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The Manufacturing of Glass Bottles and tumblers from Silica Sand

Technical Report · March 2015

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 The Manufacturing of Glass Bottles and Tumblers
from Silica Sand

BUSINESS PLAN

Prepared by:

Adeyemo Victor Adedayo

AGY 514; Entrepreneurial Skills and Consultancy II

Submitted to: Mr L.L Kolawole and DR. I.A. Okunlola

Department of Earth Sciences, Ladoke Akintola University of Technology Ogbomoso.

March, 2015
 Table of contents
Page

Confidentiality Agreement 3

I. Mission Statement 4

II. Executive Summary 4

III. Team 5
IV. Product Description & Application 5
V. Glass Bottle And Tumbler Manufacturing Process 6

VI. The Marketing Plan 12

A. Market Study 12
B. Glass Furnace Capacity & Production Program 16

VII. SWOT Analysis 19

VIII. Raw Materials And Inputs 21

A. Raw & Auxiliary Materials 21
B. Utilities 22

IX. Technology & Engineering 23

A. Technology 23
B. Engineering 24

X. Manpower & Training Requirement 26

A. Manpower Requirement 26
B. Training Requirement 27

XI. Financial Analysis 27

A. Total Initial Investment Cost 28
B. Production Cost 28
C. Financial Evaluation 29
D. Economic Benefits 32
E. Registration With Corporate Affairs Commission (C.A.C) 32

XII. Environmental Issues 33

A. Pollution Control Scheme 33

2
Confidentiality Agreement

The undersigned reader acknowledges that the information provided in this business plan is

confidential; therefore, the reader agrees not to disclose it without the express written permission

of Adeyemo Victor Adedayo (www.victoradedayoadeyemo.blogspot.com)

It is acknowledged by the reader that information to be furnished in this business plan is in all

respects confidential in nature, other than information that is in the public domain through other

means, and that any disclosure or use of this confidential information by the reader may cause

serious harm or damage to this intended Company.

Upon request, this document is to be immediately returned to Adeyemo Victor Adedayo.

_______________________

Signature

_______________________

Name (printed)

_______________________

Date

This is a business plan. It does not imply offering of securities.

3
 I. Mission statement
The mission of this company is to become the premier manufacturer of glass bottles and

tumblers in Nigeria, with a trademark that denote high quality but affordable glass item. The

company’s goal would be to grow steadily and operate in all the major cities in Nigeria,

becoming profitable by the first year of operations.

II. Executive Summary

The business ideas that foster the creation of this business plan is to start a glass bottle and

tumbler manufacturing company that will take advantage of some of the most abundant natural

resources available in Nigeria, through the manufacturing of glass bottles and tumblers from

silica sand and the use of natural gas as production fuel. This plan envisages the establishment of

a plant for the production of glass bottles and tumblers to meet the increasing demand of the

products of the numerous brewery companies, hotels, bars and joint centers operating in the

country, with the aim to be a leading icon in the production and sales of glass bottles and

tumblers in Nigeria, with a production capacity of 15 million bottles and 6 million tumblers per

annum. The present demand for the proposed product is estimated at 21 million bottles and 8.75

million tumblers per annum. The demand is expected to reach 43.8 million bottles and 18.19

million tumblers by the year 2022. The plant will create employment opportunities for 76

persons. The total investment requirement is estimated at about 4.6 billion naira, out of which 4.5

billion is required for plant and machinery. The project is financially viable with an internal rate

of return (IRR) of 34% and a net present value (NPV) of 354.8 million naira discounted at 30%.

This goal will be driven by a small team of selected, competent and skillful professionals in

various aspects of management/administration and manufacturing.

4
III. Team

Manpower Req. Name

Qty.
General Manager 1
Executive secretary 1
Plan and Statistics Head 1
Production and Technical manager 1
Commercial and Marketing Manager 1
Financial Manager 1
Administration Manger 1
Personnel 1
Secretary 3
Glass Technologist 1
Production workers 30
Technicians 10
Sales man 4
Store Head 1
General Accountant 2
Finance and Budget Accountant 2
General Service 15

IV. Product Description & Application

Glass bottles and tumblers are vitreous silica compounds produced in a suction fed type blowing

machine. Glass bottles are used for handling liquid, paste or powder products from beverage,

cosmetic or pharmaceutical industries. Shape, color and size of glass bottles may vary according

to clients demand, architecture and strength. Almost all glass bottles are flat bottom, straight with

a ‘neck’ for corking or sealing. Glass bottles are produced either clear, brown or in green color.

