Business Plan For Fisheries Processing And Exporting 6j4p5x

Fisheries Processing and Export Business Plan

Table of Contents 1

INTRODUCTORY PAGE..........................................................................................4 1.1

Name of the company....................................................................................4

1.2

Name and Addresses of Principals.................................................................4

1.3

Nature of Business.........................................................................................4

1.4

Statement of Financing Needed.....................................................................4

1.5

Statement of Confidentiality of Report..........................................................4

2

EXECUTIVE SUMMARY..........................................................................................5

3

INDUSTRY ANALYSIS.............................................................................................6 3.1

4

5

Pest Analysis..................................................................................................6

3.1.1

Political....................................................................................................6

3.1.2

Economic.................................................................................................7

3.1.3

Social.......................................................................................................8

3.1.4

Technology..............................................................................................9

DESCRIPTION OF VENTURE................................................................................11 4.1

Our Mission..................................................................................................11

4.2

Our Business................................................................................................11

4.3

Our Product..................................................................................................12

4.4

The Entrepreneurs’ Background..................................................................12

PRODUCTION PLAN.............................................................................................14 5.1

Process Flow Chart.......................................................................................15

5.2

Machinery and Equipment...........................................................................16

5.2.1 5.3 6

Vehicles.................................................................................................16

Exporting.....................................................................................................16

OPERATIONAL PLAN...........................................................................................17 6.1

Technology Utilization..................................................................................18

6.2

Flow of orders..............................................................................................18

6.2.1

g of a Contract.............................................................................18

6.2.2

Documentation......................................................................................19

6.2.3

Post Shipment Documents.....................................................................20

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Fisheries Processing and Export Business Plan 6.2.4

How to Claim Duty Drawbacks..............................................................20

6.2.5

Quoting Prices.......................................................................................21

6.2.6

g the Contract..............................................................................21

6.2.7

of Delivery..................................................................................21

6.2.8

Packaging..............................................................................................21

6.2.9

Transport...............................................................................................21

6.2.10 Suppliers................................................................................................21 7

MARKETING PLAN...............................................................................................22 7.1

Pricing Strategy...........................................................................................22

7.2

Competitors and Value Addition..................................................................22

7.3

Market for exports.......................................................................................22

7.4

Distribution..................................................................................................23

8

ORGANIZATIONAL PLAN.....................................................................................25 8.1

Form of Ownership.......................................................................................25

8.2

Registration of the Company.......................................................................25

8.3

Registration of a Partnership.......................................................................25

8.4

Partnership Deed.........................................................................................25

8.5

Principal Partners.........................................................................................26

8.6

Authority of Principal Partners.....................................................................26

8.6.1

CEO........................................................................................................27

8.6.2

Finance Directors...................................................................................27

8.6.3

Sales/Marketing Director.......................................................................27

8.6.4

Sales Analyst.........................................................................................28

8.6.5

HR Director............................................................................................28

8.6.6

istrative Assistant........................................................................28

8.6.7

Production & Inventory Control Manager...............................................28

8.7 9

Sources of Hiring Employees.......................................................................29

ASSESSMENT OF RISKS......................................................................................30 9.1

10

Competitors.................................................................................................31 FINANCIAL PLAN..............................................................................................32

10.1 Project Cost..................................................................................................32 10.2 Project Returns............................................................................................32 2 |Page

Fisheries Processing and Export Business Plan 10.3 Project Financing.........................................................................................32 10.4 Pro Forma Income Statement......................................................................33 10.5 Pro Forma Cash Flow Statement..................................................................34 10.6 Pro Forma Balance Sheet.............................................................................35 10.7 Breakeven Analysis......................................................................................36 10.8 Sources for Procurement of Finance............................................................37 10.9 Summary of the Salient of Financing................................................37 11

EXIT STRATEGY...............................................................................................39

12

APPENDIX........................................................................................................40

12.1 REGULATIONS..............................................................................................40 12.2 Network for Dealing with Regulations..........................................................42 12.3 Our Products................................................................................................44 12.4 Miscellaneous..............................................................................................45 12.5 Process Flow Chart of a Sea Food Processing..............................................50 12.6 Questionnaire for Customers.......................................................................51 12.7 Questionnaire for Entrepreneur...................................................................52 12.8 Analysis of Questionnaire............................................................................54 12.9 Supplier Evaluation Questionnaire...............................................................58 Supplier Evaluation Questionnaire

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1 INTRODUCTORY PAGE 1.1 Name of the company Alpha Fish Processing and Exports Karachi Fish harbor, Pakistan.

1.2 Name and Addresses of Principals Nabeela Saleh Zahri Quetta, Pakistan. Rabiya Anjum Karachi, Pakistan. Sidra Shahid Karachi, Pakistan. Sugandh Munir Banglani Hyderabad, Karachi.

1.3 Nature of Business Processing and export of fisheries.

1.4 Statement of Financing Needed The total project investment is Rs. 120,521,267 which includes capital cost of Rs. 91,416,722 and working capital of Rs. 29,104,545. It is assumed that the project would be partially equity financed (50%) and partially debt financed (50%).

1.5 Statement of Confidentiality of Report This plan is strictly to be held as the ownership of the four entrepreneurs mentioned above. It is written for the purpose of obtaining finance from banks and investors and all the data contained therein is based on our research. The ideas presented our subject to originality of the entrepreneurs, hence are their ownership and therefore cannot and should not be copied or stolen.

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2 EXECUTIVE SUMMARY

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3 INDUSTRY ANALYSIS Fishery plays an important role in the national economy. It provides employment to about 100,000 fishermen directly. In addition, another 400,000 people are employed in ancillary industries. It is also a major source of export earnings. In July-May 2002-03 fish and fishery products valued at US $ 117 million were exported from Pakistan. Federal Government is responsible for fishery of Exclusive Economic Zone of Pakistan. Pakistan is endowed with rich fishery potential. It is located in the northern part of the Arabian Sea and has a coastline of about 1,120 km with a broad continental shelf and its Exclusive Economic Zone extends up to 200 n. miles from the coast. There are about 16,000 fishing boats in coastal area of Pakistan which operate in shallow coastal waters as well as in offshore areas. These fishing boats undertake fishing trips lasting for few hours to about 25 days depending upon type of fishing. Total production from inland and marine waters is approximately 0.60 M. tons.

3.1 Pest Analysis 3.1.1 Political

There is no separate ministry for the fishery sector. The Ministry of Food, Agriculture and Livestock (MINFAL) is the federal agency responsible for fisheries. For sustainable development and management of marine fisheries resources, MFD promulgated the Exclusive Fishing Zone (Regulation of Fishing) Act, 1975. Fisheries management is carried out through licensing, indicating exploitable stocks and species, designating environmentally friendly fishing gear and methods, and by enforcing restrictions with regards to closed season, closed areas, etc. Pakistan also adheres to the guidelines of the FAO Code of Conduct for Responsible Fisheries. The EU market effort is being coordinated by Karachi Fish Harbor Authority, Marine Fisheries Department, Fishermen Cooperative Society, Sind government and the Ministry of Food, Agriculture and Livestock. 6 |Page

Fisheries Processing and Export Business Plan There are no specific trading policies with regards to exportation. There are hundreds of “cowboy” units in Pakistan that work on “so-called contractual” bases and dip the average quality of the catch. The local farmers also claim that the boats from Taiwan, China, Japan and Korea encroach their waters and use giant fishing nets that result in depletion of fishing stocks for Pakistan. Fish and fishery products are processed and exported to over 50 countries. About 30 – 35% of the fish and fishery products are exported to European Union countries. Japan, U. S. A. China, Saudi Arabia, U. A. E. Malaysia, S. Korea, Hong Kong, Sri Lanka and Singapore are other major importing countries. Fish export has showed an increasing trend in the past many years, however, a substantial decrease has occurred during 1998-99 which is attributed mainly due to glut in the international market and because of financial crises in the Southeast Asian countries. Export of seafood is facing many problems, most notably the following: • Post harvest losses are high due to handling of fish catch on board and long voyage time. • Congestion at Karachi Fish Harbor. There are more than 16,000 fish boats operating in Sind zone. •

The storage capacity is only 10,000 tons which is not sufficient to cater the future requirements.

