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Biscuit Factory Business Plan

Prepared by

Linda Aines and Ali Salem

For

THE AFGHANISTAN AGRICULTURAL DEVELOPMENT PROJECT

Citizens Network for Foreign Affairs (CNFA), Inc.

September 2004

CNFA 1111 19th St. NW, Suite 900 Washington, DC 20036 Tel. +1.202.296.3920 Fax. +1.202.296.3948 http://www.cnfa.org

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Biscuit Factory Business Plan

Summary Highlights

• There are a large number of small bakeries providing a variety of fresh baked goods

including biscuits that are produced and sold over the counter in many outlets in every Afghan city and village.

• Imported packaged biscuits, mostly from Iran, Pakistan and India, are found in every corner shop, grocery stores, vendors with carts and supermarkets.

• Bakery owners indicated that biscuits were a rapidly growing market and biscuit consumption was increasing rapidly (Quentin Johnson 2003.) School aid programs now use biscuits imported from India.

• An automatic biscuit factory located in Kabul, to produce wrapped soft or hard biscuit, would be a “First to Market.”

• The proposed capacity of the Biscuit Factory is 250 kg/hr. The estimated total cost of the equipment is approximately $250,000

• The biscuit produced will be fortified. The added cost of fortification per packaged biscuit is $0.03 which is negligible.

• The biscuit factory will import its own enriched soft flour directly from Pakistan as well as food grade packaging but other ingredients will be purchased from the local market.

• Biscuits have a long shelf life and can be transported safely to remote locations.

• Investment in training personnel is as important an investment as machinery. It is recommended that at least a plant operator, and at least a mechanic and electrician be trained for one month at the Vendor’s facility.

• Manuals for operation, quality control, maintenance and sanitation should be written and made available at the start-up of the enterprises.

• A Quality Control manager should be trained to run a modest laboratory, sanitation program, GMP and HACCP. Most often, this person performs production planning and maintains proper supply of raw materials and finished products.

• An opportunity exists to help Afghanistan who has a population that has chronic malnutrition in some regions by introducing biscuits made with “super flour.” The super flour mix may be “soft” enough to mix with local flour and produce good biscuits with high protein.

• A market for the biscuits would be the FAO/World Food Program which currently distributes 30,000 MT of imported biscuits to schools as a school funding program.

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• Biscuits produced are expected to be of a quality, freshness, taste and nutrition than the imported biscuits from Pakistan and other countries.

• Such a Biscuit Factory will serve as a model of modern agribusiness technology; the success of the factory and its product will serve as a model for further expansion of industrialized bakeries or biscuit factories in Afghanistan,

• Focus groups conducted in Kabul showed women’s propensity to buy fortified biscuits for their family is at a high level of interest (94%) and they may be willing to pay a premium price (81%) for good quality fortified biscuit packages.

• Marketing will be very much a part of the ongoing sales effort at the Factory. Biscuit packaging will be designed to be distinctive and clearly show that the flour is fortified. Vehicles (with strong signage) will make deliveries move the product within the region.

• Methods of reaching and educating women about fortified flour and biscuits will be researched and tested. Radio advertisements will feature the company and special qualities or benefits of the new Biscuits.

• Income and cash flow projections on the Biscuit Factory show a profitable first year and payback of initial investment within two years.

Background

Biscuits are an important luxury food for the Afghan people, especially the children. All packaged biscuits currently sold in Afghanistan are imported from several countries. There is a growing market for these biscuits and providing a substitute for the imported biscuits is a worthy investment project. We expect that the biscuits can be produced in Kabul, at a competitive price, with a factory that is up to date and operating efficiently. There are many small-scale biscuit bakeries throughout Afghanistan. These bakeries produce, among other products, two types of biscuits ---one is a short bread type and the other is a crisp type biscuits. The ingredients to produce these biscuits are: imported 75% extraction soft flour (non-enriched) from Pakistan, Kazakhstan or Tajikistan, sugar and vegetable oil or ghee. The bakeries produce the biscuit by hand and bake them on steel trays in hearth oven (not tandor ovens). The biscuits are produced with inadequate Good Manufacturing Practices (GMP), food safety, hygiene and without proper packaging. There are also packaged biscuits. All are imported from a number of countries such as Pakistan, Turkey, India, Iran and England. These biscuits are sold in every corner shop, grocery store, vendors on carts around school and supermarket. The FAO/ World Food Program is currently buying and distributing 30,000 MT of imported biscuits to schools in Afghanistan. It is one of their mechanisms for school funding and WFP would gladly purchase biscuits produced locally for this program. There is no accurate information, in Afghanistan, on the number of these small bakeries and their capacities. Even if we were able to get capacities, there is no way to estimate

