MODEL FEASIBILITY STUDY

AND BUSINESS PLAN

FOR
GINGER PROCESSING
TO
OLEORESIN- AN INDUSTRY WIDE
STUDY REPORT
FINAL REPORT

SUBMITTED TO: PREPARED BY:

PDF Implementation Team

USAID NEXTT Project
20, Port Harcourt Crescent,
Off Gimbiya Street,
Garki II, Abuja, Nigeria.

MAY, 2017
 TABLE OF CONTENTS
SECTION TITLE PAGE
EXECUTIVE SUMMARY IV

I INTRODUCTION
preamble 1

methodology 2

Period of Study 3

II THE GINGER CROP

Ginger Crop – Background Information 4

Ginger in Nigeria 6

Ginger Products, Components and Uses 6

The Main Commercial Forms of Ginger 8

Why Ginger is Processed 9

Post-Production Operations 11

Proximate Composition of Ginger 16

III PROCESSING OF GINGER

Factors to Consider 17
Technology Available Worldwide 17
Description of manufacturing process 19
employed in Nigeria
Ginger Splitting 20
Ginger Drying 20
Ginger Products 22

i
IV OLEORESINS/GINGER OLEORESIN
Definition of Oleoresins 27
Advantages of Oleoresins 27
Uses /Applications of Oleoresins 28
Market Potential of Oleoresins 28

Some Spice Oleoresins and Their Applications 31

Ginger Oleoresin 32
Methods of Oleoresin Extraction 33
Value Additions 39
Ultrasound Treatment on Dried Ginger Powder 40

Quality Assessment of Oleoresins 40

V IDENTIFICATION OF MAJOR STAKEHOLDERS

IN THE NIGERIAN GINGER VALUE CHAIN
Categorization 42
Swot Analysis of Nigeria’s Ginger Value Chain 43
Major Components of Ginger Oleoresin Value Chain 45

VI ESTABLISHMENT OF A MODEL GINGER

OLEORESIN PLANT
The Scale f Operation 55
Estimated Total Project Cost And Breakdown 56
Manpower Requirements 56
Financial Appraisal of the Model Ginger Oleoresin Plant 59

VII CONCLUSION AND RECOMMENDATIONS

Conclusion 67
Recommendations 68

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 APPENDICES

APPENDIX TITLE PAGE

I BREAKDOWN OF ESTIMATED PROJECT COST 69
II DEPRECIATION SCHEDULE 71
III SCHEDULE OF STAFFING AND REMUNERATION 72
IV SCHEDULE OF WORKING CAPITAL 73
V PROJECTED REVENUE AND EXPENDITURE 74
STATEMENT FOR FIVE YEARS
VI PROJECTED FUNDFLOW STATEMENT FOR FIVE 75
YEAR
VII PROJECTED BALANCE SHEET STATEMENT FOR 76
FIVE YEARS

iii
 EXECUTIVE SUMMARY
 USAIDNEXTT sponsored this study and the main objective is to encourage and
attract investment and Investors along the Ginger Oleoresin Value chain.
 The study critically examined the Nigerian Ginger Value chain covering
production, processing and marketing. Key stakeholders are identified and their
roles defined.
 Oleoresins, and in particular Ginger Oleoresin are given special attention,
definition, uses and applications, market potentials, production process, quality
standards, major off-takers (local and international) and machinery/equipment
requirements and sources of supply are covered.
 The study revealed that despite the large production of Ginger in Nigeria (over
300,000 metric tonnes per annum) little or no value-addition takes place. The
bulk of the harvested Ginger (80%) are exported raw or dried whilst Nigeria
spends her scarce foreign exchange in importing processed-ginger-products like
essential oils and oleoresin. Some of the reasons identified for unfortunate
situation include poor infrastructure facilities (power supply in particular) and
high cost of borrowing. Despite the huge local and foreign market for Ginger
Oleoresin, there is only one company in Nigeria, producing the product, at
irregular intervals.
 Requirements for establishing a model Ginger Oleoresin plant are identified and
evaluated. The estimated total cost is ₦220,000,000 including initial working
capital of ₦100,000,000.

iv
 The proposed financing plan is:

Source Amount ₦’000 % Share

Equity Contribution 73,600 33.5

Term Loan 46,400 21.0

Bank Overdraft 100,000 45.5

Total 220,000 100.0

The huge working capital requirement is for the stocking of ginger (raw
material) required for continuous production.
 The financial returns are quite handsome. Profit-after-tax increases from about
₦67.0 million in the first year to over ₦380.0 million in the fifth year.
The two facilities are repaid within three years and there is enough cash in the
business to meet all other financial liabilities.
Average annual return on Investment is 34% further financial analysis confirms
that the model plant is a good investment.
 Recommendations are put forward for both the Prospective Investor(s) in Ginger
Oleoresin and the Federal Government.

For Prospective Investor in GO

 Start with a relatively small-capacity-plant (like the model plant in this report)
and expand gradually.
 Network with and take-part in the activities of existing Groups/Coalition on
Ginger so as to enjoy the benefits that will accrue from the activities of such
groups.

v
 For Federal Government
 Provide long-tenured and very low interest intervention fund for Investors in
Ginger Oleoresin and other Agro-allied Project
 Current Agricultural Input-Supply schemes of the Federal Ministry of
Agriculture should be reviewed to make them more effective and impactful.
 Engage the new Coalition on Ginger Transformation Agenda and work closely
with the group with a view to removing all the identified bottlenecks in the
Ginger Value Chain.


vi
SECTION I: INTRODUCTION
1.1. PREAMBLE
This study was commissioned in March, 2017 by USAID Nigeria
Expanded Trade and Transport (NEXTT) to critically examine the
Ginger Processing to Oleoresin Value Chain in Nigeria – components
of the Value Chain, challenges, opportunities, major Stakeholders,
government policies and economic outlook.

The main objective of the study is to attract local and foreign

Investors and encourage Investment along the Value Chain.

1.2. Our firm – ROMIS CONSULTANTS LTD, was competitively

selected to carry out the study. The main components of the study
include:
 An assessment of the economic situation of the Country, in
particular government policies, programmes and regulations as
they affect the establishment of a Ginger Oleoresin Value Chain
in Nigeria.

 Collection and analysis of relevant secondary and primary data

to be used in determining the feasibility of investment along the
Value Chain.
 Determination of the entry Strategies for new Investors and
challenges being faced by existing Investors.

 Assessment of the different process technologies with a view to

coming up with appropriate factory design and plant layout.

 Determination of various machines, equipment and their

specifications for the establishment of scalable Ginger Oleoresin
plan.

1
  Financial projection and analysis that will demonstrate the
financial viability or others of the plant.

 Determination of any other issues and factors relevant to the

attainment of the objective of the study.

1.3. METHODOLOGY
The methodology used for this study consists of three investigational
approaches covering Desk Research/Literature Review, Field Work
and Liaison Activities. In getting the necessary data/information for
the study, all possible sources are explored, including Internet.
Desk – research covers the extraction, refinement and analysis of
secondary data from published and unpublished sources of
information such as Professional Journals, Magazines, Dailies,
Statistical Publications and Research Findings.

Field work involves the collection and processing of primary data

through visits, interviews, formal and informal discussion, sampling,
visual inspection and observations.

Liaison Activities entail effective communication between interested

parties and co-ordination of views and perception on the assignment.
Interested parties include:
USAID NEXTT, Ginger Farmers, and Stakeholders along the Value
Chain.

1.4. Places visited during the course of this assignment include:

 Kaduna State Ministry of Agriculture
 Kachia Local government Headquarters
 Ahmadu Bello University, Zaria
 Research Institutes like FIIRO, National Root Crops Research
Institute Umundike
2
  Raw Materials Research and Development Council
 National Bureau of Statistics
 Development Bank like Bank of Industry, (BIO) Development
Bank of Nigeria (DBN), Nigeria Export - Import Bank
(NEXIM) and some MSME –friendly Commercial Banks.
 Machinery/Equipment Vendors
 Offices of some Major Ginger Exporters and Processors
We also organized Focus – Group - Discussion FGD with some
major Stakeholders along the Ginger Value Chain, visited some
Ginger markets and interacted with a few Ginger Cooperatives and
Groups/Associations in Kaduna State and Abuja.

1.5. PERIOD OF STUDY

The study was conducted and report written within the months of
March and May, 2017.

3
SECTION II: THE GINGER CROP

2.1 GINGER CROP – BACKGROUND INFORMATION

Ginger (Zingiber officinale) is an herbaceous perennial plant belonging to the
order Scitamineae and the family Zingiberaceae. It is a root crop and a typical
herb extensively grown across the world for its pungent aromatic under-ground
stem or rhizome which makes it an important export commodity in world trade
(NEPC,1999; Erinle,1989; Ajibade&Dauda, 2005). The knobby rhizome is dug
up when the 1 meter tall leaves and stems of the plant wither, which occurs
between 6 and 12 months after planting.

Ginger’s origin is not well established though it is generally thought to be a

native of Asia, where it was first cultivated. It was also cultivated in the tropical
regions of America. Ginger was introduced to Europe by Arab traders from
Indian the first century AD. The Arabs also took the plant from India to East
Africa in the thirteenth century while the Portuguese took it to West Africa and
other part of the tropics in the sixteen century. Ginger was introduced to Nigeria

4
in 1927. The spice was known in Germany and France in the ninth century and
had become common in trade as pepper by the thirteenth century.

The Chinese and Indians however were probably the earliest cultivators. It is
therefore safe to say that Ginger is believed to have originated from East Asia. It
appears to have been used as a spice and medicine from early times by Indians
and Chinese.

Ginger is an erect herbaceous plant with fibrous stem bearing creeping under-
ground tuber or rhizome. Its Botanical name is Zigiber officinale. It is a crop that
makes heavy demand on labour during cultivation and exhaust soils. It strives
best on medium loams with a good supply of humours. It is cultivated as an
annual crop, which is reproduced by means of cutting the rhizome (i.e. it is
propagated vegetatively). The chemical composition of ginger makes it a very
sought after spice. The ginger of commerce is the elongated, branched and
pungent pseudo-stem (underground root-like stems) of the plant or rhizome.
Ginger is grown over a wide area of the tropics, although the major production
areas are in South and East Asia. In the early years of the twentieth century, the
most widely known producers and exporters of ginger were China, Jamaica and
Sierra Leon. A number of other countries have since emerged as important
ginger exporters amongst which Nigeria and more recently Australia are the
most notable.

5
2.2 GINGER IN NIGERIA
Ginger is grown in Nigeria generally in the Middle Belt States. The most notable
are Kaduna, Plateaus, Niger and Nassarawa States in order of quantity produced.
The production of ginger in Nigeria started vigorously in 1927, when an
investigation was carried out to find a crop that would generate internal trade for
the people of Southern Zaria Province (now Southern Kaduna), the traditional
home of ginger production in Nigeria. The plant is now cultivated in different
parts of Nigeria, though the major producing areas include Kaduna, Nassarawa,
Sokoto, Zamfara, Akwa-Ibom, Oyo, Abia and Lagos states. Southern Kaduna
still remain the largest producers of fresh ginger in Nigeria in Kachia, Jabba,
Jama’a and Kagarko Local Government Areas (Bernard, 2008). ). Nigeria
ranked first in terms of the percentage of total hectares of ginger under
cultivation but her contribution to total world output is too low compared to
other countries. This can be attributed to the fact that most of production is
undertaken by smallholder and traditional farmers with rudimentary production
techniques and low yields. In addition, the smallholder farmers are constrained
by many problems like the farmers do not see it as a business enterprise,
therefore are not adequately focused on profit maximizing motive. (FAO,2010).
The varieties produced in Nigeria are ‘TaffinGiwa’ and ‘YatsunBiri’ which is
higher in monoterpene and oil, giving a more pungent aroma and pungency.
Therefore it is usually preferred for the production of oils and oleoresins
(KADP, 2000;Chukwu&Emehuite, 2003).

2.3 GINGER PRODUCTS, COMPONENTS AND USES

Ginger products, such as essential oil and oleoresin, are internationally
commercialized for use in food and pharmaceutical processing. Essential oil is
characterized by monoterpenes and sesquiterpenic compounds while the main

6
pungent compounds in the oleoresin are a series of homologues called gingerols
and shogaols.
In recent years, more and more pharmaceutical effects have been found on
ginger. It can act as an aphrodisiac, a carminative, a rubifacient, an anti-
asthmatic and as a stimulant to the gastrointestinal tract. Ginger is often used for
the treatment of stomachaches, and cardiovascular and motor diseases. It also
possesses anti-inflammatory activity and regulates bacterial growth, as well as
providing protection for immune-depressed patients, such as individuals who are
HIV positive.

Many active components have been found in ginger. The active component
obtained from ginger is a high value-added product and due to such, there is
continued research for improved extraction techniques that will lead to better
quality extracts and greater yields.

