SSF F#1/Rev.

00/10-11-13
ANNEX A
PROJECT PROPOSAL

I. Profile of the SSF Project

Title of the SSF Project: Misamis Occidental Food Innovation Center

Cooperator: Northwestern Mindanao State College of Science and Technology

Northwestern Mindanao State College of Science and Technology

(NMSCST) is a public college in the Philippines mandated to offer
higher professional, technical instructions for special purposes and
promote research and extension services, advanced studies and
progressive leadership in education, agriculture, engineering, arts
and sciences, short-term vocational-technical and other courses as
may be relevant and it shall also provide primary consideration to
the integration of researches/ studies for the development of the
Province of Misamis Occidental. The College started as Tangub Agro-
Industrial School (TANAIS) in Sumirap, Tangub City wayback 1971
which offered secondary agriculture and trade curricula. In 1973, the
school was then transferred to Labuyo, Tangub City. The school
started offering post secondary courses in 1974 and had been an
affiliate off campus institute of the Central Mindanao University,
Musuan, Bukidnon from 1979 to 1984. In 1994, Bachelor's Degree in
Secondary Education and Industrial Technology were then offered.
In 2001, RA 9146 was approved converting TANAIS into a State
College to be known as the Northwestern Mindanao State College of
Science and Technology.

With its mandate, it has various income generating projects that will
surely provide faculty and staff additional opportunities to augment
income, assists the livelihood program of the government of Tangub
City, and at the same time hasten the attainment of fiscal autonomy
of the school. Currently, it is composed of more or less 200 workers
committed to serve the institution in achieving its vision and mission
for the greater good of the society.

The Food Innovation Center, in line with its mandate, will be

implemented by NMSCST under their Income Generating Projects
with the support of the Department of Trade and Industry and the
Local Government Unit (LGU) of Tangub City. The LGU will extend
support by lending us their CSF building through a Memorandum of
Agreement to house the equipment of the said project. The College
will shoulder the operating expenses that will

Location: 2nd Floor, Food Innovation Center

Mindanao University of Science and Technology
Lapasan, Cagayan de Oro City
2nd Congressional District of Cagayan de Oro
Industry Cluster: Processed Food

Service Line: Design, Lay-out and Printing

Short production of packaging

Target Beneficiaries: - No. of registered businesses in Cagayan de Oro (2013) : 18,462

- No. of registered businesses in Misamis Oriental (2013) : 7,597
- No. of food processors in Misamis Oriental: 6,514
- No. of Jobs Generated
Direct: 6 center employees

Total SSF Project Cost: PhP 3,100,000.00

Breakdown of SSF Project Cost:

 SSF Specifications Quantity Unit Cost Amount
Equipment (details of the equipment including its rated
capacity)
Digital  Ideal for proofs, label and packaging
1 PhP PhP PhP PhP
Label 3,100,000.00 3,100,000.00
Printer (UV prototypes and short production runs
Inkjet  Six piezo printheads to ensure increased
Printer/ output speeds
Cutter)
 ECO-UV inks are the industry’s newest
generation of UV inks
 Six colors (CMYK+White plus Clear Coat)
 Layered clear coat produces unique
textures and finishes
 Supports hundreds of media options
including metallic and synthetic papers,
foils, BOPP, PE and PET film and flexible
substrates
 Safe, long lasting and energy efficient LED
Lamps
 Outstanding image quality up to 1440 dpi
 Colour System for spot color matching
 Variable Data Printing

Max. Printing
736mm
Width
Max. Cutting
736mm
Width
Media Width 182mm to 762mm
Ethernet (100Base-TX or 10Base-
Interface
T)
Print Heads 6 x Piezo Inkjet
6-Colour CMYK plus White & Clear
Print Colours
Coat
Print
Maximum 1440 dpi
Resolution
Ink Curing Unit Dual UV LED Lamps
Ink Types Eco-UVTM
Ink Cartridge 220ml per cartridge
Ink level indicator for each colour,
Ink Monitoring
ink low warning system
RIP Software Roland VersaWorksTM
Power Saving Auto Sleep
 Max Material
Thickness for 1.0mm including liner
Printing
Recommended Temperature 20-32° Celsius;
Environment Humidity 35-80%
Stand, power cord, blade, blade
holder, media clamps, replacement
Accessories blade for separating knife, cleaning
kit, software RIP (Roland
VersaWorks ), user's manual, etc.
(W) 2200mm x (D) 820mm x (H)
Dimensions
1260mm
Weight 177kg with Stand

II. SSF Project Description

RATIONALE

ASEAN integration is already at our doorsteps and intense competition is imminent. To raise
the bar of local products, MSMEs must endeavor to improve its quality and packaging.
However this is tall order when faced with limited skill, information and technology. It is for
this reason that the Mindanao University of Science and Technology with the support of
DOST-10, DTI and the 2nd Congressional District of Cagayan de Oro established the Food
Innovation Center side by side with the Packaging and Labeling Center.

