Chapter 1

INTRODUCTION

Background of the Study

Cashew (Anacardium occidentale), a native of Brazil, was introduced in Nigeria

during the latter half of the Sixteenth Century for the purpose of afforestation and soil

conservation. From its humble beginning as a crop intended to check soil erosion,

cashew has emerged as a major foreign exchange earner next only to tea and coffee.

Cashew nut is one of the important nuts grown in the world and ranked first. Among

various nuts such as hazelnuts, almonds, etc., cashew nut enjoys an unenviable position

and it is an unavoidable snack in all important social functions especially in the western

countries.

In the Philippines, Cashew (Anacardium occidentale L.), locally known as ‘kasoy’,

is one of the most important nut crops in the Philippines. It is a versatile crop with many

economic uses in the food industry as food and feed. Presently, only the nut is given

attention by cashew growers as it commands a good demand in the market among

domestic consumers. In addition, cashew nut is exported to Europe and other Asian

countries. In 1995, the Philippines exported 1,124 tons of raw and processed nuts valued

at US $ 879,573; India was the major buyer (64 %) of raw nuts, and France in the form of

processed and preserved nuts (Table 1).

During the same year, the country imported 48.92 tons of cashew nuts amounting

to an FOB value of US$ 199,345 (Table 2). The raw nut requirement was mainly supplied

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by Singapore; the processed kernels and preserved products came from Singapore (47

%), USA (27 %), and Taiwan (17 %). Cashew has a high potential for commercial

cultivation as there is a steady demand for nutritious food items and an expanding market

for processed and other value added cashew-based products.

Cashew is grown in most regions of the country mainly as a backyard crop or as a

component of many small-scale diversified orchards. Palawan is the leading production

center where more than 90 percent of the 2.6 million bearing trees are found. Other

important areas are Llocos Region, Central Luzon, Northern Mindanao and Western

Visayas

Objectives of the Study

This business feasibility studies try to show the likelihood of your proposed action

succeeding or failing, through a careful look at the costs and opportunities involved. This

study helps to determine if a proposed strategic action makes sense operationally and

will produce the desired results.

It also aimed to evaluate the current position of the business and recommend

strategies for the improvement of Rusty Cashew Nuts Inc. at Brgy. Zone 3, Koronadal,

South Cotabato. Specifically, it aims to:

1. Describe the profile of Rusty Cashew Nuts Inc.

2. Present the internal Analysis of Rusty Cashew Nuts Inc. in terms of:

a. Organizational;

b. Operational;

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 c. Marketing, and

d. Financial.

3. Develop and recommend strategies in the following aspects:

a. organizational

b. Operational;

c. Marketing, and

d. Financial

Scope and Limitations

This study was conducted only in Koronadal City, South Cotabato. It focuses on

the INTEGRATED PRODUCTION AND SELLING RACTICES OF CASHEW NUTS in

Koronadal City. Some of the data collected were made available to the researcher for the

purpose of this study.

Locale of the study

The study covers the area of City of Koronadal, Province of South Cotabato.

Koronadal City is the Capital City of South Cotabato, which is also the center of trade and

industry, with a population of 195, 398 (2021).

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Benefits of the Study

Cashew nut is now treated as a health friendly nut. This is primarily due to high fat

(47 percent) content, out of which 82 percent are in unsaturated form and the proportion

of the monosaturated fatty acid and polysaturated fatty acid in 4:1 ratio, thereby reduce

the cholesterol (Rao and Venkataraman ,1995). The high dietary fiber & high

monosaturated fatty acid lower the blood glucose and improve insulin resistance.

Cashew nuts are also very good for cold & flue due to presence of Vitamin E and protein.

Selenium rich cashew kernels can help to protect against lungs, liver, skin, brain and

gastrointestinal cancer (Sacks, 1999). As a whole, cashew nuts are becoming

established as a food item that can protect human beings against major diseases

including heart diseases, diabetics, cancer etc., with its rare combination carbohydrates

and protein.

Cashew kernel is a rich source of energy and a snack of great taste. Cashews are

especially rich in unsaturated fats- a category of fats linked to a lower risk of premature

death and heart disease. They’re also low in sugar, a source of fiber, and contain almost

the same amount of protein as an equivalent quantity of cooked meat. In addition,

cashews having good amount of copper, a mineral which is essential for energy

production, a strong immune system and for healthy brain development. They’re also a

rich source of magnesium, manganese and nutrients which are important for bone health.

Cashews are rich in carotenoids and polyphenols, and of antioxidants which may help to

reduce inflammation and offer protection from different diseases.

Cashews are low in sugar and rich in fibre, and plant protein. Cashews appear to

provide fewer calories than once thought. Their rich fibre and protein content can help

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reduce hunger and increase feeling full. Put together, all of these factors may help you

lose excess weight. Cashews are low in sugar and rich in fibre- two factors which, when

combined, may help reduce blood sugar levels and protect against the development of

type 2 diabetes.

