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Detergent Powder PDF
Detergent Powder PDF
PROFILE ON PRODUCTION OF
DETERGENT POWDER
185-2
TABLE OF CONTENTS
PAGE
I. SUMMARY 185-3
A. TECHNOLOGY 185-8
B. ENGINEERING 185-10
I. SUMMARY
This profile envisages the establishment of a plant for the production of detergent powder
with a capacity of 100 tonnes per annum.
The present demand for the proposed product is estimated at 2,726 tonnes per annum. The
demand is expected to reach at 4,539 tonnes by the year 2020.
The total investment requirement is estimated at Birr 15.06 million, out of which Birr 7.5
million is required for plant and machinery.
The project is financially viable with an internal rate of return (IRR) of 25 % and a net
present value (NPV) of Birr 10.09 million discounted at 8.5%.
Detergents, term applied to materials, the solutions of which aid in the removal of dirt or
other foreign matter from contaminated surfaces. A detergent powder is a product
formulated from the constituents such as surfactants, which perform the primary cleaning
and washing action by reducing the surface tension of water builders, which boost the
cleaning power of the surfactant and other additives. Detergent powder is proved to be
effective in hard water and cool or cold water, whereas soap is often wholly ineffective
under both conditions. The major use of detergent powders is in households for washing
clothes and utensils. They are suitable for hand washing and also for machine washing in
laundries and dish washers.
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A. MARKET STUDY
The countrys requirement for detergent powder has been met through domestic production
and imports. However, data on domestic production of the product is not readily available.
Since imports are considered as a proxy for demand gap (i.e. the gap between domestic
production and domestic demand), import data is used to estimate the demand for detergent
powder. The quantity of imports of detergent powder is depicted Table 3.1.
Table 3.1
IMPORTS OF DETERGENT POWDER
2000 3,843.31
2001 5,946.48
2002 4,143.1
2003 623.06
2004 2,630.29
2005 2,508.65
2006 3,039.32
Average 3,247.74
2. Projected Demand
The major factors that affect the demand for detergent powder include income and
population growth. Accordingly, the demand for the product is projected by employing an
average annual growth rate of 4%, which is equivalent to the growth rate of urban
population. (See Table 3.2)
Table 3.2
PROJECTED UNSATISFIED DEMAND FOR DETERGENT POWDER
The average retail price of different brands of locally produced detergent powder is Birr 2
per 100 grams. Allowing margin for wholesalers and retailers margins, the estimated factory
gate price of the product for the envisaged plant is set at Birr 1.50 per 100 grams or Birr 8.60
per kg.
The products of the envisaged plant can get its market outlet through the existing wholesale
and retail network.
1. Plant Capacity
A plant with annual capacity of 3000 tonnenes, of detergent powder per year is envisaged on
the basis of a production schedule of 300 days per annum and three shifts of eight hours a
day. The plant capacity is determined by considering the unsatisfied demand and economy
of scale limitations. Based on the market study the envisaged plant will have annual
production capacity of 100 tonnes. The plant will operate in a single shift of 8 hours a day,
and for 300 days a year.
2. Production Programme
The schedule is worked out considering the time required for gradual build up in labour
productivity and fine tuning of machinery and market penetration period. Production will
commence at 70%, and then will grow to 85% and 100% in the second year, and the third
year and then after, respectively. Detail production programme is shown in Table 3.3
below.
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Table 3.3
PRODUCTION PROGRAMME
Year 1 2 3-10
Capacity utilization (%) 70 85 100
Production (tonnes) 2,100 2,550 3,000
The major raw materials used to produce detergent powder are Alkyl benzene sulphonic
acid, sodium tri polyphosphate, sodium sulphate, sodium silicate, and caustic soda. Caustic
soda can be obtained locally while the other raw materials are supposed to be imported from
foreign sources. How ever, there is a possibility to manufacture sodium sulphate and sodium
silicate locally as the starting materials for these chemicals are locally available. Auxiliary
material, printed polyethylene is necessary as packing materials. Annual consumption of
raw and auxiliary materials at full production capacity and their corresponding cost is given
in Table 4.1 below. The total cost of raw material is estimated at Birr 45,024240.
Table 4.1
RAW AND AUXILIARY MATERIALS REQUIREMENT AND COST
B. UTILITIES
Electricity, water and fuel oil are the utilities required by the envisaged plant. Detailed
requirement and costs of utilities are shown in Table 4.2. The total cost of utilities is
estimated at birr 645,160.
Table 4.2
UTILITIES REQUIREMENT AND COST
A. TECHNOLOGY
1. Production Process
Standard detergent powder manufacturing plant consists of mixing, drying, after drying,
packing and antipollution units. These units are briefly described as follows:
Mixing unit: - Alkyl benzene sulphonic acid is neutralized and mixed with builders such as
sodium tri polyphosphate, sodium silicate, sodium sulphate and other minor ingredients.
