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Feasibility Study for Essential Oil Extraction and

Production Business Pan in Ethiopia by Suleman Mossa

Project Profile on Essential Oil Extraction and Production

Feasibility Study Business Pan in Ethiopia.
This project profile is prepared in order to provide general information on the opportunity
for an investor to setup a steam distillation unit for extraction of essential oil from
Eucalyptus Globulus which would be specially grown for this purpose.
Demand projection divulges that the domestic demandfor essential oil is substantial and is
increasing with time. Accordingly, the planned plant is set to produce 120 tons annually.

Investment
The total investment cost of the projectincluding working capital is estimated at Birr 4.22
million and creates 51 jobs and Birr 624,960 of income.

The financial result indicates that the project will generate profit beginning from the first
year of operation. Moreover, the project will breakeven at 16.8% of capacity utilization and
it will payback fully the initial investment less working capital in one year and 9 months.
The result further shows that the calculated IRR of the project is 54.4% and the net
present value at 18 % discount is Birr 7,306,834.92.

In addition to this, the proposed project possesseswide range of economic and social
benefits such as increasing the level of investment, tax revenue, employment creation and
import substitution.
Generally, the project is technically feasible, financially and commercially viable as well as
socially and economically acceptable. Hence the project is worth implementing.

Product Description and Application

An essential oil is an aromatic volatile substance.It is named after the French word
'essence', (not the English word 'essential'). It is extracted by distillation from a single
botanical species. Essential oils are obtained fromblossoms, seeds, fruits, fruit peels,
leaves, stems, barks, wood, roots, and plant secretions.

Essential oils are found in hundreds of products but are generally used as odorants,
flavorants, and pharmaceutical ingredients. As odorants, they are used in perfumes,
lotions and other cosmetics, soaps, detergents, andother products ranging from animal
feed to insecticides. As flavorants, they are present in a wide variety of foods, including
soft drinks, baked products, ice creams, candy, confections, etc. As pharmaceutical
ingredients, essential oils are used in dental products such as toothpaste, aromatherapy
and phytotherapy products, and a large number of medicines.

Plant Capacity
Given the projected demand presented earlier, and the planned technology, the envisaged
plant is set to produce 120 tons of essential oil annually that would be used mainly by the
soap industry and other toiletry products. This capacity is about 11.5% of the demand
projected in 2009/10 and it further decreases as time goes by.

Production Program
The program is scheduled based on the considerationthat the envisaged plant will work
275 days in a year in 2 shifts, where the remainingdays will be holidays and for
maintenance. During the first year of operation theplant will operate at 40 percent capacity
and then at to 60 percent in the 2nd year and 80 percent in the 3rd year. The capacity will
grow to 100 percent starting from the 4th year. This consideration is developed based on
the assumption that market and logistics barriers would take place for the first three years
of operation.

Production Process

The most appropriate production process of essential oil production from the leaves of
eucalyptus globulus plant is steam distillation.
Generally speaking steam distillation is the most common method of extracting essential
oils. First, fresh or sometimes dried, botanical material is placed in the plant chamber of
the still and pressurized steam is generated in a separate chamber and circulated through
the plant material.

The heat of the steam forces the tiny intercellular pockets that hold the essential oils to
open and release them. The temperature of the steam must be high enough to open the
pouches, yet not so high that itdestroys the plants or burns the essential oils. As they are
released, the tiny droplets of essential oil evaporate and, together with the steam
molecules, travel through atube into the still's condensation
chamber. As the steam cools, it condenses into water. The essential oil forms a film on the
surface of the water. To separate the essentialoil from the water, the film is then decanted
or skimmed off the top. The remaining water, a byproduct of distillation, is called floral
water, distillate, or hydrosol.
There are alternative ways of producing essential oils. These are Cold Pressing or Cold
Compression (which is mainly used to obtain citrus fruit oils), and Solvent Extraction (a
method of extraction used on delicate plants). However, for the eucalyptus globulus,
steam distillation is more appropriate.

Machinery and Equipment

The machineries and equipment required for producing essential oils are detailed in table
4 below.

The total cost of machinery and equipment includingfreight insurance and bank cost is
estimated to be about Birr 950,000.

.............................................................#######....................................................
.......................

Need Customized Feasibility Study or Business Plan for Bank Loan?

Ask for FREE project related details with our consultant/industry expert.

