MAKING PENCILS BUSINESS IN UGANDA

 MAKING PENCILS BUSINESS IN UGANDA

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$

Capital Investment Item Units Qty @ Amount
Delivery Van No. 1 6,000 6,000
Power Saw No. 1 500 500
Grover No. 1 250 250
Eraser Tipping Machine No. 1 800 800
Ferrule No. 1 1,200 1,200
Painting Machine No. 1 1,000 1,000
Shaping Machine No. 3 800 2,400
Furniture No. 5 30 150
Total Amount       12,300

1. Operating Costs in US$

Item Units @ Qty/ day PdnCost/ day Pdn cost/ mth Prod. Cost/ Year
Direct Costs            
Cedar Ft 2 500 1000 26000 312000
Graphite Kgs 1 60 60 1560 18720
Sub total       1,060 27,560 330,720

General Costs (Over heads)

Rent 400 4,800
Packaging Material 200 2,400
Labour 300 3,600
Utilities (Power & Water) 400 4,800
Repair & Servicing 200 2,400
Fuel 300 3,600
Depreciation (Asset write off) Expenses 256.25 3,075
Sub – total 2,056 24,675
Total Operating Costs 29,616 355,395

Project Product Costs & Price Structure

Item Qty/ day Qty/yr @ Pdn Cost/yr UPx T/rev
Pencils (Dzns) 6000 1,872,000 0.19 355,395 0.3 505,440

Profitability Analysis in US$

Profitability Item Per day Per Month Per Year
Revenue 1,620 42,120 505,440
Less: Production & Operating Costs 1,139 29,616 355,395
Profit 481 12,504 150,045

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.

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