VCO

HeaVCO Private Limited

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1.0 EXECUTIVE SUMMARY

HeaVCO is a company that contain by 4 main managers and the leader is CEO.

The other mangers are operation manage6r, marketing manager and financial

manager. The strength and successful of the organization is depend on the

manager to manage the business. Our organization has a motive and objective to

achieve our target.

The company‘s business philosophy is to develop and commercialize coconut-

based products, while at the same time empowering local communities through

integrating local communities‘ business activities into the company‘s processes.

Our company produces and sells products such as virgin coconut oil. The

company started the business with one product: virgin coconut oil, which is a

popular food supplement product. Virgin coconut oil (VCO) is the newest, high-

value coconut product very much sought after for its human, nutraceutical benefits

and as a functional food. World demand for VCO is rapidly increasing. VCO

production, which at present is mostly done at household, micro- or village-scale

levels, is rising rapidly and has excellent potential for improving coconut farm

incomes by five to eight-folds over traditional copra production or sale of fresh

nuts. Asian Pacific Coconut Community (APCC) and member countries are

strongly promoting VCO for health and improving livlihoods of smallholder

coconut processors. However, one major concern is that unless VCO is produced

correctly under well-managed, hygienic conditions, the poor quality oil produced

will not meet prescribed standards, and may not be suitable for human

consumption.

The fast developing niche and high value markets for VCO as a food

supplement, as a body moisturiser and carrier oil for aromatherapy, as a hair

conditioner and as other applications, is generating a great deal of interest among

coconut farmers and landowners, businessmen and entrepreneurs. The attraction is

in the different processes for producing VCO with the goal being a possible

source for improving livelihoods and incomes.

In terms in this business plan, our company will provide a production on VCO

by industrial scale bit for the starter, we will do it by homemade. This is the

starting point to promote our product to the consumer or customer and established


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a trust on them. This is also a starting point to gain their attraction towards our

product.

Basically, VCO is defined as Oil obtained from the fresh, mature kernel (meat)

of the coconut by mechanical or natural means, with or without the use of heat,

without undergoing chemical refining, bleaching or de-odourising, and which

does not lead to the alteration of the nature of the oil. Virgin coconut oil is suitable

for human consumption without the need for further processing. It has a fresh

coconut aroma that can be mild to intense depending on the oil extraction process

used.

2.0 COMPANY PROFILE

2.1. Company Profile

Basic Information

Company Name: HeaVCO

Business Type: Partnership

Product/Service: Virgin coconut oil (VCO)

Address: 33, Jalan Mutuara Emas 7/6, Taman Mount Austin,

81100, Johor Bahru, Johor, Malaysia.

Ownership & Capital

Year Established: August 2012

Ownership Type: Private Limited

Trade & Market

Main Markets: Penang, Johor, Selangor, Kuala Lumpur


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2.2. Company Description

Logo

Motto

Leap Towards The Healthy Wealth

2.2.1.1. Objective

HeaVCO is produced to meet the demand of the market. The objectives are:

To get a maximum profit from time to time.

To increase the customer.

To create job opportunities to people who is unemployed.

Follows the campaign of government to the “Healthy Life”.


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2.2.1.2. Mission

Our mission is to manufacture the finest virgin coconut oil and associated

products available on the market today.

We intend to do this operating with honesty and integrity.

We would hope that we can share our success with people who are a lot less

fortunate than ourselves. We will always pay coconut farmers a fair price for their

coconuts and we will always pay our employees a fair days pay for a fair days

work.

We will never compromise the quality of our oil to increase the yield. Virgin

Coconut Oil is a totally natural product, made using the finest organic coconuts.

Nothing will convince us to alter our production methods.

2.2.1.3. Vision

We expect, over the next few years, to see virgin coconut oil recognised for the

numerous health benefits it offers, this is happening, but it is happening slowly.

We aim to make Virgin Coconut Oil, the premier VCO brand in the world.

We aim to ship our oil to as many countries as possible. This amazing oil, with so

many benefits, should be available in stores all over the world.


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3.0 MANAGEMENT PLAN

3.1. Management Team and Responsibilities

POSITION TASK AND RESPONSIBILITIES

Chief Executive Officer

The decision maker of this company

Serves as a peacemaker if disputes arises between the

members

Generate networks with the UMK authorities as well as

other non-profit organisation related to the main aim of

our business

Manages all the human resources

Human Resource

Manager

Manages all the administrative works

Distributes the profit amongst the shareholders

Marketing Manager Decides the proper marketing strategies for the company

Determine the pricing of the product according to the

demands and needs of the market and keep track on the

latest findings regarding of the business

Production Manager Supervise all field related activities

Manages the one stop centre in and out

Financial Manager Control and balancing company‘s account.

Make sure the budget and influence of money is clear.

Help finance manager in company‘s budgeting.


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3.2. Organization Chart

4.0 PRODUCT DESCRIPTION

4.1. Product definition

The Philippine National Standard for VCO (PNS/BAFPS 22:2004/ ICS

67.2000.10) officially defines VCO as:

• Oil obtained from the fresh, mature kernel (meat) of the coconut by

mechanical or natural means, with or without the use of heat, without

undergoing chemical refining, bleaching or de-odourising, and which does not

lead to the alteration of the nature of the oil. Virgin coconut oil is suitable for

human consumption without the need for further processing.

• VCO consists mainly of medium-chain triglycerides, which are resistant to

peroxidation. The saturated fatty acids in VCO are distinct from animal fats,

the latter consisting mainly of long-chain saturated fatty acids.

• VCO is the purest form of coconut oil, essentially water clear or colourless. It

contains natural Vitamin E and has not undergone any hydrolytic and

atmospheric oxidation as demonstrated by its very low, free fatty acid (FFA)

content (even without refining) and low peroxide value. It has a fresh coconut

aroma that can be mild to intense depending on the oil extraction process used.

(Chief Executive Officer)

HARTINA HUSSIN

Human Resource Manager

ATIQAH IZYANNIE

Operation Manager

CHUA HIU CHING

Marketing Manager

MOOI WEI CHEIN

Financial Manager

HO NEE KHING


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• VCO differs greatly from traditionally produced, copra derived coconut oil,

which must undergo chemical refining, bleaching and de-odourisation

processes to make it suitable for human consumption. RBD (refined, bleached

and deodourised) coconut oil made from copra, is yellow in colour, odourless,

tasteless and does not contain natural Vitamin E, since this is removed when

the oil is subjected to high temperature and various chemical processes.

