1 Smoked and Dried Fish Production

Contents
I. Executive Summary..............................................................................3
1.1. General Information..........................................................................3
1.2. Project Objective...............................................................................3
1.3. Budgetary Requirement....................................................................4
1.4. Project Component............................................................................5
II. Market Aspect..........................................................................................8
2.1. Product Description...........................................................................8
2.2. Target Market....................................................................................8
2.3. Demand.............................................................................................8
2.4. Supply...............................................................................................8
2.5. Demand & Supply Analysis...............................................................9
2.6. Market Share.....................................................................................9
2.7. Price..................................................................................................9
2.8. Channel of Distribution....................................................................10
2.9. Promotional Strategy.......................................................................10
2.10. Projected Sales..............................................................................10
III. Technical Aspect...................................................................................12
3.1. Product............................................................................................12
3.2. Process (Flow chart)........................................................................12
3.3. Cooking tools and Equipment.........................................................13
3.4. Capacity..........................................................................................14
3.5. Project Location...............................................................................14
3.7. Raw Materials (Source/Transportation/Cost)....................................14
IV. Management Aspect.............................................................................18
4.1 Proponent.........................................................................................18
4.3 Project Management Team...............................................................18
4.4. Selling and Administrative Expenses..............................................19
4.4 Timetable of Activities......................................................................20
V. Financial Aspect.....................................................................................21
5.1 Total Project Cost..............................................................................21
5.3 Financial Assumptions......................................................................21

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5.4 Projected Financial Statements........................................................22
Projected Income Statements.............................................................22
Table 18: Projected Income Statement................................................22
Projected Cash Flow Statement..........................................................23
Projected Balance Sheet.....................................................................24
5.5. Financial Ratio Analysis...................................................................24
Profitability ratios................................................................................24
Productivity Ratios..............................................................................25
5.6. Investment Decision Analysis..........................................................25
Return on Investment..........................................................................25
Payback Period....................................................................................26
Internal Rate of Return........................................................................26
VI. Social Desirability.................................................................................27
6.1 Direct Benefits..................................................................................27
6.2 Indirect Benefits...............................................................................28
Annex........................................................................................................29

I. Executive Summary

1.1. General Information

Project Title :Smoked and Dried Fish Production
Project Location :Purok 1, Day-asan, Surigao City
Proponent :Day-asan Womens Association

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Contact Person :MarianPerdizo
Designation :AssociationSecretary
Contact Number :0946-342-0708
Employment Generation :3.25
No. of Beneficiaries : 39(Active Members)
Total Project Cost : Php 889, 630.00 (100%)
Grant Amount
DSWD :Php 845, 730.00 (95%)
St. Paul University : Php 18, 500.00 (2%)
DTI : Php 5,000.00 (1%)
Proponent :Php 20, 400.00 (2%)
Funding Institution : Department of Social Welfare and
Development
Funding Program : Sustainable Livelihood Program
Grant Purpose :1. Conduct a skills training to members
about
business management to
empower the association.

2. Capacitate the members through

conducting capability building on
organizational development to strengthen
the
organization and equip the officers and
members with right skills and attitude in
managing an organization.

3. Purchase of Inventorygood
for one cycle, construction of building and
purchase of other assets.

1.2. Project Objective

Generally, the proposed project aims to provide economic activity to
the group that will be given additional source of income to the
PantawidPamilya beneficiaries. Moreover, the project will promote locally
produced products of Day-asan to Surigao del Norte and Agusan del Sur.

The project specifically aims to:

a.) To acquire fund assistance to Department of Social & Welfare

Development under its Sustainable Livelihood Program for the
skillstraining, capacity building, and starter kits.

b.) Empower the Association through Skills Training on business

Management and Capability Building on Organization Training.

c.) To have annual profit sharing of 70% amounting to an average of

Php 2,200.00/member per annum,

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d.) To employ seven (7) people, with an incremental employment of
3.25.

