1

(Summary of a Techno-Economic Feasibility Study Report on

IQF Plant for Manufacturing Frozen Vegetables)

Dr. Sreekanta Sheel 2

1. Introduction
Fruits and vegetables in their fresh state are very much vulnerable to heavy post-harvest losses,
both in quantity and quality during transportation and marketing. Estimated post-harvest loss of
fruits and vegetables is reported to be 20-25 per cent. For highly perishable commodities, the loss
may go as high as 40 per cent. So, if these perishable commodities are processed into shelf-stable
products at commercial level, the financial return is expected to be more for the growers as well as
the post-harvest loss will be reduced to a great extent.

Freezing is one of the oldest methods to preserve food. It delays the growth of microorganism and
slows down changes that affect quality or cause spoilage in vegetables and it preserves the taste,
texture and nutritional value in food. IQF (Individually Quick Frozen) equipment is used to rapidly
freeze individual pieces of vegetables before packaging. This process helps to preserve taste,
texture and nutritional value in food.

The demand for frozen vegetables is due to daily consumption. The reasons for assuming
availability of effective demand for these products are: hygienically processed and packaged,
properly retention of quality parameters in the packaged product, and recent advancement of
technology in this field. However, it is well-known that the demand of the products especially in the
export market has been increasing day by day. Hence, the project aims at establishing a modern
IQF plant for manufacturing of frozen vegetables.

2. Land and Location of the Project

The project is proposed to be located at the place where all the infrastructural facilities like power,
water, gas and related other facilities are available. Raw materials availability and good
communication to the sea port are also to be considered at the project site. The land should be
considered adequate for the proposed project and also should have sufficient provision for
accommodation and further expansion.

3. Building and Other Civil Cost

The civil construction of the proposed project includes 11000 sqft built area with prefab, high quality
roofing with adequate civil-structure. The construction includes main production plant, raw materials
store, finished goods store, packaging materials store, R&D, QC laboratory, office rooms, guard
room, conference room, toilet, boundary wall etc.

4. Brief Description of the Project

The proposed project envisages establishment of a modern IQF plant for frozen vegetables. The
total production capacity of the plant is 2400 MT per year at 100% capacity utilization with working
16 hours per day and 300 days per year. The plant comprises vegetable processing, IQF freezing
and packing unit. The project will acquire ISO, GMP, HACCP and other related certifications and
maintain the concerned rules and regulations properly. The processed products will be sold
especially in the foreign market.

1 Paperpresented in the workshop entitled “Frozen Vegetable Export : Challenges and

Opportunities” held at Hortex Foundation, 22, Manik Miah Avenue, Dhaka on 13 May, 2010
2 Logistics(Transportation and Storage) Expert, Supply Chain Development Component, National
Agricultural Technology Project (NATP), Hortex Foundation, 22, Manik Miah Avenue, Dhaka.
Cell: 01714 083 764
5. Product, Prices and Production capacity
It is assumed that the plant will increasingly operate at 70, 75 and 80 percent capacity in its 1 st , 2nd ,
3rd year and beyond respectively. The unit price and annual production capacity of the plant at
100% capacity utilization are shown in Table 1.

Table 1 Annual Production capacity and Price (at 100% capacity utilization)

Item of Product Quantity No. of Pack Average Unit Average Total

(MT) Package Size Factory Sale Factory/ Factory
(No. in (gm) Price/kg (Tk.) Price per MT sale Price
'000') (Tk. In “000”) (Tk. In
“000”)
1. Vegetables 2400 2400 1000 67 67 160800

6. Sources of Raw Materials

All the quality vegetables will be produced through contract farming following Good Agricultural
Practices (GAP). The vegetable commodity to be processed will be selected on the basis of market
demand. Production plan for the demanded frozen vegetables will be prepared on the basis of
monthly availability of the commodities. The project shall not purchase any vegetable commodities
from abroad. A considerable amount of vegetables will be processed into frozen products, as a
result the growers will find their market and hence, they will be encouraged to grow more crops. The
amount of raw materials required for the project is presented in Table 2.