4.2. Product characteristics and uses

The degree of saturation and length of the carbon chain of the fatty acids

comprising a particular fat or oil determines its properties, corresponding uses and its

effects on human health. The more saturated the fat and the longer the chain, the

harder the fat and the higher the melting point (Fife, 2001).

Coconut oil is unique amid fats and oils, as it contains the highest percentage

of medium-chain fatty acids (MCFA) with a carbon-chain length of 8 to 12 carbon

atoms. VCO behaves and metabolises differently in the human body to other saturated

and unsaturated fats or oils. MCFA in coconut oil is about 64%, with lauric fatty acid

(C12) as the highest ranging from 47 to 53% depending on the coconut variety.

For edible purposes, coconut oil is generally used as a frying and cooking oil

because of its excellent resistance to rancidity development. It is also used as a

substitute for expensive butterfat in filled milk, filled cheese and ice cream making

these products cheaper without changing their palatability. When hydrogenated,

coconut oil is used as margarine, shortening and baking fat. Other edible applications

of coconut oil are:

• as a source of fat in infant formulas and baby foods because of its easy

digestibility and absorbability;

• as a spray oil for crackers, cookies and cereals to enhance flavour, increase

shelf-life and impart a glossy appearance;

• As an ingredient in confectionaries such as candy bars, toffee, caramels, etc.


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The Spectrum of Coconut Products states that in food preparations and in diet,

coconut oil performs the following functions.

• It serves as an important source of energy in the diet.

• It supplies specific nutritional requirements.

• It provides a lubricating action in dressings or leavening effect in baked items.

• It acts as carrier and protective agent for fat-soluble vitamins.

• It enhances the flavour of food.

VCO can also be used in all applications where crude, cochin and refined,

bleached, de-odourised (RBD) coconut oils are normally used, and would be a much

better alternative if it could be made available in large volumes at affordable prices.

In the manufacture of oleo chemicals reserved for cosmetic applications, the

use of VCO instead of copra-derived oil will enhance the quality of the final product

because of its hypoallergenic properties. One interesting development to note, is that

VCO is being focused on specific applications distinct from the traditional uses of

coconut oil listed above.

The current emerging major uses of VCO are as:

• a hair and skin conditioner;

• an oil base for various cosmetic and skin care products;

• a carrier oil for aromatherapy and massage oils;

• a nutraceutical and functional food.

Mr. Arthur Bautista of the Splash Research Institute defines nutraceutical as

Natural food components that provide health benefits or reduce the risk of chronic

disease, above and beyond their basic nutritional function.

Simply put, nutraceuticals are substances that not only nourish but also heal. Virgin

coconut oil is considered a nutraceutical because studies have shown the following

facts.

• The medium chain (C8 – C12) fats in coconut oil are similar in structure to the fats

in mother‘s milk that gives babies immunity to disease. There are also similar

beneficial effects in adults, (Kabara, 2000).


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• VCO possesses anti-inflammatory, anti-microbial and antioxidant properties which

work together to protect arteries from atherosclerosis and the human heart from

cardiovascular disease, (Fife, 2004).

• VCO boosts the immune system.

• VCO protects against heart disease by increasing high density lipoprotein (HDL)

that collects the excess or unused cholesterol in the body for excretion by the liver.

• VCO provides protection from infectious diseases not easily cured by known

antibiotics.

VCO is digested easily without the need for bile and goes directly to the liver for

conversion into energy, (Dayrit, 2003).

• VCO stimulates metabolism, boosts energy and prevents deposition of fats thereby

preventing obesity, (Dayrit, 2003).

• VCO improves the nutritional value of food by increasing absorption of vitamins,

minerals and amino acids, (Fife, 2004).

• VCO is the world‘s only natural, low-calorie fat, (Fife, 2004).

• VCO inhibits the action of cancer-forming substances (Clara Lim Syliangco, 1987).

4.3. Identity characteristics

Gas Liquid Chromatography (GLC) range of fatty acids composition of VCO

shall be in accordance with Table 1.


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Table 1: Gas Liquid Chromotagraphy range of fatty acid composition of VCO

Common name Composition (%)

Caproic acid C 6:0 ND – 0.7

Caprylic acid C 8:0 4.6 – 10.0

Capric acid C 10:0 5.0 – 8.0

Lauric acid C 12:0 45.1 and above

Myristic acid C 14:0 16.8 – 21

Palmitic acid C 16:0 7.5 – 10.2

Palmitoleic acid C 16:1 ND*

Stearic acid C 18:0 2.0 – 4.0

Oleic acid C 18:1 5.0 – 10.0

Linoleic acid C 18:2 1.0 – 2.5

Linolenic acid C 18:3

C 24:1

ND – 0.2

ND

* ND= non-detectable

The fatty acid profile of virgin coconut oil is greatly dependent on the coconut variety.

Studies done by the Philippine Coconut Authority (PCA) Zamboanga Research

Centre, revealed that coconut hybrid varieties have a higher lauric fatty acid content

(above 50%) than local tall varieties.

4.4. Colour, odour and taste

Virgin coconut oil shall be colourless, sediment free, with natural fresh coconut aroma

and free from rancid odours or tastes.

4.5. Specifications

Virgin coconut oil shall conform to the requirements specified in the table 2.


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Table 2: Virgin coconut oil property requirements

Properties Specification

Moisture and volatile content 0.20% max.

Free fatty acids (expressed as lauric acid) 0.20% max.

Peroxide value 3.0 meq/kg oil max.

Food additives None permitted

Contaminants

Matter volatile at 105°C

0.20% max.

Heavy metal

Iron (Fe)

Copper (Cu)

Lead (Pb)

Arsenic (As)

mg/kg max.

5.0

0.40

0.10

0.10

In the absence of a laboratory analysis report, the quality of VCO can be assessed

through sensory evaluation by testing the following attributes:

Colour: Virgin coconut oil has a clear water appearance.

Based on the studies done under the Philippines/UK Aflatoxin Reduction in Copra

Project, the colour of the oil is either brought about by contaminants in the oil (as in

tapahan drying of copra), or by high temperature processing and microbial

contamination of the coconut meat prior to oil extraction. Depending on the type of

micro-organisms that cause the contamination, the oil colour can appear yellow or

pink or red-orange.

