Fresh And Minimally Processed Fruits And Vegetables
Investing in
Uganda
======== = Potentials In Fresh & Minimally Processed Fruits & Vegetables For Export
Project Title: Fresh and Minimally Processed Fruits and Vegetables For Export Proposed Total Investment In US $: 2,624,115 Contact: Uganda Investment Authority Twed Plaza, Plot 22B, Lumumba Avenue P.O. Box 7418 Kampala Uganda, East Africa Tel: +256 (0) 414 301 000 Fax: +256 (0) 414 342 903 [email protected]
October 2009
Table Of Contents 1.0
Background To Investing In Minimally Processed Fresh Fruits And Vegetables ...........1
1.1 1.2 1.3 1.4
History ...........................................................................................................................1 Market............................................................................................................................1 Current Capabilities and Players ................................................................................1 Competitiveness ...........................................................................................................2 2.0. The Proposed Project (Fresh And Minimally Processed Fruits And Vegetables For Export) ...............3 2.1 Purpose Of The Project..............................................................................................3 2.2 Rationale Behind The Project ....................................................................................3 2.2.1 Access to Resources ...........................................................................................3 2.2.2 Access to Markets or Market Niche.................................................................3 2.2.3 Capability and Competence...............................................................................3 2.2.4 Favourable Location...........................................................................................3 2.2.5 Cost Competitiveness.........................................................................................4 2.3 Projected Capacities, Sales and Preferred Technology...........................................4 2.3.1 Planned Products and Services..................................................................................4 2.3.2 Projected Sales..................................................................................................................4 2.3.3 Potential Markets.........................................................................................................5 2.3.4 Technological Options and Preferred Choice, Sources and Costs ....................5 2.4:0 Average Estimated Total Investment Costs (In US Dollar) ..................................5 2.5: Main Production Inputs Locally Available...............................................................6 2.5.1: Raw Materials: .............................................................................................................6 2.6: Location, Logistics and Environmental Aspects.....................................................6 2.6.1: Location: ......................................................................................................................6 2.6.2: Possibility of project location in a special economic zone: ..........................7 2.6.3: Environmental Issues and Waste Disposal:....................................................7 2.7 Special Conditions, Regulatory and Licensing Issues and Procedures........................7 3.0 - Selected Factor Costs............................................................................................................7 3.1 Infrastructure Available at Proposed Site........................................................................7 4.0 - Preliminary Financial Viability Analysis of the Proposed Investment ..........................8 4.1.1 Land and Space Requirements..........................................................................8 4.1.2 Technology ..........................................................................................................8 4.1.3 Equipment ...........................................................................................................8 4.1.4 Civil engineering works......................................................................................8 4.1.5 Project Implementation .....................................................................................8 4.1.6 Pre-production Capital Expenditures ..............................................................8 4.1.7 Working Capital Requirements.........................................................................9 4.2 Personnel and Labour Costs (refer to Section on Labour Requirement)...................9 4.2.3 Factory Supplies and Over heads .....................................................................9 4.2.4 Labour Requirements.........................................................................................9 4.7 Financial Analysis...................................................................................................... 10 4.7.1 Profitability Analysis........................................................................................ 10 4.7.2 Feasibility Analysis........................................................................................... 10
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1.0 Background To Investing In Minimally Processed Fresh Fruits Vegetables 1.1 History
And
Uganda is predominantly an agricultural country. About 40% of the Gross Domestic Product and 90%of the Crop Sector predominates the Agricultural Sector. Besides, nearly 86% of the active rural labour force is engaged in agriculture. The horticultural sector is one of the fastest growing subsectors in Uganda, with a growth rate of 20% per year. The fruits and vegetables sub-sector is important in the rural economy because of its contribution to the value addition and diversification of income generation and foreign exchange inflows to the country. Uganda has a fairly well distributed rainfall and moderate temperature that allows production of a variety of tropical and sub-tropical fruits and vegetables. This is complimented by fairly fertile soils which support the production of very high quality and nutritious fruits. At present, improved varieties of particular fruits and vegetables, such as passion fruits, have been developed, and Uganda boasts of some of the sweetest and juiciest pineapples and apple bananas, renown in the market for their flavour and distinct quality. In addition, Uganda has been the market leader for supply of high quality hot peppers to EU market due to conducive production conditions in Uganda. Different varieties of mangoes are also grown in various districts, some of which are suitable for fresh markets, while others are suitable for drying, juice processing and other products. Uganda also produces probably some of the sweetest bananas (apple bananas and Gros Michel (Bogoya) compared to many other countries. Production of these fruits has been increasing in many districts as a result of conducive weather conditions. Despite the increasing production of a number of fruits, there has been a lot of post-harvest losses associated with the peak production seasons. However, Uganda is well placed to produce very high quality, semi- processed or value added fresh fruits and vegetables for the fast changing consumer clientele in the international market. 1.2
Market
The European Union has the largest potential consumption for fresh fruits and vegetables from Uganda. In 2006, overall consumption of fresh fruit in the EU was 77 million tonnes. Consumption of fresh vegetables amounted to 62 million tonnes. From 2002 to 2006, fruit consumption grew by 2.7%, though the consumption of vegetables remained stable. EU imports of fresh fruits accounted for € 19 billion in value an increase of 20% since 2002. Import volumes increased by 10% over the same period reaching 25 million tonnes. German, UK and Netherlands are the main importers of fresh fruits to the EU together accounting for nearly half of the EU imports by value in 2006. 1.3
Current Capabilities and Players
Currently the demand for fruits and vegetables from Uganda has been moderate and high for organic and value added products. However, most companies or producer associations exporting fresh fruits and vegetables from Uganda are small to medium with little or no investment capacity to scale up the production and take advantage of the market demand, and hence have been unable to explore the export of value added products currently on demand in Europe and other International markets. Most of the current exports have been in raw fruits and vegetables and largely to the wholesale markets where competition is growing and prices going down. Besides, access to financial credit to facilitate investment has been limited for such companies; yet it
1
requires some substantial capital to invest in appropriate infrastructure, if they are to take advantage of the value added market for fruits and vegetables, which attracts high demand and prices. Currently, there are over 15 companies exporting fresh fruits and vegetables largely to the EU and, to a less extent, to the COMESA region, although the latter is largely informal. On average, the existing companies each exports 2 – 15 tonnes of fresh fruits per week, largely to the wholesale markets in Europe. Uganda Exports of Fresh Fruits and Vegetables; 2004 – 2008 Year Volume (Tonnes) 2004 2005 2006 2007 2008 Total
4,834 4,877 6,029 6,705 7,603 30,048
Source: CAA
The potential to increase the export volumes for fresh fruits and vegetables from Uganda to reach up to 1,000 tonnes per week (about 52,000 tonnes per annum), is high if the diversification in value added fresh fruits and investment in appropriate produce handling infrastructure is realised. So far, the existing fresh fruit and vegetable export companies have not explored investment in value added fresh fruits and vegetables, due to their being limited in investment capital required to establish appropriate handling infrastructure that can guarantee the international food safety and quality requirements for such markets and products. 1.4
Competitiveness
Uganda has a higher potential for supply of fresh fruits and vegetables. Looking at the trend in consumption, especially in the EU and other International markets where consumers are now looking for health and convenience, Uganda is more competitive and suited to respond to this market trend, as can be elaborated below: • Uganda’s fresh fruits are re-knowned in the international market for their uniqueness from two angles. 1. The excellence in terms of colour and taste (without additives or artificial preservatives). 2. The fact that they can be exported in the organic quality, unlike many other countries that are competing with Uganda; Uganda is the largest producer and exporter of internationally certified organic fruits and vegetables from Africa. •
By combining the excellence of taste and flavour, organic quality to address the health interest of consumers, with semi-processing into a range of value added products including pre-cut or sliced, pre-packed in consumer packs, pre-washed and portioned to address the convenience , exports of fresh fruits and vegetables from Uganda are more competitive than those from other countries.