•

Pakistan is exporter of raw material or semi processed fish / seafood.

1.1.1 Economic 1.1.1.1Production

Pakistan is endowed with rich fishery potential. The total fish production of Pakistan is in the order of 500,000 metric tons of which about 80% is marine fish. Shrimp constitute about 10% of the marine catch. Most of the shrimp catch is frozen and exported to Japan, USA, UK, Singapore, Belgium, etc. The demand for shrimps is increasing in the world market whereas; its production from natural sources in Pakistan is in stage of decline.

1.1.1.2Employment

The fisheries sector in Pakistan offers direct employment to thousands of people. It provides employment to about 400,000 fishermen directly. In addition, another 500,000 people are employed in ancillary industries. 7 |Page


1.1.1.3Exports

Pakistan exports reasonable quantity of shrimp, fish and its products and earns a substantial amount of foreign exchange. Shrimp is the main export item both by weight (about 30 000 t) and by value (approximately US$ 73.2 million). It is exported mostly fresh; frozen either as shell-on tails or as peeled and divined. The USA, Japan and the EU are the main importers. Pakistan also exports fish meal, fish maws and shark fins, as well as growing quantities of chilled fish, for which the main markets are Singapore and the Gulf. In recent years export of these items has not shown any significant increase because of the increased quantities of fishmeal required by the poultry industry. Out of the total installed processing capacity less than 40 per cent is being utilized. Pakistan is exporter of raw material or semi processed fish / seafood. Fish and fishery products are processed and exported to over 50 countries. About 30 – 35% of the fish and fishery products are exported to European Union countries. Japan, U. S. A. China, Saudi Arabia, U. A. E. Malaysia, S. Korea, Hong Kong, Sri Lanka and Singapore are other major importing countries.

1.1.1.4Economic Aid

Pakistan receives economic aid from several international sources as loans and grants. The International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), etc provides long term loans to Pakistan. Pakistan also receives bilateral aid from developed and oil-rich countries.

1.1.2 Social

Fish is a major source of both livelihood and nutrition for millions of the world's poorest people. An article illustrates that in 2001, more than 48 percent of the world population (close to 3 billion people) obtained 15-25 percent of their proteins from fisheries, and more than 400 million people received more than 50 percent of their proteins from fisheries (FAO, 2004). The latter include the poorest people in coastal rural areas and small island developing states for whom a decrease in fish catch often means an immediate loss in sources of food and calorie intake. 8 |Page


1.1.2.1Ethics

The ethics of fisheries have been summarized it the table shown below: Dimensions of the ethics of fisheries Subject

Objective

Ecosystem

Ecosystem well-being

Fish stocks

Conservation

Fisheries

Responsible fisheries, sustainable development

Fishers

Safety on board, freedom and well-being, just access

Fishing communities

Eradication of poverty, cultural diversity

Other stakeholders Cross-sectoral equity, societal efficiency Consumers

Right to food, food safety

Politicians

Transparent policies, public deliberation

Due to such vital importance of the fisheries sector, it is very important to use this resource at a sustainable level. The findings of an FAO report indicate that during the next 25 years the world population shall be doubled, the livestock population would shrink and most of the nations will have to depend on oceanic resources to meet bulk of the animal protein demand. But unfortunately the authorities have not taken any notice and therefore, not made plans to take appropriate action to effectively overcome this problem. The negligence in exploiting marine fisheries resources in Pakistan is highly regrettable. The world market stood at 52 billion US$ in 1997 with Pakistan's share of less than 0.33 per cent. Due to the changing eating habits and depleting natural resources, world seafood market is termed as mainly 'sellers’ market'. The focus in fishing is shifting from already exploited regions to under-exploited areas because of conservation and environment pressures.

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Fisheries Processing and Export Business Plan 1.1.3 Technology

There are many fishing techniques or methods for catching fish. The term can also be applied to methods for catching other aquatic animals such as mollusks (shellfish, squid, and octopus) and edible marine invertebrates. Fishing techniques include hand gathering, spear fishing, netting, angling and trapping. Recreational, commercial and artisanal fishers use different techniques, and also, sometimes, the same techniques. Recreational fishers fish for pleasure or sport, while commercial fishers fish for profit. Artisanal fishers use traditional, low-tech methods, for survival in third-world countries, and as a cultural heritage in other countries. Mostly, recreational fishers use angling methods and commercial fishers use netting methods. A commercial fishing enterprise may vary from one man with a small boat with hand-casting nets or a few pot traps, to a huge fleet of trawlers processing tons of fish every day. Commercial fishing gear includes weights, nets (e.g. purse seine), seine nets (e.g. beach seine), trawls (e.g. bottom trawl), dredges, hooks and line (e.g. long line and hand line), lift nets, gillnets, entangling nets and traps. Modern trawlers make extensive use of contemporary electronics, including navigation and communication equipment, fish detection devices, and equipment to control and monitor gear. Just which equipment will be installed depends on the size and type of the trawler. Navigational instruments, such as an autopilot and GPS, are used for maneuvering the vessel in harbor and at sea. Radar can be used, for example, when pair trawling to keep the correct distance between the two vessels. Communication instruments range from basic radio devices to maritime distress systems and EPIRBs, as well as devices for communicating with the crew. Fish detection devices, such as echo sounders and sonar, are used to locate fish.

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2 DESCRIPTION OF VENTURE The fisheries industry in Pakistan is a major source of export earnings. In 2002-2003, fish and fishery products valued at US $ 117 million were exported from Pakistan. Pakistan is endowed with rich fishery potential. It is located in the northern part of the Arabian Sea and has a coastline of about 1,120 km with a broad continental shelf and its Exclusive Economic Zone extends upto 200 n. miles from the coast. Total production from inland and marine waters is approximately 0.60 M. tons. As a highly perishable commodity, fish has a significant requirement for processing. More than 60 percent of total world fisheries production underwent some form of processing. Fish and fishery products are processed and exported to over 50 countries. About 30 – 35% of the fish and fishery products are exported to European Union countries. However, due to several issues, mainly concerned with complying with international standards, this figure has dropped. (Source: www.pakissan.com) In view of the above facts, it is evident that despite the issues faced by the fisheries sector in Pakistan, fish processing and exporting still remains a highly attractive business with great potential.

2.1 Our Mission To be one of the leaders in hygienically processing and exporting fish business in Pakistan.

2.2 Our Business Our business will deal with processing and exporting of various fish types, while maintaining high standards of hygiene at all stages of the process. Poor hygienic condition is one of the biggest problems faced by Pakistan’s fishing industry. The conditions surrounding the port are 11 | P a g e

Fisheries Processing and Export Business Plan very dirty. Sewerage water is dumped in these waters and the same water is used to clean the fish. The processing units use obsolete machinery, which adds to the unhygienic conditions that fish are exposed to. Such unhygienic conditions at harbors and plants pose great risks to our venture as well the industry as a whole. Keeping in view the above facts, we intend to provide a healthy product by using technology that assures relatively higher standards of hygiene as against other processing and exporting businesses in Pakistan. The goal of our business is to export hygienically processed fish of “AA and A Grade”, which comply with international standards. By adopting hygienic and cleaner methods of fish processing and storing, we can exploit the huge opportunity that exists in the fisheries sector.

