Model Business Plan For Moringa Processing To Tea PDF

CHAPTER ITEM PAGE INDEX
NUMBER
1 EXECUTIVE SUMMARY 4
2 PLANS OF OPERATIONS 7
3 PRODUCTS AND SERVICES 15
4 BUSINESS AND INDUSTRY PROFILE 18
5 PRODUCTION PROCESS 22
6 MARKET ANALYSIS AND MARKETING 41
STRATEGY
7 FINANCIAL FOCAST 54
ATTACHED [APPENDIX]
1 SALES AND SUPPLY ANALYSIS 62
2 CHART TO ACCOUNT 69
3 ASIC FINANCIAL ACCOUNTING AND 73
INVENTORY MANAGEMENT
4 SAMPLE CONTRACT FOR HIRING A 74
CONSTRUCTION FIRM
CHAPTER ONE
EXECUTIVE SUMMARY
THIS CHAPTER COVERS:

1.1 THE PROJECT [EXECUTIVE SUMMARY]
1.2 PROJECT PROFILE
1.3 PROJECT GOAL AND OBJECT
1.1 EXECUTIVE SUMMARY
In a world where more than 800 million continue to suffer from chronic malnourishment
and where the global population is expected to grow by another 2 billion to reach 9.6 billion
people by 2050. Never before have people consumed so much Green Tea or depended so
greatly on the sector for their well-being. Green Tea is extremely nutritious a vital source
of protein and essential nutrients, especially for many poorer and unhealthy members of
our global community, Moringa is a source not just of health but also of wealth,
Employment in the sector has grown faster than the world’s population. In Nigeria, the
Semi-Arid zones of Northern Nigeria have large farming communities. However, the
extent of growth of this Moringa Tea business is not quite significant due to several reasons.
Among which are the following: The Moringa farming and processing is left for the low
income people who have little capacity for growth and expansion.
The Moringa tea processing activity is done only on subsistence level and mostly by the
less privileged of communities. The ways and means of farming Moringa is too expensive
for the farmer and the option of processing is tasking as well.
The capacity to develop well established market outlets is lacking. The requisite
infrastructure and utilities needed for processing Moringa Tea are either inadequate or
lacking.
The primary objective of this study is to identify windows of business opportunity within
the Moringa Tea industry that are likely to have a good marketing potential for the
Promoter. The business plan also aimed at identifying and describing the corresponding
market segment(s) that would ultimately lead to more effective product and marketing.
With a retail value of nearly $2 million, Nigeria alone exports potential for Moringa Tea.
Raw materials required for processing of Moringa leaves to tea are easily available in the
farms, however. Moringa been considered to be the principal component, and the high
quality availability will need some advance planning.
The location analysis provides valuable information on economically suitable site for
operative activity, access and the availability of services and utilities, the economic
viability of the new facility, determines the market factors for launching the product and
discern information on the availability of necessary services and utilities for a new facility.
Machinery required for the processing of Moringa leaves to Tea and packaging is available
both local and imported, local machinery reportedly give poor quality output especially For
Green Tea which is considered to be highly sophisticated and hygienic; hence it could not
be done by using local machinery.
However, packaging could be done on locally fabricated materials. The organizational

structure of the project depended on the management style and control techniques of the
business.
The implementation of the project requires the commitment of financial and time resources,
a clearly identifiable finance and time resource required by being optimistic on the various
conditions affecting implementation. The financial models For the Moringa Tea processing
factory clearly inputs and make assumptions are based on primary research conducted with
similar processors and confirmed wherever possible by stakeholders who are experts in the
industry.
After processing the data produced though this business plan, operation assumptions and
projections were used to develop a financial model that empirically supports the anecdotal
conclude that this is a viable, worthwhile project. Beyond proving the demand for and
internal financial viability or this project, it is important to demonstrate the potential
external economic impact of the proposed processing Factory.
The sales growth assumptions used for financial modeling of this project are extremely
conservative. The low estimates are derived by the study team’s conclusion that sales
growth in short term will be limited by supply and it will take time to develop a reliable
supply network.
1.2 PROJECT PROFILE
1.2.1 Project Brief
The project involves processing Moringa leaves tea and then packing and marketing the
product under my brand. The branded tea will be positioned in competition with other
branded and unbranded tea. The brand standardization will be done through the
combination of different types of unbranded/ open tea available in the market. It is
suggested that the company should initially introduce its products in small town markets
where brand awareness is easy to make and heavy advertisement budget is not required.
1.2.2 Opportunity Rationale

In Nigeria, a morning and evening cup of tea is an essential part of everyday culture. This
tradition has existed for many years. Every guest in a home in Nigeria is most likely to ask
for a cup of tea to relax after a demanding journey. This trend has always created a strong
demand for tea in Nigeria and made it a world net importer of tea. In terms of tea
consumption, it is among the largest consumers. Even in summer when the weather is
extremely hot tea is drunk twice a day.
During the review period for this project, the Moringa market grew in both volume and
value terms. Moringa tea is a part of daily life, and urban areas generate the most sales.
Urban areas drove sales growth because they consist 66% of the country's population.
Consequently, companies have to focus on urban areas to maintain their market shares.
Throughout the review period, sales of loose Moringa tea were very dynamic as consumers
in urban areas always buy Moringa tea. Introducing affordable brand in other areas would
attract sales. On the other side, in these areas, offices prefer to use Moringa tea bags. Such
a market could also be explored with low cost and high product quality.
The Moringa tea sachet packets have seen high sales growth throughout the country and
especially in urban areas. This business plan focuses on Northern Nigeria for such a
business but opportunity exists in other regions of the country for similar business.
1.2.3 Proposed Business Legal Status
It is recommended that this project should be started as sole proprietorship or partnership
as it does not involve heavy investment. Moreover, less complications and costs are
involved informing, administering and running the sole proprietorship or partnership
business.
1.2.4 Project Capacity and Rationale

The project consists of a Teabag-manufacturing machine having production capacity of
1,000Teabags per hour. Working 7 hours a day and working for 250 days. The project is
assumed to start with 40% capacity utilization. At 40% capacity utilization, the production
breakdown of the four different categories of products is shown in the table below:
1.2.5 Project Investment

The total cost of the project is N108 million. This amount includes cost of the business
equipment, working capital and other pre-operating costs. The project cost is further
divided in debt and equity at the split ratio of 50%-50%.
1.2.6 Proposed Product Mix

Moringa tea is a vast product group available in the local market from which countless
blends can be made altering the mix of different Moringa tea leaves for color and taste. The
product would be of a blend that would give a unique taste in such a way to focus the lower
and middle-income groups of people. Such classes of consumers usually focus on strong
taste. The price would be less than that offered by the brands targeting higher-end consumer
classes. The box packs would be in two different sizes of 50 grams and 100grams. Twenty
sachets would be packed in a box for sale to the wholesalers.
1.2.7 Proposed Location

Since the center of the unbranded tea market is located at the states whose commercial
quantity of Moringa is formed, therefore, the area for the production and distribution
facility should be near that it.
1.2.8 Key Success Factors
 High demand of such blended Moringa tea due to health benefit.
 Accelerated sales growth experienced in the category of sachet packs.
 Extensive distribution channel for the sachet packs focusing even on small kiosks.
 The product should be focusing the price conscious segment of the market by
providing similar and better quality branded product at lesser price.
 Emphasizing on excellent service to the wholesalers.
 Adapting to the rapid social and economic changes.
 Improving the packaging will increase the life of Moringa tea and hence would
secure the overall distribution and selling techniques.
1.3 PROJECT GOAL AND OBJECTIVES Mm

The goal of this project is to harness Nigeria Moringa production and export potential with
special attention to addressing the constraint of rudimentary machinery and labour-
intensive techniques of Moringa Tea processing by Local Investors which result to low
Moringa Tea, Year quality that do not meet export standard.
There is also the problem of access to finance from banks and other financial institutions
(DFI, angel investors’ etc.) by the Local Investors. The project intends to solve this
challenge by creating an operational manual cum business plan that will spur investments
in Shea processing facilities by providing potential promoters with a comprehensive guide
that details how to set up and operate such a facility, demonstrating the financial viability
of such venture to attract banks, investors and other sources of financing.
This will lead to the establishment of modern medium size Moringa Tea factories which
will be managed by private investors or social entrepreneurs that will produce export-
quality Moringa Tea across the Moringa Tea zones in Nigeria. The facilities may be
Greenfield ventures developed on otherwise unused land or they may involve upgrading to
existing small-scale producers. They will typically be located close areas where Moringa
is farmed, but within easy access of good roads to facilitate sales/exports.
CHAPTER TWO
PLANT OPERATIONS

2.1 FORM OF OWNERSHIP
2.2 COMPANY STRUCTURE (ORGANIZATION CHART)
2.3 RESPONSIBILITIES AND QUALIFICATION OF
MANAGEMENT STAFFS AND WORKERS
2.4 REMUNERATION AND BENEFITS PACKAGES
2.1 FORM OF OWNERSHIP
The ownership structure of this processing factory may be in form of joint venture between
the interested private investor(s) or cooperative(s) in the community where the factory is
being sited or 100% own by the private investor. In a case where it is joint ventures with
the cooperatives the equity (shares) owner-ship may be based on an agreed percentage with
the private investor having the majority of the equity. Company liabilities (profit and loss)
will be shared between the parties on the bases of this percentage ownership. There will be
an organ (committee) in the organization like the board of directors which will comprise
both the representatives of the private investors and the cooperatives. This board will be
the highest decision making organ of the company. Each partner in this joint venture will
play strategic roles based on their areas of strength and experience in ensuring that the
factory runs successfully and profitably.
For the private investor, he/she will play the lead and critical roles in the partnership
arrangement being the major shareholders and financiers of the investment. These include
sourcing for fund to purchase processing equipment, erection of factory building and
factory running cost (overhead). More importantly, the day to day management of the
factory should be part of his/her responsibility.
In the case of the cooperatives, they will provide the land where the factory will be sited
(since it is their community), and ensure regular supply of raw material (Moringa leaves)
enough to process throughout the year of the factory. This will be achieved by individual
members of the cooperatives selling their leave to the processing factory at an agreed
competitive market price. Other responsibilities may include some of their members to
work in the factory as contract staffs as the need may arise.
2.2 COMPANY STRUCTURE (ORGANIZATION CHART)
ORGANOGRAM OF THE COMPANY
BOARD OF DIRECTORS/OWNERS
MD/CEO
ADMIN/
SECRETARY,
DRIVER
FACTORY
SECURITY
MANAGER
AND
CLEANER
MARTING AND PRODUCTION AND QUALITY CONTROL AND

