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 |
| Sub–total | 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 | ||||
| Sub–total | 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