Aroma: A good quality VCO does not have any rancid smell. It has a sweet coconut

aroma which may range from mild to intense depending on the process used for

extraction.

Taste: A good quality VCO should not have off-flavours or a sour taste. It should not

cause any itchiness in the throat when ingested as this is an indication that the free

fatty acid content is already higher than the prescribed standard.


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Quality assurance in processing VCO

Quality assurance in the context of any industry should be viewed in two ways.

1. Ensure that the product produced by any processor conforms to domestic and

internationally accepted product standards. The market for VCO, whether

local or international, has to be protected and sustained by ensuring that only

VCO of the highest quality is produced.

2. Quality assurance should be strictly implemented to protect the consumer. The

VCO on sale must be of the highest quality since there is no way for a

consumer to check the quality when it is bought in a packaged container. At

present, VCO is generally bought as a food supplement or nutraceutical

because of the increasing quantity of literature indicating its beneficial effect

on human health. In this instance, quality is of paramount importance since the

product is being ingested directly and not as a food ingredient or a cooking

medium.

4.6. VCO Processing

4.6.1.1. Modified Natural Fermentation Method

Fermentation generally means the addition of yeast or enzyme or suitable

micro-organism to a feedstock to obtain a desired product. However, in the case of the

Natural Fermentation Method for producing VCO, no other substance is added. It has

been observed that when a coconut milk mixture is allowed to stand for more than 10

hours under favourable conditions, the oil naturally separates from the water and the

protein.

The mechanism for this natural separation without the addition of any

fermentation agent is unexplained. One theory is that the natural enzyme in coconut

meat, which is subsequently transferred to the coconut milk, is being activated at

some point. Another theory is that airborne lactic acid bacteria, which have the

capability to break the protein bonds, act on the coconut milk causing VCO separation.


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It can be surmised that the term, Natural Fermentation Method, was coined

because the water and the curd that separate out from the oil, smell and taste sour. It is

‗natural‘ because no other substance is added to achieve the fermentation.

Modified Natural Fermentation Method has the lowest labour requirement and

the least energy input. However, if the fermentation process is not properly controlled,

then it produces oil with a sour smell and relatively higher free fatty acid content

nullifying the saving in labour costs as the oil cannot be classed as VCO. Precise

controls for the maturity of coconuts and the ambient conditions for the fermentation

room are necessary to obtain good, high quality oil recovery.

The Modified Natural Fermentation Method comprises two distinct parts –

extraction/preparation of coconut milk and processing of the VCO from the milk.

The Modified Natural Fermentation Method has the lowest labour requirement

with the least energy input of all the methods.

Oil recovery is 20 kg/100 kg fresh coconut meat.


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4.6.1.2. Extraction and preparation

Table 3: Process for the extraction and preparation of coconut milk (Source: Revised

excerpt from Bawalan, (2004)

Process Action to take

1) Selecting nuts Select fully matured nuts (12 to 13 months old) and de-husk;

the husk should be turning brown — not green.

2) Splitting and grating

Split the de-husked nut into two and grate the meat either

manually or through the use of motorised grater. Another

method is to manually de-shell the coconut and feed the meat

with testa into a Thai motorised coconut shredder.

3) First milk extraction

Extract the milk from the grated coconut meat either by hand

or by manually operated or motorised coconut milk press.

This can be the hydraulic type, vertical screw or horizontal

screw type press, manually operated or motorised. Set aside

the milk obtained. Prepare the coconut milk residue (sapal)

for second extraction.

4) Second milk

extraction

Do a second milk extraction by mixing water with the sepal

obtained from the first milk extraction using a ratio 2 sapal:1

water. Press the residue again.

5) Mixing of first and

second milk extracts

Mix thoroughly the first and second milk extracts by stirring

vigorously for about 10 minutes.

4.6.1.3. Processing of VCO

In the traditional Natural Fermentation Method, selling and subsequent

fermentation of coconut milk is done for 36 to 48 hours. However, laboratory

analyses of VCO produced using this process, show that the free fatty acid (FFA)

content (33% to 38%) greatly exceeds the prescribed standard of maximum 0.1%.

Likewise, in many cases, coconut oil produced will be pale yellow in colour and will

not meet the VCO standard.


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Table 4: The Modified Natural Fermentation Method of processing coconut milk to

produce VCO

Process Action

1) Settling of the coconut milk

mixtures

Allow the coconut milk mixture to stand for 16 – 24 hours in

a place where the temperature can be maintained at 35 –

40°C.

Note 1: If the intention is to recover coco skim milk for

further use as a beverage, then two-stage settling has to be

carried out (the first stage settling is done in the refrigerator

or ice box for 3 hours. After separating the cream from coco

skim milk, the cream is again allowed to settle (second stage

settling at 35– 40°C for 13 – 21 hours.

2) Separation of the oil and

fermented curd layers

Separate the oil from the fermented curd by using a ladle to

scoop the oil off the top.

Note 2: Dispose of the water phase (fermented skim milk)

and gummy portions by diluting with water before draining

into grease trap and then into the sewage system or soakage

pit. Put the fermented curd and the oil in separate containers.

3) Oil drying Drying is required to ensure that all residual moisture is

removed to prolong the shelf-life of the VCO.

Note 3: Apart from removing the residual oil, heating the

VCO in a double boiler or vacuum dryer will ensure that

fermentation will be stopped. It will also remove the faint

sour smell in the oil.

Note 4: If the oil is subjected to incubation (air-drying) or

vacuum drying, then it needs to be filtered first (Step 4).

4) Filtration of oil Filter the VCO to remove adhering particles of fermented

curd.

Note 5: Filtration of the VCO produced from the Modified

Natural Fermentation Method does not require special

filtration equipment as only relatively large particles of curd

near the surface of the oil need to be separated. Any filtering

medium that can trap the curd will be appropriate.


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Note 6: One practical and simple way of filtering the oil is

by pouring the oil over sterilized cotton wool placed in the

hole of a big funnel, and allowing it to trickle down. For a

large-scale operation, a fabricated pressure filter with filter

cloth is recommended to increase filtration rate.

5) Heating of fermented curd After VCO separation, the fermented curd is heated to

recover the residual Class B oil that can be used for making

skin care products and herbal soaps. The temperatures are

not as strictly controlled but should not exceed 90°C or the

oil will become dark yellow.

