Seeds Ltd.

Business Plan For A New and Improved Seed Cleaning Plant Nav Khinda, Sean McAlpine and Noor Syed April 05, 2007

Contents of the Plan

        Introduction Background Current Situation Goals Key Questions Operational Plan Marketing Plan Financial Plan

Introduction

 Seeds is an on-farm cleaning and packaging plant in Sask.

• Cereals, pulses and oil seeds are cleaned and quality tested to broker’s specification • Four machines clean and sort the seeds according to color, size, shape and density.

•Six employees

size and color comparison of beans

Color, Weight and Size Variations in Seeds Variety of pulses soya beans green lentils green split peas dried peas wheat germ black mustard oats Golden flax hemp coriander Pinto beans fenugreek wheat grain Assorted beans

Background

 began seed cleaning operation in 1985  Authorized for pedigree and certified for organic seed cleaning  Seeds Ltd. became incorporated in 1997

Current Situation

Seed variety

Chickpeas, Lentils, Peas and Beans Flax Small Lentils Mustard Coriander

Unmet Requirements Comments

Not able to process fragile crops Unable to meet 99.99% purity Not able to remove cereals Unable to meet 99.9% purity Unable to remove splits and wheat Gluten is allergen, 100% wheat free Wheat is an allergen

Current Situation

 Seeds Ltd. Business Plan  New equipment will further improve capability to clean seeds to customer specifications  Increase the plant capacity

Goals of New Plant



Reach sales of $1 M



Continue superior quality service

ORGANIZATIONAL CHART

President Administrative Asst.

Plant Operator Plant Assistants Warehouse Technologist Warehouse Technologist 3 rd technologist

Shipping

Plan View of Operations

Long Term Storage Warehouse Processing Future Development Area Screenings Raw Material Storage Receiving Screenings Burning Area Bulk Shipping

WORK FLOW PLAN 1.

RECEIVING 2.

CLEANING 3.

PACKAGING

Packaging

HACCP and ISO

•Seeds Ltd. meets HACCP inspection regulations •Currently no certification for seed cleaning plants exists •Voluntary compliance and free inspection is available •New plant is designed with improvements in critical control points •According to customers specifications lab tests are outsourced

Canadian Food Inspection Agency

Marketing Questions

•

Organic industry expanding?

•

Who are the current competitors?

•

Unique services?

•

Supply a niche market successfully?

•

Buying and selling direct

•

Will HACCP be a factor in the future?

•

Should a quality control lab be part of the QC system?

In-house?

The Four P’s

1. Products and Services - cleaning, storage and packaging of various seeds - high quality of service 2. Pricing - cost plus; time required for processing - below or in par with others 3. Promotion - develop relations with existing and new brokers

STP

 Segmentation   Geographical location Broker specifications  Targeting  Continue to focus on organic market  Positioning   Consistent high

quality

std.

Approachable, professional and dependable

SWOT Analysis

•

Strengths

•

knowledge & experience

•

solid reputation

•

economy of scope

•

Weaknesses

•

location (rail)

•

company size

•

Opportunities

•

emerging trend of higher quality standards

•

growth in organic industry

•

Threats

•

power of buyers

•

environment

•

large competitors

•

demand

Marketing Strategies

     Sales and Profit Objectives  $1 million in sales Channels of Distribution  Customers arrange for delivery and pickup Pricing Policy  Cost plus  We recommend a market value approach Select Markets/Products/Service Mix  Organic, Export, High purity demands Selling and Advertising   Minimal effort $10,000 per year in trade shows

Debt and Equity

Breakdown of funding for BirdSeeds Ltd.

Finance Source Owner Equity Venture Capital Long Term Debt Total Financing Cdn $ $ 598,300 $ 1,015,872 $ 356,928 $ 1,971,100

Financial Analysis and Overall Financial Performance Summary of the Financial Situation (Base case scenario) Year Sales COGS Gross Profit Expenses Net Income Before Taxes Income Tax Net Income Net Cash Flow to Equity Net Present Value (NPV) IRR 2008 $1,030,857 $809,634 $221,223 $72,685 2009 $1,149,312 $913,426 $235,885 $72,554 2013 $1,253,838 $727,290 $526,548 $71,326 $148,538 $14,854 $133,684 $369,912 $287,909 25.11% $163,331 $16,333 $146,998 $455,221 $59,327 $395,894 $483,930 $497,037 2017 $1,367,870 $709,740 $658,131 $68,607 $589,524 $106,333 $483,190 $504,836

Risk Analysis

Variable

Capacity Cleaning Price Grade Changes Number of Employees Wage rates Seed Price Interest rate Inflation rate Tax rate 2 2 2 2 3

Level of Importance (1, 2, 3)

1 1 2 2

Key for the table.

1. Critical for success and feasibility 2. Important for financial performance 3. Minor importance, but has damaging effect on financial performance.

Scenario Analyses

Variable Capacity % Capacity Grade Changes Packaging Price NPV IRR Base Case 100% 27.8

1 $ 38.86

Worst Case 80% 24.2

3 $ 36.91

$ 287,909 $(1,027,617) 25% -6% Best Case 100% 27.8

0 $ 40.80

$ 855,391 35%

Break even Analysis

25000 20000 15000 10000 5000 0

IRR Cash Flow Net Income

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year

Break even Analysis

$25.00

$20.00

$15.00

$10.00

$5.00

$ IRR Cash Flow Net Income 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Summary

 Volume is key  Marketing will play an important role  Viable Business Plan

Interactive Session

Thank You