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 Chapter 2

INDUSTRY ANALYSIS

The Global cashew market is projected to register a CAGR of 4.6% during the

forecast period (2022- 2027). COVID- 19 had a direct and unfavorable impact on the

cashew market, globally. Global lockdown to curb and contain the pandemic adversely

affected the distribution channels.

SWOT Analysis
This is a tool to analyse the viability, feasibility of the business venture. This is to

determine the strengths and weaknesses of the enterprise. This is an internal

examination of the business venture. While the threats and opportunities of the

enterprise can be determine through the analysis of the external environment of the

enterprise. Below is the matrix of the SWOT or TWOS analysis:

Internal Factors External Environment

Strengths: Opportunities:

- Resources – adequate - Market Shares – gain a

financial capital, competent larger market share in the

personnel, availability of farm area of quality food products,

inputs both domestic and national

- Management – experienced markets.

and successful businessman, - Profits – ensure profitability

educator and humane. and fair return of investments

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 for the owners and

stakeholders.

Weaknesses : Threats:

- Resources- the dearth of - Competition – as the saying

committed personnel, volatile goes, Filipino are fond of

market situation in this time this: gaya-gaya”. Similar

of global pandemic. enterprise may sprout like

- Management – mushrooms.

misunderstanding among the - Peace and Order – the threat

management team and the of insurgency, like the NPA,

board of trustees of the and the armed groups

organization. around the area.

- Health and Safety Issues –

the surge of the covid 19 that

cause the world wide

pandemic.

The SWOT/TWOS analysis of the firm

Current Status of Cashew Production

Cashew is grown in most regions of the country mainly as a backyard crop or as a

component of many small-scale diversified orchards. Palawan is the leading production

center where more than 90 percent of the 2.6 million bearing trees are found. Other

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important areas are Llocos Region, Central Luzon, Northern Mindanao and Western

Visayas.

In these areas, most of the bearing trees are of local origin. However, for new

plantings, predominantly in Palawan, the recommended superior varieties such as Mitra,

Recto and Fernandez have been used (Table 3).

Table 1. Philippines Exports of Cashew, 1995

Country Volume (kg) FOB Value (US$)

1. Cashew nuts (fresh/dried) - shelled/peeled 1,122,428 865,627

China 262,000 231,750

Hongkong 100,000 69,720

India 760,428 564,197

2. Cashew nuts - processed/preserved 1,946 13,846

Canada 180 782

Taiwan 147 2,063

France 787 6,037

TTP 767 4,470

Others 65 494

Source: Foreign Trade Statistics, 1995

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Table 2. Philippines Cashew Imports, 1995

Country Volume (kg) FOB Value (US$)

1. Cashew nuts (fresh/dried - shelled/peeled 3,088 23,262

Republic of China 1,145 1,071

Singapore 1,943 22,191

2. Cashew nuts - processed/preserved 45,841 176,083

Republic of China 26,886 34,621

Hongkong 1,140 4,685

Singapore 9,916 83,161

USA 7,899 53,616

Source: Foreign Trade Statistics, 1995

Table 3. Recommended/Promising Cashew Varieties in the Philippines

Variety Apple Nut Kernel Kernel Total Average Apple

Weight Weight Weight Recovery Soluble Prod. Per Colour

(g) (g) (g) (%) Solids (%) Tree (kg)*

Mitra 146.39 13.43 3.74 27.84 13.08 9.67 orange

Fernandez 117.48 11.93 2.94 24.64 13.28 6.90 orange

CIG 129.00 12.78 3.55 27.77 15.84 7.38 orange

Callwag 79.48 11.71 3.10 26.47 13.88 7.02 yellow/

orange

Recto 70.22 10.13 2.96 29.22 12.36 7.93 red/

orange

Source: Cashew Varieties, STARRDEC Leaflet, 1996

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* Seven-year-old trees

3. PROPAGATION AND PRODUCTION OF PLANTING MATERIAL

Propagation of cashew in the Philippines is either from seed or through cleft

grafting. Most of the existing cashew orchards were established using seed from selected

mother trees of superior performance. With the initiation of a government program for

establishment of scion groves using recommended varieties, the importance of planting

grafted plants has been emphasized to cashew farmers.

At present, the recommended varieties are being propagated in government

nurseries in Palawan, Rizal and Romblon, DA - Region VI, the Western Luzon Agriculture

College (WLAC) and the University of the Philippines - Los Banos (UPLB). Most of the

plants are grafted using the stocks of any variety with scions from the recommended

varieties.