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2.0. The Proposed Project (Fresh And Minimally Processed Fruits And Vegetables For Export) 2.1
Purpose Of The Project
The purpose of this project is to increase the competitiveness of fresh fruits and vegetables exports from Uganda by investing in production of value added (Minimally processed) fresh fruits, including, pre-cut, sliced, portioned and pre-packed in consumer retail packs and exploiting the currently high demand of organic and fair traded fruit and vegetable products from Uganda. 2.2
Rationale Behind The Project
2.2.1 Access to Resources The raw materials for use in the production of minimally processed fresh fruits and vegetables are readily available, locally. Four proposed product lines (Apple bananas, Pineapples, Passion fruits, hot peppers), will be targeted initially. Production can be stimulated easily for scaling up, once sufficient demand and capacity is established. The production of the fresh fruits such as apple bananas, pineapple, passion fruits, as well as fresh vegetables like hot pepper and other potential fruits and vegetables, is largely dominated by small scale farm holder producers covering many parts of the Central, Eastern and Western parts of the country. Uganda is also the leading African country regarding organic agriculture production, with over 200,000 internationally certified organic farmers (IFOAM AND FiBL, 2009: ‘The World of Organic Agriculture, Statistics and Emerging Tends 2009’). Pineapple, passion fruits and apple banana are among the most produced organic fruits in Uganda and hence providing an extra access to organic fruit raw materials, increasing further the competitiveness of Uganda’s value added fresh fruits and vegetables. 2.2.2 Access to Markets or Market Niche. Uganda is already exporting fresh fruits and vegetables to the EU, though not in a value added form. Current Exporters are reporting more demand for and a diversity of value added ready to eat fresh fruits and vegetables from their buyers in line with the current trends of consumers. Basing on import enquiries registered by the Organic Trade Point at NOGAMU, import inquiries for organic but value added fresh fruits and vegetables is estimated to be about five to ten times the current ordinary raw fresh fruit and vegetable exports. Based on the growing global market for organic products now estimated to be above $67 billion, Uganda is bound to be the market leader in the supply of organic minimally processed fruits and vegetables. In addition, conventional hot peppers from Uganda are more preferred, especially in the UK, Netherlands and France, due to their high quality compared to that of other competing countries (Flona Commodities, 2009). 2.2.3 Capability and Competence Uganda has a pool of competent and well educated labour force that will provide a base for recruiting appropriate staff for the project. 2.2.4 Favourable Location Uganda is located at the heart of Africa, with numerous water bodies and fertile soils that are driving production of a variety of fruits and vegetables for the export and regional market. Its geographical suitability for organic production, more than any other country
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in Africa, also presents enormous advantages for supply of organic fruit raw materials for value addition. Uganda is well connected to the international world markets by a major International Airport with sufficient cargo flights out of Uganda. There is a direct railway and road transport to the port of Mombasa for delivering the finished products to the market by sea. 2.2.5 Cost Competitiveness Cost of labour and raw materials needed in this project are lowest in Uganda compared to the other countries in the region. 2.3
Projected Capacities, Sales and Preferred Technology
2.3.1 Planned Products and Services The project is planned to process and export value added, minimally processed, fresh fruits and vegetables for the retail market. A range of fresh fruits and vegetable products will be handled by the same handling facility, but this project will target the four most highly demanded fruits from Uganda which include: Pineapples, Apple bananas, Passion fruits and Hot peppers. Pineapples will be peeled, sliced and packed in ready to eat consumer packs, while apple bananas, passion fruits and hot peppers will be washed and pre-packed in consumer retail packs, instead of the usual bulk packages, using cartons. Other products will be added on the range as demand arises. It is possible to process an average minimum of 20 tonnes of fresh fruits and vegetables per day (400 tonnes per month) at a single handling facility, once sufficient infrastructure is installed. This implies an annual projected minimum capacity of 4,800 tonnes of value added fresh fruits and vegetables, largely in the organic quality, and some in the conventional quality, depending on prevailing demand and competitiveness. See Summary in Table 1 below: Table 1: Projected Annual Exports of Minimally Processed Fresh Fruits and Vegetables from the Project Product Projected Annual exports (Tonnes) Year 1 Year 2 Year 3 Year 4 Year 5 Pineapples 2,000 2,400 2,400 2,400 2,400 Apple bananas 800 960 960 960 960 Passion fruits 800 960 960 960 960 Hot pepper 400 480 480 480 480 TOTAL 4,000 4,800 4,800 4,800 4,800
2.3.2 Projected Sales A survey carried out in 2008 by NOGAMU in Uganda indicated that Fresh organic pineapples fetch an average of € 0.65/kg FOB, €0.65/kg ($0.90/kg) for organic apple bananas, €1.2/kg ($1.7/kg) for organic passion fruits and an average of €1/kg ($1.3/kg) for conventional hot peppers. All prices are FOB. Accordingly, basing on the average, a projected capacity of 400 tonnes value added fresh fruits and vegetables per month from the processing facility will be realised. Given that the facility will handle 50% pineapples, 20% passion fruits, 20% apple bananas and 10% hot peppers, the projected total sales of $4,404,000 per annum can be realised.
