PETROLEUM JELLY BUSINESS IN UGANDA

Introduction

Cosmetic products are widely used by many people in the country. Cosmetic products can attract a great customer base if they are of high quality. An estimated fixed cost of US$16,790 when injected into the project can yield estimated revenue of US$ 281,190 in the first year of operation. The payback period is approximately 6 months. Due to the increasing demand for the product in both rural and urban areas, there is market viability for the product The idea envisages production of 60,000 units annually.

Production Process

The technology and process is simple. The process involves mixing crude petroleum jelly with lubrication oils using a mixer. The mixture is passed into a boiler and heated until it melts. While being stirred by a mixer, perfumed ingredients are added and stirred together with the boiling jelly. The thoroughly mixed liquid jelly is then passed to a chilling container to cool at a temperature of about 400°c and then packed in the respective packing containers.

Capital Investment Requirements

Capital Investment Item Units Qty @ Amount
Mixer No 2 660 1,320
Boiler No 1 1,870 1,870
Cooler No 2 385 770
Gas cooker No 1 825 825
Mixing container No 2 330 660
Transfer funnels No 3 41.8 125.4
Furniture and fixture No 1 2,200 2,200
Delivery van No 1 7,700 7,700
Other tools No 1 1,320 1,320
Total 16,790.4

Production and Operation costs

Cost Item Units @/day Qty/day Pdn Cost/day Pdn Cost/ month Pdn Cost/ Year1
Direct costs3:
Crude Petroleum Jelly Kgs 0.75 129 97 2,517 30,200
Oils Litres 3 7 22 583 7,000
Scented ingredients Kgs 7.5 1 10 250 3,000
Wax Kgs 2 2 4 100 1,200
Packaging materials Pieces 0.04 721 29 750 9,000
Subtotal 4,200 50,400
General costs (Overheads)
Labour 700 8400
Other materials 1000 12000
Utilities 1500 18000
Administrative expenses 1500 18000
Selling and Distribution 3250 39000
Fuel 3000 36000
Miscellaneous expenses 700 8400
Depreciation (Asset write off) Expenses 2544 30528
Subtotal 14194 170328
Total Operating Costs 18,394 219,652

 

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 Total revenue
Petroleum jelly 721 224,952 1 220,728 1.25 281,190
Total 220,728 281,190

Profitability Analysis Table

Profitability Item Per day Per Month Per Year
Revenue 901 23,433 281,190
Less: Production and Operating Costs 704 18,304 219,652
Profit 197 5,039 61,538

Market analysis

The market for cosmetics widely exists both in urban and rural areas.

Producing different brands may increase the sales revenue though there is stiff competition from other service providers such as: Movit products Ltd, Samona products ltd, Mwana mugimu, Sleeping baby and other imported cosmetics. Sources of supply of raw materials and equipments

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