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the biscuit volume in the small bakeries. Neither is there accurate statistics on the volume of imported biscuits into the country. In order to collect this information, one would have to travel to Dubai where the major importers are. A middleman that we sought to interview in Afghanistan (Habbib Kolazar) could not be found. The Business

We have investigated the building of a Biscuit Bakery or Biscuit Factory as an investment opportunity. Our research shows that there seems to be a market for packaged biscuits, all of which are now being imported into Afghanistan. The Biscuit Factory we propose will be completely automatic except for the mixing where all ingredients have to be measured and placed in the mixing bowl. Soft flour is the main ingredient in biscuit manufacturing. There is no locally produced soft flour in Afghanistan. To the best of our knowledge, there is no soft wheat grown in Afghanistan and there is no roller mill capable of milling soft wheat to 75% extraction flour at 0.48% ash content. Therefore, it is recommended that the proposed factory import their own soft flour directly from Pakistan. In the tender specification, the factory should specify enrichment of the flour. Direct importation will achieve cost cutting of the main ingredient. Packaging materials will also need to be imported directly from Iran or Pakistan. All other ingredients can be purchased in the local marketplace. The Factory will have 26 employees initially operating an 8 hour shift. These include 2 office manager/staff; 1 salesperson: 6 machine operators; 2 maintenance; 2 guards; and 13 laborers. During succeeding years or as demand expands, the Factory will increase operations to two shifts then on to 3 shifts or 24 hour operation. 2. Facility Requirements: The whole manufacturing area is about 270 square meters (45 meter long by 6 meter wide). Additional space is needed for warehouse of ingredients and finished products. The full list of machinery needed and cost of each machinery FOB is attached in the appendix. A full view of the whole factory is also attached. (See Appendix 1 for diagram and specifications.) The cost of the equipment is $113,000 FOB, and the total equipment investment is estimated to be $226,000 with installation but excluding land and building. Another manufacturer from China offers an automatic line that is more versatile and can produce a larger variety of biscuits. It costs $170,000 FOB. Such a Biscuit Factory will serve as a model of modern agribusiness technology; the profitability of the factory and its products will serve as a model for further development of similar factories in Afghanistan. The investment required for startup of the Biscuit Factory is $500,000. A majority of the funds will be used for building the new factory, purchasing biscuit making equipment, and for startup expenses until the factory gets fully into operation:

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- Land is $20,000 and Building $154,000 - Factory Equipment (includes installation) $226,000

-Generator: need 150 KVA generator $25,000 - Operating Capital 65,000 -Vehicle for pick up and delivery (1): $10,000 Additional vehicles purchased in Yr 2 and 3 TOTAL $500,000

The factory equipment can be purchased from one of several turn-key factory suppliers in China, Italy and the United States. The list of manufacturers that would provide needed equipment is listed here below and their equipment can be viewed on their websites:

LIST OF BISCUIT FACTORY MACHINERY

1. Zhuai Hongfu Food Mechanical Manufacturing Co., Ltd

Tel:0086-756-850783 http://www.hfmachine.com.cn

Fax: 0086-756-8508316

Email: zxf@hfmachine.com.en

Contact: xifeng Zhang

2. Huawei Machinery Factory http://www. huawei-machinery.com

Tel: 0757-26325600

Fax:0757=26325609

Email: hauwei@huawei-machinery.com

3. Scledensi ( Italy) http://www.scledensi.it/

Web: http://www.scledensi.itSemi automatic

4. APV Baker (USA) http://www.apvbaker.com/biscuit/

Web: http://www.apvbaker.com

(See Appendix 1 through 4 for machinery schematics and specifications.)