INVENTORY MAINTENANCE WAREHOUSE
SUPERVISOR SUPERVISOR SUPERVISOR
MARKETING FATORY QUALITY

EXECUTIVES WORKERS/ CONTROL
AND SALES LABOURERS OFFICER
2.3 HUMAN RESOURCE REQUIREMENT/RESPONSIBILITIES AND
QUALIFICATIONS OF MANAGEMENT STAFFS AND WORKERS
The optimum number of direct laborers and administration staff has been worked out
keeping to the capacity utilization level of the outfit under consideration.
Detailed Schedule of Staffing and Remuneration is as displayed overleaf.
1. Board Member
A member of the board is part of the highest decision making organ of the
organization. She/he should be an experienced entrepreneurs and investor that is
passionate about the industry and ready to invest his/ her money into the industry.
In case of joint venture ownership with women cooperatives, such person should
be the head of the cooperative or deputy head.
2. Managing Director and Chief Executive Officer
She/he is number one management staff of the organization and chief executive
officer of the company. She/he runs the daily affairs of the company and effectively
manages both human and material resources of the company which he translates to
output. She/ he deals with both internal and external affairs of the company,
implements the decisions of the board and report back to the board.
3. Factory Manager
He/she must be a graduate (BSc/B.Eng./BTech/HND) in any these disciplines
Agric, Engineering, Food Processing Engineering, Mechanical Engineering,
Industrial Engineering or Food Science and Technology. He/she must be an
experienced person that has worked in an agro-processing/ food processing industry
nothing less than 7 years with the last two years at senior level. He/she must be hard
working independently with little supervision, thinking outside the box, a good
team player with excellent leadership and managerial skills and good interpersonal
and skills.
4. Quality Control Officer
She/he must possess National Diploma (ND) in Food Science and Technology.
He/she must be an experienced person that has worked in an agro—processing/food
processing industry nothing less than 2 years. He/she must have practical laboratory
knowledge on sampling techniques, sample testing and testing and result analysis.
Must be able to work independently with little supervision, a good team player with
excellent leadership skills and must have good interpersonal relationship.
5. Marketing and Inventory Supervisor
He/she must be a graduate (BSc/B.Eng./BTech/HND) in Marketing, Agribusiness,
Business Administration or any social science discipline. He/she must be an
experienced person that has worked in an agro-processing/Food processing
industry nothing less than 2 years. He/she must have practical knowledge in agro-
products marketing. Understand the product market in Nigeria and consumers
behavior. Such person must be familiar with stock taking technique and inventory
control, a good team player with excellent leadership skills and must have good
interpersonal relationship.
6. Account and Administration Officer
Such person must possess National Diploma (ND) in Accounting or Business
Administration and be familiar with basic accounting principle. She/he must be able
to keep records of the company financial transactions and staff records, good team
player with excellent leadership skills and must have good interpersonal
relationship. She/he works closely with CED on human resource management.
7. Driver
Must possess a valid driver’s license with not less than 5 years driving experience
must be physical fit and mentally sound.
8. Factory Workers
They must be physically fit, mental sound and hard working.
9. Security
10. Cleaner
2.4 The Salaries Structure Of All The Direct And Indirect Labour Is Given In Details In
The Following Table:
Description No. Salary Total Monthly

Salary
Owner/CEO 1 60,000 60,000
Accounts Officer 1 25,000 25,000
Factory Manager 1 35,000 35,000
Quality Control Officer 1 30,000 30,000
Factory Workers 5 25,000 125,000
Marketing Officer 1 30,000 30,000
Security 1 20,500 20,500
Cleaner 1 15,000 15,000
Total 10 325,500
CHAPTER THREE
PRODUCTS AND SERVICES

3.1 DESCRIPTION OF PRODUCT AND SERVICES
3.2 CUSTOMER BENEFITS AND ECONOMIC IMPACT
3.3 COSTS
3.4 KEY SUPPLIERS
3.1 PRODUCT AND SERVICES
Moringa oleifera (hereafter referred to simply as ‘moringa’) is the best known and most
widely cultivated of the 14 tree species belonging to the family Moringacae. It is native to
the sub-Himalayan parts of Northern India, Pakistan, Bangladesh and Afghanistan, but has
progressively proliferated and today can be found in tropical and sub-tropical regions all
over the world.
Moringa is well known throughout the world for its characteristics as a highly resilient tree
that grows very fast and is easy to propagate. It grows best in arid condition and has very
low requirements in terms of nutrients, water and management. Moringa is highly resistant
to drought and disease.
The tree is cultivated extensively throughout the tropics and subtropics. In India, it is often
grown in plantations. Production in Africa is dominated by smallholder production systems
and wild collection. Moringa's nutritional properties in particular are highly impressive:
almost every part of the tree is edible and has powerful medicinal properties. Fresh leaves
from the Moringa tree, for example, have been shown to contain more than 4x the amount
of vitamin A of carrots, 7x times the vitamin C of oranges, 4x the calcium of milk, 7x the
potassium of bananas, 3/4 the iron of spinach and twice the amount of protein of yoghurt
(see Figure Z below). They also contain large amounts of minerals, all the essential amino
acids, and antioxidants. While the leaves are eaten throughout West Africa and in parts of
Asia, people in the Indian sub—continent consider the trees’ young seedpods a delicacy as
well.
Although mainly known for its nutritional and medicinal properties, moringa is also used
for a variety of other uses, including industrial ones.
Moringa leaves have exceptional nutritional value, containing a variety of vitamins,

minerals, and all of the9 essential amino acids (including two amino acids that are
especially important for children’s diets). The latter in particular is highly rare for a plant.
Furthermore fresh leaves of moringa also contain niazinin, niazimicin and niaziminin A
and B which have hypotensive effect (lower blood pressure), all compounds that seem to
be very rare in nature. Another phytochemical found in moringa is beta-sitosterol, which
reduces the excess of cholesterol in the human blood. Carbohydrate, fat and phosphorous
contents of the leaves are low. (For a more complete nutritional profile of moringa leaves
see Annex I). Figure 3 shows a few selected nutritional values of fresh vs. dried moringa
leaves.
When used for human consumption, the leaves can be either cooked (treated much like
spinach) or dried. Although drying the leaves decreases some of the levels of vitamins, it
significantly increases the amount of most other nutrients present in the leaves (see Figure
3). Dried leaves can be used to prepare tea (or more accurately a tisane) or as a kitchen
herb to be added to various dishes. The leaves are also commonly ground into a tea, which
is then used as a nutritional supplement. This moringa leaf tea has recently beg unto attract
attention in Western markets and as such an increasingly be found in health stores and
online.
100g Moringa Fresh Leaf = 100g Moringa Dry Leaf =
4 times the Vitamin A of Carrots 10 times the Vitamin A of Carrots

7 times the Vitamin C of Oranges ½ times the Vitamin C of Oranges
4 times the Calcium of Milk 17 times the Calcium of Milk
3 times the Potassium of Banana 15 times the Potassium of Banana
¾ the Iron of Spinach 25 the Iron of Spinach
2 times the Protein of Yoghurt 9 times the Protein of Yoghurt
Packing such powerful nutrition, various organizations Worldwide have incorporated

moringa leaves as an important element – or even the basis for – nutritional programs that
aim to combat malnutrition. In one of the studies conducted Within the framework of such
a program in Senegal, Lowell Fuglie argues that, “for a child aged 1-3, a 100g serving of
fresh leaves would provide all his daily requirements of calcium, about 75% of his iron and
half his protein needs, as Well as important supplies of potassium, B complex vitamins,
copper and all the essential amino acids. As little as 20 grams of Fresh leaves would provide
a child with all the vitamins A and C he needs.” Findings like these, together With a Wealth
of anecdotal evidence on the subject, strongly suggest that the regular consumption of
Moringa leaf tea might be an effective and rather simple Way to help combat malnutrition.
In this regard, it should not be overlooked that Moringa is generally widely available in
nearly all parts of the World still affected by malnutrition.
3.2 BENEFITS AND ECONOMIC IMPACT

The impact and benefits of this project is directly felt by people (men, women, young) in
the processing community and also by extension the entire members of the community.
Some of these benefits among others include:
* Improvement in Moringa Tea processing skills among
* Income generation and Wealth creation
* Women and youth empowerment
* Employment creation especially among youths that will work in the factory
* Improvement in standard of living
* Reduction of social vices caused by unemployment among youths
* Socio economic development and growth
* Industrial development and growth
* Effective natural resources management Moringa
* Increase in national GDP
3.3 KEY SUPPLIERS

The key suppliers of the raw materials Moringa Leaves to this processing factory are the
members of Moringa cooperatives. Since their cooperative(s) are lively joint partner and
owner of the factory. Other members of the community that are into Moringa Farming are
also targeted as suppliers because Moringa Leaves will be purchased at competitive market
prices in the community, the factory is located.
Other suppliers are the packaging companies that will supply packaging materials for
product packaging.
CHAPTER FOUR
BUSINESS AND INDUSTRY PROFILE

4.1 INDUSTRY ANALYSIS [BACKGROUND AND OVERVIEW]
4.2 SIGNIFICANT TRENDS
4.3 KEY SUCCESS FACTOR IN THE INDUSTRY
4.1 INDUSTRY ANALYSIS (BACKGROUND AND OVERVIEW)
The current volume of Moringa sold internationally is not sufficient to qualify it as a
commodity on the global market, and hence the trade statistics for Moringa products are
only available in an aggregated form. The global market for Moringa products is
considered substantial, however, with current estimates of overUS$54 billion a year (CJP,
2013).
While Moringa is used for a wide variety of purposes, two Moringa products in particular
stand out in terms of their commercial potential: moringa leaf tea and moringa oil as an
ingredient for cosmetic products. Following an overall trend on the international market –
where natural products have experienced strong market growth over the last decade –
demand for these two natural products is strongly growing. This demand is mainly driven
by consumers in developed and emerging economies (particularly the US, Canada and the
EU), who are increasingly seeking out dietary supplements and cosmetics derived from
natural sources.
On the global market, Moringa leaf tea is used as a supplement, falling into the same market
category (Herbs 86 Botanicals) as ‘Green Tea’ like spirulina, barley grass and wheat grass.
The global market for green tea (also referred to as the nutraceutical market) has seen a
rapid growth over the past years, and this is a trend that is expected to continue.
Interestingly, the tremendous growth of the nutraceutical market is strongly driven by the
rising consumption of dietary supplements (which in 2013 took up a market share of 37%).
The main markets for green tea supplements are the US, followed by Western Europe and
Japan, all with an affluent middle class willing to invest in alternative health and food
products. While the US dominates the overall market in nutritional supplements, Europe
accounts for the largest share of the world marker in herbal/botanical supplements and
remedies. Asia-Pacific and Japan make up the other important market for botanicals, with
the Asia – Pacific market (led largely by China and India) set to pave the way with the
highest growth rate (10.5%) through 20I7 (Global Industry Analysts, Inc, 2013).
Until recently the local Nigerian market for Moringa products remained largely
undeveloped. This has begun to change over the past years following international trends
along with Nigerian government’s recognition (led by the Ministries of Health and
Agriculture) of Moringa’s potential to serve as a powerful tool in the local fight against
sickness and diseases and malnutrition. In 2013 the government through NAFDAC
launched a large-scale information campaign aimed at informing the local population about
Moringa’s many benefits.
The impact of these efforts has had results: local awareness of Moringa (Moringa leaf tea
and powder in particular) is clearly on the increase, and as a result demand for Moringa
products is growing. To meet this increased demand, more processing companies and/or
organizations are starting to grow (and to a much more limited extent process) moringa,
resulting in a variety of locally produced moringa products becoming available in the local
market. While most of these initiatives are still operated on a largely informal basis, there
is a clear interest (and potential) to develop more commercial moringa enterprises.
Following global trends and information campaigns initiated by the government, the
benefits of moringa leaf tea/powder are becoming increasingly well known. Many of those
inter viewed for this study, across all income groups, mentioned that they had heard about
the benefits of consuming moringa leaf tea. More importantly, a substantial amount
indicated they have recently started taking moringa leaves and moringa leaf tea. As a result,
demand for moringa leaf tea, albeit modest, is on the increase, with middle and higher
income groups in particular expressing interest in buying the leaf tea.
The local market for moringa leaf tea is still very small and was described as being mostly
informal. Because, moringa leaf tea is most frequently sold at a few small shops throughout
the country, although various local products are also starting to appear in some of the
capital's bigger supermarkets. Perhaps not surprisingly, among the groups that are most
interested in moringa leaf tea are NGOs that have nutrition and/or food security programs.
‘Recognizing moringa's potential as a powerful tool in their fight against sickness and
malnutrition.
Although the focus of this research is on the potential to produce moringa products for the
Nigerian markets, an important potential market that should not be overlooked is the export
market.
Nigeria shares similarities with other developing and developed nations of the world in
technology advances, socio-economic development and in consumer spending. The
changing landscape in Nigeria economic style has brought about huge appetite for Health
and healthy beneficial product as well as the beverage companies. With a strong population
of close to 170 million the timing for this project is apt. Nigeria has had a huge rural to
urban migration in the past 20 years and has seen unprecedented increase in the need for
healthy beneficial product within the sector.
Similarly, constantly growing number of working men and women are resulting in
increased demand of health beneficial product. The local market size for green tea is
estimated at over 60,000tons yearly and still growing.
The challenge in the industry is not about moringa supply, but the need to invest more in a
high technological and mechanized green tea processing plants to satisfy the demand of the
market, Moringa is very much a self-sustaining industry, which could scale very quickly
with investment in processing machinery and skills training.
Due to the large existing market for green tea targeting both domestic and international
markets for export purposes with an estimated population of over I70 million people is
indeed a large market while the supply of is grossly inadequate. The current fluctuation in
exchange rate has affected tremendously the importation supply position, therefore
increasing the demand for locally produced products, this led to the setting up of small
processing companies in Kwara, Niger, Zamfara, Plateau, Kano and Kaduna States.
Despite the local production, the demand for the product is far beyond the supply.
Competitions exist for all types of businesses. However, the major competitors are
organizations who operate less than 500kg production capacity a day and are not able to
meet the huge demand for the product.
4.2 INDUSTRY ANALYSIS