Key Strengths and Constraints in the Cashew Sub-Sector Strengths

1. Cashew has significant production potential in semi-arid areas.

2. Pro-poor crop - the current value chain, especially at the local level, allows vulnerable

people to quickly and easily sell cashew and receive immediate payment.

3. Pro-poor crop - timing of production provides a cash income (and food) during the

hunger gap period of December to February.

4. Pro-poor crop – easy home based processing option

5. Low transaction costs (search, monitoring and enforcement) in current value chain –

buyers and sellers know quality.

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6. Women are significantly involved in collection, processing and sales of processed

(roasted) nuts to local markets.

7. Strong local market driven by growing middle class, tourism and travel

9. The Cashew sector has potential for higher value, high quality niche market products

such as organic, Fair trade and branded goods.

Constraints

1. Disorganized / random planting with the mixing of old and new trees that increases

costs of tree maintenance and harvest collection.

2. Low productivity per tree due to old trees, minimal pruning and ineffective spraying.

3. Insufficient volumes to attract large scale traders

4. Long distances to markets and poor road conditions leading to high transport costs.

5. Declining international prices for cashew due to the global economic slowdown.

6. Relatively fixed exchange rate reducing the competitiveness of exports.

7. 18% tax on exports.

8. Many farmers are subsistence orientated and either not commercially oriented or

skeptical about commercialization due to previous disappointments. Farmers have

reduced bargaining power at the factory gate as processor knows they will not take RCN

back home.

10. Climate change – seen as negatively affecting crop through heavy rains.

11. Presentation of product - challenges for local processors in packaging and presenting

cashew to the middle income domestic and tourist / traveller market segments.

12. Low price information at the farm level and weak association development

Bargaining power of suppliers

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 The Firm is equipped with farm machineries in the production of inputs, such as

cashew nuts. The firm has the ability to produce high quality of cashew nuts production.

The firm would only buy other ingredients from suppliers but not relying solely from the

suppliers for the firm inputs, such as wrapping materials and other related materials. The

firm is practicing a sustainable organic production of cashew.

Bargaining Power of buyers

The firm products have diverse customers to be catered, such as restaurants,

groceries, and supermarkets for their firm outputs: rusty cashew nuts.

Government Policies

In a democracy, the fundamental function of the government is to serve the best

interest of the people. The government provided assistance program for the small and

medium size enterprises. These are in the maintenance of peace and order, political

stability, price stability, taxes, infrastructures, education and training, public

administration, production technology, marketing assistance and financial assistance.

(Fajardo, 1999)

Republic Act (R.A.) 6977, otherwise known as the Magna Carta for Small

Enterprise was signed on 24 January 1991. This is an act to promote, develop and

assist small and medium scale enterprise (SMEs). This was done through the creation of

Small and Medium Enterprise Development (SMED) Council, the establishment of a

Small Business Guarantee and Finance Corporation (SBGFC), the mandatory allocation

of credit resources to small enterprises and the rationalization of government assistance

programs and agencies concerned with the development of SMEs.

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 In Section 13 of R.A. 6977 provides that all lending institutions whether, public or

private, shall set aside a portion of their total loan portfolio based on their Consolidated

Statement of Condition/ Balance Sheet as of the end of the previous quarter, and make it

available for small enterprise credit.( Entrepreneurship, pp.36)

List of Requirements

- Barangay clearance
- Latest Community Tax Certificate (Cedula)Contract of Lease or Land Title Tax

Declaration (whichever is applicable)

- Picture or Sketch of the Site

- Building Permit (if needed)

- Fire Safety or Inspection Permit (if needed)

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 Chapter 3

MANAGEMENT FEASIBILITY

Organizational Aspect

The organizational set up of the Firm for INTEGRATED PRODUCTION AND

SELLING RACTICES OF CASHEW NUTS:

1. FIRM MANAGER (1)

Job Duties and Tasks for: "Agricultural Crop Farm Manager"

Qualification: HND/BSC (AGRICULTURAL SCIENCE)

2. CASHIER/ACCOUNT (1)

Qualification: HND/BSC (ACCOUNTING)

3. STORE KEEPER/WAREHOUSE OFFICER

Qualification: ND (INVENTORY MANAGEMENT)

4. FARM ATTENDANT (6)

Qualification: ND (ANY SCIENCE RELATED COURSE)

5. FACTORY WORKERS (4)

Qualification: SSCE/ND (ANY RELATED SCIENCE)

6. CLEANER (2) QUALIFICATION: SSCE SECURITY OFFICER (4)

Qualification: SSCE

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  Chief Executive Officer

 Human resources and Admin Manager

 Purchasing Officer

 Food Technologist

 Marketing and Sales Team

 Accountant/cashier

 Customer Service Executives

 Delivery Drivers

 Store Manager

 Cleaner

Compensation structure

To meet the organisation objective of attracting, rewarding and retaining talent,

compensation is delivered through a holistic composition of instruments as given below:

1. Annual Guaranteed Pay (AGP)

2. Variable Pay 3. Long-term Pay

4. Non-cash Benefits

5. Post-retirement Benefits, and

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6. Guaranteed bonus

The compensation structure shall be reviewed by the BNRC based on market

trends and the Company strategy from time to time. The compensation budget shall be

based on projected business targets and staffing requirements and desired profitability

ratios. The compensation structure shall be a prudent mix of AGP and variable pay and

the proportion of variable pay with respect to total compensation (AGP plus variable pay)

shall be higher at senior levels.