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Table 2: Projected Annual Sales for Minimally Processed Fresh Fruits and Vegetables Total Annual Sales Projection (US$)* Daily Sales Product (US$) Year 1 Year 2 Year 3 Year 4 Hot pepper 2,600 520,000 686,400 755,040 830,544 Passion fruit 6,720 1,344,000 1,774,080 1,951,488 2,146,637 Pineapple 9,100 1,820,000 2,402,400 2,642,640 2,906,904 Apple banana 3,600 720,000 950,400 1,045,440 1,149,984 Total Sales 22,020 4,404,000 5,813,280 6,394,608 7,034,069
Year 5 913,598 2,361,300 3,162,456 1,264,982 7,702,337
* The projection is based on the export quantities in table 1 and on the projected annual price increment of 10% 2.3.3 Potential Markets The EU presents the most potential market for minimally processed fruits and vegetables. Currently, over 15 companies export raw fresh fruits and vegetables to the EU, and according to Enquiries available at the Organic Trade Point at NOGAMU, a number of Importers from Europe are interested in organic value added fresh fruits and vegetables. The main target will be the Supermarkets, Food Distributors and Catering Market segments like hotels and tourist establishments that need to serve ready to eat foods, especially in the UK, Netherlands, Germany and France. The growing number of Supermarkets in the region, especially in Uganda, Rwanda, Southern Sudan, Burundi and the Democratic Republic of Congo, presents added market opportunities, since Uganda is strategically situated at the centre with trade connections to all these countries, as well as the greater COMESA region, and the Middle East. 2.3.4 Technological Options and Preferred Choice, Sources and Costs The technology required in the processing of ready to eat fresh fruits and vegetables, such as fruit and vegetable salads and pre-packed fruits involves basic stages including sorting, washing, slicing, pre-packing and labelling. However, all operations must be curried out under very hygienic conditions and facilities. All equipment that get in contact with the peeled or sliced food must be made from stainless steel for easy cleaning, and quality management systems and traceability systems based on the concept of HACCP have to be established to ensure and guarantee food safety and quality. This implies that high care processing facilities will have to be established. In addition to the pack house facilities and equipment, at least two refrigerated trucks will have to be purchased to be used in the collection of fruits from the field and transportation of ready products to the shipping ports. All required process equipments are not available in Uganda, but will have to be sourced from Europe, Asia or America. For compliance to the strict European market standards, it is recommended that the equipment and installation services are out sourced from Europe. All process staff will need to be fully trained in basic and advanced food handling requirements respectively. 2.4:0
Average Estimated Total Investment Costs (In US Dollar)
Table 3: Average Estimated Total Investment Costs (In US Dollar) Investment Item Land, Site and Building development
Cost (US$) 877,500
5
Land and Site Development (2-Acres )
390,000
Building Development (Production and Administration)
487,500
Equipment and Machinery
570,000
Fruit processing line equipment
370,000
Incubator (for ripening fruits)
200,000
Auxiliary and service plant equipment( utilities, sanitation etc)
420,000
Biogas digester (to convert waste into biogas and Manure)
100,000
Refrigerated trucks
90,000
Basic laboratory
50,000
Cold Storage (2)
100,000
Extra Sanitary installations (Related HACCP certification/High care facility Change over generator Incorporation expenses (1% of total investment)
50,000 30,000 18,675
Pre-production expenditures (5% Staff, operational and Administration costs) Working capital requirements (4 months)
35,140 702,800
Raw Materials (1600 tonnes for four months)
544,000
Staff Salaries Operational costs
58,800 33,333
Administration Costs
66,667
Total investment
2.5:
2,624,115
Main Production Inputs Locally Available
2.5.1: Raw Materials: The raw materials required can be locally obtained, that is, the production of the fresh fruits namely: apple bananas, passion fruits, pineapple and hot peppers, dominated by small scale farm holder producers, and are easily available. S.N 1 2 3 4
Product Pineapple Apple bananas Passion fruits Hot pepper
Average Cost per ton (USD) 200 500 400 600
The capacity for local small holder farmers to double or triple their production capacity is very possible in a period of 2- 3 years. 2.6:
Location, Logistics and Environmental Aspects
2.6.1: Location: UIA has secured land that it can lease out to investor for setting up of processing plants. To date, a number of these pieces of land have been developed into industrial parks in Wakiso and Mukono Districts within a range of about 15 to 30 Kms from the Kampala City centre, with all the basic infrastructure, such as power, water sewerage disposal and road networks established. 6
2.6.2: Possibility of project location in a special economic zone: The Government of Uganda through the Uganda Investment Authority has demarcated special zones with a number of investment incentives, for industrial development (see 2.6.1 above) 2.6.3: Environmental Issues and Waste Disposal: Sewage Water Outlet All wastewater will be collected into drains. No wastewater will leave the plant without being treated, to remove biological matter. Solid Waste For economic and compliance to environmental waste management disposal purpose, the solid waste, from the production process, will be transferred to a bio- digester, to give two outputs; bio gas and natural manure. The bio gas may be used to subsidize power/energy cost, since it can be used in providing energy to run the incubator for ripening fruits. The manure can also be sold off to farmers at a reasonable price. 2.7 Special Conditions, Regulatory and Licensing Issues and Procedures There are no other special requirements over and above the general conditions listed in the background for one to investment in Uganda for these specific products. However, compliance to health and international food safety requirements are very critical for any investor in the food processing industry to address, especially the international market, where such conditions are mandatory and highly enforced.
3.0 - Selected Factor Costs 3.1 Infrastructure Available at Proposed Site The following infrastructure will be established. Table 4: Required Infrastructure No.