1.3. Budgetary Requirement

Hereunder, the table shows the composition of the total project cost
amounting to Php 889,630.00.

Table 1: Total Project Cost

1.4. Project Component

II. Market Aspect

2.1.Product Description
The Day-asan Womens Association offers two products, namely the
dried (Round scads, a.k.a., galunggong) and smoked fish (Milkfish).The
dried fish is packed in a 1 kg-plastic while the smoked fish is neatly
packed in a Styrofoam covered with transparent cellophane. The cost of
dried fish per kilo is worth Php 420.00 while the smoked fish is worth Php
360.00/kilo. The mode of payment is on credit for 30 days.

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Filipinos usually eat dried fish and smoked fish every breakfast. It
goes well with rice and side dish like salads, fresh tomatoes, cucumber,
and other vegetables and fruits. The shelf life of dried fish could last the
least is one week and atmost one month if stored dry and properly sealed.
On the other hand, the shelf life of smoked fish is two weeks at most.

2.2. Target Market

The target market is primarily the populace of Surigao delNorte and
the tourists, and secondarily the Agusan del Sur. The 11% of the total
population that comprised children below 5 years old is deductedfrom the
target market, assuming that this age bracket will not eat processed fish.

2.3. Demand
According to Philippines Statistics Authority, the per capita
consumption for dried fish per annum is approximately 3.744 kg. On the
other hand, the per capita consumption for smoked fish is 1 kg per annum
only. This is based on Bureau of Fish and Aquatic Resources. With these
available data, the projected demand for the next three years is shown
below. (See supporting schedule in the annex.)

Table 3: Projected Demand

2.4. Supply
The Philippine Statistics Authority shows historical volume of
production of fish in Surigao del Norte and Agusan del Sur. Of the total
volume, 70% is consumed as fresh/chilled while the remaining 30% of the
total production of fish is further processed. Apparently, record shows that
the supply for raw fish is gradually decreasing which is directly
proportionate to the volume of processed fish. (See supporting schedules
in the annex for more detailed computation.)

Table 4: Projected Supply

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2.5. Demand & Supply Analysis
Apparently, the demand still exceeds the supply resulting to
shortage of the abovementioned products. The table below shows the gap
between demand and supply. The bigger the gap the more favorable it is
for the group to enter into such venture.

Table 5: Projected Gap

2.6. Market Share

Taking also into consideration the groups capacity to produce
certain volume of processed fish, the table below shows the captured
market of the group. It is slowly increasing each year.

Table 6: Projected Market Share

2.7. Price
The proponent will use the cost plus mark-up method. In the first
year of operation, the cost per unit of both dried and smoked fish will be
increased by 25%. Each year the mark-up will increase also by 5%.

Table 7: Projected Prices

2.8. Channel of Distribution

The Department of Tourism allowed the group to display its products
in its tourism pavilion, which is also located in the barangay. Aside form
that, the products will be consigned into existing SLP stores in Surigao del
Norte, and if possible up to Agusan del Sur.

Figure 1: Distribution Channel

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2.9. Promotional Strategy

Location wise, the production area of the group is just beside the
barangay hall, fronting the Day-asan National High school, and just some
meters away from the Tourism Pavilion where tourists usually gather.

2.10. Projected Sales

The table below shows the increasing sales of the business for the
succeeding three (3) years.

Table 8: Projected Sales

Schedules:

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III. Technical Aspect

3.1.Product
These products are low in Saturated Fat. They are also good source
of Niacin, Vitamin B6, Magnesium, and Potassium, and a very good source
of Protein, Vitamin B12, Phosphorus, and Selenium. However, it is not
advisable to eat these at night since it high in cholesterol, which may lead
to hypertension. (Source, nutritiondata.self.com)

3.2.Process (Flow chart)

Fresh fish rapidly deteriorates unless some way can be found to
preserve it. Drying and smoking are just someof the methods of
preservation that works by removing water from the food, which inhibits
the growth of microorganisms. The figure below shows the systematic
process in producing dried and smoked fish.