Company Policy

1. Routine work policy

a. The employee’s working time starts from 8:00 am to 5: pm

2. Termination policy

a. It is beneficial for all parties that the employment separations process is as

clear as possible so understanding and distrust between the employees the

organization can be avoided

b. The termination of employment policy applies to all prospective or current

employees of the organization in regards to possible separation

employment.

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3. Salary Scale

Position No. of Rate of TOTAL

employees employee SALARY

monthly MONTHLY

FARM MANAGER 1 30,000 30,000

CASHIER/ACCOUNTANT 1 20,000 20,000

STORE 1 18,000 18,000

KEEPER/WAREHOUSE

OFFICER

FIRM ATTENDANT 6 10,000 60,000

FACTORY WORKERS 4 9,000 36,000

CLEANER 2 7,500 15,000

SECURITY OFFICER 4 10,000 40,000

TOTAL PHP219,000.00

4. Resignation Policy

a. The employee would like to resign should write their line manager stating

clearly the date on which they wish their resignation will be effective.

b. It is also helpful if the employees are prepared to give their reasons for

resigning from the organization.

c. Periods of notice longer than those contractually required will be accepted.

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d. Upon receiving the resignation letter or details, human resources will issue a

letter to the individual confirming their resignation and the date on which

their employment will be organized

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 Chapter 4

MARKETING FEASIBILITY

1. Replanting and/or rejuvenation

Replanting is practiced by cashew farmers in Koronadal City. However, very few

farmers do rejuvenation of old orchards.

2. Harvesting of cashew

In the Philippines, cashew trees flower from November to March, while the harvest

season is from February to May and may extend up to early June. The quality of nuts and

yield is dependent on weather conditions during the fruiting stage. If it rains during the

reproductive phase, poor quality nuts are produced. Fruits are usually harvested

manually, although a number of farmers wait for the fruits to drop as the main concern of

farmers is the nut. Nuts are picked from the ground, separated from the cashew apple,

cleaned and dried.

In places where cashew apples are processed into juice, wine and other

delicacies, fruits are harvested using a pole with a wire hook attached to its end. The pole

is provided with a shallow net or cloth bag to catch the detached fruits.

3. Marketing

Cashew is mainly marketed as raw nut to local traders and processors. Some

growers process cashew nuts into roasted splits and whole kernels and sell them directly

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to consumers, wholesalers or retailers. Most of the raw nuts shipped to Metro Manila are

processed for use by food manufacturers.

Marketing Aspect

DIRECT BUYER (CONSUMER) or the

RUSTY NUTS INC.

WHOLESALER

RETAILER

CONSUMER

FIGURE 2: FLOW CHART:

The flow chart shows the distribution channel of the products RUSTY NUTS INC.

The local traders or wholesalers employ local agents to collect nuts from different

areas. Some traders go directly to farmers to buy cashew nuts and transport the produce

to processors. Some of the wholesalers also export raw nuts.

In most villages, farmers are not yet organized to market their raw produce or

processed products. With the introduction of a government program to provide

assistance, especially through farmer organizations, the trend now is for farmers to

formally organize themselves and affiliate the organization with the Cooperative

Development Authority. This supports also the marketing activities of farmers.

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Rusty cashew nuts, it is the products which is sell to the public through developing

supplying the industry.

Corporate Logo and Brand Name

Rusty
Nuts Inc.

Logo

Brand Name: RUSTY NUTS INC.

Organizational Aspect

The organizational set up of the RUSTY NUTS INC. is

FIRM MANAGER

CASHIER/ ACCOUNTANT

STORE KEEPER/OFFICER

FARM ATTENDANT FACTORY WORKERS

Table 1: The Organizational Structure of RUSTY NUTS INC.

