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Compedium of Diaspora opportunities

MAKING LLDPE MAILING COVER / ENVELOPES BUSINESS IN UGANDA

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Introduction

Linear low-density polyethylene (LLDPE) is a linear polymer, with short number of branches; it has a narrower molecular weight. LLDPE mailing covers and envelops are a good substitute for the conventional paper covers. Aesthetically designed and lightweight, these envelopes also save on postage charges and can be recycled, have excellent wear and tear resistance and are durable. A plant to make such products can be put up anywhere in Uganda, and it can cost US$78,055 with a production capacity of 50,000Kgs per year. The project is estimated to yield revenue of US$109,996, with a net profit of 29%.

Capital Investment Requirement in US $

ITEM Units Qty Price Total
Blown film extruder No. 1 4500 4500
Bag making machine No. 1 3750 3750
printing machine No. 1 2000 2000
Weighing balance No. 2 25 50
TC of tools & Equipment 10,300
  1. Production costs assume 312 days per year with daily capacity of 160 Kgs.
  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 all other costs incurred to produce the product.
  4. A production month is 26 work days
  5. Currency used is US Dollars.

Production and Operation in US $

Direct materials, supplies and costs

Production Process, Capacity and Technology

The LLDPE granules along with fillers and pacifiers are charged into the blown film extruder, to melt and are homogenized and blown vertically upwards through a die and taken up by rollers. The air bubble controls the width of the film. The bubble is cooled by a jet of air. The film is treated for better printability and wound over paper tubes. These rolls are printed and converted in the form of envelope by cutting and side sealing. The profiled plant has a minimum capacity of 50 tonnes per annum on the basis of 312 working days in a year.

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ mth Pdn cost/ yr
Direct Costs
LLDPE Kgms 7 13 88 2,275 27,300
Filter & pacifiers Kgms 100 1 50 1,300 15,600
Terpene Ltrs 30 1 30 767 9,204
Other materials / chemicals Ltrs 75 1 75 1,950 23,400
Sub-tot 138 3,575 42,900

General Costs (Overheads) Project product and Price Structure in US $

Labour 1,115 13,380
Selling & distribution 100 1,200
Utilities (Water, power) 1,000 12,000
Rent 400 4,800
Miscellaneous expenses 100 1,200
Depreciation 215 2,575
Sub-total 2,930 35,155
Total Operating Costs 6,504.5 78,055
Item Qty/ day Qty/ yr @ Pdn cost/yr UPx TR
LLDPE Envelopes 160 49,998 1.6 78,055 2.2 109,996

Profitability Analysis in US $

Profitability Item Per day Per month Per year
Revenue 353 9,166 109,996
Less: Production and operating costs 115 3,002 78,055
Profit 237 6,164 31,941

Market

LLDPE mailing covers are used for sending documents, brochures, annual reports, magazines, shareholder certificates, etc., through post or couriers. Other features are that they are lightweight, high tear resistant, printable and economic as they can be easily protected from dust & rain, etc which makes this product easily marketable.

Source of Machinery and Materials

The equipment and machines are specialized and computerized and so they can only be imported. They can be got from USA, China, India, etc. Materials are got from Kenya and some locally.

Government Facilities

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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