Also referred to as the "miracle tree", moringa has been revered for centuries in countries
in Asia and Africa for its healing and nutritive properties as well as for its use in a wide
variety of other locations. It is considered to be one of the most useful trees in the world,
including by the World Health Organization (WHO). Use of moringa goes back to the
ancient Egyptians, Greeks and Romans, who are known to have hi valued it for use in
medicine, perfumes and body creams.
Moringa's nutritional properties in particular are highly impressive: almost every part of
the tree is edible and has powerful medicinal properties. Fresh leaves from the moringa
tree, for example, have been shown to contain more than 4x the amount of vitamin A of
carrots, 7x times the vitamin C of oranges, 4x the calcium of milk, 7x the potassium of
bananas, 3 4- the iron of spinach and twice the amount of protein of yoghurt. They also
contain large amounts of minerals, all the essential amino acids, and antioxidants. While
the leaves are eaten throughout West Africa and in parts of Asia, people in the Indian sub-
continent consider the trees’ young seedpods a delicacy as well.
Although mainly known for its nutritional and medicinal properties, moringa is also used
for a variety of other uses, including industrial ones. These include the use of moringa seed
oil for biodiesel, the lubrication of fine machinery, and as an ingredient in cosmetic
products. The seeds and seed cake are used for water purification.
Global
Developing countries in Asia and Africa account for more than 85 percent of world
Moringa Tea production and exports. India and China are dominant in both. Developed
countries account for about 62 percent of world Moringa tea imports.
Table 4
Country Percentage of World Moringa Tea
Consumption
India 29%
China 22%
Japan 5%
Turkey 5%
Pakistan 6%
Iran 4%
Egypt 4%
Poland 1%
Australia 0.4%
Rest of World 23.6%
Total 100%
SIGNIFICANT TRENDS
Nigeria is the largest market in sub-Saharan Africa with a population of more than T60
million people, and a population growth rate estimated at three percent annually. Petroleum
exports account for 20 percent of GDP, 95 percent of total export earnings, and close to 85
percent of federal government revenue. Domestic manufacturing is low with an average
capacity utilization of 4Opercent (2009). This is so mainly due to the high cost and
unreliability of electricity and underdeveloped infrastructure. The market is dominated by
low-income consumers. Nigeria remains a large food importing country (over $3 billion)
despite some limited growth in the agricultural sector over the last few years.
Nigeria is a huge market for green tea and has the potential to consume l.5 million tons.
Industry sources approximate the country's demand at nearly 5 million MT (valued at more
than $10 million) in 2009, of this, about 75,000 metric tons, valued at approximately $1.5
million were imported. Most of the products are sourced from India, china and Pakistan.
The green tea products from India and the alternative supply sources recently became
grossly inadequate. The shrinking of the global supply contributes to the supply gap in
Nigeria.
The major challenge at present is that production in Nigeria is outstripping local demand,
though data for local demand and consumption are not readily available due to the fact that
majority of the local processors/suppliers are operating in the informal sector and there is
no documentation of their production and supply activities. However interactions with
some of the processors revealed that they always experience situation where they produce
with low patronage from buyers, due to the influx of imported substitute.
4.3 KEY SUCCESS FACTORS IN THE INDUSTRY

These are the identified key success factors that should be upheld;
1. Effective Food Quality Management System (Internal quality control, Assurance
and traceability system)
2. Effective Marketing Strategy.
3. Neat and Attractive Packaging System.
4. Consistency in Supply of Quality and Quantity to the product.
5. Product and Systems Certifications.
6. Integrity as Corporate Business Values.
CHAPTER 5
PRODUCTION PROCESS
5.1 GUIDELINES FOR APPROPRIATE OF MORINGA TEA PROCESSING

FACILITY
5.2 PRODUCTION PROCESS AND PROCEDURE
5.3 PRODUCTION FLOW CHART/TECHNOLOGY
5.4 REGULATIONS, STANDARDS AND CERTIFICATION
5.5 QUALITY ASSURANCE AND CONTROL PROCESS
5.6 FACTORY DESIGN AND LAYOUT
5.7 PROCESSING EQUIPMENTS

5.1. GUIDELINES FOR APPROPRIATE OF MORINGA TEA PROCESSING
FACILITY
In establishing an agro-processing industry like Moringa Tea processing factory, it is
imperative to put some critical factors into consideration, that is due diligence, before the
establishment this factory. Because these factors will form the cumulative determinants
that will inform the appropriate location in which the factory should be sited. If these
factors are correctly identify and rightly assessed, it will go a long way in the smooth
running of the factory and contribute immensely to the profitability of the business venture.
Some of these factors include;
i. Nearness to Moringa Tea producing communities. Volume of Moringa Tea
available to the processing plant is very important and this is a function of the
numbers of moringa farmers (especially women) in the communities.
ii. Nearness to main road for easy transportation of raw materials (moringa leaves)
and finished products (Moringa Tea). This will ease the factory logistics, workers,
and costumers and reduce cost on transportations.
iii. Accessibility to clean, safe and pure source of water. A lot of water is required in
processing. Moringa Tea, therefore water anticipated for the processing centre must
be free from contamination (both chemical and microbial contaminates). The
presence of some metal like Lead, iron and Mercury in the water source use for
washing the leaves will definitely contaminate the Tea. Such Tea will not pass
quality test. It is very important to carryout water laboratory test for the processing
centre source of water.
iv. Availability of warehouse to store leaves which will guarantee production and
processing throughout the year. The warehouse should have a capacity to store
moringa leaves for at least six months.
5.2 PRODUCTION PROCESS/PROCESSING FLOW.
The following steps are provided guidelines:
1. Stripping the Leaflets

Strip all the leaflets from the leaf petiole. This can be done directly from the
branches if the leaves have not been stripped off the main branch before
transportation. At this stage, diseased and damaged leaves are discarded.
2. Washing
Wash leaflets in troughs using clean potable water to remove dirt. Wash leaves
again in 1% saline solution for 3-5 minutes to remove microbes. Finally wash again
in clean water. Leaves are now ready for drying. Drain each trough after each wash:
fresh leaves must always be washed with fresh water.
3. Draining
Strain water from the leaves in buckets that have been perforated, spread leaflets
on trays made with food grade mesh and leave to drain between l5 — 30 minutes
before taking them to the dryer.
4. Drying
In order to produce Moringa leaf tea, moisture content of dried leaves should not
be higher than l105%. There are three main methods for drying Moringa leaves.
 Solar drying (recommended for both small and large scale processing): solar
drying is recommended for both small and large scale processing, particularly
for those in rural communities where there is no electricity. Leaves should be
spread thinly on a mesh and dry in the dryer for about 4 hours (temperature
range can be between 35°C—55°C on a very sunny day). The final product
should be very brittle. Loading density should not exceed Z kg/m2.
 Mechanical drying (recommended for large scale leaf processing): a variety 0F

electric or gas hot-air dryers is available on the market. Drying temperatures
should range between 50°C and 55°C, temperature exceeds 55°C, leaves will
"burn" and turn brown. Leaves should be dried until their moisture content is
below 10%. This method is recommended for large scale leaf processing as it
ensures year round production. Loading density should not exceed 2.5 kg/m2.
5. Milling
Mill dry leaves using a stainless steel hammer mill. For personal or household use,
leaves can be pounded in a mortar, or milled with a kitchen blender. Small-scale
processors can use a burr mill or rent/ acquire a commercial hammer mill for routine
milling of their products.
6. Sieving
Sieve the leaf tea if needed. When you mill with a hammer mill, the fineness of the
product will depend on the size of the screen used in milling. lf too coarse, sift using
a sifter with the desired screen size Recommended particle sizes are:
 Coarse (1.0mm – 1.5mm)
 Fine (0.5mm – 1.0mm)
 Very Fine (0.2mm – 0.5mm)
7. Drying the Leaf Tea

Moringa leaf tea strongly attracts moisture and the product can reabsorb humidity
during or after milling. It is easily contaminated by molds and the particles of finely
milled tea are more easily penetrated by bacteria. For this reason, moringa leaf tea
should be dried at 50°C for 30 minutes to reduce moisture content considerably
below 7.5%.
8. Packaging and Labeling

Mill dry leaves using a stainless steel hammer mill. For personal or household use,
leaves can be pounded in a mortar, or milled with a kitchen blender. Small—scale
processors can use a burr mill or rent/ acquire a commercial hammer mill for routine
milling of their products.
The following steps and guidelines are recommended with regards to the packaging
and labeling of moringa leaf tea.
 Personal hygiene: all persons involved in the packaging of moringa leaf
products must ensure that, while on duty, personal cleanliness and hygiene are
maintained. Personal protective equipment (PPE) such as head caps, nose
masks, disposable gloves, etc. must be used at all times.
 Packaging in bulk: the temperature and humidity must be controlled in the

packaging room, to avoid re-humidification of the product. After drying, the tea
is left to cool and packed into clean, single-use tea bags and sealed. This is
enclosed in a second carton and heat-sealed. This is to maintain freshness and
dryness prior to further use. The bags should be stored in a cool, dry place
 Final packaging: the temperature and humidity must be controlled in the

packaging room, to avoid re-humidification of the product. Moringa leaf tea
products should be packaged in clean, dry and opaque containers made of
materials that do not affect the quality of the product. Each package must be
properly sealed to prevent content leakage as Well as moisture absorption.
 Labeling: each package of moringa leaf tea product must be legibly marked
with the following information:
a) Name of product
b) Net content
c) Name and address of producer
d) Country of origin
e) Lot / batch identification number or code
f) Instructions for use
g) Production date
h) Nutritional information (optional).
5.4 REGULATIONS, STANDARDS AND CERTIFICATION

