TANGCO PTE LTD
Executive Summary
BT
5/29/2014
Executive Summary
1. Our ideal “Durian Orchard” has to produce good quality durians and have a consistency
of supply throughout the year. This is beneficial to durian consumers even off peak
season simultaneously durian producer can enjoy consistent income as well.
Despite the many varieties of durians for growers to plant their best choices, one
popular strategy is to plant a clonal mix of 50% of D197 or D24, 30% of D99, 20% of D98
or D114. Research shows that D24 is planted with D99, D98 or D114, the performance of
any of the 4 types increase significantly in terms of yield and fruit quality. Another
advantage is D99 can bear fruits during off-season and thus produce two crops per year.
D197 is in high demand currently and D24 is classified as mid-season clone; D98 and
D114 are late-season clones. Hence, we have durians the whole year for people to enjoy
them.
A full time staff is required to take care and monitor of the trees’ health and fruits, upkeep the surrounding area and void off unnecessary matters affecting the trees and
fruits. Of course advice from my friends and Malaysian Department of Agriculture (DOA)
will be useful in making our durian orchard a success.
2. I am proposing to start small with 3 - 5 acres of agricultural land preferably with full
grown durian trees. The best approach is durian clone; a durian clone is a descendant of
a selected durian cultivar which is produced by vegetative reproduction by using budgrafting or inarching process. Thus limiting fruition to 2 years instead 5 years and
increase fruit yield and quality. Another advantage is that clones with different maturity
indices can stretch the durian fruit season over several weeks.
3. Taiwan, Hong Kong and Singapore are major importers of durians, accounting for 90% of
total exports from Malaysia, Thailand and Indonesia. Singapore is the largest export
market absorbing 65% of total durian export. Hong Kong is the second largest market
for fresh durian in the world accounting for 20% of global exports where 99% is supplied
by Thailand and a steady growth of minimum 10% annually. China is the latest and fast
growing buyer of frozen durian pulp from Malaysia. Potentially they will be one of the
biggest
importers
over
time.
According to FAMA or DOA statistic dated in 2011, Malaysia currently produced 300,000
tons of durian with revenue estimated at RM1.3 billion annually and is still insufficient.
We might not play a major role in the market place, however, given the opportunity to
China’s invitation anything is possible in future.
4. The most important advantage over competitors is to provide durian for the whole year
with
different
varieties.
Peninsula (West) Malaysia has two fruiting seasons because durian is grown in different
localities affected by either the north-east or south-west monsoons or both. Growing
areas are divided into 3 regions influenced by the annual monsoons and the change
from wet to dry weather and the effect of a dry spell will actually determine the quality
of the fruit. Our proposed land is located in Region 2 covering West, Central and South
region, this region usually has two dry spells of 2-3 weeks in January-February and JulyAugust with wet weather occurring from October to December. Thus, there tend to be
two durian flowering seasons, February-April and July-September, and two fruit seasons
with the main season from June to August and the smaller off season in DecemberJanuary. Water is important to promote growth and development of the flower buds,
blooming, fruit set, fruit growth and maturity. The best option is have an efficient
irrigation system to manage water properly during the durian reproductive stage to
achieve high yields of good quality fruits. Not only supply water but to deliver plant
nutrients,
supplements
and
chemicals
directly
to
the
trees.
DOA is offering advisory and consultancy services for durian farmers and I believe the
services offered will be very helpful in managing the durian farm.
End of the day quality and value for money is up most significant in term of customers’
satisfactory.
5. The main objective is to recoup the investor’s fund within 10 years for this project.
Initial two years will be to lay a good foundation and by the third year or earlier our
fruits will be ready for the markets and expected to generate minimum 10% income.
After the fourth and subsequent years anticipate paying back 15%-20% to investor.
Key strategies are:
 Operate retail stores in high traffic strategic locations in Klang Valley
like Kuala Lumpur and Petaling Jaya.
 Selling via retail stores can command a higher pricing than selling to
wholesalers.