Today, in food processing, the main use of spice oleoresins are in processed
meat, fish, vegetables, soups, sauces, chutneys, dressings, cheeses as well as
dairy products, baked foods, confectionery, snacks and beverages. Ginger
oleoresin is important for its volatile oil as well as its non-volatile pungent oils

There is a great demand for ginger oleoresins abroad, especially for the
production of alcoholic beverages, as well as in the production of gingerbread
and drinks like ginger ale. Ginger oleoresin also has a huge demand in the
Ayurvedic and pharmaceutical industries.

7
2.4 THE MAIN COMMERCIAL FORMS OF GINGER
Until the processing of ginger was introduced ginger entered the international
market in the form of its three primary products namely:
a) Fresh (green) ginger

b) Preserved ginger

c) Dried (split or pealed) ginger

Ginger is however traded mainly in the two forms of fresh and dried. Preserved
ginger is prepared from the immature rhizome while the more pungent and
aromatic spice is prepared by harvesting and drying the mature rhizome. Fresh
ginger, consumed as a vegetable, is harvested both when immature and mature.

2.4.1.Fresh Ginger
Because of the high water content of fresh ginger the trade in it is limited due to
high cost of transportation and low resistance to spoilage due to heat humidity
and handling. A larger proportion on the trade in fresh ginger occurs among the
countries of Asia. The overall trade in fresh ginger in the international market is
however insignificant. The value of fresh spices and herbs has led to greater
attention o the factors affecting their perishability. Post harvest conditions that
are suitable for one fresh herb may not be appropriate for another. Critical
factors in determining the shelf life of fresh herbs and spices include
temperature, humidity, and atmosphere, light and handling among others.

2.4.2. Preserved Ginger

Preserved ginger is prepared in some of the producing countries notably in
China, Hong Kong, Australia and India. Two forms of processed preserved
ginger entering the market are:

8
 i. Preserved ginger in sugar syrup

ii. Dry or crystallized ginger: - this is ginger that has been impregnated with
sugar syrup, dried and crated with crystalline sugar.

2.4.3. Dry Ginger

The dry ginger may be peeled or sliced before drying. The drying could be sun-
dried or mechanically dried. The sun-dried ginger is more common in Nigeria
and India. The sun dried ginger is inferior in quality to the mechanically dried
because of impurities like sand, animal faeces foreign matter etc. The dried has
been the form in which ginger is traded internationally in the whole or split
forms. While flavour is the critical factor for the spices, cleanliness and the
freedom from microbial contamination are also crucial elements of the spice
quality. The traditional existing forms of drying ginger can be improved to
increase the amount of value addition. Few modifications on the existing
practice such as sorting, grading, cleaning, peeling in proper way; drying and
packaging will gradually improve the quality of the end product. The spices are
sold to various spice companies for further processing, including cleaning,
grinding, blending and packaging.

2.5. WHY GINGER IS PROCESSED

While ginger is grown only in some countries, it is sought for all over the world.
Ginger is a seasonal crop and is perishable. Products like spice, oil and oleoresin
can be made from the ginger. Ginger is harvested in large quantity during the
season. Due to lack of processing facilities a large proportion of the production
could be wasted.
Unprocessed ginger however contains extraneous matter such as insect parts and
stone or support colonies of bacteria or fungi, when, they arrive from suppliers.
Processor must treat these problems of contamination before the spices are put in
the market. Ginger finds a good market potential the year round as it is used not
9
 only as a spice in preservations but also in confectionary, pharmaceuticals, soft
drinks, soap processing industry, food, flavour, perfumery, confectionary and
bakery and other industries.

The FDA and the American Spice Trade Association (ASTA) each have
developed specifications for foreign material (defects) in imported spices. Both
sets of guidelines recognize that spices need additional cleaning by processors
after they arrive from suppliers. Processors use air separators gravity separators,
and centrifugal separators to rid spices of foreign matter.

Microorganisms in spices can lead to spoilage or disease if the infected spices

are incorporated into food products. Although microbial contamination is often
attributed to the lack of good sanitary conditions in some countries where the
spices are produced, even onion in powder grown and processed in the United
States may have total plate count of 1million/g. Spices that originate from plants
that produce natural anti-microbial substances generally contain smaller
bacterial population. Cinnamon muster and nutmeg are examples of spices with
low levels of bacteria.

2.5.1 Treatment for microbes

i. Treating the spices with ethylene oxide can reduce microbial counts by 90%.
However, this gas has been classified as a carcinogen, and it can react with
chlorides in foods to produce toxic and persistent chlorohydrins.
ii. Propylene oxide is an alternative to ethylene oxide but it is less effective at
reducing microbes and also generates chlorohydrins
iii. Sterilization by heat seriously degrades the flavour of spices.
iv. Microwave treatment of spices has been attempted but does not effectively
reduce microbes levels.
v. Ultraviolet radiation does not have enough penetrating power to
decontaminate spices.

10
 vi. The most effective way to reduce or eliminate bacterial and fungal
populations on spices and the least likely to cause flavour changes is to
subject them to ionizing radiation. However such products must be labelled
as “treated with radiation”. The spice industry is still leery for the public’s
reaction to irradiated food. It’s a result, less that 1% of spices used in the
processed foods are irradiated. No spices sold in the retail stores in the
United States are (known to be) treated with irradiation.
vii. Another method for overcoming microbial contamination is to process
the herbs and spices into their essential oils and oleoresins.

Nigerian ginger has been found to be of superior quality that is good and
suitable for both productions of ginger oleoresins and essential oil. Due to
the lack of ginger processing facilities within the country the farmers have to
sell their produce in the fresh form and traditionally dried form at low prices.
This is of inferior quality than the mechanically processed one. Processing
facilities within the country can make Nigerian ginger compete in the world
market with added value. Moreover, since ginger began to be used in
processed products, it has become necessary to ensure consistent taste and
flavour for the purposes of standardization. If is for some of these reasons
that there has been a movement away from the ground spices generally
towards the use of the processed forms of ginger namely; essential oil and
oleoresin.

2.6 POST-PRODUCTION OPERATIONS

2.6.1 Harvest
The time of harvest after planting depends on the end-use. For fresh products
and preserves, one should harvest rhizomes while they are still tender, low in
pungency and fiber content, therefore before they are fully mature. Harvest for
dried spices and oil is best at full maturity, when the leaves turn yellow; leaving

11
 the rhizomes in the ground past that stage may reduce pungency and oil content,
and increase the fiber content.
Maximum oil and oleoresin contents are between 150 and 170 days after
planting. In Hawaii, gingerol, the pungent constituent of ginger, increased over
time in rhizomes of 'Hawaiian' cultivar as measured on a fresh-weight basis,
while it reached a peak 16 weeks after planting on a dry-weight basis, decreased
and increased again to reach a second peak at 24 weeks. Likewise, the maximum
oleoresin content was reached after 28 weeks on a fresh weight basis. Time from
planting to maturity may be highly affected by the type of soil in which ginger is
grown.

In summary, the best harvest time for each end-use is:

For fresh consumption: 5 months

For preserved ginger: 5-7 months

For dried ginger: 8-9 months, when leaves start yellowing

For essential oil production: 8-9 months

In some countries , harvest is fully mechanized using special equipment; the

crop must be planted in such way that interspacing between rows is adapted to
equipment. Care should always be taken to assure integrity of the rhizomes
during harvest and postharvest handling.

2.6.2 Washing and drying

Fresh rhizomes should be washed, and cleaned from debris, shoots and roots.
When available, pressure washing is preferred as it is more efficient and tends to
reduce the microbial load. Traditionally, rhizomes are killed by a 10 min.
immersion in boiling water, which also inactivates enzymatic processes, then
sun-dried.

12
Another method is to scrape, peel, or slice rhizomes prior to drying. Peeling or
scraping is advised for reducing drying time, thus minimizing mold growth and
fermentation. However, while this process decreases the fiber content by
removing the outside corky skin, it also tends to remove some of the oils
constituents, as they are more concentrated in the peel, and therefore reduces
some of the pungency. The peeled rhizomes may be bleached to improve
appearance.

After peeling and washing, rhizomes are first soaked in water for 2 to 3 hours,
then steeped in a solution of 1.5 to 2.0% lime (calcium oxide) for 6 hours, then
drained and sun-dried. This procedure is used when a light bright color is
desired.

The Indian Spice Board recommends the following sequence for preparing dry
spices:
soaking in water overnight to loosen the soil, peeling/scraping with pointed-end
bamboo splinters, washing off the residual peel, sun drying for one week,
soaking in 2% lime for 6 hours, and final drying
(www.indianspices.com/html/s1926pac.htm).
Drying should be done to 8-10% moisture, and should not exceed 12%.
Expected weight loss during drying is 60-70%. Cleaning and drying procedures
should be done as fast as possible after harvest to ensure minimum loss from
microbial contamination, mold growth and fermentation. Mechanical washers,
slicers, and solar or hot air driers may help minimize contamination from dust
during post harvest handling operations.

Sun-drying peeled ginger takes 7 to 9 days to reach a moisture content of 7.8%

to 8.8%.33 If the ginger is sliced, it takes only 5 to 6 hours by using a cross-flow
drier, while it takes 16 to 18 hours to dry scraped whole ginger using the same
equipment and conditions. Mechanical drying will ensure a more homogenous
13
and cleaner product. When drying with hot air, care should be taken to adjust air
flow and temperature. Drying should not exceed the critical temperature of 60 ºC
to avoid flesh darkening and discoloration.

Specific equipment is suggested for optimum cleaning of the dried rhizomes. An

air screen separator will help remove dead insects, excreta and extraneous
matter, while a rotary knife cutter with a screen separator will help remove
residual insects and other extraneous matter.

The following terms are used to describe the various forms of dried rhizome.

Peeled, scraped, uncoated: whole rhizome with the corky skin removed

Rough scraped: whole rhizome with the skin partially removed

Unpeeled or coated: whole rhizome with skin intact

Black ginger: whole rhizomes scalded before being scraped and dried

Bleached: whole rhizome treated with lime or diluted sulfuric acid

Splits and slices: unpeeled rhizomes, split or sliced

Ratoons: second growth rhizomes, small, dark and very fibrous.

Quality specifications are imposed by the importing country, and pertain to

cleanliness specifications rather than quality of the spice as stated in table 1.

Table 1: ASTA Cleanliness Specifications for Ginger

Extraneous matter includes but is not restricted to: stones, dirt, wire, string, stems, sticks, non
toxic foreign seeds, excreta, manure, and animal contamination.

14
 Proper care must be taken to meet minimum requirements otherwise a lot may
be rejected and need further cleaning and/or disinfection with ethylene oxide or
irradiation.

2.6.3 Packaging
Dry slices or powder are packaged in Kraft multi-wall laminated bags. Some
laminates may be better than others due to film permeability. Whichever film is
used, storage in a cool and dry environment is crucial for dry spices.
2.6.4 Storage
Dried rhizomes, slices, or splits should be stored in a cool environment (10-
15°C). When stored at room temperature (23-26 ºC), losses of up to 20%
oleoresin (dry weight) were observed on dry ginger after 3 months, and the
content of gingerol decreased. It is therefore recommended to extract or distill
dried ginger rapidly, if cold storage is not available, when oil or oleoresin is the
final product. The importance of a dry storage for dried ginger destined for
distillation can only be emphasized because additionally, mycotoxins from mold
may be co-distilled with the essential oil. Mold and bacteria developing on dried
rhizomes may be efficiently controlled with gamma-irradiation at doses of 5 to
10 kGy, with minor changes in the quality of ginger oil. Ethylene oxide is also
used as a fumigation treatment on spices. The U.S. Environmental Protection
Agency (EPA) has a maximum tolerance residue for ethylene oxide of 50 ppm
on spices. Both disinfection by irradiation and ethylene oxide treatments require
specially built and highly secured facilities.
Alternatives to irradiation or synthetic chemicals were investigated by the Indian
Institute of Spices Research. They found that leaf powder of Glycosmis
pentaphylla and Azadirachta indica added to dried ginger rhizomes in sealed
polyethylene bags were effective at preventing damage from the cigarette beetle
(Lasioderma serricorne) (http://www.iisr.org/department/cropprod/hhigh.htm).

15
2.7 PROXIMATE COMPOSITION OF GINGER

Oil Content 3-5%

Protein 6-9%
Carbohydrate 60-70%
Fibre 3-8%
Ash 7-8%
Moisture 7-12%
Volatile 2-3%

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SECTION III: PROCESSING OF GINGER

3.1 FACTORS TO CONSIDER

There are two important factors to consider when selecting Ginger Rhizomes for
processing: The stage of maturity at harvest, and the native properties of the type
grown.