This detergent slurry is transferred to the top of the spray drying tower by high pressure
pump.
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Drying unit: - The mixed slurry is sprayed from the nozzles at the top of the drying tower.
The sprayed detergent slurry is dried by hot air coming from the furnace. The dried
detergent powder is taken out at the bottom of the tower, and is transferred to the sieve by
belt conveyor and air lift equipment.
After drying unit: - Fine shaped detergent powder is screened by the sieve and stocked in
baggies after being perfumed.
Packing unit: - The final product is packed here. Detergent powder is fed into the packing
machine from baggies.
Anti pollution unit: - Dust contained in the exhaust air, is washed and separated by the
spraying system. This water, containing detergent dust is recycled to the mixing unit again.
2. Source of Technology
The technology of detergent powder production can easily be purchased from India.
Addresses of machinery suppliers are given below:-
1. Micro Machines Limited of India
Tel: 91 281 368564
Fax: 91 281 366010
B. ENGINEERING
The list of machinery and equipment required by the envisaged plant is given in Table 5.1
below. The total cost of machinery and equipment with the envisaged capacity is estimated
at Birr 7.5 million, out of which birr 6 million is required in foreign currency.
Table 5.1
MACHINERY AND EQUIPMENT REQUIREMENT
Sr. Qty.
No. Description (No.)
1 Caustic soda solution tank 1
2 Alkyl benzene sulphonic acid tank 1
3 Neutralizer 1
4 Sodium silicate tank 1
5 Mixing vessel 1
6 High pressure tank 1
7 Pumps Set
8 Furnace 1
9 Blowers Set
10 Spray drying tower 1
11 Cyclone Set
12 Conveyors Set
13 Sieve Set
14 Perfumer 1
15 Baggies Set
16 Packing machine 1
17 Anti pollution unit 1
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The total land requirement, including provision for open space is 3000 m2, of which 1,500
m2 will be covered by building. Estimating unit building construction cost of Birr 2,300 per
m2, the total cost of building will be Birr 3.45 million. The cost of land leasing is Birr 0.15
per m2, and for 80 years land holding will be Birr 36,000. Thus, the total investment cost of
land, building and civil works will be Birr 3.486 million.
3. Proposed Location
A. MANPOWER REQUIREMENT
The plant requires 51 workers, and their annual expenditure, including fringe benefits, is
estimated at Birr 539,250. For details see Table 6.1.
B. TRAINING REQUIREMENT
Table 6.1
MANPOWER REQUIREMENT AND ANNUAL LABOUR COST
The financial analysis of the detergent powder project is based on the data presented in the
previous chapters and the following assumptions:-
The total investment cost of the project including working capital is estimated at Birr 15.06
million, of which 39 per cent will be required in foreign currency.
The major breakdown of the total initial investment cost is shown in Table 7.1.
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Table 7.1
INITIAL INVESTMENT COST
* N.B Pre-production expenditure includes interest during construction ( Birr 714.92 thousand ) training
(Birr 30 thousand ) and Birr 120 thousand costs of registration, licensing and formation of the company
including legal fees, commissioning expenses, etc.
B. PRODUCTION COST
The annual production cost at full operation capacity is estimated at Birr 48.05 million
(see Table 7.2). The material and utility cost accounts for 95.05 per cent, while repair and
maintenance take 0.24 per cent of the production cost.
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Table 7.2
ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR)
Items Cost %
Raw Material and Inputs 45,024.24 93.70
Utilities 645.16 1.34
Maintenance and repair 117.04 0.24
Labour direct 323.55 0.67
Factory overheads 134.81 0.28
Administration Costs 215.7 0.45
Total Operating Costs 46,460.50 96.69
Depreciation 1019.3 2.12
Cost of Finance 570.36 1.19
Total Production Cost 48,050.16 100
C. FINANCIAL EVALUATION
1. Profitability
According to the projected income statement, the project will start generating profit in the
first year of operation. Important ratios such as profit to total sales, 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 life-time of the project.
The income statement and the other indicators of profitability show that the project is viable.
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2. Break-even Analysis
The break-even point of the project including cost of finance when it starts to operate at full
capacity ( year 3) is estimated by using income statement projection.
BE = Fixed Cost = 29 %
Sales Variable Cost
The investment cost and income statement projection are used to project the pay-back
period. The projects initial investment will be fully recovered within 4 years.
Based on the cash flow statement, the calculated IRR of the project is 25 % and the net
present value at 8.5% discount rate is Birr 10.09 million.
D. ECONOMIC BENEFITS
The project can create employment for 51 persons. In addition to supply of the domestic
needs, the project will generate Birr 6.9 million in terms of tax revenue. The establishment
of such factory will have a foreign exchange saving effect to the country by substituting the
current imports.