Xonyx Oil Palm Production

Concept for M.I.C

August 29, 2009

…the next frontier

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NEXTZON BUSINESS SERVICES LIMITED

Business Concept
 The business concept is based on the demand – supply gap for oil palm products due
to difficulties experienced by current players in the sector in getting adequate
quantity of fresh fruit bunches (FFB), thereby forcing most processing plants to
operate far below production capacity

 Nigeria used to be the largest exporter of oil palm products until 1934 when the
country was surpassed by Malaysia. Africa led the world in production and export of
palm oil throughout the first half of the 20th century, led by Nigeria until the discovery
of crude mineral oil that eventually led to the abandonment of this sector.

 The total annual market demand for palm oil in Nigeria is estimated to be 1.9 million
tons, while the country’s production is estimated to be 850,000 tons thereby, leaving
a deficit of about 1.05 million tons which is being offset by importation and smuggling.
(figures deduced from NIFOR’s report)
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Business Model
Oil Palm Cultivation (FFB Make use of a
Production) Malaysian Technical
Partner with partner
Belgians for Land preparation
overall Seedling sourcing
management Nursery
and control Maturity
Harvesting
Power Generation
Oil Palm Processing
Utilizing wastes from the
Crude Palm Oil
FFB to fuel a bio power
Refined Palm Oil
plant.
PKO

Feed Mill
Malaysians will
Palm Kernel Meal oversee operations
while Indians will be
in charge of
engineering
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Analysis of Key Players

Company Profile Business Model Strength
Presco Staff Strength: 1,500 Products  Large Staff base
Revenue: N2.3Billion Palm oil  Access to fund from
PAT: 37.27 Million Refined Bleached and overseas
Production Capacity: Deodorized Oil (RBDO)  Strong management
9,700 Hectares of Oil Palm Fatty Acid Distillate team with vast
Palm (PFAD) experience in agro-
Palm oil mill with a Palm Olein allied business
capacity of 24T FFB/Hr Palm Stearin  Industry leader
Refinery with a Crude Palm Kernel Oil  High financial turn over
capacity of 60T/day (CPKO)  Big asset base
PKO crushing plant PKO  Technology
with a capacity of Power Generation
45T/day

Okomu Oil Palm Plc Staff Strength: 1,300Products  Large Staff base
permanent & 3,000development  Access to fund from
contract staff. Palm oil processing overseas
Revenue: N4.7Billion PKO  Strong management
PAT: N 1.21 BillionRubber Processing team with vast
(2008) Palm Kernel Cake experience in agro-
Production Capacity: Power Generation allied business
25,000 Hectares of Oil  Technical alliance with
Palm & Rubber foreign partners
Palm oil mill with a  High financial turn over
capacity of 30T FFB/Hr  Big asset base
PKO crushing plant  Technology
with a capacity of
60T/Week
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Analysis of Key Players

Company Business Model

rofile trength eaknesses
Okitipupa OilFinancial Products  Wide Product Poor
Palm Plc Performance: development offerings Management
Revenue:N214 Palm oil Technical  Just
Million processing alliance with resuscitating
Edible grade foreign from
PAT: 12.7 Million PKO partners financial
Bio diesel  Big asset base mismanage
Corn oil  Technology ments
Coconut oil  Low turn
Groundnut oil over as a
Jatropha oil result of past
 Soya bean oil financial
Bio diesel oil misappropria
Vegetable oil tion
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Key Success Factors

 The following key success factors have been identified among the
leading industry players:

 Strong capital base

 Strong management team
 Good logistics
 Good Planning
 Size of plantation
 Technical expertise
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Potters Analysis
Low bargaining
Moderate threat
power of buyers
of New Entrants
•Very low regulatory •Weak buyers
requirements (price)
•The market is big •Fragmented
+
enough for so many (many but
players Entrants different)
•Very few serious players •Demand far
•The industry is highly exceeds supply
+ •Increasing
capital intensive Competitive
•Moderate industry customer
High Suppliers Rivalry Buyers
regulation sophistication
bargaining relatively low
power of •Low exit
suppliers + barrier
Substitutes
•Very few major
players + Moderate
•Moderate effect threat from
of substitutes substitutes
•Growing •E.g groundnut, rape,
soy oil, etc
market
•Substitute not as
•Alternate use
efficient in terms of
as bio fuel productivity
•Multi use of oil palm
unlike substitute
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Planned Implementation
Strategy Land Acquisition/lease and Oil palm
Acquisition/Leasing of existing palm
plantation and processing mill cultivation