2.3 Our Product We aim to begin by processing and exporting mainly the following types of fish: ○ ○ ○ ○ ○ ○ ○

White pomfret Squid Soul fish Rohu Eel Deep sea shrimps Black tiger prawn

We plan on renting a fish processing unit on Karachi Fish Harbor. Karachi Harbor currently handles 90% of fish and seafood catch in Pakistan and 95% of fish and seafood exports from Pakistan. The processed fish will be exported to several countries including European Union countries, Japan, USA, China, Saudi Arabia, UAE, Malaysia, South Korea, Hong Kong, Sri Lanka and Singapore. More than 75% of the product will go to EU countries, Japan and USA, since they are main importers of fish products, while the rest will be exported to other countries.

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1.1 The Entrepreneurs’ Background The entrepreneurs are namely:

• • • •

Nabeela Saleh Zahri Rabiya Anjum Sidra Shahid Sugandh Munir Banglani

The entrepreneurs are graduates of Institute of Business istration, a prestigious and highly reputable business school of Pakistan. They have recently completed their BBA (Hons), and all of them have had significant exposure to the corporate world, since interning was a compulsory requirement at IBA. However, these four are planning to implement their business plan which they wrote as part of their Entrepreneurship course during their BBA days. The entrepreneurs have sound knowledge of the business owing to their research in the sector which they did when they were constructing their business plan. Sugandh and Nabeela are majors in Finace, while Rabiya and Sidra are marketing majors thus, the diversity in the team in balanced. Such set of skills will prove to be beneficial for their venture.

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1 PRODUCTION PLAN A number of steps take place from catching the fish at the harbor to exporting it to international markets. However, we only deal with processing raw fish and exporting the final product of the plant. The catch will be bought from fishermen on the Karachi Fish Harbor (KFH).

For consistent availability of fish, a contract system with the local fishermen will be maintained. The personnel required in the plant will be hired locally as well. They will comprise of skilled as well as semiskilled workers. Skilled workers will be needed for operating equipment whereas, other nontechnical activities will be handled by semiskilled workers. The catch acquired from KFH will be brought to the processing plant. A 2 acre plant will be rented in proximity of Karachi harbor to facilitate easy availability and transport of fish from the harbor to the plant. The location will provide an added advantage of being near to the raw material supply. The plant will be upgraded by purchasing and installing high quality machinery and equipment to ensure that the product processing meets international standards. At the plant, the fish will undergo a process which will be partly done by machines and equipment, and partly by skilled labor that possess good knowledge about factory processes.

1.1 Process Flow Chart The process flow chart for the Sea Food Processing Plant is given below

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Fisheries Processing and Export Business Plan (Source: SMEDA Seafood Processing Plant Report)

Blast freezing is the most efficient and effective methods of freezing fish. It is prevalent in other processing plants in Pakistan as well. In this process, high air flow is given to freeze the fish. Packaging is done in several methods such as plastics, cartons and bags. Plastics and cartons are be used for fish that is to be exported whereas, bags are employed for local supply. Hence, we will require high quality material of plastics and cartons for packaging fish. The fish categories will also be packaged in different forms. Frozen shrimps will be packed into cartons and weight will range from 2- 4 kg packs. Frozen fish will be packaged according to the international requirements which is 10 kg boxes.

1.2 Machinery and Equipment Machines needed in the processing unit along with their capacity are listed below: Machinery/ Specifications

Quantity

Flake Ice Machine, Capacity (25 T / 24 Hours)

2

Storage Bin, Capacity (12 Tons)

2

Blast Freezers , Capacity (2T / 8 Hours) -30 C

4

Cold Store , Capacity ( 250 T , 50x 50x 15) -30 4 C Central Air conditioning System

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1

Fisheries Processing and Export Business Plan (Processing Hall) Tables and Racks Generator

1

(Source: SMEDA Seafood Processing Plant Report) Other office equipment would include office furniture, computer, fax and telecom system. 1.2.1 Vehicles

The venture will require 2 open trucks with 2 refrigerated containers. The shipment of final product will be done by hired transportation whereas, the trucks of the business will be used to bring raw material i.e. fish catch from the harbor to the plant.

1.3 Exporting For export, once inspections are completed, the exporter compiles the requisite set of documents and s a clearing agent to prepare a shipping bill, submitted with the documents to the Customs Department. The Customs Department allows the clearing agent to instruct the transporter to retrieve the container from the exporter and take it to the port gate for inspection. Upon final approval, Customs authorizes a final physical inspection of the container before it is sealed by the port customs authority or a bonded carrier. The exporter pays the Export Development Surcharge to the Export Development Fund and the clearing agent arranges container transfer to the terminal for loading onto the launches.

2 OPERATIONAL PLAN We have decided to upgrade, with the help of federal government, an already existing processing plant and to incorporate the idea of Export Promotion Bureau to procure appliances and equipments, and hot water pressure washing machine for cleaning of boxes and auction halls and foot operated taps for up-gradation of Quality Control Laboratory to meet International standards.

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Fisheries Processing and Export Business Plan Furthermore we have decided to set up our office near the processing plant with a quality control department and Research and Development. Quality control department will check the quality of fresh fish after washing in the storage area and before forwarding it for further processing. The fishery products are checked for any harmful or toxic products. After the processing of one batch of products is completed, a sample would be again tested for quality and standards in the quality control department. The people in the quality control will be from the relevant field with relevant amount of experience. There will be separate Research and Development department for latest information about processes and technology available for the betterment of the business. The day to day operations would be maintained from the office near the plant and for continuous availability of raw material a contract system with local fishermen will be maintained. All the production and operations of the company would be controlled by the owners. However the procurement of raw materials will be on contractual basis only. Furthermore we intend to operate our plant almost throughout the year. But we will make sure that the plant is ready during the peak seasons of fish catch. According to SMEDA’s report on Sea Food processing plant, the processing plants should be ready to operate during the months of July to March so that we can avail the full catch of the season. Washing, cutting and packaging would be the major operations that will be carried out in our plant. The shipping of the finished products would be done on the basis of number of orders made by the clients and it shall be done on contractual basis. However later it will be done by the business. For that purpose we are planning to buy vehicles and refrigerated containers for fulfilling the consignments. Number of vehicles and containers would depend on the number of orders placed by our clients.

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2.1 Technology Utilization Since we want to meet the international standards for processed fish, we intend to implement latest technology in our processing plant. With the help of Export Promotion Bureau, we will implement a hot water pressure washing machine for cleaning of fish and boxes. This machine will help us in ensuring the quality of fisheries that will be send for further processing. We would be also up-grading foot operated taps for our Quality Control laboratory to meet the international standards of quality and hygiene in our products. The machines that we will use for fish processing would be Automatic Fish Fillet Machine and Pillow Packaging Machine. Pillow Packaging Machine is touchable human-machine operation and use for various kinds of packaging. Automatic Fish Fillet Machine is high yielding machine with comparatively small size than the other machines operating in Pakistan. However due declining fish stocks, we would be only be able to operate at approximately 40 percent of total capacity of the equipment available for running the business. The plant will also have its own packaging and cold storage facilities as mentioned earlier. This will help us to maintain the quality of fish brought in for processing and the quality of fish after it is being processed.