Location:

The recommended location of Kabul is closest to sources of raw materials needed. Kabul is the largest market for biscuits. Kabul has a population of 3.3 million and is considered the largest market center in the country. Distribution of biscuits to markets outside Kabul can be easily done through a distributor or by factory-arranged transportation. Volume and capacity:

The Factory will have a capacity is 250 kg/hour. It is recommended to start production on 8 hour shifts then expand as demand increases and the brand is better established.

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Sources and costs of inputs:

Formulation of biscuit varies for different products. The formulation of the various products will be worked out with the vendor. A typical formula for biscuit is as follows:

Soft flour 55.00% Shortening* 7.65% Sugar 2.00%

NFDM 3.25% Salt 1.1% Sodium Bicarbonate 0.8% Monocalcium Phosphate 1.0 Water 29.2% * Shortening non emulsified all vegetable hydrogenated fat

This formula is used to calculate the cost of goods sold for the proposed factory. Other ingredients may be needed for sandwiched biscuits or flavored ones. Production per hour is 231kg of biscuit. After allowing for 5% rejects, the plant is expected to produce 1155 packaged biscuits/per hour each weighing 200g each. Until brand recognition in the market is established, it is projected to run the plant for 8 hours daily. Therefore total production is about 9,230 packaged biscuits per day. Opportunity for Using local flour in Biscuit Manufacturing:

An opportunity exists to use local flour at 75% extraction. The International Assistance Mission (IAM) has a project producing complementary flour called super flour. This flour is a simple mixture of roasted rice, chickpeas and maize that has been ground and mixed together in equal proportion. The capacity is about 12 MT per month. Rice and maize are high starch grains. Chickpeas contribute protein that will not impact gluten content if mixed with flour. It is suggested to run several trials to mix the super flour with 75% extraction local hard flour at 5% and 10% level. The mix may be soft enough to increase the spread factor and produce good biscuits with high protein. The testing should include the machine ability of the dough, the biscuit quality, as well as the taste of the biscuits. These trials can be easily done in the laboratory of American Institute of Baking at Manhattan, Kansas. If such tests are successful then samples of the mixed flour should be sent to the vendor of the machinery for testing the machine ability issues. Another set of trials, if economically feasible, is to add 5% or 10% wheat starch to 75% extraction local flour and test them for biscuit baking quality. A third recommendation is to try to add small percentage of sodium meta bisulfite to weaken the gluten of 75% extraction local flour. The success of any of these trials will have a significant impact on the business and use locally produced flour. Not to mention the improved nutritional quality of the flour would be very beneficial to the health of the consumer.

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Proposed owner: In all interviews we conducted, we find that there are sources of investment capital in Afghanistan and in Kabul. There are many investors who are seeing opportunities and starting various enterprises. There are investors looking for new opportunities according to interviews with local NGOs. However, due to lack of time, finding a prospective investor was left to the future managers of CNFA in Kabul. It is hoped that the owner has sufficient knowledge on baking, marketing experience in branded foods, and understanding the whole market chain.

Training:

Investment in training key personnel of the Biscuit Factory is as important an investment in the machinery. After all, the operators of the factory are the people who will keep the mill running and maintained 24 hours a day. Therefore, it is recommended that at least one operator, one mechanic and one electrician be trained in the vendor facility or pilot biscuit factory. These people should be present during installation. The start-up duration should be long enough to achieve maximum production for at least one week which is considered additional training on site. These three personnel should have counterpart trainees at start-up and later on until they have become comfortable to perform their job. Preparation of manual is an integral part of training and continuous performance. Operation, maintenance, quality assurance and sanitation manuals should be prepared before startup. The quality assurance manager should be trained in good manufacturing practices, fumigation schedules, sanitation and production planning unless the company hires personnel to cover these areas. A HACCP (Hazard Analysis Critical Control Points) program as well as GMP (Goods Manufacturing Practices) should be implemented. Proper training and experience will result in improving quality, modification of recipe, adding different flavors and reducing breakage or rejects which will add to the bottom line of the enterprise.