Land Land
Acquisition Preparation

3 -4 Years
Field growing
Palm Oil Mill
plantation

Palm Oil Milling and Refining

Out Growers Scheme Formation

Palm Oil Palm Oil Refining

Organisation of out growers
Milling
scheme to boost output from
8
our plantation
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Entrepreneur's Profile
Name : Lawason, Oladipo Akinwale
Academic Qualifications :
2003 –2004 University of Lagos, Akoka-Yaba, Lagos
Master of Science in Political Science (Public Administration)
1999 –2000 University of Lagos, Akoka-Yaba, Lagos
Master of International Law and Diplomacy
1985 - 1990 University of Liberia, Monrovia-Liberia
Bachelor of Business Administration (Management/ Public Administration)
Professional Qualifications And Affiliations:
Nigerian Institute of Management Corporate Member
Nigerian Society for International Law Corporate Member
Nigerian Institute for Advanced Legal Studies Registered Member
Institute of Public Administration of Nigeria Corporate Member
Work Experience
City Financial Partners (1990 -1993) Business Advisory (Finance) Financial Consultant
National Poverty Alleviation Programme Lagos Surulere Local Government Coordinator
Total Service Station, Alapere (1993 – 2006) Total Service Station, Alapere Dealer
Wallam Inc (June 2005 till date) Business relationships Director
Xonyx Nigeria Ltd (June 1997 – till date) Business Advisory MD/CEO
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Oil Palm Hectarage in Nigeria

by State
State Wild Grove (Ha) Small Holdings Estates (Ha)
(Ha)
Imo 45,000 27,000 6,000
Akwa Ibom 300,000 28,825 1,312
Cross River 250,000 15,800 20,149
Anambra 200,000 12,000 3,000
Oyo 200,000 - -
Rivers 150,000 7,000 19,000
Abia 150,000 14,000 2,000
Osun 150,000 - -
Ogun 120,000 - 4,500
Ondo 85,000 4,000 14,670
Benue 85,000 - -
Delta 60,000 8,000 6,500
Edo 50,000 - 19,334
Kogi 50,000 - 19,334
Total 2,300,000 117,625 96,465
Grand Total 2,514,090
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Market Analysis
…for the purpose of this concept and considering the business models of key players in the industry, it will be expedient to base
our target market segmentation on customer behaviour and geographic attractiveness.

Market Segment Characteristics Estimated SizeTotal Market

(Nos) Demand
Food Industry Demand These are fast moving consumer goodsOver 100,000
manufacturers that use palm oil and its allied 1.9 million
products to produce margarine, noodles, pasta etc. Metric tonnes
They are more interested in well refined products.
This segment includes multinationals (Unilever,
Cadbury, Nestle), large local conglomerates
(Dangote Industries, Nigerian Flour Mills, Honeywell
etc). They are the largest industrial consumer of
palm oil.
Cosmetic Industry This segment consists of body beauty care productsOver 50
manufacturers. This group requires substantial
quantities of palm oil and allied products as major
constituents for producing creams, lotions, body oil
etc.
Soap and Detergent PKO and palm oil are major constituents use by soapOver 100
and detergent industry for the production of different
kind of cleaning products
Cooking and FryingPalm oil is used for frying and cooking than for anyOver 80,000,000
Demand other purposes. Its uses range from salad and
cooking oils in the homes to industrial uses such as
frying instant noodles, potato chips, doughnuts, etc.
Traditional cooking provides a large market for liquid
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Palm Oil Market Share

 Palm oil is the largest vegetable oil
by volume globally; with 27%
World Oils & Fats Production Share market share (Soybean oil is next
largest with 23%).

 Production of oils and fats totalled

159.7 million tonnes in 2008 of
which palm oil and soybean
production were respectively 43.1
million tonnes and 36.9 tonnes, thus
accounting for 50% of the total.

 Production of palm oil has grown

faster than that of any other oil or
fat and overtook soybean as the
most produced oil in 2008.
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Approximate Financial
requirement
Set up cost for a 5 ton FFB/Hr Integrated Palm Oil Mill Processing &
Refining Plant
Setup Cost    
Fixed Assets    
Land Acquisition (500 Hectares) 75,000,000  
Building, infrastructure and Constructions 21,593,100  
Tankers (10) 60,000,000  
Palm oil Processing & Refining Plants 385,845,000  
Storage Tanks 30,000,000  
Agricultural Mchineries & Equipment 75,000,000  
Trucks (5) 30,000,000  
Motor Vehicle 25,000,000  
Office Equipment & Facilities 8,000,000  
Others 0  
     
Total Fixed Assets 710,438,100 710,438,100
     
Seedling Acquisition & Land Preparation    
Seedling 150/Hectare (N500/seedling) 37,500,000.0  
Land clearing & Culturing 20,000,000.0  
Working Capital    
Operating cash needs for 1 year    
Administrative Expenses 250,000,000.0  
Total Working Capital 307,500,000.0 307,500,000
     
