MAKING DESIGNER COTTON BAGS BUSINESS IN UGANDA

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 32,760 bags in the first year of operation with an initial investment fixed capital totaling to US$5,150 & estimated revenue of US$144,144 in the first year of project operation. The project is also expected to yield a net profit of 44%.

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 a relatively small scale production, the capital requirements and equipment are as tabled bellow.

 

Capital Investment Requirements in US$

Capital investment item units Qty @ Total
Stretching Machine No 2 300 600
Sewing Machine No 2 1,000 2,000
Furniture No 1,400
Art printing Machine No 1 400 400
Other tools No 750
Total       5,150

Production and Operating Costs in US$ Direct Materials, Supplies and Costs (a)Direct Materials, Supplies and Costs

Cost Item Units @ Qty/ day Pdn cost/day Pdn cost/ mth Pdn cost/yr
Direct costs          
Cotton Cloth Mtrs 2 45 90 2,340 28,080
Thread Rolls 2 4 3 78 936
Printing Paint Ltrs 5 7 35 910 10,920
Cotton wool Rolls 6 10 60 1,560 18,720
Sub-total     66 188 4,888 58,656

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 107 1,288
Sub-total 1,789 21,478
Total Operating Costs 6,677 80,134
  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.
  5. The valuation currency used is United States Dollars

Market Analysis

The market is very easy to explore as the government is trying to ban the use of polythene bags.

Project product costs and Price Structure

Item Qty/ day Qty/ yr @ Pdn cost/yr UPx T/rev
Designer Cotton Bags 105 32,760 3.10 80,134 4.4 144,144

Profitability Analysis Table

Profitability Item Per Day Per Month Per Year
Revenue 462 12,012 144,144
Less: Pdn & Operating Costs 257 6,678 80,134
Profit 205 5,334 64,011

Government 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.

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