FEASIBILITY STUDY ON PALM OIL PRODUCTION IN

NIGERIA
Posted by Ane | Jun 20, 2017 | Uncategorized | 0  |     

 FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

Table of Contents
 FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
Introduction:
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
FEASIBILITY STUDY:
A feasibility study is an analysis of the viability of an idea. Feasibility study answers the essential question of “should we
proceed with the proposed project idea?” In fact, a feasibility study aims to objectively and rationally uncover the strengths and
weaknesses of an existing business or a proposed one.Feasibility study will let you identify the following before you start writing
your business plan. How, where, an d to whom you intend to sell a service or product. Who are your competition. How much money
you need to start your business and keep it running until it is established. Where and how the business will operate. Provide in-depth
details about the business to determine if and how it can succeed, Serves as a valuable tool for developing a winning business plan.
List in detail all the things you need to make the business work; Identify logistical and other business-related problems and
solutions;  Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment.
Feasibility study is always a component of Business Plan and Business Proposal
(2)  CONTENT PAGE:
(3) THE EXECUTIVE SUMMARY
(4) TECHNICAL FEASIBILITY:
(5)  LEGAL FEASIBILITY:
 (6)   OPERATIONAL FEASIBILITY:
 (7)    SCHEDULE FEASIBILITY:
MILESTONE
(8) RESOURCE FEASIBILITY:
(9) MARKET RESEARCH STUDIES:
o        MARKETING PLAN
o (A) PRODUCTS & SERVICES
o (B) PRICING
o (C) PROMOTIONS PLAN:
(10) FINANCIAL FEASIBILITYThis part deals with cost estimations, revenue estimation and financial/investment
analysis.
o ANNUAL DEPRECIATION OF FIXED ASSETS:
(11) FINANCIAL ANALYSIS:
13  CONCLUSION:

Feasibility study in palm oil production in Nigeria – is related to palm oil processing business plan, feasibility
study on palm oil production in Nigeria, palm oil processing equipment,
palm oil production process, start palm oil business, palm oil processing plant cost, palm tree plantation in
Nigeria, which state is the highest producer of palm oil in Nigeria. As a matter of fact, people also ask, How
palm oil is extracted? How do you grow palm oil? Is palm oil bad for you?
In the light of the above,oil palm business is becoming a very important business recently. This has lead to
making the processing of the oil a big business in recent times too. This has made the illustrative example of
feasibility study on palm oil production in Nigeria as in this article inevitable. Correspondingly,the oil
processing business has moved from the traditional family or community subsistence methods to commercial
mechanized processing system of medium scale and large/ industrial scale production. Whichever scale that is
in operation requires a good feasibility study for it to take off fine and survive as a commercial venture.
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
Feasibility study is an assessment of the practicality of a proposed business. 

In this article I’m going to give you details of the components of a winning feasibility study, and illustrate
them with quantitative and graphical examples. In the light of this,I have therefore included here a lot of
illustrative examples for your better understanding. These illustrations are to let you know to what extent you
could go to assess the feasibility of your project. No two feasibility study is the same. The content, tables and
figures vary depending on your capital outlay and other factors. You could make contacts for further inquiries.
INTRODUCTION:
Palm oil is a yellow butter-like oil derived from the fruit of the oil palm and used as an edible fat and by
manufacturing industries in household products like candles, pharmaceutical products, confectioneries,
cosmetics etc.

Various techniques may be used to process palm oil fruits for edible oil, and may be grouped into four
categories according to throughput and degree of complexity of the unit operational machinery: traditional
methods, small-scale mechanical units, medium-scale mills and large industrial mills. Generally, processing
units handling up to 2 tonnes of fresh fruit bunches per hour are considered to be small-scale, while large-scale
mills are able to process more than 10 tonnes per hour.

Usually,your feasibility study should be able to highlight all of these methods but then concentration will be on
the type being projected for in the study.

