DRAFT PROPOSAL FOR RECYCLE LUBRICATION PLANT

PROJECT:

CADANGAN MEMBINA JETI PERSENDIRIAN DI KOMPARTMEN 54, PTD 1367, SUNGAI LEBAM MK TANJUNG SURAT, KOTA TINGGI, JOHOR

CLIENT

YONGVIC SDN BHD

CONTRACTOR :

TEGUH AMANI SDN BHD

Table of Contents
1.0 1.1 1.2 FEASIBILITY STUDY ...................................................................................................................... 2 INTRODUCTION ....................................................................................................................... 2 MARKET FEASIBILITY STUDY ................................................................................................... 2 Product and Services ....................................................................................................... 2 Customer & Client ........................................................................................................... 3 Competitor ...................................................................................................................... 5

1.2.1 1.2.2 1.2.3 1.3

TECHNICAL FEASIBILITY STUDY ............................................................................................... 7 Technology And Equipment ............................................................................................ 7 Manpower ....................................................................................................................... 8 Location ........................................................................................................................... 9

1.3.1 1.3.1 1.3.3 1.4

ORGANIZATIONAL FEASIBILITY STUDY .................................................................................. 12 Organization Structure .................................................................................................. 12 Compensation ............................................................................................................... 12

1.4.1 1.4.2 1.5

FINANCIAL FEASIBILITY STUDY .............................................................................................. 13 Start up Capital.............................................................................................................. 13 Financial Sources ........................................................................................................... 19 Profitability Analysis...................................................................................................... 20 Financial Performance .................................................................................................. 26

1.5.1 1.5.2 1.5.3 1.5.4 2.0 3.0

FINDINGS ................................................................................................................................... 30 CONCLUSION ............................................................................................................................. 32

1.0 1.1

FEASIBILITY STUDY INTRODUCTION YONGVIC SDN. BHD. proposes to construct and operate an Off-Site Schedule

Waste Recovery Plant located on Kompartmen 54, Ptd 1367, Sungai Lebam Mk Tanjung Surat, Kota Tinggi, Johor

The construction of the plant is to collect and recover scheduled waste such as of oily and lubrication from industrial sources.

1.2

MARKET FEASIBILITY STUDY The market feasibility study is an assessment of the overall appeal of the market for

the product or service being proposed. 1.2.1 Product and Services The raw material to be utilized is classified as Scheduled Wastes under the First Schedule of the Environmental Quality (Scheduled Wastes) Regulations, 2005 described as follows: SW 305 SW 306 SW 307 SW 308 SW 309 SW 310 SW 311 SW 312 Spent lubricating oil. Spent hydraulic oil. Spent mineral oil-water emulsion. Oil tanker sludges. Oil-water mixture such as ballast water. Sludge from mineral oil storage tank. Waste of oil or oily sludge. Oily residue from automotive workshop, service station oil or grease interceptor. SW 314 Oil or sludge from oil refinery plant maintenance operation.

This Project requires the approval of the Department of Environment (DOE) prior its implementation. The EIA report shall be prepared in accordance with the guidelines prescribed by the Director General and shall contain an assessment of the impact of such activity will have on the environment and to propose measures shall be undertaken to prevent, reduce, or control the adverse impact on the environment.
2

Scheduled waste that has undergone a recovery process and meet the Malaysia standard is allowed to be traded as : Diesel Light lubrication Heavy lubrication Other than diesel and lubrication that become outgoing product from the recovery process, waste water and sludge also will be the product but it not for trade. 1.2.2 Customer & Client The customer for this business is already well know. It can come from personal or company, private or government and most importantly, the product for this business is already become the needed for person to survive. This is due to the product is in our daily life. Our potential client is mostly come from workshop that run some maintenance and servicing on any machines. This is due to machine usually need some some lubrication for them to operate. Whether engine oil, transmission oil, hydraulic oil, diesel or any combination of this lubrication, it still can be recycle on our recycle lubrication site. The responsibility for client is to supply the used oil or scheduled waste to us and operation will take over to re-refining the lubrication back. Port and jetty also become our target potential client, there are: Terminal Jeti Penumpang di Muar, Johor Jeti Penumpang di Mersing, Johor Jeti Jabatan Laut di Johor Bahru, Johor Jeti Jabatan Laut di Tg. Pelepas, Johor Pelabuhan Tanjung Pelapas Sdn. Bhd. Johor Port Bhd.

