Refrigerated Transportation Service [Rs. 6.37 million, May-2021]

Refrigerated Transportation Service [Rs. 6.37 million, May-2021]
File Size:
974.54 kB
Date:
22 November 2021
Downloads:
117 x

Refrigerated Transportation is a temperature-controlled transportation service. It is a modern technique to transport perishable and temperature sensitive goods, such as meat, fish, fruits and vegetables, medicines, vaccines, dairy products, frozen food, etc. in a refrigerated container. Refrigerated Transportation Services have gained popularity around the world in recent years and offer their customers (businesses, households, general public, etc.) effective ways to deliver fresh products both nationally and across the world.

This “Pre-feasibility Document” provides details for setting up a business of “Refrigerated Transportation Services”. The proposed logistics services business is aimed at serving FMCG1, Pharmaceutical and healthcare companies, entities involved in business of fruits and vegetables, dairy products, meat and others involved in trading of temperature sensitive products. The proposed business will provide temperature-controlled logistics services within a city, in an area of 50-60 kilometers radius; using one refrigerated vehicle. The service model works on a sequential pattern starting from the time when a client approaches the service provider and completing when the cargo is delivered at the desired destination.

The Refrigerated Transportation Services ensures that the cargo remains stored and preserved in a safe condition, at the required temperatures, so that it may maintain its quality till it gets delivered at the desired destination. Failing to keep the products at the required temperatures can result in initiating the process of decay due to microbial growth; which can lead to rotting, degradation or discoloring of the products. Increasing awareness about healthy and hygienic food and growing demand for fresh fruits, vegetables, fish, meat and other perishable food products creates a market for the proposed project.

For the purpose of this study, it has been assumed that the business will be started with one Reefer (a special vehicle used to transport temperature sensitive products) having container dimensions of 168’x74’x82’, attached with a truck having engine capacity of 2,771cc that will transport frozen food2 items within a city, in an area of 50-60 kilometers radius. The service may be provided within a city or inter-city.

The logistics services business is proposed to be ideally located in large cities like Karachi, Lahore, Faisalabad, etc. or medium cities like Peshawar, Rawalpindi, Quetta, Gujranwala, Sialkot, Sukkur, Multan, Hyderabad, Mardan, etc.

The proposed business is assumed to make 1,120 deliveries in a year. During the first year of operations, it is assumed that the project will operate at 60% of its total transportation capacity, which is equal to 672 deliveries. The service capacity utilization is assumed to increase at a rate of 10% per annum to reach the maximum 90% capacity in the 4th year of operations. Steady growth of business is expected with the entrepreneur having some prior experience or education in the related field of business.

The proposed project will be set up in a rented building having an area of 456 sq. ft. The project requires a total investment of PKR 6.37 million. This includes capital investment of PKR 5.76 million and working capital of PKR 0.61 million. This project will be established using 100% equity. The Net Present Value (NPV) of project is PKR 19.47 million with an Internal Rate of Return (IRR) of 57% and a Payback period of 2.29 years. Further, the proposed project is expected to generate Gross Annual Revenues of PKR 8.06 million in 1st year after coming into operations, Gross Profit (GP) ratio ranging from 46% to 62% and Net Profit (NP) ratio ranging from 11% to 39% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 44% (488 deliveries) with breakeven revenue of PKR 5.86 million.

The proposed project may also be established using leveraged financing. At 50% financing at a cost of KIBOR+3%, the proposed project provides Net Present Value (NPV) of PKR 22.22million, Internal Rate of Return (IRR) of 57% and Payback period of 2.27 years. Further, this project is expected to generate Net Profit (NP) ratio ranging from 7% to 39% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 50% (556 deliveries) with breakeven revenue of PKR 6.67 million.

The proposed project will provide employment opportunities to 4 to 6 persons. The legal business status of this project is proposed as “Sole Proprietorship”.

 
 
 
Powered by Phoca Download