Ginger rhizomes may be harvested from 5 months after planting. At this age,
they are immature. They are tender with a mild flavor and are suitable for fresh
consumption or for processing into preserved ginger. After 7 months the
rhizomes will become less tender and the flavor will be too strong to use them
fresh. They are then only useful for drying. Mature rhizomes for drying are
harvested between 8 and 9 months of age when they have a high aroma and
flavor. If they are harvested later than this, the fibre content will be too high.

Also Gingers grown in different parts of the world can differ in their native
properties such as taste, flavor, aroma and colour. This affects their suitability
for processing. It is most important when preparing dried ginger which needs
rhizomes with a strong favour and aroma. When drying ginger size is also
important. Medium sized rhizomes are the most suitable for drying. The large
rhizomes often have a high moisture content which causes problems with drying.

3.2 TECHNOLOGY AVAILABLE WORLDWIDE

At the international market, ginger is presented in three major forms namely;
Fresh or Green ginger, Preserved ginger and Dried (split and dried). The
most important form of ginger commercially is the dried ginger. The dry ginger
can be processed in industries to ginger powder, ginger oil and ginger Oleoresin.

17
Only split ginger with low moisture content of between 10 – 12% can be
processed into the products listed above. In developed economies, a splitting
machine is used to split the ginger into uniform thickness to ensure quick drying.
The split ginger is dried in dryers to protect them from micro-organisms attack
which can lead to reduction and deterioration in the quality of ginger
respectively after harvesting.

Table 3.2 Product form and uses of Ginger

Form Description Uses
(a) Dried Ginger
1. Peeled Scraped The cork skin cleanly Spice and confectionery
removed with damage to the
underlying tissue.
2. Rough Scrapped Cork skin partly removed Spice and confectionery
usually only on one side
3. Unpeeled or Coated The skin remain intact Spice and confectionery
4. Black Ginger 10-15mm scalding in boiling Spice and confectionery
water and dried.
5. Bleached or limited Clean peeled and treated with Spice and confectionery
lime as sulphurous acid
6. Split or Sliced Unpeeled or unscrapped but Spice and confectionery
longitudinally split or sliced.
(b) Preserved Ginger Prepared from 5-7 months Spice and confectionery
old peeled, cut into pieces
and impregnated with sugar
syrup.
(c) Fresh Ginger Raw Vegetable
(d) Ground Ginger Dried and ground Spice and confectionery
(e) Essential Oil and Extractants Confectionery and
Oleoresin performery
Source: RMRDC Ginger Publication

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3.3 DESCRIPTION OF MANUFACTURING PROCESS
EMPLOYED IN NIGERIA
Ginger processing in Nigeria is both manually and mechanically executed.
Splitting ginger rhizomes manually using a sharp knife is associated with a lot of
problems ranging from low output, high human labour, cost, risk or accidents of
operators through cutting of their fingers and production of in even thickness in
the split rhizomes which result in uneven and poor drying and consequently poor
quality materials leading to low price rates both in local international markets.

The NRCRI has fabricated a ginger splitting machine to take care of the
problems associated with manual splitting of being laborious as mentioned
earlier.

The most commonly risk associated with ginger splitting is knife cut due to its
irregular shape. And when this happens, product time is lost, the rate of doing
work reduces and production output further reduces.

In the Northern part of the Country, drying is not so much a problem because of
the high intensity of the sun and low humidity. However, ginger has to be
exposed to the sun for a long period of time so that it can dry completely and to
the required standard. In order to meet the standard specifications for dried
ginger, it must be dried to 10-12% moisture content. The drying must also be
uniform. In the Southern part of the Country, drying is a problem because of
high relative humidity and high rainfall experienced throughout the year.

To boost ginger production and increase its supply considerable new methods
must be developed to split and dry it in good quality and lesser time. Mechanical
splitting is thus necessary to split the ginger into uniform thickness for uniform
and quick drying which is only obtainable by use of mechanical drying.

19
3.4 GINGER SPLITTING
After harvesting, ginger must be split to allow and uniform drying. This is by
cutting the tuber longitudinally so that a maximum surface can be exposed for
drying. The cutting edge must be sharp so as to avoid multiple cutting or
crushing. There are two known methods for doing this, namely, Traditional and
Mechanical methods.

Traditional method of splitting involves holding the ginger with the left hand,
and with the right hand passing a sharp kitchen knife through it longitudinally.
This makes the ginger to be cut into two halves almost symmetrically.

Mechanical method involves the use of machine, manually operated or

motorized one to split ginger. The ginger splitting machine that is available in
the country was designed and fabricated by NRCRI, Umudike. The machine has
two rollers that rotate in clockwise and anticlockwise direction inwardly. They
are positioned directly under the hopper to re-orientate the ginger in such a way
to facilitate splitting. This machine positions ginger longitudinally at the
splitting point. At the splitting point is a disc with four knifes for splitting ginger
into uniform thickness as preset. The split ginger falls by gravity.

3.5 GINGER DRYING

Drying is the process that comes after splitting. This drying is done to reduce the
moisture content to a minimum that will not affect the quality of the ginger when
stored. This is one of the storage methods for ginger and this can be achieved
through Natural Artificial/Mechanical methods

Natural method involves spreading the split ginger in an open space where the
rays from sun fall upon them on a spread mat, bare floor or a platform made for
the purpose. In sub-humid parts of Nigeria, where there is high intensity of
20
sunshine and low relative humidity almost throughout the year, the split ginger
is allowed to stay until drying is completely achieved. But if otherwise, it will be
removed at unset and spread again at sunshine until complete drying is achieved.

Artificial/Mechanical drying involves the use of artificial method for drying.

That is using other materials to produce heat or making use of other source of
heat other than the natural sun.

Two prototypes of ginger drying using mechanical methods were produced at

NRCRI, Umudike. One of such is a compartment built to accommodate two or
three racks/platform to contain split ginger. Kerosene stove as the sources of
heat is placed underneath a heat exchanger to transfer heat to the racks by
convention.

The other prototype is electrically operated. The chamber is electrically heated

and the ginger moved by convention into the drying chamber. The drying
chamber has trays arranged in staggered form to allow for effective circulation
of heat. The moisture removed passes through the vent opening. It dried 3mm of
ginger to 10-12% moisture content in 4-5 hours.

21
 Ginger Rhizome

Dehydration Straining Sorting

Grinding Drying Washing

Sieving Size Reduction Pulverizing

Ginger powder Solvent Steam Water

Extraction Distrillation Extraction

Solvent Stripping Separation Centrifuging Sterilization

Oleoresin Ginger oil Drying Blending

Starch Ginger soft drink

Flowchart of Ginger Processing

3.6 GINGER PRODUCTS

Ginger can be processed into various products namely, ginger oil, ginger
Oleoresin, ginger candy, ginger soft drink, ginger shreds, ginger pickle and
ginger chutney.

3.6.1 GINGER OIL

Ginger oil is prepared by steam distillation or grinds paste or dried powdered
ginger which is used as a flavouring agent for soft drinks, ginger beer and in
food preparation. For oil extraction, dried rhizomes are ground to a coarse

22
 slurry, paste or powder, loaded into a still for distillation and steam is passed
through the slurry/paste/powder. The steam containing the volatile components
is condensed with cold water and collected in separate container. The oil can be
separated from the water upon cooling by the separatory funnel. Re-distillation
can be done to increase oil yield. Usually oil yield obtained from dried rhizomes
is 1.5% to 3.5% on dry weight basis and o.4% on green weight basis depending
upon variety of ginger used.

3.6.2 GINGER OLEORESIN

This is a blend of oil and resinoids. Oleoresin is obtained by extraction of dried
ginger, pulverized to coarse powder, with organic solvents like ethanol or
acetone. Oleoresin content ranges from 3.5% to 9.5%. But to get the true flavour
of fresh ginger, solvent extraction is not the ideal choice because during the
removal of the solvent from the extract, several components are lost along with
the solvent. Supercritical Fluid extraction offers another choice whereby the true
fresh flavour is retained in the extract.

Supercritical Fluid Extraction Process (SCFE) is also known as CO2 Extraction

Process. It is a high technology process for extracting oleoresins from fresh
ginger with the use of hazardous organic solvent such as acetone, hexane and
methylene chloride. SCFE is the two-step process which uses a dense gas as a
solvent eg. Carbon dioxide (CO2) for extraction, above its critical temperature
(31oC) and critical pressure (74bar). The feed (fresh ginger), generally ground
solid is charged into the extractor. Supercritical CO2 is fed to the extractor
through a high-pressure pump (100-500 bar0. The extract laden CO2 is sent to a
separator (60-120 bar) via a pressure reduction valve. At reduced temperature
and pressure conditions, the extract precipitates out in the separator.
The exact free CO2 stream, leaving the separator is then recycled to the
extractor.
23
3.6.3 GINGER CANDY
Ginger candy can be prepared by selecting big sized rhizomes of low fiber
content. These rhizomes should be washed with water to remove the adhered dirt
and debris. The peel should be removed with the help of wooden splinters or
knives and wash thoroughly with water. After this, rhizomes should be pricked
properly with the help of forks so that sugar can penetrate deep in the tissues.
The pricked rhizomes should be cut into piece of 1-2cm thickness. The ginger
pieces should be removed from water and kept in shade for drying. After this,
the ginger pieces should be spread in a stainless steel utensil having alternate
layer of sugar and ginger pieces (1kg ginger pieces: 1kg sugar) and kept for 24
hours. On second day remove the ginger pieces from sugar syrup and add 2 gm
citric acid and boil the syrup until sugar strength reached up to 60 obrix. Allow
the syrup to cool, add the ginger pieces into the syrup and keep it for 24 hours.
On the third day remove the ginger pieces and add 1gm citric acid and boil the
syrup until sugar strength reached up to 65oBrix, allow the syrup to cool and add
the ginger pieces into the syrup. Again keep it for 24 hours. On next day, the
same process should be repeated by addition of 1gm citric acid and boiling the
syrup until the sugar strength reaches up to 75 oBrix. Allow the syrup to cool and
add the pieces into the syrup. Keep it for 4 days in syrup. Then remove the well
soaked pieces from syrup and dry it in oven at 60o C for 6-8 hours. These dried
pieces can be coated with powdered sugar or confectioner’s sugar or glucose
powder by sprinkling the powder over the pieces and mixed thoroughly. Fill the
coated ginger candy in glass/jars or pack in polyethylene pouches and store in
cool and dry place.

24
3.6.4 GINGER SOFT DRINK
Ginger ready to serve (RTS) soft drink can be prepared by selecting healthy and
blemish free rhizomes. The rhizomes are washed with water and peeled with the
help of wooden splinters or knives. Cut into small pieces and pulp by passing
through mixer-grinder by addition of little water to facilitate easy pulping. After
pulping, strain the pulp and keep it for 1 hour for settling down the sediments at
bottom. Siphon off the clear juice and mix it with sugar syrup solution which
can be prepared by addition of sugar + citric acid + water @ 120gm + 3gm citric
acid + 850 ml water. Strain the sugar syrup with muslin cloth to remove the
impurities from dissolved sugar and mix the ginger juice or pulp @ 30 ml and
then add the ingredient thoroughly and fill into the bottles then crown cork. The
sealed bottles should be pasteurized at 85oC for 15 minutes and then cooled and
can be kept for storage in cool and dry place.

3.6.5 GINGER SHREDS

Ginger shreds can be prepared by washing and peeling of the rhizomes. After
peeling, rhizomes should be grated in to small pieces. Then grated small pieces
of ginger should be kept in the muslin cloths and squeezed slightly to remove
excess juice content. Then add black salt and common salt @ 4% and it should
be kept in oven for drying at 60oC for 2 days. Final product should be packed in
polyethylene pouches and kept in cool and dry place for use. However, a
mechanical shredder can also be used to cut the young stem ginger to fine and
even shreds after trimming and washing process. The ginger shreds are then
blanched and packed in containers with a vinegar based solution with no added
sugar to preserve the fresh ginger. There is also an option with sugar.

25
3.6.6 GINGER PICKLE
Ginger pickle can be prepared by washing and peeling of the rhizomes. The
peeled rhizomes will be cut into small rectangular pieces, which are dried in
shade for removal of outer moisture. The mixture of spices (ajowain + black
pepper + cumin seed + chilli powder and citric acid @ 1ogm each for 250gm of
ginger pieces) should be prepared and mixed together. After this, fill all
materials into a glass jar and keep for sun during up to 2 weeks with occasional
stirring. Finally it can be stored in a cool and dry place.

3.6.7 GINGER CHUTENY

Chutney of good quality and taste can be prepared by using ginger. For this
ginger rhizomes (250g) and garlic (100g) should also be grinded in mixer and
the resulting paste of ginger mixed with tamarind and garlic. This mixture
should be heated a little and add salt (100g). Then frying of another garlic paste
(100g), fenugreek powder (20g) should be mixed with ginger paste, sugar (500g)
and fill into glass jar. Final product should be stored in cool and dry place.