Other than ship that docking in port and jetty that doing loading and unloading activities, ship building and repairing also become our target client such as : Cagarbumi Management Services

Furthermore, there are 230 automobile workshop in Johor (Source: Federation Of Automobile Workshop Owners Association Of Malaysia, FAWOAM) and the total number of vehicle that was registered in Johor is 2,809,390 units for the data first quarter of 2011.
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Other than vehicle, ships also need to dispose their lubrication after undergoes repairing process. Thus, it become our potential client with the total number of ships that registered in Malaysia until 2009 is 4,677 units. Industrial sector also can become our potential client.

Figure 1 : Total Motor Vehicle By Types And State, Malaysia, First Quarter, 2011

Figure 2 : Total Of Ship Registered In Malaysia By Type (New Classification) And Weight, 2009 1.2.3 Competitor For recycle lubrication plant, in South Malaysia, especially Johor, there are 7 contractor that run this business. There are: NO. CONTRACTOR 1 5E Resources Sdn. Bhd. PLO 317 & 318, Jalan Perak Kawasan Perindustrian Pasir Gudang 81700 Pasir Gudang Waste groups I. Asid tidak organic terpakai (SW 206) II. Minyak pelincir, hidraulik dan emulsi terpakai (SW 305, SW 306 & SW 307) III. Sisa berminyak (SW 312) IV. Buangan pelarut organic terhalogen & bukan terhalogen (SW 322 & SW 323) V. Bekas, beg atau kelengkapan dicemari BT (SW 409)

VI. Kain buruk, enap cemar dakwat, buangan dakwat cat, pigmen, lakuer, pewarna (SW 410, SW 416, SW 417 & SW 418) 2 KB Enviro Sdn Bhd (Kotor Bina Sdn Bhd) Lot PTD 2288 HS(D) 15332,Telok Kelok, Mukim Pantai Timur KOTA TINGGI 3 OLST Petroleum (M) Sdn.Bhd Lot 35 PLO 596 Jalan MIEL 1 Kawasan Perindustrian pasir gudang, 81700 Pasir Gudang. 4 Perniagaan Saudara Baru PTD 1505 jalan sg. Ulu tiram Batu 151/2 ulu tiram 81800 Johor Bahru 5 Rengkas Maju Sdn. Bhd. PLO 416, jalan wawasan 16 Kawasan perindustrian sri gading, 83300 batu pahat 6 Techno Indah Sdn Bhd PLO 3, pasir gudang industrial estate, 81707 pasir gudang 7 Yozai (M) Sdn.Bhd PLO 593 jalan keluli 9 kawasan perindustrian pasir gudang 81700 pasir gudang I. Pelarut terhalogen terpakai dari pembersihan dan penyahgrisan (SW 323) II. Pelarut organik aromatik terpakai dari proses pembersihan, pembersihan/penyahgrisan (SW 322) III. Pelarut organik bukan aromatik te4rpakai dari proses pembasuhan, pembersihan/penyahgrisan (SW 322) IV. Cat terbuang yang tidak mengikuti spesifikasi
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I. Slop oil (SW 309) II. Enapcemar minyak dari kapal (SW 308)

I. Minyak hidraulic terpakai (SW 306) II. Minyak atau gris terpakai (SW 305) III. Emulsi minyak air terpakai (SW 307)

I. Minyak atau gris terpakai (SW 305) II. Minyak hidraulic terpakai (SW 306) III. Emulsi minyak air terpakai (SW 307) IV. Penapis minyak terpakai (SW 410) I. Minyak atau gris terpakai (SW 305) II. Minyak hidraulic terpakai (SW 306) III. Emulsi minyak air terpakai (SW 307)

I.

Slop oil (SW 309)

II. Enapcemar minyak dari kapal (SW 308)

dari kilang pengeluar cat (SW 418) V. Minyak pelicir terpakai (SW 305) VI. Minyak hidraulic terpakai (SW 306) VII. Emulsi minyak mineral-air terpakai (SW 307) VIII. Sisa minyak dari bengkel, stesen servis @ perangkap minyak (SW 312) IX. Enapcemar daripada operasi penyelenggaraan loji penapis minyak (SW 314) X. Sisa bertar dari loji penapisan minyak (SW 315) XI. Buangan cecair terma (SW 327) XII. Bekas atau kelengkapan yang dilupuskan yang dicemari bahan kimia (SW 409) XIII. Kain buruk yang dicemari dengan buangan terjadual (SW 410) XIV. Enapcemar dakwat, cat, pigmen, lakuer, pewarna atau vernis (SW 416) XV. Buangan dakwat, cat, pigmen, lakuer, pewarna atau vernis (SW 417)