Total Setup Cost   1,017,938,100
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Revenue Analysis for CPO

Only Palm Oil Processing Mini-Mill (POPM)
5 Metric Tonnes (mt) FFB per Hour
POPM Throughput mt FFB / Hour
5.00
Average Extraction Ratio Oil to FFB 16.0%
Value of Crude Palm Oil (CPO) Naira /mt
105,000
Ratio of Nuts to FFB Nuts to FFB 16.2%
Residual Value of Palm Nuts Naira /mt
5,250
Cost of Fresh Fruit Bunches (FFB) Naira /mt
7,500
Production Costs Naira /mt
3,000
Turn Key Capital Cost of Mill Naira
183,750,000
Variables Per Hour Per Day Per Month Per Year
Utilisation Hours 22 12
1 8
FFB Processed mt
5.00 40.00 880 10,560
Total CPO Produced mt
0.80 6.40 140.80 1,689.60
Total of Residual Nuts mt
0.81 6.48 142.56 1,710.72
Total Value of CPO Naira
84,000 672,000 14,784,000 177,408,000
Total Value of Residual Nuts Naira
4,253 34,020 748,440 8,981,280
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Why will the Project

Work?
This project is presumed to succeed because of the following
reasons:
 The promoter’s entrepreneurial drive.
 Promoter’s access and relationship with men of repute and
clout
o The above attribute can be leveraged to facilitate fund raising.
 Promoter’s business advisory and finance background
 Alliances and partnership
 Prevailing market situation i.e. huge demand – supply gap
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Actions taken to date

 The promoter and Nextzon met with the Economic Adviser to the Governor of Ogun State
and we agreed the following:

 The economic adviser is compiling a list of the Oil Palm zones and estates in the State and their
status to give us information
 We intend to use this information to determine our take-off strategy and how to proceed

 We are also researching technical partners and conditions of bringing them on board of this project

 We are also researching sources of Agriculture funds to aid set up when time comes
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Actions taken to date

S/N Fund Provider Fund Characteristics/ and Fund Beneficiaries
attributes
1. International Fund  IFAD in July 2009 gave a  Major beneficiaries are the
for Agricultural loan of USD40 million to the people farmers who have no
Development Farmers in Nigeria access to funds.
 The grant is in support of the  With about 345,000 house
Federal Government’s Rural holds to benefit
Financing Institution Building  Other beneficiaries include:
Program (RUFIN) 1.70 Micro Finance Banks
 Its targeted at 12 States in 2. 70 Non Bank Micro Finance
the six geopolitical zones in Institutions
Nigeria 3.Central Bank of
4.Nigerian Agricultural
Cooperative and Rural
Development Bank
5. Research Institutions
2. Agricultural  The grant will finance a fund  The foundation recently gave
Foundation for buy back, allow farmers grants to Da All Green Seeds
buy improved inputs; Limited (DAGS) in Kaduna
 It will also be used for State
capacity building for  DAGS produces sorghum
farmers, radio adverts etc seeds for farmers on credit,
 The grant from USAAF will the farmers cultivate these
be for five years seeds and sell back the
harvest to the company

NEXTZON BUSINESS SERVICES LIMITED
Actions taken to date
S/N Fund Provider Fund Characteristics/ and
attributes
3. Mechanized Agric  The organization is an 
Micro Credit Agricultural fund raiser in
Investment Scheme Nigeria
 Recently it made USD 1
Billion available to Nigerian
farmers
 The funds were/are made
available by investors in
South Africa and Dubai who
are interested in Agriculture 
in Nigeria
 The investors desire to
transform crude farmers to
mechanized farmers
4. CDC Group  CDC is a fund of funds
investing their capital with
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Fund Beneficiaries
The fund will be made
available to micro farmers
with a minimum of N500,000
and maximum 10,000,000 for
each farmers
 The funds will be available for
farmers who can plant and
harvest any crop between 6
to 12 months
It is required that the
beneficiaries open an account
with a micro finance bank and
also contribute 6% of the
desired loan
 Also the loan applicant must
join a recognized cooperative
society.
 The interest rate will be
between 7.5% to 15% per
annum, depending on the
micro - finance institutions
 SMEs in Emerging economies
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Actions taken to date

S/N Fund Provider Fund Characteristics/ and Fund Beneficiaries
attributes
5. AECF  For-profit private companies  Agribusiness
which have, or intend to,  Rural financial services
start business enterprises in  Rural media
Sub-Saharan Africa in the  other information services
field of agriculture, agri-
business, rural financial
services and media and
information services to these
sectors.
 Provides grants and
repayable grants (zero
interest loans) up to a
maximum of USD $1.5m per
company (the average grant
size will be US$D750, 000)
to the most innovative
proposals that are adjudged
to have the greatest impact
on the largest number of
rural poor people.