3. Markets for Outputs There is a large market for biscuits in Afghanistan for household consumption, and school aid programs that now use biscuits imported from India. The biscuit bakery owners indicated that biscuits were a rapidly growing market and biscuit consumption was increasing rapidly (Quentin Johnson 2003.) Likewise, the supermarket shelves dedicated a lot of space to the various imported biscuits, indicating that they are a popular item. All supermarkets, small markets, even street kiosks carry them—again indicating their popularity. GDP increased 20% in 2003. The primary market will initially be in Kabul, and then expand.

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Competitive products, sources, and prices:

Competitive products made in Pakistan, and other developing countries as well as UK, are everywhere in Kabul and throughout Afghanistan. The retail price of various packages is shown on the following table. It will be important to produce in such a way that the Afghan-made biscuits are priced competitively.

Retail Price of Biscuit adjusted to 200g Package

Origin Price (USD) Turkish 0.80 Pakistan (Biscuit) 0.56 Pakistan (Cracker) 0.72 Pakistan (Sandwich) 0.55 England 0.90 England 1.04 England 2.60

Marketing Strategies:

The marketing focus of the factory should be on quality, freshness, good packaging, good taste and nutrition. Focus Group surveys conducted with 16 women during our stay in Kabul showed that consumers would buy Afghanistan-made biscuit if the quality and taste is good. They indicated interest in increased nutritional quality (94%) and willingness to pay a premium price (81%) for good quality, fortified biscuit packages (See Appendix 5.) Marketing will be very much a part of the ongoing sales effort at the Factory. Biscuit packaging will be designed to be distinctive and clearly show that the biscuits are fortified or, if the test case is successful, show the benefits of “super flour.” Methods of reaching and educating women about fortified biscuits will be researched and tested. Radio advertisements will feature the company and special qualities and benefits of the new biscuits. Although there are ample would-be distributors who would want to handle the products in their own way. A best strategy would be to have truck and drivers that would deliver on a consistent basis to the larger retailers and distributors. Strong signage on delivery vehicles will show locally made biscuits and health, nutrition benefits and move the product within the region.

. Anticipated domestic and export potential: In the near term, the market will be strictly domestic with an eye for import substitution but in the long term, emphasis may switch to adding export markets. Markets are also

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increasing in Pakistan, Iran, and India. The Biscuit Factory’s products can be positioned as a strong brand and be potentially a significant player in the Afghanistan market. There currently is no competition other than imports for the Afghan market. If the product can be priced competitively and be of comparable quality, it will be well received in Afghanistan and substitute some of the import. It can also take advantage of humanitarian programs such as the WFP purchases for School Feeding Program.

An opportunity exists to help Afghanistan who has a population that has chronic malnutrition in some regions by introducing biscuits made with “super flour.” The biscuits made with fortified flour or made with “super flour” give these products an added advantage and differentiate the product from other products being sold in Afghanistan. Brand loyalty can be achieved faster with the added nutrition and due to the biscuits being made in Afghanistan.

4. Business Plan

Investment and Cash Flow Projections (First Year) for Biscuit Factory

Quarter 1 Quarter 2 Quarter 3 Quarter 4

Investment Income Cost of Goods sold Labor Cost Other Expenses Gross Income Loan Repayment Depreciation Cash Flow

$500,000 $131,670 157,011 11,750 9,698 (46,789) 13,284 4,300 $ 627

395,010 235,515 14,100 14,274 131,121 19,926 6,450

$105,373

395,010 235,515 14,100 14,274 131,121 19,926 6,450

$210,119

395,010 235,515 14,100 14,274 131,121 19,926 6,450 $314,865

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Investment and Cash Flow Projections, 3 years – Biscuit Factory

Year 1 Year 2 Year 3

Investment Income Cost of Goods Sold Labor Cost Other Expenses Gross Income Loan Repayment Depreciation Cash Flow