1.3

TECHNICAL FEASIBILITY STUDY A technical feasibility study is concerned with determining whether the business has

the necessary technology and equipment to produce the intended product and service. 1.3.1 Technology And Equipment The technology and equipment that used in recycle lubrication plant is: 1) Dehydration Stage The stage will have a dehydration vessel, with Vacuum Pump to create Vacuum in the vessel, condenser, receivers. Apart from this it will also have circulation pump, valves, filters, interconnecting piping, transfer pumps, also arrangement of heating as desired by you, etc. This vessel will be used for removal of water from the oil and for distilling diesel out of the oil. 2) High Vacuum Distillation Stage
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This stage will have vessel suitable for High Vacuum Distillation Process, with floating condensers/ suitable heat ex-changers, Everest Vacuum Pumping System, Vacuum Gauges, Temperature Gauges, circulation pumps, valves, filters, interconnecting piping, tranfer pumps, etc. This stage is after dehydration of the oil wherein Light, Medium and Heavy lube are distilled and collected in different receivers after heating the oil at different temperatures. With the vessel suitable heating arrangement will be provided as desired by you to heat the oil at different temperatures

3) Clay Treatment System The stage will have a clay treatment vessel, with Vacuum Pump to create Vacuum in the vessel, condenser and receivers. Apart from this the system will also have circulation pump, valves, filters, interconnecting piping, transfer pumps, also arrangement of heating as desired by you, etc. Also this will be provided with a Pneumatic System for lifting of Activated Clay from pit to the clay treatment vessel. This vessel will be used for treatment of heavy lube with the Activated clay to make the oil for sale to the market after passing through the Horizontal Leaf Filter press. This arrangement makes the oil free from smell, if any and also make the oil good in colour.

4) Cooling Tower This stage is used to transfer waste heat to the atmosphere.

5) Horizontal Leaf Filter Press This will be provided to filter the oil after the Activated clay treatment of the oil to remove the traces of clay . 1.3.1 Manpower The manpower that need to run both business lines is as below: No. 1 2 Manpower Technician Machine operator Number of position 2 2

1.3.3

Location The location of ship repair and maintenance workshop and recycle lubrication plant

is located at the JETI PERSENDIRIAN DI KOMPARTMEN 54, PTD 1367, SUNGAI LEBAM MK TANJUNG SURAT, KOTA TINGGI, JOHOR. Detail location as the Figure 3 & 4 below. The site location is near the main road and jetty that operate loading and unloading container. Thus in term of distribution and transportation, there should be no obstacle to do that. The location also near with the Bandar Penawar town that makes the business operation easy and reachable. It also will provide the labour force for the operation and provide jobs opportunities for the residents. The site location is surrounded by oil palm plantation with the minimum resident at there. Thus, the operation will never disturb human life by the pollution of air, noise and water.

Main road

Oil palm plantation Jetty loading & unloading operation Bandar Penawar

Site location

Figure 3 : Satellite View

10

Recycle Lubrication Plant

Figure 4: Site Location

11

1.4

ORGANIZATIONAL FEASIBILITY STUDY An organizational feasibility study is concerned with determining whether the

business has the necessary and sufficient human resource to bring a particular product/service idea to market successfully. 1.4.1 Organization Structure

Director

Finance & Administration Manager

Operation Manager

Finance

Administration

Technician

Machine Operator

Figure 5: Organization Chart 1.4.2 Compensation 1) Salary No. 2 3 Position Technician Machine operator Salary* (RM) 1600 900

*Not include EPF and SOCSO 2) Employee Provident Fund (EPF) Contribution The Companys and your contributions towards EPF shall be 12% and 11% respectively or at such prevailing statutory provisions gazetted from time to time.