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

FEASIBILITY STUDY:
Related to feasibility study contents are:
components of a feasibility study, project feasibility study, sample feasibility study of a project, feasibility
study template, how to do a feasibility study, importance of feasibility study, types of feasibility
study,feasibility study pdf.
A FEASIBILITY STUDY IS AN ANALYSIS OF THE VIABILITY OF AN IDEA.
FEASIBILITY STUDY ANSWERS THE ESSENTIAL QUESTION OF “SHOULD
WE PROCEED WITH THE PROPOSED PROJECT IDEA?”
IN FACT, A FEASIBILITY STUDY AIMS TO OBJECTIVELY AND
RATIONALLY UNCOVER THE STRENGTHS AND WEAKNESSES OF AN
EXISTING BUSINESS OR A PROPOSED ONE.FEASIBILITY STUDY WILL
LET YOU IDENTIFY THE FOLLOWING BEFORE YOU START WRITING
YOUR BUSINESS PLAN.

HOW, WHERE, AN D TO WHOM YOU INTEND TO SELL A

SERVICE OR PRODUCT.
WHO ARE YOUR COMPETITION.
HOW MUCH MONEY YOU NEED TO START YOUR BUSINESS AND
KEEP IT RUNNING UNTIL IT IS ESTABLISHED.
WHERE AND HOW THE BUSINESS WILL OPERATE.
PROVIDE IN-DEPTH DETAILS ABOUT THE BUSINESS TO
DETERMINE IF AND HOW IT CAN SUCCEED,
SERVES AS A VALUABLE TOOL FOR DEVELOPING A WINNING
BUSINESS PLAN.
LIST IN DETAIL ALL THE THINGS YOU NEED TO MAKE THE
BUSINESS WORK;
IDENTIFY LOGISTICAL AND OTHER BUSINESS-RELATED
PROBLEMS AND SOLUTIONS;  
DEVELOP MARKETING STRATEGIES TO CONVINCE A BANK OR
INVESTOR THAT YOUR BUSINESS IS WORTH CONSIDERING AS AN
INVESTMENT.
FEASIBILITY STUDY IS ALWAYS A COMPONENT OF BUSINESS PLAN
AND BUSINESS PROPOSAL
omponents of Feasibility Study:

tle Page

ontent Page

ecutive Summary

chnical feasibility

gal feasibility

perational feasibility

hedule feasibility

source feasibility

nancial feasibility

arket research studies

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

) TITLE PAGE:
This is the front/cover page.

It shows the name of the company and the Logo, the title of the feasibility study, the author, period covered
and date. This page must be well designed to give good impression of what is inside of it.

2)   CONTENT PAGE :
This is the list of the topics in the document and their page references. Every item in the document must be
identified here for easy referencing.

READ ALSO: Palm Oil Business Plan Simplified

3)  THE EXECUTIVE SUMMARY
ould take few pages and must show the following:
oduction: this gives the summary or general highlight of all that is done in the research study.

me of the business/firm

ure of business

iness address

iness/study objective

ion

sion,

pose.

ime to write these with relevant details.

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
READ ALSO: Break-even For Business Plan
(4)  TECHNICAL FEASIBILITY:
This assessment is based on the design system requirements. It is to determine whether the company has or
could afford the technical expertise to handle completion of the project.
This part must consider the following:
The part of the business being examined

The human and economic factor involved or available

The possible solutions to the problem 

The concern is whether the proposal is both technically feasible.

This has to be accompanied with relevant technical drawings, maps, designs etc. displayed.

The cost implications will only be highlighted but must be built into the financial aspect of the
feasibility study.

The processing procedures such as:

The Palm Fruit Processing Stages

The following stages in palm oil making using the old pattern include the following:
 The first stage: Bunch Reception: the palm will be cut from the tree in bunches .

The second stage: Threshing: cut it from the bunk and after few days it will be selected. 

The third stage: Sterilization: cook the selected with an industrial pot/kettle for sterilization.

The fourth stage: fruit digestion and pulp pressing.

The fifth stage: Oil clarification (sieving).