The following regulatory bodies will provide the standard on which our business will be
set upon from the very beginning:
National Agency for Food, Drugs Administration & Control (NAFDAC) - standards for
processing, factory conditions, packaging and quality. The certification of NAFDAC on
our products will give it international acceptance as they are recognized as the regulatory
body for such in Nigeria.
Standards Organization of Nigeria (SON) — as the body of government in charge of

ensuring that products meet required quality standards, we have commenced of testing of
our butter according to the quality parameters from SON to enable us perfect our
production process. We would not compromise on quality in our production, with SON
certification our products will be export ready.
Nigeria Export Promotion Council (NEPC) - as a business that has interest in export, we
will adhere strictly to the guidelines from the NEPC to enable us penetrate the market with
ease. Export procedures and documentation are currently being studied and we will imbibe
the terms and conditions.
Ministry of Trade & Investments - Our Business name and logo will be trademarked
Fair-trade –is a foreign certification, it will give the product appeal in countries such as the
United States and the United Kingdom among others.
5.5 QUALITY STANDARD, ASSURANCE AND CONTROL PROCESS
Standards Organization of Nigeria (SON) in line with her statutory responsibility of
ensuring that products both manufactured in Nigeria and imported into the country meet
expected quality standard, established Nigerian industrial Standards (NIS). This is
contained in a document called ‘A Moringa Tea standard’ specifying a set of requirements
that concern Moringa Tea from the moringa leave through processing to the finished
product. These standards specify quality requirements, packaging and labeling
requirements as well as sampling and test methods.
It is also imperative that individual processing factory/company should have her own
quality standard specification which is always a benchmarked or a bit higher than the
national industrial standard or international standard depending on the off-taker quality
require mentor international market/country intend to access.
For Nigerian Industrial Standard (NIS), the different terminologies associated with the
product are also stated in these standards.
SPECIFICATIONS ON QUALITY REQUIREMENTS

These standards for Moringa Tea products specify quality requirements on the following
parameters: Physical, Chemical and Microbiology properties.
i. Physical Properties;
Colour, Odour, Physical Characteristics, ty, Insoluble debris, Moisture Content and
Melting point
ii. Chemical Properties;
Lead, Mercury, Iron, Protein, and Shelf life, Vitamin E, Vitamin A, FFA, Perioxide
and Bioactive FX.
iii. Microbiological Properties
Coli form Count, Mold and Debris cult.
It is important to note that quality control start at the point of harvest of the fresh moringa
leaves. Handling and processing it determines the quality of the kernel and the quality of
the Tea. This means that subsequent methods/steps during the processing of the leaves have
little or no effect on improving the butter quality as it only maintains the quality of the Tea.
Therefore there is need to control the leaves quality in order to achieve the
required/acceptable quality.
When your moringa leaves is exposed to one or more of the conditions listed below, certain
microsoias activities occur:-
i. Excess heat
ii. Excess moisture
iii. Light exposure
iv. Open air
v. Presence of any metal, etc
In order to achieve quality Moringa Tea, in-process and finished products analysis is very
essential. Samples for the test are usually taken at different stages of the processing and at
different interval depending on the type of test to be carried out. This test will help in
detecting any quality defect before, during and after processing which will form the bases
of the factory traceability system. In each case the starting or basic materials will be
subjected to certain tests in order to determine whether they are suitable for the process
concerned. The analysis to determine the quality of moringa leaves consists of a group of
selected tests, carried out before processing, in-process material and finished product,
which together provides the best possible general insight into the usefulness of the material.
Part of this test can be carried out in the in-house factory laboratory provided it is furnished
with necessary laboratory equipment while the final test may be conducted in bigger
certified laboratory either in-country or abroad as the case may be.
On the basis of the results of these tests, quality is usually designated. All these tests help
to determine the quality and therefore the commercial value of the product.
5.6 FACTORY DESIGN AND LAYOUT
5.7 RECOMMENDATIONS ON THE TYPE OF EQUIPMENT TO PURCHASE
This equipment depend heavily on electricity supply for operation.

Since the factory is a medium size factory with expected annual processing capacity of 20
tones, therefore the type of equipment that will be recommended for usage in the factory
are semi- automated process equipment powered by diesel/petro engine of 8hp.
The average daily combined processing capacity of the factory will be on an average of 3-
5 tons per day. Some of the recommended processing equipment are ;
i. Drying Machine
ii. Dehumidifier
iii. Grating / Milling machine.
iv. Tea blending machine
v. Filling, sealing and packaging machine.
vi. Laboratory Equipment
GRATTING/GRINDING MACHINES
AUTOMATIC DRYING MACHINES
DEHUMIDIFIER MACHINES
TEA BLENDING MACHINES
FILL AND SEALING MACHINE

LABORATORY EQUIPMENT
CHAPTER 6
MARKET ANALYSIS AND MARKETING STARTEGY
6:1. MARKET ANALYSIS AND TARGET MARKET
6:2. MARKETING AND SALES STRATEGY
6:3. MARKET AND SWOT ANALYSIS
6:4. ENVIRONMENT, HEALTH AND SAFTY CONSIDERATION
6:5. RISKS AND MITIGATIONS
6:6. CHANNEL OF DISTRIBUTIONS

6.1 MARKET ANALYSIS AND TARGET MARKET
On the global market, moringa leaf tea is used as a supplement, falling into the same market
category (Herbs and Botanicals) as ‘green tea’ like spirulina, barley grass and wheat grass.
The global market for green tea (also referred to the nutraceutical market) has seen a rapid
growth over the past years, and this is a trend that is expected to continue. Interestingly,
the tremendous growth of the nutraceutical market is strongly driven by the rising
consumption of dietary supplements (which in 2013 took up a market share of 37%), and
in particular a sharp increase in the sales of herbal and botanical supplements (RNCOS,
2013).Overall, the international herbal supplement and remedies market is expected to
reach US$ 93 billion by 2015(Global industry Analysts Inc, 2013).
The main markets for green tea supplements are the US, followed by Western Europe and
Japan, all with an affluent middle class willing to invest in alternative in alternative health
and food products. While the US dominates the overall market in nutritional supplements,
Europe accounts for the largest share of the world market in herbal/botanicals, supplements
and remedies. Asi-Pacific and Japan make up the other important market for botanicals,
with the Asi-pacific market (led largely by china and India) set to pave the way with the
highest growth rate (10.5%) through 2017 (Global industry analysis, Inc, 2013).
Although moringa leaf tea is traded on an increasingly large scale, market data about trade
volumes and market share are not available. Judging by the increasing number of
international products available on the international market (as well as the growing number
of international producers), it seems safe to say that demand for moringa leaf tea products
is growing. Various potential international buyers of moringa products confirm that there
is demand for this product.
In the US, moringa is increasingly becoming available in health shops, both online and
offline. While the leaf tea has been sold for a few years already, stores like whole foods
are also starting to carry ‘consumer ready’ products like the KuliKuli health bars, which
currently contain moringa sourced in Africa. Various US companies have started to
produce their own moringa, most often in central or Latin America.
Although moringa leaf tea as dietary supplement is becoming increasingly popular, in the
European beverage segment moringa leaves are currently mostly used in teas or energy
drinks (BTC-Belgian Development Agency). They are marketed as caffeine-free energy
boosters and as a super food, with a composition comparable to spirulina. Under current
EU regulation, only the whole or tea leaves of Moringa are allowed to be imported.
Potential for import of other products derived from Moringa leaves such as leaf extract-
remains limited as their status under the Novel food Regulation is unclear. Industry sources,
however, indicate that extracts from Moringa leaves could have good commercial potial
considering their high antioxidant activity along with mineral and vitamin content (BTC-
Belian development agency).
The current global market leaf tea is dominated by India, which meets more than 80% of
global demand. That such a large percentage of global Moringa production is taking place
in India is largely due to the country’s long tradition of including moringa in its food
consumption. As a result, Indian moringa is grown on large plantations, making it possible
for Indian wholesalers to sell moringa leaf tea at a comparatively low price (and most of
the time online). More recently, the market has seen additions of various African
companies that differentiate themselves by branding their moringa products as ‘wild-
collected’ and/or grown by smallhoder farmers. They claim their moringa leaftea is, as a
result, of a higher quality, while also providing a story that Western consumers consider
important. The market is complete by a variety of Western retail shops that sell smaller
packages to end consumers in the US and Western Europe. Interestingly, it is not
financially feasible to process moringa leaves in the EU. This is mainly due to the fact that
moringa leaves need to be dried immediately upon harvesting and the cost of transporting
loose dried leaves (higher volume as well as more weight due to stems) is much higher
than transporting dried leaf tea. This means EU buyers are dependent on countries that
produce moringa in tea form in order to meet their demands.
While strong market growth means there is space for new entrants on the market for
moringa leaf tea products, it will be essential for new players to differentiate themselves
from the current major ones. In order to avoid competition with Indian (and increasingly
Chinese) wholesalers that already offer moringa leaf tea at a comparatively low price,
Nigerian producers are most likely to be successful targeting market niches where they are
less subject to rivals and can demand higher margins. Examples of such niches are
companies or retailers that target the higher end of the market with high quality, exotic
products that are certified sustainable, fair and/or organic.
Until recently the local Nigerian market for moringa products remained largely
undeveloped. This has begun to change over the past years following international trends
along with Nigerian government’s recognition (led by the Ministries of Health and
Agriculture) of moringa’s potential to serve as a powerful tool in the local fight against
sickness and diseases and malnutrition. In 2013 the government through NAFDAC
launched a large-scale information campaign aimed at informing the local population about
moringa’s many benefits.
The impact of these efforts has had results: local awareness of moringa (moringa leaf tea
and powder in particular is clearly on the increase, and as a result demand for moringa
products is growing. To meet this increased demand, more processing companies and/or
organizations are starting to grow (and to a much more limited extent process) moringa,
resulting in a variety of locally produced moringa products becoming available in the local
market while most of these initiatives are still operated on a largely informal basis, there is
a clear interest and potential to develop more commercial moringa enterprises.
6.1.1 THE NIGERIAN MARKET FOR MORINGA LEAF TEA AND PRICING
In Nigeria, Following global trends and information campaigns initiated by the
government, the benefits of moringa leaf tea/powder are becoming increasingly well
known. Many of those inter viewed for this study, across all income groups, mentioned
that they had heard about the benefits of consuming moringa leaf tea. More importantly, a
Substantial amount indicated they have recently started taking motinga leaves and moringa
leaf tea. As a result, demand for moringa leaf tea, albeit modest, is on the increase, with
middle and higher income groups in particular expressing interest in buying the leaf tea.
The local market for moringa leaf tea is still very small and was described as being mostly
informal. Because, moringa leaf tea is most frequently sold at a few small shops throughout
the country, although various local products are also starting to appear in some of the
capitals bigger supermarkets.
Perhaps not surprisingly, among the groups that are most interested in moringa leaf tea are
NGOs that have nutrition and/or food security programs. Recognizing moringa’s potential
as a powerful tool m their fight against sickness and malnutrition.
Although the focus of this research is on the potential to produce moringa products for the
Nigerian markets, an important potential marker that should not be overlooked is the export
market.
As is the case with moringa leaf tea sold on the international market, prices for locally
produced moringa leaf tea vary substantially: PwodwiLakay, a small company that focuses
on selling its retail product to the local market, sells the tea for 150/110gr Another
company, Ayiti sells its leaf tea for flog US$36/lb) The company Plasbags is selling
moringa leaf tea for U$352.5 (110g)
Nigeria shares similarities with other developing and developed nations of the world in
technology advances, socio-economic development and in consumer spending. The
changing landscape in Nigeria’s economic style has brought about huge appetite for Health
and healthy beneficial product as well as the beverage companies. With a strong population
of close to 170 million the timing for this protect is apt. Nigeria has had a huge rural to
urban migration in the past 20 years and has seen unprecedented increase in the need for
healthy beneficial product within the sector.
Similarly, constantly growing number of working men and women are resulting in
increased demand of: health beneficial product. The local market size for green tea is
estimated at over 60,000 tons yearly and still growing.
The challenge in the industry is not about moringa supply, but the need to invest more in a
high technological and mechanized green tea processing Plants to satisfy the demand of
the market, Mormgais very much a self- sustaining industry, which could scale very
quickly with investment in processing machinery and skills training.
6.1.2 DEMAND/SUPPLY GAP ANALYSIS

