SHOCK ABSORBER RECONDITIONING
Introduction
Shock absorbers are essential items for smooth riding of any automobile. Their basic function is to absorb any shocks to ensure a comfortable ride and better control of the vehicle/automobile. With the high number of automobiles in Uganda and noting the state of most of Uganda’s roads, the rate at which shock absorbers are replaced is high. Therefore, starting a plant for reconditioning shock absorbers is a very viable project indeed. The project cost is US$12,740, capacity of 4,000 per year giving US$978 as revenue in a year.
Production Process
Capacity and Technology Shock absorbers are opened and checked for oil passage and required pressure. The dirt is removed and fresh oil is filled after replacing rubber bushes and seals. The profiled plant has a minimum capacity of reconditioning 4,000 shock absorbers per annum but this can be increased as a bigger customer base is captured.
Market Analysis
The market is mainly from existing vehicles for reconditioning the shock absorbers. The used shock absorbers can be reconditioned and used, which costs less than a quarter of the price of a new set. It would also be recommended to liaise with automobile dealers. There are several players in this sector especially merged in KISEKA market – Kampala Uganda.
Capital investment Requirement in US$
|
Item |
Unit |
Qty |
Price |
Total |
|
Bench vices |
No |
2 |
100 |
200 |
|
Boring tools |
No |
4 |
75 |
300 |
|
Self-tapping plugs |
No |
4 |
50 |
200 |
|
Other Hand tools |
Set |
2 |
250 |
500 |
|
Total cost of Machinery & Tools |
1,200 |
Production and Operation costs in US$
Direct materials, supplies and costs
|
Cost Item |
Units |
Unit |
Qty |
Prod |
Prod |
Prod |
||
|
Direct Costs |
||||||||
|
Used shock absorbers |
Pcs |
0.25 |
12.8 |
3.21 |
83.3 |
1000 |
||
|
lubricating oil |
ltrs |
6 |
0.32 |
1.9 |
50 |
600 |
||
|
Rubber |
pckts |
13 |
0.06 |
0.8 |
22 |
260 |
||
|
Packaging |
ltrs |
1 |
1.60 |
1.6 |
42 |
500 |
||
|
Sub-total |
8 |
196.67 |
2,360 |
|||||
|
General Costs (Overheads) |
||||||||
|
Labour |
300 |
3,600 |
||||||
|
Selling & distribution |
200 |
2,400 |
||||||
|
Utilities (Water, power) |
70 |
840 |
||||||
|
Administration |
20 |
240 |
||||||
|
Rent |
150 |
1,800 |
||||||
|
Miscellaneous expenses |
100 |
1,200 |
||||||
|
Depreciation |
25 |
300 |
||||||
|
Sub-total |
865 |
10,380 |
||||||
|
Total Operating Costs |
1,061.67 |
12,740 |
||||||
1. Production costs assumed are for 312 days per year with daily capacity of 12.8pcs.
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 other costs directly incurred to produce the product.
4. Currency used is US Dollars.
Project product costs and Price Structure in US$
|
Item |
Qty |
Qty |
Unit |
Prod |
Unit |
Total |
|
Shock absorbers |
12.8 |
3,994 |
3.19 |
12,740 |
3.5 |
13,978 |
Profitability Analysis in US $
|
Item |
Per |
Per |
Per |
|
Revenue |
45 |
1,165 |
13,978 |
|
Less: Production and operating |
41 |
1,062 |
12,740 |
|
Profit |
4 |
103 |
1,238 |