revenue

Pre-Operational Expense Rs. 68,530

TTaabbllee 1133--66 DDeepprreecciiaattiioonn RRaatteess

Building/Infrastructure 5%

Machinery and Equipment 10%

Furniture & fixtures 10%

Vehicle (tractor) 20%

Office equipment 10%

TTaabbllee 1133--77 CCaasshh FFllooww AAssssuummppttiioonnss

Accounts Receivables Cycle (In Days) 60

Accounts Payable Cycle (In Days) 30

Cash on Hand Rs. 500,000

Fish are caught from October to June, the peak being March to May. Ribbon fish, croakers, sole and some other species areexported to South Korea and China. Indian mackerel are exported to Thailand, Malaysia and Indonesia, while chilled fish areexported to Singapore and the Middle East.

Documents

Prefeasibility Report on Sea Food Processing