An Export Business Plan (RiceBran)

An Export Business Plan (RiceBran)

Executive Summary

Rice is one of the world's most important food crops and more than half of the people in the world eat rice as the main part of their diets. Young rice plants have a bright green color and as the grain ripen the plants turn golden yellow. A typical rice kernel is ¼ to 3/8 inches long.
Rice bran oil is a source of vitamin E complex, antioxidants and other micronutrients to helpfight free radicals. Rice bran oil has the best balance of saturated, monounsaturated andpolyunsaturated fats and recommended by such organs as the American Heart Association andthe world health organization.
Bangladesh is forced today, to import oil for domestic. Consumption by spending invaluable foreign exchanges. Since there is a sample demand in export market for de-oiled meal, which brings in valuable foreign exchange to the country. Therefore any propositions to recover oil from any possible source should not only prove profitable but also will help in cutting down imports of oils thus saving foreign exchange. Hence pitting up a new Solvent extraction plant is encouraged by the Government & attractive for investor also. Further this will contribute it share to solve unemployment problem by creating an employment to people directly & indirectly. There is huge opportunity for export due to low cost in labor and raw material.

Company Description:
1. Name of the Industrial Concern: MSB Oil Mills Ltd.
2. Name of the Brand : MSB Brand Rice Bran Oil
3. Address : Dhap, Jail road, Rangpur-5400
a) Registered office : same
b) Factory : Rangpur- Dinajpurregion
4. Directors: Local Partnership
5. Line of activity:Edible oil extraction
6. Size of the industry:Medium Scale Industry


Resource Availability:
People : Manpower in the RangpurDinajpur region
Technology : Experienced personnel in Bangladesh
Financial Fund : Equity +Debt Capital Or Consortium with Rice mill owners.


Product description :
Rice Bran:

It is the outer brown layer of rice grain. Rice bran forms 8% of grass Milled rice contains 15-20%oil. 0.4-1.5%wax, 5-8% Proteins, 40-50% Carbohydrates, and 5-8% Fiber. Rice bran processing& production of oil is increasing year to year.

Post-Milling Precautions:
To avoid the lipase action rice bran has to be stabilized immediately on Production.


Common Name:
Rice Paddy (English), Chal (Bangla), Chawal (Hindi), Dhan (Punjabi) Bhatta (Kannada)Bran is a layer b/w husk & endosperm of the paddy grain. There are 18,000 varietes of rice in the world.

Name for bran:
Rice bran, Chal (Bangla) The Major Rice producing contents are Asia (Roof mills of the long Himalaya range & its radiating arms in South East Asia). Africa & America.

Cultivation condition :
Short day plant Rain fed/ irrigated Crop= 39oS lalitude (Australia) to 45o N latitude Growing (Japan) 50o N latitude (china) below sea level to 1978 meters high above sea land.
Temperature = 16-200 C at flowering time & 18-30oC
Condition = during ripening
Duration= 85-90 days to 240 days in different varieties
Soil = Reverine, aluminum, red yellow, red loamy hill & Sub –Montane, terrain, laterite, coastal aluminum red sandy, Mixed red & black & Medium and black.
Seasons= Kharif& Rabi
Harvest = Harvested when Moisture content of the grain is 20-25% Paddy is driedunder shade to 13-14% Moisture before milling.
Grain colour = white & Red Yields of Rice = All India average 1.67 tones hectare.

Rice Bran Oil:
Bangladesh though not being significant in Rice manufacture, but a huge area is used to produce rice thus having potential to produce about 5 lakh tones of Rice Bran Oil per annum form outer brown layer of rice called 'brain. Currently the industry is processing about huge tones of Rice bran by solvent extraction process producing about 18 lakhs tones of Rice Bran Oil per annum, out of which 16.0 lakhs tones is of edible grade and the balance 2 lakh tones is none edible grade.

a) It is good for heart, it contain oryzanol which increase HDL (good) Cholesterol and lowers LDL (bad) Cholesterol & triglycerides.
b) It has the ideal ratio of saturated Mono unsaturated & polyunsaturated fatly acids & is the closest to world health organization recommendation.
c) It is good for skin it contain squares, which improves skin, tone delays wrinkle formation.
d) It has hydroxy 3 MethoxyCinnamic acids which stimulates hormonal secretion & rejuvenates health.
e) It has to cotrienol which helps in maintaining balance of nervous system.
f) It has tocotrienol which has anti-thrombotic & anti-cancer properties.
g) Food tried in refined Rice Bran Oil absorbs 15%.
3.4 Cooking advantages of rice brain oil:
a) Nutritionally Superior
b) Contains more Micronutrients
c) More stable at higher temperature
d) Longer shift life
e) Oil is less sticky, saves Soaps
f) Economical 15% less absorption of oil during frying
g) Gives better taste & flavor to food items.