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Roles and Responsibilities:

Chief Executive Officer

 Creates the vision and direction for the organization, communicates and ensures

that it is effectively implemented

 Drafts the overall budget and other important documents on behalf of the

organization

 Monitors and evaluates the direction of the business and removes policies that

are not regarded as effective

Human resources and Admin Manager

 Ensures that all the administrative functions of the organization flows smoothly

 Recruits and carries out orientation for new employees. Also trains and carries

out periodic assessment on the employees

 In charge of the overall welfare and incentive package of the employees

Purchasing Officer

 Responsible for procuring raw materials on behalf of the firm

 Sources for vendors and suppliers and ensures that they are reliable, and deals

with them on behalf of the organization

 Drafts and reviews the necessary purchasing contracts for the benefit of the

organization

Food Technologist

 Responsible for ensuring the right preservation of the processed cashew nuts

before being packaged and sold to customers

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  Ensures that due process is followed at all times during processing and

packaging of the cashew nuts

 Serves as the quality assurance officer on behalf of Tabgate Agro Allied Ltd

Marketing and Sales Team

 Conducts market research in order to discover new target markets on behalf of

the organization

 Responsible for drafting effective marketing strategies and also developing new

plans in order to expand and increase sales

 Helps increase sales or the organization by engaging in direct marketing and

sales

Accountant/cashier

 Prepares financial statements, accounts, reports and budgets on behalf of the

organization

 Manages cash inflow and outflow and also administers payrolls

 Ensures that the organization complies with tax by preparing accurate tax

information and submitting to the tax authorities

Customer Service Executives

 Works on behalf of the company by taking orders from clients, answers inquiries

by passing along accurate information

 Maintains an accurate and updated customer database on behalf of the

organization

 Stays abreast of industry trends and also organizational policies so as to pass

accurate information to customers

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Delivery Drivers

 Drives the company’s van to and from several sales location and ensures that all

orders are accurately delivered

 Supervises and assists the loading and offloading of products from the van

 Ensures that he obeys traffic regulations at all times and keeps a logbook of

distances travelled and routes taken

Store Manager

 Responsible for inventory and monitors to know when replenishment is needed

 Responsible for the security of the shop

 Carries out light repairs when necessary

Cleaner

 Responsible for cleaning the premises and convenience for employees and

customers

 Ensures that cleaning supplies don’t run out of stock

 Carries out any other duties as might be assigned by the human resources and

admin manage

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 Chapter 5

TECHNICAL/ OPERATIONAL FEASIBILITY

This study discusses about the processes of production and activities of the

company. It also states about the machineries and equipment used in the production and

other aspects regarding bringing the raw materials into a finished product ready to trade.

Product specifications, the product flow chart the list of machinery, tools and equipment

are enumerated with their corresponding costs, the raw materials and fund sources are

also cited.

Location

The proposed business and processing site will be operated at Brgy. Zone III,

Koronadal City, South Cotabto. We have seen that the place will be suitable for building a

warehouse and production units because it is at par from the trading centre of South

Cotabato. It is accessible since it is along the road

In the effort to make profits, Rusty Nuts Inc. formulated a strategy that is

necessary to achieve the corporate goal. To attain a certain level of sales, the farm

adoption of a marketing strategy is required.

After identifying the target market, the firm will have to gather answer to the four

questions on what the target market wants. Most often, the firm will decide on satisfying

only a portion of what the target market wants. A marketing strategy will be crafted to

achieve that goal.

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 Business at Glance

Raw materials Cashew Fruits

Major Product outputs Rusty cashew nuts

Total project costs 43.66

Land development, building and civil 5.18

construction

Machinery and equipment 7.75

Utilities (power and water facilities) 0.8

Miscellaneous fixed assets 0.9

Pre- operative assets 0.9

Contingencies 1.20

Working capital margin 26.98

Source of Raw Materials

The raw materials are mainly cashew fruit. It can be purchased to some other area

around Visayas region, specifically in Palawan

Waste Management Disposal

The waste from the processing place will be identified as biodegradable. these

wastes will be disposed in a landfill located at the plant side of the non- biodegradable

wastes and will be recycled or sold to junk shops.

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 Manufacturing Process of The Cashew Nuts

Flow chart for cashew nut:

Cleaning

Soaking in water

Roasting

Shelling

Expeller extraction

Pre grading

Drying

Peeling

Grading

Packaging

Storage

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MARKET DEMAND AND SUPPLY FOR CASHEW NUT

Cashew processing is a very competitive but also a potentially lucrative activity

that can and should be exploited by more small-scale processors. Other countries that

are in the process of re-building their local cashew processing industry would be well

advised to follow the example of small scale, mainly manual processing operations.

There are several good reasons why small-scale producers and processors should get

involved in cashew processing, including the following:

 Cashew kernels are a high value luxury commodity with sales growing steadily at

an annual rate of seven per cent, with every expectation that the market will remain

strong.

 There is substantial potential to exploit cashew by-products, such as cashew

butter, from broken nuts, CNSL for industrial and medicinal purposes and the juice of the

cashew apple that can be processed further.

