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 | Â | Â | Â | 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 | Â | Â | Â | Â | Â | |
| 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 | Â | Â | 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 |
- Production costs assumed are for 312 days per year with daily capacity of producing 105 pieces of cotton bags.
- Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
- Direct costs include: materials, supplies and other costs that directly go into production of the product.
- Total monthly days assumed are 26-work days.
- 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.
