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MAKING SCOURING POWDER BUSINESS IN UGANDA

By: wmutenza0 comments

Introduction

Scouring powder is a widely used household product. It is used in cleaning of metallic and ceramic products such as: tiles, toilet bawls, bathtubs & rinsing sinks etc.

Production Capacity Technology & Process

The production process involves the mixing of baking soda, salt, and borax powder in the right quantities and then the mixture is stored in an air tight container. Production capacity of 99,840kgms of scouring powder in the first year of operation and a total annual revenue of US$53,914can be realized when a total operating cost of US$32,319 is injected into the project. The net profit margin is 40% and the pay back is 1 year and 3 month.

  • Investment Scale, Capital Requirements and Equipment
  • The investment scale largely depends on the production capacity and the ease with which raw materials are acquired.
  • The major equipment required includes the following items as tabled bellow.

Capital Investment Requirements

Capital investment item units Qty @ Total($)
Mixer No 1 400 400
Air tight Container No 1 500 500
Delivery Van(0.5 -tone) No 1 4,000 4,000
Furniture & Fixture No 1,200
Weighing Scale No 1 200 200
Other Tools No 1,200
Total       7,500

Production and Operating Costs (a)Direct materials, Supplies and Costs

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ mth Pdn cost/yr
Direct Costs          
Salt Kgs 0.4 16 6 167 2,000
Borax Powder Kgs 0.35 32 11 292 3,500
Baking Soda Kgs 0.4 32 13 333 3,994
Packaging Materials Pcs 0.08 160 13 333 4,000
Other materials   83 1,000
Sub-total     240 43 1208 14,494

General Costs(Overheads)

Labour 292 3,500
Rent 267 3,200
Utilities 267 3,200
Selling & distribution 225 2,700
Cleaning & Toiletries 154 1,850
Miscellaneous expenses 125 1,500
Depreciation 156 1,875
Sub-total 1,485 17,825
Total operating Costs 2,693 32,319
  1. Production costs assumed are for 312 days per year with daily capacity of producing 320kgs of scouring powder.
  2. Depreciation (fixed asset write off) assumes 4-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 intoproduction of the product.
  4. Total monthly days assumed are 26-days.
  5. The valuation currency used is United States Dollars

Market Analysis

The market exists widely in urban areas and the product can easily be supplied to supermarkets, wholesale and retail shops. Big producers such as: Mukwano Industries Ltd and Unilever Uganda Ltd may affect production costs and Price of new entrants as they produce at relatively low costs since they enjoy the economies of large scale production.

Project Product Costs and Price Structure

Item Qty/day Qty/yr @ Pdn cost/ yr UPx T/rev
Scouring Powder 320 99,840 0.32 32,319 0.54 53,914

Profitability Analysis Table

Profitability Item Per Day Per Month Per Year
Revenue 173 4,493 53,914
Less: Production& Operating Costs 104 2,693 32,319
Profit 69 1,800 21,595

Government Facilities & Incentives

Poverty eradication programs such as “Bonna Bagagawale”are aimed at financing such projects. There is also the European investment fund.

Capital Investment Requirements in US$ General Costs (Overheads)

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