2.2 Flow of orders Initially we will contract our potential clients through their Governments or export institutions working in those countries. However later when we make a strong customer base with these clients, we will develop proper channel for order placements and their consignment to our valued customers.

2.2.1 g of a Contract

When prices are accepted then a contract is signed with the firm for supply of goods which becomes binding on both the buyer & seller. Contract is a document, which normally contains: i. Name of exporter ii. Name of importer

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Fisheries Processing and Export Business Plan iii. Item of sale iv. Unit price v. Total quantity vi. of delivery (FOB, C&F, CIF etc.)* Inco deal with the questions related to the delivery of the products from the seller to the buyer. This includes the carriage of products, export and import clearance responsibilities, who pays for what, and who has risk for the condition of the products at different locations within the transport process. Inco are always used with a geographical location and do not deal with transfer of title. vii. of payment (There could be basically two arrangements for payment; first being through direct funds transfer without involving any credit facility. This funds transfer could be both before the shipment of goods or after the shipment of goods generally referred as Cash Against Documents (CAD). Second arrangement is through the Letter of Credit (LC). The customer’s bank provides a ‘letter of credit’, which promises to pay the supplier as long as the are met. There are two types of LC, LC sight and LC Deferred payment. The payment may be paid immediately at sight or at a later date). viii. Mode of shipment (Sea, Air, Road) ix. Currency in which transaction will be made. x. Validity period of a contract & delivery period. xi. Shipping marks if any. xii. Arbitration clause.

2.2.2 Documentation

The following documents are normally used in exports: 1. E-Form (Through authorized Commercial Bank). 2. Shipping Bill (Through authorized Clearing agents). 3. B/L or AWB (Through clearing agents) 19 | P a g e

Fisheries Processing and Export Business Plan 4. Commercial Invoice 5. Packing List 6. Certificate Country of origin (Through Chamber) or 6(a) GSP (Through EPB) 7. Textile quota Export license/visa document required for textile items under quota restraint 8. Pre-shipment certificate through EPB for certain textile item s for exports to management textile item. 9. Export contract registration details

2.2.3 Post Shipment Documents

1. Textile quota Export license/visa document required for textile items under quota restraint 4th copy of shipping (through customs) bill to be used for rebates on bank/sales tax refund/textile quota. 2. BCA (Bank Credit Advice) to be received from commercial banks after foreign exchange is received. The BCA is considered proof for the purpose of rebates, refinance scheme etc. 2.2.4 How to Claim Duty Drawbacks

Duty Drawback is the most commonly availed incentive by exporters. It is the amount reimbursed by the government to exporters as compensation for Customs Duty collected at the time of import. For the purpose, CBR sets aside a certain percentage of customs duty collected on imported raw material for incentivising export production. The following documents must be in order when Exporter files the claim for export rebate and submits the file to the customs rebate section 1. Bank Credit Advice ( B.C.A ) 2. Bill of Lading (First Original). 3. Railway Receipt (Attested by the Railways). 4. Customs Signed Invoice with Two Photocopies. 5. Packing List. 20 | P a g e

Fisheries Processing and Export Business Plan 6. Exchange Rate Certificate 7. Copy of Shipping Bill. 8. Photo Copy of Form “E”. 9. Laboratory Test Report. (if required) 10. Photocopy of SRO. (relevant to exporter’s product) 11. Copy of Cross Border Certificate (In case of export through land route). 12.Sales Tax Return of clearing agent of previous month (if claim launched through clearing agent) 2.2.5 Quoting Prices

In case of export, many things have to be considered for quoting prices, such as the cost including, packing, insurance, credit, agent’s commission, documentation fee, marking charges, transportation charges, export duties etc. 2.2.6 g the Contract

When prices are accepted then a contract is signed with the firm for supply of goods which becomes binding on both the buyer & seller. 2.2.7 of Delivery

When the exporter is making an offer, he quotes the price of his product. If the offer is accepted then a contract is signed between the buyer and the seller. The contract includes and conditions under which goods are delivered. The buyer sitting in the overseas market is normally not interested to receive charge of goods at one's factory site so we will give the buyer the charge of goods on FOB basis which means free on Board at the seaport. It means that charges of the consignment are fully paid up to that point and the rest of the freight will be paid by the buyer. This will make it clear as to who is responsible for the goods if anything goes wrong.

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Fisheries Processing and Export Business Plan 2.2.8 Packaging

Packaging will be seaworthy, and we will have a contract with Pakistan Packing Institute which will handle the packaging. 2.2.9 Transport

Transportation will be through the sea, as it will be most economical. 2.2.10Suppliers

We will acquire our supply if fish from the local fish suppliers wholesale market. These goods will undergo strict quality control procedures.

3 MARKETING PLAN 3.1 Pricing Strategy Since the number of firms is very limited in the industry, the entire industry works on more or less the same strategy. Our company shall follow a costdriven strategy. To maintain our exports, we shall always kept our prices low as compared to our competitors. Our export share in the world market is not likely to decrease over the next two years. The industry we shall operate in is a tax free industry. This step was taken by the government long ago to encourage private processing plant owners to improve the quality of their catch and exports.

3.2 Competitors and Value Addition There has been lack of diversification and failure to introduce new and latest techniques of fish processing over the last two decades. Firms like Super Fresh and Mahi Seafoods have worked one for value addition. Now they not only process and package the fish but have also diversified like they have introduced products like fish kebabs and fish koftas. This does not only meet the need of local consumers but they have also export these products. There was little diversification in 90s (that led to a negative growth) in the fishery products, however, in late 90s and mid 2000s, the growth rate was positive and this is because of diversification of fish products like processed, marinated and ready to eat prawns and ready to fry prawns.

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3.3 Market for exports Pakistan’s exports of fishery products stand at about 0.25% of world exports. A rough estimate based on maximum sustainable yield figures, existing value addition, and foreign benchmarks, puts our total export potential from this sector at around US$ 1.0 billion from existing natural resources. If we include the high potential area of aquaculture, our company can yield even higher export earnings. Previously, the consignments destined to EU, Japan and USA were in fresh or frozen form, whereas to Sri Lanka these were in dried, salted form. This shows little value addition. Dried or salted fish would not fetch a price as high as value added products would such as fish-minced meat, fish pickle, fish kababs, fish cakes, fish flour etc. These products are made from fish species which are usually used as trash in fishmeal reduction such as catfish, sardine, anchovy, lizardfish, threadfin bream etc. We have good prospects for these products in Middle East, Far East, Hong Kong, Singapore, U.K. etc. A rough estimate based on maximum sustainable yield figures, existing value addition, and foreign benchmarks, puts our total export potential from this sector at around US$ 1.0 billion from existing natural resources. If we include the high potential area of aquaculture, our fisheries sector can yield even higher export earnings.

