MAKING EXPANDED PET PRE-FOAMS FOR PACKAGING BUSINESS IN UGANDA

By: wmutenza0 comments

Introduction

This project is for manufacturing and marketing of Expanded Pet pre-foams. Foam nets are preferred over conventional packaging materials due to their merits. They are mainly used for packaging glass bottles, medicine and electronic instruments.

The business idea is premised on production of 2002 rolls per month which translates into 24,024 rolls per year, with a capital investment of US$35,100 The revenue potential is estimated at US$96,096 per year with a net profit margin of 24% and a payback period of 3 years 6 months.

Production Process

LDP along with additives like blowing agent, talcum powder, etc. are mixed in the blender. This mixture is fed into the hopper of the extruder where the molten substance is mixed with Freon gas to provide smooth & glassy surface and strength. The extruded LDPE passes through a multi hole double rotation and expands.

LDPE foam nets are pulled out by drawing machine and trimmed by pneumatic device. The nets are dropped into stainless steel container smoothly and continuously, from where they are removed, packed and sent to the market.

 

Capital Investment Requirements in US$

Capital Investment Item Units Qty @ Amount
Mixer No 1 3,000 3,000
Extruder Screw diameter No 1 2,800 2,800
Multi hole double rotating die No 1 2,700 2,700
Drawing and cutting unit No 1 24,000 24,000
Freon gas supply System No 1 2,000 2,000
Blender No 1 600 600
Total       35,100

Production and Operating Costs Direct Materials, Supplies and Costs

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ month Pdn cost/ year
Direct Cost          
Low Density Polythene rolls 0.8 50 40 1040 12,480
Resin liter 2.5 20 50 1300 15,600
Freon gas liter 2.2 10 22 572 6,864
Talcum powder KG 2.4 10 24 624 7,488
Sub-total     90 136 3,536 42,432

General Costs(Overheads)

Rent 240 2,880
Labour 850 10,200
Utilities 140 1,680
Preliminary costs 100 1,200
Transport Costs 230 2,760
Miscellaneous costs 250 3,000
Depreciation (Asset write off) Exp 731 8,775
Sub-total 2,541 30,495
Total Operating Costs 6,077 72,927
  1. Production costs assumed 312 days per year with a daily capacity of 77 rolls of Expanded Pet Pre-foams
  2. Depreciation (fixed asset write off) assumes4 years life of assets written off at _25% per year for all assets.
  3. Direct Costs include materials, supplies and other costs that directly go into production of the product.
  4. A production month is assumed to have 26 days

Project Product Costs and Price

Item Qty/day Qty/Yr @ Pdn cost/Yr UPx T/rev
Expanded Pet Pre-Foam 77 24,024 3 72,927 4 96,096

Profitability Analysis in US$

Profitability Item Per day Per Month Per Yr
Revenue 308 8,008 96,096
Less: Production and Operating Costs 234 6,077 72,927
Profit 74 1931 23,169

Supply of Raw materials and Equipments

Raw materials can be procured locally or imported from Kenya while Equipments may also be imported from China and Japan.

Government Incentives Available

Government has put up Organizations like Private Sector Foundation Uganda which serve as a channel through which subsidies and free advisory services are provided to investors.

 

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