States of rice bran oil in other countries:
a) Rice bran Oil is extensively used in Japan, Korea, China, Taiwan, and Thailand as premium Edible oil.
b) In Japan, Rice bran oil is more popularly known as "Heart oil".
c) In recent years, U.S. Scientists has also shown tremendous interest in the cholesterol lowering properties of rice bran oil.
d) In western countries rice bran oil has acquired the status of a 'health food'.

Raw materials & consumables:
The main raw materials are rice bran/oil Cakes. The unit requires 45000 mts / 60000 mts of ricebran/oil cakes at installed capacity per annum. The proposed location is having a major paddy growing area. There are about 200 rice Mills & oil Mills in & around Rangpur- Dinajpur region we can procure rice bran/oil Cakes from surrounding district of Rangpur- Dinajpur region where number of oil Mills & Rice Mills are situated but do not have any solvent extractions plants which are running in these areas.

Essential services:

Power:
The unit requires 500KVA Power. We need to install 500 KVA D.G. Set to offset loadshedding & power failure along with STEAM TURIBINE for generation of power. The steam that is produced for the purpose of in house use will be passed through the turbine to generate power Around 400 KVA Power will be generated & the same will be used for our own power requirements. This will cut down the power cost.

Water:
The requirement of water in the processes is for use in the boiler for system generation and also in cooling tower. The set consumption after accounting for re circulation and human consumption is estimated at 100000 liters of water per day. The company need to get permission from the ministry to get abundant water supply. The Company can propose to have its own bore well in the project.

Steam:
The steam is Major Cost element in the production of Solvent oils. The company needs to install the boiler with a capacity to produce 14 ton per hour of steam. Boiler is a sophisticatedwhich can run an agro waste like groundnut shells, Paddy help the company to reduce the costof production and cost of transportation by using the locally available fuel which are emanatingfrom rice mill and oil Mills situated in and around the area. The boiler proposed in the F.B.Cboiler (fluidized bed) which will enhance the heat required for generation of steam & reduce theair pollution.



Man Power:
Administration Technical
1) General Manager 1) Engineer
2) Chief Accounts 2) Plant Operators
3) Clerk 3) Preparatory Operators
4) Typists 4) Boiler attainders
5) Sales-Clerks 5) Electronics
6) Store- Keepers 6) Others
7) Supervisors 7) Unskilled laborers
8) Attainders
9) Security
The Man Power required is two categories Skilled and Unskilled. The Skilled workers like boiler operators, plant's operator, electricians etc., and the company needs to have the skilled workers who are working in other existing solvent extraction plants. The additional Manpower required will be recruited & Trained in the own plant. Some of the above manpower which are already available in the existing setup, and additional people wherever necessary will be recruited & trained in the plant.

Transport:
As the plant will be located near the Rangpur – Dinajpur region, required transport would be available easily. Transportation is vital.

Quality Control:
Company needs to have full pledged laboratory for testing the raw materials and finished goods for the quality control purpose. Additional equipment's are proposed to be purchased & a provision of Tk 15 lakhs also needs to be made in this project.

Effluents:
1) Company needs to take the permission of pollution control board, as per their guidance required equipment's are already in place to control water and air pollution.2) For this unit the clearance from local Government authority needs to be obtained.3) We propose to install effluent treatment plant to avoid water pollution.4) Above measures along with any other guidelines/ Measures will be undertaken as per the prescribed guidelines of pollution control board.