The center intends to cultivate innovation by capacitating MSMEs with equipment for
prototyping whether for product or packaging. It also intends to further encourage learning
among students, professionals and entrepreneurs where expertise will be further honed and
curious minds molded.

The center is now awaiting arrival of processing and packaging equipment. The packaging
equipment includes vacuum sealer, continuous band sealer, granular vertical form fill seal,
shrink packaging machine, desktop cup sealing machine and induction sealing machine. But
without a printer, the center still lacks the capability to produce labels, boxes and printed PET
film. The initial plan was that the printing of design and label will be outsourced. However
after consultation with the private sector and after scanning for capabilities of local printers,
it was recognize that available printing technologies were very limited.

The following are the local printing limitations:

1. No local printer is capable of printing on PET film, clear vinyl or clear acrylic
2. Die cutting technology requires a lead time of two weeks
3. Each batch for die cutting requires high operational costs. The more volume per batch,
the cheaper it gets. That’s why printers require a minimum order of 500 pieces.
4. No local printer is capable of giving a superior metallic silver print utilizing light black,
metallic silver and high-density white.

With so many limitations, creativity in designing label and packaging is hampered. It is for
this reason that this proposal is put forth to upgrade the designing capabilities of the
Packaging and Labeling Center.

OBJECTIVE

Specifically the center aims to achieve the following objectives:

1. To increase designing and packaging capabilities

2. To enable MSMEs to print on PET or PP film or vinyl for outdoor decals, signages and
billboards
3. To allow short-run printing without minimum orders
ORGANIZATION MANAGEMENT

The packaging and labelling center will be managed by MUST, it will be under the Institute of
Entrepreneurship and Productivity under the supervision of the VP for Finance and Resource
Generation. An advisory council will be organized, composed of representations from DOST-X,
DTI-X, the 2nd Congressional District of Cagayan de Oro, FOPANORMIN and MUST. This body
will establish the implementing rules and regulations of the center’s operation:

Figure 1.
Proposed Organizational Structure of the Packaging and Labeling Center of Region X.

MUST Board of Regents

University President

VP – Finance and Resource

Generation

Institute of Entrepreneurship
and Productivity

Advisory Council

Center Supervisor

Graphic Designers: Fulltime 2 Fulltime Packaging

1 Fulltime initially Bookkeeper/Cashier Equipment Operators
3 On-call basis Document Controller

Instrument Technician

On contract basis

A. Staff Functions and Responsibilities

Advisory Council - the center’s advisory council will be composed of 5 representatives from
the various stakeholders, the council will establish the rules and policies that will govern the
operation of the center.

Center Supervisor - the center supervisor is in-charge of the overall operation of the facility.
His/her primary functions are the following:
 - deal with clients and facilitate the processing of the availed services
- assign specific job orders to specific designers/consultants
- contact other potential designers/consultants for the center
- schedule the work assignments of the equipment operators
- oversee and approve procurement procedures for supplies and materials
- authorize and approve the purchase of supplies, other materials and equipments if
needed
- Proposed starting salary is Php15,000.00/month

Full-time Graphic Designers - are technically trained personnel who are in charge of designing,
lay outing, constructing and printing mock labels or packaging materials for a specific product.
His/her primary are functions are:
- talk to clients regarding product specification and client expectation in the
label/package development.
- design, lay-out, construct/print mock labels or packaging material
- incorporate client feedback and suggestions in the completion of the label/package
design
- test packaging material compatibility with product.
- Proposed starting salary is Php10,000.00/month

Bookkeeper/Document Controller - will be in-charge of all the financial and other records of
the center. His/her primary functions are the following:
- record and update all financial transactions
- keep all documentary records of the center
- prepare financial statements
- Proposed starting salary is Php8,000.00/month