Table 2. Requirement of raw materials

A. Local Raw Materials Requirement (at 100% capacity level)

Total annual Unit cost per Total amount
Raw Materials Description
quantity (MT) MT (Tk."000") (in Tk. "000")
1. Vegetable 3360.00 13 43680
2. Cartoons L.S. 300
Total (Local Raw Materials) 43980

B. Imported Raw Materials Requirement (at 100% capacity level)

Total annual
Unit cost/ Total amount
Raw Materials Description quantity
piece (Tk) (in Tk. "000")
(No. in 000)
Packaging Materials:
Laminated pouches packets (for frozen
vegetables) 2400 2.5 6000

Total (Imported Raw Materials) 6000

Total (Local + Imported Raw

Materials) 49980

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7. Machinery and Equipments

A. Imported Machinery/ Equipments

The project will be run by the combination of imported and local machinery. The machinery are
proposed to be imported from different countries like China, Italy, Taiwan, Japan, India etc. In this
relation, the sponsors should collect the best price quotations of machinery. After comprehensive
scrutiny and in-depth field survey and as per the best and suitable price offer, the price of the imported
machinery stands at 475.62 Lac.

B. Local Machinery/ Equipments

At present, in Bangladesh, there are some quality machinery manufacturers who are now producing
high quality machinery. The sponsors should study them and decided to use in the project. Apart from
this, supporting machinery to the imported ones may also be purchased locally. The total cost of local
machinery and equipments stands at Tk. 70.00 Lac.

The list of machinery and equipment with capacity, origin and price has been shown in Table 3. In
calculation of price, conversion rate 1 US$ = Tk. 70.00 was considered.

Table 3. Requirement of Machinery and Equipments

Name Capacity Origin Amount
(kg/hr) (Tk. In "000")
A. Imported Machinery

1. Vegetable Processing, Blanching, IQF & Packing

Lines
a). R.O. Water purify system 1 MT/hr Taiwan 1386
b) Vegetables processing line
i) vegetables washing machine 400-1200 kg/hr Taiwan 693
ii) Vegetable peeling machine 400-1200 kg/hr Taiwan 693
iii) Inspection conveyor Taiwan 424
iv) Dicing Machine 300-1000 kg/hr Taiwan 462
v) Slicing machine 200-1000 kg/hr Taiwan 231
c) Corn Kernel Machine
i) Corn kernel scraping machine 200-300 kg/hr Taiwan 270
d) Leafy and Bean Vegetables Cutting
i) Cutting machine 500-1500 kg/hr Taiwan 246
e) Washing, Blaching and Drying
i) Upward conveyor, 2 No. Taiwan 770
ii) Cut leaf and root vegetable washing machine Taiwan 1463
iii) Blanching and cooling machine:
iii)-1. Blanching machine Taiwan 2926
iii)-2. Chiller Taiwan 662
iv) Connecting conveyor Taiwan 424
v) Vibrational de-watering system Taiwan 732
f) Tunnel Type IQF System
i) Tunnel system 500 kg/hr Taiwan 12936
ii) 75 HP Screw condensing unit, 2 No. Taiwan 8624
iii) Water cooling system, 2 No. Taiwan 508
g) Packing System
i) Automatic computer scale weigher 40 pouch/min Taiwan 5313

Vegetables Processing, Blanching, IQF & Packing

38762
Lines (Total)

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Table 3. Contd…
Name Capacity Origin Amount
(kg/hr) (Tk. In "000")
2. Boiler, Generator 400kVA and Accessories 7800
3. Laboratory Equipment 1000

Total for Imported Machinery (A) 47562

B. Local Machinery
1. Deep Tube Well 12000gal/hr 1500
2. Cold Storage 50 MT 5200
3. Workshop Machinery 300
Total for Local Machinery (B) 7000

Grand Total for Machinery and

54562
Equipments

8. Transport
The project will require transports for carrying raw materials to the factory and finished goods to the
points from where the products will be exported. The detailed information on these transports is
presented in Table 4.

