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Compedium of Diaspora opportunities

MAKING COLOURED WAX CRAYONS BUSINESS IN UGANDA

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Introduction

Used as educational aid for drawings and sketches, coloured wax crayons are in great demand now, especially with current policy reforms in the education sector. They are normally used by children and artists, although they can be used by professionals, especially in business presentations, etc. A plant for making coloured wax crayons can be set up anywhere and does not require much in terms of expertise. This makes the project suitable for both rural and urban folks and will cost US$2,720 with capacity of 59,998 boxes annually, estimated revenues US$ 59,998per year with a net profit margin of 45%.

Production Process, capacity and Technology

The process consists of melting wax with the appropriate dye/ pigment. Filler is added to the melted wax and cast in required shapes and sizes. Finally, the crayons are wrapped and packed in cardboard boxes. The envisaged plant would have a minimum capacity of 192.3 boxes (1 gross per box) per day. This is on the basis of 312 working days in a year and single 8-hour daily work shifts.

Capital Investment Requirement in US $

Item Units Qty Price Total
Mixer No 1 1,200 1,200
Packing &Sealing machine No 2 4 8
Mould No 2 82 164
Boilers/ Melting machine No 2 512 1,024
Compressor /cooler No 1 324 324
TC of tools & Equipment       2,720
  1. Production costs assumed are for 312 days per year with daily capacity of 192.3 boxes.
  2. Depreciation (fixed asset write off) assumes 4 year life of assets written off at 25% per year for all assets.
  3. Direct costs include: materials, supplies and other costs directly incurred to produce the product.
  4. Currency used is US Dollars

Production and Operating costs in US$

Direct materials, supplies and costs

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ mth Pdn cost/ yr
Direct Costs            
Paraffin, ltrs 1.3 0.5 0.624 16 195
Wax kgs 3 16 48.09 1250 15004
Dyes pkts/kgs 3.3 0.1 0.325 8.45 101.4
Packaging material pkts/kgs 1.5 9.62 14.43 375.18 4502.16
Sub-total       63.469 1,650 19,802

General Costs (Overheads) Project product cost and Price Structure

Labour 390 4,680
Selling & distribution 200 2,400
Utilities (Water, power) 150 1,800
Administration 50 600
Rent 150 1,800
Miscellaneous expenses 100 1,200
Depreciation 57 680
Sub-total 1,097 13,160
Total Operating Costs 2,747 32,962
Item Qty/day Qty/yr Unit cost Pdn cost/yr UPx TR
Crayons 192 59,998 0.5 32,962 1 59,998

Profitability Analysis in US$

Profitability Item Per day Per month Per year
Revenue 192.3 5,000 59,998
Less: Production and operating costs 106 2,747 32,962
Profit 87 2,253 27,035

Market

With the growing education base both in urban and rural areas, the use of coloured wax crayons have shot up in the last few years. Therefore, there is ready market and for this, educational institutions including nurseries, vocational colleges like Art academies, should be targeted. Supply should also be made to bookshops and other stationery shops.

Source of machinery and raw materials:

It can be locally made by Tonet Ltd, Kanyanya Gayaza Rd or John Lugendo and Co Ltd, Ndeeba Masaka Rd email lugendojohn07@ yahoo.com. Wax can be locally sourced cheaply, but can also be imported.

Government incentive:

Startup costs 25% granted on actual cost over the first four years in four equal installments. Initial allowance granted in the first year of production; 75% granted on the cost base of plant and machinery for industries located elsewhere in the country.

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