 Cashew is a good crop for smallholder farmers. In Mozambique cashew is

considered by smallholder farmers to be one of their most lucrative crops. It requires few

inputs and harvesting does not coincide with peak labour demands for other food crop,

thus cashew has the potential to increase the incomes of poor producers, to create

employment opportunities during harvesting and processing and to increase exports.

However, as with all small-scale processing operations, cashew processing is not without

risk or problems. In order for the small-scale processor to succeed, there are certain

constraints, which also need to be considered:

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  Cashew production is very weather dependent so supply is variable. World

prices, although stable on average, are

 Highly volatile in the short term.

 Luxury goods must be of high quality. In order to compete directly in the world

market, a high level of standards,

 Branding and marketing are required.

 Exploitation of by-products requires new technology, which may be expensive or

difficult to obtain.

MARKETING STRATEGY FOR CASHEW NUT

The increasing urbanization and income offers huge scope for marketing of fruit

based products. Urban organized platforms such as departmental stores, malls, super

markets can be attractive platforms to sell well packaged and branded cashew products.

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 Chapter 6

FINANCIAL FEASIBILITY

Detailed Project Assumption

This model DPR for cashew nut is unit basically prepared as a template based on

a certain assumptions that may vary with capacity, location, raw materials availability etc.

an entrepreneur can use this model DPR format and modify as per requirement and

sustainability. The assumptions made in preparations of this particular DPR are given in

this DPR assumes expansion of existing fruit processing unit by adding new nut

processing line. Therefore, land and civil infrastructures are assumed as already

available with the entrepreneurs.

Here are the considered assumptions as listed below in the tables of different costs,

which may vary as per seasons, machinery designs and suppliers.

1. Cashew cost considered @rs. 160/ kg

2. 1kg Cashew will produce 60% recovery

3. 1 batch size is approximately 100 kg

4. No. of hours per day are approximately 8-10 hours

5. Batch yield is 95 %

Detailed Project Assumptions

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 Parameter Assumption

Capacity of the Cashew 150 MT/annum

nuts unit

Utilization of capacity 1st year Implementation, days

55%; in 2nd, 65% in third in

forth year. 90% in fifth year,

and 100% in sixth years

onwards

Working days per year 300 days

Working hours per day 10 hours

Interests on term and 12% `

working capital loan

Repayment period Seven year with one year

grace period is considered

Average prices of raw 160

materials

Average sale prices per kg 690 Rs/kg

Seed extraction 60

CASHEW NUT 1.7 kg Cashew Fruit 1 kg

Cashew nut

WORKING CAPITAL REQUIREMENTS

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Particulars Period Year 2(55%) Year 3(65%) Year 4 (75%)

Raw material 7 days 11.02 13.03 17.76

stock

Work in progress 15 days 22.05 26.05 35.53

Packing material 15 days 0.45 0.53 0.73

Finished goods’ 15 days 24.46 28.91 39.43

stocks

Receivables 30 days 48.93 57.83 78.85

Working 30 days 0.79 0.93 1.27

expenses

Total current 107.70 127.28 173.57

assets

Expenditure, Revenue, and Profitability Analysis

Particulars 1st year 2nd 3rd 4th 5th 6th year

year year year year

Total installed capacity 255 MT 82.5 97.5 112.5 135 150

Cashew

fruits/

annum

Capacity utilization Under 55% 65% 75% 90% 100%

const.

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Expenditures 0

Cashew (160kg) 0.00 198.0 234.00 270.00 324.00 360.00

Packaging materials 0.00 4.95 11.70 13.50 16.20 0.87

Utilities 0.00 0.48 0.57 0.65 0.78 0.87

Salaries 2.16 7.28 7.28 7.28 7.28 7.28

Repair maintenance 0.00 0.70 0.80 0.90 0.90 0.90

Insurance 0.30 0.30 0.30 0.30 0.30 0.30

Miscellaneous expenses 0.50 2.30 2.30 2.30 2.30 2.30

Total expenditure 2.96 214.01 256.95 294.94 351.77 389.66

Total Sales Revenue 0.00 569.25 672.75 776.25 931.50 1035.00

Sales of Cashew nuts 0.00 569.25 672.75 776.25 931.50 1035.00

PBDIT (TOTAL EXP/ - -2.96 355.24 415.80 481.31 579.73 645.34

TOTAL SALES REV.)CASH

INFLOWS

Depreciation on civil work 0.26 0.25 0.23 0.22 0.21 0.20

Depreciation on machinery 0.78 0.70 0.63 0.56 0.51 0.46

Depreciation on other fixed 0.12 0.10 0.09 0.07 0.06 0.05

assets

Interests on term loan 2.41 2.32 2.23 2.13 2.02 1.89

Interests on working capital 0.00 9.69 9.69 9.69 9.69 9.69

Profit after depreciation and -6.52 351.87 412.62 478.32 576.93 642.74

interests

Tax 0.00 105.56 123.79 143.50 173.08 192.82

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 Profit after depreciation, -6.52 246.31 288.83 334.83 403.85 449.92

