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

PROJECT PROFILEProject BriefThis project is related to setting up an ice plant of 20-tons capacity per day to cater to the needs of the institutions such as hotels, restaurants, bakeries, dairy, fish seller’s etc. The proposed project will manufacture ice blocks varying from 50 kg to 100 kg in weight.

Opportunity RationaleMost of areas of southern India have long duration of summer due to which demand for ice is high for more than six months of the year. As India is a developing country and large portion of the population cannot afford refrigerators for domestic use. Another growing market for ice plants are industries linked to food products i.e. fish, dairy, bakeries, restaurants etc. With this growing demand a large number of ice plants are operating in the country.

There are approximately 1,300 ice plants operating in the Punjab, catering to the needs of different institutional and domestic buyers. The total installed capacity of ice plants in Punjab is approximately 432,669-tons of ice blocks per day2. The need of ice blocks is increasing due to economic growth, as major buyers are institutional buyers (dairy, bakery, hotel, etc.), who buy in bulk.

Market Entry TimingThe ice plant should be started up when the season begins in mid April and closed when it ends up in September. The peak season is of four months i.e. from mid April to mid August. The rest of the period i.e. two months is moderate season. The best time to enter into this business is in the month of April.

Proposed Business Legal StatusIt is recommended that this project should be started as sole proprietorship or partnership as this does not involve heavy investment. Moreover, less complications and costs are involved in forming, administering and running the sole proprietorship or partnership business. The tax rates applicable for sole proprietorship is lower than private or public limited. Most of the ice plants in the country are operating as sole proprietorship or partnership basis.

Project Capacity and Rationale

The proposed project has a capacity of producing 600 blocks on the basis of 2 shifts of 12 hours.

Project InvestmentThe total cost of the project is Rs. 7.87 million. This amount includes the land, machinery, building, water and electricity connection and salt required etc. The cost of land varies from area to area.

Proposed Product MixThe facility will produce 500-600 ice blocks of weight 130-150 kg as solid ice blocks in peak season and 200-300 ice blocks in off-season.

Recommended Project ParametersCapacity Human Resource Technology/Machinery Location600 Ice Blocks/Day14 Local Areas close to the cities.

Financial SummaryProject Cost IRR NPV Payback Period Cost of Capital(WACC)7.87 million 35% 6,242,867 3.14 16.8%Proposed LocationIt is recommended that the proposed project be installed in localities close to cities, so that the ice blocks are accessible to the dealers and institutional buyers.

Key Success Factors/Practical Tips for Success• The location plays an important role, as finished ice blocks should be easily accessible to dealers.• It is important that solid ice blocks are produced through proper freezing time utilization as solid ice blocks are much heavier, more transparent and provides higher price in the market.• Weather factor plays an important role, due to seasonal nature of the business i.e. In summers the demand for ice blocks increases, while after mid September the temperature starts changing & demand starts to fall, which means the entrepreneur should reduce the production according to the demand of ice.• One of the most important aspects for success of any business is minimizing the cost ofproduction, in case of ice plant this can be achieved by proper training of workers, whichwould ensure reduction in raw material wastage and better maintenance of machinery etc.• It is advisable to run the plant on natural gas, rather than electricity, as the major expense in production of ice is electricity. The use of natural gas instead of electricity will reduce the electricity expense approximately by half.

Strategic Recommendations

In order to sell the ice blocks, it is recommended to develop a chain of dealers who buy the ice blocks on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in view the number of blocks to be purchased on daily basis. In case the dealer is unable to pick theagreed number of blocks on a particular day, the amount is deducted from his security.

CURRENT INDUSTRY STRUCTURECurrent Industry StructureIce plants are installed with the capacity for daily production of 15, 25, 30 and 50 tons of ice blocks in Pakistan. Mostly ice plants are operating with the production capacity of 15 and 30 tons of ice blocks in the country, while selling price is decided once in a month by the owners of ice plants.