Table 4. Requirement of Transports

Total Price
Transport: No. Unit Price
('000')

1. Sedan car 2 1500 3000

2. Normal Container Van (Cap. 5 Ton) 2 2000 4000
3 Refer Van 2 2000 4000
Total 11000

9. Manpower

With a view to ensure efficient and effective functioning of day to day activities of the project during
erection and on completion, technical, administrative, marketing and sales personnel, skilled and
unskilled labour will be required. The total manpower requirement for the project during commercial
operation is 111person (comprising i). General, Administrative, Marketing and Sales Personnel, 34
person; ii) Technical, 23 person and iii) worker 54 person). The wages and salaries are assumed to
be increased 5% per year. Semi skilled and unskilled persons will gather technical know how from
highly qualified and well experienced production manager and quality control officer with a view to
turn themselves into skilled hand as well as increase production efficiency. A Food Technology
Consultant will work part time in order to advice the technical personnel in relation to production
planning, evaluation and technological aspects and monitor the production, quality control and R &
D activities of the project.

10. Manufacturing Technology

10.1 Manufacturing of Frozen Vegetables

The manufacturing process includes number of steps and different for different products. The
flowchart in Figure1 summarizes the production process of frozen vegetables. Some vegetables
require pre-washing like potato that contain excessive amount of dirt before entering the processing
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line. Blanching is the dipping of vegetables in boiling water or steam for a short period of time,
depending upon the kind of vegetable and its size. It is done to slow down the action of enzymes
that can cause loss of flavor, color and texture. Blanching time is very important because under
blanching accelerates the activity of enzymes and over blanching cause loss of flavor, color and
texture. After blanching, products should be cooled in order to reduce the freezing time.

IQF (Individually Quick Frozen) equipment is used to rapidly freeze individual pieces of vegetables
before storage. This process helps to preserve taste, texture and nutritional value in food.. IQF
freezing is done in a blast freezing tunnel capable of quickly freezing large quantities of blanched
product to -20oC keeping the individual pieces separate. After freezing, products are stored in bulk
before they are shipped to customer in smaller packages according to their requirements. The
processor will have a cold store with 50 to 100 MT capacity to keep frozen vegetables for the
purpose of short term storage of the finished goods. The flowchart in Figure1 summarizes the
production process of frozen vegetables.

Contract Growing of
Vegetables

Factory Gate Inspection

Pre-washing

Preparation Fresh-cut Vegetables Line

Frozen Vegetables Line

(Peeling, Slicing, Dicing)

Washing Packaging Sell Fresh-cut Vegetables

Blanching & Cooling

Freezing

Bulk Storage

Packaging

Distribution

Figure1. Manufacturing process flow chart for frozen vegetables

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10.2 Recovery Ratios of Different Vegetables During Preparation of Frozen Vegetables
The Table 5. shows the recovery ratio of different vegetables. For example, to make one kilo of
frozen cauliflower, two kg of fresh cauliflower is required. The average recovery ratio for the
vegetables to be frozen has been considered 71% in calculation of vegetable requirement.

Table 5. Recovery ratios of different vegetables during preparation frozen vegetables

Name of Vegetables Recovery ratio

Cauliflower 50%
Green Beans 90%
Okra 90%
Peas 38%

10.3. Pollution Control and Waste Disposal

In the production process, no chemicals will be used. Therefore the project will no pose any
pollution or any harmful waste disposal problem. The discarded portion of the vegetables will be
removed from the factory and used to prepare compost in a place away from the factory. The
compost will be used as manure in the vegetable production field. However, an waste treatment
mechanism will be established in the factory premises for maintaining proper sanitation in the plant.