interests and tax

Surplus available for 2.41 2.32 2.23 2.13 2.02 1.89

repayment

Coverage available 2.41 2.32 2.23 2.13 2.02 1.89

Total Debt outgo 0.80 0.89 0.98 1.08 1.19 1.32

Debt service Coverage Ratio 3.00 2.62 2.28 1.97 1.69 1.44

Average 2.16

Cash accruals -5.37 247.35 289.78 335.69 404.64 450.63

Payback period 2.5

years

FINANCIAL ASSESSMENT OF THE PROJECT

Particular 1st 2nd 3rd 4th 5th 6TH 7th 8th

s year year year year year year year year

Capital 43.66 0.00 0.00 0.00 0.00 0.00 0.00 0.00

cost

Recurring 2.96 214.01 256.95 294.94 351.77 389.66 389.66 389.66

cost

Total cost 46.62 214.01 256.95 294.94 351.77 389.66 389.66 389.66 2333.2

Benefit 0.00 569.25 672.75 776.25 931.50 1035.0 1035.0 1035.0

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cost 0 0

Total 6.99

depreciate

d value of

all assets

Total 0.00 569.25 672.75 776.25 931.50 1035.0 1035.0 1041.9 6061.7

benefits 0 0 9 4

Benefit- 2.598

cost ratio

Net 3728.4

present 9

BREAKING EVEN ANALYSIS

PARTICULARS 1ST 2nd 3rd 4th 5th 6th 7TH 8th year

year year year year year year year

Capacity utilization Under 55% 65% 75% 90% 100% 100% 100%

const.

Production 82.25 97.5 112.5 135 150 150 150

Fixed cost

Permanent staff 7.284 7.284 7.284 7.284 7.284 7.284 7.284 7.284

salaries

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Depreciation on 0.26 0.25 0.23 0.22 0.21 0.20 0.19 0.18

building

Depreciation on 0.78 0.70 0.63 0.56 0.51 0.46 0.41 0.37

machineries

Depreciation on 0.12 0.10 0.09 0.07 0.06 0.05 0.05 0.04

other fixed assets

Interests on term 2.41 2.32 2.23 2.13 2.02 1.89 1.76 1.76

loan

Insurance 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Total fixed cost 11.14 10.95 10.76 7.57 10.38. 10.18 9.98 9.77

Sales Revenue 0 569.25 672.75 776.25 931.5 1035 1035 1035

Variable cost

Cashew Nut 0.00 198.00 234.0 270.00 324.00 360.00 360.00 360.00

Packaging material 0.00 4.95 5.85 6.75 8.10 9.00 9.00 9.00

Casual staff salaries 0.00 5.78 5.78 5.78 5.78 5.78 5.78 5.78

Utilities 0.00 0.48 0.57 0.65 0.78 0.87 0.87 0.87

Repair and 0.00 0.70 0.80 0.90 0.90 0.90 0.90 0.90

maintenance

Miscellaneous 0.50 2.00 2.00 2.00 2.00 2.00 2.00 2.00

expenses

Interests on working 0.00 9.69 9.69 9.69 9.69 9.69 9.69 9.69

capital

Total Variable Cost 0.50 21.61 258.69 295.78 351.26 388.25 388.25 388.25

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Break-even point

As % of sale - 12.00 10.00 8.0 8.00 7.00 7.00 6.00

Break-even Point - 68.31 67.28 62.10 74.52 72.45 72.45 62.10

Financial Aspect
Rusty Cashew Nuts Inc.have invested substantial capital out lay. Below is the

breakdown of capital investment of the firm in terms of Philippine Peso as shown below:

Particulars Amount

Land (3 has at 1,000.000.00/ha. 2001 figures) Php3,000,000.00

Buildings/ Shades 2,300,000.00

Infrastructures (roads, fences, irrigation 1,500,000.00

systems)

Cashew Nuts Fruits 700,000.00

Plants ( crops- seeds, pesticides, fertilizers 500,000.00

and others)

Delivery Truck/ Farm service car 1,200,000.00

Total Php9,200,000.00

Figure No. 3: List of Capital Outlay of Rusty Cashew Nuts, Inc. Firm

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 Chapter VII

Corporate Social Responsibility

Internal areas Middle areas External areas

Market
responsibility/ Values
economic Environmental standards
Labour standards Contribution
efficiency
Supply chain Sponsoring
Legal
management Social activities
compliance
without stakeholders
loopholes

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 Chapter 8

FINDINGS, CONCLUSION AND RECOMMENDATION

Survey Results:

The result of the survey provides an insight on the operation of Rusty Cashew

Nuts. These results are the basis for the strategic management planning for the firm.