Infrastructure & Civil works
Qty
Cost/unit
Amount
2
75,000
8,000
30
150,000 75,000 240,000
1500
250
375,000
1
Land 2-Acres )
2 3
Site preparation and development (8000 sqm) x 30 USD Plant (1500sqms)
4
Offices (150 sqm)
150
250
37,500
5
Housing for management (300 sqms)
300
250
75,000
Total Investment Infrastructure & Civil works
877,500
7
Food Processing Plant Layout • The plant shall not be located where there is a possibility of production of pollutants as well as swampy areas likely to be sources of hazards like flooding and any unhygienic bearing on the food processing plant. • All food processing plants should have hygienically designed easily accessible and cleanable premises that are constructed in such as a way as to prevent contamination of products. • To avoid cross contamination, it is absolutely essential that raw materials are received in a separate area and stored in a separate cold room. From here, the sequence of processing operations should be as direct as possible. This layout minimizes the risk of re-contamination of a semi-processed product. • There should be clear physical segregation between “clean” and “unclean operation” areas. “Unclean” areas are those where raw materials are handled and the “clean operations” include sorting of dried fruits, packaging and storage of final products. The separation between the clean and unclean areas must be complete. 4.0 - Preliminary Financial Viability Analysis of the Proposed Investment 4.1 Estimated Capital Costs of Selected Projects These will take into account the following factors: 4.1.1 Land and Space Requirements Refer to section on infrastructure available above. 4.1.2 Technology The technology for processing ready to eat value added fresh fruits and vegetables involves simple cleaning , cutting/slicing and packing under very hygienic conditions. 4.1.3 Equipment Overall investment in equipment is substantial, but the equipment that meets the hygienic and food safety standards is readily available in Europe. 4.1.4 • • •
Civil engineering works
The civil works required include the preparation and landscaping of the site. Civil works to prepare the ground for building of the infrastructure. Building of the infrastructure to the specifications required to house the equipment and the auxiliary service centres and points.
4.1.5 Project Implementation The project can be implemented within a period of one year. 4.1.6 Pre-production Capital Expenditures Technical Training This will be required for the technical staff to handle the equipment and the whole product flow, including hygiene processes. The training will be provided by the supplier of the equipment, as regards equipment, and organisations that provide services in Quality system establishment including HACCP.
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4.1.7 Working Capital Requirements Raw materials will be procured from the local farmers with preference for those who are organic certified, as projected below: Table 5: Working Capital Requirements S/N Product Requirement per month (tones) 1 Pineapple 200 2 Apple bananas 80 3 4
Passion fruits Hot pepper Average cost per 4 months
No to required for 4 months of business cycle 800 320
Average Price per ton (US$) 200 500
320 160 1600
400 600
80 40 400
Total (US$) 160,000 160,000 128,000 96,000 544,000
4.2 Personnel and Labour Costs (refer to Section on Labour Requirement) Type
Units
Unit Cost
Quantity
Annual cost
Managerial
3
1000
12
36,000
Technical
4
750
12
36,000
Skilled
8
400
12
38,400
50
110
12
66,000
Unskilled Sub-total Working capital requirements
176,400 4 Months
58,800
4.2.3 Factory Supplies and Over heads The overheads are costed on the industrial average of the three major processors in the country for a period of 12 months. It is assumed that maximum trading period that the processor will allow is 120 days to recycle or recover all the funds on sales, such that a maximum cash flow of 4 months would be sufficient to cover the working capital requirement of the business/plant. Overhead Item Operational costs (average industrial) Administration Costs (average industrial) Sub-total Working capital requirements (4 months) Operational costs (average industrial) Administration Costs (average industrial) Working capital requirement
Units Months Months
Qty 12 12
Unit Cost 8,333.3 16,667
Cost (US$) 100,000 200,000 300,000
1.00 1.00
33,333 66,667
33,333 66,667 100,000
4.2.4 Labour Requirements To establish a minimally processed medium sized processing plant for fresh fruits and vegetables in Uganda, one would estimate to employ and average of 65 people with about 23% of these being in management, technical and sales and the rest working as casual unskilled labour. Casual will mainly be required to sort and peel the fruits. 4.6
Indicative time schedule for Project Implementation
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Pre investment phase (should be able to take between 2 weeks to 1 month) • Incorporation period (registration of business and obtaining investors licences). Investment Phase (should be able to take up to 5 months) • Acquisition of land. • Build infrastructure. • Step of equipment. Production Phase (should be able to take between 1 to 2 months) 4.7 4.7.1
Financial Analysis Profitability Analysis
Item
Year 1
Year 2
Year 3
Year 4
5
Revenue Manufacturing Costs
4,404,000 1,591,570
5,813,280 1,909,884
6,394,608 1,909,884
7,034,069 1,909,884
7,702,337 1,909,884
Gross Profit Overheads Net Profit before Interest and Tax
2,812,430 934,990 1,877,441
3,903,396 965,074 2,938,323
4,484,724 961,711 3,523,013
5,124,185 969,678 4,154,507
5,792,453 984,389 4,808,064
Development Loan Interest Expense Net Profit/(Loss) before Tax Taxation(30%) Net Profit/(Loss) After Tax Accumulated Profit(Loss) Net Profit Margin Return on Investment(After Tax)
400,440 1,477,001 0 1,477,001 1,477,001 34% 56%
312,270 2,626,053 0 2,626,053 4,103,053 45% 100%
224,099 3,298,914 2,220,590 1,078,323 5,181,377 17% 41%
135,929 4,018,577 1,205,573 2,813,004 7,994,381 40% 107%
47,759 4,760,305 1,428,092 3,332,214 11,326,595 43% 127%
4.7.2
30%
Feasibility Analysis
Item
Year 1 0 4,404,000 524,823 2,099,292
Year 2 3,207,172 5,813,280
Year 3 7,567,723 6,394,608
Year 4 12,536,516 7,034,069
Year 5 18,166,722 7,702,337
Total 0 31,348,294 524,823 2,099,292
Total
7,028,115
9,020,452
13,962,331
19,570,585
25,869,059
33,972,409
Capital Expenditure Overheads Interest payments payments Loan Repayments Total Balance C/f NPV Analysis:
2,624,115 717,490 246,084 233,255 3,820,943 3,207,172
787,954 198,266 466,509 1,452,729 7,567,723
817,020 142,285 466,509 1,425,815 12,536,516
851,050 86,304 466,509 1,403,864 18,166,722
886,726 30,323 466,509 1,383,559 24,485,500
2,624,115 4,060,239 703,263 2,099,292 9,486,909 24,485,500
Year 2 7,567,723
Year 3 12,536,516
Year 4 18,166,722
Year 5 24,485,500
Net Cflows
Balance -2,624,115 583,057 4,943,608
Sales Equity Cash Injection Loan Capital Injection
Year End Cashflows Discount Factor NPV Pay back
Year 1 65,963,633 10% 103,251,810 Year 0 Year 1 Year 2 Year 3
Investment 2,624,115
0 3,207,172 4,360,551
Payback 0 1 2
Payback
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Uganda
======== = Potentials In Fresh & Minimally Processed Fruits & Vegetables For Export
Project Title: Fresh and Minimally Processed Fruits and Vegetables For Export Proposed Total Investment In US $: 2,624,115 Contact: Uganda Investment Authority Twed Plaza, Plot 22B, Lumumba Avenue P.O. Box 7418 Kampala Uganda, East Africa Tel: +256 (0) 414 301 000 Fax: +256 (0) 414 342 903 [email protected]
October 2009
Table Of Contents 1.0
Background To Investing In Minimally Processed Fresh Fruits And Vegetables ...........1
1.1 1.2 1.3 1.4
History ...........................................................................................................................1 Market............................................................................................................................1 Current Capabilities and Players ................................................................................1 Competitiveness ...........................................................................................................2 2.0. The Proposed Project (Fresh And Minimally Processed Fruits And Vegetables For Export) ...............3 2.1 Purpose Of The Project..............................................................................................3 2.2 Rationale Behind The Project ....................................................................................3 2.2.1 Access to Resources ...........................................................................................3 2.2.2 Access to Markets or Market Niche.................................................................3 2.2.3 Capability and Competence...............................................................................3 2.2.4 Favourable Location...........................................................................................3 2.2.5 Cost Competitiveness.........................................................................................4 2.3 Projected Capacities, Sales and Preferred Technology...........................................4 2.3.1 Planned Products and