Note 7: After the Class B oil is recovered, the toasted curd

can be mixed with other compost material and use as organic

fertiliser.

Note 8: The Class B oil recovered by heating should be dried

in a double boiler. Do NOT MIX with the Class A VCO.

6) Packaging and storage VCO may be stored in stainless steel containers and poly-

lined drums. Pour oil into very dry bottles for marketing.

Note 9: The recommended packaging material for virgin

coconut oil (VCO) is glass. PET bottles (plastic bottles

normally used for mineral water) can be used in cases where

the VCO is immediately consumed. Glass is recommended if

the VCO is sold in stores where it may remain on the shelf

for several weeks.


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4.7. HAZARD ANALYSIS WORKSHEET


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4.9. Critical Control Points in processing VCO

Common processing Critical Control Points

To ensure that only high quality VCO will be produced, the following Critical Control

measures should be applied in all of the processes discussed in this VCO manual.

Critical Control Points for individual processes are given later in manual.

1. Receipt and inspection of nuts

All de-husked nuts are inspected to segregate and

reject immature, germinated or spoiled nuts when

delivered to the plant. Only fully mature nuts, 12 to 13

months old, should be used for VCO production. As an

indicator of maturity of the nut, the husk and shell is

brown in colour and the nut makes a sloshing sound

when shaken.

Always ensure that the nut, while fully mature,

does not have a haustorium (Figure 5) because the oil

content of the kernel starts to decline once the haustorium

is formed and the quality deteriorates as the haustorium

grows bigger.

Proper procedures must be adopted so that nuts do

not break while unloading. Likewise, exposure to

sunlight of the dehusked nuts during delivery, weighing

and unloading should be avoided to prevent cracking of

the shell that will cause spoilage. Nuts will crack and

begin to decay after one hour in the sun.

Figure 1: De-husked

coconuts with

haustoriums; these are

not suitable for VCO

processing


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Storage

De-husked nuts should be kept in clean storage areas with cement floors, good

ventilation and adequate rain/sun cover.

Avoid sun exposure of the de-husked nuts. Storage bins should be designed

and partitioned so that the principle of first-in first-out can be easily implemented.

The pile of de-husked nuts should not be placed directly on the cement floor but on an

elevated platform (pallet) with slats so that the coconut water can flow away if

breakages occur. Maximum height for the storage pile of fresh nuts should not exceed

1.8 metres.

De-husked, fresh coconuts should be processed within seven days from the

time of harvest. Therefore the VCO processing facility should be placed within the

coconut producing areas to ensure freshness of raw material and to lower transport

costs of the nuts.

2. Handling of coconut water

Coconut water spoils and ferments very rapidly once the nut is opened. When the nut

is split, coconut water should be collected in a container and properly disposed of in

one of two ways. As another source of income it can be converted into vinegar — or

other products including nata de coco and electrolyte drinks, or diluted with water and

flushed into soakage pits or the sewage system.

Coconut water should not be left on the floor as it will attract flies and become a

source of contamination. Undiluted coconut water becomes very acidic and will

destroy the cement surface of the floor if it is not tiled. It also generates a foul smell

once fermentation has started.

3. Drying and handling of VCO

Water in oil causes it to go rancid thus shortening its shelf life. To ensure the VCO

will have a long shelf-life, it should be subjected to an oil-drying process after

recovery from coconut milk or extraction from dry grated or granulated coconut meat.

Removal of residual moisture is critical in the VCO produced from the Modified

Kitchen Method and the Modified Natural Fermentation Method. Because both are


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wet extraction processes, that is, recovery is from meat with intermediate moisture

content, the end product will contain more moisture than with high pressure expelling.

Drying of the oil can be achieved using one of the following methods.

Figure 2: Drying and handling VCO

a) Preparing VCO samples from expeller oil for quality checking

• Place the extracted oil in a double boiler and heat for about fifteen minutes or until

the oil has changed from turbid to water-clear colour. Oil temperature should not

exceed 65°C.

• Incubate or air-heat the oil in the container at 50°C for 12 hours or until the oil has

changed from turbid to water-clear colour.

• Vacuum dry using a commercial vacuum dryer at 50°C.

Vacuum drying is the most effective way of drying oil without the risk of the colour

turning yellow but the investment cost is high, so it is not a viable option for micro-

scale processing.

A double boiler can be made by placing a stainless steel mixing bowl or basin in a

larger pan that is half filled with water. Pour the oil into the smaller container. Once

the water in the pan starts to boil, reduce the heat to the lowest possible setting so that

the hot water remains at a simmer point.

Do not allow oil to boil or the container to boil dry!


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Remember! Water is the arch enemy of oil!

Oil drying temperatures should not exceed 65°C or oil will be yellow which is then

classified as Class B oil.

4. Handling of coconut milk

Coconut milk contains protein and other nutrients, is low in acid and has a high

moisture and nutrient content making it very susceptible to microbial contamination

and rapid spoilage. Because of these characteristics, grating or milling of fresh

coconut meat and subsequent extraction of the milk should be done in a clean

environment and under very strict sanitary conditions. The following critical control

measures must be applied at all times:

• Always ensure that grating or scraping of coconut meat and subsequent milk

extraction is done under sanitary conditions by observing good personal hygiene.

Wash hands with soap and water before doing any preparation work; wear the

necessary protective clothing with hair cover. Do not wear jewellery on the hands or

arms.

• Ensure that all materials, utensils or equipment used in extracting and holding

coconut meat and milk are thoroughly cleaned and rinsed with hot water. Utensils

should be free from any soap residues.

• High quality clean water should be used for the diluents or re-hydrating agent for the

second milk extraction. It should be free from microbial contamination and low in

mineral content. Filtered, purified or demineralised water is preferable. Coconut water

can also be used as diluents, but a specific handling procedure must be observed to

avoid microbial contamination. The coconut water must be filtered and immediately

placed in a refrigerator or ice box while waiting for the grating and first milk

extraction to be completed.


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1) Low Pressure Extraction and High Pressure Expeller Critical

Control Points

The low pressure extraction methods and the high pressure expeller methods

belong to the general category of Fresh-dry processing of VCO where the VCO is

obtained by first drying the fresh, grated or comminute coconut meat and then

pressing the dried meat to separate the oil. Hence, in both processes, the most critical

step is the drying of the meat. The following critical control measures must be

observed when preparing the coconut meat for subsequent oil extraction.