Part 1: The Demographic Profile of the Respondents

a. Gender

Particulars Numbers Percentage

Male 110 55%

Female 90 45%

Total 200 100%

Table No. 1: Demographic profile

b. Age range

Age Range Number Percentage

16- 20 71 35.5%

21 - 25 86 43%

26 - 30 21 15.5%

31 and above 12 6%

Table No. 2: Age range of the respondents

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Part 2: Survey Questionnaires

1. Is the demand of the products meet by the producer?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

2 56 108 28 6

1% 28% 54% 14% 3%

2. Is the texture and freshness of Cashew Nuts acceptable in the local market?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

9 51 123 15 2

4.5% 25.5% 61.5% 7.5% 1%

3. Is the selling price of the Cashew Nuts acceptable in the local market?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

17 46 120 15 2

8.5% 23% 60% 7.5% 1%

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4. Is the service satisfaction rendered to the customer attained?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

28 38 97 24 13

14% 19% 48.5% 12% 6.5%

5. Is the volume of the Cashew nuts Product enough to supply the local market?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

4 42 98 36 20

2% 21% 49% 18% 10%

6. Is the quality of the Cashew Nuts acceptable to the consumer?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

15 47 112 20 6

7.5% 23.5% 56% 10% 3%

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7. Is the time set on delivering of the products achieve by the producer?

Excellent Very Satisfactory Poor Very Poor

Satisfactory

4 32 119 42 3

2% 16% 59.5% 21% 1.5%

Findings and Recommended Strategies

Based on the results of the survey, the following are the findings:

A. Organizational Aspect

The organizational structure of the Rusty Nuts Inc., is clear and specific. It is a

simple line organization. It is the simplest and oldest form of organizational structure.

(T.J. Rodriguez, 2002) In this structure the authority is delegated from the top

management down to the rank and file.

In the long-run, expansion is inevitable and the restructuring of the organization is

recommended. There are several factors that the business is growing. Considering the

population growth of the locality and the increase of disposable income of the individuals

in the community a more complex organizational structure is necessary.

B. Operational/ Technical Aspect

The Rusty Nuts Inc. is in its infancy. Limited operation is being done inside the

production of Cashew Nuts. In due time, as the growing population of cashew fruits, a

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more comprehensive operation is needed to ensure safety and quality products. That is

providing these fruits place for conservation.

C. Marketing Aspect

The market of quality food products is a necessity, especially, the population is

experiencing a higher living standards. The Cashew Nuts Inc. felt the needs to supply

this needs, the need of quality food products. On the other hand, it also offers an

opportunity to deliver a quality cashew nuts products

It is recommended that Cashew Nuts Inc. should improve its marketing activities in

order to satisfy the needs and wants of its clients. It has to exploit their primary market

and its secondary market. These markets are defined by Medina, 2008 as primary

market is the type of market formed when the firm introduces a new product class to

address the demand or needs. While the secondary market is a type of market that is an

offshoot of the primary market – when the customer develop specific needs or

preferences.

D. Financial Aspect

It is shown above the financial outlay of the farm, amounting to

PhP9, 200.000.00. It is a sizable outlay. The operation of the business is

expected to generate income to sustain its development and expansion.

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 CONCLUSION

Based on the above-mentioned findings and recommendations, the researcher

concluded that the following areas have been address:

Organizational Aspect

Rusty Nuts, Inc. –management is using scientific management and marketing

approaches in the administration of the production Processes. The implementation of the

results derived from the evaluation of the internal and external factors affecting the

operation of the firm.

Operational/ Technical Aspect

Action plans are being implemented foe maximum productivity and profitability of

the production -operation.

Marketing Aspect

The marketing approach of the firm is a combination of basic and complex

strategies. This is aimed to increase its market share and to introduce new products in

the market.

Financial Aspect

Based on the capital outlay of the firm, it has the capability to expand its

productive operations and generate income to sustain the operation of the Company.

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References:

Barnett, Tim, et al (2001). Management Control: Management Styles; Organizing, USA

Beckhard, R. & Harris, R. (1999). Organization Development: Strategies and Models.

Reading, MA, USA

Faylon, P. S., et al. (2007). The state and future supply of and demand for Agriculture,

Forestry and Natural Resources (AFNR) graduates in the Philippines: Medina,

Roberto, (2008). Principles of Marketing, Revised Edition, Rex Bookstore, Mla.,

Philippines=

Medina, Roberto, (2008). Principles of Marketing, Revised Edition, Rex Bookstore, Mla.,

Philippines

Rodriguez, T. J. (2009). Management at Work- A worktext, Mandarin Eagle System

One, Manila, Philippines

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