Figure 2: Dried Fish Process

Figure 3: Smoked Fish Process

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3.3.Cooking tools and Equipment

The table below shows the existing and to be acquired cooking
toolsand equipment of the group. It includes the unit cost, quantity,
estimated/remaining useful life, and the annual depreciation expense.

Table 9: Existing Assets

Table 10: To-be acquired Assets

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3.4.Capacity
The solar dryer could dry approximately 4,500 pieces of medium-
sized or about 150 kilograms of galunggong. On the other hand, the
smoke house could only process 240 pieces of medium-sized bangus per
production.

Table 11: Rated Capacity

3.5.Project Location
The project is strategically located at Purok 1, Barangay Day-asan,
Suirgao City. The barangay hall is just adjacent to the production site.
Also, it is fronting the National High school of Day-asan. Around 100
meters away from the area, the tourism pavilion is located where locally
made products will be displayed to cater the tourists demand; included in
it will be the products of the group.

3.7.Raw Materials (Source/Transportation/Cost)

Surigao City is abundant in fisheries especially Barangay Day-asan
as it is just near the body of water. The galunggong will be purchased just
in Dayasan, while the bangus will be ordered from Barangay Nabagos
SLP association. The estimated freight cost each year is Php 12,000.00.
The table below shows the projected total cost of the raw materials.

Table 12: Raw Materials

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Schedules:

3.8. Labor

The business will hire one (1) project manager, two (2)
washers/helpers, and two (2) packers/helpers. They will be compensated
on a daily basis but will be paid once the products are sold in cash.

Table 13: Labor Cost

Schedules:

3.10. Overhead Cost

The table below shows the monthly and projected yearly production
overhead expenses of the business. Expenses are increased by 5% each
year to cover up with the inflation rate.

Table 14: Overhead Costs

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Note 1:

Dried fish

Smoked fish

Note 2:

3.10. Production Cost

The production cost is equals to the raw materials used plus direct
labor cost and the overhead expenses. The tables below the production
cost per product line.

Dried fish

Smoked fish

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IV. Management Aspect

4.1 Proponent
The Day-asan Womens Association is organized last year 2014 with
an initial members of 30 women, and is still accepting new members. The
members are mostly plain housewives, barangay hall workers, and tourist
guides. The proponent is located at Purok 1, Barangay Day-asan, Surigao
city.

Initially they started a mini catering services. The Department of

Tourism granted the group cooking tools and equipment for the said
business. Up until now the group is still doing catering services, but mostly
only for the BLGU activities. The profit they earned is equally distributed
to the members of the group.

4.2 Organizational Structure

The group is an association composed of 39 female members. The

group elected officers to lead the group. It conducts its association once
every month for updates and any concerns related to the group. It has
applied for a certification at Department of Labor and Employment. Every
year end, the group plans to divide dividend to the members from profit
earned by the group.

4.3 Project Management Team

Project Manager will be responsible for supervising the
project. She must have general control on the affairs of the
association as well as on the project. She is also responsible to
report matters of the business to project monitoring
committee as well as to the members of the association.
Administrative Manager is the one responsible for
managing the administrative activities of the group such as
the finances, marketing, and promotions.
Bookkeeper will prepare the monthly financial statements
and annual financial report of the association. The bookkeeper
will be given an honorarium.
Project Monitoring Committee is the officials and trusted
members of the association. Their responsibility lies in making
sound decisions on the matters concerning the overall activity
of the association.See Figure 4.1 for the organizational chart of
this project.

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Figure 4: Organizational Chart

4.4. Selling and Administrative Expenses

The table below shows the expenses to be incurred for the selling
and administrative activities.