• Dry the coconut meat within four hours of opening the nut. Delay in drying will

allow bacterial contamination of the fresh meat and will result in an unacceptable

yellow oil.

• Dry the grated or granulated coconut meat at a temperature of 70 to 75°C using an

indirect, hot-air dryer, either steam heated or biomass fired. If the drying temperature

is too low, bacterial contamination will occur resulting in unacceptable yellow oil. On

the other hand, if the drying temperature is too high, the grated meat will burn, also

resulting in yellow oil.

Under conditions of low humidity and clear, hot days, the grated meat can be solar

dried. A well-designed solar dryer can normally generate a drying temperature of

about 70°C that is sufficient for the intended purpose. However, additional heat may

be needed to ensure this temperature is reached on cloudy, rainy days. Open sun-

drying is not recommended as grated meat can become contaminated with dust and

insects and temperatures are too low to prevent bacterial breakdown of the meat.

• If using a direct contact dryer similar to the one being used in the South Pacific for

the Direct Micro Expelling (DME) process, constant attention and turning of the

grated meat is required to prevent it from becoming scorched or burnt, which will

result in an unacceptable yellow oil. Dry with care and maintain good hygiene

handling.


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5.0 COMPETITOR ANALYSIS

The main competitors are come from competitors that produce same or likely

product and market their product at the same place. The main competitors come of

our business of course from farmers that practice same or likely method that we use

that is chemical free and market their product near or on same place we have for

example of our business. This is one competitor which running the same business

with us:

Table 5: Competitor Analysis

Company Strength Weakness

Joyce Chua Established over 10 years

Good reputation in society

Innovation of product

Carry out HACCP during

the production

Unable to fulfil the

demand from society

Aaron Yen Carry out HACCP during

the production

Export VCO to foreign

country

Limited production

capacity

Unable to fulfill the

demand from local society

Luen Yen Yee Carry out HACCP during

the production

New established in society

No HACCP

Small business

Low income

Others Have a regular customers

Lower price compared to

others

Micro business

No promotion

Low production capacity


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5.1. Market Share

Market share refers to the portion of the market that the business can control

after taking into consideration market size and the competitors position in the

same market. Market share also refers to percentage of the total market size.

Table 6: Market share before the entry of HeaVCO

Company Market share, %

Joyce Chua (WT SUMBER BUMI SDN BHD) 33

Aaron Lim (Adirondack (M) Sdn. Bhd) 26

Luen Yen Yee (PRESTIGE POOLS

CONSTRUCTION SDN BHD)

22

Others 19

- Total = 100

Table 6: Market share after the entry of HeaVCO

Company Market Share, %

Joyce Chua (WT SUMBER BUMI SDN BHD) 26

Aaron Lim (Adirondack (M) Sdn. Bhd.) 20

Luen Yen Yee (PRESTIGE POOLS

CONSTRUCTION SDN BHD)

18

HeaVCO 28

Others 8

- Total = 100


32

Figure 2: The market share before the entry of HeaVCO

Figure 3: Market share after the entry of HeaVCO

33%

26%

22%

19%

Sales (%)

Joyce Chua (WT SUMBER

BUMI SDN BHD) 33%

Aaron Lim (Adirondack

(M) Sdn. Bhd.) 26%

Luen Yen Yee (PRESTIGE

POOLS CONSTRUCTION

SDN BHD) 22%

Others

26%

20%

18%

28%

8%

Sales (%) Joyce Chua (WT SUMBER

BUMI SDN BHD) 26%

Aaron Lim (Adirondack

(M) Sdn. Bhd.) 20%

Luen Yen Yee (PRESTIGE

POOLS CONSTRUCTION

SDN BHD) 18%

HeaVCO 28%

Others 8%


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6.0 MARKETING PLAN

6.1. Marketing summary

Marketing is one of the most important element is forming a business. Without

proper marketing plan, a business will never achieve their goals.

The main objective of marketing plan is to satisfy customer‘s wants and needs

through creating and exchanging products and value with others as well as

contributing towards profit for the business. For that purpose, the partners had made a

research to identify the demand of the people.

In consumer needs and wants, there are some factors that make Virgin coconut

oil become a demand for customers. The factor that influences the customers to buy

the product is because giving healthiness for everyone. This is because virgin coconut

oil provide varies of benefit such as Lowers cholesterol and blood pressure levels,

cancer fighting, natural antibiotic and etc. This means that it make human become

healthy and prevent human for causing obesity and have a strong immune system.

For the marketing plan conclusion, the most important thing that influence our

strategies in winning the customers heart and also compete with other company is our

promotion concept that acting more friendly to the customer beside we supplying the

best product for them. Also providing a high quality product will fulfil the customers

need and wants nowadays. When the customers are satisfied and trust our product that

we provide, they will be our fix customers and will buy our product when needs. For

the increasing our sale, we offered confidence work strategies that is also to fulfil the

customer need and want. They are, pricing strategies, distribution strategies and

product strategies that is the main scope in marketing plan. All of the strategies that

being mentioned are important in achieving the marketing objective.

6.2. Marketing Objectives

Generate a 5-10% yearly increase in sales.

Increase market penetration every year

To conquer and dominate in local market

Expand the business and open more outlets in Malaysia


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6.3. Marketing concept

Our marketing concept is production orientation. The focus of the business is not

only the needs of the customer, but also reducing costs by mass production. Therefore,

we have sell with lower price and can compete with others.

6.4. Marketing strategy

6.4.1.1. Target market

Our target market mainly focus in housewife and company who used virgin

coconut oil to produce shampoos, conditioners, moisturizers, health supplements,

massage oils. Although coconut oil can modified and use in others way but we will

focus it as cooking oil and our target is housewife.

Table 7: Target Market Analysis

Target Market(s) Percentage (%)

Moderate and high income 45%

Retailer 30%

High education 15%

Others 10%

6.5. Market segmentation

6.5.1.1. Geographic Segmentation

We will act as supplier and wholesaler. Our product will sales in varies mini

market and hypermarket such as Giant and Tesco. The entire place we sell is the hot

spot place since we are still new company cannot just simply send our product to vary

place. At the early stage, we will focus in hot spot to make our company name

become familiar first. So we will focus on the area that people will go everyday to

buy daily need product.