Due to the large existing market for green tea targeting both domestic and international
markets for export purposes with an estimated population of over I70 million people is
indeed a large marker while the supply of is grossly inadequate. The current fluctuation in
exchange rate has affected tremendously the importation supply position, therefore
increasing the demand for locally produced products, this led to the setting up of small
processing companies in Kwara, Niger, Zamfara, Plateau, Kano and Kaduna States,
Despite the local production, the demand for the product is far beyond the supply.
6.2 MARKETING AND SALES STRATEGY
The company will adopt multi-marketing and sales approach to fulfill the varying desires
and expectations of their target customers both nationally and internationally. This
approach will provide the firm with a major competitive advantage and significant
additional commercial opportunities compared to as single approach. It will involve the
engagement of both marketing staff and sales consultants. The former will target customers
in Nigeria while the latter will focus on international customers.
The goal of the marketing strategy is to devise a marketing plan and formulate strategies,
which would help to achieve the marketing objectives of the company. For international
market, the sales consultant will leverage on her international contacts to promote the
company and her products at international trade fair both within and outside Nigeria with
the purpose of attracting new buyers/off takers.
For the local market (Nigerian market), special attention will be given to two marketing
segment; cosmetic/soap manufacturers that uses the unrefined Moringa Tea for further
production, and end users of unrefined Moringa Tea. The selling strategy to the end users
to purchase our products will be based on three basic reasons; quality, uniqueness and
affordability.
Specialized marketing and sales efforts will be geared towards corporate entities like
maternity home/hospitals, hair dressing salon and cosmetic shops. Strategic partnership
will be developed as well with retailers that can significantly improve the in-store
experience for the product. Establishing shop-in-shop formats or retail partnership where
the company is leading the industry. Such co-operations can be particularly effective in
marketing that are dominated by price and lack of differentiation. Our products and
services will be promoted via the following mediums:
Website: Up to date information on our products and services will be made available to
our customers. Orders can be made online through our web portal using an online payments
system.
Electronic and print media: Awareness will be created for our products and services
through the radio, newspapers and fliers
Direct marketing: Proposal will be written to companies with the potential to patronize
our products and services e.g importing and exporting companies etc through our sales
consultant.
One-on-one marketing: Is easy when our service and products meet customers’
expectation. We will therefore ensure good quality and excellent customer service in all
we do.
Network marketing, commission based marketing: Are all marketing strategies that will
be considered in the course of our operations.
Training and Capacity building programmes: will be held from time to time and this
will also serve as an avenue to publicize our products and services.
6.3 MARKETING AND SWOT ANALYSIS
SWOT analysis helps the investment reach its objectives. This is a strategic planning tool.
It helps the business to focus on key issues and looks at the Strengths, Weaknesses,
Opportunities and Threats involved in the business.
Strength Weakness
 Availability of raw materials in abundance  Non availability of international certified
 NEPC’s incentive for export processed laboratory for testing
products  Inadequate finance
 Very good Understanding of the market  Poor infrastructural facility to support
 Having a state of the art facility business (power)
factory/machinery  High cost of production and doing business
 Dependable customer base in Nigeria
 High interest rate
Opportunity Threats
 Export market in USA, Europe, Asia and  Non establishment of commercially viable
Middle East domestic Moringa tree plantations in
 Growing acceptance of made in Nigeria Nigeria
products  Climate change that may affect
 Few players in the Moringa Tea processing sectional/productivity or output of Moringa
industry in Nigeria trees
 Growing customer base  Local level of insecurity in some Moringa
 Current favourable government policies for producing communities
SME  Wrong Perception of made in products
 Volume commitments (Nigeria’s poor image) in the international
community.
6.4 ENVIRONMENTAL, HEALTH AND SAFETY CONSIDERATION

The environmental and social impact assessment will be carried out to reveal the effect
(both positive and negative) of the moringa leaves processing activities will have on the
immediate environment.
Safety first will be the company policy and every factory staff will be supplied with
protective equipment to be used in the factory during working period.
6.5 RISKS AND MITIGATIONS

S/N TYPE OF RISK RISK ANALYSIS RISK MITIGATIONS
1. OPERATIONAL Poor access of insufficient Raw material could be sourced
raw materials (moringa through moringa tree farmers’
leaves) supplies cooperation.
Irregular or non-availability Storage of extra leaves in the

of moringa leaves for supply warehouse for off-season
during off-production season processing
Moringa leaves supplier sells Offer supplier an attractive price
their nuts to other buyers and pay immediately
Build loyalty by involving the

supplier in the business.
Breakdown of processing Usage of equipment and machines

equipment and industrial that are among the best in terms of
accident model, supplier ratings, efficiency,
cost effectiveness and maintenance
cost economy
Have an in-house technical team

that can carry out minor repairs.
Major repairs can be contracted to

external technicians/engineers
Top quality Safety measure be put

in place to cope with any machine
operational risk.
Hike in fuel prices or fuel Construction/Acquiring of fuel
scarcity’s storage tank that can last for
several months
Workers going on strike Adopting morale boosting and

productivity enhancing personnel
policies and better remuneration
packages.
Good employee relationship with

management.
2. MARKET stiff competition in the Good distributor volume and value
market by other producers incentives
Using price discounts as a market

entry strategy
Product certification Top quality

products at all times
Efficient production strategies to

ensure constant product
availability and order delivery
Demand for products Check out market trends before
entering into contracts.
Slow down, no buyers can Look into local and regional
afford markets.
High product quality and standards
Fluctuation in exchange rates Negotiate sales prices in local

currency or in a relatively stable
currency (e.g. Euro) sell back to
back
3. FINANCIAL Payment to moringa leaves Handle payment via bank account.
suppliers disappear on the
way Involve moringa leaves supplier
cooperative groups
Margins are not sufficient to Increase efficiency, reduce
cover operational cost production cost per unit.
Calculate with leeway for

unforeseen cost and sufficient
target margins
No loan can be obtained to Organize trade loans in time, agree
maintain cash flow with suppliers and other customers
when payment are to be made
The buyers do not pay or Know and trust your client (track
payless when after having record).
received the products
6.6. CHANNEL OF DISTRIBUTIONS
DISTRIBUTIONS CHANNEL
Finished Product Store

Warehoused goods Finishing Line + Quality Control
Distribution/Marketing Manager
Export Markets Distributor

Mega Distributor outlet
Special Household
Major markets Sales point
Mage stores orders Customer
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CHAPTER 7
FINANCIAL FORECAST
7:1. FINANCIAL ANALYSIS AND APPRAISAL
7:2. FINANCIAL PLAN AND STRUCTURE
7:3. INCOME STATEMENTS
7:4. CASHFLOW STSTEMENTS
7:5. BALANCE SHEET STATEMENTS
7:6. BREAKEVEN AND RATIO ANALYSIS
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7. FINANCIAL ANALYSIS AND APPRAISAL
7.1 Assumptions
The financial models for the Green Tea processing facility presented here and all assumptions are
based on primary research conducted on similar processors and further confirmed by stakeholders
who are experts in the industry. The table below summarizes the key assumptions made in the
financial models.
Variables Value Comments
Operating Assumptions
Minimum monthly 10,000 kg Based on interview operating time of 7 hours/day (1 hour
capacity. rest).
Number of employees 12 Most commonly observed.
Minimum Wage # 20,000 Model assumes monthly legal minimum wage for factory
workers of similar operations.
Working days 21 per month Sunday is a day of rest at most factories.
Price / Ton N250,000 -- Assuming a typical inception/ growth phase.
N270,000
Revenue Assumptions
Minimum Volume 10,000 Kg This is the mid-point quoted range of 10-20 kg. Being
processed per month fairly consistent throughout with other operators.
Capacity processed per 50%-100% According to interviews, a conservative estimate of 50%
month was made.
Trading Assumptions
Volume purchased per 1/3 of total Purchase is spread over 3 months, 3 months selected
month purchased reflect period of highest supply and lowest price.
Volume sold per month 1/3 of total If we maintain high quality, selling 10 tons is feasible.
sold Typically, some spoilage occurs and quality reduction
eliminates potential for sale to large-scale buyers.
Spoilage / Losses 2% Typical losses are 2% of purchased volume, but it is
assumed that we will employ basic quality control
practices.
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Product Prices Avg. prices Based on market research of prices from 2017
Investment Assumptions
All investment assumptions were derived from interviews, either with processors, marketers involved
in trading, or industry players.
Running Cost Assumptions
Energy costs (per 0.03% Conservative estimates based on interviews,
month)
Maintenance and 1% Estimated from interview data. Maintenance involves
repairs (per month) cleaning residues and applying lubricant to moving parts.
Financial assumptions
Taxes 30% Cash flow estimates earnings before interest and taxes.
Exchange rate #400 : l US$ Current rate as of with CBN.
Loan Assumptions
Loan Amount #54,000,000 Machineries, Equipment, working capital cold vans etc.
Interest rate 12.5% Typical interest rate offered to entrepreneurs by

development banks in Nigeria for loans secured by
collateral.
Payback period 60 months Typical repayment period offered to entrepreneurs by
development banks in Nigeria.
7.2 Limitations of the Financial Models

While the data used to build these financial models is as accurate as possible. These models
should be verified, updated and fine-tuned prior to being used in the roll-out of the Project.
7.3 Estimated Project Cost.

When completed, the estimated cost of the expanded project is N108, 000,000.00 Million.
The breakdown is displayed in Table below:
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Proposed Initial Capital
Structure
In Thousands of Nigerian Naira
Investment Total
N'000 N'000
Plant & Machinery 38,000 38,000
Auxiliary machines/Equipment 2,250 2,250
Land & Building 32,950 32,950
Furniture & Fittings 1.750 1.750
Operational Vehicles 3,250 3,250

Generator 8,000 8,000
Pre-Operating Cost 6,400 6,400
Working Capital 10,250 10,250
Contingency 5,150 5,150
Total Project Cost 108,000 108,000
Percentage (%) 100%
9.4 Proposed Financing Plan

The proposed financing plan for the project is as follows:
Source Amount %
(N`000)
Equity Contribution (in form of money invested ) 54,000 50%
New Term Loan 54,000 50%
108,000 100
TOTAL
The term loan is expected to attract maximum interest rate of 12.5% per annum.
58 | P a g e
Moringa
Proposed Initial Capital Structure
Description Equity Loan Additions Total
N'000 N'000 N'000 N'000

Cash - - -
Land & Building 16,475 16,475 - 32,950
Plant & Machinery 19,000 19,000 - 38,000
Auxillary Machine/EquipmentS 1,125 1,125 - 2,250
Furniture & fittings 875 875 - 1,750
Operational Vehicles 1,625 1,625 - 3,250
Generator 4,000 4,000 - 8,000
Pre-operating cost 3,200 3,200 - 6,400
Working Capital 5,125 5,125 - 10,250
Contingeny 2,575 2,575 - 5,150
Total Project Cost 54,000 54,000 - 108,000
Percentage (%) 50% 50% 100%
Summary
Equity Contribution 50%
Loan 50%
100%
Year 1
Equity 54,000
Loan 54,000
108,000
Fixed Assets 86,200