Table 15: Selling and Administrative Expenses

4.4 Timetable of Activities

Table below illustrates the timeframe of activities prior to the start of
the business operation. The first thing to do is the skills training and

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capability of the group, followed by the preparation of feasibility study
which consolidates various data gathering through interview, site visits
and submission of feasibility study to Department of Social welfare and
Development. Next will be the four-month approval and processing of
approval documents. Upon releasing of fund, the association will start the
construction of building.Then after that is the purchases of inventory.

Figure 5: Gantt chart

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V. Financial Aspect

5.1 Total Project Cost

Table shows the composition of the Total Project Cost which
amounted to Php889,630.00. The grant amount is 98% of the total project
cost. It comprises the building, cooking tools and equipment, working
capital (1 cycle), and skills training and capability building.

Table 16: total Project Cost

5.2 Proposed Sources of Funds

Table shows the contribution of the stakeholders. The total

project is Php 889,630.00. The proponent will contribute 2% of it and the
remaining will be the counterpart of the other partners.

Table 17: Budgetary Requirement

5.3 Financial Assumptions

All amounts in the total project cost are rounded-up to the
nearest hundredths.
Working capital cycle is equal to 34 days.
All costs, except depreciation, are assumed to increase by 5%
annually based on the rate of inflation in Surigao City, which is
3.8% as of June 2016.
Mark-up for is 25% for year 1, 30% for year 2, and 35% for the
third year.

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Straight-line method is used for the computation of
depreciation.
Dividend sharing is 70% of the net income that is distributed
after a year of operation.
The skills training and capability building is considered as part
of the other assets and is amortized for three (3) years.
The critical asset is the life of the building, which is five (10)
years.

5.4 Projected Financial Statements

Projected financial statements for three (3) years are computed as
presented in the following tables.

Projected Income Statements

Table 18: Projected Income Statement

Projected Cash Flow Statement

The statement provides information about cash receipts and
payments of an entity during a certain period. It helps project the

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future net cash flows of the entity. It also shows the liquidity of the
enterprise.

Table 19: Projected Cash Flow Statement

Projected Balance Sheet

The balance sheet statement shows the financial condition of
an entity by listing all the assets, liabilities and owners equity at a
specific period. It indicates the stability of the enterprise.

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Table 20: Projected Balance Sheet

5.5. Financial Ratio Analysis

Profitability ratios
The profitability ratios measure the ability of the business to
generate profit in relation to sales.

Table 21: Profitability Ratios

Productivity Ratios
These ratios indicate how fast a firm converts various
accounts into cash or sales.

Table 22: Inventory Turnover

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The inventory turnover indicates the number of times

inventories were acquired during the period.

Table 23: Inventory Days

The inventory days indicate the length of time spent before

average inventory is sold to customer.

5.6. Investment Decision Analysis

The following ratios are used to aid the entrepreneur in making the
best alternative for the business.

Return on Investment
This is a method of finding out the rate of return on
investment by estimating the expected annual profit compared with
the invested money.

Table 24: Return on Investment

Payback Period
This refers to the length of time before an investment is
recovered. It is the period where the cumulative net cash flow
equals the cost of investment.

Table 25: payback Period

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Internal Rate of Return

This is the rate of return taking into account the time value of
money. It is rate where initial investment is equal to the net present
value (NPV) of expected cash flows for the life of the project or the
rate where NPV is zero. When IRR is acceptable, the entrepreneur
may proceed with the project.

Table 26: Internal Rate of Return

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VI. Social Desirability

6.1 Direct Benefits
The effectiveness of the project will create an employment for non-
member of the association. The project manager and the production
workerswill be compensatedwith minimum daily wage; Php 3,000.00 per
month for the administrative manager, and Php 500.00 per month for the
bookkeeper. Also, the members of the association will also receive a
dividend every end of the year, which is equivalent to 70% of their net
income. Table below shows the computation of the employment
generation.

Table 27: Employment Generation

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6.2 Indirect Benefits

The realization of the project will indirectly benefit the BLGU and
promote tourism in the area. There will also a continuous value chain of
products produced in Surigao City.

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Annex

1. Demand Computation

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2. Supply Computation

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