$ 500,000 1,316,700 863,555 54,040 52,518

$ 346,587 73,062 23,650

$ 314,865

20,000 3,160,080 1,978,320 118,440 110,585 $952,735 79,704 29,796

$ 1,138,100

20,000

4,740,120 3,115,860 186,516 189,277 1,248,467 79,704 29,796 $2,257,067

A detailed first year cash flow projection and list of assumptions is included in Appendix 6 and 6a. The plant is starting with only one 8 hour shift and can expand as demand for the product expands. The Cash Flow projections reflect movement to two 8-hour shifts in Year 2 and into a 24 hour operation in Year 3. Additions to the personnel and sales staff are reflected in year 2 and 3 as production increases. Other vehicles for distribution were added during Year 2 and Year 3.

The Kabul Biscuit Factory requires a substantial investment but the potential profits, the quick payback, the creation of jobs, the opportunity for import substitution and the benefits to the region make this investment worthwhile. Some financing from local banks, from RAMP’s credit programs and CNFA grants may be available. The Factory will employ approximately 26 well trained professional and staff. We recommend a radio and print marketing campaign that will educate the public about the benefits of fortified biscuits. During the first year, 26 jobs are created. By Year 3, a total of 60 jobs will have been created.

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APPENDIX 1 -- Zhuai Hongfu Food Mechanical Manufacturing

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APPENDIX 1a - Zhuai Hongfu Food Mechanical Manufacturing A HF400 HARD AND SOFT BISCUIT LINE

PRODUCT Specification: Product type: soda cracker, hard and soft biscuits. Capacity: approx. 250kg/h Baking time: soda cracker 4 min

Hard biscuits 4 min Soft biscuit 5~6 min Please According to your fact

Dimensions of machine� 45560mm×5050×1700

Net Weight: 20 Tons

Gross Weight: 22 Tons

Power: 190Kw

Manpower:20 skilled worker

Electricity supply: 380Volts, 3 phases, 50HZ alternating current supply

1. Horizontal dough mixer Type: HM150 Price: USD5,000.00

Function: This machine is suitable to mix all types of biscuit dough and to blend other raw materials. Continuously and equable dough mixing can be achieved. a. Capacity: 75~150 Kg per time, not less than 400kgs/h b. Speed of the main oar: 28rpm c. Power: 7.5Kw d. Dimensions(L×W×H): 1340×1000×1550mm mm e. Net weight: 1500Kg

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2. Laminator Type:DS400 Price:USD19,000.00 Function: The laminator has functions of sheeting, fat spreading and laminating. For getting high quality of sheets, it is completed with the HF400 type biscuit-shaping machine for pre-treating the dough. First rolling the sheet, then feeding it out perpendicularly. In the course the sheet is equably laminated in many layers. The sheets get multiplayer and high surface quality and little change. It is necessary for the production of high quality hard biscuit (soda crackers and fermentation biscuit). a. Speed of rolling: 1.5-3.8M/min b. Thick of the sheets: 4-8MM c. Layers: 3-8 d. Dimensions(L×W×H) : 1950×1150×1500mm e. Power: 3Kw f. Weight: 2500kg

3. HF400 sheet forming and cutting machine Type:GC400 Price:USD21,000.00

Function: This machine reduce the dough several times to a required thickness and print the biscuit design on the continuously fed sheet and cut out the individual dough pieces. For hard biscuit. Including gauge roll1 (with hopper), gauge roll /2/3, rotary cutter, rest conveyor and panner, connecting parts. a. Capacity: 200kg for hard biscuit b. Speed of gauge rolls: 4~8Meters/min

c. Dimensions(L×W×H): 7750×1030×1400mm

d. Power: 4.5kw e. Weight: 6000kg

4. Salt sprinkler Type:DXL400 Price:USD1,800.00

Function: coat the top of the goods with granular materials such as salt or sugar or sesame. It may be mounted on several parts of the line. Adjusting the gap between adjustable plate and hopper or varying the speed of top roller can control the amount of powder sprinkled. a. Capacity: 0~0.2kg/min

