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91.

CORRUGATED PAPER BOX

II. SUMMARY PRODUCT DESCRIPTION & APPLICATION MARKET STUDY AND PLANT CAPACITY A. AUXILARY MATERIALS C. UTILITIES V. TOTAL INITIAL INVESTMENT COST B. PRODUCTION COST C. MANPOWER REQUIREMENT B. ECONOMIC BENEFITS 91-3 91-3 91-3 91-3 91-5 91-6 91-6 91-7 91-7 91-8 91-8 91-9 91-10 91-10 91-11 91-11 91-11 91-12 91-13 91-13 . ENGINEERING VI. TECHNOLOGY & ENGINEERING A. III. MANPOWER & TRAINING REQUIREMENT A.91-2 TABLE OF CONTENTS PAGE I. RAW MATERIALS AND INPUTS A. RAW MATERIALS B. FINANCIAL EVALUATION D. PLANT CAPACITY & PRODUCTION PROGRAMME IV. MARKET STUDY B. TECHNOLOGY B. FINANCIAL ANLYSIS A. TRAINING REQUIREMENT VII.

6 million. light weight products available in variety of shapes and sizes.91-3 I. protect it from banging around and keep it from spilling.4 % and a net present value (NPV) of Birr 4.2. The total investment requirement is estimated at Birr 3. three types of corrugated boards can be produced: single faced (or two ply). Many industrial goods and horticultural products are packed using corrugated paper boxes. SUMMARY This profile envisages the establishment of a plant for the production of Corrugated paper box with a capacity of 300 tonnes per annum. II. III. Each box is made to hold something just right.5 %. . They are eco-friendly. corrugated paper boxes are made with important information about the consignment printed on them. A. MARKET STUDY AND PLANT CAPACITY MARKET STUDY Past Supply And Present Demand Corrugated paper boxes are made from corrugated paper boards which have a row of air columns. The double -faced corrugated board is most commonly used for different packing applications. The demand is expected to reach at 508 tonnes by the year 2010. The air acts as a cushion while the paper column makes the material strong. The plant will create employment opportunities for 31 persons. The project is financially viable with an internal rate of return (IRR) of 30. out of which Birr 1. 1. Moreover.83 million is required for plant and machinery. A corrugated board is produced by gluing fluted or corrugated paper (middle layer) with two facing (inner and outer) layers to form a continuous board which is finished into boxes of various dimensions by slotting and creasing operations Based on the number of layers used. PRODUCT DESCRIPTION AND APPLICATION Corrugated paper box (also called carton) is widely used for diverse packing applications. The present demand for the proposed product is estimated at 362 tonnes per annum. recyclable. discounted at 8. double faced (or three ply) and double walled boards.

220 6.683 * * 6. . Thus.997 CSA.91-4 Because of its inherent advantages. Ethiopian Customs Authority. External Trade Statistics. corrugated paper box annual average import for the five years amounts to 321 tonnes.417 6. Source : 5. corrugated packaging is used practically for every purpose. Therefore. Table 3. cosmetics and consumer durables corrugated paper boxes are the most suitable to pack consignments.144 7. Corrugated paper box is supplied by both domestic producers like Ethiopian Pulp and Paper Share Company.401 8. Recently. pharmaceuticals.143 6. soaps. excluding the year 2004. For the purpose of this study. Annual Survey of Manufacturing Industries. a closer investigation of the data set reveals that the imported figure for the year 2004 was exceptionally low. the current effective demand for paper box is estimated at 362 tonnes. The domestic production of paper and imported corrugated box are presented in Table 3. the imported corrugated paper box is considered as a gap between the domestic supply and the overall demand for corrugated boxes in the country. diversified application like long-time weather resistant boxes are being manufactured creating a promising future for corrugated paper box packaging.719 6.1. However. textile. In various industries like food. Annual average domestic production of paper in the period 1999-2002 was 6.422 tonnes while the six years average imported supply of corrugated paper boxes alone was 276 tonnes. cigarette. Accordingly.422 Imported Corrugated Paper Box 274 257 501 314 259 52 276 321 Total 1999 2000 2001 2002 2003 2004 Average Average excluding 2004 * Not available. Data on the domestic production is provided only on aggregate production of paper. Burayu Carton Factory and others as well as by foreign companies through import. the unsatisfied demand by the local production of corrugated paper boxes is estimated on the basis of the 1999-2003 import data and the annual domestic paper production growth rate of 7 %.1 DOMESTIC PRODUCTION OF PAPER AND IMPORTED CORRUGATED PAPER BOXES IN TONNES Year Domestic Production of Paper 5.