11. Quality Assurance

11.1 Good Agricultural Practice (GAP)

The concept of Good Agricultural Practices is the application of available knowledge to the use of
the natural resource base in a sustainable way for the production of safe, healthy food and non-food
agricultural produces, in a humane manner, while achieving economic viability and social stability.
The underlying theme is one of knowing, understanding, planning, measuring, recording, and
managing to achieve identified social, environmental and production goals. This requires a sound
and comprehensive management strategy and the capability for responsive tactical adjustments as
circumstances change. Success depends upon developing the skill and knowledge bases, on
continuous recording and analysis of performance, and the use of expert advice as required. The
Guidelines portray the norms of good agriculture within 10 groups of resource concerns and
practices. This structure is designed to provide the framework within which detailed management
guidelines can be prepared for individual farming systems and for integrated production systems
within specific agro-ecosystems.

The principles of EUREP-GAP are expected to be followed considering the status of local resource
base during production of agricultural produces (to be used in the factory) through contract faming.

11.2 Good Manufacturing Practices (GMP)

GMP refers to the Good Manufacturing Practice Regulations promulgated by the US Food and Drug
Administration under the authority of the Federal Food, Drug, and Cosmetic Act. These regulations,
which have the force of law, require that manufacturers, processors, and packagers of drugs,
medical devices, some food, and blood take proactive steps to ensure that their products are safe,
pure, and effective. GMP regulations require a quality approach to manufacturing, enabling
companies to minimize or eliminate instances of contamination, mixups, and errors. This in turn,
protects the consumer from purchasing a product which is not effective or even dangerous.
GMP is also sometimes referred to as "cGMP". The "c" stands for "current," reminding
manufacturers that they must employ technologies and systems which are up-to-date in order to
comply with the regulation. Systems and equipment used to prevent contamination, mix-ups, and
errors, which may have been "top-of-the-line" 20 years ago, may be less than adequate by today's
standards. At the GMP Institute, it is believed that GMP is a good business tool which will help to

6
 refine both compliance and performance at a
company. GMP requirements are largely common
sense practices which will help a company better
itself as it moves toward a quality approach using
continuous improvement. The diagram in Figure 2
illustrates how it may be approached creating and
maintaining a GMP lifestyle in a company.

11.3 Quality Management Principles (ISO 9000:2000)

The quality management system standards of the
revised ISO 9000:2000 series are based on eight
quality management principles. These principles can
be used by senior management as a framework to
guide their organizations towards improved
performance. The principles are derived from the
collective experience and knowledge of the
international experts who participate in ISO
Technical Committee ISO/TC 176, Quality
management and quality assurance, which is
responsible for developing and maintaining the ISO
9000 standards.
Figure 2. Diagram of GMP lifestyle in a company
The enterprise will acquire the related certificate
from ISO and be aware of the principles of ISO 9000:2000 and ISO 9004:2000. The managers
typically will take part in applying the principles to improve their organizations' performance. Eight
quality management principles will be strictly followed by the enterprise.

11.4 Hazards Analysis and Critical Control Point (HACCP)

HACCP is a management system in which food safety is addressed through the analysis and
control of biological, chemical, and physical hazards from raw material production, procurement and
handling, to manufacturing, distribution and consumption of the finished product. For successful
implementation of a HACCP plan, management must be strongly committed to the HACCP concept.
A firm commitment to HACCP by top management provides company employees with a sense of
the importance of producing safe food.

HACCP is designed for use in all segments of the food industry from growing, harvesting,
processing, manufacturing, distributing, and merchandising to preparing food for consumption.
Prerequisite programs such as current Good Manufacturing Practices (cGMPs) are an essential
foundation for the development and implementation of successful HACCP plans. Food safety
systems based on the HACCP principles have been successfully applied in food processing plants,
retail food stores, and food service operations. The seven principles of HACCP have been
universally accepted by government agencies, trade associations and the food industry around the
world.