b. Dimensions(l×w×h): 590×980×350mm

c. Power: 0.18kw d. Speed: changeable e. Weight: 150kg

5. Rotary moulder Type:GY400 Price:USD6,000.00

Function: the rotary moulder produces biscuit shapes of soft dough products. The forcing roll pulls dough from the hopper and presses it against the moulding roll to fill a series of biscuit impressions engraved on the roll periphery. Excess dough is removed by a scraper on the moulding roll’s surface and is returned to the hopper by adhesion to the forcing roll. a. Capacity: 250kg/h for soft biscuit

b. Dimensions(l×w×h): 800×980×350mm

c. Power: 2.2kw d. Weight: 1000kg

6. Oven drive and oven tension Type:DWG400 Price:USD7,000.00

Function: this unit includes oven drive drum and oven tension and tracking drum. The principal function of oven drive is provided the drive to oven band. The tension drum provides a turning point for the oven band at the feed end. It gives constant tension for the band and allows for any expansion or contraction of it.

a. Dimensions(l×w×h): 3300×680×880mm

b. Power: 1.5kw c. Weight: 2000kg

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d. Drums: �Ф600mm

e. With wire band which strong enough to withstand the oven temperature f. Stepless speed suitable for different requirement and production capacity g. Cast iron housing h. Stepless change speed by frequency transformer

7. Tunnel type biscuit backing oven Type:GL400 Price:32,000.00

Function: the tunnel type electric biscuit baking oven is an important part of the line. It’s made up of oven chamber, heating system, fully automatic temperature control system. It is suitable to every biscuit baking techniques. a. Dimension: 28000×950×1200mm b. 3 temperature zones c. Installed power: 150kw d. Capacity: 250kg/h e. Hearth plate is painted with ovenproof antirust paint f. Weight: 4000kg

8. Peeling machine Type:BL400 Price:USD1,200.00

Function: this unit strips the biscuit by a stripper knife from the oven band and transfers them to the oil sprayer; in this case the residue is removed. a. Dimensions(l×w×h): 1200×920×780 mm b. Weight: 400kg

9. Oil sprayer Type:PY400 Price:USD5,000.00

Function: this unit sprays oil on surface of the biscuit out of the oven. The quality of color, taste and smell is ameliorated. The nozzles atomize the oil and equably spray them on biscuit surfaces. The quantity of oil is adjustable. The excessive oil is filtered when the sprayed biscuit sent by its wire band. A. Dimension (l×w×h): 3000×920×1400mm B. Width of web: 460mm C. Power of web drive: 0.55kw E. Power of pump: 1.5kw F. Weight: 450kg

10. Cooling conveyor Type:LS400 Price:USD2,500.00 Function: biscuits leave the oven in a hot plastic state and need to be cooled to achieve stability and facilitate handing. Cooling conveyor carry the hot biscuits for an appropriate length of time and their configuration is designed to suit the available space A. Dimension (l×w×h): 8000×820×680mm B. Width of web: 460mm C. Power of web drive: 0.75kw E. Weight: 1000kg

11. Packing conveyor Type:ZBT400: Priec:USD2,500.00 Function: provide a table for handling biscuit. Formed steel section side plates are connected by stretchers. A. Dimension (l×w×h): 6000×820×680mm B. Width of web: 460mm C. Power: 0.37kw E. Weight: 600kg

12. Packaging machine Type:PM320 Price:USD10,000.00

Function: Applicable for packing various solid regular objects such as biscuit or loaded by box/tray etc. A. intensity of sealing >15N/mm

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B. Capacity:25~180 packs/min C. Total power:4.5Kw D. Max. Film width: 90~420mm E. frequency converter to step-less speed regulation. F. size of bag: L=90~280, W=30~160, H=5~50mm

TOTAL: FOB Jiuzhou port 113,000.00 (This price will be valid within 60 days)

Shipment: with 8 weeks of receiving the L/C

Payment: by irrevocable Letter of credit at sight

Guarantee: sealer undertakes to supply a replacement or to repair any part in which a defect in

materials or workmanship appears within 12 months of dispatch provided that the part is of

seller’s own manufacture and buyer proves that the defect has developed under proper and

normal conditions or use and maintenance.