Bank -
Others 21,800
108,000
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Moringa
Project Requirement
Category Description Total Cost

N'000 N'000
Land & Building Land & Building 32,950 32,950
Machinery Plant & Machinery 38,000 38,000
Auxillary Machine/Equipment 2,250 2,250
Furniture & fittings 1,750 1,750
Operational Vehicles 3,250 3,250
Generator 8,000 8,000
Others Cost Pre-operating cost 6,400 6,400
Working Capital 10,250 10,250
Contingeny 5,150 5,150
108,000 108,000
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Moringa Tea
Loan Information
Summary
Loan Amount 54,000 Rate (per period) 3%
Annual Interest Rate 12.5% Total Payments 73,434
Term of Loan in Years 5 Total Interest 19,434
First Payment Date 1/1/2018
Payment Frequency Quarterly
Compound Period Quarterly
Payment Type End of Period
Quarterly Payment(N'000) 3,672
Yearly Summary
Additional Year-End
Year Payments Interest Paid Principal Paid
Payments Balance
N'000 N'000 N'000 N'000 N'000
- - - - 54,000
2018 14,687 - 6,370 8,317 45,683
2019 14,687 - 5,281 9,406 36,277
2020 14,687 - 4,049 10,638 25,639
2021 14,687 - 2,655 12,032 13,607
2022 14,687 - 1,079 13,607 -
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OPTION -1 OPERATING @ 100% PRODUCTION CAPACITY
Projected Income Statement Option_1 @ 100%

Period Year_1 Year_2 Year_3 Year_4 Year_5
100% 100% 100% 100% 100%
% of % of % of % of % of
N'000 N'000 N'000 N'000 N'000
Revenue Revenue Revenue Revenue Revenue
Revenue 117,600 119,952 122,304 124,656 127,008
Raw Materials+Packaging 58,212 49.5% 61,123 51.0% 64,179 52.5% 67,388 54% 70,757 56%
Production Wages 2,280 1.9% 2,508 2.1% 2,759 2.3% 3,035 2% 3,338 3%
60,492 63,631 66,938 70,422 74,095
Gross Profit 57,108 56,321 55,366 54,234 52,913
Admin Salaries 2,046 1.7% 2,251 1.9% 2,476 2.0% 2,723 2.2% 2,996 2.4%
Pre-Operating Cost 6,400 5.4% - 0.0% - 0.0% - 0.0% - 0.0%
Marketing & Sales Expenses 1,235 1.1% 1,259 1.1% 1,284 1.1% 1,309 1.1% 1,334 1.1%
Vehicle Fuelling and Maintenance 163 0.1% 171 0.1% 179 0.1% 188 0.2% 198 0.2%
Utilities 965 0.8% 1,013 0.8% 1,064 0.9% 1,117 0.9% 1,173 0.9%
Repairs and Maintenance of PPE 483 0.4% 507 0.0% 532 0.0% 559 0.0% 586 0.0%
Interest on Loan 6,370 5.4% 5,281 4.4% 4,049 3.3% 2,655 2.1% 1,079 0.8%
Depreciation 7,534 6.4% 7,534 6.3% 7,533 6.2% 7,534 6.0% 6,284 4.9%
Total Expenses 25,195 18,015 17,117 16,085 13,650
Profit Before Tax 31,913 38,306 38,250 38,148 39,263
Taxation Provision @ 30% 9,574 8.1% 11,492 9.6% 11,475 9.4% 11,445 9.2% 11,779 9.3%
Profit After Tax 22,339 26,814 26,775 26,704 27,484
Retained Earnings 22,339 49,153 75,928 102,632 130,116
Profit Margin 19% 22% 22% 21% 22%
Cost of Debt 8.8% 8.8% 8.8% 8.8% 8.8%
DSCR 5.29 6.85 8.37 11.48 20.92
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Projected Cash Flow Option_1 @ 100%
INFLOW N'000 N'000 N'000 N'000 N'000

Equity 54,000 - - - -
Loan 54,000 - - - -
Cash from Debtors 98,784 125,456 127,925 130,395 132,864
SUB-Total 206,784 125,456 127,925 130,395 132,864
OUTFLOW
Land & Building 32,950 - - - -
Plant & Machinery 38,000 - - - -
Auxillary Machine/Equipment 2,250 - - - -
Furniture & fittings 1,750 - - - -
Operational Vehicles 3,250 - - - -
Generator 8,000 - - - -
Raw Materials+Packaging 40,748 60,249 63,262 66,425 69,746
Production Wages 2,280 2,508 2,759 3,035 3,338
Admin Salaries 2,046 2,251 2,476 2,723 2,996
Pre-Operating Expenses 6,400
Marketing & Sales Expenses 1,235 1,259 1,284 1,309 1,334
Vehicle Fuelling and Maintenance 163 171 179 188 198
Utilities 965 1,013 1,064 1,117 1,173
Repairs and Maintenance of PPE 483 507 532 559 586
Loan Repayment-Interest 6,370 5,281 4,049 2,655 1,079
Loan Repayment-Principal 8,317 9,406 10,638 12,032 13,607
Taxation - 9,574 11,492 11,475 11,445
VAT 4,704 5,974 6,092 6,209 6,327
SUB-Total 159,910 98,193 103,826 107,727 111,829
Summary
Opening Cash Balance - 46,874 74,137 98,236 120,904
Surplus/(Deficit) 46,874 27,263 24,099 22,668 21,036
Closing Cash Balance 46,874 74,137 98,236 120,904 141,940
63 | P a g e
Projected Balance Sheet Option_1 @ 100%
Year_1 Year_2 Year_3 Year_4 Year_5

Property, Plant & Equipments N'000 N'000 N'000 N'000 N'000
Land & Building 32,291 31,632 30,973 30,314 29,655
Plant & Machinery 34,200 30,400 26,600 22,800 19,000
Auxillary Machine/Equipment 2,025 1,800 1,574 1,349 1,124
Furniture & fittings 1,313 875 438 - -
Operational Vehicles 2,438 1,625 813 - -
Generator 6,400 4,800 3,200 1,600 -
78,666 71,132 63,597 56,063 49,779
Current Assets
Debtors 24,696 25,190 25,684 26,178 26,672
Bank 46,874 74,137 98,236 120,904 141,940
150,236 170,459 187,517 203,145 218,391
Financed By
Equity 54,000 54,000 54,000 54,000 54,000
Long Term Liabilities

Loan 45,683 36,277 25,639 13,607 -
Current Liabilities
Creditors 17,464 18,337 19,254 20,216 21,227
Company Tax 9,574 11,492 11,475 11,445 11,779
VAT Payable 1,176 1,200 1,223 1,247 1,270
150,236 170,459 187,517 203,145 218,391
KEY INDICATORS
Current Ratio 2.54 3.20 3.88 4.47 4.92
Debt/Equity Ratio 97% 65% 44% 30% 19%
ROCE 31% 31% 27% 24% 22%
FAT 1.49 1.69 1.92 2.22 2.55
ROE 29% 26% 21% 17% 15%
Debt/Total Assets 49% 39% 31% 23% 16%
DSCR 5.29 6.85 8.37 11.48 20.92
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Break-Even Analysis Option_1 @ 100%
100% 100% 100% 100% 100%
N'000 N'000 N'000 N'000 N'000
Net Sales Revenue 117,600 119,952 122,304 124,656 127,008
Variables Costs 61,727 64,890 68,222 71,731 75,429
Contribution 55,873 55,062 54,082 52,925 51,579

CS Ratio 48% 46% 44% 42% 41%
Fixed Cost

Utilities 965 1,013 1,064 1,117 1,173
Depreciation 7,534 7,534 7,533 7,534 6,284
Interest on Loan 6,370 5,281 4,049 2,655 1,079
15,032 13,999 12,825 11,495 8,734
BEP (N) 31,638 30,496 29,003 27,074 21,506

MOS (N) 85,962 89,456 93,301 97,582 105,502
BEP (%) 27% 25% 24% 22% 17%
65 | P a g e
Computation of Cash Collection, Payment, VAT, Debtors and Creditors
1st Month/Year 80%
Debtors Collection Assumption
Next Month/Year 20%

N'000 N'000 N'000 N'000 N'000
Sales 123,480 125,950 128,419 130,889 133,358
Cash Received: 1st Month/Year 98,784 100,760 102,735 104,711 106,687
Next Month/Year - 24,696 25,190 25,684 26,178
Collection From Debtors 98,784 125,456 127,925 130,395 132,864
Debtors 24,696 25,190 25,684 26,178 26,672
VAT on Collection @ 5% 4,704 5,974 6,092 6,209 6,327
1st Month/Year 70%

Creditors Payment Assumption
Next Month/Year 30%
N'000 N'000 N'000 N'000 N'000
Purchases
1st Month/Year 40,748 42,786 44,925 47,171 49,530
Cash Paid
Next Month/Year - 17,464 18,337 19,254 20,216
Amount Paid to Creditors 40,748 60,249 63,262 66,425 69,746
Creditors 17,464 18,337 19,254 20,216 21,227
66 | P a g e
Assumptions Year 1 Year 2 Year 3 Year 4 Year 5
Production
Input Requirement (Tons/Day) 2.00 2.00 2.00 2.00 2.00
Calender Months/Annum 12 12 12 12 12
No. of days/month 21 21 21 21 21
No. of days/Annum 200 200 200 200 200
Production/Annum/(Ton) 504 504 504 504 504
Normal Loss/Wastages (Ton) 10 10 10 10 10

Output @ 100% 494 494 494 494 494
Depreciation (Straight Line) 7,534 7,534 7,533 7,534 6,284

Payment to Creditors 70% 30%
Receipt from Debtors 80% 20%
Inflation 5% 5% 5% 5% 5%
Selling Price N/Ton 250,000 255,000 260,000 265,000 270,000
Depreciation Rate:
Land & Building 2% 2% 2% 2% 2%
Plant & Machinery 10% 10% 10% 10% 10%
Auxillary Machine/Equipment 10% 10% 10% 10% 10%
Furniture & Fittings 25% 25% 25% 25% 25%
Operational Vehicles 25% 25% 25% 25% 25%
Generator 20% 20% 20% 20% 20%
VAT on Sales 5% 5% 5% 5% 5%
Selling Prices Price/Ton Year_1 Year_2 Year_3 Year_4 Year_5

Product N'000 N'000 N'000 N'000 N'000 N'000
Sales 123,480 125,950 128,419 130,889 133,358
123,480 125,950 128,419 130,889 133,358
67 | P a g e
Analysis of Cost/Expenses
N'000 N'000 N'000 N'000 N'000
Variable Cost
Marketing & Sales Expenses 1,235 1,259 1,284 1,309 1,334
1,235 1,259 1,284 1,309 1,334
Raw Materials (Moringa Leaves) 55,440 58,212 61,123 64,179 67,388

Packaging Materials 2,772 2,911 3,056 3,209 3,369
61,727 64,890 68,222 71,731 75,429

Fixed Cost
Admin Salaries & Wages 2,046 2,251 2,476 2,723 2,996
Utilities 965 1,013 1,064 1,117 1,173
Depreciation 7,534 7,534 7,533 7,534 6,284
11,190 11,475 11,784 12,121 11,237
Total 72,917 76,365 80,005 83,852 86,665
Price/Ton Year_1 Year_2 Year_3 Year_4 Year_5

Qty Reqd
Direct Cost N'000 N'000 N'000 N'000 N'000 N'000
Raw Materials 504 110 55,440 60,984 67,082 73,791 81,170
58,212 63,895 70,139 77,000 84,539
68 | P a g e
Projected Income Statement Option_2 @75%