Foreign market analysis:

The finished products, which the company is proposed to produce, are solvent oil and de-oiled meal. The Solvent oils are edible grade and are mainly used in oil refinery units for further processing and selling as refined edible oil which is an essential & daily consumer able food item. The demand for edible oil exceeds. The supply and the government of Bangladesh is spending crores together in terms of foreign exchange to import edible oil to bridge the gap b/w the demand & supply. A short fall of edible oil is very huge. The Government in spite of best efforts to increase the production is not in a position to increase the production of edible oil in the country; our production would be only a small portion, which helps substitute the imports to the extent to our production.
Selling arrangement:
The Sales will be directly handled by the directors itself with the help of qualified Staff of the company through commission agents & brokers.
Economic Consideration:
Oil is selling at a price of ghee. One says commonly today. The statement is not for reality in this country the prices of oil and fats are always on the ascent. The reasons are
a) Over increasing population
b) Rise in the standard of living of bulk of the lower sections of the population.
c) Demand for the industrial use, soaps etc.
These factors are increased & continue to increase the demand for the oil & fats for edible &non-edible purpose. But also the increase in the production of oil seed crop is not keeping with the increasing demand.

Foreign Market Strategy:

The elements of Foreign Market strategy:
Precisely, Market strategy is the master mix of sub-mixes namely, product mix, price mix, promotion mix and place mix as a set of good many variables. These elements of marketing decisions are over which the firm has content.
Elements of Foreign Market strategy:
Product Mix Strategy
Price Mix strategy
Promotion Mix Strategy
Physical distributed.
Meaning & Objectives of Foreign Market strategy
Product 2) Pricing 3) Promotion 4) Positioning

Product strategy:
The product is the most tangible and important single component of marketing programme. The product policy and strategy is the corner stone of a marketing mix, without product, there is nothing to distribute, nothing to promote, nothing to price. If the product fails to satisfies consumer demand. No additional cost on any of the ingredients of the marketing mix will improve the product performance in the market place. A product strategy is a firm's plan for marketing its products greater emphasis is laid on the product objectives for this reason, the firm develops a product design to achieve the ret objectives. The company is producing only a single type of edible oil that is Rice bran oil our oil is different from other regular edible oil, our oil is been called as HEAT oil in Japan as it contains original which increases HOL (good) cholesterol and lowers LDL (bad) cholesterol & triglycerides. Over oil contains sequence which improves skin tone, & delay wrinkle formation over oil contain vitamin E, which helps in maintaining balance of nervous system. Over oil observes 15% less oil which can be lower in calorie in take
Cooking advantages of Rice Bran oils:
High nutritional content
Longer Shift life
Oil is less sticky, saves soap
Gives better taste & flavor to food items.
Packing:
The oil will come in 3 different type of packing that is in pouches and

2nd in the Tin and 3rd it comes in bad debts.
Quantity:
Our oil comes in 1 /2 liters, 1 liter 5 liters that is in pouch, and 15 kg Tin and 180 kgs in barrels. The pricing will be changing according to market demand and competition.

Pricing Strategy:
Pricing is an art of translating into quantities terms (taka and paisa) the value of the product or a unit of service to customers at pain of time. Price is a major marketing tool and helps in directing the products to a specific consumer regent; price is a powerful instrument in which both the buyer and seller are keenly interested. It is the price of a product or a service that ensures a decent return of investment, guaranteed table, economic structure creator, maintains and extends market. Pricing task involve establishing pricing objectives. Identifying the factors governing the product value in monetary terms, formation of pricing policies and the strategies, implementing them and controlling them for the best result. Pricing plays a very vital role during sales of a product. As we can find a large number of products in the market with the some contents, so by this consumer's will be having choice to buy, so while fixing the price the company will look at the prices of the other competitors in the market & we will fix the price by keeping the Low class consumer's also. As Rice bran oil is now started growing in the market, the company had decided to offer the product is reasonable price, which would help the company product to reach more people, by the price that the product will be kept.

Promotion Strategy:
Promotion strategy deals with efforts undertaken to increase and improve demand and sales of the products of the firm. Promotion also plays a very vital role the success of a product. The way a product is promoted clearly has a major impact on the way it succeeds. Bad promotion can lay a good product to fail in the market. Hence the promotion strategy adopted by a company should be carefully planned& should be meticulous by nature. Today's Markets, regardless of your product, are full of competitors, promoting a product into this environment requires more than just a fantastic Product, but specialized product launch knowledge & a Proper Process.T he goal of a product is to establish a product as the leader in the field, the first in a class, a risk-free alternative. But to accomplish this goal two thing need to happen, first, an alternative. But to accomplish this goal two things need to happen; first an untarnished perception & image for the product & company must be created; & second, a comprehensive promotion plan, that ensures that every high leverage / cost –adjustable action is planned for and professionally executed must be implemented "In the most successful ventures planning for the product promotion starts along with preliminary design & development," Gooze says " Positioning, Sales channels & distribution, adverting & public relations all need to be addressed & should be given as much time & energy as the development & design stage. Synchronizing marketing activities with product development is critical for success." Among the key components included is a Strong Product promotion plan.
a) Clearly defined sales objectives
b) Building a large consumer base
c) Good packaging & branding
d) Assured sales channel realness
e) Promotional functions in place
f) Resources to track, Monitor & account for execution

