MAKING SHOE POLISH BUSINESS IN UGANDA

wmutenza 24/10/2020 Compendium

Introduction

It is usually a waxy paste or cream used to polish, shine, and water proof or improves and restore the appearance of leather and footwear products that it is used in both liquid and semi solid form. Shoe polish is not only used on footwear but can also be applied to all leather materials including bags, etc. The most prominent type of shoe polish, Kiwi, is imported and this gives local producers a chance to start producing shoe polish. Project capacity is 60,000 kgs annually with revenue estimated at US$ 98,842 per year. The payback period for this idea is 7 months and the net profit margin of 18%.

Production Process

Shoe polish can be manufactured using vats reasonably powerful heaters and air conditioners. There is no set method of manufacture although most methods use pressure. The process consists of homogenizing molten waxes and other additives followed by thinning with solvent. This involves heating the wax in high temperatures of up to 85 degrees Celsius. The semi-solid polish is packed in round tins, while the liquid polish is packed in plastic bottles having sponge pasted caps. Dyes are added and mixed in turpentine oil if it is not a neutral polish. The mixed mass is reduced slowly to 50 °C, and as its viscosity increases, it is poured through a closed funnel into a cooling chamber.

The poured mass is allowed to settle slowly, providing uniform distribution. The process is considered straightforward and the required equipment is relatively easy to acquire. The cost of establishing a fully fledged shoe polish manufacturing facility has been estimated at around $6800(as of 2012). The project can yield an estimated revenue of 98,842 US$ per year.

Capital Investment Requirement in US $

ITEM Units Qty Price Total
Reaction vessel with mixer & heater No 1 3,700 3,700
Storage vessel No 1 1,500 1,500
Packing machine No 1 1,200 1,200
Rota stamping Machine No 1 275 275
Weighing balance No 1 125 125
TC of tools       6,800
  1. Production costs assume 312 days per year with daily capacity of 192 Kgs.
  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 Operation 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          
Carnauba wax Kgs 2.5 9.62 24.05 625.3 7,504
Synthetic waxes Kgs 1.5 0.32 0.48 12.48 150
Paraffin Ltrs 1.25 3.21 4.0125 104 1,252
Turpentine Ltrs 3.5 0.3 1.05 27.3 328
Dye Kgs 2 3.2 6.4 166.4 1,997
Polish containers Pkts 1 16 16 416 4,992
Sub-total       52 1,352 16,223

General Costs (Overheads)

Labor 4,000 48,000
Selling & distribution 500 6,000
Utilities (Water, power) 400 4,800
Rent 300 3,600
Miscellaneous expenses 100 1,200
Depreciation 142 1,700
Sub-total 5,442 65,300
Total Operating Costs 6,793 81,523
     

Project product costs and Price Structure in

Item Qty / day Qty / yr @ Pdn cost/ yr UPx TR
Shoe Polish 192 60000 1.36 81,523 1.65 98,842

Profitability analysis in US$

Profitability Item Per day Per month Per year
Revenue 316.8 8,237 98,842
Less: Production & operating costs 261 6,793 81,523
Profit 56 1,443 17,319

Market

Leather footwear is a common product in rural and urban areas and shoe-polish is essential to improving the life and appearance of the footwear. If good quality shoe polish is locally produced, buyers cannot be an issue; what matters will be quality.

Source of machinery

These equipments can be easily fabricated from Uganda as it helps reduce cost but importing may remain an option.

Government incentives

75% initial allowance granted in the first year of production on the cost base of plant and machinery for industries elsewhere in Uganda.

Cleaning and Toiletries

 

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