MAKING RUBBER WASHERS BUSINESS IN UGANDA

Introduction

The rubber washers are rings made of rubber used in mechanical devices and are used to plug any sort of leak in the pipeline system, seal parts in contact with liquids. They are used to prevent vibrations from spreading from one part to another so reducing noise. These are mainly common with chemical and food industries as major consumers of rubber washers and gaskets, etc.

With the continuing and increase in the rate of construction works, the demand for rubber washers, many of which are imported, will increase. The project annual operating cost is US $ 129,466 producing 359,986 units annually translating into revenue estimated at US $ 179,993 per year. The net profit margin is estimated 28% with a payback period of 4 months. Thus is viable and can be put up in areas where access to prime properties is guaranteed.

Production Process

In manufacturing these products, rubber compounds are cut into moulds and pressed with the help of hand press, which are heated with steam, cut to required sizes and finally packed for the market. The profiled plant has a minimum plant capacity of 359,986 units of washers per year

Capital Investment Requirements in US$

Item Units Qty Price Total
Fly press Machine No 1 1530 1530
Moulds No 4 1000 4000
Furniture No 5 75 375
Other hand tools No 1 500 500
TC of tools       6405
  1. Production costs assume 312 days per year with daily capacity of 1,154 washers.
  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 all other costs incurred to produce the product.
  4. A production month is 26 work days
  5. Currency used is US Dollars.

Production and Operating costs in US $

a. Direct Materials, Supplies and costs

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ mth Pdn cost/ yr
Direct Costs            
Rubber Kgs/ pkts 0.1 9.62 0.962 25.012 300.14
other chemicals ltrs 75 0.32 24 624 7,488
Packaging materials -paper boxes Kgs/ pkts 0.1 3.21 0.321 8.346 100.15
Lubricant kgs/ ltres 12.5 0.3 4 104 1,248
Polyethene bags Kgs/ pkts 0.5 1 0.5 13 156
Sub-total       360 9,367 112,406

General Costs (Overheads) Project product costs and Price Structure in

Labour 455 5,460
Selling & distribution 250 3,000
Utilities (Water, power) 250 3,000
Rent 200 2,400
Miscellaneous expenses 100 1,200
Depreciation 167 2,000
Sub-total 1,422 17,060
Total Operating Costs 10,789 129,466
Item Qty/ day Qty/yr @ Pdn cost/ yr UPx TR($)
Rubber Washers 1,154 359,986 0.4 129,466 0.5 179,993

Profitability Analysis in US $

Profitability Item Per day Per month Per year
Revenue 577 14,999 179,993
Less: Production and operating costs 415 10,789 129,466
Profit 162 4,211 50,527

Market

Industrial houses are the major consumers of rubber washers. Therefore, the entrepreneur has to establish a network before entering the market. However, due to the booming premises’ construction in the country the market is promising.

Source of Equipment and Material

Equipment can be fabricated in Uganda at: Tonet Ltd, Kanyanya, Gayaza Rd, John Lugendo and Co Ltd Ndeeba Masaka Rd, email lugendojohn07@yahoo.com and Tree Shade Ltd, Mwanga II Rd- Kisenyi Kampala can provide this. Materials are both imported and locally purchased.

Government Intervention

Initial allowance of 75% granted in the first year of production on the cost base of plant and machinery for industries located elsewhere in the country. 25% start up granted on actual cost over the first four years in equal installments.

Risk certainty

The risk with this idea is in case of poor quality rubber rings, the business may lose its market. Therefore, the need for better management control.

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