26
SECTION IV: OLEORESINS/GINGER
OLEORESIN

4.1 DEFINITION OF OLEORESINS

Oleoresins are the concentrates liquid form of the spice. They are obtained from
Ginger by extraction with a non-aqueous solvent followed by removal of the
solvent by evaporation. This spice derivative has the same character and
property of the spice it is obtained from. They reproduce the character of the
respective spice and spice oil fully. Spice oleoresins represent the complete
flavour profile of the spice. It contains the volatile as well as non volatile
constituents of spices. Oleoresins can replace whole/ground spices without
impairing any flavour and aroma characteristics. Spice oleoresins guarantee
superior quality of flavour and aroma. They are complete and balanced,
consistent and standardized.

The quality of an oleoresin is typically evaluated on the basis of presence of the

active ingredients in desired levels. As these are concentrated extracts, they are
typically used as a diluted dispersion plated on a neutral dry carrier or as a
diluted blend in a solubilising medium such as vegetable oil to match the desired
strength of the ground spic/herb. All the spices contain essential oils in varying
proportions which can be extracted by steam distillation.

4.2 ADVANTAGES OF OLEORESINS

Below you can find the advantages of oleoresins
i. Easy to store and transport
ii. More stable when heated
iii. More economical to use.
27
 iv. Easier to control for quality and cleaner than the equivalent ground spice
v. Free from contamination
vi. Concentrated form reduces storage space and bulk handling and transport
requirements
vii. Longer shelf life due to minimal oxidative degradation or loss of flavour.

4.3 USES/APPLICATIONS OF OLEORESINS

Spice oleoresins find wide application in a number of industries for their strong
flavour and aroma and mainly as a flavouring agent in the food processing
industry. The oleoresins and spice oils are preferred because of their
microbiological advantages, uniformity in flavour and pungency, ease of storage
and transport.

Oleoresins have large domestic as well as export markets. They are consumed
by broad spectrum of manufacturer of beverages, soup powders, curry powders,
confectioneries, noodles, canned meats, sauces, poultry products and so on.
Most of the end use industries are growing steadily and bound to increase with
increase preference of quality products. The use of spice is rapidly replaced with
oleoresins and exports of these products instead of raw spices results in
considerable value addition.

Spice oleoresins are mainly used in processed meat, fish and vegetables, soups,
sauces, chutneys and dressings, cheeses and other dairy products, baked foods,
confectionery, snacks and beverages. India enjoys the distinction of being the
single largest supplier of spice oleoresins to the world.

4.4 MARKET POTENTIAL OF OLEORESINS

The global oleoresin market size was USD 449.4 million in 2015. Owing to its
high temperature applications along with favourable solubility characteristics,
oleoresin is widely used as a flavouring agent in the food industry. Growing

28
market demand for packaged spices and spice mixes in food applications has
assisted the overall market growth.

They mostly have their applications in salad dressings and coloring pickle
products. They are mainly suited for high temperature applications which consist
of baking and frying. Besides, they are used widely as an additive in food
industry due to its solubility characteristics. Oleoresins are mostly preferred
because of their microbiological advantages, uniformity in flavour and aroma,
ease of storage and transport

Factors such as growing population, dynamic lifestyle and increase in a number

of fatal diseases across the globe are anticipated to positively impact the market.
These extract are also used in pharmaceutical industry for treatments related to
back pain, distress and cancer. Oleoresin commonly derived from certain spices
such as turmeric and paprika are not only intended for their flavour but also for
their intense colouring properties they offer.

Growing confectionery and baked food products demand in developed regions is

presumed to aid the overall market shortly. Changing dietary trends and food
consumption patterns are expected to aid the confectionery and baked food
along with beverages demand.

Oleoresin extraction process involves huge investments in the preliminary

stages, making the entry barriers high for new entrants in the industry. India held
over 50% of the overall production in 2015. Growing preference for natural
ingredients over synthetic colours and flavours among consumers are also
expected to benefit the demand. Rising raw material prices due to pesticide
usage and reduction in cultivable land in recent past may have negative impact
on the market.

29
The European Food Safety Authority has declared the usage of capsicum
oleoresin as a potential feed additive for chicken for helping them increase their
fattening ratio. Such regulations are expected to assist the growth for oleoresin
market over the forecast period.

Several R&D initiatives have been taken to introduce oleoresins for

aromatherapy applications. Recent advances are being made to produce raw
material components which are cheaper and are not affected by microbial
contamination.

U.S. oleoresin market volume by product, 2014-2024 (Tons)

The global oleoresin market (http://www.grandviewresearch.com/industry-

analysis/oleoresins-market) is expected to reach USD 1.69 billion by 2022,
according to a new report by Grand View Research, Inc. Increasing flavours
demand is expected to remain a key driving factor for global oleoresin market
over the forecast period. Shifting consumer preferences towards natural
ingredients over synthetic flavours is also expected to have a positive impact on
the market growth. Oleoresins are widely used in treating cancer, stress and
back pain owing to its antioxidant and anti-inflammatory properties which is
expected to help in its market development further.

30
4.5 SOME SPICE OLEORESINS AND THEIR APPLICATIONS
TYPE OF DESCRIPTION SOURCE APPLICATIONS
OLEORESIN
Black Pepper Oleoresin of black India, Brazil, Malaysia, Flavouring, masking,
Oleoresin pepper is 2-5%, pepper Indonesia, Vietnam and deodorizing, pungency,
oleoresin is a thick, Thailand. colorant.
green, viscous liquid,
difficult to mix uniformly
and is not easy to pour.
Capsicum (Chilli) It is prepared by India, Spain, Portugal, Meat canning,
Oleoresin extracting the crushed Central Europe, Southern Beverages,
capsicum (Capsicum Africa. Pharmaceutical,
Annum Linn) with Perfumery,
volatile solvents. Typical Confectionery, Tobacco,
yield of oleoresin Sauces, Soup powders,
depends on the solvent Curry powders,
used and ranges from noodles.
11.5-16.5%. Its a Dark
red viscous liquid.
Cinnamon Bark Oleoresin is prepared by North America Cinnamon oleoresin is
Oleoresin extracting cinnamon used in flavouring, cake
bark with organic and similar mixes,
solvents, the yield using pickles, prepared
ethanol is 10-12% and meats, convenience
using benzene is 2.5- foods and related
4.3%. Recently 1,1,2- products. Leaf oil is
trichloro-1,2,2- used as a flavouring
trifluroethane has also agent for seasonings
been used. It is Reddish and savoury snacks to a
brown powder. small extent
Clove Bud Clove oleoresin is Indonesia, Madagascar, In the food industry,
Oleoresin prepared by solvent Tanzania, Sri-Lanka cloves are often used in
extraction of clove bud, the form of ground
yielded about 18-22% extracted essential oils
oleoresin (90-92% or oleoresin in a small

31
 volatile components) amount because of
using benzene and 22- their intense flavour.
31% using alcohol.
Ground clove is
extracted by suitable
solvent(s) then
evaporated or distilled
to obtain oleoresin
Ginger Oleoresin Ginger oleoresin is India, China, Nigeria, Oleoresin is employed
obtained by extraction Sierra-Leone, Indonesia, for flavouring all kinds
of powdered dry ginger Bangladesh, Australia, of products and
with suitable organic Fiji, Jamaica and Nepal. confectionary and fins
solvents like alcohol, Among them India and limited use in
acetone etc. Its Dark China are the dominant perfumery.
brown in colour & suppliers to the world
viscous liquid. General a market
yield of 3.9-9.3% with an
average of 6.5% on dry
weight of ginger is
obtained

4.6 GINGER OLEORESIN

Oleoresins are extracts from herbs or spices used as flavouring and colouring in
food products and pharmaceutical compositions. The major off takers of Ginger
oleoresin are pharmaceutical, cosmetics and Food Industries. Ginger oleoresin is
an important condiment in these industries due to its antioxidant and poly-
phenonic compounds. It is also used for flavouring of all kinds of foods and
confectioneries. Ginger oleoresin is a dark brown viscous liquid, with a volatile
oil content of 15%. They originated in the 1930’s when the oleoresins of black
pepper and ginger were developed. These original oleoresins were produced by
dissolving ground spice with a solvent, removing the solvent under vacuum and
disposing of the waste materials. The spice oleoresins are actually the
concentrated liquid from the spices that reproduce the character of respective

32
 spice fully. Ginger has an average oleoresin content of 5.87% per weight of
whole (Kannan and Madhusoodanan, 2007). These first oleoresins were heavy
masses of the volatile and non-volatile portion of spices. As extraction
technology improved, product quality and demand increased.
Oleoresins have numerous advantages over whole or ground spices. They can be
customized to a specific food product’s requirements for invisibility, solubility
and dispensability. Other advantages include instant flavour release,
standardized flavour, and aroma to meet precise specifications, uniform
dispersion in the product, and easy handling and storage.

Oleoresins are also free from enzymes, tannins and contain natural antioxidants.
They do not contribute colour and moisture significantly to the final product.
The losses from volatilisation of essential oil are minimized due to the presence
of resins.

They are free from bacteria, filth and other contaminants. They have long shelf
life like under normal and semi-adverse conditions. They require less warehouse
space required to store equivalent amount of natural spice flavour. Furthermore,
they require less time in cleanup Spartans because liquid oleoresin does not
leave particulate matter.

The demand for spice oils and oleoresins is increasing day by day, as more and
more spicy snacks are being developed and introduced by fast food chains with
standardized flavours.

4.7 METHODS OF OLEORESIN EXTRACTION

Traditionally, the essential oil/oleoresin from rhizome is extracted using solvent
extraction and steam distillation techniques by employing high temperatures.
Several studies have indicated that high temperature reduces the antioxidant
activity and total phenolic contents in the extracts. Recently, supercritical carbon

33
 dioxide (SC-CO2) extraction is gaining much attention over thermal extraction to
produce essential oils of pharmaceutical importance (Said et al. 2014). Because
of its unique properties of separating natural products at room temperature and at
a reasonable price, the problem of thermal degradation of antioxidants,
polyphenols and other volatile compounds can be reduced (Said et al. 2014).
The method also has the ability to produce solvent-free products. According to
the SC-CO2 extraction is the best method to extract gingerol constituents from
fresh ginger with respect to the solvent extraction. In addition, carbon dioxide is
generally recognized as safe for use in food applications. However, ultrasound-
assisted extraction is a novel method to effectively extract chemical constituents
from plant materials. Many investigations have reported that the use of
ultrasound treatment prior to supercritical extraction process enhances both
extraction rate and yield. In recent years, ultrasound-assisted extraction method
was also successfully applied in the extraction of natural compounds from garlic,
olives and coconut shell powder (Rodrigues et al. 2008).

4.7.1 Solvent Extraction Process

Oleoresins are obtained from spices by extraction with a non-aqueous solvent
followed by removal of the solvent by evaporation. To start with various raw
spices are cleaned and then ground to the required mesh size. Then extraction is
undertaken with the help of proper solvent. Solvents that can be used are hexane,
acetone, ethylene dichloride, or alcohol. Extraction is done by percolation of the
solvents at room temperature through a bed of ground spice packed in a SS
percolator. Then the dark viscous extract containing not less than 10% of total
soluble solids are drawn off and distilled under reduced pressure to remove the
excess of solvent. The essential oil is obtained by steam distillation.
The main steps required to produce oleoresins with solvents, are indicated in the
flow chart shown in figure 3.

34
 Cleaning and grinding of spices

Extraction with the help of solvent

Distillation of the extract

Recovery of Solvent

Blending and Packing

(a) Flow chart

(b) Flow Diagram

Fig. 3: Flow chart and diagram of Solvent extraction method.

4.7.2 Supercritical Fluid Extraction Process

A supercritical fluid is any substance at a temperature and pressure above its
critical point, where distinct liquid and gas phases do not exist. In addition, close
to the critical point, small changes in pressure or temperature result in large

35
 changes in density, allowing many properties of a supercritical fluid to be "fine-
tuned".
The advantages of supercritical fluid extraction (compared with liquid
extraction) are that it is relatively rapid because of the low viscosities and high
diffusivities associated with supercritical fluids. The extraction can be selective
to some extent by controlling the density of the medium and the extracted
material is easily recovered by simply depressurizing, allowing the supercritical
fluid to return to gas phase and evaporate leaving no or little solvent residues.

Carbon dioxide is the most common supercritical solvent. The use of

supercritical fluids is essentially limited to supercritical carbon dioxide
(SCFCO2) extraction since carbon dioxide has the advantages of being
inexpensive and nontoxic and because its critical point is easily reached.

4.7.3 Process Description

According to Spiro and Kandiah (1990) model. Ginger root is charged to T-101,
as described in Fig. 4 the extraction vessel. Supercritical CO2 is then fed from
the holding tank, TK-101, to the extractor. The supercritical CO2 is then passed
through the extraction vessel for a total of six hours.

