Bio-Charcoal Manufacturing Center

4 A.M BIO-CHARCOAL MANUFACTURING CENTER

Unit 3 Carbon Market Barangay Ermita, Cebu City

EXECUTIVE SUMMARY

Charcoal has been a commodity since it was introduced in the market as one of the used fuel for cooking of food for home consumption, Traditional industrial (i.e. activities related to food-, agro- and metal-processing; industries based on forest products, minerals or textile products; or industrial/ commercial activities of miscellaneous types). People are used with the charcoal because of its low cost however forest degradation are in outsized number that are rapid in action and result to the declining of supply of charcoal.

The purpose of the study is to propose a manufacturing center that will help the people in Barangay Ermita to minimize their wastes and bring theses wastes into a usable product that can produce charcoal. The name of the manufacturing center is the 4 A.M Manufacturing Center that produces Bio-Charcoal as the main product of the business. The product that will produce from these wastes is called "Bio-Charcoal". The product is derived from Bio in short with biodegradable or wastes that can be recyclable and Charcoal. Bio-Charcoal was designed to substitute the existing charcoal present in the market. To be able to gain sales in the market industry, the manufacturing center will support the wholesalers' marketing strategy by doing promotional activities convincing the end-users that Bio-Charcoal is safe, of good quality and can surpass the characteristics of the regular wood charcoal. The manufacturing center is located at Unit 3 Carbon Market, Ermita Cebu City.

A material testing is done on the product bio-charcoal/activated carbon, using the oxygen bomb calorimeter, in order to obtain its heating value. A test was done in USC Material Testing Laboratory in February 18, 2011 and see Appendix 5 for full details. It is found out that the average heating value of the product is 34,355.05 KJ/kg or 6,184.85 Btu/lb. This means that it is most likely comparable to the heating value of that with the traditional charcoal which is equivalent to 7748 BTU/lb (this is for germilina wood).

As provided by the PENRO data, there were about 18 bagsakan that operates within the Metropolitan Cities of Cebu. Based on survey results on these bagsakan, there are 12 active bagsakan that operates in the City. These bagsakan shows interest and are considered as potential market. And out from these, the available market is 10 or 92%, which shows interest and capability on acquiring the proposed product- the bio-charcoal. Expected annual purchase for these markets is 201,600 sacks. This is based on the respondent buying frequency of markets. Average purchase per bagsakan per year is 20,160 and the expected annual market demand is 20,160 sacks, this is based on the market share of 1 bagsakan. Percent market for the first year is 10%. The product will be sold for 140 pesos per sack and is expected to have sales of Php 2,802,400.00 on the first year of its operation. The researchers consider a 2% of increase in market share on the second year, a 3% increase in the third year and a decrease of 1% in both the fourth and fifth year of operation. These are supported with some marketing strategies and promotional activities every year. Business marketing strategies are product demonstration on the bagsakan stores in the introductory stage, joining trade fair for the growth stage, giving of flyers and print ads is done in the maturity and decline stage. Cost of these promotional activities changes from stage to stage.

The total pre-operating cost of the business is 1,451,754.752 pesos. The working capital for the first three months of operation is 721,632.802 pesos. Ratio used for debt-equity is 40:60, wherein 40% percent will be loaned from the bank with the interest of 12%, Philippine National Bank (PNB) in particular, and the remaining 60% will be coming from the investors. Loaned amount will be 950,000 pesos and 1,500,000 pesos as equity will be coming from the investors (this is good for 5 partners in the business).

Comprehensive study in the aspects of marketing, technical, management, and financial shows that the proposed manufacturing center for bio-charcoal is a feasible business that will require an initial start up capital of 2,173,387.554 pesos with the business form of partnership.

After evaluating the study through marketing segmentation,