Services..................................................................................4 2.3.2 Projected Sales..................................................................................................................4 2.3.3 Potential Markets.........................................................................................................5 2.3.4 Technological Options and Preferred Choice, Sources and Costs ....................5 2.4:0 Average Estimated Total Investment Costs (In US Dollar) ..................................5 2.5: Main Production Inputs Locally Available...............................................................6 2.5.1: Raw Materials: .............................................................................................................6 2.6: Location, Logistics and Environmental Aspects.....................................................6 2.6.1: Location: ......................................................................................................................6 2.6.2: Possibility of project location in a special economic zone: ..........................7 2.6.3: Environmental Issues and Waste Disposal:....................................................7 2.7 Special Conditions, Regulatory and Licensing Issues and Procedures........................7 3.0 - Selected Factor Costs............................................................................................................7 3.1 Infrastructure Available at Proposed Site........................................................................7 4.0 - Preliminary Financial Viability Analysis of the Proposed Investment ..........................8 4.1.1 Land and Space Requirements..........................................................................8 4.1.2 Technology ..........................................................................................................8 4.1.3 Equipment ...........................................................................................................8 4.1.4 Civil engineering works......................................................................................8 4.1.5 Project Implementation .....................................................................................8 4.1.6 Pre-production Capital Expenditures ..............................................................8 4.1.7 Working Capital Requirements.........................................................................9 4.2 Personnel and Labour Costs (refer to Section on Labour Requirement)...................9 4.2.3 Factory Supplies and Over heads .....................................................................9 4.2.4 Labour Requirements.........................................................................................9 4.7 Financial Analysis...................................................................................................... 10 4.7.1 Profitability Analysis........................................................................................ 10 4.7.2 Feasibility Analysis........................................................................................... 10
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1.0 Background To Investing In Minimally Processed Fresh Fruits Vegetables 1.1 History
And
Uganda is predominantly an agricultural country. About 40% of the Gross Domestic Product and 90%of the Crop Sector predominates the Agricultural Sector. Besides, nearly 86% of the active rural labour force is engaged in agriculture. The horticultural sector is one of the fastest growing subsectors in Uganda, with a growth rate of 20% per year. The fruits and vegetables sub-sector is important in the rural economy because of its contribution to the value addition and diversification of income generation and foreign exchange inflows to the country. Uganda has a fairly well distributed rainfall and moderate temperature that allows production of a variety of tropical and sub-tropical fruits and vegetables. This is complimented by fairly fertile soils which support the production of very high quality and nutritious fruits. At present, improved varieties of particular fruits and vegetables, such as passion fruits, have been developed, and Uganda boasts of some of the sweetest and juiciest pineapples and apple bananas, renown in the market for their flavour and distinct quality. In addition, Uganda has been the market leader for supply of high quality hot peppers to EU market due to conducive production conditions in Uganda. Different varieties of mangoes are also grown in various districts, some of which are suitable for fresh markets, while others are suitable for drying, juice processing and other products. Uganda also produces probably some of the sweetest bananas (apple bananas and Gros Michel (Bogoya) compared to many other countries. Production of these fruits has been increasing in many districts as a result of conducive weather conditions. Despite the increasing production of a number of fruits, there has been a lot of post-harvest losses associated with the peak production seasons. However, Uganda is well placed to produce very high quality, semi- processed or value added fresh fruits and vegetables for the fast changing consumer clientele in the international market. 1.2
Market
The European Union has the largest potential consumption for fresh fruits and vegetables from Uganda. In 2006, overall consumption of fresh fruit in the EU was 77 million tonnes. Consumption of fresh vegetables amounted to 62 million tonnes. From 2002 to 2006, fruit consumption grew by 2.7%, though the consumption of vegetables remained stable. EU imports of fresh fruits accounted for € 19 billion in value an increase of 20% since 2002. Import volumes increased by 10% over the same period reaching 25 million tonnes. German, UK and Netherlands are the main importers of fresh fruits to the EU together accounting for nearly half of the EU imports by value in 2006. 1.3
Current Capabilities and Players
Currently the demand for fruits and vegetables from Uganda has been moderate and high for organic and value added products. However, most companies or producer associations exporting fresh fruits and vegetables from Uganda are small to medium with little or no investment capacity to scale up the production and take advantage of the market demand, and hence have been unable to explore the export of value added products currently on demand in Europe and other International markets. Most of the current exports have been in raw fruits and vegetables and largely to the wholesale markets where competition is growing and prices going down. Besides, access to financial credit to facilitate investment has been limited for such companies; yet it
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requires some substantial capital to invest in appropriate infrastructure, if they are to take advantage of the value added market for fruits and vegetables, which attracts high demand and prices. Currently, there are over 15 companies exporting fresh fruits and vegetables largely to the EU and, to a less extent, to the COMESA region, although the latter is largely informal. On average, the existing companies each exports 2 – 15 tonnes of fresh fruits per week, largely to the wholesale markets in Europe. Uganda Exports of Fresh Fruits and Vegetables; 2004 – 2008 Year Volume (Tonnes) 2004 2005 2006 2007 2008 Total
4,834 4,877 6,029 6,705 7,603 30,048
Source: CAA
The potential to increase the export volumes for fresh fruits and vegetables from Uganda to reach up to 1,000 tonnes per week (about 52,000 tonnes per annum), is high if the diversification in value added fresh fruits and investment in appropriate produce handling infrastructure is realised. So far, the existing fresh fruit and vegetable export companies have not explored investment in value added fresh fruits and vegetables, due to their being limited in investment capital required to establish appropriate handling infrastructure that can guarantee the international food safety and quality requirements for such markets and products. 1.4
Competitiveness
Uganda has a higher potential for supply of fresh fruits and vegetables. Looking at the trend in consumption, especially in the EU and other International markets where consumers are now looking for health and convenience, Uganda is more competitive and suited to respond to this market trend, as can be elaborated below: • Uganda’s fresh fruits are re-knowned in the international market for their uniqueness from two angles. 1. The excellence in terms of colour and taste (without additives or artificial preservatives). 2. The fact that they can be exported in the organic quality, unlike many other countries that are competing with Uganda; Uganda is the largest producer and exporter of internationally certified organic fruits and vegetables from Africa. •
By combining the excellence of taste and flavour, organic quality to address the health interest of consumers, with semi-processing into a range of value added products including pre-cut or sliced, pre-packed in consumer packs, pre-washed and portioned to address the convenience , exports of fresh fruits and vegetables from Uganda are more competitive than those from other countries.