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
The sixth stage: package in a container and the oil is ready for sale. After this process, the kernels and the chaff
will be separated from others for domestic uses and consumption in these steps below;
 First stage: Nuts and fibre recovery from the threshing & clarification
 Second stage: Palm kernel nuts drying (using heat from sunlight)
Third stage: Palm nut cracking (using kernel crusher)
Fourth stage: Kernel separation (shells from nuts)
 Fifth stage: Kernel storage (for sales or further processing to CPKO).

There are modern ways of doing these things mechanically using modern equipment. Whichever model you
are using must be well explained.
(5)  LEGAL FEASIBILITY:
This aspect is to determine whether the proposed system conflicts with legal requirements of the
business/project. It must comply with the local protection, regulations and if the proposed venture is acceptable
in accordance to the laws of the land.
This will highlight the relevant regulatory bodies and laws, patent rights and other intellectual property laws
involved. It will also show the cost implications if there are needs for franchise, business registration etc.

 (6)   OPERATIONAL FEASIBILITY:

The operational feasibility assessment focuses on the degree to which the proposed business fits in with the
existing business environment and objectives with regard to development schedule, delivery date, corporate
culture and existing business processes.

To ensure success, desired operational outcomes must be imparted during the planning stage. These include
such design-dependent parameters as reliability, maintainability, supportability, usability, reducibility,
indispensability, sustainability, affordability and others. These parameters are required to be considered at the
early stages of design if desired operational behaviours are to be realized. 
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
It will also show list of equipment needed such as:

  Processing plants:

S/N EQUIPMENTS
Palm oil plant production line: includes Thresher, Boiler & Kettle,
1 Digester, Fibre separator, Pressers,
2  Palm kernel crusher/cracker
3  Palm kernel nut crusher and separators
4 Electricity (Diesel Generator)
5 Storage Tank
6 Overhead water Tank, Water pump
Other Facilities:

In addition to obtaining appropriate equipment for the palm fruit processing just described above, a facility will
also be needed to house the mill. It is estimated that a simple building of about 1000 square meters would be
sufficient to house the equipment, and to provide room for both an office and limited storage. There will be 2
bore holes and a medium size generator to power the operations. Documentation and record-keeping would be
best facilitated with a computer and printer.

 (7)     SCHEDULE FEASIBILITY:

A business will fail if it takes too long to be planned before it is useful. Typically this means estimating how
long the business will take to start. Schedule feasibility is a measure of how reasonable the planning timetable
is going to take. It is to say ‘given our technical expertise, are the project deadlines reasonable? This area shall
have some topics like this.

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

MILESTONE
The milestone schedule of the palm mill if the business is to start operation in 201

Initial capital to be made ready in July 2017 

Purchase of the equipment must be completed in August 2017 

Equipment installation must be completed mid September 2017 

Test rum to be completed by September ending. 

2 bore holes must be ready before September 2017 

Every start-up processes should be complete between now and ending of September 2017. 
 Full scale production shall start 1 October 2017 

For expansion purpose one additional equipment to be bought every first month from year two to year
five.

(8)  RESOURCE FEASIBILITY:

This involves questions such as how much time is available to build the new business, when it can be built,
type and amount of resources required and the source of such funds.

The following is an illustrative table of source of funds:

Source Amount (N’000)

Year    1 2 3 4 5 Total (N’000)
Equity contribution 1.00 1.00
Investors: Family 7.60 7.60
 Mr. ABC 4.50 3.00 3.00 3.00 3.00 16.50
Other Sources 3.00 3.00 3.00 0.9 9.90
Total Financing 16.1 6.00 6.00 3.90 3.00 35.0

This table shows that N35,000,000.00 is required for this business, and will be provided over 5 years period,
and by who.

(9) MARKET RESEARCH STUDIES:

This is one of the most important sections of the feasibility study as it examines the marketability of the
product or services and convinces readers that there is a potential market for the product or services. If a
significant market for the product or services cannot be established, then there is no project.
Typically, market studies will assess the potential sales of the product, absorption and market capture rates and
the project’s timing.FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
Therefore, this aspect of the feasibility study will show the following:

       MARKETING PLAN
Marketing plan section will have sub-sections that explain the product to be sold, pricing, promotion and
distribution plans to achieve good sales.