Year Year_1 Year_2 Year_3 Year_4 Year_5
75% 75% 75% 75% 75%
N'000 N'000 N'000 N'000 N'000
Revenue 88,200 89,964 91,728 93,492 95,256
45,939 48,350 50,893 53,575 56,406
Gross Profit 42,261 41,614 40,835 39,917 38,850
Admin Salaries 2,046 2.3% 2,251 2.5% 2,476 2.7% 2,723 2.9% 2,996 3.1%
Marketing & Sales Expenses 926 1.1% 945 1.1% 963 1.1% 982 1.1% 1,000 1.1%
Utilities 965 1.1% 1,013 1.1% 1,064 1.2% 1,117 1.2% 1,173 1.2%
Interest on Loan 6,370 7.2% 5,281 5.9% 4,049 4.4% 2,655 2.8% 1,079 1.1%
Depreciation 7,534 8.5% 7,534 8.4% 7,533 8.2% 7,534 8.1% 6,284 6.6%
Total Expenses 24,886 17,701 16,796 15,758 13,316
Taxation Provision @ 30% 5,212 5.9% 7,174 8.0% 7,212 7.9% 7,248 7.8% 7,660 8.0%
Profit After Tax 12,162 16,739 16,828 16,911 17,874
Profit Margin 14% 19% 18% 18% 19%
Cost of Debt 8.8% 8.8% 8.8% 8.8% 8.8%
DSCR 3.80 5.11 6.20 8.43 15.15
69 | P a g e
Projected Cash Flow Option_2 @75%
INFLOW N'000 N'000 N'000 N'000 N'000

Equity 54,000 - - - -
Loan 54,000 - - - -
SUB-Total 182,088 94,092 95,944 97,796 99,648
OUTFLOW
Generator 8,000 - - - -
Admin Salaries 2,046 2,251 2,476 2,723 2,996
Marketing & Sales Expenses 926 945 963 982 1,000
Utilities 965 1,013 1,064 1,117 1,173
Taxation - 5,212 7,174 7,212 7,248
VAT 3,528 4,481 4,569 4,657 4,745
SUB-Total 148,238 76,961 81,849 84,978 88,280
Summary
Surplus/(Deficit) 33,850 17,131 14,095 12,818 11,368
70 | P a g e
Projected Balance Sheet Option_2 @75%

Land & Building 32,291 31,632 30,973 30,314 29,655
Plant & Machinery 34,200 30,400 26,600 22,800 19,000
Generator 6,400 4,800 3,200 1,600 -
78,666 71,132 63,597 56,063 49,779
Current Assets
Debtors 18,522 18,892 19,263 19,633 20,004
Bank 33,850 50,981 65,076 77,894 89,263
131,038 141,005 147,936 153,591 159,045
Financed By
Equity 54,000 54,000 54,000 54,000 54,000

Loan 45,683 36,277 25,639 13,607 -
Current Liabilities
Creditors 13,098 13,753 14,440 15,162 15,920
Company Tax 5,212 7,174 7,212 7,248 7,660
VAT Payable 882 900 917 935 953
131,038 141,005 147,936 153,591 159,045

- - - - -
KEY INDICATORS Option_2 @75%
Current Ratio 2.73 3.20 3.74 4.18 4.45
ROCE 21% 24% 22% 21% 20%
FAT 1.12 1.26 1.44 1.67 1.91
ROE 18% 20% 17% 14% 13%
DSCR 3.80 5.11 6.20 8.43 15.15
71 | P a g e
75% 75% 75% 75% 75%
N'000 N'000 N'000 N'000 N'000
Variables Costs 46,865 49,295 51,856 54,557 57,406
Contribution 41,335 40,669 39,872 38,935 37,850

CS Ratio 47% 45% 43% 42% 40%
Fixed Cost

Utilities 965 1,013 1,064 1,117 1,173
Depreciation 7,534 7,534 7,533 7,534 6,284
Interest on Loan 6,370 5,281 4,049 2,655 1,079
15,032 13,999 12,825 11,495 8,734
BEP (N) 32,074 30,966 29,504 27,601 21,980

MOS (N) 56,126 58,998 62,224 65,891 73,276
BEP (%) 36% 34% 32% 30% 23%
72 | P a g e
1st Month/Year 80%
Next Month/Year 20%

N'000 N'000 N'000 N'000 N'000
Sales 92,610 94,462 96,314 98,167 100,019
Next Month/Year - 18,522 18,892 19,263 19,633
Debtors 18,522 18,892 19,263 19,633 20,004
1st Month/Year 70%

Next Month/Year 30%
N'000 N'000 N'000 N'000 N'000
Purchases
1st Month/Year 30,561 32,089 33,694 35,379 37,147
Cash Paid
Next Month/Year - 13,098 13,753 14,440 15,162
Creditors 13,098 13,753 14,440 15,162 15,920
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Assumptions Year_1 Year_2 Year_3 Year_4 Year_5
Production
No. of days/Annum 200 200 200 200 200
Normal Loss/Wastages 8 8 8 8 8
Output @ 75% 370 370 370 370 370
Depreciation (Straight Line) 7,534 7,534 7,533 7,534 6,284

Inflation 5% 5% 5% 5% 5%
Selling Price N/Ton 250,000 255,000 260,000 265,000 270,000
Depreciation Rate:
Plant & Machinery 10% 10% 10% 10% 10%
Generator 20% 20% 20% 20% 20%
VAT on Sales 5% 5% 5% 5% 5%

Product N'000 N'000 N'000 N'000 N'000 N'000
Sales 92,610 94,462 96,314 98,167 100,019
92,610 94,462 96,314 98,167 100,019
74 | P a g e
N'000 N'000 N'000 N'000 N'000
Variable Cost
Marketing & Sales Expenses 926 945 963 982 1,000
926 945 963 982 1,000

46,865 49,295 51,856 54,557 57,406

Fixed Cost
Utilities 965 1,013 1,064 1,117 1,173
Depreciation 7,534 7,534 7,533 7,534 6,284
11,190 11,475 11,784 12,121 11,237
Total 58,055 60,770 63,640 66,678 68,643

Qty Reqd
Raw Materials 378 110 41,580 45,738 50,312 55,343 60,877
75 | P a g e
Projected Income Statement

Year Year_1 Year_2 Year_3 Year_4 Year_5
50% 50% 50% 50% 50%
N'000 N'000 N'000 N'000 N'000
Revenue 58,800 59,976 61,152 62,328 63,504
31,386 33,069 34,848 36,729 38,717
Gross Profit 27,414 26,907 26,304 25,599 24,787
Admin Salaries 2,046 3.5% 2,251 3.8% 2,476 4.0% 2,723 4.4% 2,996 4.7%
Marketing & Sales Expenses 617 1.1% 630 1.1% 642 1.1% 654 1.1% 667 1.1%
Utilities 965 1.6% 1,013 1.7% 1,064 1.7% 1,117 1.8% 1,173 1.8%
Interest on Loan 6,370 10.8% 5,281 8.8% 4,049 6.6% 2,655 4.3% 1,079 1.7%
Depreciation 7,534 12.8% 7,534 12.6% 7,533 12.3% 7,534 12.1% 6,284 9.9%
Total Expenses 24,578 17,386 16,475 15,431 12,983
Taxation Provision @ 30% 851 1.4% 2,856 4.8% 2,949 4.8% 3,051 4.9% 3,541 5.6%
Profit After Tax 1,986 6,665 6,881 7,118 8,263
Profit Margin 3% 11% 11% 11% 13%
Cost of Debt 8.8% 8.8% 8.8% 8.8% 8.8%
DSCR 2.32 3.37 4.03 5.39 9.38
76 | P a g e
Projected Cash Flow
In Thousands of Nigerian Naira
INFLOW N'000 N'000 N'000 N'000 N'000
Equity 54,000 - - - -
Loan 54,000 - - - -
SUB-Total 157,392 62,728 63,963 65,197 66,432
OUTFLOW
Generator 8,000 - - - -
Admin Salaries 2,046 2,251 2,476 2,723 2,996
Marketing & Sales Expenses 617 630 642 654 667
Utilities 965 1,013 1,064 1,117 1,173
Taxation - 851 2,856 2,949 3,051
VAT 2,352 2,987 3,046 3,105 3,163
SUB-Total 136,566 55,728 59,872 62,229 64,732
Summary
Surplus/(Deficit) 20,826 6,999 4,091 2,968 1,701
77 | P a g e
Projected Balance Sheet Option_3 @ 50%

Land & Building 32,291 31,632 30,973 30,314 29,655
Plant & Machinery 34,200 30,400 26,600 22,800 19,000
Generator 6,400 4,800 3,200 1,600 -
78,666 71,132 63,597 56,063 49,779
Current Assets
Debtors 12,348 12,595 12,842 13,089 13,336
Bank 20,826 27,825 31,916 34,884 36,585
111,840 111,552 108,355 104,036 99,700
Financed By
Equity 54,000 54,000 54,000 54,000 54,000

Loan 45,683 36,277 25,639 13,607 -
Current Liabilities
Creditors 8,732 9,168 9,627 10,108 10,614
Company Tax 851 2,856 2,949 3,051 3,541
VAT Payable 588 600 612 623 635
111,840 111,552 108,355 104,036 99,700

- - - - -
Current Ratio 3.26 3.20 3.39 3.48 3.38
ROCE 9% 15% 15% 14% 15%
FAT 0.75 0.84 0.96 1.11 1.28
ROE 4% 11% 10% 9% 10%
DSCR 2.32 3.37 4.03 5.39 9.38
78 | P a g e
50% 55% 60% 65% 70%
N'000 N'000 N'000 N'000 N'000
Variables Costs 32,003 33,699 35,490 37,383 39,383
Contribution 26,797 26,277 25,662 24,945 24,121

CS Ratio 46% 44% 42% 40% 38%
Fixed Cost

Utilities 965 1,013 1,064 1,117 1,173
Depreciation 7,534 7,534 7,533 7,534 6,284
Interest on Loan 6,370 5,281 4,049 2,655 1,079
15,032 13,999 12,825 11,495 8,734
BEP (N) 32,984 31,951 30,562 28,720 22,994

MOS (N) 25,816 28,025 30,590 33,608 40,510
BEP (%) 56% 53% 50% 46% 36%
79 | P a g e
1st Month/Year 80%
Next Month/Year 20%

N'000 N'000 N'000 N'000 N'000
Sales 61,740 62,975 64,210 65,444 66,679
Next Month/Year - 12,348 12,595 12,842 13,089
Debtors 12,348 12,595 12,842 13,089 13,336
1st Month/Year 70%

Next Month/Year 30%
N'000 N'000 N'000 N'000 N'000
Purchases
1st Month/Year 20,374 21,393 22,463 23,586 24,765
Cash Paid
Next Month/Year - 8,732 9,168 9,627 10,108
Creditors 8,732 9,168 9,627 10,108 10,614
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Assumptions Year_1 Year_2 Year_3 Year_4 Year_5
Production
No. of days/Annum 200 200 200 200 200
Normal Loss/Wastages 5 5 5 5 5
Output @ 75% 247 247 247 247 247
Depreciation 7,534 7,534 7,533 7,534 6,284

Inflation 5% 5% 5% 5% 5%
Selling Price(N)/Ton 250,000 255,000 260,000 265,000 270,000
Depreciation Rate:
Plant & Machinery 10% 10% 10% 10% 10%
Generator 20% 20% 20% 20% 20%
VAT @5% 5% 5% 5% 5% 5%

