MAKING PENCILS
Introduction
A pencil is a writing implement or art medium constructed of a narrow, solid pigment core inside a protective casing. The case provides an external scaffold to protect the structural integrity of the core, and also prevents the pigment from accidentally staining the hand during use. Pencils are widely used in the country in fields like education, carpentry, and artillery work among others, hence creating a big demand for them.
Production Capacity
The production capacity is estimated at 6,000 dozens of pencils per day.
Raw Materials
The most important ingredient in a
pencil is the graphite, which most people continue to call lead, which is a
method of combining graphite with clay and wax or other chemicals. The cedar
usually arrives at the
factory already dried, stained, and waxed to prevent warping.
Process & Technology
Modern pencils are made industrially by mixing finely ground graphite and clay powders, adding water, forming long spaghetti-like strings, and firing them in a kiln. The resulting strings are dipped in oil or molten wax, which seeps into the tiny holes of the material, resulting in smoother writing. A juniper or incense-cedar plank with several long parallel grooves is cut to fashion a “slat,” and the graphite/clay strings are inserted into the grooves. Another grooved plank is glued on top, and the whole assembly is then cut into individual pencils, which are then varnished or painted. Afterwards people can then add personal things like pencil grips and eraser toppers & Labels.
Equipment
The Essential tools and equipment required are; Circular Saw, Grover, Eraser Tipping machine, Ferrule, Painting machine & Shaper. These equipment may be imported from China & India.
Scale of Investment & Capital
Investment Requirements
The scale of investment is estimated at US$12,650 where at least 6,000 dozens of pencils will be manufactured in a day.
Market Analysis
Pencils are widely used in the country
in almost all fields such as Education, Carpentry and Artillery among others;
hence creating a big demand for them. Picfare – Uganda Ltd is the major key
player in
this Industry.
Project Costs
The Project fixed capital requirements
are summarized in the Table below:
Capital Investment Requirements in US$
|
Item |
Units |
Qty |
Unit |
Amount |
|
Delivery Van |
No. |
1 |
6,000 |
6,000 |
|
Power Saw |
No. |
1 |
500 |
500 |
|
Grover |
No. |
1 |
200 |
200 |
|
Eraser Tipping Machine |
No. |
1 |
800 |
800 |
|
Ferrule |
No. |
1 |
1,000 |
1,000 |
|
Painting Machine |
No. |
1 |
1,000 |
1,000 |
|
Shaping Machine |
No. |
3 |
1,000 |
3,000 |
|
Furniture |
No. |
5 |
30 |
150 |
|
Total Amount |
12,650 |
1. Operating Costs in US$
|
Item |
Units |
Unit |
Qty/day |
Prod. |
Prod. |
Prod. |
|
Direct Costs |
||||||
|
Cedar |
Ft |
2 |
500 |
1000 |
26000 |
312000 |
|
Graphite |
Kgs |
1 |
60 |
60 |
1560 |
18720 |
|
Sub total |
1,060 |
27,560 |
330,720 |
|||
|
General Costs (Over heads) |
||||||
|
Rent |
400 |
4,800 |
||||
|
Packaging Material |
200 |
2,400 |
||||
|
Labour |
400 |
4,800 |
||||
|
Utilities (Power & Water) |
400 |
4,800 |
||||
|
Repair & Servicing |
400 |
4,800 |
||||
|
Fuel |
400 |
4,800 |
||||
|
Depreciation (Asset write off) Expenses |
264 |
3,163 |
||||
|
Sub - total |
2,464 |
29,563 |
||||
|
Total Operating Costs |
30,024 |
360,283 |
2. Project Product Costs & Price Structure in US$
|
Item |
Qty/day |
Qty/yr |
Unit |
Prod |
Unit |
T/rev |
|
Pencils |
6000 |
1,872,000 |
0.19 |
360,283 |
0.25 |
468,000 |
3. Profitability Analysis in US$
|
Item |
Per |
Per |
Per Year |
|
Revenue |
1,500 |
39,000 |
468,000 |
|
Less: Production & Operating Costs |
1,060 |
30,024 |
360,283 |
|
Profit |
440 |
8,976 |
107,718 |