      PRODUCTS & SERVICES

This section will show things like;
“The products include Crude Palm Oil (CPO), Crude Palm Kernel Oil (CPO), Special Palm Oil (SPO), Palm
Kernel Nut (PKN), Palm Kernel Cake (PKC) and, Palm Kernel Shells (PKS). The management is looking at
the products in drums (tons), and 20litre kegs. This is to enable both small, medium and large scale customers
to have full access to the quantity they want to purchase”.

Other sources of product must be listed here such as:

– Would you be buying processed products from third parties such as the community markets, other processing
firms, local farms etc.?
– Would you be buying unprocessed fruits/bunches in like manner?

– Would you be processing palm fruits for third parties commercially?

– Would you be storing products – your products and those you buy from third parties to sell in future?
Then you highlight the Uses Of The Finished Palm Products.

The products will be used to produce other primary and secondary products in the food and drug industry and
for other industrial purposes
They include;
1. Food Products
 Cooking Oil 

Deep Frying Oils 

Margarines and spreads Bakery fats 

Cocoa butter alternative fats 

Confectionary fats 

Ice cream fats Infants nutrition fats 

Other food applications

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
2. Non Food Products

 Soaps Candles 

Pharmaceuticals 

Lubrication and Grease Surfactants 

Industrial 
 Chemicals 

Agrochemicals 

Coatings 

Paints and lacquers 

Electronics 

Leather 

Biodiesel

OTHER PRODUCTS
Apart from palm oil, palm kernel and palm kernel oil which are the main products of the oil palm, the
processing wastes generated from the trees and during palm fruits processing (to obtain palm oil and palm
kernel oil) have several uses. The sludge is used in making traditional soaps and fertilizer and the Palm Kernel
Cake is used widely as an input into the animal feed industry and for fertilizers. The processing wastes include
empty bunch refuse, fibre, shell, sludge and mill effluent.

In addition, the other parts of the palm tree (trunk, leaves, fibre) have broad uses, while the bunch refuse, and
by-products from the oil processing (fibre, shell, sludge) can be used as fuel for the mills, making briquettes to
substitute for fuel wood,

(B) PRICING
This section discusses the pricing plan for the products that will be processed..
PRICING OF PALM OIL

The pricing of palm oil is seasonal. You have to show in a table like the one below, how oil palm prices
fluctuate between the season period and the off season period, and the category of buyers. Use your own
researched figures.

Pricing of Palm oil:

AVERAGE SELLING
PRICE  PER 20 AVERAGE
CATEGORY OF LITRE KEG PRICE
ACTOR IN  THE PRICE PER
S/N VALUE CHAIN SEA-SON Low High (L + H)/2 1 TON
1 Farmer/ Peak N6,500 N7,000 N6,750 N315,000
 Processor Off N7,000 N7,500 N7,250 N378,000
Peak N7,500 N8,000 N7,750 N340,200
2 Wholesaler/Dealer Off N8,500 N9,000 N8,750 N389,025
Peak N7,000 N8,800 N7,900 N349,650
3 Retailer Off N9,000 N9,500 N9,250 N396,900
A proper feasibility study will reveal all these and will give you the basis for estimating your sales/turnover for
the period in question. You will do the same for all other products and by-products of palm oil.

PRICING OF PALM KERNEL NUT, OIL AND CAKE

The pricing of palm kernel and palm kernel oil is also seasonal depending on the supply of palm fruits. Prices
can also nearly double between peak production season (when prices are lowest) and the off season when
prices are higher. Consider the following tentative prices.· 
1 ton of PKN = N100,800
1 ton of PKO = N371,700
1 ton of PKC = N50,400

Source: Nigeria local open market.