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3) SOCSO Contribution is based on prevailing SOCSOs statutory provisions 5%. 1.5 FINANCIAL FEASIBILITY STUDY The financial feasibility study is an assessment of the financial aspect of the business. 1.5.1 Start up Capital Start-up capital refers to the total cash required to start the business which include the cost for the purchase of non current assets, working capital, development costs and other expenses. 1) Operation Expenditure
OPERATIONS EXPENDITURE Fixed Assets Machinaries Equipment Tools 13,900 RM 2,592,960

Working Capital Raw Materials & Packaging Carriage Inward & Duty Salaries, EPF & SOCSO Others 5,800 1,964 25,566

Other Expenditure Other Expenditure Pre-Operations Expenditure Deposit (rent, utilities, etc.) Business Registration & Licences Insurance & Road Tax for Motor Vehicle Other Expenditure TOTAL 3,500 2,400 1,314 2,647,403

13

OPERATIONS BUDGET
Particulars F.Assets Monthly Exp. Others Total

Fixed Assets Machinaries Equipment Tools 13900 2592960 2,592,960 13,900 Working Capital Raw Materials & Packaging Carriage Inward & Duty Salaries, EPF & SOCSO Others 25,566 5,800 1,964 Pre-Operations & Other Expenditure Other Expenditure 3,500 2,400 1,314 2,606,860 33,329 7,214 3,500 2,400 1,314 2,647,403 25,566 5,800 1,964 -

Deposit (rent, utilities, etc.) Business Registration & Licences Insurance & Road Tax for Motor Vehicle Other Pre-Operations Expenditure
Total

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Fixed Assets Machineries

No. 1 2 3 4 Module Dehydration system High vacuum oil distillation system Clay treatment system Recommended spares for continuous duty Central control room 5 for electric control panel 6 7 8 9 Horizontal pressure leaf filter press Water jet pump Second hand lorry 1 ton Storage tank 2500 ltr. 76125 260 19000 2300 Total (RM) 2 1 1 2 152250 260 19000 4600 2592960.05 37231.22 1 37231.22 Price per quantity 152250 780890.27 155715.21 201907.87 Quantity 2 2 2 1 Total (RM) 304500 1561780.54 311430.42 201907.87

Tool
No. Items 1 2 3 Workshop tool kit set Pipe wrench Oil Filter wrench Price per unit (RM) Quantity 13800 25 75 1 1 1 Total (RM) 13800 25 75 13900

TOTAL (RM)

15

Working Capital Raw Materials

No . 1 2 3 Purchase Diesel mechanical spare part electricity Capacit y 55 120 Price per capacity (RM) 1.8 0.266 Total (RM) Quantit y 2 2 Batc h 3 3 Day of work 30 30 Total (RM) 17820 2000 5745.6 25565.6

Salaries, EPF & SOCSO

No. Position. Salary (RM) EPF (11%) (RM) 1 2 Technician Machine Operator 1600 900 176 99 SOCSO (5%)(RM) 80 45 2 2 3712 2088 Quantity Total (RM)

TOTAL (RM)

5800

Others
No. 1 2 3 4 5 6 Items Water bill Electricity bill Internet bill Digi Phone Bill Stationary & paper Unit 100 3600 1 2 1 1 Total (RM) Price per Unit 2.96 0.266 120 70 200 250 Total (RM) 296 957.6 120 140 200 250 1963.6

16

Pre-Operations Expenditure Business Registration & Licences

No. Items 1 2 Business registration Business license Total (RM) 2500 1000 3500

Total (RM)

Insurance & Road Tax for Motor Vehicle No. Items 1 2 3 Insurance Road tax Tax fee Total (RM) 1200 500 700 2400

Total (RM)

Other Expenditure
No. Items 1 2 Printing Bank charge Total (RM) 1000 314 1314

Total (RM)

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2) Projected Sales And Purchases

SALES PROJECTION Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total Year 1 ToTal Year 2 Total Year 3 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 2,229,013 26,748,161 26,748,161 26,748,161 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

PURCHASE PROJECTION 25,566 23,566 23,566 23,566 23,566 24,566 23,566 23,566 23,566 23,566 23,566 23,566 285,790 285,790 285,790

Total Year 1 ToTal Year 2 Total Year 3

Sales Projection
No. Sales Capacity (litre) 645.81 Price per capacity (RM) 1.8 Quanti ty 2 Batc h 3 Day of work 30 Total (RM) 209242.4 4 508575.6 1511195. 4 2229013. 44

Diesel Light lubrication Heavy lubrication

1130.168

2.5

30

2798.51

30

Total (RM)