3.4 Distribution The flow of the fish shall be channeled from boat owner/fish catcher to commission agent, to wholesaler, to retailer, to consumer for local market. It shall go from commission agent to exporter/processor to importer to consumer for export market. Boat owner/fisherman  commission agent wholesaler  retailer  consumer (Local marketing flow) Boat owner/fisherman commission agent  exporter/processor importer (Export marketing flow) The system is that the owner lends his boat to the fish catcher, on profit sharing basis, generally equally divided. Thus, if the catch is sold, hypothetically, for $255, the owner will deduct the direct cost of such items 23 | P a g e

Fisheries Processing and Export Business Plan as oil, ration to the crew, ice and salt. No depreciation, repair, or replacement costs are included in it. If the cost, comes to $85 the remaining $170 will be divided equally, $85 each by the boat owner and fish catcher. Since the boat remains in the water for several days, the fish catcher takes a crew with him, which generally consists of his family . But if the family are not available, he may hire crew and pay them from his own share of earning. The fish catcher shall bring his catch to the auction hall, where commission agent (called mole holder) authorized by Fishermen Co-operative Society (FCS) awaits the arrival of the catch. Only the authorized commission agent can process the sale and no fisherman can sell his product directly to wholesaler, retailer, consumer, fish processor or exporter. The commission agent shall arrange the auction for the catch. Purchasers assess the value of the commodity, make their bids and the commodity goes to the highest bidder. The fisherman shall pay 6.25 percent of the gross value of the commodity, which is divided equally by the Fishermen’s Cooperative Society (FCS) and auctioneer. The fish shall be ed on from the catcher via the commission agent to the processor/exporter to importer or the local wholesaler, then to retailer, and finally to consumer. The fish is generally brought to the auction hall/market on the fish harbor where the processor/exporter or wholesalers purchase the catch. Almost all the processing units are located in Karachi. Therefore, the catch meant for processing/export shall either purchased at harbor, or shall be brought to Karachi immediately if purchased at other fish harbors. The purchase made for local sale shall be bought by wholesaler who delivers it to the retailer in local market which shall be ultimately sold to consumer.

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4 ORGANIZATIONAL PLAN 4.1 Form of Ownership The organizational form of the business will be a ed Ordinary Partnership (ROP) between 5 people. An ROP is one in which the partnership agreement, including the details of capital contributions, management and objects, must be in writing, and ed with the Ministry of Commerce.

4.2 Registration of the Company For registration, we will need to consult the Chamber of Commerce. We will have to become a member of the Chamber of Commerce which will tell us if a certain name has been taken or not, etc. There is a pro forma that needs to be filled. It requires information such as the scope of business, nature of the business; which in our case is processing and services, company profile and also the profile of the directors of the company, so on and so forth.

4.3 Registration of a Partnership The registration of partnerships is not compulsory by law. It is optional and there is no penalty for non-registration, but since it is a ed ordinary type of partnership, we plan to our business because there are disadvantages for not ing. If any dispute arises among the partners or ex-partners they may not resolve the issue through the civil courts. An uned firm cannot institute a suit to settle these disagreements. Neither can an uned firm sue a third party for the enforcement of any rights arising from a contract, e.g. the recovery of the price of goods supplied. Moreover, in order to become a member of PFEA (Pakistan Fisheries Exporters Association) or Chamber of Commerce and gain the benefits of these hips, we have to the company.

4.4 Partnership Deed The mutual rights and obligations of all partners must be documented in the shape of a “partnership deed”. This needs to be signed by all the partners 25 | P a g e

Fisheries Processing and Export Business Plan and subsequent copies held by each partner. At the time of registration, a copy of the deed has to be submitted with an application to the Registrar of Firms in the concerned area. This document may also be referred to as an “Article of partnership”.

4.5 Principal Partners The 4 partners will be the founding owners of the business namely: • • • •

Rabiya Anjum Sidra Shahid Nabeela Saleh Sughand Muneer

All these 4 partners are graduates of the most renowned business institution of Pakistan IBA (Institute of Business istration). All the four have had remarkable academic performance as well as a proven record of extracurricular activities. They have all always worked as a strong team on various projects in the four years of their education hence there all know how to work in harmony. Moreover, together as a team they also participated and won various business plan competitions at inter-university and international levels. The 5th partner will be the investor who invests 50% of the capital in our business. All the other four partners would have equal partnership and ownership rights and decision making authority; however the 5thpartnerwould be just a sleeping partner.

1.1 Authority of Principal Partners Alpha Fish Processing and Exports is a business that will be formed by five partners. All the partners will have an active hand in running the business and will acquaint themselves intimately with all aspects related to it. These partners will further hire employees to ensure that the business is run efficiently. Apart from that a few experts will also be hired to gain a firm foothold in the industry. The partners will be the owners looking after all the activities of the business as Co-Founders and look into the financial aspects and the hiring of the management.

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This is a rough organizational chart that will be followed by Alpha Fish Processing and Exports:

1.1.1 CEO

The CEO/ PRESIDENT of the company is one the four partners. He will be selected by the method of voting by all partners. His responsibilities will include making decisions of particular and major issues after holding a meeting. He will also represent the company at all levels whether domestic or international and also at the Chamber of Commerce.

1.1.2 Finance Directors

The finance manager is one of the partners of the company. She is responsible for all the ing and book keeping activities of the company. She is also responsible for setting budgets for the activities set by the Sale/ Marketing Manager and the Production and Inventory Manager. She will look into the tax procedures and deal with it by hiring a tax consultant if required. Sughand and Nabeela Saleh will be the Finance Directors.

1.1.3 Sales/Marketing Director

The sales/ Marketing Manager will handle all the issues associated with creating a good image of the product and all the activities that will increase sales and procure more customers. The responsibility of creating a reliable and superior image falls on her shoulders. She will be aided by the sales analyst and make decisions accordingly. Moreover, she will also be responsible to conduct consumer research to keep the customer centric approach and perform efficiently. Rabiya Anjum will be the Marketing Director. 27 | P a g e


1.1.4 Sales Analyst

The sales analyst will be an expert who will have atleast 3 years of experience in the fisheries industry and is well acquainted with all the new techniques that will help the business incur a profit. It will be his responsibility to predict accurate trends of consumer preference and industry trends and advise the manager on the most feasible decision or course of action.

1.1.5 HR Director

The HR Director will be again one of the partners who will look into the hiring of all the labour and will also look into the aspects of the business that have been outsourced. The HR Director will also have to hire mid-level Marketing Manager, Finance Manager, HR Manager, Production Manager and Inventory Control Manager who will all report to their respective directors. The majorly outsourced branch is of the transportation of the goods to the warehouse from the suppliers. It is the company's policy to retrieve the goods from our suppliers once they are ready to ensure a reliable supply and lessen the burden on the supplier; thereby strengthening our relationship with them. She will ensure that all the people employed in their respective capacities are fully capable and are properly matched with the tasks assigned. He will also settle any grievances that might occur amongst the employees as well as their compensation and performance appraisals. Sidra Shahid will be the HR Director.

1.1.6 istrative Assistant

The istrative assistant although will primarily work under the HR Manager, he will also do secretarial work for the other managers and assist the sales analyst if required. He will do all the istrative work and set up meetings and sort out schedules of the managers. He will also be required to have a minimum of 3 years of experience to be eligible for the job.

1.1.7 Production & Inventory Control Manager

The inventory manager will be a highly skilled expert. He will also shoulder the responsibilities usually done by a supply chain manager along with his 28 | P a g e

Fisheries Processing and Export Business Plan respective duties. Therefore, he must have a minimum of 3 years of experience. He should be well versed with the inventory system that the company decides on using. He will be required to keep a close check on the level of inventory and to keep a good rapport with the suppliers for the product to be ready on time. He will also need to maintain good communications with the transport and packaging companies and will keep tabs on them more closely than the HR manager. He will have a ware-house worker and a watchman who will report directly to him. The ware-house worker will keep a visual check on the inventory and will be present for the loading and the unloading of the goods in the ware-house. The watchman will be there to create a visual deterrence for theft because there will be a security system set in the warehouse to guard the inventory. Furthermore, his responsibilities will include deciding the schedule of production and making a plan for it. Moreover, he would have to provide overall management of the ongoing production operations including assisting in inventory control, scheduling, documentation, equipment maintenance, calibration, shipping, and quality control/inspection. Furthermore, he would have to assist in creation of efficient processes through hands-on development and training. Also he would have to track quality of all processes through analysis of recorded data and formation of additional testpoints and lastly correlate results with requirements/specifications. This manager will be hired and should have atleast 3 years of work experience. However; all the co-founders will have an active involvement and control over the entire management and production keeping themselves completely updated with the entire process.