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6.5.1.2. Demographic segmentation

In market segmentation, that is demographic aspect; our main target is for the

moderate and high income. We also focused on high educated person. The reason

why we focused on this group is because they can think wisely before buying a

product. Not only high educated people, we also focus our product as raw material for

big company to produce shampoos, conditioners, moisturizers, health supplements,

massage oils.

6.6. Marketing Mix

As we new business, we must give full concentration in marketing strategies

and efficient, systematic administration and management must be done. Our

marketing strategies consist of 6P‘s indicate for aspect:

1) Product or service strategy

2) Price strategy

3) Distribution strategy

4) Process strategy

5) People strategy

6) Physical environment

1) Product or Services Strategy

Our business focuses on marketing strategy in the market aspect. The purpose

of this marketing strategy is to fulfil needs and wants and make them satisfy with it.

The product strategies are as follow:

Quality

Due proper sales technique, complete and high quality of product is very

importance to avoid the product from the defect during store delivery process. We

also will make sure the concentration of the virgin coconut oil is 100% without

adding others oil. HACCP analysis and CCP will be focus on to produce high

quality product. We also will apply HALAL certificate to convince muslim.


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Packaging

For packaging aspect, we have focus on 100% closed of the cap. This can

make sure our product do not change or spoiled because of the leaking. The design of

our product is unique, clean and clear to looking on. The benefit of the product will

mention clearly to attract the customer. The attractive design packaging will convince

the customer to try on our product.

2) Price strategy

The price strategies is main target is to achieve our business objectives or

goals. The price of the virgin coconut oil will be provided with a similar and suitable

price according to the cost of production. We offered the high quality of product and

cheapest compared competitor. It is to attract more customers and get them to trust

our business. This is because we produce high volume of product. This allows us can

put a low price compare to competitor. This is penetration strategy. To determine the

price, we consider all cost involve in production. We need to make sure our business

is able to get return from sales, first we compared with competitor price in the market

to make sure our product price is not too cheap or expensive and then we analyze

what is the price that the customer willing to pay.

3) Process strategy

For the process strategy we are using pilot plant scale because we don‘t have

enough models. By using pilot plant scale we can produce enough production for

sales.

4) Place or Distribution Strategy

Our product located in varies mini market and hypermarket such as Giant,

Tesco. For the companies that want to buy the product with us can buy contact us.

They can buy from our company. If the quantities that buy from them are higher, we

will provide delivery service. For the mini market and hyper market we will send to

their place.


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Distribution Strategies

Distribution strategy is aimed at establishing a structured and controllable

distribution system to ensure the product offered reached the target customer. A

distribution channel moves goods from producers to consumers. The most common

form of distribution is:

1) Manufacturer Customers

Customer can get lower price if they buy VCO direct from manufacturer

compared they buy at hypermarket because the retailer will eat up mark up to

make profit. So, the price will be higher

2) Manufacturer Retailer Customer

5) People strategy

We provide a hotline to allow customer to call when they face a problem after

consuming our product. All the workers are well training. We will not allow worker

who do not train before accept a phone called.

6) Physical environment

The product that we product have a good looking and the design is a modern

style. The oil that produces will be clear and the customer can see it clearly.

6.7. Promotion Strategy

Promotion is important in order to get the product well known by public.

Good promotion strategies will attract people to buy our product and it will increase

our sales. We will organize many promotion methods in introducing our product to

the customer and in local market. The promotion that will be done by us is like:-

1) Advertisement

Advertisement is a very important way to promote our product. We need to

promote our product in news paper, magazine and internet. Nowadays internet

already becomes a very important pathway to provide information to customer.

We can record a video to promote our company.


38

2) Sign Board

This method is very important to make people know about our product. Sign

board will be put near the Hot spot in the city or in highway. It makes the

customer familiar with our product.

3) Sponsor for healthy event

This allows customer know our objective and our company roles. We are the

company who enhance healthy life-style. This can increase company reputation.

4) Business Card

The business card will be given to the target customer such as the company

that use virgin coconut oil as raw material so that they can easily contact us.

7.0 OPERATION PLAN

Production/Operational plan is defined as the production planning of a product or

service according to the quantity, quality, specification and time specified by the

customer at the lowest cost possible. An operational activity includes:

a. Business inputs

b. Transformation process

c. Output


39

Figure 4: The operational Activity

I. Transformation Process

a) Generally the transformation process:

1. Materials (coconut milk)

2. Machinery & equipment (coconut grinder, filter)

3. Technology (grinding, fermentation, packaging)

4. Labor (machine operator, general worker)

Business Inputs

• Labor

• Raw material

• Machinery

• Technology

• Capital

Output

• Product

• Service

Transformation

Process

Controlling


40

In the production of VCO, the transformation process is listed as below:

Raw Materials

1. Coconut milk

2. Coconut meat

Machinery and Equipments

1. coconut dehusking

2. coconut grinding

3. coconut milk extracting

4. bottles

b) Efficiency of the Transformation Process

The productivity index (P.I) is used to measure the effectiveness of the

transformation process

Formula: P.I = Output/Input cost

Example:

Sales = RM2, 000/day

Operational cost = RM1, 200/day

P.I = RM2, 000/RM1, 200 = 1.67

P.I index of more than 1 indicates the efficiency of the transformation process.

Technology

1. Grinding

2. Fermenation

3. Packaging


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II. Process Flowchart

It is schematic representation of the production/operation process from

the start until the product or service is sold or delivered. It must show:

The sequence (step by step)

Description of each process/activity

Time (days, hours or minutes)

Figure 5: The process flow of production VCO

c) Material Requirement Planning

So, in the production of VCO, we need atleast 500 of coconuts to be processed

into VCO.

Make coconut milk (use only old coconuts which is in brown color)

Fermented overnight

(the separation occurs naturally during fermentation for 24-48 hours in an enclosed container).

Fermented at room temperature

Final product:

virgin coconut oil floats on the surface

Packaging

Finished product are stored before deliery


42

d) Acquisition of Machinery and Equipment

For the production of homemade coconut oil, we need coconut dehusking,

coconut grinding, coconut milk extracting, and bottles for the production of VCO.