Packaging Equipment Operators/Technician- are technically trained personnel who are in

charge of the operation, day to day maintenance and cleaning of the equipments assigned to
them. His/her primary functions are the following:
- operate assigned equipment for contracted job orders
- clean assigned equipment before and after use
- clean assigned production area
- calibrate, check-up, and conduct preventive and corrective maintenance activities
for assigned equipment.
- Proposed starting salary is Php8,000.00/month
Cashier - is in charge of all cash receiving and releasing transactions. His/her primary functions
are the following:
- accept payments for all job orders and issue corresponding receipts
- release salaries of workers and payments to suppliers
- maintain the cash book
- act as sales representative for all items and services sold/provided at the center
- Proposed starting salary Php8,000.00/month

Instrument Technicians - these are equipment specialists that will be contracted only when
the equipment cannot be fixed by the equipment operator. These technicians may be provided
by the equipment supplier. If technicians from suppliers are not available, local technicians
may be contracted if the need arises. Cost of services will be charged to operating cost.
 EXPECTED OUTPUT

There are only three expected output which are the following:

1. Improvement in quality
a. Film over Paper
Film presents a lot of advantages over paper. These include durability, thermal
stability, tear resistance, chemical resistance and strength. As for aesthetics,
graphics are brighter and crispier on film than on paper. Furthermore, the
increasing trend of a no-label look or clear labeling for emphasis also increased
demand for films. With the given capability of the proposed printer, MSMEs can
now print on film.

b. More Creative and Attractive Label Designs

The proposed printer is capable of giving a highly reflective metallic silver print
with incredibly sharp image quality.

2. Reduce Cost

Roland LEC 330 Local Printer Local Printer

(No minimum Minimum of Minimum of
order required) 500 pieces 1000 pieces

Cost per sq. foot on P35.00 P38.00 P19.00

paper board

Roland LEC 330 Local Printer

Cost per sq. food P35.00 P50.00
on sticker paper

III. SSF Project Implementation

PRODUCTION GAPS

No Before SSF After SSF

1 Printing is limited to paper substrates
Printing can now be down in film substrates such
as polyethylene, polypropylene, vinyl or acrylic
3 Printing has a minimum order of 500 No minimum order
pieces
4 Not capable of metallic print Capable of Highly Reflective Metallic Print
MARKETS

The primary focus of the Packaging and Labeling Center is to cater to food-related business
which is estimated to comprise 25% of the total number of establishment in Northern
Mindanao. Although the printer is primarily intended for the printing of labels and packaging,
it can also cater to printing of tarpaulin, decals, signages and billboards of other non-food
related business. Below is the size of the potential market.

Number of establishment in Cagayan de Oro and Misamis Oriental in 2013

Area Number
Cagayan de Oro 18,462
Misamis Oriental 7,597
Food-Related Business in Misamis Oriental 6,514

To further specify the demand for printing of packaging and labels, below is data gathered
from FOPANORMIN, DOST-X and DTI-X indicating the packaging needs of identified MSMEs
every year.