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2.0. The Proposed Project (Fresh And Minimally Processed Fruits And Vegetables For Export) 2.1
Purpose Of The Project
The purpose of this project is to increase the competitiveness of fresh fruits and vegetables exports from Uganda by investing in production of value added (Minimally processed) fresh fruits, including, pre-cut, sliced, portioned and pre-packed in consumer retail packs and exploiting the currently high demand of organic and fair traded fruit and vegetable products from Uganda. 2.2
Rationale Behind The Project
2.2.1 Access to Resources The raw materials for use in the production of minimally processed fresh fruits and vegetables are readily available, locally. Four proposed product lines (Apple bananas, Pineapples, Passion fruits, hot peppers), will be targeted initially. Production can be stimulated easily for scaling up, once sufficient demand and capacity is established. The production of the fresh fruits such as apple bananas, pineapple, passion fruits, as well as fresh vegetables like hot pepper and other potential fruits and vegetables, is largely dominated by small scale farm holder producers covering many parts of the Central, Eastern and Western parts of the country. Uganda is also the leading African country regarding organic agriculture production, with over 200,000 internationally certified organic farmers (IFOAM AND FiBL, 2009: ‘The World of Organic Agriculture, Statistics and Emerging Tends 2009’). Pineapple, passion fruits and apple banana are among the most produced organic fruits in Uganda and hence providing an extra access to organic fruit raw materials, increasing further the competitiveness of Uganda’s value added fresh fruits and vegetables. 2.2.2 Access to Markets or Market Niche. Uganda is already exporting fresh fruits and vegetables to the EU, though not in a value added form. Current Exporters are reporting more demand for and a diversity of value added ready to eat fresh fruits and vegetables from their buyers in line with the current trends of consumers. Basing on import enquiries registered by the Organic Trade Point at NOGAMU, import inquiries for organic but value added fresh fruits and vegetables is estimated to be about five to ten times the current ordinary raw fresh fruit and vegetable exports. Based on the growing global market for organic products now estimated to be above $67 billion, Uganda is bound to be the market leader in the supply of organic minimally processed fruits and vegetables. In addition, conventional hot peppers from Uganda are more preferred, especially in the UK, Netherlands and France, due to their high quality compared to that of other competing countries (Flona Commodities, 2009). 2.2.3 Capability and Competence Uganda has a pool of competent and well educated labour force that will provide a base for recruiting appropriate staff for the project. 2.2.4 Favourable Location Uganda is located at the heart of Africa, with numerous water bodies and fertile soils that are driving production of a variety of fruits and vegetables for the export and regional market. Its geographical suitability for organic production, more than any other country
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in Africa, also presents enormous advantages for supply of organic fruit raw materials for value addition. Uganda is well connected to the international world markets by a major International Airport with sufficient cargo flights out of Uganda. There is a direct railway and road transport to the port of Mombasa for delivering the finished products to the market by sea. 2.2.5 Cost Competitiveness Cost of labour and raw materials needed in this project are lowest in Uganda compared to the other countries in the region. 2.3
Projected Capacities, Sales and Preferred Technology
2.3.1 Planned Products and Services The project is planned to process and export value added, minimally processed, fresh fruits and vegetables for the retail market. A range of fresh fruits and vegetable products will be handled by the same handling facility, but this project will target the four most highly demanded fruits from Uganda which include: Pineapples, Apple bananas, Passion fruits and Hot peppers. Pineapples will be peeled, sliced and packed in ready to eat consumer packs, while apple bananas, passion fruits and hot peppers will be washed and pre-packed in consumer retail packs, instead of the usual bulk packages, using cartons. Other products will be added on the range as demand arises. It is possible to process an average minimum of 20 tonnes of fresh fruits and vegetables per day (400 tonnes per month) at a single handling facility, once sufficient infrastructure is installed. This implies an annual projected minimum capacity of 4,800 tonnes of value added fresh fruits and vegetables, largely in the organic quality, and some in the conventional quality, depending on prevailing demand and competitiveness. See Summary in Table 1 below: Table 1: Projected Annual Exports of Minimally Processed Fresh Fruits and Vegetables from the Project Product Projected Annual exports (Tonnes) Year 1 Year 2 Year 3 Year 4 Year 5 Pineapples 2,000 2,400 2,400 2,400 2,400 Apple bananas 800 960 960 960 960 Passion fruits 800 960 960 960 960 Hot pepper 400 480 480 480 480 TOTAL 4,000 4,800 4,800 4,800 4,800
2.3.2 Projected Sales A survey carried out in 2008 by NOGAMU in Uganda indicated that Fresh organic pineapples fetch an average of € 0.65/kg FOB, €0.65/kg ($0.90/kg) for organic apple bananas, €1.2/kg ($1.7/kg) for organic passion fruits and an average of €1/kg ($1.3/kg) for conventional hot peppers. All prices are FOB. Accordingly, basing on the average, a projected capacity of 400 tonnes value added fresh fruits and vegetables per month from the processing facility will be realised. Given that the facility will handle 50% pineapples, 20% passion fruits, 20% apple bananas and 10% hot peppers, the projected total sales of $4,404,000 per annum can be realised.
