Introduction
A serviette is a small piece of table linen that is used to wipe the mouth and to cover the lap in order to protect clothing when eating. Made out of light absorbent material, napkins are soft to absorb sweat and clean the mouth. The market is constituted by individual consumers, hospitals, restaurants, homes and hotels among others. The business idea aims at production of 2,600 packets of serviettes per month which translates into 31,200 packets annually. The revenue potential is estimated at 11,180 dollars per month, translating into 134,160 dollars per year The total capital investment for the project is 3,635 dollars. The net profit margin is estimated at 29% with a payback period of 3 months.
Plant Capacity
The profiled plant is expected to produce 40,560 units (each unit with 10 packs of 50 pieces each) per annum.
Technology and Production Process
To make serviettes, a hand driven knitting machine and a yarn twister are used. The raw materials include Cotton staple yarn, absorbent thread, cotton thread, cardboard boxes and craft papers.
Cotton staple yarn is knitted into loose fabric tube, cut to required pieces of absorbent cottons with the ends of the napkins tied by thread and packed in printed polythene bags.
Scale of Investment
Capital Investment Requirements
| Capital Investment Item | Units | Qty | @ | Amount |
|---|---|---|---|---|
| Hand driven Knitting Machine | No | 1 | 3,462 | 3,462 |
| Yarn Twister | No | 1 | 173 | 173 |
| Total | Â | Â | Â | 3,635 |
Production and Operation costs
| Cost Item | Units | @/ day | Qty/ day | Prod. Cost/ day | Prod. Cost/ month | Prod Cost/ Year1 |
|---|---|---|---|---|---|---|
| Direct costs3: | Â | Â | Â | Â | Â | Â |
| Cotton staple yarn | Yarns | 3 | 40 | 120 | 3,120 | 37,440 |
| Absorbent thread | No | 3 | 30 | 90 | 2,340 | 28,080 |
| Cotton thread | Yarns | 3 | 10 | 30 | 780 | 9,360 |
| Cardboard boxes | No | 0.76 | 5 | 3.8 | 99 | 1,186 |
| Craft papers | No | 1.7 | 15 | 25.5 | 663 | 7,956 |
| Sub-total | Â | Â | Â | Â | 7,002 | 84,022 |
General costs (Overheads)
| Labour | 250 | 3,000 |
|---|---|---|
| Utilities | 300 | 3,600 |
| Selling and Distribution | 100 | 1,200 |
| Administrative expenses | 100 | 1,200 |
| Shelter | 150 | 1,800 |
| Depreciation machinery | 76 | 909 |
| Sub-total | 976 | 11,709 |
| Total Operating Costs | 7,978 | 94,673 |
- Production is assumed for 312 days per year.
- Depreciation assumes 4 year life of assets written off at 25% per year for all assets.
- A production Month is assumed to have 26 days.
Project Product costs and Price Structure $
| Item | Qty / day | Qty/yr | @ | Pdn/ yr | UPx | T/rev |
|---|---|---|---|---|---|---|
| Plain Serviettes | 70 | 21,840 | 3 | 66,271 | 4 | 87,360 |
| Decorated Serviettes | 30 | 9,360 | 3 | 28,402 | 5 | 46,800 |
| Total | 100 | 31,200 | 6 | 94,673 | 9 | 134,160 |
Profitability Analysis Table
| Profitability Item | Per day | Per Month | Per Year |
|---|---|---|---|
| Revenue | 430 | 11,180 | 134,160 |
| Less: Production and Operating Costs | 303 | 7,889 | 94,673 |
| Profit | 127 | 3,291 | 39,487 |
- Sources of Supply of Raw Materials and Equipments
- All equipments and raw materials can be sourced locally.
- Government Facilities and Incentives
There are a number of government programme to facilitate industrialists. Among them is Private Sector Foundation Uganda which builds capacity and develops business plans and feasibility studies for investors.
Market Analysis
The Market cuts across Individual consumers, hospitals, restaurants, homes and hotels among others. However, there are many competitors thus the need for exploiting the export market.