Installation: We will send four persons for erection and installation supervision.

Customer provides round-trip ticket, local hotel, accommodation, meals and local travel

for them. And customer need provide some persons to helping our persons for

installation. Other fee is not needed.

Yours sincerely,

Ms. Xifeng Zhang

Aug 18, 2004

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APPENDIX 2

SHUNDE BEIJIAO TOWN HUAWEI MACHINERY FACTORY OF FOSHAN CITY. ADD: KUNZHOU INDUSTRIAL ZONE, BEIJIAO TOWN, SHUNDE CITY, GUANGDONG, CHINA

Tel:86-0757-26325608(0-9) Fax:86-0757-26325609

Website: www.huaji-machinery.com Email: huaji@huaji-machinery.com EQUIPMENT AND PRICE LIST OF “HUAWEI” BISCUIT PRODUCTION LINE PRODUCT Specification: Product type: hard biscuit and soft biscuit, also including sandwich

biscuit…etc.

Capacity: approx. 250kg/h Baking time: Hard biscuits 4 min Soft biscuits 5 min

Dimension: Please According to your plant size to design

Electricity supply: 380Volts, 3 phases, 50HZ alternating current supply CODE DESCRIPTION OF

GOODS QUANTITY

PRICE FOB

(USD) SPEC (MM)

WEIGHT (G.W)

REMARK

1 Horizontal Dough Mixer 2 pieces 14,000

1590x1220x1735 5.6T

2 Three-roll cut machine 1piece 8,500

950X1500X1500 2.5T

3 Sheet forming and cutting machine

1 set 34,000

15400x1500x1300 10T

Two-roll cut machine 3pieces

Rotary Cutter 1piece

Produce hard biscuit

Transition machine 1piece

Separating location 1piece

Inc

lud

ing

Gathering remnant-material by recycle device

1piece

4 Horizontal rotary molder 1 piece 7,000

1250×1500×1120 2.6T Produce soft biscuit

5 In-stove and salt/sugar Spreader

1piece 4,000

450×1200×400 1.1T

6

Electric Oven

1set

50,000

40000×1900×1750

10.8T

30m, including

the driven of the

oven and movitity

of the oven

7 Out stove machine 1piece 2,500

1050×1200×880 0.6T

8 Oil sprayer 1piece 9,000

4000×920×1620 1.5T Including oil

flitter

9 Cooling and Sending conveyer 1piece 4,000

15000×900×850 1.8T 15m

10 Auto biscuit Sorting machine 1piece 6,000

3300×1200×1220 1.7T

11 Packing console 1piece 3,000

8000×900×850 1.0T 8m

12 Sandwich Machine 1piece 10,000

4100x1050x1400 1T HW-B

13 Packaging Machine 2piece 18,000

4020x715x1560 1.8T HW-320

TOTAL AMOUNT:

170,000USD (with electric oven)

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APPENDIX 2 (continued)

REMARK:

1.Term of payment: FOB Shunde port.

2.The proper scheme can be offered according to your requirement (plant size, capacity etc.)

3.The above offer doesn’t include fixing and debugging charge (5%���� ����8 )

4.The above machines equip with flexible speed controller

5. The above equipments of complete biscuit production line need 3-4 GP40’

佛 山 市 顺 德 区 北 滘 镇 华 威 机 器 厂 S H U N D E B E I J I A O T O W N H U A W E I M A C H I N E R Y F A C T O R Y O F F O S H A N

C I T Y

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APPENDIX 2a Huawei Machinery - CHINA

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APPENDIX 2b Huawei Machinery

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APPENDIX 3 (SCLEDENSI –ITALY)

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APPENDIX 4 (APV BAKER—USA)