12. The Management of the Enterprise

The overall management of the firm will be vested on the Managing Director of the company, who
will remain as the Chief Executive of the company. The Managing Director will be responsible for all
executive works. The company will employ one General Manager (GM) to supervise and execute
the day to day operation. The Managing Director along with the GM shall be responsible for policy
formulation and GM will be in complete in-charge of execution. The works shall also be supervised
by the Chairman himself. Required other skilled managers and skilled manpower shall be recruited
to carry out all daily activities. In addition to these, one part time Food Technology Consultant will
advise the operational team in technological, research & development, quality control, planning,
monitoring and evaluation aspects. The organization chart of the enterprise is shown in Figure 3.

7
 .
Top Management
Board of Directors

Chairman

CEO/
Managing Director Food Technology Consultant

Technical Coordination & Monitoring

GM

General Manager
Manager
Plant

Plant Manager
Manager

Manager Manager (Materials Manager Manager Manager Manager R & D , Training,

Deptt.

(Finance & Purchasing & Contract Manager (Quality Monitoring

(Admin) (Production) (Engineering) (Marketing)
Accounting) Growing) Assurance) and Promotional
Publication
Manager
Section

Incen- Vegetables Ware House Export

tives Materials Contract Admin & and Cold Factory Utility Domestic
Purchasing Growing Freezing Marketing Marketin
Personnel Storage Machinery Services
g

Figure 3. Organization Chart of the Enterprise

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13. Market Feasibility
As the demand for agro-processed products especially frozen vegetables in the export market
increases to a great extent per year, there is opportunity to increase their production. The
entrepreneur with its well experienced manpower and sophisticated machinery set will create
its good image in the foreign market. He/she will succeed in developing a profitable business
through the use of a number of competitive advantages like quality and flexibility, ability to
sale at lower prices due to enjoying facility of opportunity of incentives from Government of
Bangladesh, cheap and availability of raw material and labour. The sponsors and experts of
the enterprise with their extensive background and experiences in the related field and sheer
passion will propel the business into profitability.

14. Financial Analysis

Assumptions Used in Financial Analysis

The procedures and assumptions usually observed by the most financial institutions which were
used in the financial projections are as follows:

i) The project will work for 300 days per on the basis of one shift of 16 hours operation per
day at 100% capacity utilization.

ii) The price of the raw materials and finished goods has been calculated on the current
price basis.

iii) Stores and spare has been calculated as 1.0 percent, 1.5 percent and 2.0 percent for
the 1st , 2nd and subsequent years respectively on the machinery cost.

iv) The cost of repair and maintenance for the project has been calculated as 1.0 percent,
1.5 percent and 2.0 percent for the 1st , 2nd and subsequent years respectively on the
machinery cost.

v) Rent, tax and insurance etc. for the project has been calculated 0.5% every year on the
fixed cost.

vi) In cases of wages and salaries, increment will be at 5% per year.

vii) The capacity utilization has been assumed at 70%, 75% & 80% for the 1st, 2nd and
subsequent years respectively

viii) Depreciation has been calculated at the following rates:

Building 5%
Machinery 10%
Furniture 20%
Intangible assets 20%
Other items 20%

ix) Economic returns have been calculated for three years only. This conservative view is
customarily followed by most financial institutions in Bangladesh when conducting
financial analysis.

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14.1 Fixed Cost of the Project
Item (Tk. in "000")
a) Cost of Land and Registration 17,250
b) Civil & Other Works 11,330
c) Imported Machinery 54696
d) Local Machinery 7000
e) Erection & Installation 1950
f) Internal Freight 150
g) Transport 11000
h) Furniture & Fixture 1050
i) Preliminary Expenses & Other Costs 4750
j) Interest During Construction Period (IDCP) 3279
Total Fixed Cost 112,455

14.2 Working Capital

Item (Tk. in "000")
a) Net Working Capital 5758
b) Quantity of Margin (Initial Working Capital) 2303
c) Working Capital Loan 3455