There are several factors to be considered before buying machinery & equipment:

Price

Quality in terms durability

Easiness of acquiring spare-parts

Maintenance

Technology & simple to operate

Reputation of the supplier

After sales service

e) Operational Manpower Planning

The function of operational manpower planning is to determine the volume of

production. It also helps in determine the standard time in producing a unit of

product, man productive hours, determine number of workers and the source, and

calculate the cost of direct and indirect labor.

In this context, when the manpower planning is increase, the production of

VCO also increases. The standard time for producing VCO is maximum 2 days in

the room temperature without using any heat treatment. So, for the beginning, we

will do by ourselves which are five of us in order to reduce the labor cost. We will

do the work by shifting in order to gain the high production of VCO.


43

Table 8: Manpower Planning in HeaVCO

POSITION NUMBER OF STAFF

Chief Executive Officer 1

Marketing Manager 1

Financial Manager 1

Human Resource Manager 1

Chief Operating Officer 1

Total 5

f) Selecting a Location

There are several factors to be considered:

Distance from source of materials

Supply of labor

Transportation

Distance from target market

Price of the property

Other factors:

Basic infrastructure & facilities

g) Operation Budget

For the operation budget, we will take these few things into considerations

which are:

Cost of machinery and equipment

Direct materials

Direct labor

Prime cost = Direct materials + Direct Labor

operational overheads

Utilities


44

The following section will identify the proposed operational plan for ABCO:

I. Location And Premises

We had selected Johor Bahru as our starting point in business operation. JB is

a developed city with the high demand on the health. That is the reason we choose

JB as our first operation business.

II. Legal Environment

There are no current legal obligations for HeaVCO.

III. Personnel

HeaVCO will start with a total of 5 initial members that includes owners and

management team.

IV. General Operating Hours

HeaVCO intends to operate Monday thru Saturday from 8 am to 5 pm. ABCO

will be operational year round.

V. Machinery, equipment

Due to the involvement in making VCO, our company produces VCO as our

product. Therefore, equipment plays a vital role in providing the excellent product

to the customers. Purchasing of equipment require huge amount of capital, which

in turn comes to the payment via instalment annually which ease of progress of

company‘s development in terms of cash flow. So, our company decided to lease

equipment which to overcome the issue of capital insufficiency. For the

production of VCO, we need coconut dehusking, coconut grinding, coconut milk

extracting, and bottles for the production of VCO.

VI. Assets

A unit of van is used which functions as delivery transport to the customer.


45

VII. The production process

As with any production process, the operational workflow for the business is

quite uniform and simple to follow. The following is a step by step outline of how

production of VCO has been made:

Step I: Make coconut milk (use only old coconuts which is in brown color)

Step II: Ferment overnight (the separation occurs naturally during fermentation for

24-48 hours in an enclosed container).

Step III: put it into the refrigerator and the virgin coconut oil is ready to use.

The virgin coconut oil floats on the surface. The fermentation of virgin coconut oil

has been done.

VIII. Raw material

The raw materials that had been used in this production of VCO is coconut

whether in coconut milk or coconut meat.

IX. Customer service plans

Our company will provide a customer services plan. This plan is implemented

to those who are take order the VCO with us whether in large quantity or small

quantity. For the higher quantity, we will deliver to their home or company but

depends on the locations. If it is more than 30km from our company, we will

charge the delivery fee upon the product price. If it is not more than 30km, we will

provide free delivery for them. They must purchased atleast 50 bottles of VCO.


46

7.8. Service Execution Timeline

Table 9: HeaVCO will follow this service execution model to enter in the oil market.

Task Execution Period

January February March April May June July

Choosing location √

Company

Development

√ √ √ √

Hiring training

and admin staff

√ √

Advertising √ √ √ √

Opening of

HeaVCO

√


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8.0 SWOT ANALYSIS

I. SWOT ANALYSIS

Table 10: SWOT Analysis of HeaVCO

STRENTGHS WEAKNESSES

1. No side effect

2. Healthy

3. Virgin Coconut Oil has long shelf

life

1. Excessive Coconut Oil May

Harm

2. Flavour does not taste good

3. Target moderate and high income

people

OPPORTUNNITIES THREATS

1. Healthy Life Style

2. Low Competitor

3. High Demand In Indian Market

1. New distribution channel (new

competitor)

2. The price of raw material

increase

3. Economy downturn


48

a) STRENGTHS

1. No side effect

As we know virgin coconut oil is very safe to use for people all over ages. In

addition this product does not harm people and does not have side effect when use

it.

2. Healthy

Moreover, the virgin coconut oil can treated hair damage and hair loss. It is

one of the earth friendly products and does not contain any chemical during the

production. It improves digestion and nutrient absorption encouraging weight loss.

It also controls killer disease such as diabetes. Finally it is an antioxidant product.

3. Virgin Coconut Oil has long shelf life

Actually, virgin coconut oil has long shelf life compare to other oil. This is

because virgin coconut oil is completely natural and unrefined. The unique texture,

taste and quality of our oil is achieved by using a traditional cold-press process

and by using only mature, organic coconuts. Coconut oil is highly stable and does

not create any Trans fat. Coconut oil contains no cholesterol and provides lauric

acid, which has been shown to boost the immune system.

b) WEAKNESSES

1. Excessive Coconut Oil May Harm

Everything that we take excessive can harm ourselves. For example when

consume too many of coconut oil even though the oil is good to our health it will

give bad impact to our health. It will gain weight and hair loss.

2. Flavour does not taste good

Coconut usually have a smell that is nor bad or nice. But during the

fermentation process, the coconut milk will produce sticky sour smell and the sour

smell will actually attached to the end product. Not strong as during the

fermentation process. So customer will think twice to buy this product.


49

3. Target moderate and high income people

Because of the high production price and the raw material is quite expensive,

therefore it cause low income people cannot afford. For the high educated people ,

they will concern in healthy product . This cause out market become small

compare to others product.

c) OPPORTUNITIES

1. Healthy life style

Nowadays, people are more concern about a healthy life style. Even though

there is a lot of healthy product out there, they still want our product to maintain

their health condition. This is due to what we offer the benefit of our product.

2. Low competitor

In the market, there are low competitors in the production of virgin coconut oil.

This is because the product come from bio-product sources and not many people

know how to produces product from bio-materials.

3. High demand in Indian market

Usually in daily life, Indian love to use virgin coconut oil. For example, they

applied it to hair and skin. Due to high demand of this product, our company has

high potential to produce more virgin coconut oil.

d) THREATS

1. New distribution channel (new competitor)

When the product is known for the benefit and the business is profitable, many

new competitors will appear and take advantage of this opportunity. As the

premier entrepreneur in this sector, we have to maintain our quality of the product

so that our customer still trusts in our product.