36
 Fig. 4: Schematic of Ginger oleoresin Extraction Process

Equipment Descriptions
T-101 Ginger Oleoresin Extraction Vessel
E-101 Flash Vessel Pre-heater
V-101 Flash Vessel
C-101 CO2 Recycle Compressor
E-102 Recycle Cooler
TK-101 CO2 Storage Tank

At the end of the six hours, 95% of the 6-gingerol, which is assumed to make up
30% of the ginger oleoresin, has been removed from the ginger root. The CO2
and extracted ginger oleoresin leave the extractor and enter E-101, the pre-
heater, where the mixture is heated using low-pressure steam. The pressure of
the mixture is then throttled to 65 bar, causing the supercritical CO2 to become a
gas. The two-phase mixture then enters the flash vessel, V-101, where
essentially all of the liquid oleoresin exits from the bottom of the flash vessel.
Essentially all of the CO2 exits the top of the flash vessel and then enters C-101
and E-102, where it is compressed and cooled back to supercritical pressure and
temperature. The recycled CO2 is then sent back to TK-101.
After the extraction, the CO2 and extracted ginger oleoresin enter a pre-heater
and then a throttling valve. It is necessary to heat the mixture before entering the
valve to keep the oleoresin above its freezing point of 31°C upon the reduction
in pressure.

The process is operated such that the entire amount of CO 2 in the holding tank is
circulated through the process only once over the six-hour extraction period.
Once a given amount of CO2 has passed through all the pieces of equipment, it is
sent back to the storage tank where it is accumulated for extraction of the next
batch of ginger root. The process is then shut down for two hours while the spent
37
 ginger is removed from the extractor and a new batch of ginger root is charged
to the extractor.

4.7.4 Environmental Significance

Replacement of organic solvents such as hexane, ethyl acetate, and chlorinated
hydrocarbons with a benign solvent such as supercritical CO2 is also considered
desirable from an environmental standpoint. It is :
i. environmentally friendly extraction process

ii. safe substitute for organic solvents

iii. volatile organic compound (VOC) emissions eliminated

4.7.5 Steam Distillation Process

Different processing methods are required to extract essential oils from different
plants. Most oils are extracted using steam distillation, during which the plant
material is permeated with steam. As the plant tissues break down, the essential
oils and water vapor are released, then collected and cooled. The volatile
essential oil condenses, separates and is easily isolated. In this process the steam
is prepared in a separate chamber and piped into the tank. This is more
expensive than the other methods. This is especially good for plant materials
with high boiling point oils. In this method the temperature and pressure can be
increased for certain oils. The rate of distillation and yield of oil are high and the
quality of the oil is good.
The quality of an oleoresin is typically evaluated on the basis of: -
i. Presence of the active ingredients in the desired levels

ii. The bite giving resin portion containing a combination of alkaloids,

gums, pigments, etc.
iii. The aroma giving volatile/essential oil component

38
 iv. The comparison of the flavour/aroma profile of the oleoresin in
comparison with the natural spice in application.
v. The ease of use in terms of pourability, dispersibility, blending,
etc.
vi. The consistency of flavour, colour, viscosity over repeated
batches.
vii. The acceptability of the extraction solvent used and mineral
residual levels present thereof. Acetone, hexane, alcohols,
methylene chloride and CO2 are commonly used solvents.
However, chlorinated solvents are gradually getting phased out in
most part of the world due to concerns about their carcinogenicity.

4.8 VALUE ADDITIONS

4.8.1 Standardization of Oleoresins

Standardization if necessary is achieved when essential oils are added to the
oleoresins to increase or reinforce the flavour and increase the “test” of the
spice. Because these standard oleoresins are blended with essential oils, they are
functional spice but not true representation of the plant material. Standardized
oleoresins maintain a consistent percentage of essential oil. Each manufacturer
standardizes its oleoresin so that these spice extractives produce the same flavor
from batch to batch and from year to year. This process of standardization
reduces the difference caused by varying quality and sources of spice crops.

4.8.2 Dilution
The oleoresin contains the aroma and flavour of the spice in a concentrated
viscous liquid or semi-solid form. Due to this high concentration, oleoresins
cannot be incorporated into food products unless they are diluted. Dilution could
be achieved by dispersing the oleoresin on a dry cannier such as salt dextrose
sugar or starch to produce a dry soluble spice. It could also be dispersed to
produce fat based soluble spice or by emulsifying the oleoresin with gum acacia

39
 or by dissolving it in alcohol or another appropriate solvent to yield a liquid
soluble spice.

4.9 ULTRASOUND TREATMENT ON DRIED GINGER POWDER

An ultrasound treatment on the raw material creates novel and interesting
methodologies, which are often complementary to conventional extraction
methods.

The ultrasound pre-treatment was given in flat bottom flask at 40°C for 60 min.
The temperature was maintained using a water bath temperature controller. After
completion of the ultrasound treatment, the material is placed into the extractor
for SCFCO2 extraction. The extraction is then carried out in SCFCO2 unit at a
pressure of 20 and 25 MPa and temperature of 32 and 35°C, respectively.

4.10 QUALITY ASSESSMENT OF OLEORESINS

The quality of oleoresin is evaluated using following parameters:
i. Presence of the active ingredients in the desired levels
ii. The bite giving resin portion containing a combination of alkaloids, gums,
pigments etc.
iii. The aroma giving volatile/essential oil component.

40
 iv. The comparison of the flavour/aroma profile of the oleoresin with the
natural spice in application
v. The ease of use in terms or pourability, dispersibility, blending etc.
vi. The consistency of flavour, colour, viscosity over repeated batches and
vii. The acceptability of the extraction solvent used and mineral residual levels
present thereof.
Acetone, hexane, alcohols, methylene chloride and CO2 are commonly used
solvents. However, chlorinated solvents are gradually getting phased out in
most part of the world due to concerns about their carcinogenicity.

41
SECTION V: IDENTIFICATION OF MAJOR
STAKEHOLDERS IN THE
NIGERIAN GINGER VALUE CHAIN

5.1 CATEGORIZATION
The Stakeholders can be broadly classified into two groups:
ACTORS AND ENABLES/FACILITATORS/SERVICE PROVIDERS
Example of Stakeholders under each category and the functions they perform are
as depicted below:
Category A:
Actor Function(s) Specific Examples
(i) Input – Suppliers They provide seedling s, Fed Ministry of Agriculture,
fertilizer pesticides for Olam and some NGOs
Ginger Cultivation.
(ii) Farmers (Small, Grow and sell Ginger to Many of such Actors were
Medium, Large) Exporters and/or identified on the field.
processors.
(iii) Local Processors They buy Ginger from Belphins Nigeria Ltd;
Farmers and process into Kafanchan
Ginger products for local
consumption or Export.
(iv) Exporters They buy Ginger direct  Olam Nigeria Limited
from Farmers or through  Gold Chains International
their Cooperatives and
export same.
(v) Commodity They buy in bulk, sell to They are mainly individuals
Merchants Exporters Wholesaler and and/or organizations that
sometimes keep until off – have access to big cash.
season when they can
made huge profit.

42
5.2 Category B: Enable/Facilitators/Service Providers:
They provide support services or represent the common interest of members of
the Value Chain.

Enabler Function(s) Examples

Ginger Farmers Provide Farmers with price
Cooperative Society information, assist farmers
access government incentives
etc.
Government Provides Input to Farmers at
Agencies subsidized rates.
Research Institutes Provide relevant research
findings to Farmers to
improve the quality of their
products.
Micro Finance Banks They extend credit to Farmers
and some to boost their operations
Commercial Banks
 Jaba Ginger Union
 Rimma Guaranty Network
Cooperative Federation Ltd.
 Federal Ministry of
Agriculture
 ADP
Institutes of Root – Crop
Research, FIIRO
Union Bank, First Bank.

5.3 SWOT ANALYSIS OF NIGERIA’S GINGER VALUE CHAIN

SWOT analysis is a good strategic planning tool that helps the Investment
reaches its objectives. Our study revealed the following strengths, weaknesses,
opportunities and threats involved in the Value Chain.

Strengths
 Nigeria ranks first in terms of the
percentage of total hectares of land
under Ginger cultivation.
 Nigeria’s soil is very good for Ginger
cultivation. The number of States
involved in large scale Ginger
cultivation has increased from the six
43
Weaknesses
 Lower yield per hectare compared
to other Ginger productions.
 Countries (12 – 15 ton per Ha as
against 30 – 50 tons in some
countries.
 Poor processing technique
 Non availability of International
Certified Quality Laboratory for
testing.
 North Central States of Kaduna, Niger,
Kwara, Benue, Nassarawa and Kogi to
over 15 States now.
 Nigeria’s Ginger is rated one of the best
in the world because of its pungency
and high oil content.
 Low value addition
 Poor Infrastructural facilities –
power, road etc.
 None availability of long termed
and low interest fund for business.
 Limited access to finance
 Unfavourable business
environment - bureaucracy,
multiple taxation.

Opportunities Threats
 Ginger business is highly profitable  High level of insecurity, particular
because it is a high – value crop. in the Kaduna – a major Ginger
 The demand for Ginger worldwide is producing State.
increasing daily because of its numerous  Poor Image of Nigeria abroad that
uses. affect perception of our foreign
 Ready availability of land for Ginger customers.
plantation and processing.
 Manpower also available.
 Knowledge and experience in the
Ginger farming business due to
continuous training and support from
some international donor agencies.
 Despite the fact that Nigeria exports
close to 80% of her local production,
she still cannot meet the export demand
for her Ginger.

44
5.4 MAJOR COMPONENTS OF GINGER OLEORESIN (GO)
VALUE CHAIN
The following are the major components of GO Value Chain:
 Raw material, Souring, Production and Marketing.

5.4.1 Raw material (Ginger) Production

Any Investor in ginger Oleoresin does not need to lose any sleep in respect of
sourcing the right quality of raw material which is ginger for he/her plant.
Ginger is ready available and experienced ginger Farmer and organized Ginger
Farmer Cooperatives and Clusters are on ground to supply the right quality and
quantity, once the price is good. In the course of this study, we identified
individuals and two major organized ginger Farmer groups that have the
experience, the technical knowhow and the network that will ensure regular
supply of the right type of ginger required for the production of Ginger
Oleoresin.

These Individuals include Baba Idris, Baba Ahmed, Baba Peter, Bitrus Comrade
Marcus and hundreds of others resident in mostly the Southern part of Kaduna
State especially in Kachia, Kagarko, Jaba, Jama a local government areas, Zango
– Kataf, Sanga kaura, Kauru, Kajura and Lere. Each of these Indiviaduals has
over 2o years experience in ginger plantation and Ginger business.

Two of the major organized Groups/clusters/Cooperative Societies identified

are:
 Jaba ginger Union which is made-up of over 60 members groups and
close to 1,600 individuals members spread across the State. Services
provided by the Union to all its members include:
 Supply of the right quality input (seeds, fertilizer, chemical);

45
 capacity- building training aimed at ensuring high yield and quality
output and post harvest handling to prepare the output for Export
market.
 Credit – facilities
 Warehouse facility
 Market access (local and international)
 Advocacy
 Rimma Guaranty Network Co-operative Federation Ltd. The organization
is made up of five Cooperative Unions and membership spread over 8
(eight) local government areas of Kaduna State with over 5,000 individual
members.

There are other of such groups and associations in all the ginger processing
States of Kaduna, FCT, Nassarawa, Benue, Niger, Gombe, Kogi, Abia, Imo
and Ebonyi.

The efforts of the Federal Government and that of other Ginger producing
States to promote the cultivation of ginger have started to yield results. One of
such results in the increasing number of Farmers in about fifteen (15) of the 36
States that are now ginger Farmers.

Another landmark result is the Promotion of Nigeria from the 6th position to the
4th in the world ginger production. The three Countries front of Nigeria are
INDIA, CHINA and NEPAL. Yet another major output of these efforts is the
steady improvement in the quality of Nigerian ginger. It has now been
established that the quality of fresh Ginger produced in Nigeria is the best in the
world and is highly valued for its aroma, pungency, high oil and Oleoresin in
contents.

Recently a new coalition of interested/concerned individuals and groups has

been formed to pursue what members call “Ginger Transformation Agenda”.
46
The main objective of the coalition is to increase the production, processing and
marketing of ginger crop along the value chain in order to popularize utilization
with a view to creating employment opportunities, increase income accruing to
Ginger Farmers, reduce poverty as well as boost food security.