Your feasibility study will reveal the actual prices.
(C)  PROMOTIONS PLAN:
Consider the following statements;
“although the company’s current contacts in the palm oil product chains are for local consumption, expansion
to every part of Nigeria and other countries (for exportation purposes) is quite likely in the foreseeable future.
The unique marketing approach of using local and foreign distributors, and customer awareness will be
maintained using T.V, Radio and Online advertising. Direct researcher/sales personnel will be available in the
Company; this is to enhance first-hand information on what the customers are seeking especially in cities and
state. The management will develop a fully loaded website highlighting the palm oil processing mills, technical
analysis of production process and the organizational chart of the company’s management”.

You must use this medium to explain how you intend to market your products, including your distribution
plans.
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
(10)  FINANCIAL FEASIBILITYTHIS PART DEALS WITH COST
ESTIMATIONS, REVENUE ESTIMATION AND FINANCIAL/INVESTMENT
ANALYSIS.
The financial viability can be judged on the following parameters:
Total estimated cost of the project 
Financing of the project in terms of its capital structure, debt to equity ratio. 
 Existing investment by the promoter in any other business – eg industry average.
Projected cash flow, 
Profitability ratios like gross profit margin, net profit margin and rate of return on investment (RIO).
The financial viability of a project should provide the following information:
– Full details of the assets to be financed and how liquid those assets are.

– Project’s funding potential and repayment terms.

Remember a feasibility study is a survey. Information as the following are necessary here:

KEY FINANCIAL ASSUMPTIONS:

State the assumptions you are making in order to carry out this survey. All things being equal, it is hoped that
based on these assumptions your estimates would be realised. Where the result of this study is not favourable
and there is need for adjustments, all of these would also be adjusted.  
1.The revenue items including palm oil products are assumed to increase during peak time – you can estimate
the per cent-age increase.
Sales and related marketing expenses are expected to increase by 20% each year due to expected increase in
palm fruit supply from third party customers.
3. The registration cost and other start-up processes costs are assumed to be incurred in year one alone.

The total cash needed to start up and run the company is N35 million to be provided over the first 5 years.

Where bank loan is sought for, interest will be charged at commercial rate.

Taxes shall be on the balance sheet of each year

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

BASIS FOR FINANCIAL ANALYSIS AND PROJECTIONS:

These are assumptions that relate to financial projections and analysis. You must state them.
1. TAX deduction is 30% taking advantage of tax incentives for agriculture and agro-allied firms.
2.Depreciation is charged on all the tangible capital items on a straight line basis on the following;
· Building 2%
· Motor Vehicle 25%
· Plants and Machinery 25%
· Furniture’s and Fittings 20%
· Amortization of intangible capital items are absorbed at 20%.
 4. Borrowing rate is at current commercial lending rate.
5. The accounting records are in accrual basis.
6. Every expenditure incurred in the first three years is capitalized and amortized/depreciated accordingly.

You can add more to suit your study.

is time to go ahead producing relevant tables to buttress your findings and analysis. Such tables could include
the following:

                 FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

BLE SHOWING CAPITAL EXPENDITURE FOR OIL MILL FACTORY AND ADMIN BLOCK

AMOUNT AMOUNT AMOUNT

S/NO.
DESCRIPTION       N       N       N
Equipment – sterilizing, pressing,
1 clarification plants, generator etc. 7,000,000
Other plants, Pick-up Van, 1 No car, 5
2 manual carts 3,000,000
3. 1 No bore hole 650,000
4. Factory and Admin building 3,500,000
5. Admin. Furniture and fittings. 500,000
5. Admin and factory staff – Salaries 2,400,00
6. Incorporation expenses 120,000
7. Utilities and others 500,000
EVENUE ESTIMATES:
 OIL PALM REVENUE

Year 1 2 3 4
Yield 6 tones 9 tones 12 tones 12 tones
Yields in Litre 8,436 12,654 16,872 16,872
Value in Naira
@N12,000/25ltr 4,049,280 6,073,920 8,098,560 8,098,560
                                                 
The analysis of this revenue estimates must be shown. Remember they are to be generated by your marketing
feasibility study. Now you can understand that there are various feasibility studies to be incorporated in this
one feasibility study.