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Purchase Projection
No. Month Purchases Diesel 1 January Electricity Mechanical spare part 2 February Diesel Electricity Diesel Electricity Diesel Electricity Diesel Electricity Diesel 6 June Electricity Mechanical spare part 7 July Diesel Electricity Diesel Electricity Diesel Electricity Diesel Electricity Diesel Electricity Diesel Electricity Total (RM) Price per purchases (RM) 17820 5745.6 2000 17820 5745.6 17820 5745.6 17820 5745.6 17820 5745.6 17820 5745.6 1000 17820 5745.6 17820 5745.6 17820 5745.6 17820 5745.6 17820 5745.6 17820 5745.6 23565.6 24565.6 23565.6 25565.6 Total (RM)

March

23565.6

April

23565.6

May

23565.6

August

23565.6

September

23565.6

10

October

23565.6

11

November

23565.6

12

December

23565.6 285787.2

1.5.2

Financial Sources After determining the start up capital, the next stage is for the business to identify

the sources of fund to finance the start up capital. The business has two options either to
19

utilize internal financing or external financing to finance the proposed venture. For this business, the source of financing is utilize the external financing that get from the loan of banks which maybe comes from SME banks, or others local banks.
Recycle Lubrication Plant PROJECT IMPLEMENTATION COST & SOURCES OF FINANCE Project Implementation Cost Sources of Finance
HirePurchase

Requirements

Cost

Loan

Own Contribution Existing F.

Fixed Assets Land & Building Computer Office furniture

Cash

Assets

2,592,96 Machinaries Equipment Tools 13,900 0

2,592,96 0

13,900

Working Capital Administrative Marketing Operations

months

33,329 7,214 264,740

33,329 7,214 264,740

Pre-Operations & Other Expenditure Contingencies 10%

TOTAL

2,912,14 4

2,912,14 4

1.5.3

Profitability Analysis Profitability analysis involve determining whether the proposed venture is

generating enough profit to make the proposed venture feasible. Thus, in order to conduct a

20

profitability analysis, the business should prepare a 3 years financial projection which will include the following financial statements: Cash flow statement Income Statement and Balance Sheet Statement

21

1.5.3.1 Cash Flow Statement

Recycle Lubrication Plant CASH FLOW PRO FORMA STATEMENT

MONTH

PreOperations

10

11

12

TOTAL YR 1

YEAR 2

YEAR 3

CASH INFLOW Capital (Cash) Loan 2,912,144 2,229,0 Cash Sales Collection of Accounts Receivable TOTAL CASH INFLOW 2,912,144 2,229,0 13 2,229,0 13 2,229,0 13 2,229,0 13 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,013 29,660,305 26,748,1 61 26,748,1 61 13 2,229,0 13 2,229,0 13 2,229,0 13 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,01 3 2,229,013 26,748,161 2,912,144 26,748,1 61 26,748,1 61

CASH OUTFLOW Administrative Expenditure Top management team salary Administrator

Marketing Expenditure Television Internet Newspaper Bus

Operations Expenditure

22

Cash Purchase Payment of Account Payable Carriage Inward & Duty Salaries, EPF & SOCSO Others

7,670

7,070 17,896

7,070 16,496

7,070 16,496

7,070 16,496

7,370 16,496

7,070 17,196

7,070 16,496

7,070 16,496

7,070 16,496

7,070 16,496

7,070 16,496

85,737 183,557

85,737 200,053

85,737 200,053

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

5,800 1,964

69,600 23,563

69,600 23,563

69,600 23,563

Other Expenditure Pre-Operations Deposit (rent, utilities, etc.) Business Registration & Licences Insurance & Road Tax for Motor Vehicle Other Pre-Operations Expenditure Fixed Assets Purchase of Fixed Assets - Land & Building Purchase of Fixed Assets - Others Hire-Purchase Down Payment Hire-Purchase Repayment: Principal Interest Loan Repayment: Principal Interest 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 48,536 12,134 582,429 145,607 582,429 145,607 3,597,97 Tax Payable TOTAL CASH OUTFLOW 2,614,074 76,103 2,152,9 11 298,070 2,450,9 80 93,399 2,135,6 15 2,450,9 80 4,586,5 95 91,999 2,137,0 15 4,586,5 95 6,723,6 09 91,999 2,137,0 15 6,723,6 09 8,860,6 24 91,999 2,137,01 5 8,860,62 4 10,997,6 38 92,299 2,136,71 5 10,997,6 38 13,134,3 53 92,699 2,136,31 4 13,134,3 53 15,270,6 67 91,999 2,137,01 4 15,270,6 67 17,407,6 82 91,999 2,137,01 4 17,407,6 82 19,544,6 96 91,999 2,137,01 4 19,544,6 96 21,681,7 10 91,999 2,137,01 4 21,681,7 10 23,818,7 24 3,597,302 3,689,301 (1,460,28 8) 23,818,72 4 22,358,43 6 22,358,436 3,597,302 7,301,869 6 4,707,36 5 22,040,7 96 22,358,4 36 44,399,2 32 582,429 145,607 3,597,97 6 4,707,36 5 22,040,7 96 44,399,2 32 66,440,0 28 2,606,860 2,606,860 2,400 1,314 2,400 1,314 2,400 2,400 3,500 3,500