MSME Packaging Material Needs by Type and Estimated Number

Type Most Commonly Needed Estimated(Maximum)
Number of) Units
Needed Per Year
Glass Bottles for Liquid and Semi-solid Products (wine, 14, 220
jams, jellies, bagoong)
Customized and Printed Plastic Bags/Pouch/Foil Packs (nuts, 1,373,000
coco sugar, bakery products, candies, peanut products, etc.)
Plastic Bottles ( ready to drink beverages, peanut butter, 400,000
moringa capsules, juice concentrates)
Plastic Cups (ice cream cups, buko juice cups) 400,000
Box Board Packaging ( cakes and pastries, pizza, ham, bakery 468,000
products, etc.)
Projected number of job orders in next three years
Service Name Projected no. of Job Orders per Service Type
Year 1 at 20% Year 2 at 30% Year 3 at 40%
production production production
capacity capacity capacity
1.Label Design
----With concept 30 products 40 products 40 products
development
----Without concept 30 products 40 products 40 products
development
2. Package Structure and
Label Design
----Stock design w/minimal 30 products 40 products 40 products
alteration
----Custom design 30 products 40 products 40 products
3. Printing Services 180 job orders 240 job orders 240 job orders
4. Toll Packaging Services
and Facilities
4.1. Induction Sealer 1,380 hrs. of 1,840 hrs. of 1,840 hrs. of
4.2.Continuous Band operation/year for operation/year for operation/year for
Sealer each equipment = each equipment = each equipment =
4.3. Vacuum Packaging 6,900 hours/year 9,200 hours/year 9,200 hours/year
Machine
4.4. Use of Food 180 days 240 days 240 days
Preparation Room
5. Consultancy and 6 8 8
Training
TOTAL No. of Job Orders -60 products for -80 products for -80 products for
per Year package structure package structure package structure
and label design and label design and label design
-180 job orders for
printing services -240 job orders for -240 job orders for
-total of 6,900 hrs. printing services printing services
of operation for all -total of 9,200 hrs. -total of 9,200 hrs.
equipment and of operation for all of operation for all
facilities equipment and equipment and
-6 consultancy/ facilities facilities
training activities -8 consultancy/ -8 consultancy/
training activities training activities
GROSS INCOME based on Php2,945,448.00 Php3,927,264.00 Php3,927,264.00
projected operating
capacity
 Food Innovation Center
Table 7. Projected Comprehensive Income Statement
December 31, Year 1, 2, 3 & 4
Year 1 (at 60% production Year 2 (at 80% Year 3 (at 80% production Year 4 (at 80%
capacity) production capacity) capacity) production capacity)
REVENUE/SALES Php2,945,448.00 Php3,927,264.00 Php3,927,264.00 Php3,927,264.00
Less: Salaries and Benefits (776,890.00) (776,890.00) (776,890.00) (805,490.00)
Depreciation Cost [Non-cash expense] [1,063,017.33] [1,063,017.33] [1,063,017.33] [1,063,017.33]
Consumable Packaging Materials [250,000.00] [250,000.00] [250,000.00] 300,000.00
[Subsidized for year 1 &2 ]
Consumable Printing Materials [250,000.00] [250,000.00] [250,000.00] 300,000.00
[Subsidized for year 1 &2 ]
GROSS MARGIN 605,540.67 1,587,356.67 1,587,356.67 1,458,756.67
Less Operating Expense [Subsidized for year
1 & 2]
Trainings and Seminars 30,000.00 30,000.00 30,000.00 30,000.00
Office Supplies 20,000.00 20,000.00 20,000.00 20,000.00
Electricity 100,000.00 100,000.00 100,000.00 100,000.00
Water 20,000.00 20,000.00 20,000.00 20,000.00
Repair and Maintenance 100,000.00 100,000.00 100,000.00 200,000.00
Taxes and Licenses 50,000.00 50,000.00 50,000.00 50,000.00
Communication Cost 15,000.00 15,000.00 15,000.00 15,000.00
Transportation Cost 50,000.00 50,000.00 50,000.00 50,000.00
Documentation Cost 5,000.00 5,000.00 5,000.00 5,000.00
Professional Fees (Designers and 50,000.00 50,000.00 50,000.00 50,000.00
Technicians)
Insurance 10,000.00 10,000.00 10,000.00 10,000.00
Promotional and Advertising 50,000.00 50,000.00 50,000.00 50,000.00
SUB-TOTAL [500,000.00] [500,000.00] [500,000.00] [600,000.00]
PROFIT(LOSS) FROM OPERATIONS 105,540.67 1,087,356.67 1,087,356.67 858,756.67
Table 13. Equipment Depreciation Schedule with Justification on the Importance of Highly Priced Equipment