(iii) ESTIMATED OPERATING EXPENSES

YEAR 1 2 3 4
OIL MILL
2 Mill operators 480,000 480,000 528,000 528,000
Raw Materials 200,000 200,000 220,000 220,000
2 Casual labours 360,000 360,000 396,000 396,000
Utilities 100,000 100,000 110,000 110,000
TOTAL 1,140,000 1,140,000 1,254,000 1,254,000
ADMINISTRATION
2 Staff 480,000 480,000 528,000 528,000
1 Driver 240,000 240,000 264,000 264,000
2 Security men 360,000 360,000 396,000 396,000
Utilities 100,000 100,000 100,000 100,000
Professional fees – Auditing
etc 120,000 120,000 150,000 150,000
 Sub-total          1,300,000 1,300,000 1,438,000 1,438,000
Marketing:
Packaging 84,000 112,000 140,000 168,000
Label 10,000 12,000 15,000 18,000
1 casual labour 180,000 180,000 180,000 180,000
Utilities 100,000 100,000 100,000 100,000
Sub-total 374,000 404,000 432.000 466,000

Notice that this estimate is in sections.

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

ANNUAL DEPRECIATION OF FIXED ASSETS:
You have to state the bases for the depreciation like ‘ the annual depreciation for this project is calculated using
the straight line method’. You could also use diminishing balance method, sum of digits methods etc. But you
have to know that by relevant accounting standard, the method adopted here will also be the method to use in
other accounting processes. That will make the figures generated in such processes comparable.
Sample of Schedule of Annual Depreciation:
The table shows the cost of the depreciation of fixed assets over the projected years.
Tangible Fixed Assets will be depreciated as per normal depreciation rate for such assets, while intangible
assets ( other capitalized expenses) will be amortized over 4 years from the year of revenue earning. You could
decide that the amortization rate adopted be 10%, 20%,30% and 40% for year 1 to 3 respectively or amortized
on equal basis for the specified period.

(iv) TABLE SHOWING DEPRECIATION SCHEDULE

ANNUAL DEPRECIATION OF ASSETS

ITEM BOOK VALUE 1 2 3 4 5
1 Land 6,000,000 ,0 0 0 0 0
2 Building 2% 5,500,000 110,000 110,000 110,000 110,000 110,000
Plants &
3 Machinery 7,000,000 700.000 700,000 700,000 700,000 700,000
4. Bore Hole 10% 2,600,000 260,000 260,000 260,000 260,000 260,000
Furniture Fixtures
5 & Fittings 500,000 75,000 75,000 75,000 75,000 75,000
6 Motor Vehicle 3,000,000 300,000 300,000 300,000 300,000 300,000
7 Amortizable 9,160,000 1,832,0001,832,000 1,832,000 1,832,000 1,832,000
Capital
 Expenditures.
TOTAL 33,760,000 3,277,000 3,277,000 3,277,000 3,277,000 3,277,000

FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA

(v) TABLE SHOWING SUMMARY OF AMORTIZED CAPITAL EXPENDITURES:

1. Admin and factory staff – Salaries 2,400,000

2. Incorporation expenses 120,000
3. Utilities and others 500,000
4. Construction of 3 fish ponds 300,000
5. Fingerlings 20,000
6. Feeds 50,000
7. Cows 1,000,000
8 Goats 500,000
9 Miscellaneous Expenses 100,000
TOTAL =======
These are the start-up expenses capitalized, which must be amortized as per the entity financial policy.

(11) FINANCIAL ANALYSIS:

This part will now be used to analyze the entire operations financially.