CASH SURPLUS (DEFICIT)

298,070

22,358,436

BEGINNING CASH BALANCE

ENDING CASH BALANCE

298,070

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1.5.3.2 Income Statement

Recycle Lubrication Plant PRO-FORMA INCOME STATEMENT

Year 1 Sales Less: Cost of Sales Opening stock Purchases tolak: Ending Stock Pengangkutan Masuk & Duti 285,790 285,790 285,790 26,748,161 Year 2 26,748,161 Year 3 26,748,161

Gross Profit

Less: Enpenditure Administrative Expenditure Marketing Expenditure Other Expenditure Business Registration & Licences Insurance & Road Tax for Motor Vehicle Other Pre-Operations Expenditure Interest on Hire-Purchase Interest on Loan Depreciation of Fixed Assets Belanja Operasi Total Expenditure Net Profit Before Tax Tax Net Profit After Tax Accumulated Net Profit 145,607 521,372 93,163 1,053,146 25,695,015 3,597,302 22,097,713 22,097,713 145,607 521,372 93,163 1,048,332 25,699,829 3,597,976 22,101,853 44,199,566 145,607 521,372 93,163 1,048,332 25,699,829 3,597,976 22,101,853 66,301,418 3,500 2,400 1,314 2,400 2,400

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1.5.3.3 Balance Sheet Statements

Recycle Lubrication Plant PRO-FORMA BALANCE SHEET Year 1 ASSETS Year 2 Year 3

Fixed Assets (Book Value) Land & Building Computer Office furniture

Machinaries Equipment Tools

2,074,368

1,555,776

1,037,184

11,120

8,340

5,560

2,085,488 Current Assets Stock of Raw Materials Stock of Finished Goods Accounts Receivable Cash Balance 22,358,436 22,358,436 Other Assets Deposit 0 0

1,564,116

1,042,744

0 0

0 0

44,399,232 44,399,232

66,440,028 66,440,028

TOTAL ASSETS

24,443,924

45,963,348

67,482,772

Owners' Equity Capital Accumulated Profit 22,097,713 22,097,713 Long Term Liabilities Loan Balance Hire-Purchase Balance 2,329,715 Current Liabilities Accounts Payable 16,496 16,496 16,496 1,747,286 1,164,857 2,329,715 1,747,286 1,164,857 44,199,566 44,199,566 66,301,418 66,301,418

TOTAL EQUITY & LIABILITIES

24,443,924

45,963,348

67,482,772

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1.5.4

Financial Performance

Recycle Lubrication Plant FINANCIAL PERFORMANCE Year 1 PROFITABILITY Sales Gross Profit Profit Before Tax Profit After Tax Accumulated Profit 25,695,015 22,097,713 22,097,713 25,699,829 22,101,853 44,199,566 25,699,829 22,101,853 66,301,418 26,748,161 26,748,161 26,748,161 Year 2 Year 3

LIQUIDITY Total Cash Inflow Total Cash Outflow Surplus (Deficit) Accumulated Cash 29,660,305 7,301,869 22,358,436 22,358,436 26,748,161 4,707,365 22,040,796 44,399,232 26,748,161 4,707,365 22,040,796 66,440,028

SAFETY Owners' Equity Fixed Assets Current Assets Long Term Liabilities Current Liabilities 22,097,713 2,085,488 22,358,436 2,329,715 16,496 44,199,566 1,564,116 44,399,232 1,747,286 16,496 66,301,418 1,042,744 66,440,028 1,164,857 16,496

FINANCIAL RATIOS Profitability Return on Sales Return on Equity Return on Investment Liquidity Current Ratio Quick Ratio (Acid Test) 1355.4 1355.4 2691.4 2691.4 4027.5 4027.5 83% 100% 90% 83% 50% 48% 83% 33% 33%