Our realistic project reports for bank Loan accompanied by a detailed financial plan
can make all the difference to get the funding you need.

Our consulting firm can prepare successful and standard project reports for
commercial agriculture, agro-processing, manufacturing and service enterprises as
per National Bank Standards.

Al lProject Feasibility Studies| Business Plans will be prepared by experienced certified

consultants and the market research and analysis are supported by computerized data
bank.

Standard Project Report - Map of National Bank of Ethiopia

A Standard project report for new business ventures is quite important in getting the
project itself off the ground. Therefore the project Feasibility Study report should be
prepared as per National Bank Standards.

The project report covers all the aspects of business; from analyzing the market,
confirming availability of various necessities such as plant & machinery, raw materials to
forecasting the financial requirements. The project also provides sectoral information, brief
on Government policies and international scenario, which have some bearing on the
project itself.

The scope of the report includes assessing market potential and investment decision
making. in a very planned manner by formulating detailed manufacturing techniques and
forecasting financial aspects by estimating the cost of raw material, formulating the cash
flow statement, projecting the balance sheet etc.

A SWOT analysis is often carried out in the initial reports. This helps to identify the
strengths, weaknesses, opportunities and threats of the business or a project.

The project so formulated considering the below-mentioned aspects and submitting

to any bank for availing credit facility for establishment of the project. The bank will
then examine the project for its technical feasibility, financial viability and
bankability.

Our Service Packages

Haqiqa Business Solution helps entrepreneurs all over the world to start and grow
businesses successfully and profitably. We provide you with business ideas and
smart solutions that help you to build a profitable business empire. We have plenty
of resources that will assist you in your entrepreneurship journey.

Auditing Financial Statements

Preparation of Successful Business Plans | Feasibility Study,
Project Profiles for Manufacturing Plant, Commercial Agriculture.
Agro Processing and Service Enterprises.
Preparation of Project Proposals for NGOs,
Market Research Study, which will make it easier for your to start
and run your business profitably.
Technical and Commercial Counseling for setting up new
industrial project and Most Profitable Small Scale Business.

PROJECT REPORT TABLE INDEX.

Each ‘Haqiqa Business Solution’ MARKET OVERVIEW CUM DETAILED TECHNO
ECONOMIC FEASIBILITY REPORT (Complete Report) tentatively covers.

1. Executive Summary
2. Product Description and Application
3. Market Study

Present Demand and Supply

Export & Import Statistics Data
Projected Demand
Names and Addresses of Existing Units (Present Manufactures)
Pricing and Distribution

1. Technical Study

Plant Capacity and Production Program

Availability and Source of Raw and Auxiliary materials
Material Requirement and Cost
Electrification, Electric Load and Water
Location and Site

1. Technology and Engineering

TECHNOLOGY
Production Process
Machinery and Equipment
ENGINEERING
Construction Process
Civil Engineering Cost
Plant Layout

1. Human Resource and Training Requirement

Human Resource.
Training Requirement

1. Economic and Social Benefit and Justification

Profit Generation
Import Substitution and Foreign Exchange Saving
Employment and Income Generation
Environmental Impact

Financial Analysis details as under:

10. Underlying Assumption

11. Initial Investment Cost
12. Production Cost
13. Sources of Finance
14. Financial Evaluation:
Break-Even Analysis and profitability analysis
Simple Rate of Return
Internal Rate of Return/IRR and Net Present Value/NPV
Sensitivity Analysis

Annexure-Financial Statements will be for 5 to 10 Years:

Annexure:: Net Working Capital

Annexure:: Projected Cash Flow
Annexure:: Discounted Cash Flow
Annexure:: Projected Income Statement
Annexure:: Projected Balance Sheet
Annexure:: Loan Amortization Schedule
Annexure:: Project Implementation Schedule

____________________________________________________________
___________________________________________________

You should not miss:-

Feasibility Study

Get In Touch//

Suleman Mossa General Manager

Mobile = +251 944-22-82-55

WhatApp, Telegram, imo and Messanger Contact = +251 944-22-82-55

Piazza, Kelifa Business Center Office No.507 Addis Ababa, Ethiopia

E-mail: haqiqa2000@gmail.com

Website ፡ www.ethiopianauditor.wordpress.com

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Suleman Mossa | June 14, 2021 at 9:55 pm | Categories: Feasibility Study | Business Plan and Project
Profiles | URL: https://wp.me/pcw0UU-sD

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