1.2 Sources of Hiring Employees The employees will be hired through ads in the newspapers. The applications received will be reviewed, evaluated, interviewed and selected by the HR Manager.

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2 ASSESSMENT OF RISKS The production conditions in Pakistani fish processing market are really unhygienic which, was a major reason for ban of Pakistani fish products in 2007 by the European Union as the quality of processed fish did not match their standards. Since then Pakistan has been facing problems in increasing its seafood exports. Pakistani authorities requested the European Union officials to visit the harbor in August last year. The EU officials promised to visit the country by the end of the year, but then changed their plans without giving Pakistan any reason. However we are planning to change this risk into an opportunity by investing into an already existing plant and to upgrade it to the level matched with the European Union and international standards. This would help us to be among the processing units that are exporting to the Japan, USA and European Countries. Another problem that can be faced would we be the dumping of solid waste and toxic materials by chemical factories etc into the sea which, in return affect the quality of fish cached. According to a Pakistan Council of Scientific and industrial Research (1999) study, huge amounts of toxic metals have been found in marine life such as fish, lobsters, crabs and shrimps. The metals include mercury, cium, chromium, lead, arsenic and zinc. Many of these metals are carcinogens and can cause genetic deformities and other fatal diseases. Hence we have to take extra care in processing the fish to meet the International standards for quality of the fishery products. Furthermore the markets for export are continuously expanded and diversified with increase in demand for variety of fishery products. The diversification in demand has provided us with an opportunity to cater to the expanded markets with competitive costs. Additionally fish stocks in Pakistan are declining by15 percent every year because of the widespread use of fishing nets and because of this the plants are only operating at 20 percent of their total capacity which in turn is increasing their costs of maintaining the plants. According to Faisal Iftikhar Chairman of Pakistan Fisheries Exporters Association the fish industry would come to end within next five years if this continued. This will create a problem for capacity utilization as currently. To avoid any such problems in the coming years of our business we are planning to start a fish farm as well. 30 | P a g e

Fisheries Processing and Export Business Plan However that could only be possible if we are able to recover our costs of starting the business within appropriate time. Moreover the exchange rates and regulatory environment of the importing countries will also have an impact on our exports. Currently US dollar has depreciated because of which the exports to USA would be expensive. However euro and Japanese yen have appreciated and if this trend continues then our exports would be cheap to these countries consequently making it difficult for us to achieve the breakeven point on time.

2.1 Competitors European Union, Japan and USA have developed markets for fish imports with Vietnam, China, Indonesia and Canada as major fish exporters to these countries. Companies like Cafatex Corp which is a Vietnam based seafood exporter and Dalian Fulejia Foodstuffs Co, Ltd, a Chinese fish exporting in these markets. Hence for a newly developed fish exporting business, like ours, it is difficult to penetrate into the market. Therefore we planned to keep our prices competitive with higher range of products available to the consumers in these markets according to their preferences. The preferences of the consumers were found out through a market survey conducted in the markets of these countries. Other competitors may also include the local fish exporting units which are already in the market. These include 11 processing units that are exporting to European Union currently. However these units are not listed with the European.

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3 FINANCIAL PLAN The financial plan has been devised with the aid of SMEDA and he figures provided by them and hence are as near to be realistic as possible.

3.1 Project Cost

3.2 Project Returns

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3.3 Project Financing

3.4 Pro Forma Income Statement

3.5 Pro Forma Cash Flow Statement

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34 | P a g e


3.6 Pro Forma Balance Sheet

3.7 Breakeven Analysis 90341 Fixed Cost= 150 S.P (PER 46000 35 | P a g e

Fisheries Processing and Export Business Plan TON)= V.C TON)=

(PER

BREAK UNITS=

Rupees thousands

9500 EVEN 90341150 46000 9500

= 2475.1

In

Units

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3.8 Sources for Procurement of Finance The sources for the procurement of finances will include: •

Angel investor or Venture Capitalist

An angel investor is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. Venture Capitalist funds money by owning equity in the companies it invests in. 50% of the investment required will be financed by such an investor in return for which this investor will have equal profit sharing in the business; however as a sleeping partner. •

Letter of Credit

A letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the credit. According to this, a bank/DFI makes a written undertaking to pay the supplier if the actual buyer fails to pay. This way, the business will not have to make advance or immediate payments. This can be availed from the NBP, for example. •

Term loan

This will be a long term loan of 50% of the total investment required. This loan can be availed from a bank/DFI. Repayment will be done in installments, with interest. •

Personal Guarantees

This basically entitles the owners of the business to personally repay the loans in the event of default by the business. Once the business has become a success and has good business rating, personal guarantees will no longer be required by the bank.

1.1 Summary of the Salient of Financing If the loan is obtained from a bank, the interest rate will be too high so getting a loan from an investor is a better option. For obtaining a bank loan, 37 | P a g e

Fisheries Processing and Export Business Plan we need to give something as a guarantee; it can also be obtained on personal guarantee. If we have an order, a Letter of Credit (LC) could've been our guarantee against which obtaining a loan will be very easy. However, when we first set up the business, we won’t have any order at the time, in which case a personal guarantee of the owners of the business will be required to get a loan. According to prudential regulations, the maximum exposure of a bank on a single SME should not exceed Rs. 75 million, and the bank should make sure that the loan has been properly utilized for the purpose for which is was taken. If loan is not an option then we can easily assume that the initial investment is being made by the partners.

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2 EXIT STRATEGY The owners of Alpha Fish Processing and Export will exit this endeavor after they have created a flourishing business that could be sold for a substantial profit. It is the owners' intention to run this business until they are ready to retire or have decided to sell the business and start another. In the event the proposed plan is not successful the owners will implement necessary measures to exit the business endeavor with minimal damage to the owners and investors. All equipment and merchandise will be sold to cover any outstanding debts. Any remaining debt will be paid by the owners in the form of monthly payments until all debts are paid in full. The owners will consider themselves successful when they have acquired a market share of 12-15% and the limits for achieving such a milestone is within 7-8 years after starting the business. The success of the business will be monitored monthly in the first year and quarterly in subsequent years. The owners are aware that it usually takes new businesses four years to start turning a profit and that the business could operate at a loss during that time. The owners will keep this in mind when evaluating the state of the business, and make adjustments when possible to keep the business running with a positive cash flow. Acceptable loss has been determined; if the business exceeds this amount and is unable to compensate the owners, we will begin the process of closing the business and paying back debt. Moreover, the owners believe that the most likely exit will come from the sale of the Company or licensing of its intellectual property to one of its strategic partners or to another enterprise. This will be the option in the event of one or more of the partners wanting to continue the business while the others not.