14.3. Total Cost of the Project

Item (Tk. in "000")
a) Total Fixed Cost 112,455
b) Quantity of Margin (Initial Working Capital) 2303
Total Project Cost 114758

14.4 Repayment Considerations

i). Rate of Interest for Term Loan 10.00%
i). Rate of Interest for and Working Capital 12.00%
iii) Rate of Interest during construction period 10.00%
iv) Construction period (Months) 6
v). Grace period including construction period (Months) 12
vi). Repayment period of loan (Years) 5
vii) Debt-Equity Ratio for Term Loan 60:40
viii) Debt Equity Ratio for Working Capital Loan 60:40

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14.5. Means of Finance

The funds to be required for implementation of the project may be proposed in the following manner:

Item Existing Proposed Total

L/C L/C F/C
Term Loan 0 19,940 45636 65,576
IDCP 0 3,279 0 3,279
Total Loan 0 23219 45636 68,855
Equity Capital-Sponsor's Investment 15750 27,751 2402 45,903

Total Cost of the project 15750 50970 48037 114758

14.6 Cost of Goods Sold (at 70% Capacity utilization in the 1st Year)

Item (Tk. in "000")

i) Raw Materials (RM)
a) Local Raw Materials 30786
b) Imported Raw Materials 4200
Total RM(a+b) 34986
ii) Factory wages and salaries (Workers) 3007
iii) Manufacturing Expenses (ME):
a) Indirect wages(Technical) 4765
b) Repair and maintenance of machinery and transport 748
c) Taxes and Insurance 562
d) Store and Spares 638
e) Transport (fuel, oil) 2000
f) Depreciation 6946
g) Utilities 5719
Total ME (a+b+c+d+e+f+g) 21379
iv) Factory Cost (i+ii+iii) 59372
Add. Opening stock of (WIP) 0
Total wok-in-process 59372
Less: Closing stock of WIP 495
v) Total cost of production 58877
Add. Opening stock of (F/G) 0
Total goods available for sale 58877
Less: Closing stock of (F/G) 491
vi) Cost of Goods Sold 58386

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14.7 Earning Forecast (at 70% Capacity Utilization in the 1st Year)
Item (Tk. in "000")
i) Annual Sales Revenue 110692
VAT Applicable Annual Sales Revenue* 0
Less: VAT Adjustment 0
ii) Net Sales Revenue 110692
iii) Cost of Goods Sold 58386
iv) Gross profit 52305
v) Administrative and General Expenses (AGE):
Admnistrative salary 7526
Printing and Stationery 500
Postage, Telephone, Faxes etc. 200
Advertisement 500
Conveyance & T/D 500
Depreciation 4016
Legal and Audit 300
Miscellaneous 500
Total AGE (a+b+c+d+e+f+g) 14041
vi) Distribution and selling expenses 3321
vii) Operating Profit 34943
g) Financial Expenses (Interest) 4185
j) Net Profit 30758

14.8 Profitability Ratios (at 70% Capacity Utilization in the 1st Year)
Gross profit to sales (%) 47.25
Operating profit to sales (%) 31.57
Net profit to sales (%) 27.79
Return on equity (%) 76.12
Return on Total Investment (%) 30.45

14.9 Break Even Point (BEP) Percent in Capacity (at 80% capacity utilization in the 3rd year)
Profit Volume Ratio (PV Ratio) 0.54521
Break-even Sales (Tk. in '000') 61844
Break-even capacity (Rated) 38.46%
Break-even capacity (Proposed Capacity Level) 48.13%
Margin of Safety 51.87%

12
 14.10 Pay Back Period (Years) 3.40

14.11 Fixed Assets Coverage Ratio 1.63

14.12 Current Ratio 1.67

14.13 Debt Service Coverage Ratio (At 80% capacity utilization in

2.34
the 3rd year)

