LEATHER TANNING
Introduction
Hides and skins are given shape and form after
processing in tanneries, where a specially designed drum is used. A leg
operated mobile unit can be used in tanning leather. With the massive presence
of cattle, especially the Ankole long horned and the Zebu breed, there is a
substantial supply of hides and skins. With the increasing demand for both raw
leather and leather products, setting up a leather tanning industry is indeed a
viable project. This can cost US$ 16,650, production capacity of 62,400kgs per
year and estimated revenue of US$ 21,840 annually
Production Process, Capacity and Technology
The tannery process is divided into sorting, trimming the skins, soaking, liming, removing the hair/fur, fleshing, bating and picking. The drum made out of fibre reinforced plastic is used to soak the hides and skin. It is a simple and cost effective way of tanning the leather, which improves productivity, quality and mitigates drudgery. The profiled plant has a minimum capacity of 200 hides and skins per day.
Market Analysis
There is an ever-increasing demand for leather products processed from skins and hides. As traditional tanning methods do not ensure good quality leather, tanning for quality leather has become an important activity. The best examples of Investors in this field Include; Uganda Leather Tanning Industry located in Jinja and other submerging small scale Industries.
Capital Investment Requirement in US $
|
Item |
Unit |
Qty |
Price |
Total |
|
Tanning machine |
No |
1 |
1,750 |
1,750 |
|
Tanning drum |
No |
1 |
1,500 |
1,500 |
|
Cleaning Tools & Equipment |
No |
1 |
1,000 |
1,000 |
|
Cutting Tools |
No |
1 |
150 |
150 |
|
Total cost of Machinery & Tools |
4,400 |
1. Production costs assume 312 days per year with daily capacity of 2000 rubbers.
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 days
5. Currency used is US Dollars.
Production
and Operating cost in US$
Direct materials, supplies and costs.
|
Cost Item |
Units |
Unit |
Qty |
Prod |
Prod |
Prod |
|
|
Direct Costs |
|||||||
|
Skins & Hides |
kgs |
0.25 |
16.03 |
4.01 |
104.2 |
1,250 |
|
|
Tanning |
kgs |
15 |
0.32 |
4.81 |
125.0 |
1,500 |
|
|
Lime |
ltrs |
2.5 |
0.16 |
0.40 |
10.4 |
125 |
|
|
Salt |
kgs |
0.25 |
0.96 |
0.24 |
6.3 |
75 |
|
|
Sub-total |
9 |
245.83 |
2,950 |
||||
|
General Costs (Overheads) |
|||||||
|
Labour |
400 |
4,800 |
|||||
|
Selling & distribution |
100 |
1,200 |
|||||
|
Utilities (Water, power) |
300 |
3,600 |
|||||
|
Administration |
100 |
1,200 |
|||||
|
Rent |
100 |
1,200 |
|||||
|
Miscellaneous expenses |
50 |
600 |
|||||
|
Depreciation |
92 |
1,100 |
|||||
|
Sub-total |
1,142 |
13,700 |
|||||
|
Total Operating Costs |
1,387 |
16,650 |
|||||
Project product costs and Price structure in US$
|
Item |
Qty |
Qty |
Unit |
Prod |
Unit |
Total rev |
|
Dehydrated |
200.0 |
62,400 |
0.27 |
16,650 |
0.35 |
21,840 |
Profitability Analysis in US$
|
Item |
Per |
Per |
Per |
|
Revenue |
70 |
1,820 |
21,840 |
|
Less: Production and operating costs |
53 |
1,388 |
16,650 |
|
Profit |
17 |
433 |
5,190 |