Safety Debt to Equity Ratio 0.1 0.0 0.0

BREAK-EVEN ANALYSIS Break-Even Point (Sales) Break-Even Point (%) 681,474 3% 676,608 3% 676,608 3%

26

27

Current Ratio
4500.0 4000.0 3500.0 3000.0 2500.0 2000.0 1500.0 1000.0 500.0 0.0

Ratio

2 Year

28

Quick Ratio (Acid-Test)

4500.0 4000.0 3500.0 3000.0 2500.0 2000.0 1500.0 1000.0 500.0 0.0 Ratio 1 Year 2 3

Debt to Equity Ratio

0.1 0.1 0.1 Ratio 0.1 0.0 0.0 0.0 1 2 Year 3

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2.0

FINDINGS After review the feasibility study, even thought the start up capital to open this

business is very high, about RM 2,647,403 and the cost maybe can increase to RM 3 million, but, the potential customer and market for this business lines is very high. This business lines also supported by government due to it help the pollution issues. Furthermore, this business lines also have very huge potential to growth and the profitability is also high. By looking at the financial feasibility study, the estimate profit after tax for year one is RM 22,097,713 and RM 22,101,853 for year 2 and 3. This profitability also show the growth from year 1 to year 2 and it can expand more by opening a new site at new market. Other than that, the company also can think to expand the existing site from just have two re-refining tank to maybe 26 tank. This is due to the total tonnage of scheduled waste received by the Kualiti Alam Sdn. Bhd. is 120,000 tons in 1998 compared with 30,000 tons in 1996 (Law Hieng Ding, 1998). The existing site can occupied until 4,320 tons of scheduled waste for one year operation. Thus, it still have 115,680 tons of scheduled waste that can re-refining by this company and it show the potential for this company to growth and expand their market for future planning. In term of competitors, in Johor state, there are 7 contractor of scheduled waste treatment. The advantages of this company compared to others competitor is this company is running a complete treatment for scheduled waste from SW 305 until SW 314 except SW 313. Mostly, competitors just collect the scheduled waste for SW 305, SW 306, and SW 312 due to it source is easy to reach. For this company, due to its location is near to the Jetty of import and export, and ship repair and maintenance workshop, it have advantages to collect the used oil from ship; SW 308 and SW 309. The financial analysis for this company has been summaries in table below. The financial for the three years of operation was compared with Waste Management, Inc. (WM), the same business lines but operate in North America. The purpose of comparing with WM is want to make a benchmarking on this business due to WM is already establish on waste management.

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No.

Items Management Effectiveness

Year 1

Year 2

Year 3

Waste Management, Inc. (WM)

Comments

This is a measurement of the efficiency of a company in utilizing its assets. Thus, the 1 Return on Assets 90% 48% 33% 6.05% company is highly utilize the assets by from year to year, it decrease, it maybe due to the depreciation of the assets. Measures the rate of return on common stockholders investment. Thus, the company shows a very high return for their stockholders'.

Return On Equity

100%

50%

33%

15.27%

Income Statement 3 Revenue 26,748,161 26,748,161 26,748,161 12,680,000,000 This measure the sales of this company. By looking at Waste Management, Inc revenue, company revenue is small maybe due to it capacity.

Balance Sheet 4 Total Cash 24,443,924 45,963,348 67,482,772 676,000,000 Measures the cash payment for the operation. The total cash for company is lower compare to WM but, for time to time, the total cash is increase. Measure the debt to run the operation. The decreasing value from year 1 to year 3 show a good performance on debt for the company. Current ratio is a measurement of a companys ability to use current assets to pay for its 6 Current Ratio 1,355 2,691 4,028 1 current liabilities. Thus, highest current ratio will reduce the risk that the companys assets will fail to cover liabilities. Cash Flow Statement 7 Operating Cash Flow 7,301,869 4,707,356 4,707,365 2,380,000,000 This show the cash flow out for the operation. The decreasing value of cash flow out from year 1 to year 2 show a efficiency on managing cash flow.

Total Liabilities

2,346,211

1,763,782

1,181,354

9,170,000,000

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3.0

CONCLUSION As the conclusion, after review all the feasibility study and the financial, this dream

can become reality due to the convenience profitability after one year operation. The profit maybe can go more higher if the oil price in world is increase. This business lines also have potential to growth with the minimum risk. Thus, this convincing feasibility study should be continue with the further steps of make the dreams comes true.

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