Therefore. . and then to 712 tonnes by the year 2015. Pricing and Distribution Demand (Tonnes) 387 415 443 475 508 543 581 622 666 712 An ex-factory price of Birr 8. PLANT CAPACITY AND PRODUCTION PROGRAMME Plant Capacity The market study conducted for the product in the region indicates that the demand for corrugated paper box by the year 2006 will be 387 tonnes.2. Projected Demand The demand for corrugated paper box as an all-purpose product is related with the overall economic development of the country. B. Manufacturers usage of new boxes rather than using previously used boxes is one of the reasons for the ever increasing demand for corrugated boxes. the new project in BGRS should have a distribution and storage warehouse at least in major cities. the average growth rate of 7 % achieved in the domestic production of paper is adopted to project the demand for corrugate paper box. will result in more demand for suitable packaging. 1.2 PROJECTED DEMAND FOR CORRUGATED PAPER BOX Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3. most importantly at Addis Ababa. Distribution of corrugated paper box by the new entrants in the market shall be handled through direct delivery to customers. This piece has a weight of 0. The projected demand for corrugated paper box is presented in Table 3. and this figure will grow to 508 tonnes by the year 2010. Growth anticipated in the manufacturing and agro-industries.91-5 2.90 per pcs (550 x 550 x 250 mm) is recommended.75 kg. Table 3. Hence.

The plant will operate single shift.3 depicts the proposed production programme. Adhesive and printing inks are locally available. The adhesive material commonly used in the paper packaging industry is either silicate adhesive (water glass) or starch adhesive. All the three types of paper raw materials acquired through import. three grades of kraft paper raw materials are required. 8 hours a day. For a double .3 PRODUCTION PROGRAMME Year Capacity utilization (%) Production (Tonne) 1 70 210 2 85 255 3-10 100 300 IV. and Fluting medium . 2. These are:Kraft liner .The middle corrugated layer having a specific weight of 112127 g/m2 and higher stiffness. adhesive or glue and printing inks.The innermost flat layer with a specific weight of 160-180 g/ m2. and for 300 days a year.91-6 Based on the demand projection indicated above the proposed plant will have a capacity of 300 tonnes of corrugated paper box per annum having different sizes. in the 2nd year and finally to 100% in the 3rd year and thenafter. This gradual development of annual output is very important in order to get used to the technology and penetrate the local and national market.faced corrugated paper box. Test liner . Table 3. Production Programme The plant will initially be operated at 70% of its installed capacity and gradually increase its annual output to 85%. . A. Table 3.The outermost flat layer with a specific weight of 170-180 g/m2. which is the proposed type for most packing uses. RAW MATERIALS AND INPUTS RAW MATERIALS The most important raw materials used in making corrugated paper box are kraft paper of different grades.

1 RAW MATERIALS REQUIREMENT AND COST Sr No.91-7 Table 4.000 5. Annual requirement and cost of utilities are shown in Table 4. Table 4.P.00 115. 1 2 3 Description Kraft liner Fluting Meduim Test liner Total Qty (Tonnes) 100 110 92 Unit Price (Birr) 5. fuel oil and water are inputs required for the envisaged plant.000 - Cost ('000 Birr) 32. the following can be cited: i) ii) Yashi Paper Limited Darshan Nagar. UTILITIES Electricity .224135.500 4.2 shows the annual requirement of auxiliary materials for the production of corrugated paper box. No.00 147.2 AUXILIARY MATERIALS REQUIREMENT AND COSTS Sr. India Sappi Cape Kraft (PTY) Ltd. Table 4. Auxiliary raw materials required for the production of corrugated paper box include: adhesives. Faizabd . 1 2 Qty (Tonnes) Adhesive (starch) 8.000 Cost ('000 Birr) 500 605 368 1478 Among potential supplier of kraft paper to the world market. .0 finishing chemicals Total - Description Unit Price (Birr) 4000 115.00 C.. Fax: + 27 21 5522152 South Africa AUXILIARY MATERIALS B.0 Inks and other 1. inks and finishing chemicals.3 below. U.