14.14 Internal Rate of Return (IRR) 21.72%

14.15 Net Present Value of the Annuity (Tk. in "000") 58,642

14.16 Employment Generation (No. of Person) 111

14.17 Annual Contribution to GDP (At 80% capacity level in the

69782
3rd year) (Tk. in "000")

15. Economic Feasibility

This agro-based project is a priority economic development initiative. The project on implementation
will create new direct job opportunities for 111 people including Food Technologist, Chemists and
other categories. The project also provide a large number of workers specially, women who are
accustomed with food processing may be employed. Development of this plant will facilitate the
agro-processing machinery, equipment and support industries who will be better established in this
country. Growers of vegetables will be highly encouraged to grow their crops because they will find
out a great user to whom they will sell their products. The project will contribute 697.82 Lac per year
to G.D.P (according to the 3rd year operation).

16. SWOT analysis

The following SWOT analysis captures key strengths and weaknesses within the company and
describe the threats may be faced by the enterprise.

16.1 Strengths
 High-quality product offerings that exceed competitor’s offerings of price, quality, and
service.
 Improved product quality will be ensured with the sophisticated machinery, skilled
manpower and monitoring production and quality control aspects by Food Technology
Consultant; raw materials especially, the agricultural commodity will be produced through
contract growing system while the quality of the produces will be ensured as well as
production cost will be reduced as a result more commission can be provided to the retailer.
 Promotional activities will be performed to a great extent

16.2 Weaknesses
 Country image

16.3 Opportunities
 Cheap and availability of raw material and labour
 Due to maintenance of proper quality, the products will gain popularity.

13
  To sale at lower prices due to enjoying facility of incentives from Government of
Bangladesh. Government has liberalized the industrial and investment policies in recent
years by reducing bureaucratic control over private investment and opening up many areas.
Major incentives are as follows:
 Tax Exemptions : Generally 5 to 7 years. However, for power generation exemption
is allowed for 15 years.
 Duty : No import duty for export oriented industry.

 The ability to develop long-term commercial contracts which should lower costs associated
with production. Hence, retailers’ demand will be increased due to provision of higher
commission

16.4 Threats
 Well established brand name of the others
 Natural calamities for crops during production

17. Conclusion and Recommendation

The institutional market for frozen vegetables is huge and growing. Middle East and
Far East countries can offer many opportunities to Bangladeshi exporters of frozen vegetables. The
demand for quality products is growing amongst the hotel and hospitality industry. For example in
UAE tourism business is booming and it is expected that in the next five years more than 200 hotels
will open in Dubai. Prepacked frozen items help the chefs control the volume and quality of
ingredients thus providing guaranteed consistency of ingredients and quality of the end product. In
Saudi Arabia, 80% retail food is imported. Malaysia imported $23 million worth of frozen vegetables
in 2004.

A frozen vegetable line does not require very heavy investment. Except for an IQF tunnel freezer, all
other equipments can be made locally. The capacity of an IQF freezer is very important as it is the
main component of the whole process. A processor has limited time to buy different vegetables at
low price due to short production period of vegetables and the efficiency of an IQF freezer
determines the factory’s profitability. With some modification, the same production line can also be
used to make fresh-cut produce, quick frozen fish, frozen fruits, cooked/semi cooked hamburger,
patties or chicken nuggets. This is an excellent time to enter into frozen vegetables market. Local
market is developing rapidly and demand for processed food is increasing due to growing per capita
income, and increasing number of two-income families.

The pre-feasibility study indicates that the project is technically feasible, financially profitable,
economically desirable and rewarding from a marketing aspect. From the market analysis, it was
found that there is huge demand gap in the foreign market and hence, the whole products may
easily be consumed. Implementation of the project will generate direct employment of 111 persons.
The above feasibility of the project indicates that it is possible to generate sufficient revenue from its
operation to pay back debt obligation and annual operational expenses. Consequently, prospective
and potential entrepreneurs may come forward to invest in this potential industry. The project is
financially desirable, therefore may be considered suitable for bank financing.

14
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