The specific objectives and expected deliverables of the coalition are as follows:

 To increase ginger production from the 2015 level of 310,000 metric tones
to 650,000 metric tones (more than double) by 2018 through provision of
high yield ginger varieties and agro-chemicals to farmers and the
adaptation of GAP (Good Agricultural Practices).
 To popularize ginger crop so as to attract more farmers across the States
to cultivate the crop.
 To promote the establishment of Small/Medium Scale Enterprises within
Clusters/Groups of Farmers which will in turn stimulate local processing
of ginger crop to get more value and income for the farmers.
 To improve processing and quality of produce through capacity building.

Within the foregoing, it is apparent that the supply of Ginger to interested

Investor on Ginger Oleoresin Project is almost assured. Sources at the RMRDC
(Raw – Material Research Development Council) also confirmed that there is
adequate and sustainable quantity of Ginger for industrial processing in Nigeria
based on the study conducted by the Council.

Relevant Support Organizations and or Enabler in the Ginger production

component of the Value Chain include:
 Federal Ministry of Agriculture
 Raw Materials Research and Development Council (RMRDC)
 Federal Institute of Industrial Research, Oshodi (FIIRO)
 National Root Crop Research Institute Umudike
 Nigeria Export Promotion Council (NEPC)

47
  Organized Ginger Growers and Marketers Associations, Groups,
Cooperative Societies in various Ginger growing States of the Federation
 Interested Private Organizations like Olam Nigeria Ltd, Goldchains
International and Belphins Nigeria Ltd (the only identified GO producer
in Nigeria).

5.4.2 PRODUCTION COMPONENT OF GINGER OLEORESIN

VALUE CHAIN
Despite the availability of high quality Ginger (which is the main raw material
for Ginger Oleoresin production) and increased ginger cultivation activities in
many states across the states, there is little or no local production of ginger
oleoresin, and in fact many ginger-based-industrial products. The ONLY
operating ginger oleoresin local producer during the study is BELPHINS
NIGERIA LIMITED, (BNL) Kafanchan, Kaduna South, Kaduna.

BNL’s production of ginger oleoresin for export is NOT even regular due to a
number of reasons (poor infrastructure facilities particularly power and high-
cost-of borrowing in Nigeria etc.)

BNL’s ginger oleoresin plant’s capacity is one(1) metric tonne of split ginger per
HOUR and is designed for continuous operation – 24 hours per day of 3 shifts,
but its production is epileptic.

The other ginger oleoresin Project – Ginger Process Factory (Kachia Food
Company Ltd) was established by the Kaduna State in 1981. We gathered during
the study that the company folded up many years ago. The site is now an eye-
sore with dilapidated buildings and overgrown weeds. Thus BNL remains the
ONLY identified company that has the capacity to produce ginger oleoresin as
at now in Nigeria.

48
With the growing Local and International demand for ginger oleoresin and the
limited local production, the prospects are very bright for new Investors.

Ginger oleoresin is a very-high-value product and the market is closed – in the

sense that all the off takers can be identified, they know themselves and they
have their quality specifications.

Any Investor in ginger oleoresin should take note of the following production
related issues:

a) Input Material: To get good quality and quantity of ginger oleoresin, the
ginger that will serve as input material must:
i. Be harvested 8 to 9 months after planting to get very high aroma,
pungency and flavour. Ginger can be harvested from about 5 months after
planting, but the ones to be used for ginger oil and ginger oleoresin should
be harvested from 7-9 months after planting – matured ginger produces
good results.
Also, the type or variety of Ginger to be used should be the one that
contains more oleoresin. Our study identified three major varieties – The
Yellow Variety (called Tafia Giwa in Hausa which means the feet of an
elephant), the Black variety (called Yatsun Biri in Hausa language
meaning – the fingers of a monkey), and Tumeric Variety. Our
investigations revealed that the BLACK VARIETY contains more
oleoresin than the other two varieties.
b) Production Process/Selection of the right solvent : The main steps required
to produce ginger oleoresin include extraction with SOLVENTS, solvent
removal, standardization, and dilution through dispersion, emulsification or
solubilisation. Detailed production process is as stated in paragraph of this
report. It is however very important to use the right type of solvent for the
extraction. Prolonged research has confirmed that the use of steam or carbon
49
 dioxide (CO2) is environmentally preferred over hydrocarbon or
halohydrocarbon solvents since they generate little or no hazardous wastes.
Kim et al (1992) reported extracts yield of 6.9% with CO 2. For certifiable
organic production of ginger oleoresin, synthetic solvents like petrochemical-
based Haxaxe, Pentane di-and tri-chloroethanes, aceton are NOT allowed
and cannot be used as solvent for ginger oleoresin extraction.
The international Federation of Organic Movement (I FOAM) specifies that
only ETHANOL, WATER/STEAM, EDIBLE OILS or CARBON DIOXIDE
are allowed and permitted to be used as solvents for the extraction of ginger
oleoresin. The most common SOLVENT used is ETHANOL with a
concentration of between 90-95%
c) Quality Standards: Quality standards may vary from country to country and
from major user to another. However, the differences are not much.
What should be of interest to any Investor in the ginger oleoresin is to
produce to the quality required by the customers.
Examples of Quality standards are the ones defined by the U.S. Essential oil
Association. The Association is made up of major off taker of ginger oil and
oleoresin.
The standards for oleoresins are:
i. Volatile oil content : 18-35ml per 100g
ii. Refractive Index : 1.488-1.498
iii. Optical Rotation : -30o to -60om

Quality parameters generally cover the following

 Physical properties
 Chemical properties and
 Microbiological properties.
 Physical examination of the product is undertaken to determine its
appearance, odor and taste. It is also examine for extraneous matter.
After the subjective tests of quality assessment are completed, objective
physiochemical tests are then carried out.
50
 Microbiological contamination poses one of the more serious quality
problems. However, fumigation and sterilization procedures have been
developed to control this.

Local Quality standards certification organisations in Nigeria include:

i. National Agency for Food, Drugs Administration and Control
(NAFDAC) – that sets standards for factory conditions, processing and
final output
ii. Standards Organisation of Nigeria (SON)
iii. Nigeria Export Promotion Council (NEPC) – sets and oversees
standards as, regards quality and packaging of Nigerian exportable
products – Ginger Oleoresin is one of such product.

(d) Machinery and Equipment

Another very important aspect of production component of Ginger
Oleoresins (GO) Value Chain is the acquisition of the right type of
machinery/equipment to produce good quality Ginger Oleoresin efficiently.

India is the world leading producer of Ginger. Our study also revealed that
India is one of the major suppliers of Ginger oleoresin Machinery and
Equipment that are very efficiently, rugged, easy to maintain and price
competitive. Some other suppliers are identified in other parts of the world.

Manufacturers/Suppliers include:
(i) Flour Tech Engineers Pvt Ltd.
182, Sector 24 Faridabad – 121 005 Haryana, India.
(ii) Flavourite Foods & Services Pvt Ltd
Khasra, 50/1, Tillorekhurd, India, India.
(iii) SHIVA ENGINEERS
T Block, Plot No: 533 Bhosari MIDC, Maharashra, India

(iv) Deven Supereriticals Pvt Ltd,

Mumbai, India.
The Company specialized in the design, manufacture, supply and
installation such as: Extractors/Reactors (E/R) Separators (S), CO2
Tank (T) Condenser (CN), Pre-cooler (PC) Evaporator (EV), Pre-
heater (PH), CO2 pump (P) and Entrainer Pump (2)
51
(v) PAPRIKA OLEO’S INDIA
36, M.C.C. Street,
Vir Udhunagari, 626001
India.

(vi) Sanjivani Phyto Pharmar Pvt Ltd

C.B.D Belapur
Maharashtra State,
India.

Manufacturers of Stainless Steel Distillation Equipment identified

include:
(i) ASL – Heavy Fabrication Division,
Ramco Industrial Park
Mombassa Road, Nairobi, Kenya
(ii) Morris Steel & Company
Mogadishu Road,
Nairobi, Kenya.
(iii) EDESA (Essential Distillation Equipment)
Riebeek Kastel 7306,
Western Cape, South Africa
Suppliers of steam Boilers identified include:
(i) Industrial boiler Products Co. Ltd
Kampala Road, Industrial Area,
Nairobi, Kenya
(ii) Benco plant & Engineering PTY Ltd
159 Van Eeden Crescent,
Rosslyn, Karin Park
Gauteng, South Africa
(iii) Firetech Boilers Pvt Ltd
Firetech House, Bangalore,
India.
(iv) Hurst Boiler & Welding Company Inc;
100 Boilermaker Lane,
Coolidge, GA 31738-0530,
USA.

52
5.4.3 MARKETING COMPONENT
This is another very important component of the Ginger Oleoresin Value
Chain.
Processed ginger trade is a closed trade and the following should be noted:
 Ginger processing to the right specifications is a very skilled and highly
technical operation. Improper extraction may lead to a loss of the
desired principles thus making the product bad for commercial
exploitation.

 The bulk of the demand for processed ginger from the food industry is
for dispersed spice extract. It was for the reason that it was
recommended that for the Nigerian plant, the straight (un-dispersed)
Oleoresin extract should be produced, and that this should be marketed
through existing concerns in the importing Countries such as United
States, United Kingdom, Saudi Arabia, Morocco, Japan, Federal
Republic of Germany, Yemen, and Canada. This was considered the
best course to follow since firms in the importing Countries are more
familiar with the requirements of the market, are in a better position to
meet individual specifications, provide technical know-how, and after
sales services more effectively.

 Ginger Oleoresin is a niche market and the off-takers are identifiable

and well known.
Marketing must precede production. The needs (quantity, quality,
timing, delivery schedule etc) of the off-takers must first be ascertained
before production commences. Local Ginger Oleoresin off-takers/users
depend wholly on importation to meet their needs.

53
Identified Local of-Takers of Ginger Oleoresin are:
(i) NASCO Group
1, Old Airport Road,
Jos, Plateau State, Nigeria

(ii) Nestle Nigeria Plc

Shagamu Inter-Change,
Shagamu, Ogun State, Nigeria
(iii) YALE Foods,
Oluyole Industrial Estate,
Ring Road, Oluyola,
Ibadan, Oyo State, Nigeira
(iv) Unilever Nigeria Plc,
Lagos, Nigeria
(v) HAANSBRO A&P Foods Ltd,
Lagos, Nigeria
(vi) OK Foods Ltd,
Oshodi, Isolo, Lagos, Nigeria.

(vii) EMZOR Pharmaceutical Industrial Ltd,

Oshodi, Lagos, Nigeria

(viii) Other Food and Pharmaceutical Companies in various States across the
County.
Foreign off-takers of GO, include:
(i) Danisco (Denmark) http://www.danisco.com
(ii) Degussa (Germany) http://www.flavors-fruit-systems.com
(iii) Firmenich (Swizerland) http://www.firmenich.com
(iv) Givaudan (Swizerland) http://www.givaudan.com
(v) Mane (France) http://www.mane.com
(vi) McCormick (USA) http://www.mccormickflavor.com
(vii) Robertet (France) http://www.robertet.com
(viii) Symrise (Germany) http://www.symrise.com
(ix) Quest (USA) http://www.questintl.com

A visit to this website: (www.go4worldbusiness.com) will also bring out more off-
takers of GO in other Asian Countries.

54
SECTION VI: ESTABLISHMENT OF A MODEL
GINGER OLEORESIN PLANT

6.1 THE SCALE OF OPERATION

GO production is a high – tech project and can hardly be amendable to a
small-scale operation. GO plants are usually designed to operate continuously
for 24 hours of the day. This means a typical GO plant has to operate 3 shifts
of 8 hours per plant per shift a day.

Though the raw material (Ginger) is readily locally available and the market
for the GO is assured, and also the technical manpower can be sourced
locally, the two major challenges that may confront Investors in the project
are poor infrastructural facilities (in particular power supply) and the absence
of long – tenured – low- cost fund from our local financial institutions to
support such projects.

6.2 In view of the two identified constraints, the model plant is based on a
modest nominal installed capacity of just 1 metric tone of split-dried ginger
per hour, yielding between 40 – 50 litres or kg of GO per hour.

In appraising this model plant, the following cost items are identified and
evaluated:
- land
- Factory Machinery and Equipment
- Auxiliary Equipment
- Manpower
- Vehicles
- Office Furniture, Fittings and Equipment
- Others that include preliminary and Pre-operational expenses and
Contingencies.

55
6.3 ESTIMATED TOTAL PROJECT COST AND BREAKDOWN
The estimated total cost of setting up the model GO plant is N220,000,000,
including initial working capital of N100,000,000.

Like in many agro-allied projects, the working capital requirement is usually

heavy. This is because enough provision has to be made for stocking enough
raw-materials that will be needed during the off-season of the product.

Detailed breakdown of the project cost is as displayed at Appendix I, and the

accompanying depreciation schedule is stated at Appendix II.