and Folder gluer.000 min) Grand Total 247.000 min) Fuel oil (at the rate of 1.scorer for sizing and finally to the printer . namely:Corrugator.5 75.slotter for specific box (carton) designs and necessary printing patterns.ply) board produced in such a way is directed to the slitter . 1 2 3 Annual Unit Cost Total Cost (Birr) (Birr) Consumption Electricity (120 kWh) 185.5 litres / 50 tonnes 1700 85. The adhesive applied at this points with an applicator roll is used to form a bond between the corrugated medium and the single face liner.690 Water (at the rate of 1. Source of Technology The technology of corrugated paper box manufacturing can be obtained from the following sources:- . A. 2. The fluting medium leaves its winding reel. and then passes between two corrugated rolls to get "U" shape of a flute.walled board (3 . No. Printer slotter. TECHNOLOGY AND ENGINEERING TECHNOLOGY Production Process The conventional technology of corrugated paper box production is a batch process where four major operations are involved.91-8 Table 4. The single . passes over heated rolls and goes through steam showers.000 m3 1. The kraft liner rolls are unwounded and continuously drawn over heated drum that comes in contact with the glued flute tips.000 kWh 0.690 Description V.3 UTILITIES REQUIREMENT & COST Sr.5 liters / 50. Slitter scorer.474 87. The web is then guided to the double facer unit where the test liner is glued to the other face of the flute medium and this completes the process of single -walled corrugated board. 1.

91-9 1) New long Machine Works. of which Birr 1.000. Jung .0015 Japan DAEWOO CORPORATION CPO BOX 2924 541. These are considered to cover an area of about 500 m2. No. Built . warehouses. the total site area is estimated to be 1. 1. Table 5. ENGINEERING Machinery and Equipment The basic machinery and equipment required for the envisage plant are listed in Table 5.1 MACHINERY AND EQUIPMENT REQUIREMENT AND COST Unit Price (Birr) 350 165 225 185 135 350 250 Cost ('000 Birr) FC 350 165 225 185 135 350 250 1660 LC 175 175 TC Sr. Taking into account reserve area for future expansion. Ltd. Bank charges.KU TOKYO 110 . is estimated at Birr 140.gu. Land acquisition by means of lease. and space for gardening. 5-Ga.0 per m2 and for 70 years land holding. Korea 2) B. Building and Civil Works Qty (Tonne) 1 1 1 1 1 1 1 - 1660 175 1835 1660 2. at the rate of Birr 2. Insurance. 4 -14 MGASHI UENO . handling charges.000 m2.66 million is required in foreign currency and the balance is in local currency. Namdaemun . 1 2 3 4 5 6 7 Description Corrugator Slitter scorer Printer Rotary slitter Folder gluer Boiler Fork lift (5-10 ton) Total FOB Freight.1. etc. accommodation of vehicles and trucks. offices and guard houses.6 CHOME TAITO .835 million. .ro. Seoul. Grand Total Land. The total cost estimate is Birr 1.up area of the plant is comprised of main factory building.

together with annual salary expenditure including fringe benefits. Therefore. will be better equipped with infrastructure and utility supplies in the near future. 7. 11. proximity to raw materials can not be considered as a factor for selecting location. 3. Table 6. Thus. The aggregate expenditure on plant building and land lease value will be Birr 640. Description General manager Production supervisor Accountant Maintenance head Personnel Clerk Secretary Stores head Cashier General services Guard Operators Assistant operators Technicians Sub total Employee benefit (25% BS) Grand Total Req. 1 1 1 1 1 2 3 1 1 3 3 6 3 4 31 Monthly Salary (Birr) 2000 1200 700 800 600 400 500 500 400 200 200 600 300 500 Annual Expenditure 24000 14400 8400 9600 7200 9600 18000 6000 4800 7200 7200 43200 10800 24000 194. Assosa is preferred to be an appropriate location for the establishment of corrugated paper box plant. 13. 3.000.000 .1 indicates the details of manpower requirement. Proposed Location The basic raw material.N o.91-10 Taking the average building construction cost of Birr 1000 per m2 into consideration. availability of infrastructure and utilities. A. 8. Thus. 4. 10. is to be imported from foreign country. 9. the total investment cost of land. VI. taking factors such as proximity to end users. 12. 5. which is rolls of kraft paper. No. Assosa. MANPOWER AND TRAINING REQUIREMENT MANPOWER REQUIREMENT The plant requires technical.000. Table 6.1 MANPOWER REQUIREMENT & ANNUAL LABOUR COST Sr. production and administrative manpower. 1. the total cost of building is estimated at Birr 500. 2. A total of 31 persons are required. 14. being the major town of the region.400 48.600 243.000. 6. building and civil works assuming that the total land lease cost will be paid in advance will be Birr 780.