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Table 2: Projected Annual Sales for Minimally Processed Fresh Fruits and Vegetables Total Annual Sales Projection (US$)* Daily Sales Product (US$) Year 1 Year 2 Year 3 Year 4 Hot pepper 2,600 520,000 686,400 755,040 830,544 Passion fruit 6,720 1,344,000 1,774,080 1,951,488 2,146,637 Pineapple 9,100 1,820,000 2,402,400 2,642,640 2,906,904 Apple banana 3,600 720,000 950,400 1,045,440 1,149,984 Total Sales 22,020 4,404,000 5,813,280 6,394,608 7,034,069
Year 5 913,598 2,361,300 3,162,456 1,264,982 7,702,337
* The projection is based on the export quantities in table 1 and on the projected annual price increment of 10% 2.3.3 Potential Markets The EU presents the most potential market for minimally processed fruits and vegetables. Currently, over 15 companies export raw fresh fruits and vegetables to the EU, and according to Enquiries available at the Organic Trade Point at NOGAMU, a number of Importers from Europe are interested in organic value added fresh fruits and vegetables. The main target will be the Supermarkets, Food Distributors and Catering Market segments like hotels and tourist establishments that need to serve ready to eat foods, especially in the UK, Netherlands, Germany and France. The growing number of Supermarkets in the region, especially in Uganda, Rwanda, Southern Sudan, Burundi and the Democratic Republic of Congo, presents added market opportunities, since Uganda is strategically situated at the centre with trade connections to all these countries, as well as the greater COMESA region, and the Middle East. 2.3.4 Technological Options and Preferred Choice, Sources and Costs The technology required in the processing of ready to eat fresh fruits and vegetables, such as fruit and vegetable salads and pre-packed fruits involves basic stages including sorting, washing, slicing, pre-packing and labelling. However, all operations must be curried out under very hygienic conditions and facilities. All equipment that get in contact with the peeled or sliced food must be made from stainless steel for easy cleaning, and quality management systems and traceability systems based on the concept of HACCP have to be established to ensure and guarantee food safety and quality. This implies that high care processing facilities will have to be established. In addition to the pack house facilities and equipment, at least two refrigerated trucks will have to be purchased to be used in the collection of fruits from the field and transportation of ready products to the shipping ports. All required process equipments are not available in Uganda, but will have to be sourced from Europe, Asia or America. For compliance to the strict European market standards, it is recommended that the equipment and installation services are out sourced from Europe. All process staff will need to be fully trained in basic and advanced food handling requirements respectively. 2.4:0
Average Estimated Total Investment Costs (In US Dollar)
Table 3: Average Estimated Total Investment Costs (In US Dollar) Investment Item Land, Site and Building development
Cost (US$) 877,500
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Land and Site Development (2-Acres )
390,000
Building Development (Production and Administration)
487,500
Equipment and Machinery
570,000
Fruit processing line equipment
370,000
Incubator (for ripening fruits)
200,000
Auxiliary and service plant equipment( utilities, sanitation etc)
420,000
Biogas digester (to convert waste into biogas and Manure)
100,000
Refrigerated trucks
90,000
Basic laboratory
50,000
Cold Storage (2)
100,000
Extra Sanitary installations (Related HACCP certification/High care facility Change over generator Incorporation expenses (1% of total investment)
50,000 30,000 18,675
Pre-production expenditures (5% Staff, operational and Administration costs) Working capital requirements (4 months)
35,140 702,800
Raw Materials (1600 tonnes for four months)
544,000
Staff Salaries Operational costs
58,800 33,333
Administration Costs
66,667
Total investment
2.5:
2,624,115
Main Production Inputs Locally Available
2.5.1: Raw Materials: The raw materials required can be locally obtained, that is, the production of the fresh fruits namely: apple bananas, passion fruits, pineapple and hot peppers, dominated by small scale farm holder producers, and are easily available. S.N 1 2 3 4
Product Pineapple Apple bananas Passion fruits Hot pepper
Average Cost per ton (USD) 200 500 400 600
The capacity for local small holder farmers to double or triple their production capacity is very possible in a period of 2- 3 years. 2.6:
Location, Logistics and Environmental Aspects
2.6.1: Location: UIA has secured land that it can lease out to investor for setting up of processing plants. To date, a number of these pieces of land have been developed into industrial parks in Wakiso and Mukono Districts within a range of about 15 to 30 Kms from the Kampala City centre, with all the basic infrastructure, such as power, water sewerage disposal and road networks established. 6
2.6.2: Possibility of project location in a special economic zone: The Government of Uganda through the Uganda Investment Authority has demarcated special zones with a number of investment incentives, for industrial development (see 2.6.1 above) 2.6.3: Environmental Issues and Waste Disposal: Sewage Water Outlet All wastewater will be collected into drains. No wastewater will leave the plant without being treated, to remove biological matter. Solid Waste For economic and compliance to environmental waste management disposal purpose, the solid waste, from the production process, will be transferred to a bio- digester, to give two outputs; bio gas and natural manure. The bio gas may be used to subsidize power/energy cost, since it can be used in providing energy to run the incubator for ripening fruits. The manure can also be sold off to farmers at a reasonable price. 2.7 Special Conditions, Regulatory and Licensing Issues and Procedures There are no other special requirements over and above the general conditions listed in the background for one to investment in Uganda for these specific products. However, compliance to health and international food safety requirements are very critical for any investor in the food processing industry to address, especially the international market, where such conditions are mandatory and highly enforced.
3.0 - Selected Factor Costs 3.1 Infrastructure Available at Proposed Site The following infrastructure will be established. Table 4: Required Infrastructure No.