Name of Equipment No. Acquisition Total Cost Estimated Salvage Annual Equipment Justification
of Cost Life Span Value Depreciation
Units in Years
Building with Renovation (worth 1 2,0000,000.00 2,500,000.00 25 500,000.00 80,000.00
Php500,000.00)
Roland LEC 330 Printer 1 3,100,000.00 3,100,000.00 10 100,000.00 25,000.00
Computer desktop with licensed 1 *210,000.00 210,000.00 3 70,000.00 The computer hardware and
softwares for designer’s use software to be acquired
(Mackintosh) must be durable and fitted
Laser printer for designer’s use (for 1 20,000.00 20,000.00 2 10,000.00 for designing purposes. Since
printing mock-up labels and trial this is the heart of the
packaging material) services that will be offered
by the center, the most
Digital SLR Camera 1 80,000.00 80,000.00 5 16,000.00
advanced and appropriate
Continuous Digital Printer for 1 1,500,000.00 1,500,000.00 5 100,000.00 280,000.00 This machine will address
model and software should
Label/Package Printing in Rolls printing needs of MSMEs in
Desktop Cup Sealing Machine 2 100,000.00 200,000.00 2 40,000.00 80,000.00 be acquired.
Northern Mindanao since it
Shrink Packaging Machine 1 100,000.00 100,000.00 2 20,000.00 40,000.00 can do short run printing for
Table Top Scale 9 7,500.00 67,500.00 2 33,750.00 minimal number of orders of
(This is a computer operated
Platform Scale 3 35,000.00 105,000.00 2 15,000.00 45,000.00 MSMEs
digital printing machine. It is
Vacuum Packaging Machine 2 *150,000.00 300,000.00 5 40,000.00 52,000.00 If this machine will be made
capable of customizing design and
Continuous Band Sealer 3 40,000.00 120,000.00 2 15,000.00 52,500.00 available for use to MSMEs,
shape of printed labels and
Induction Sealing Machine 3 40,000.00 120,000.00 3 15,000.00 35,000.00 it will contribute greatly to
stickers)
Refractometer 2 50,000.00 100,000.00 5 20,000.00 16,000.00 the extension of shelf life of
(This machine removes air and
pH meter 2 50,000.00 100,000.00 5 20,000.00 16,000.00 products.
water vapour from the product
IR Pyrometer (Non Contact
packaging rendering the product 2 25,000.00 50,000.00 1 10,000.00 40,000.00
Thermometer
Glass display cabinet
very stable against spoilage) 2 10,000.00 20,000.00 5 2,000.00 3,600.00
Stainless Steel Working Table 9 50,000.00 450,000.00 5 90,000.00 72,000.00
Heavy Duty Upright Refrigerator/ 1 *120,000.00 120,000.00 3 20,000.00 33,333.33 This machine is to be used
Freezer for short term storage of
Office Tables 5 5,000.00 25,000.00 5 2,500.00 4,500.00 products that cannot be
Office Swivel Chairs 5 2,500.00 12,500.00 5 2,500.00 packed yet, to avoid product
Office Bench/Sofa 1 10,000.00 10,000.00 5 1,000.00 1,800.00 spoilage or temperature
Office Conference Table w/Chairs 1 15,000.00 15,000.00 5 1,000.00 2,800.00 abuse.
Bookshelves 3 10,000.00 30,000.00 5 3,000.00 5,400.00
Office Desktop Computers 2 *75,000.00 150,000.00 2 75,000.00 This desktop computer
(complete set) w/printer
TOTAL 1,063,017.33 will be used for preparation
(Mackintosh) of office documents and
accounting purposes.
Table 8. Projected Schedule of Employee Salaries for year 1 to 4

Employee Number of Monthly Number of Year 1 Salaries Year 2 Salaries Year 3 Salaries Year 4 Salaries
Employees Salary Months in and Wages and Wages and Wages and Wages w/4%
a Year increase
Manager 1 15,000.00 13 195,000.00 195,000.00 195,000.00 202,800.00
Graphic Designer 1 10,000.00 13 130,000.00 130,000.00 135,200.00 135,200.00
Bookkeeper/Cashier 1 10,000.00 13 130,000.00 130,000.00 130,000.00 135,200.00
Packaging Equipment Operator 2 10,000.00 13 260,000.00 260,000.00 260,000.00 270,400.00
TOTAL 5 715,000.00 715,000.00 715,000.00 743,600.00

Table 9. Projected Schedule of Employee Benefits

Employee Number Monthly PAG-IBIG SSS Benefit PhilHealth Total Benefits Number Total Benefits for
of Emplo- Salary Benefit per per month Benefit per per month of One Year
yees month month months
per year
Manager 1 15,000.00 100.00 1,090.00 187.50 1,377.50 12 16,530.00
Graphic Designer 1 10,000.00 100.00 720.00 125.00 945.00 12 11,340.00
Bookkeeper/Cashier 1 8,000.00 100.00 720.00 125.00 945.00 12 11,340.00
Packaging Equipment 2 8,000.00 200.00 1,440.00 250.00 1,890.00 12 22,680.00
TOTAL
Operator 5 500.00 3,970.00 687.50 5,157.50 12 61,890.00
 Particulars No. MUST SSF Total
of Cost
Units
A. Fixed Capital
1. Roland LEC 330 Printer 1 3,100,000 3,100,000
B. Packaging Consumables 1,500,000 1,000,000
C. Initial Operating Cost 1,000,000 1,000,000
TOTAL 2,500,000 3,100,000 5,600,000
PERCENTAGE SHARING 45% 55% 100%

Prepared by: Approved by:

LORAINE C. BRILLANTES MA. ELIZA A. PABILLORE

TIDS Provincial Director