000. VII.1 per cent will be required in foreign currency. FINANCIAL ANALYSIS The financial analysis of the corrugated paper box project is based on the data presented in the previous chapters and the following assumptions:Construction period Source of finance Tax holidays Bank interest Discounted cashflow Repair and maintenance Accounts receivable Raw material. import Work in progress Finished products Cash in hand Accounts payable A. local Raw materials.1 . It is proposed that appropriate training programmee will have to be executed at the workshop of the machinery supplier(s).91-11 B. The training programme shall be incorporated in the main contractual agreement of technology supply and procurement. of which 46.5 % 3 % of the total plant and machinery 30 days 30 days 90 days 5 days 30 days 5 days 30 days TOTAL INITIAL INVESTMENT COST The total initial investment cost of the project including working capital is estimated at 3.5 % 8. Local component of the training programme is estimated to be Birr 20. 1 years 30 % equity 70 % loan 3 years 7. TRAINING REQUIREMENT Training is required for technical staff and operators. The major breakdown of the total initial investment cost is shown in Table 7.6 million.

Table 7. ** Administrative cost includes salaries and wages.0 87. 7 Cost Items Land lease value Building and Civil Work Plant Machinery and Equipment Office Furniture and Equipment Vehicle Pre-production Expenditure* Working Capital Total Investment cost Foreign share Total ('000 BIRR) 140 500 1. materials and services used by administrative staff etc.9 8. social costs on salaries of direct labour.B Pre-production expenditure includes interest during construction (Birr194 thousand).2 2.2). etc. insurance.1 227 161.6 6. 3.8 9.190. 1 2.835 65 375 25 466.620 247.7 65. etc. training (Birr20 thousand). commissioning expenses. social costs. insurance of factory workers. and ( Birr 5 thousand) costs of registration.4 per cent while repair and maintenance take 2.6million (see Table 7.1 INITIAL INVESTMENT COST Sr.2 ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR) Items Raw Material and Inputs Utilities Maintenance and repair Labour direct Factory overheads * Administration Cost ** Total Operating Costs Depreciation Cost of Finance Total Production Cost Cost 1.1 * N.4 0. No.9 3. 6.5 3. 4.578.601 46.3 100 *Factory overhead cost includes salaries and wages of supervisors.6 163.3 % 62. licensing and formation of the company including legal fees.6 2. B. PRODUCTION COST The annual production cost at full operation capacity of the plant is estimated at Birr 2.3 6. The material and utility cost accounts for 72.8 6.91-12 Table 7.2 2. . 5.5 per cent of the production cost.3 84.

The establishment of such factory will have a foreign exchange saving effect to the country by substituting the current imports. Break-even Analysis The break-even point of the project including cost of finance when it starts to operates at full capacity ( year 3 ) is estimated by using income statement projection.5% discount rate is Birr 4. 1.91-13 C.4 % and the net present value at 8. ECONOMIC BENEFITS The project can create employment for 31 persons. 2. income tax and sales tax revenue. . net profit to equity (Return on equity) and net profit plus interest on total investment (return on total investment) show an increasing trend during the lifetime of the project.8 million per annum in terms of tax revenue when it starts to operate at full capacity.2 million. the calculated IRR of the project is 30. The project's initial investment will be fully recovered within 4 years. D. The income statement and the other indicators of profitability show that the project is viable. BE = 3. the project will start generating profit in the first year of operation. Internal Rate of Return and Net Present Value Based on the cash flow statement. In addition to supply of the domestic needs. the project will generate Birr 0. 4. Pay-Back Period = 36. Important ratios such as profit to total sales. FINANCIAL EVALUATION Profitability According to the projected income statement. the Regional Government can collect employment. Moreover.7% Fixed Cost Sales – Variable cost The investment cost and income statement projection are used to project the pay-back period.