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APPENDIX 5

Focus Groups Questionnaire Results - Biscuit Factory

. About Biscuits: Do you buy packaged biscuits for your home now? Or make them? Buy(9) Make (0) Do you know where the biscuits are made? Yes (16) No 0 If biscuits were made in Afghanistan, would you buy Afghan? Yes (16) No 0 (several commented: “If they are good!”) Would you perceive these to be fresher? Better quality? Yes (13) No (3) (not always) Would you pay a little more for the Afghan made biscuits? Yes (15) No (1) If 90 afs more? If 40 afs more? If 20 afs more? If 10 afs more? (10) (Yes if quality is better) note: there was some questions about the value of the biscuits which they felt cost only 10 afs... therefore would they be willing to pay double price? Yes) Would you pay a little more for the Afghan made biscuits if fortified with Vitamins, mineral as Iron, zinc etc... yes (13) No. ( 3) If 90 afs more? If 40 afs more? If 20 afs more? If 10 afs more? (It was difficult to gage what the price tolerance was on this, as many woman seemed to indicate a willingness to pay more for the nutrition for their children and that they would stretch as much as possible if they knew it was fortified. And unconditionally, “the biscuits should taste good. (The women exhibited a great deal of interest in having fortified flours and snacks....and said as they left that they hoped it would happen.)

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APPENDIX 6 (Detailed Cash flow projection-12 months)

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Appendix 6a

Assumptions and Limitations to the Cash Flow Analysis

The purpose of this memo is to explain the assumptions used to develop the business plan models, and highlight the limitations of the analysis. Information is lacking in Afghanistan therefore information was gathered using the following sources: - Interviews managers of flour mills and cake factories, - Interviews with main suppliers, - Interviews with stakeholders, such as World Food Program, UNICEF, Mercy Corp, Altai, RAMP and others, Industry data from other countries.

1. Model: Description and Assumptions Inflation or NPV is not represented in this model. The mill operates one shift 8 hours days per month during first year , two shifts—16 hours per day in Year 2 and on to 3 shifts in Year 3.

Loan: There is availability of loan from Banks at 7-13% interest but little information exists as to where and loans available from RAMP who will loan $50-200,000 loans at 9-12%. They actively pursue agribusiness projects that are viable and can show impact A repayment schedule of $$6642 has been used based on a $200,000 loan at 12% on a 3 year repayment schedule.

Revenues are a function of: Actual computation of dough 250 kg/hr which produces 231 kg of biscuits. Multiplied by 8 hours X 25 days less 5% rejects equals 48390 kg of biscuit. These are packed into 200g packages which makes 219,450 packages and sold at $ .60 to the wholesalers. First few months were assumed to be at half (50%) capacity. Assume that retailer will sell it for $.80/pkg. This is similar to the imported price. Each of two year thereafter, we adjusted for additional shift ,assumed 5% inflation

Expenses are function of: - Cost of goods sold (raw materials): The equipment capacity is 250 kg per hour. First two months of operation was estimated at half the usual amount. The facility will operate 8 hours a day and add a shift in years 2 and 3. First few months were assumed to be at half (50%) capacity but supplies are purchased during previous month. Added 5% to expenses in Years 2, and 3.

- Transportation is assumed to be at $8/MT/100 km . - Packaging: is included in Cost of Goods sold.

- Labor/Human resources: 2 guards ($100 ea), 2 office (300 ea.); 6 machine operators ($300 ea.) 2 maintenance ($200 ea); 13 laborers (100 ea.) Paid full staff during Month 1—this is a training period for all employees. Staff increased to adjust for 2nd and 3rd shift increases in Year 2 and 3. - Electricity: 102 kilowatt /hour/at .11/kw (USD) is $3366/month - Machinery Parts and repairs are on warrantee during first year. - Maintenance assumed to be 1% of Revenues - Capital Purchases include Land, Building, Equipment +installation, vehicles. - Land is $20,000 and Building $154,000 - Factory Equipment (includes installation) $226.000

-Generator: need 150 KVA generator $25000, -Vehicle for pick up and delivery (1) : $10,000 Additional vehicles purchased in Yr 2 and 3 - Depreciation of Capital Purchases as follows:

Building 20 years, 10,000/yr or 833/mos Equipment and Generator 10 years, 13800/yr, 1150/mos Vehicle, 5 years. $2000/yr, $167/mos total 2150/mos

2. Limitations It was difficult to obtain data from factory management, since these factories are not all proficient with computing and accounting tools. We made assumptions about operating costs....