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3 APPENDIX 3.1 REGULATIONS Exporters should take note of the following regulations when exporting from Pakistan: •

For size and weight maximums, an exporter must check with the destination country's limits

•

Dimensional weight or actual weight, whichever is greater, determines the shipment tariff

•

Foreign exchange rules and procedures apply to exports as determined by the State Bank of Pakistan

EXPORT CONTROL REGULATIONS. Exchange policies regarding exports cover all goods exported from Pakistan irrespective of whether they are subject to license under the Export Trade Control Regulations or not. Similarly, nothing in the Exchange policies relieves the exporters from the necessity of complying with the Export Trade Control Regulations as laid down by the Government from time to time. The Government of Pakistan has under the Export Trade Control Regulations banned exports to Israel. SHIPMENT LOST OR DAMAGED IN TRANSIT. (i) If shipments from Pakistan are lost in transit for which payment has not already been received, the Authorised Dealers must see that an insurance claim is made immediately the loss is known. The triplicate copy of the relative export form should be endorsed with the narration "Shipment Lost" under the stamp and signature of the Authorised Dealer and sent to the State Bank under a separate covering letter giving the following particulars and bearing running serial number: (a) Name of the insurance company with which goods were insured. (b) Amount of insurance and its currency. (c) Place where claim is payable. (ii) The Authorised Dealer who had certified the export form should pursue the matter with the shipper and ensure that in each case the exporter has received the insurance claim and produces encashment certificate, in cases where claims are paid in foreign currencies and Rupee 40 | P a g e

Fisheries Processing and Export Business Plan payment certificate where settlements are made in Rupees. These certificates should be forwarded by the Authorised Dealer to the State Bank giving reference of relative export forms. SHIPMENTS SHUT-OUT ENTIRELY. (i) Where a shipment to be made by a particular vessel is entirely shutout and reshipped by another vessel, the exporter should apply on the prescribed form in duplicate to the Customs for permission to alter the name of the vessel on the relative export form and the shipping bill. (ii) Where a shipment is entirely shut-out and is not being reshipped immediately by another vessel, the exporter should give a notice to the Customs in the prescribed form in duplicate. It will be the responsibility of the exporter concerned to produce to the Authorised Dealer who had certified the export form, a copy of the shut-out notice duly certified by the Customs within 21 days from the date of certification of the export form. On receipt of the shut-out notice, the Authorised Dealer should treat the relative export forms as cancelled and forward the shut-out notice to the State Bank. Quantitative restrictions, exchange controls, and other direct state interventions into trade have been largely eliminated; ordinary customs duties are now the primary trade policy Instrument CUSTOM PROCEDURE FOR EXPORTS Exports play a vital role in the development of any economy. One of the initiatives taken by the Government of Pakistan to enhance & boost exports, is to provide various export incentives as well as streamlining export processes. Among other steps taken by Government, the simplification of the export clearance procedure is considered to be a vital step in the facilitation of the exporter. The following procedure has been explained in of various stages of inspection, clearance and documentation required: CLEARING PROCEDURE Once the consignment to be exported arrives at the port, usually a clearing agent’s services are sought so as to facilitate the procedure of clearing the consignments. The documents to be provided by an exporter to the clearing agent are as follows: a) Packing list 41 | P a g e

Fisheries Processing and Export Business Plan b) Invoice c) State Bank form d) Letter of Credit or Contract e) Certificate of Origin However if the exporter is exporting for the first time, then the following documents have to be provided in addition to those mentioned above: a) Sales Tax Registration Certificate (copy) b) NTN Number (certificate) c) Export Registration Certificate (No longer required according to SRO 490(I)/2002 dated 5th August, 2002) Provided the above mentioned documents are complete, the clearing agent prepares the shipping bill and files the documents with Custom department. A “machine number” is allotted to the Shipping Bill, and the case is forwarded to the Port Gate. The consignment is allowed to enter the port vicinity, and is ed at the gate according to the allotted number. The Deputy Superintendent (D.S.) marks the consignment for examination to the inspector of the examination hall. Once the inspector has examined the consignment, the case is marked to the D.S. for approval. 2% Export Development Surcharge (EDS) of the invoice value shall be deducted through receiving banks upon remittance of export proceeds against the Export Development Fund (EDF). However, EDS has been waived off for small exporters and those who exceeded their exports more than 10%. Provided the D.S. approves the case, it is forwarded to the Superintendent with the examination report for final approval. The case if approved by the Superintendent is marked to the D.S. for “Out of Charge”. The container is given a final physical check and is sealed by the bonded carriers or the port customs authority.

1.1 Network for Dealing with Regulations •

P.F.E.A (Pakistan Fisheries Exporters Association) As mentioned earlier, the association that Alpha Fish Proessing and Export has become member of is Pakistan Fisheries Exporters Association (P.F.E.A) as not only does it help in processing of fishery products; but also, the in the enhancement of export of them.

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Fisheries Processing and Export Business Plan Therefore, for any regulation that has to do with the fisheries industry or is related to the firms in the fishery sector Alpha Fish Processing and Export can deal with it with the help of P.F.E.A which can help influence the regulation if it is working against the majority or force the implementation of a regulation which is in the benefit of the majority. •

SMEDA (Small and Medium Enterprises Development Authority) Regarding any regulations small and medium enterprises, Alpha Fish Processing and Export will use the network created by its hip in SMEDA. For instance, for facilitation of securing finance and any regulations in that regard, SMEDA would be approached to deal with them.

•

FPCCI (Federal Pakistan Chamber of Commerce and Industries) The FPCCI has advocated and voiced the collective opinion, concern and aspiration of the private sector and offered helpful advice and solid assistance to the Government in its efforts to promote exports, encourage foreign investment and stimulate economic activity in the country. The FPCCI has its fingers on the pulse of the economy and serves as a bridge between the private sector and the Government. The FPCCI is playing an active role in presenting problems of trade, industry and environment and safeguarding the interests of the private sector through constant dialogue with the Government. Moreover, among the many activities of FPCCI it also facilitates in the exchange of information relating to trade, industry and economy with foreign Chambers and Institutions. Hence for any sort of regulations that the government imposes on the private sector, specifically relating to export sector, the FPCCI and the network built with it can be approached to deal with such regulations.

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1.1 Our Products

White Pomfret

Squid

Soul Fish

Rohu

Eel

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Deep Sea Shrimps

Black Tiger Prawn 1.2 Miscellaneous

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510,000 Exports of Fish and Fish Preparations (Million rupees) 14000

490,000

12000 10000

Exports of Fish and Fish Preparations

8000 6000 4000 2000 0

470,000

Tonnes

2003- 2004- 2005- 2006- 200704 05 06 07 08

450,000

Fish Production

Year

Inland

1990

113.2

1991

115.9

1992

(Thousand Tonnes)

430,000 Marine

Total

369.8

483

402.8

518.7

121.6

431.5

553.1

1993

122.5

499.2

621.7

1994

139.5

410,000 390,000 418.6

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370,000

558.1

Fisheries Processing and Export Business Plan 1995

136.4

405.5

541.9

1996

160.2

395.3

555.5

1997

167.5

422.1

589.6

1998

163.5

433.5

597

1999

179.9

474.6

654.5

2000

176.4

438.4

614.8

2001

178.6

451

629.6

2002

183.3

454.5

637.8

2003

165.7

400.5

566.2

2004

170.5

403

573.5

2005

174.6

406

580.6

2006

179.9

425

604.9

2007

250

390

640

Source: Marine Fisheries Department, Karachi

Fish Production

Thousand Tonnes

600 500 400 300 200 100

19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07

0

Inland Fish Catch Year Marine Fish Catch

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Year

Exports of Fish and Fish Preparations

2003-04

8805.6

2004-05

8259.1

2005-06

11624.5

2006-07

11419.1

2007-08

13327.5

Source: Marine Fisheries Department, Karachi

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1.3 Process Flow Chart of a Sea Food Processing

