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 equipments required are; Circular Saw, Grover, Eraser Tipping machine, Ferrule, Painting machine & Shaper. These equipments may be imported from China & India.

Scale of Investment & Capital Investment Requirements

The total scale of investment is estimated at US$12,300 where at least 1,872,000 dozens of pencils will be manufactured in a year and this will generate annual revenue of US $ 505,400 in the first of project operation with a net profit margin of 30%.

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.

Project Costs

The Project fixed capital requirements are summarized in the Table below:

Capital Investment Requirements in US$

1. Operating Costs in US$

General Costs (Over heads)

Project Product Costs & Price Structure

Profitability Analysis in US$

Source of Supply of Raw Materials

Raw materials will be imported from India which has good quality Granite.

Government Facilities and Incentives Available

The government is ready and willing to provide incentives to investors in form of land and tax exemptions among others.