 DOE’s AgriBazaar service was established with the purpose of
promoting trade between producers and suppliers to provide an
internet-based trading hub for retailers, wholesalers, collectors,
traders, farmers, exporters and importers to interact with and do
business online and benefits everybody.
6. An
interesting
article
extract
from
Washington
Post:
In most parts of the world, durian might be considered fresh if it hasn’t been frozen. But
in Penang, durian is considered fresh only if it fell from the tree that morning. And even
that is not good enough for the most discriminating connoisseurs, such as Seng, who
claim that in the hour it takes to transport the durian from orchard to town market, the
fruit has already lost some of its fragrance. That is why, in recent years, a few other
farmers have started inviting people out to the orchard for on-the-spot tastings. When
durian season is in full swing, Seng fills his patio with tables and chairs and an LCD
screen that shows an informational presentation on durians. He teaches his customers
to distinguish the fruit of younger trees, which is sweeter, creamier and gummier in
texture, from that of more mature trees, which is so strong that it tastes almost like
cheese. Durian from some of the oldest trees is so concentrated that it’s mostly bitter
and can make your tongue go numb for about 10 seconds at first tasting.
Despite his lofty-sounding ideas, Seng’s dream does have a practical strategy. “As
people become connoisseurs, they eat only the best quality, and so they eat less,” he
says. Seng’s customers from Hong Kong, Japan and Singapore are no amateurs and they
come all the way here just to sample his best durians: “In the long term, there will be
more high-end customers, and I’ll make a profit.” These days, access to the finest durian
has become a status symbol in Southeast Asia. Last year, tycoon Stanley Ho of Macau
sent a private jet (durians are not allowed on commercial flights) to Singapore just to
retrieve 88 durians (a lucky number in Asian cultures) valued at a total of about $1,500.
Until he reaches such lucrative heights, Seng is committed to growing the finest durians
he can. I notice that his orchard still bears traces of the last few rambutan trees he has
just chopped down to make room for new durian saplings. For now, he is content to
spread the love of durians to all those who will come, believing it’s only a matter of time
before durian fever will overtake them.
7. Key Issues
 Land acquisition – location is the most important, has to be strategically located
near stream or river or well or last resort to rent water from nearby village. Land
also comes in different sizes, takes a bit time and efforts to source our ideal land.
 Proper irrigation system – use water-pumps to pump water from stream or river
or well and distribute water effectively and evenly via PVC pipes to trees.
 Pests and insect control – require DOA services to counter such setbacks.
8. Finance Requirement
There is a financing requirement of US380,000, which will be sought from your organization.
The equity offered will be 40%. The company has no loans or overdrafts and at this stage does
not plan any.
In terms financial structure, the shareholding structure of the company will be as follows:
Shareholders
CEO (Founder)
Pre – Financing Stake
60%
Post – Financing Stake
40%
Current Investors
New Investors
Total
40%
30%
30%
100%
100%
The investment will be used as follows:
Investment Area
Land Acquisition
Working
Capital
Development
Contingency
Total
Proportion
65.8%
+ 24.2%
10%
100%
Amount
$250000
$92000
$38000
$380000
Cash Projections
As stated previously, the company anticipates its first sales to be achieved after 24 months’ time
– though this could be sooner.
Forecast Cash Balance for the next three years (first year by month):
120000
1st Twelve Mths
100000
Income
Column1
80000
60000
40000
20000
0
The company will have a basic monthly cash-burn of $2,559 per month, equivalent to $30,704
per year. The average cash burn before sales in year two is expected to rise to $2,613 per
month, equivalent to $31,358 per year.
Though we expect to generate income in 24 months, through controlling the cash burn in an
event of a delay the company could support a further 12 month delay without having to return
for more funding.
Overleaf are illustrative projections for the three years.
Exit Route
These funds will be used to take the fruit to market, at which stage we could continue to supply
at lower levels without further funding or may decide to undertake a second round of financing
to expand more aggressively.