There are approximately 1300 ice plants operating in the Punjab, catering to the needs of different institutional and domestic buyers. The details of installed ice plants in the Punjab are given in the table below:

EXECUTIVE SUMMARY

Name of the Unit :Address of the Factory & Admin. office :Constitution : Sole proprietorshipName of the proprietor :Date of formation :Date of commercial operation expected:Line of activity :Type of industry :Registration particularsa) TNGST :b) SSI :Purpose of the loan :Amount loan required : Lakh Rs.

a) Fund Basedi. Term Loan 21.00ii. Cash credit 0.00

b) Non-Fund Basediii. Letter Credit 0.00iv. Bank Guarantee 0.00

------------Total assistance 21.00

=======Own Contribution

a) Capital : 30.00b) Unsecured loan from relative : 0.00

------------Total 51.00

=======Feasibility at Glance :a) DSCR : 2.21 : 1b) Debt/Equity Ratio : 0.89 : 1c) Current Ratio : 1.78 : 1d) Break Even (in %) :e) Cash Break Even (in %) :Project Highlights : The proprietor is well

experienced in this line and the project is economically viable one.

INTRODUCTION

M/s xXxxxx is being started as sole proprietory concern to manufacture white ice blocks during May 2005. This proposed ice plant factory is situated on the road-side at Valan Nagar, very closer to Muttom fishing harbour and well connected to the NH-7. The proprietor is well experienced in this line of activity as, being chief executive in a Mumbai based ice manufacturing company.

MISSION STATEMENT The promoter going to adopt innovative technology for power consumption and offer this cost advantages to available to customer by reducing the selling price of ice blocks at very lower rate. The promoters’ goal is to double the unit’s capacity in next five years.

ABOUT THE PROMOTER

The promoter is a Mumbai based ice plant fabricator. He has worked in an ice Factory at Vashi, Mumbai. Later on he has taken M/s Chisty ice factory through lease agreement and operated this ice factory for more than 7years. As such he has 12 years experience in this line and have in depth knowledge and contacts in this industry. He has earned vast money and decided to settle himself in his native place. As a part of his vision he acquired properties in and around his nativity and proposed this project at his own land very nearer to the Muttom Fishing harbour.

Net Worth:

PROJECT DETAILS

LAND:The proposed unit is established at Valan Nagar, Azhagappapuram, K.K. District in 23.67 cents land at R.S. No. ___________________ Azhagappapuram village, Agastheeswaram Taluk. The site is situated at the road side and well connected to NH-7. It has locational advantage being very nearer fishing harbour.

BUILDINGTotal build-up area proposed is 1500sq.ft. for the plant and machine room in the ground floor, the land raised from 7ft. deep to road level by sand and gravel filling, and have office at the first floor having 1000 sq.ft. space. This build up area is well protected by pucca compound wall and have ample frontage for the vehicle movement.

PLANT AND MACHINARYThe promoter has identified the company for plant erection and commissioning, by making several enquiries on cost and performance and warranty support of the concern. This plant and machinery alone will cost Rs. 29.5 lakhs.

FURNITURE AND FITTINGSThe furniture and fittings required is only for office use and a sum of Rs.1.34 lakhs provided in the project.

OFFICE EQUIPMENTSOne computer is provided in the project and others office equipments like calculators, billing machines etc. is also provided and the total cost of Rs.0.75 lakhs is allocated.

UTILITIESPOWER

The unit has applied for 67 kw power connection, TNEB has already erected transformer with 100 kva capacity and could avail the connection at any point of time.

WATERWater is available through out the year and in plenty. The Adjacent coconut garden, owned by the proprietor, has deep well and pump set to supply water to this plant.

DRAINAGENo harmful sewage effluence is there and the unit is situated very far away from residential quarters and the sewage water is directed to the nearby coconut garden.

Key Success Factors for this unit• The proposed location plays an important role, as finished ice blocks could be easily accessible to fish vendors and dealers

• Our Ice blocks are produced through proper freezing time utilization as solid ice blocks are much heavier, more transparent and provides higher price in the market.

• Weather factor plays an important role, due to seasonal nature of this business i.e. In contrast to this known factor, our factory is mainly depends on fish vendors of Muttom Fishing harbour and nearby suburbs and Nagercoil town. Through out the year the fishing is carried out, only 45 days is given as non fishing period for breeding. As such the demand for the product is even one.

• One of the most important aspects for success of any business is minimizing the cost of production, in case of ice plant this can be achieved by proper training of workers and adoption of new technology to reduce the power consumption, which would ensure reduction in power consumption, raw material wastage and better maintenance of machinery etc.