Infrastructure & Civil works
Qty
Cost/unit
Amount
2
75,000
8,000
30
150,000 75,000 240,000
1500
250
375,000
1
Land 2-Acres )
2 3
Site preparation and development (8000 sqm) x 30 USD Plant (1500sqms)
4
Offices (150 sqm)
150
250
37,500
5
Housing for management (300 sqms)
300
250
75,000
Total Investment Infrastructure & Civil works
877,500
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Food Processing Plant Layout • The plant shall not be located where there is a possibility of production of pollutants as well as swampy areas likely to be sources of hazards like flooding and any unhygienic bearing on the food processing plant. • All food processing plants should have hygienically designed easily accessible and cleanable premises that are constructed in such as a way as to prevent contamination of products. • To avoid cross contamination, it is absolutely essential that raw materials are received in a separate area and stored in a separate cold room. From here, the sequence of processing operations should be as direct as possible. This layout minimizes the risk of re-contamination of a semi-processed product. • There should be clear physical segregation between “clean” and “unclean operation” areas. “Unclean” areas are those where raw materials are handled and the “clean operations” include sorting of dried fruits, packaging and storage of final products. The separation between the clean and unclean areas must be complete. 4.0 - Preliminary Financial Viability Analysis of the Proposed Investment 4.1 Estimated Capital Costs of Selected Projects These will take into account the following factors: 4.1.1 Land and Space Requirements Refer to section on infrastructure available above. 4.1.2 Technology The technology for processing ready to eat value added fresh fruits and vegetables involves simple cleaning , cutting/slicing and packing under very hygienic conditions. 4.1.3 Equipment Overall investment in equipment is substantial, but the equipment that meets the hygienic and food safety standards is readily available in Europe. 4.1.4 • • •
Civil engineering works
The civil works required include the preparation and landscaping of the site. Civil works to prepare the ground for building of the infrastructure. Building of the infrastructure to the specifications required to house the equipment and the auxiliary service centres and points.
4.1.5 Project Implementation The project can be implemented within a period of one year. 4.1.6 Pre-production Capital Expenditures Technical Training This will be required for the technical staff to handle the equipment and the whole product flow, including hygiene processes. The training will be provided by the supplier of the equipment, as regards equipment, and organisations that provide services in Quality system establishment including HACCP.
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4.1.7 Working Capital Requirements Raw materials will be procured from the local farmers with preference for those who are organic certified, as projected below: Table 5: Working Capital Requirements S/N Product Requirement per month (tones) 1 Pineapple 200 2 Apple bananas 80 3 4
Passion fruits Hot pepper Average cost per 4 months
No to required for 4 months of business cycle 800 320
Average Price per ton (US$) 200 500
320 160 1600
400 600
80 40 400
Total (US$) 160,000 160,000 128,000 96,000 544,000
4.2 Personnel and Labour Costs (refer to Section on Labour Requirement) Type
Units
Unit Cost
Quantity
Annual cost
Managerial
3
1000
12
36,000
Technical
4
750
12
36,000
Skilled
8
400
12
38,400
50
110
12
66,000
Unskilled Sub-total Working capital requirements
176,400 4 Months
58,800
4.2.3 Factory Supplies and Over heads The overheads are costed on the industrial average of the three major processors in the country for a period of 12 months. It is assumed that maximum trading period that the processor will allow is 120 days to recycle or recover all the funds on sales, such that a maximum cash flow of 4 months would be sufficient to cover the working capital requirement of the business/plant. Overhead Item Operational costs (average industrial) Administration Costs (average industrial) Sub-total Working capital requirements (4 months) Operational costs (average industrial) Administration Costs (average industrial) Working capital requirement
Units Months Months
Qty 12 12
Unit Cost 8,333.3 16,667
Cost (US$) 100,000 200,000 300,000
1.00 1.00
33,333 66,667
33,333 66,667 100,000
4.2.4 Labour Requirements To establish a minimally processed medium sized processing plant for fresh fruits and vegetables in Uganda, one would estimate to employ and average of 65 people with about 23% of these being in management, technical and sales and the rest working as casual unskilled labour. Casual will mainly be required to sort and peel the fruits. 4.6
Indicative time schedule for Project Implementation
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Pre investment phase (should be able to take between 2 weeks to 1 month) • Incorporation period (registration of business and obtaining investors licences). Investment Phase (should be able to take up to 5 months) • Acquisition of land. • Build infrastructure. • Step of equipment. Production Phase (should be able to take between 1 to 2 months) 4.7 4.7.1
Financial Analysis Profitability Analysis
Item
Year 1
Year 2
Year 3
Year 4
5
Revenue Manufacturing Costs
4,404,000 1,591,570
5,813,280 1,909,884
6,394,608 1,909,884
7,034,069 1,909,884
7,702,337 1,909,884
Gross Profit Overheads Net Profit before Interest and Tax
2,812,430 934,990 1,877,441
3,903,396 965,074 2,938,323
4,484,724 961,711 3,523,013
5,124,185 969,678 4,154,507
5,792,453 984,389 4,808,064
Development Loan Interest Expense Net Profit/(Loss) before Tax Taxation(30%) Net Profit/(Loss) After Tax Accumulated Profit(Loss) Net Profit Margin Return on Investment(After Tax)
400,440 1,477,001 0 1,477,001 1,477,001 34% 56%
312,270 2,626,053 0 2,626,053 4,103,053 45% 100%
224,099 3,298,914 2,220,590 1,078,323 5,181,377 17% 41%
135,929 4,018,577 1,205,573 2,813,004 7,994,381 40% 107%
47,759 4,760,305 1,428,092 3,332,214 11,326,595 43% 127%
4.7.2
30%
Feasibility Analysis
Item
Year 1 0 4,404,000 524,823 2,099,292
Year 2 3,207,172 5,813,280
Year 3 7,567,723 6,394,608
Year 4 12,536,516 7,034,069
Year 5 18,166,722 7,702,337
Total 0 31,348,294 524,823 2,099,292
Total
7,028,115
9,020,452
13,962,331
19,570,585
25,869,059
33,972,409
Capital Expenditure Overheads Interest payments payments Loan Repayments Total Balance C/f NPV Analysis:
2,624,115 717,490 246,084 233,255 3,820,943 3,207,172
787,954 198,266 466,509 1,452,729 7,567,723
817,020 142,285 466,509 1,425,815 12,536,516
851,050 86,304 466,509 1,403,864 18,166,722
886,726 30,323 466,509 1,383,559 24,485,500
2,624,115 4,060,239 703,263 2,099,292 9,486,909 24,485,500
Year 2 7,567,723
Year 3 12,536,516
Year 4 18,166,722
Year 5 24,485,500
Net Cflows
Balance -2,624,115 583,057 4,943,608
Sales Equity Cash Injection Loan Capital Injection
Year End Cashflows Discount Factor NPV Pay back
Year 1 65,963,633 10% 103,251,810 Year 0 Year 1 Year 2 Year 3
Investment 2,624,115
0 3,207,172 4,360,551
Payback 0 1 2
Payback
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