2. The price of raw material increase

For the price, our company sold the product still cheap and we do not have to

worry for the other opponent. Nowadays, the price of raw materials is increase but

we cannot simply increase the price of our virgin coconut oil due to competitor. In


50

that case, financial manager has to find the solution on how to solve the price of

the product such as search for new supplier.

3. Economy downturn

Economic downturn will cause lower expenditures by consumers, lower

demand for products and services, lower productions and job cuts. Lower cash

flows and limited financing are the major challenges faced by our company.

9.0 FINANCIAL PLAN

9.1. Financial Objectives

Decrease customer acquisition costs by every purchase

Holding spending, as a percentage of sales, at a steady rate.

Achieve positive net worth by years two.

Capture and maintain a gross margin of 10-20%

Our initial capital for this business is RM 300, 000. We estimated our return of

investment is shown as below:


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9.2. Income Statement

Table 11: Income Statement

YEAR 1 2 3 4

Goods of sales 500,000 600,000 750,000 900,000

A. DEVELOPMENT COSTS

1. land rental

120, 000 120, 000 120, 000 120, 000

2. Renovation

6,000 - - -

Sub-total 16,000 - - -

TOTAL A 142, 000 120, 000 120, 000 120, 000

B. OPERATIONAL COST

1. Company maintenance

7,000 7,500 8,000 9,000

2. Staff Salaries & Wages

30, 500 35, 500 38, 500 40, 500

3. Equipment maintenance

1, 000 1, 000 2, 000 2, 000

4.Insurance(company)

1, 500 1, 500 1, 500 1, 500

5. Employees' Welfare

1, 000 1, 000 1, 000 1, 000

6. Taxes & Permits

1, 000 1, 000 1, 000 1, 000

7. Utilities cost

3, 000 3, 000 3, 000 3, 000

8. Advertising fees

2, 500 2, 500 2, 500 2, 500

9. Equipment

150,000 - - -

10. Miscellaneous

500 500 500 500

TOTAL C 198, 000 53, 500 58, 000 61, 000

340, 000

173,500

178,000

181,000 TOTAL OF EXPENSES

INCOMESTATEMENT

291,500 426,500 572,000 719,000


52

9.3. Cash flow for 4 years

Table 12: Cash flow for 4 years

2012 2013 2014 2015

Liabities RM 40 000 RM30,000 RM 28,000 RM 19,000

Equity RM 45 000 RM 60 000 RM 72 000 RM 101 000

ToTal asset RM 85,000 RM 90,000 RM 100,000 RM 120,000

9.4. Balance sheet

Table 13: Balance sheet

Current assets

Cash RM 50 000

Account receivable RM 10 000

Inventory RM 25 000

Total current assets RM 85 000

Current liabilities:

Account payable RM 10 000

Total current liabilities RM 10 000

Working capital RM 75 000

Noncurrent assets:

Equipment RM 12 000

Utilities RM 3 000

Plus Noncurrent assets: RM 15 000

Total assets less current liabilities RM 90 000

Net assets RM 90 000

Stockholder equity:

Common stock RM 50 000

Retained earnings(Inventory +

Equipment + Utilities) RM 40 000

Total owners’ equity RM 90 000


53

10.0 CONTROL

The purpose of HeaVCO marketing plan is to serve as a guide for the shop.

HeaVCO will seek customer feedback on marketing efforts and may conduct surveys

or focus groups to test ad effectiveness.

The following areas will be monitored to gauge performance:

Revenue-monthly and annual

Expenses- monthly and annual

Customer satisfaction

10.1. Implementation

The implementation that will be done by Fabulocity Pets is through advertising

such as mass media and internet. Besides that, flyers distribution will be done around

Kuala Lumpur area. Enlightenment and awareness programme can be implemented

through advertisement regarding the funding.

10.2. Contingency Planning

Difficulties and risks:

Problems developing a sufficiently large client base.

Significant economic downturns.

Worst case risks include:

Determining that the business can no longer support itself.

Having to liquidate equipment to cover liabilities.


54

11.0 CONCLUSION

Today a trend has the high demand for Virgin Oil. That is the main reason

we developed our HeaVCO Company in order to meet the demand the market. We

have management capability, industry attractiveness, and competitive advantages.

As a result, this is the best business opportunity which compliance with our motto,

―Wealth to Health‖. From the research, Virgin Coconut Oil has been reported to

help many skin problems as well and it has many benefits. Last but not least, more

improvements, invention and research should be done in order to improve the

quality of virgin coconut oil and fully utilize the natural resource. We have

focused on cost-based strategy. This business plan has been developed in order to

create a healthy lifestyle. In a nutshell, HeaVCO Company is the best producer in

producing pure virgin coconut oil.

12.0 REFERENCES

1. http://tropicsbest.com/virgin-coconut-oil-centrifuge-process

2. http://www.mixph.com/2008/08/production-process-of-coconut-flour-and-

virgin-coconut-oil.html

3. http://www.bizplancorner.com/samples/health-club-business-plan.pdf

http://tropicsbest.com/virgin-coconut-oil-centrifuge-process

http://www.mixph.com/2008/08/production-process-of-coconut-flour-and-virgin-coconut-oil.html

http://www.mixph.com/2008/08/production-process-of-coconut-flour-and-virgin-coconut-oil.html

http://www.bizplancorner.com/samples/health-club-business-plan.pdf


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13.0 APPENDICES

1. Guideline and Control for making VCO


56


57


58


59


60


61

2) Packaging Material

3) Business Card

Leap Toward Healthy Wealth

www.heavco.com Jenn Chua Tel: +607-89010423

Fax: +607-89010422

250mI

Manufacturing by:

HeaVCO MANUFACTURING

SDN. BHD (183510V)

33, Jalan Mutuara Emas 7/6,

Taman Mount Austin,

84000 Muar, Johor, Malysia.

Tel: +607-89010423

Fax: +607-89010422

Contents:

100% Pure Virgin Coconut Oil

Product of Malaysia

HeaVCO

http://www.heavco.com/

VCO

Documents

chief executive

luen yen yee

taman mount

heavco private

heavco private

heavco private

heavco private

separation