Positioning:
"Positioning is not about features & specifications it is the care message that differentiates our product from everything else in the market place. A unique product identifies strong tunes the market's perception of our product and in turn reinforces your company's overall positioning".
To make sure everyone is working toward the same goal, certain milestones should be established.
a) Have we identified all necessary launch channels?
b) What number of new product do we plan to sell by a specific date?
c) When will the product be ready to launch at rational trade convection?
d) Are sufficient Stocking orders placed with key distributors?
e) How can we grow the product into a 5-10 percent market entrenchment by a specified date?

"In order to establish the new product's identity in the market place, the core message must be repeated over and over again" this requires consists positioning within all of the company's marketing communications, including.
a) New & Current product literature
b) Press releases
c) Product specifications
d) Sales presentations

SWOT analysis and Risk Management:
SWOT Analysis:
Strengths:
1. Consistency in earning profit.
2. MSB oil is the only 100 % Heart oil- Rice Bran Edible oil in the market of.

Weakness:
Political Instability
Aggressive shipment
Unfavorable Climate condition
Fragmentation of market.
High requirement of working capital.
Seasonality of raw material.
Fluctuation in market demand

Opportunities:
Growing demand for the health caring oil products.
Rising income levels and changing consumption patterns.
Favorable demographic profile and changing lifestyles.
Opening of global markets.


Threatening:
As this is the one of the Rice Bran oil in Bangladesh, there is very few Competitor for same products. But there is a competition from other oil company products.

Risk Management
Major 2 competitors:
1. KBC Agro Products Ltd
2. Rashid Oil Mills Ltd

Market risk:
The preliminary research indicates that the target consumers are willing to purchase our product. Competition in this industry can be overcome by strengthening and expanding the distribution network.
Threat of new entrants dealing with Rice bran business.



Performance Analysis:

Capacity:
Extraction Capacity: Initial: Extraction of 100 tons per day from 500 tons of rice bran.
It can be converted to 300 tons per day after 2 years.
Refine capacity : 30 tons per day
Market prospect:
Total Market size of edible oil in Bangladesh: 1.4 million tons/yr.

Export Information:
Of the total market size is 1.4 million tons/yr is imported from countries like Malaysia, Indonesia, India etc. So, there is no question to export as huge demand in local market is available.
Market growth:
There is a huge market in Bangladesh i.e. local market is more lucrative. Even there is huge opportunity for export due to low cost in labour and raw material.
c) Main raw materials: Rice bran, oil cakes & Soya bean seeds.
9. End use of finished products: Refined edible oils wholesale and retail Consumers .
Forecasting:


1st year (tk)
2nd year (tk)
3rd year (tk)
Annual Target
Turnover
19.2 crore
96 crore
192 crore
Target % PBT
33.81%
35%
45%






Conclusion:
Rice bran is an incredible source of the vitamins, minerals, amino acids, essential fatty acids and antioxidant nutrients that help fight disease and promote good health. It's no wonder the healthy oil that comes from rice bran is becoming so successful at replacing hydrogenated oils containing tans fat. Research is ongoing with this invaluable food source and scientists have found components critical to human health. Rice bran oil is ideal oil for margarine and shortening. The flavor gives the good palatability and the desired prime form crystal provides smooth plasticity and spreading qualities. Since rice bran oil contains three different kinds of natural antioxidants -namely TOCOPHEROL, TOCOTRIENOL and ORYZANOL some of the major antioxidants companies have recently switched their basic oil to rice bran oil. Delicate yet flavorful, rice bran oil just may be the world's healthiest edible oil, containing vitamins, antioxidants and other nutrients - rice bran oil is rich in vitamin E complex, tocopherols and tocotrienols, a unique antioxidant known as gamma oryzanol, high quantities of phytosterols, polyphenols and squalence. Rice bran has a very good shelf life compared to other cooking oils because of these antioxidants. Rice bran oil is extremely light, versatile and delicious use it to fry. Rice Bran Oil has a balanced fatty acid profile close to the World Health Organization (WHO), American heart association's (AHA) etc.



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