 (vi) INCOME STATEMENT

Year 1 2 3 4 5
Sales: Oil Mill  – – 4,049,280 6,074,920 8,098.560
  Fish pond 4,230,000 5,400,000 6,480,000 6,480,000 6,480,000
Kernel and other by-
products    –    – 1,197,000 1,197,000 1,197,000
Life Stock         –     –       –     –     –
TOTAL REVENUE 4,230,000 5,400,000 11,726,280 13,751,920 15,775,560
Direct cost of
production
Plantation – – (1,120,000) (1,120,000) (1,232,,000)
Oil Mill – – (1,140,000) (1,140,000) (1,254,000)
GROSS PROFIT
(LOSS) 4,230,000 5,400,000 9,466,280 11,491,920 13,289,560
Less:
Admin Expenses – – 1,300,000 1,300,000 1,438,000
Marketing – – 374,000 404,000 432,000
Depreciation:
Fixed Assets 1,445,000 1,445,000 1,445,000 1,445,000 1,445,000
Amortized Expenses 1,832,000   1,832,000 1,832,000 1,832,000 1,832,000
NET
PROFIT/(LOSS) 953,000 2,123,000 4,515,280 6,510,920 8,142,560
Provision for tax  134,000 318,450 677,000 976,638 1,221,384
Net profit after tax 810,000 1,804,550 3,838,280 5,534,282 6,921,176
Gross Profit  margin      –     – 81% 83.6% 84%
Net profit margin
before tax      22.5%      39.3% 38.5% 51% 51.6%
Return on investment 8.1% 18% 38.38% 55.34% 69.2%
Note the accounting ratios generated here. Gross profit margin, Net profit margin and ROI. These are good
investment indicators.
With this you will understand that if you generate unreliable figures that shows that the business is feasible
which is not true, the business will soon be in trouble.
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
(vii) TABLE OF BALANCE SHEET/STATEMENT OF THE ENTITY POSITION

1 2 3 4 5
YEAR N N N N N
ASSET
EMPLOYED:
Plantation 11,870,000 13,820,000 14,120,000 14,120,000 14,120,000
 Oil Mill 4,620,000 9,620,000 17,670,000 17,670,000 17,670,000
Fish and Life-stock 1,675,000 1,850,000 1,970,000 1,970,000 5,220,000
18,165,000 25.290,000 33,760,000 33,760,000 37,010,000
Life-stock
appreciation      –      –     – 3,250,000 –
Less Accumulated
Depreciation 3,277,000 9,831,000 9,831,000 13,108,000 16,385,000
14,888,000 15,459,000 23,929,000 23,902,000 20,625,000
Current assets less
current liabilities 3,022,000 10,255,550 11,623,830 24,335,112 37,533,288
17,910,000 25,714,550 35,552,830 48,237,112 58,158,288
NET ASSETS ======= ======= ======= ======= =======
FINANCED BY
Authorized capital 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Director’s Current
account
‘ 16,100,000 22,100,000 28,100,000 32,000,000 35,000,000
Reserves/Retained
profits 810,000 2,614,550 6,452,830 11,987,112 22,158,288
Revaluation Surplus      –      –      – 3,250,000    –
17,910,000 25,714,550 35,552.830 48,237,112 58,158,288
Shareholders Fund ======= ======= ======= ======= =======
(VIII) 
TABLE SHOWING PROJECT EVALUATION USING PAY-BACK MATHOD
This analysis will show you how long it will take the business to pay back your investment.

Revenue
Year Investment cost in  N In  N Cumulative Balance in N
1 16,100,000 4,230,000 (11,870,000)
2 6,000,000 5,400,000 (12,470,000)
3 6,000,000 7,115,280 (11,354,720)
 4 3,900,000 8,811,282 (6,443,438)
5 3,000,000 10,198,176 754,738
Revaluation of life-stock – 3,250,000 4,004,738
This shows that this project pays back in 5 years.
FEASIBILITY STUDY ON PALM OIL PRODUCTION IN NIGERIA
13  CONCLUSION :
This will carry your recommendations based on the feasibility study. Your recommendation could be to go
ahead with the project, stop the project, modify the project or any other alternative.

Note also that these tables can be converted to graphs, bar charts, pie charts etc. for better illustration.

Now you can write your business plan, or business proposals. In addition to giving a comprehensive report
based on this study, you can also attach some of these reports as part of the business plan main body or as
appendix.

GOOD-LUCK – You can now write your business plan on palm oil production. You can make contacts for
professional attention if you have need to do so.