After consideration of several popular courier services such as DHL, FedEx, UPS, we selected DHL as they offered the unique solution of transporting floriculture products with state-of-the art technology. Their website (http://www.dhl.com/en/logistics/warehousing_and_distribution/) did not contain specific information about the transportation costs. We then contacted the local agent for DHL through telephone for the following data the calculation is based on.
Weight cost
500g box 538.2 Rs (5 flowers)
1 kg box 648.5 Rs (10 flowers)
64.85 (average logistics cost for one flower)
logistics cost for the one flower 65 Rs
· Water and electricity = 10 Rs
· Equipment = 5 Rs
· Labours = 10 Rs
· Fertilisers = 5 Rs
· Other = 5 Rs
Total cost =100 Rs
ANTHURIUM
Logistics cost for the one flower 65 Rs
· Water and electricity = 10 Rs
· Labours = 5 Rs
· Fertilisers = 5 Rs
· Other = 5 Rs
Total cost 90 Rs
Phalaenopsis
Logistics cost for the one flower 65 Rs
· Water and electricity = 10 Rs
· Labours = 10 Rs
· Fertilisers = 10 Rs
· Other = 10 Rs
Total cost 688 Rs
Orchid
Logistics cost for the one flower = 65 Rs
· Water and electricity = 10 Rs
· Labours = 10 Rs
· Fertilisers = 10 Rs
· Other = 10 Rs
Total cost 105 Rs
Ginger Flower
Logistics cost for the one flower = 65 Rs
· Water and electricity = 05 Rs
· Labours = 05 Rs
· Fertilisers = 05 Rs
· Other = 05 Rs
Total cost 85 Rs
Roses
Logistics cost for the one flower = 65 Rs
· Water and electricity = 05 Rs
· Labours = 05 Rs
· Fertilisers = 10 Rs
· Other = 05 Rs
Total cost 90 Rs
The logistics cost is actually an overhead cost, or in other words a fixed cost for several flowers. Technically the logistics cost of Rs.65 for is applicable because we transport our products in bulk. The cost for one product is calculated here to analyse the cost of one product with regard to logistics.
We will be looking at the logistics cost for one quota to project our cash flow.
Logistics cost for a flower = Rs.65
No. of flowers for 1 quota= 50,000
Logistics cost for one quota = Rs. 3,250,000
Product Costs
PRODUCT |
GERBERA |
CARNATION
|
ORCHID |
TUBEROUS BEGONIAS |
MARIGOLDS |
Cost per product (include all costs) |
Rs: 0.20 |
Rs: 0.35 |
Rs: 0.50 |
Rs: 0.15 |
Rs: 0 .25 |
Price per product [Before TAX] |
$0.05 Rs: 6.00 |
$ 0.15 Rs:18.00 |
$ 0.05 Rs:6.00 |
$ 0.07 Rs:8.40 |
$ 0.25 Rs:30.00 |
Price per product [After all TAX] |
$0.06 Rs: 7.02 |
$0.17 Rs:21.06 |
$0.06 Rs: 7.02 |
$0.081 Rs: 9.82 |
$0.29 Rs: 35.10 |
Profit per product |
Rs: 6.82 |
Rs: 20.71 |
Rs: 6.52 |
Rs: 9.67 |
Rs:34.85 |
Per quota cost |
Rs:10,000 |
Rs: 17,500 |
Rs:25,000 |
Rs:7,500 |
Rs: 12,500 |
Per quota earn |
Rs: 341,000 |
Rs: 1,035,500 |
Rs:326,000 |
Rs:483,500 |
Rs:1,742,500 |
Per quota Profit |
Rs:331,000 |
Rs: 1,018,000 |
Rs: 301,000 |
Rs: 476,000 |
Rs: 1,730,000 |
PRODUCT |
DAFFODILS |
PETUNIAS |
PANSIES |
DIANTHUS |
ATIRRHINUMS |
Total Cost per product |
Rs.0.30 |
Rs.1.40 |
Rs.1.30 |
Rs.0.40 |
Rs.0.40 |
Price Before Tax per product |
$0.07 Rs.8.00 |
$0.5 Rs.12.00 |
$0.3 Rs.11.00 |
$0.4 Rs.9.00 |
$0.4 Rs.9.00 |
Price After Tax per product |
0.26 |
0.47 |
0.47 |
0.42 |
0.42 |
Rs.8.02 |
Rs.12.4 |
Rs.11.4 |
Rs.9.02 |
Rs.9.02 |
|
Profit Per Product |
Rs.7.78 |
Rs.11.00 |
Rs.10.10 |
Rs.8.68 |
Rs.8.68 |
Per quota cost |
Rs.15,000 |
Rs.70,000 |
Rs.65,000 |
Rs.20,000 |
Rs.20,000 |
Per quota earn |
Rs.401,000 |
Rs.620,000 |
Rs.570,000 |
Rs.451,000 |
Rs.451,000 |
Per quota Profit |
Rs.386,000 |
Rs.550,000 |
Rs.505,000 |
Rs.431,000 |
Rs.431,000 |
That means, 50,000* 10 categories = 500,000 flowers exported per quota
Base Total cost for production = Rs. 262,500
Base Total revenue per quota = Rs. 6,421,500
(Data obtained from
http://www.melbournemarkets.com.au/)
AUSTRALIAN TAX METHOD ON FLORICULTURE regarding SRI LANKAN IMPORTS:
HS Commodity Code MFN duty rate Sales tax Additional duties and taxes
8419.81 0% 12% PAL (Ports and Airports Levy)
Projected Income Statements for one year per quota
Base
Income |
|
|
Sales |
|
6421500 |
|
|
|
COGS |
|
262500 |
|
|
|
Gross Profit |
|
6159000 |
|
|
|
Operational Expenses |
|
|
Logistics |
3250000 |
|
Promotions |
500000 |
|
Utility |
1525000 |
|
Total expenses |
|
5275000 |
|
|
|
Profit Before Tax |
|
884000 |
Tax(12%) |
|
106080 |
Profit After Tax |
|
777920 |
Worst |
||
Income |
|
|
Sales |
|
6100425 |
|
|
|
COGS |
|
262500 |
|
|
|
Gross Profit |
|
5837925 |
|
|
|
Operational Expenses |
|
|
Logistics |
3250000 |
|
Promotions |
500000 |
|
Utility |
1525000 |
|
Total expenses |
|
5275000 |
|
|
|
Profit Before Tax |
|
562925 |
Tax(12%) |
|
67551 |
Profit After Tax |
|
495374 |
Best |
||
Income |
|
|
Sales |
|
7063650 |
|
|
|
COGS |
|
262500 |
|
|
|
Gross Profit |
|
6801150 |
|
|
|
Operational Expenses |
|
|
Logistics |
3250000 |
|
Promotions |
500000 |
|
Utility |
1525000 |
|
Total expenses |
|
5275000 |
|
|
|
Profit Before Tax |
|
1526150 |
Tax(12%) |
|
183138 |
Profit After Tax |
|
1343012 |
Land |
6,500,000 |
Snap & grow kits |
1,200,000 |
Potting benches & tables |
1,700,000 |
Seeds |
1,010,400 |
Pre-Marketing |
5,614,704 |
Total |
14,949,104 |
Base case:
14,949,104 / 777,920 = 19.23
Approximately 19 years and 3 months
Worst Case:
14,949,104 / 495,374 = 30.24
Approximately 30 years and 3 months
Best Case:
19,949,104 / 1,343,012 = 14.85
Approximately 14 years and 11 months