A feasibility study of establishing another filled milk processing plant

• Main Author: Cortez, Leonardo V.
• Format: text
• Language: English
• Published: Animo Repository 1968
• Subjects: Dairy processing; Dairy plants; Milk plants; Milk plants > Design and construction; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/112; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=6950&context=etd_masteral
• Institution: De La Salle University

This research determines the feasibility of establishing an evaporated filled milk processing plant in the Philippines. The project will have a rated capacity of 6,000 cases of 14 oz/48 tin cans and 3,000 cases of 6 oz/96 tin cans a day. It will be undertaken as a joint venture between a foreign dairy concern and Filipino investors. The study comprised three main fields of investigation, namely marketing, technical, and cost and finance requirements. The marketing aspect described the market for the product and presented analyses and projections based on existing studies. The technical aspect concerned the physical and operating requirements of the project and described the legal considerations involved. The cost and finance aspects looked into the investment requirement, the financial viability of the project under a practicable capital structure, and profitability, in relation to the market and technical factors. Based on the findings of the study, the project as conceived was not profitable and not viable. The plant was quite large in relation to the market contemplated. It was difficult for the project to compete with the three existing plants because these plants acquired their facilities prior to the devaluation of the peso against the dollar. The high cost of plant machinery expressed itself in total production cost in the form of high depreciation charges, high repairs and maintenance allowance. Also, the evaporated canned filled milk industry was still a buyer's market. There was an excess capacity in the industry up until the early seventies. Cash generation potential of the project based on anticipated sales volume fell short of amortization requirements, thus the project would not be able to pay loans at all due to persistent losses for the first five years of operation.