MAKING WIRE NAILS
Introduction
This business idea is for manufacturing and marketing of wire nails. The nails consist of hard drawn bright mild steel wire with a head, which helps in driving the nail inside. They are made in various sizes. Wire nails are used for roofing, fastening in carpentry and woodwork, fencing, etc. With the rise in construction activities, both commercial and private, the demand for wire nails is bound to increase. Setting up a plant to make wire nails would thus meet this demand. This business idea is premised on manufacturing 769 kilograms of three inch wire nails per day which translates into 239,928 kgs of wire nails per annum. The revenue potential is estimated at US$390 per month translating into US$ 419,880 per annum with a sales margin of 25% and total investment requirement of US$ 302,265 for the first year of project operation.
Production Capacity
The plant at the onset of production has a minimum capacity of 20 tonnes of nails each month. As a bigger segment of the market is captured, output can be increased.
Manufacturing Process Description and
Technology
The manufacturing technology involves feeding steel wire in the form of coil into a wire nail-forming machine. At first, cold heading forms the head and then the point takes shape. The nails are tumbled in a tumbling barrel with sawdust or similar materials to remove burrs. The finished nails are weighed and packed for marketing.
Market Analysis
The market for Wire Nails is high throughout the year both in Rural and Urban Areas. The major key players in this sector include; Roofings (U) Ltd, Steel Rolling Mills, Sembule Steel Mills, among others.
Investment Scale Capital Requirements
and Equipment
The Investment scale depends on the set goals and objectives of the project and the market for the products.
The Capital Investment Requirements in
US$
|
Item |
Units |
Qty |
Unit |
Amount |
|
Automatic
Wire Nail making |
No |
1 |
25,000 |
25,000 |
|
Grinding
machine with 1-horse |
No |
2 |
12,500 |
25,000 |
|
Steel Polishing Drums |
No |
4 |
500 |
2,000 |
|
Wire
Drawing Machine with 5- |
No |
2 |
4,000 |
8,000 |
|
Delivery Van |
No |
1 |
6,000 |
6,000 |
|
Other Tools |
2,500 |
2,500 |
||
|
Total |
68,500 |
Production and operating costs in US$
|
Cost Item |
Unit |
Unit |
Qty/ |
cost/ |
cost/ |
cost/ |
|
Direct Costs |
||||||
|
Iron and steel oar |
tone |
500 |
1 |
500 |
13,000 |
156,000 |
|
Lubricant Oil |
Liter |
2 |
200 |
400 |
10,400 |
124,800 |
|
Cotton Waste |
Kg |
0.25 |
200 |
50 |
1,300 |
15,600 |
|
Packing materials |
No |
2 |
10 |
20 |
520 |
6,240 |
|
Sub-total |
411 |
970 |
25,220 |
302,640 |
||
|
General Costs (Overheads) |
||||||
|
Other materials |
1,000 |
12,000 |
||||
|
Rent |
750 |
9,000 |
||||
|
Labour |
1,000 |
12,000 |
||||
|
Utilities (Power $ water) |
250 |
3,000 |
||||
|
Preliminary Costs |
250 |
3,000 |
||||
|
Miscellaneous costs |
250 |
3,000 |
||||
|
Depreciation (Asset write off)Expenses |
1,427 |
17,125 |
||||
|
Sub-total |
4,927 |
59,125 |
||||
|
Total Operating Costs |
30,147 |
361,765 |
1. Production costs assumed are for 312 days per year with a daily capacity of 769 Kilograms of 3 inch wire Nails. But other nails like 1 inch nail,2 inch nail etc, can also be manufactured using the same production process .
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.
A production month is assumed to have 26
days
Project Product Cost and Price Structure in US$
|
Item |
Qty/ |
Qty/Yr. |
Unit |
Prod cost |
Unit |
T/rev |
|
Wire
Nails |
769 |
239,928 |
1.5 |
361,765 |
1.75 |
419,874 |
Profitability Analysis in US$
|
Item |
Per |
Per |
Per Yr. |
|
Revenue |
1,346 |
34,990 |
419,874 |
|
Less: Production and Operating Costs |
1,160 |
30,147 |
361,765 |
|
Profit |
186 |
4,842 |
58,109 |