6.4 MANPOWER REQUIREMENTS

The model GO plant will require a total of 33 personnel – 19 in charge of
direct operations whilst the remaining 14 will handle indirect operations.
Detailed breakdown is as displayed at Appendix III. The model plant will
require highly competent, qualified and experienced personnel to manage it.
The key positions and job-responsibilities of the holders are as tabulated
below:
Position Job Responsibilities

(i) Board of Directors Decision making and policy

formulation that affect the short and
long term operations of the company.

(ii) Plant Manger Supervise and manage all phases of

plant operation which include;
production, management, quality
Control and shipping. His duties also
include; recruiting, training of new
factory employees and providing input
into annual budget planning of the
Company, also attending management
56
 meetings. His responsibilities also
include waste reduction to the
minimum, improving efficiency of the
plant and the entire production process.

(iii) Plant Supervisor He is to assist the plant Manager by:

 Providing technical advice on issues
relating to production.
 Maintaining all safety standards and
ensuring harmonious working
environment.
 Monitoring production quality and
quality on a regular basis.
 Generating weekly/monthly reports
on production, quality standards,
and Employee safety and welfare
(iv) Procurement Officer Ensuring the availability of all required
materials at the right time, quantity and
quality. Monitoring the stock level so as
to ensure uninterrupted production
activities. He is also to monitor and
report on price – changes of raw-
materials and effect(s) on company’s
operation.
(v) Skilled Factory Workers His responsibilities include processing,
sorting, packing and operating the
machines and equipment under the
supervision of the production
supervisor. He is also to ensure quality
standards are followed and that the
output compile with the standards.
Regular cleaning, sterilization and
general upkeep of the entire plant are
also part of his responsibilities.
(vi) Technician He is to ensure routine maintenance and
servicing of all machines and
equipments in his care and keep service
record of each of the machines.
57
(vii) Managing Director/CEO He is the overall boss that ensures
smooth operation of the whole plant. He
oversees the execution of all the
decisions taken by the Board and
coordinates the activities of all
departments/divisions of the plant. He
reports to the Board, and ensures that
the Company is managed efficiently
and profitably.
(viii) Accountant/Admin His job responsibilities include:
Manager  Keeping proper track record of all
financial transactions
 Keeping proper record/inventory of
all machineries/equipment available
in the Company.
 Keeping record of all personnel in
the Company and enforcing rules
and regulations guiding the conduct
of all categories of staff.
 Coordinating budget preparation
and ensuring proper
implementation of agreed budget.
 Attending regular management
meetings.
(ix) Marketing/Sales Manager He plans, executes and coordinates all
the marketing/Sales operations of the
Company.

He also carries out regular market

research to continuously monitor the
market standing of the Company’s
products and services.

He attends management meetings, takes

part in the preparation of the annual
budget and ensures harmonious
working relationship with the staff of
other departments.

58
 Board of Directors

6.5 FINANCIAL APPRAISAL OF THE MODEL GINGER

OLEORESIN PLANT
The model GO plant is appraised to determine its financial viability. The bases
of the appraisal and the results of our analysis are as set out in the following
paragraphs:

6.5.1 PROFITABILITY
The projected Revenue and Expenditure Statement for five years and
accompanying Fund-flow and Balance Sheet Statements are as displaced at
Appendices V, VI and VII respectively. These are the following underlying
assumptions of the addenda:
(i) The nominal capacity of the Oleoresin plant is 1 metric tone of ginger per
hour that will yield 40 to 50kg or litre of Oleoresin. The lower figure of
40kg is adopted.
(ii) The plant is expected to operate for 2 shifts of 8 hours per day or 18 hours
per day, five (5) days a week and 50 weeks a year. Thus the total number
of operation hours at full capacity level of operation is 16 x 5 x 50 = 4,000
hours per year.
However, capacity utilization is projected to start at 50% level and
increase gradually to 90% level in the fifth year, as displayed at Appendix
V.

59
 (iii) Estimated cost figures for all input materials and services are as stated at
Appendix V.
(iv) The ruling ex-factory price of Ginger Oleoresin is N25,000 per kg or litre.
However, a lower figure of N15,000 per kg or litre is adopted for the
financial appraisal of this project. The price is not of any tax and/or
discounts.
(v) Utilities are consumed in proportion to the level of production activities.
(vi) Company tax is paid at the rate of 30% of profit whilst a With-Holding –
Tax (WHT) of 10% is expected to be deducted from Dividends Declared
from the fourth year of operations.
(vii) The project qualifies for a Pioneer Status Certificate that will exempt it
from three to five years. However, we still allow for tax payment.
When the Pioneer Status is granted, all the tax provisions can be re-
invested in the project.
(viii) Estimated Profit - After – Tax increase from N66,857,000 in the first year
to N149,270 in the fifth year as shown below:

Year 01 02 03 04 05
N’000 N’000 N’000 N’000 N’000
Profit –Before –Tax 95,510 122,440 153,760 185,165 213,270
Profit – After – Tax 66,857 85,708 107,632 129,615 149,289

6.5.2 LIQUIDITY
The project is liquid enough to meet all its financial obligations as at when due.
The term loan is repaid by the end of the second year of operation after a
moratorium period of 6-12 months. The Bank overdraft is retired in the third and
fourth years of operations.

Accumulated cash surplus increases from N107,510,000 in the first year to

N286,682,000 in the fifth year.

60
6.5.3 PAY BACK/CASHFLOW ANALYSIS
Year Initial Total Profit After Add Back Total Cum
Investment Tax Depreciation cashflow Cashflow
N’000 N’000 N’000 N’000 N’000
0 220,000 - - - -
1 - 66,857 12,000 78,857 78,857
2 - 85,708 12,000 97,708 176,565
3 - 107,632 12,000 119,632 296,197
4 - 129,615 12,000 141,615 437,812
5 - 149,289 12,000 161,289 599,101
Pay back is thus put at 2 years 5 months as demonstrated below:
2 years + 220,000 – 176,565 x 12
296,197 – 176,565
2 years + 43,435 x 12
119,632
2 years + (0.3631) x 12
2 years + 4.35 months
Say = 2 years 5 months

6.5.4 DISCOUNTED CASH FLOW (DCF) ANALYSIS

This analysis is carried out on the cumulative yearly cash surplus generated by
the project in order to find out if the Net-Present-Value (NPV) of the project will
be positive in which case it will be worth the while.
NPV is the difference between the total (R1, R2, Rn) discounted cashflow and
the initial capital outlay at a specified rate of interest. We adopt a higher current
commercial bank interest rate of 25% p.a to carry out the DCF Analysis.
Thus, NPV = R1 + R2 … Rn - Co
(I+r) (I+r)2 (I+r)n

61
 If the NPV is positive the project is desirable whilst a negative NPV indicates
the reverse.
The details of the DCF analysis with 25% open market interest rate, is as shown
below:
Year Cashflow PVIF@25% PVs
(N’000) (N’000)
0 220,000 -1.000 (220,000)
1 78,857 0.800 63,086
2 176,565 0.640 113,002
3 296,197 0.512 151,653
4 437,812 0.410 179,503
5 599,101 0.328 196,505

NPV = 703,749 – 220,000 = 483,749

NPV is positive, hence project is financially desirable.

6.5.5 SCHEDULE OF DISCOUNTED CASH FLOW/CALCULATION

OF INTERNAL RATE RETURN (IRR)
Item Initial Year 1 Year 2 Year 3 Year4 Year 5 Total
Capital
Net Cashflow 220,000 78,857 176,565 296,197 437,812 599,101
(N’000)
Discounted Factor @ 0.800 0.640 0.512 0.410 0.328
25%
Present Value 63,086 113,002 151,653 179,503 196,505 703,749
(N’000)
Discount Factor @ 0.500 0.250 0.125 0.063 0.016
100%
Present Value 39,429 44,141 37,025 27,582 9,586 157,763
(N’000)
IRR = 25 + 703,749 – 220,000 x 100% - 25%
703,749 – 157,763
= 25 + 483,749
545,986
= 25 + 0.886 x 75
= 25 + 66.45
62
 = 91.45
Say = 91.5% which is far greater than the 10% interest assumed for the loan
facilities

6.5.6 STATEMENT OF VALUE ADDED

Year 1 Year 2 Year 3 Year 4 Year 5
N’000 N’000 N’000 N’000 N’000
Sales Revenue 1,200,000 1,440,000 1,680,000 1,920,000 2,160,000
Bought in Materials and
Services
Input materials 1,010,250 1,212,300 1,414,350 1,616,400 1,820,450
Utilities 5,000 6,000 7,000 8,000 10,000
Gen. admin Expenses/Maint. 12,000 14,400 16,800 19,200 21,600
Etc
Sales /Marketing Expenses 24,000 28,800 33,600 38,400 43,200
Total 1,051,250 1,261,500 1,471,750 1,682,000 1,895,250
Value added 148,750 178,500 208,250 238,000 264,750
Applied as follows:
Wages & Salaries 25,000 27,500 30,250 33,275 36,600
Finance charges 16,240 16,560 12,240 7,560 2,880
Company Tax 28,653 36,732 46,128 55,550 63,981
Retained in Business:
Depreciation Charge 12,000 12,000 12,000 12,000 12,000
Earning (PAT) 66,857 85,708 107,632 129,615 149,289
Total 148,750 178,500 208,250 238,000 264,750

6.5.7 BREAK EVEN POINT ANALYSIS

Item Year 1 Year 2 Year 3 Year 4 Year 5
N’000 N’000 N’000 N’000 N’000
Sales Revenue (S) 1,200,000 1440,000 1,680,000 1,920,000 2,160,000
Fixed Cost (FC) 89,240 99,260 104,890 110,435 116,280
Variable Cost (VC) 1,015,250 1,218,300 1,421,350 1,624,400 1,830,450
Contribution (S-VC) 184,750 221,700 258,650 295,600 329,550
BEP (%) = FC
S-VC 48.3 44.8 40.6 37.4 35.3
BEP Level of Production 24.2 26.9 28.4 29.9 31.8
Activity (%)
BEP Sales Revenue (N’000) 580,800 645,600 681,600 717,600 763,200

63
6.5.8 SENSITIVITY ANALYSIS BEP IF SALES REVENUE FALLS
BY 5% AND OTHER COSTS REMAIN CONSTANT
Item Year 1 Year 2 Year 3 Year 4 Year 5
N’000 N’000 N’000 N’000 N’000
Sales Revenue (S) 1,140,000 1,368,000 1,596,000 1,824,000 2,052,000
Fixed Cost (FC) 89,240 99,260 104,890 110,435 116,280
Variable Cost (VC) 1,015,250 1,218,300 1,421,350 1,624,400 1,830,450
Contribution (S-VC) 124,750 149,700 174,650 199,600 221,550
BEP (%) = FC
S-VC 71.5 66.3 60.0 55.3 52.5
BEP Level of Production 35.8 39.8 42.0 44.3 47.2
Activity (%)
BEP Sales Revenue (N’000) 859,200 955,200 1,008,000 1,063,200 1,132,800

6.5.9 BEP WHERE VARIABLE COST INCREASES BY 5% WHILE

SALES REVENUE REMAIN CONSTANT
Item Year 1 Year 2 Year 3 Year 4 Year 5
N’000 N’000 N’000 N’000 N’000
Sales Revenue (S) 1,200,000 1,440,000 1,680,000 1,920,000 2,160,000
Fixed Cost (FC) 89,240 99,260 104,890 110,435 116,280
Variable Cost (VC) 1,066,013 1,279,215 1,492,418 1,705,620 1,921,973
Contribution (S-VC) 133,987 160,785 187,582 214,380 238,027
BEP (%) = FC 61.7 55.9 51.5 48.9
S-VC 66.6
BEP Level of Production Activity 33.3 43.2 39.1 41.2 44.0
(%)
BEP Sales Revenue (N’000) 799,200 1,036,800 938,400 988,800 1,056,000

6.5.10 BALANCE SHEET

The Projected Balance Sheet Statement at Appendix VII confirms the financial
stability of the project. The shareholders’ funds increase from initial N73,600,000 to
N462,701,000 in the fifth year. All important financial ratios are quite satisfactory.
Current ratio improves from the initial 1.6 to 7.3 in the fifth year.

64
6.5.11 BREAK – EVEN ANALYSIS
Based on the scheduled production programme, the project will breakeven at 24.2%
level of capacity utilization in the first year with sales revenue of N580,800,000 which
is easily quite achievable.

6.5.12 SENSITIVITY ANALYSIS

Two indicators are used to carry out this analysis – reduced sales revenue of up to 5%
and increase variable cost figures also of 5%.

Under the two situations, the project still remains very liquid to meet all its financial
obligations and also financially stable.

Capacity utilization in the fifth year however increases from 24.2% to 35.8% and
33.3% respectively.

