Majority of areas of Pakistan have long duration of summer due to which demand for ice is high for up to eight months of the year. This project is related to setting up an ice plant of producing 30-ton weight ice blocks to cater to the needs of domestic consumers and institutional buyers such as hotels, restaurants, schools, bakeries, dairy, fish seller’s and etc.
The consumption of ice varies according to the weather, as its demand is on peak from mid April to mid September and then remains moderate for further two months before and after the winter seasons. However, in major cities its demand does not completely ended because of its major consumption by institutional buyers (dairy, bakery, hotel, etc.), who buy in bulk.
An ice plant production facility mainly comprised of compressors, condenser, water tanks, brine agitator, accumulator for parallel supply of ammonia, crane, trolley, oil separators and electric motors. All the required machinery is manufactured local and easily acquired from local machinery suppliers. The local machinery is readily available in the market at a very reasonable price. One of the benefits of using locally manufactured machinery is availability of spare parts and it’s easier to find operators to operate these machines.
The proposed plant has an installed capacity of producing 200 ice blocks of 30-ton per block weight per day. The plant is proposed to operate 12 hours per day during peak summer season. Project will generate direct employment opportunity for 07 persons including owner manager. In order to sell the ice blocks, it is recommended to develop a chain of dealers who buy the ice blocks on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in view the number of blocks to be purchased on daily basis. In case the dealer is unable to pick the agreed number of blocks on a particular day, the amount is deducted from his security.
The estimated cost for setting up an ice factory plant is Rs. 18.43 million out of which Rs. 17.88 million is the capital cost and Rs. 0.55 million is for working capital. The project is to be financed through 50% debt and 50% equity. The project NPV is around Rs. 12.28 million, with an IRR of 31% and Payback Period of 4.08 years. The project will provide employment opportunities to 7 people including owner manager. The legal business status of this project is proposed as ‘Sole Proprietorship’.
Ice Production Process in Pakistan
Metal cans filled with water are immersed in a tank. The dimensions of the can and the temperature are usually selected to give a 12-hour production time, and batches of cans are emptied and refilled in sequence during that period. Ice block weight can range from 12 to 150 kg depending on requirements; 150 kg is regarded as the largest size of block one man can conveniently handle. An ice block plant requires continuous attention and is labor intensive.
Operational Capacity of Ice Factory
The installed and operational capacities of an Ice Plant business venture mainly depend on the installed machinery. This pre-feasibility study is based on machinery related to 30 tons capacity Ice Plant. The proposed unit will operate on 345 operational days. Total capacity of the unit will be to manufacture 200 ice blocks (having weight 150 Kgs / 30 ton) per day on 12 hours single shift basis. During first year the proposed plant will operate at 75% capacity and will produce 51,750 ice blocks. Capacity utilization growth rate of 5% is considered for subsequently years, while maximum capacity utilization (i.e. 90%) will be achieved during the 4th year of operation.
Factors of Success of Ice Factory in Pakistan
Following are the factors critical for the success of ice factory business in Pakistan:
- It is important that solid ice blocks are produced through proper freezing time utilization, as solid ice blocks are much heavier, more transparent and provides higher price in the market.
- One of the most important aspects for success of any business is minimizing the cost of production; in case of ice plant this can be achieved by proper training of workers, which would ensure reduction in raw material wastage and better maintenance of machinery etc.
- Weather plays an important role; due to seasonal nature of the business i.e. in summers the demand for ice blocks increases, while after mid September the temperature starts changing & demand starts to fall, which means the entrepreneur should reduce the production according to the demand of ice.
- Strong linkages with wholesalers / retailers for selling of Ice Blocks
- Induction of skilled labor for getting quality production.
The seasonal cycle of ice consumption and level of demand also varies significantly on the basis of geographical locations. In Pakistan, summer season is much longer in South, interior Sindh and some parts of upper Punjab; whereas, it remains moderate around the coastal belt. Accordingly, the ideal location for the proposed ice plant is the out skirts of major cities located in hot weather geographical regions.
It is proposed that plant should be established in close proximity of cities, so that the ice blocks are accessible to the dealer and institutional buyers. Raw material and labor is also easily accessible in these cities.
Overall local production of ice blocks is currently in good demand. The target market / customers for ice blocks can be divided into two categories. Firstly, domestic users, such as people living in rural areas and suburbs of cities, where access to refrigerators is difficult due to lower purchasing power. Second category is institutional buyers, who buy in bulk, such as government organizations, factories, hotels, restaurants, bakeries, fish sellers, dairy plants, etc.
Space Requirement for Ice Factory Business
The land requirement for the proposed ice plant for producing 30-ton ice blocks is around 4,500 sq. ft (1 Kanal). Land requirement is estimated while considering various infrastructure facilities including management office, production hall, opens space and etc. It is recommended that land should be acquired for the project, as it would be difficult to setup such a project at a rented place due to high machinery and installation cost. The estimated cost of acquiring 1 Kanal of land in close proximity of a major city is assumed as Rs. 2 million.
Machinery & Equipment Requirement for Ice Factory
Plant, machinery and equipment for the proposed project are stated below:
- Ammonia Compressor (7×7) Driven wheel
- Ammonia Condenser Atmosphere with 2″ Pipe 1200 ft
- Electric Motor 1450 RFM China
- Brine Tank for 480 Ice Cans, 4mm
- Brine Agitator 18″ Fan Metal
- Accumulator for regular supply of Ammonia
- Crane & Trolley with railing channel & Girder
- Cooling Coil V-Type 4″pipe & 3000 ft pipe 4″(Toyota Patta)
- Oil Separator Buffer type
- Wood work for ice cans, tank cover
- Ice Cans of 1.5 mm British Gauge
- Receiver fittings with all Safety measure Ammonia Inspection
- Blower no. 59 complete with fitting
- Electric Motor 7.5″
- Switch Gins starters and Switch Board with local cable
- Centrifugal Pump 2.5″x3″
- Erection Charges of Plant
- General Fittings for complete plant
- Generator 50 KVA