MAKING DESIGNER COTTON BAGS
Introduction
Cotton
bags are environmentally friendly products and can be a perfect replacement for
polythene and plastic bags. The business profile is targeted towards production
of 32,760bags in the first year of operation with an initial investment fixed
capital totaling to 6,100US$ & estimated revenue of 144US$ and operating
costs of 101,431 US$. The market is very easy to explore as the government is
trying to burn the use of polythene bags.
Market
Analysis
5) The
valuation currency used is United States Dollars
Project
product costs and price Structure
Production
Capacity, Technology & Process
The
production process involves cutting different sizes of cotton cloth pieces and
then stretching them on a stretching machine. The stretched pieces are tailored
into different sizes and designs using a sewing machine. Where it is necessary
to include company labels and designs, they can be sewn or just printed to add
value to the products.
Investment
Scale, Capital Requirements and Equipment
The
investment scale greatly depends on the objectives of the entrepreneur and the
machines production capacity. But on arelatively small scale production, the
capital requirements and equipment are as tabled bellow.
Capital investment
item
|
units |
Qty |
unit cost |
Total |
|
|
Stretching Machine |
No |
2 |
300 |
600 |
|
Sewing Machine |
No |
2 |
1,500 |
3,000 |
|
Furniture |
No |
- |
- |
1,400 |
|
Art printing Machine |
No |
1 |
350 |
350 |
|
Other tools |
No |
- |
- |
750 |
|
Total |
6,100 |
Production and Operating Costs in US$
(a)Direct Materials, Supplies and Costs
|
Cost Item |
Units |
Unit |
Qty/ |
Pdn |
Pdn |
Pdncost/ |
|
Direct |
||||||
|
Cotton |
Mtrs |
3.5 |
45 |
158 |
4,095 |
49,140 |
|
Thread |
Rolls |
0.75 |
4 |
3 |
78 |
936 |
|
Printing |
Ltrs |
5 |
7 |
35 |
910 |
10,920 |
|
Cotton |
Rolls |
6 |
10 |
60 |
1,560 |
18,720 |
|
Sub-total |
66 |
256 |
6,643 |
79,716 |
||
|
General Costs(Overheads) |
||||||
|
Labour |
533 |
6,400 |
||||
|
Rent |
600 |
7,200 |
||||
|
Utilities |
178 |
2,140 |
||||
|
Selling & distribution |
225 |
2,700 |
||||
|
Miscellaneous expenses |
146 |
1,750 |
||||
|
Depreciation |
127 |
1,525 |
||||
|
Sub-total |
1,810 |
21,715 |
||||
|
Total Operating Costs |
8,453 |
101,431 |
1)
Production costs assumed are for 312 days per year with daily capacity of producing
105 pieces of cotton bags.
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 into
production of the product.
4) Total monthly days assumed are 26-work days.
|
Item |
Qty/ |
Qty/yr |
Unit |
Pdn |
Unit |
T/rev |
|
Designer |
105 |
32,760 |
3.10 |
101,431 |
4.4 |
144,144 |
Profitability Analysis Table
|
Profitability Item |
Per Day |
Per |
Per Year |
|
Revenue |
462 |
12,012 |
144,144 |
|
Less: Pdn & Operating Costs |
325 |
8,453 |
101,431 |
|
Profit |
137 |
3,559 |
42,713 |
Facilities & Incentives
The
government is trying to phase out environmentally unfriendly products like
polythene & plastic bags and therefore any intervention that will lessen
environmental degradation such as use of cotton bags
will be welcomed by the government.