Introduction
Real leather purses are made out of animal hides, fish skins. It is a garget for keeping money and other documents. It is commonly known as money purse wallet simply because people use it to keep in their money in the pockets of the handbags.
Production Capacity and Process
The production capacity per day is 500 pieces of leather purses and monthly production is about 13,000 purses, which translates into an annual production of 156,000 pieces of Leather purses/wallets. The Price per leather wallet is US$ 3.5 and this means US$ 1,750 gross revenue per day hence monthly gross revenue US$ 45,500 which translates into annual gross revenue of US$ 54600.
Technology and Process of Production
This business idea involves the use of strap cutting machine, stitching machine and working tools. The process involves the strap cutting, stitching, dying and designing the product as well as fixing fasteners and punching zips.
Capital Investments Requirements in US$
| Capital Investment item | Units | Qty | @ | Amount |
|---|---|---|---|---|
| Sewing machine | Number | 2 | 520 | 1,040 |
| Leather tarning Machine | Number | 1 | 880 | 880 |
| Strap cutting | Number | 1 | 944 | 944 |
| Punching Zips | No. | 1 | 630 | 630 |
| Other equipment | Â | 1 | 520 | 520 |
| Sub-total | Â | Â | Â | 4,014 |
| Land | Â | 2 | 5,000 | 10,000 |
| Total Investment | Â | Â | Â | 14,014 |
Production and operating costs in US$
| Cost item | @/dy | Qty/dy | Cost/ dy | Cost/ mnth | Cost/yr |
|---|---|---|---|---|---|
| Direct Costs | Â | Â | Â | Â | Â |
| Turned leather | 12 | 100 | 1200 | 31,200 | 374,400 |
| Dye | 3 | 30 | 90 | 2,340 | 28,080 |
| Threads | 0.8 | 120 | 96 | 2,496 | 29,952 |
| Subtotal | 15.8 | 250 | 1,386 | 36,036 | 432,432 |
General Costs (Overheads)
| Administration expenses | 542 | 6,500 |
|---|---|---|
| Labour | 2,250 | 27,000 |
| Utilities | 650 | 7,800 |
| Rent | 700 | 8,400 |
| Selling & Distribution | 300 | 3,600 |
|---|---|---|
| Depreciation | 84 | 1,004 |
| Miscelleneous | 208 | 2,500 |
| Subtotals | 4,734 | 56,804 |
| Total operating Costs | 40,770 | 489,236 |
Market Analysis
It is projected that leather purses have a ready market in Uganda and East African countries because of their high quality despite the competition with bark cloth purses which are not durable.
Project product costs and Price structure in US$
| Item | Qty/day | Qty/year | @ | Prodn/ year | UPx | Rev |
| Lether purse | 500 | 156,000 | 3.14 | 489,236 | 3.5 | 546,000 |
Profitability Analysis in US $
| Profitability item | Per day | Per month | Per year |
|---|---|---|---|
| Revenue | 1,750 | 45,500 | 546,000 |
| Less: Production operating costs | 1,568 | 40,770 | 489,236 |
| Profit | 182 | 4,730 | 56,765 |
Sources of Supply of Machinery, Equipment and Raw Materials
Machinery is available on the local market along Entebbe road or can be imported from China and India while raw materials can be bought locally from the industrial area in Kampala and from Uganda Leather tanning Industry Limited in Jinja.