6.5.13 SOCIAL AND ECONOMIC BENEFITS

The socio and economic benefits of the project to the Nigerian economy cannot
be over emphasized. These include:
i. The project will boost industrial base of Nigeria and improve our foreign
exchange earnings through export of Oleoresin.

ii. It will generate direct employment to over 33 Nigerians of various skills

and qualifications.

iii. It will generate indirect employment to thousands of others who will serve
as suppliers of input materials, vendors and other service providers.

iv. Employment opportunities generated by the Project may reduce the crime
rate and other social vices in the Country.

v. The project will also increase the revenue base of the host state Kaduna
and that of the Federal government through payment of PAYE and
Corporate Tax respectively. Corporate Tax provision increases from
almost N30.0 million in the first year to over N200.0 million in the fifth
year.

65
vi. The Project is local-resource-based (all the input-materials are available
locally), hence it will generate higher multiplier effects on the economy.

vii. The establishment of this project will stimulate more agricultural activities
in the Ginger – producing states of Kaduna, Nasarawa, Benue, Niger and
Gombe and encourage Ginger Farmers to cultivate more acres of land.

66
SECTION VII: CONCLUSION AND
RECOMMENDATIONS
7.1 CONCLUSION
Nigeria is the world’s third largest producer of ginger, which is the main raw –
material for GO. The qualities of Nigeria’s ginger are among the best in the
World.

More and more states in Nigeria are embracing the cultivation of Ginger and
hence the supply of Ginger to any Ginger Processing plant in the Country will
not be a problem.

The demand for GO, both locally and internationally is high and keeps on
increasing yearly. Despite her position as one of the third largest Ginger
producers in the World, Nigeria still depends on Importation of processed
Ginger products like GO.

The establishment of GO plant is highly technical and capital intensive.

Relatively huge investment is required but the returns are quite attractive.

The challenges identified are poor infrastructural facilities in the Country

(especially power supply) and high cost of borrowing.

The good news however is that the Federal government is planning to address
these challenges as contained in the recently launched Economic Recovery &
growth Plan (2017 – 2020).

Despite these challenges, able Investors with the right technical support will still
find the Investment worthwhile as demonstrated with the model plant.

67
7.2 RECOMMENDATIONS
We thereby put forward the following recommendations:
i. For Prospective Investors in Ginger Oleoresin
 Establish the plant within Ginger Production States to ensure regular
supply of raw-material and cut down on transportation cost.
 Start with a relatively small-capacity-plant (like the model plant in this
report) and expand gradually.
 Network with and take-part in the activities of existing Groups/Coalition
on Ginger so as to enjoy the benefits that will accrue from the activities of
such groups.

ii. For Federal Government

 Set-up Industrial parks (where basic facilities like regular power supply,
water security etc) within Ginger-Producing states so as to encourage
Investors to establish processing facilities.
 Intensify the current efforts to significantly improve the business
environment
 Provide long-tenured and very low interest intervention fund for Investors
in Ginger Oleoresin and other Agro-allied Project
 Current Agricultural Input-Supply schemes of the Federal Ministry of
Agriculture should be reviewed to make them more effective and
impactful.
 Engage the new Coalition on Ginger Transformation Agenda and work
closely with the group with a view to removing all the identified
bottlenecks in the Ginger Value Chain.

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 APPENDIX I: BREAKDOWN OF ESTIMATED PROJECT COST
Item Unit of Quantity Price/Unit Total Cost
Measurement No N N

 Land and Development Acre 6 500,000 3,000,000

Sub-Total (A) 3,000,000
 Factory Building (25m x 23m including Square metre 575 100,000 57,500,000
store
Sub-Total (B) 57,500,000
Main Machinery/Equipment
 Supercritical Carbon – Dioxide
Extraction machine 1 14,000,000 14,000,000
 Spray washing/peeling machine 1 1,500,000 1,500,000
 Splitting machine 1 750,000 750,000
 Bleaching and Drying machine 1 6,000,000 6,000,000
 Powdery machine 1 6,000,000 6,000,000
 Crushing machine 1 750,000 750,000
 Quality control Lab. Equipment 1 1,500,000 1,500,000
Sub-Total (C) 30,500,000
Auxiliary Equipment
 Borehole Construction, Piping,
Pumping machine water-Tanks etc Set 1 2,000,000 2,000,000
 Digital Weighing Balance Scale (300kg) No 4 100,000 400,000
 Standby Generator with all accessories
40KVA Set 2 2,500,000 5,000,000
Sub-Total (D) 7,400,000
Vehicles
 5 – Ton Lorry No 1 5,000,000 5,000,000
 Pick-up/Factory utility Van No 1 3,500,000 3,500,000
Sub-Total (E) 8,500,000
Office furniture, fittings and Equipment Set 1 2,500,000 2,500,000
Sub-Total (F) 2,500,000
Preliminary/Pre-operational Expenses Lump sum 5,000,000
Sub-Total (G) 5,000,000

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TOTAL (A) + (B) + (C) + (D) + (E) (F) + (G) 114,400,000
TOTAL 114,400,000
Add contingencies and miscellaneous at about 5% 5,600,000
Total Capital Investment 120,000,000
Add Initial working Capital 100,000,000
TOTAL PROJECT COST 220,000,000

PROPOSED FINANCIAL PLAN

Source Amount Share
N N
Equity Contribution 73,600 33.5
Tern Loan 46,400 21.0
Bank Overdraft 100,000 45.5
TOTAL 220,000 100.0

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APPENDIX II: DEPRECIATION SCHEDULE

Item Initial Cost Depreciation Amount

N’000 Rate (%) N’000

Land Development 3,000 - -

Factory building including Store/Warehouse 57,500 6.6 3,800

Main Machinery/Equipment 30,500 10.0 3,000

Auxiliary Equipment 7,400 20.0 1,500

Vehicles (2) 8,500 20.0 1,700

Office furniture, fittings and Equipment 2,500 20.0 500

Other (Preliminary/Pre-operational

Expenses plus contingencies/miscellaneous 10,600 10.0 1,000

TOTAL 120,000 Say 12,000

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APPENDIX III: SCHEDULE OF STAFFING AND
REMUNERATION
Position Number Rate per Person Total Amount
per Annum
No N’000 N’000
(A) DIRECT OPERATIONS
Plant Manager 1 840 840
Plant Supervisor/Production Manager 1 720 720
Production Supervisor/Quality Control
officer 1 720 720
Procurement officer 1 600 600
Skilled factory workers (6 per shift 2
shifts per day 12 480 5,760
Technicians (Mechanical,
Electrical/Electronics, Plumbing etc) 3 480 1,440
SUB-TOTAL (A) 19 10,080

(B) INDIRECT OPERATIONS

Managing Direct/CEO 1 1,080 1,080
Accountant/Admin. Manager 1 840 840
Marketing/Sales Manager 1 840 840
Sales Executive 2 600 1,200
Accounts/Admin. Executives 2 600 1,200
Secretary/Computer operation 1 480 480
Drivers 2 480 960
Office Assistant/Delivery Clerk 1 360 360
Security men 3 480 1,440
SUB-TOTAL (B) 14 8,400
TOTAL (A) + (B) 33 18,480
Add 20% Welfare and Incentive Allowances 3,690
GRAND TOTAL 22,170
SAY 25,000

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APPENDIX IV: SCHEDULE OF WORKING CAPITAL

Year 01 02 03 04 05
Basis of estimation N’000 N’000 N’000 N’000 N’000
1 Month stock of Ginger and

Preservatives (main Raw materials) 85,000 100,000 117,000 135,000 150,000

3 months’ stock of Packaging materials 2,500 3,000 3,500 4,000 5,000

3 months provision for salaries/wages 6,250 6,875 7,600 8,500 9,500

3 months Provision for Gen. Admin.,

Maintenance, Marketing/Sales 9,000 10,800 12,600 14,400 16,200

Expenses

TOTAL 102,750 120,675 140,700 161,900 180,700

SAY 100,000 120,000 140,000 162,000 180,000

INCREASE - 20,000 20,000 22,000 18,000

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 APPENDIX V: PROJECTED REVENUE AND EXPENDITURE
STATEMENT FOR FIVE YEARS
Year 01 02 03 04 05
Level of production Activity (%) 50 60 70 80 90
Total Production Hours per year 2,000 hrs 2,400 2,800 3,200 3,600
Ginger requirement @ 1 mt per hour (mt) 2,000 mts 2,400 2,800 3,200 3,600
Output of Oleoresin @ 4% yield (in kg) 80,000 96,000 112,000 128,000 144,000
Sales Revenue @ N15,000/kg (N’000) 1,200,000 1,440,000 1,680,000 1,920,000 2,160,000
LESS EXPENDITURE
 Purchase of Ginger @ N500,000/mt 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000
 Preservatives 250 300 350 400 450
 Packaging materials 10,000 12,000 14,000 16,000 20,000
 Utilities Consumption (Petrol, Diesel,
water etc. 5,000 6,000 7,000 8,000 10,000
 Salaries/Wages 25,000 27,500 30,250 33,275 36,600
 Depreciation charges 12,000 12,000 12,000 12,000 12,000
 General Admin., Maintenance and
Insurance Exp. @ 1% of Sales Revenue.
12,000 14,400 16,800 19,200 21,600
 Marketing, Sales and Public Relation
Expenses @ 2% of Sales Revenue 24,000 28,800 33,600 38,400 43,200
 Finance Charge 16,240 16,560 12,240 7,560 2,880
TOTAL EXPENDITURE 1,104,490 1,317,560 1,526,240 1,734,835 1,946,730
Profit Before Tax 95,510 122,440 153,760 185,165 213,270
Tax @ 30% 28,653 36,732 46,128 55,550 63,981
Profit After Tax 66,857 85,708 107,632 120,615 149,289
Add Profit Brought Forward 0 66,857 152,565 260,197 339,812
Less Dividend Declared 0 0 0 50,000 100,000
PROFIT RETAINED 66,857 152,565 260,197 339,812 389,101
% Return on Sales revenue 5.6 6.0 6.4 6.8 6.9
% Return on Equity 90.8 116.5 146.2 176.1 202.8
% Return on Capital Investment 35.8 37.9 32.2 31.4 32.3
Average Annual Return on Investment = 33.92
Say = 34%

74
 APPENDIX VI: PROJECTED FUNDFLOW STATEMENT FOR
FIVE YEAR
[[

Year 00 01 02 03 04 05
INFLOW N’000 N’000 N’000 N’000 N’000 N’000
Equity Contribution 73,600 0 0 0 0 0

Term Loan 46,400 0 0 0 0 0

Bank Overdraft 0 100,000 0 0 0 0

Depreciation Provision 0 12,000 12,000 12,000 12,000 12,000

Profit Before Tax 0 95,510 122,440 153,760 185,165 213,270

TOTAL INFLOW (C) 120,000 207,510 134,440 165,760 197,165 225,270

OUTFLOW

Capital Investment 120,000 0 0 0 0 0

Working Capital Increase 0 100,000 20,000 20,000 22,000 18,000

Term Loan Repayment 0 0 46,400 0 0 0

Retirement of Bank Overdraft 0 0 0 50,000 50,000 0

Company Tax 0 0 28,653 36,732 46,128 55,550

Dividend Declared 0 0 0 0 50,000 100,000

TOTAL OUTFLOW (D) 120,000 100,000 95,053 106,732 168,128 173,550

SURPLUS/(DEFICIT) (C) – (D) 0 107,510 39,387 59,028 29,037 51,720

CUMLATIVE 0 107,510 146,897 205,925 234,962 286,682

SURPLUS/(DEFICIT)

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 APPENDIX VII: PROJECTED BALANCE SHEET STATEMENT
FOR FIVE YEARS
Year 01 02 03 04 05
CURRENT ASSET N’000 N’000 N’000 N’000 N’000
Working Capital Provision 100,000 120,000 140,000 162,000 180,000
Cumulative Cash Surplus 107,510 146,897 205,925 234,962 286,682
Total (A) 207,510 266,897 345,925 396,962 466,682
CURREN LIABILITIES
Company Tax 28,653 36,932 46,128 55,550 63,981
Bank Overdraft 100,000 100,000 50,000 0 0
Total (B) 128,653 136,732 96,128 55,550 63,981
WORKING CAPITAL INCREASE: (A) – (B) 78,857 130,165 249,797 341,412 402,701
FIXED ASSETS
Capital Investment 120,000 120,000 120,000 120,000 120,000
Less Depreciation 12,000 24,000 36,000 48,000 60,000
Net Capital Investment 108,000 96,000 84,000 72,000 60,000
Add working Capital 78,857 130,165 249,797 341,412 402,701
NET ASSET EMPLOYED 186,857 226,165 333,797 413,412 462,701
FINANCE BY:
Equity Contribution 73,600 73,600 73,600 73,600 73,600
Tern Loan 46,400 0 0 0 0
Profit retained 66,857 152,565 260,197 339,812 389,101
TOTAL 186,857 226,165 333,797 413,412 462,701

76