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1.4 Questionnaire for Customers 1. Age

_______________ 2. Occupation _______________ 3. Country,City _______________ 4. Do you consume seafood in your diet? Yes ○ No ○

Proceed further if your answer to question 4 is Yes. 1. How frequently do you buy seafood? ○ Once a fortnight ○ Once a week ○ Twice a week

○ More than twice a week

1. What quantity of seafood do you buy in a month? ○ Less than 1 kg ○ 1-3 kg ○ 3-6 kg

○ More than 6 kg

1. Where do you prefer to buy seafood from? ○ Supermarkets

○ Open fish markets

1. Will you prefer to buy hygienically processed and packed seafood over loose seafood? ○ Yes

○ No

1. If your answer to question 8 is Yes, which type of packing would you prefer? ○ Cans 51 | P a g e

Fisheries Processing and Export Business Plan ○ Reusable plastic jars ○ Other __________ 1. Which variety of seafood do you purchase?* 2. What types of seafood are you familiar with?*

*We intend to preserve and export many types of seafood to different consumer markets e.g. EU, Japan, USA and Russia. We have found through secondary research that different markets demand different varieties; hence the options for this question would probably vary.

1.1 Questionnaire for Entrepreneur Q 1 Do you have a Research and Development Department? ○ ○

Yes No

Q 2 Over the last five years how many times have you updated the technology? ○ ○ ○

1-2 times 2-3 times No (Since_________)

Q 3 in of weakness or problems rate the following from 1-5 with 5 being the worst. ○ ○ ○ ○ ○ ○ ○

Transport Government Trawlers Hygiene Storage Technology Overfishing

____ ____ ____ ____ ____ ____ ____

Q 4 What is your production? _________________ Q 5 What is the capacity of your plant? _________________ 52 | P a g e

Fisheries Processing and Export Business Plan Q 6 What is the present labor force? _________________ Q 7 How much money have you spent to rectify the hygiene problem? _________________

Q 8 What is your major export? ○ ○ ○ ○

Live Frozen Salted Canned

Q 9 What is the most demanded product? ○ ○ ○ ○

Live Frozen Salted Canned

Q 10 Apart from fish which other sea food is most demanded? ○ ○ ○ ○

Lobster Crab Squid Shrimp

Q 11 What is the international demand for seafood? _______________ Q 12 Do the trawlers fish all year? ○ ○

Yes No

Q 13 How many workshops have you attended in the last five years? ○ ○ ○

1-2 3-5 More than 5

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Fisheries Processing and Export Business Plan Q 14 Who trains your employees? ________________________________________________________________________ Q 15 What is the important reasons for the low demand in Pakistan for fish? ○ ○ ○ ○ ○ ○

Price Taste Difficulty in access Storage Cultural taste for meat Religious sect

Q 16 What is your procedure for processing of fish? ________________________________________________________________________________

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1.1 Analysis of Questionnaire There was a consensus on the Research and Development department in the industry as none of the companies had one. The entire industry doesn’t have a privately owned R & D department that could work in collaboration with the companies. The next question was related to technology. Of all the five people questioned only one said that they have improved their technology in the last five years but that too has been to improve the hygiene condition of the plant. Otherwise there has absolutely been no technological improvement in the industry in the last five years.

In of problems facing the industry, the Transport industry showed no problem to the industry. Firms have their own transporters so they do not face issues incase of fuel price hikes or strikes. Government, however, received a rating of five and was marked as the chief problem facing the industry. Every person interviewed gave the highest (very unsatisfactory) rating of five to the government. The reason behind this was said to the incompetency of the government officials to implement any kind of laws and regulations. Widespread corruption in the ranks of the government officials and the subsequent governing bodies were also said to the cause of the rating. The factory owners were so disgruntled by the attitude of the government that most of them wanted to submit their own ratings beyond five when asked to rate the government. Trawlers received an average rating of 3.6 from the interviewees. This showed that the trawlers were only moderately responsible when it came to the problems facing the industry because the nature of the problems facing the trawlers can be easily overcome through some governmental intervention. However one factory owner gave the trawlers a rating of five and said that the trawlers were very much responsible for the present condition of the industry since the deterioration of the hygienic condition starts from the trawlers. Hygiene received a very high rating from the people interviewed. The average rating of hygiene was 4.6. The official of KFHA and two factory owners gave a rating of five to the hygienic condition. The rest gave a rating of four. The factory owners have their own Storage facilities, hence there is no problem regarding the storage of the fish in the units. There is also a temporary storage facility in the harbor for fishes which have not been auctioned. One factory owner 55 | P a g e

Fisheries Processing and Export Business Plan gave a rating of three saying that in peak seasons the storage facility is not enough to cater to the supply of fish hence more storage facility units should be built. However, this is not feasible since most of the year there is under utilization of the storage facilities due to significant decrease in landing. Technology received a rating of 3.6 by three of the factory owners. One responded with four and the KFHA official said five. The official however was referring to the condition of the trawlers. The technological condition of the units is satisfactory. Overfishing also received the highest rating of five. This was due to the fact that this was leading to depletion of resources in Pakistani waters and can be disastrous for the fishing industry. The use of banned net leads to the capture of very small fishes which can only be utilized for the poultry feed. This combined with the fact that fishing takes place all year has exhausted the country’s fish resource.

The next two questions were related to the capacity utilization of the industry. Every single unit is under- utilized at the moment. Most of them are working are working at around 30 % of their capacity. One unit has a capacity of 60 tons and is storing only around 17 tons per day. The question related to the rectifying the hygiene problem in the industry yielded a curious result. Most of the owners said that the hygiene condition needed to be improved but when asked have they done anything on their own, all of them said it is not their responsibility. This is the responsibility of KFHA or the MFD. We asked that what if they worked with the fishermen to improve the condition as that would lead to the lifting of European Union ban, they said that the government will not allow since it would undermine their power All the factories major output is frozen product. There are three levels of quality of fish final product. The best quality fish is Live fish, next is fresh chilled. Both are transported by air. The next quality is frozen product. This is the major product of all the units. The most demanded international product is Live Fish because of its highest quality. One industry owner said that it is not difficult to transport it but the fish taken off from the trawlers can only be used for freezing purposes. The transportation cost is also paid by the client. Every fisheries product is in demand. However they said that the most demanded fishery product after fishes are the shrimps. The international demand was said to be unlimited. Every kg of fish produced by the units is exported. This was the reason why there is no competition in the industry.

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Fisheries Processing and Export Business Plan All, except one said that fishing takes place all year long. This leads to overfishing of the fish. They also said that the government has failed to stop the implementation of the regulation regarding overfishing. All of the employees are trained by the company themselves. Workshops are also held by different NGO’s and societies and attended by the owners and workers. But most of them said that this is useless because the employees lack basic knowledge and imparting them with advanced methods acts as counterproductive. The reasons given for the low local demand were price, religion and staple diet. The price factor was stated by two factory owners and the KFHA official. One stated the religious reasons because most people treat seafood as not preferable for eating. Another Muslim sect considers fish without skin as forbidden. Another reason given was that seafood is not our staple diet.

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1.2 Supplier Evaluation Questionnaire

COMPANY NAME:

DATE:

ADDRESS

CITY

STATE

PHONE:

FAX EMAIL

Completed questionnaires are to be signed below by an Authorized Official of your organization. The information contained in this questionnaire is certified to be complete and accurate. Supplier’s Signature and Printed Name Date

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