Product N'000 N'000 N'000 N'000 N'000 N'000
Sales 61,740 62,975 64,210 65,444 66,679
61,740 62,975 64,210 65,444 66,679
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N'000 N'000 N'000 N'000 N'000
Variable Cost
Marketing & Sales Expenses 617 630 642 654 667
617 630 642 654 667

32,003 33,699 35,490 37,383 39,383

Fixed Cost
Utilities 965 1,013 1,064 1,117 1,173
Depreciation 7,534 7,534 7,533 7,534 6,284
11,190 11,475 11,784 12,121 11,237
Total 43,193 45,174 47,274 49,504 50,620

Qty Reqd
Raw Materials 252 110 27,720 30,492 33,541 36,895 40,585
29,106 31,947 35,069 38,500 42,270
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Summary of Key Indicators of The Various Options
INDICATORS N'000 N'000 N'000 N'000 N'000
Option_1 @100% 117,600 119,952 122,304 124,656 127,008
(N ue
)
88,200 89,964 91,728 93,492 95,256

en
Option_2 @75%
et
ev
Option_3 @50% 58,800 59,976 61,152 62,328 63,504

R
N'000 % N'000 % N'000 % N'000 % N'000 %

Option_1 @100% 57,108 49% 56,321 47% 55,366 45% 54,234 44% 52,913 42%
Option_2 @75% 42,261 48% 41,614 46% 40,835 45% 39,917 43% 38,850 41%
Pr s s
it
of
ro
Option_3 @50% 27,414 47% 26,907 45% 26,304 43% 25,599 41% 24,787 39%
G
N'000 % N'000 % N'000 % N'000 % N'000 %

Option_1 @100% 22,339 19% 26,814 22% 26,775 22% 26,704 21% 27,484 22%
Option_2 @75% 12,162 14% 16,739 19% 16,828 18% 16,911 18% 17,874 19%
Af it
Ta r
x
te
of
1,986 3% 6,665 11% 6,881 11% 7,118 11% 8,263 13%

Pr
Option_3 @50%
N'000 N'000 N'000 N'000 N'000

Option_1 @100% 46,874 74,137 98,236 120,904 141,940
e
Ca ng
nc
33,850 50,981 65,076 77,894 89,263

Ba h
Option_2 @75%
i
s
os
la
20,826 27,825 31,916 34,884 36,585

Cl
Option_3 @50%
83 | P a g e
Option_1 @100%
BEP (N) 31,638 30,496 29,003 27,074 21,506
BEP (%) 27% 25% 24% 22% 17%
MOS (N) 85,962 89,456 93,301 97,582 105,502
Option_2 @75%
BEP (N'000) 32,074 30,966 29,504 27,601 21,980
Break Even BEP (%) 36% 34% 32% 30% 23%
MOS (N'000) 56,126 58,998 62,224 65,891 73,276
Option_3 @50%
BEP (N) 32,984 31,951 30,562 28,720 22,994
BEP (%) 56% 53% 50% 46% 36%
MOS (N) 25,816 28,025 30,590 33,608 40,510
84 | P a g e

Current Ratio 2.54 3.20 3.88 4.47 4.92
ROCE 31% 31% 27% 24% 22%
FAT 1.49 1.69 1.92 2.22 2.55
ROE 29% 26% 21% 17% 15%
DSCR 5.29 6.85 8.37 11.48 20.92

Current Ratio 2.73 3.20 3.74 4.18 4.45
ROCE 21% 24% 22% 21% 20%
FAT 1.12 1.26 1.44 1.67 1.91
ROE 18% 20% 17% 14% 13%
DSCR 3.80 5.11 6.20 8.43 15.15

Current Ratio 3.26 3.20 3.39 3.48 3.38
ROCE 9% 15% 15% 14% 15%
FAT 0.75 0.84 0.96 1.11 1.28
ROE 4% 11% 10% 9% 10%
DSCR 2.32 3.37 4.03 5.39 9.38
85 | P a g e
Moringa
Fixed Assets Schedule
Land & Plant & Auxillary Furniture & Operational
Generator Total
Building Machinery Machine/Equipment fittings Vehicles
Year 1
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Cost:
At 1 January 2018 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Addition - - - - - - -
Disposal - - - - - -
At 31st December 2018 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Depreciation:
At 1 January 201 8 - - - -
For the y ear 659 3,800 225 438 813 1,600 7,534
At 31st December 2018 659 3,800 225 438 813 1,600 7,534
Carry ing Am ount

At 31st December 2018 32,291 34,200 2,025 1,313 2,438 6,400 78,666

Generator
Year 2 Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Cost:
At 1 January 2019 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Addition - - - -
Disposal - - - -
At 31st December 2019 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Depreciation:
At 1 January 201 9 659 3,800 225 438 813 1,600 7,534
For the y ear 659 3,800 225 438 813 1,600 7,534
At 31st December 2019 1,318 7,600 450 875 1,625 3,200 15,068
Carry ing Am ount

At 31st December 2019 31,632 30,400 1,800 875 1,625 4,800 71,132

Generator
Year 3 Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Cost:
At 1 January 2020 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Addition - - - - - -
Disposal - - - - - -
At 31st December 2020 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Depreciation:
At 1 January 2020 1,318 7,600 451 876 1,625 3,200 15,070
For the y ear 659 3,800 225 437 813 1,600 7,533
At 31st December 2020 1,977 11,400 676 1,313 2,438 4,800 22,603
Carry ing Am ount

At 31st December 2020 30,973 26,600 1,574 438 813 3,200 63,597
86 | P a g e
Moringa
Fixed Assets Schedule

Generator
Building Machinery Machine/Equipment Fittings Vehicles
Year 4 Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Cost:
At 1 January 2021 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Addition - - - - -
Disposal - - - - -
At 31st December 2021 32,950 38,000 2,250 1,750 3,250 8,000 86,200
Depreciation:
At 1 January 2021 1,977 11,400 676 1,313 2,438 4,800 22,603
For the y ear 659 3,800 225 438 813 1,600 7,534
At 31st December 2021 2,636 15,200 901 1,750 3,250 6,400 30,137
Carry ing Am ount

At 31st December 2021 30,314 22,800 1,349 - - 1,600 56,063

Generator
Year 5 Total
N'000 N'000 N'000 N'000 N'000 N'000 N'000
Cost:
At 1 January 2022 32,950 38,000 2,250 - - 8,000 86,200
Addition - - - - - -
Disposal -
At 31st December 2022 32,950 38,000 2,250 - - 8,000 86,200
Depreciation:
At 1 January 2022 2,636 15,200 901 - 6,400 30,137
For the y ear 659 3,800 225 - 1,600 6,284
At 31st December 2022 3,295 19,000 1,126 - - 8,000 36,421
Carry ing Am ount

At 31st December 2022 29,655 19,000 1,124 - - - 49,779
87 | P a g e
APPENDIX: 1
SALES PROJECTIONS
128,000
126,000
124,000
122,000
120,000
118,000
116,000
114,000
112,000
Year 1 Year 2 Year 3 Year 4 Year 5
SALES AND COST OF SALES

140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
88 | P a g e
PROFIT BEFORE TAX
40,000
35,000
30,000
25,000
20,000 PROFIT BEFORE TAX
15,000
10,000
5,000
0
PROFIT AFTER TAX
30,000
25,000
20,000
15,000 PROFIT AFTER TAX
10,000
5,000
0
89 | P a g e
SALES AND GROSS PROFIT
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
year 1 Year 2 Year 3 Year 4 Year 5
PROFIT RESERVE
140000 130,116
120000
102,632
100000
75,928
80000
60000 49,153
40000
22,339
20000
0
90 | P a g e
CASH BALANCE
160000
140000
120000
100000
80000
60000
40000
20000
0
ASSETS GROWTH
250,000
200,000
150,000
ASSETS GROWTH
100,000
50,000
0
91 | P a g e
VIABILITY SUMMARY/CONCLUSION AND OPINION
All the indices indicated a worthwhile, promising and profitable investment. However, it is
important to apply:
1. Careful and effective implementation.
2. Sound management.
3. First class and consistent marketing programs and efforts.
4. Needed and necessary stock, procedure and accounting controls.
5. Good people and team management.
6. Excellent personnel and human resources.
7. Excellent and discipline investment practice and culture.
8. Strong determination and commitment to make the project a success.
92 | P a g e

Model Business Plan For Moringa Processing To Tea PDF

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CHAPTER ITEM PAGE INDEX

THIS CHAPTER COVERS:

However, packaging could be done on locally fabricated materials. The organizational

1.2.2 Opportunity Rationale

1.2.4 Project Capacity and Rationale

1.2.5 Project Investment

1.2.6 Proposed Product Mix

1.2.7 Proposed Location

1.3 PROJECT GOAL AND OBJECTIVES Mm

THIS CHAPTER COVERS:

ORGANOGRAM OF THE COMPANY

MARTING AND PRODUCTION AND QUALITY CONTROL AND

MARKETING FATORY QUALITY

Description No. Salary Total Monthly

PRODUCTS AND SERVICES

THIS CHAPTER COVERS:

Moringa leaves have exceptional nutritional value, containing a variety of vitamins,

4 times the Vitamin A of Carrots 10 times the Vitamin A of Carrots

Packing such powerful nutrition, various organizations Worldwide have incorporated

3.2 BENEFITS AND ECONOMIC IMPACT

3.3 KEY SUPPLIERS

BUSINESS AND INDUSTRY PROFILE

THIS CHAPTER COVERS:

4.2 INDUSTRY ANALYSIS

4.3 KEY SUCCESS FACTORS IN THE INDUSTRY

THIS CHAPTER COVERS:

5.1 GUIDELINES FOR APPROPRIATE OF MORINGA TEA PROCESSING

5.2 PRODUCTION PROCESS AND PROCEDURE

5.3 PRODUCTION FLOW CHART/TECHNOLOGY

5.4 REGULATIONS, STANDARDS AND CERTIFICATION

5.5 QUALITY ASSURANCE AND CONTROL PROCESS

5.6 FACTORY DESIGN AND LAYOUT

5.7 PROCESSING EQUIPMENTS

1. Stripping the Leaflets

 Mechanical drying (recommended for large scale leaf processing): a variety 0F

7. Drying the Leaf Tea

8. Packaging and Labeling

 Packaging in bulk: the temperature and humidity must be controlled in the

 Final packaging: the temperature and humidity must be controlled in the

5.4 REGULATIONS, STANDARDS AND CERTIFICATION

Standards Organization of Nigeria (SON) — as the body of government in charge of

SPECIFICATIONS ON QUALITY REQUIREMENTS

This equipment depend heavily on electricity supply for operation.

FILL AND SEALING MACHINE

MARKET ANALYSIS AND MARKETING STARTEGY

THIS CHAPTER COVERS:

6:1. MARKET ANALYSIS AND TARGET MARKET

6:2. MARKETING AND SALES STRATEGY

6:3. MARKET AND SWOT ANALYSIS

6:4. ENVIRONMENT, HEALTH AND SAFTY CONSIDERATION

6:5. RISKS AND MITIGATIONS

6:6. CHANNEL OF DISTRIBUTIONS

6.1.2 DEMAND/SUPPLY GAP ANALYSIS

6.4 ENVIRONMENTAL, HEALTH AND SAFETY CONSIDERATION

6.5 RISKS AND MITIGATIONS

Irregular or non-availability Storage of extra leaves in the

Build loyalty by involving the

Breakdown of processing Usage of equipment and machines

Have an in-house technical team

Major repairs can be contracted to

Top quality Safety measure be put

Workers going on strike Adopting morale boosting and

Good employee relationship with