Standard sizes for glass bottles may range from 50 ml to 1,000 ml. typical sizes are

50,100,250,330,500,630,750 and 1,000 ml. however; this company shall focus solely on the

production of 330ml sized bottles typical of those used for beer in Nigeria.

5
Tumblers are flat bottom, straight clear drinking glass without handles. They are usually

produced as 250 ml glasses.

V. Glass Bottle And Tumbler Manufacturing Process

Two important steps were taken in the 19th century in the production of container glass: The full

mechanization of bottle manufacture with the introduction of the first automatic IS (individual

section) machine around 1920. Today, the production of an IS machine can be above 500

bottles/minute. Container glass is made from a basic soda lime formulation and is melted in a

natural gas fuel fired or, exceptionally, an electrically heated furnace. The molten glass is

generally formed into the products by automated individual section (IS) machines. Where

appropriate colouring agents are added to the glass and surface coatings are applied to the

finished products.

Glass containers (a term for hollow shaped bottles regardless of size) are produced in a

two stage moulding process by using pressing and blowing techniques. There are five essential

stages in automatic bottle production.

1. Obtaining a piece of molten glass (gob) at the correct weight and temperature.

2. Forming the primary shape in a first mould (blank mould) by pressure from compressed air or

a metal plunger.

3. Transferring the primary shape (parison) into the final mould (finish mould).

4. Completing the shaping process by blowing the container with compressed air to the shape of

the final mould.

5. Removing the finished product for post forming processes.

6
 1. The melting and gob forming stage.

The ingredients for making glass are soda ash, sand and limestone; these are mixed

together and put in a furnace. The furnace is run on natural gas/fuel oil and is heated to 1600C.

The ingredients melt and mix together to make hot glowing soft material. The molten glass flows

from the furnace along a forehearth to a gathering bowl (spout) at the end. From the bottom of

the gathering bowl one to four parallel streams of glass are formed through appropriately sized

orifices. These glass streams, modulated by a mechanical plunger system, are cut into accurate

lengths by a shear mechanism to form primitive, sausage shaped, glass "gobs". The complete

system for forming the gobs is termed the feeder mechanism. Gobs are cut simultaneously from

the parallel glass streams, to be formed simultaneously in parallel moulds on the forming

machine. These are termed single, double, triple or quadruple gob machines, the latter being

adapted to high volume production of smaller containers. Double gob is the most common.

Container glass furnaces feed two or more such forming machines, each via a dedicated

forehearth. A mixture of water and soluble oil is sprayed onto the shears to ensure they do not

overheat and that the glass does not stick to them. From the feeder mechanism the gobs are

guided by a system of chutes into the blank moulds on the forming machine.

2. The Forming Process

The forming process is carried out in two stages as shown in Figure 5.1 The initial forming of the

blank may be made either by pressing with a plunger, or by blowing with compressed air,

according to the type of container. The final moulding operation is always by blowing to obtain

the finished hollow shape. These two processes are thus respectively termed "press and blow"

and "blow and blow". The formed containers are presented for post forming production stages on

a continuous conveyor. Press and blow forming is particularly adapted to producing jars, but is

7
also widely used for producing lightweight bottles. Blow and blow forming is more versatile and

is preferred for producing standard weight bottles and more complex forms. Simplified diagrams

of the two main forming processes are shown in Figure 5.1

Figure 5.1: Simplified diagrams of the two main forming processes; Press and blow forming and blow and blow forming.

During the forming process the glass temperature is reduced by as much as 600°C to ensure that

the containers are sufficiently solidified when taken away by conveyor. The extraction of heat is

achieved with high volumes of air blown against and through the moulds. To prevent glass

sticking to the moulds various high temperature graphite based release agents are applied

manually and automatically to specific mould parts (“swabbing”). The moulds require periodic

cleaning and maintenance.

8
 Glass flow from the forehearth must be held constant in order to maintain the necessary

temperature stability, viscosity and homogeneity of the glass fed to the forming process. If the

forming process is interrupted on one of the sections the gobs of hot glass are diverted by chutes

to the basement, where they are cooled with water, fragmented, and returned to the batch house

along with all other production rejects to be recycled as process cullet. The earliest automatic

machines were of rotating design, and although forming machines for tableware still use this

principle, container production is almost exclusively by the more flexible in line IS (Individual

Section) machines. The IS machine consists of multiple individual container making units

(sections) assembled side by side. Each section has mould cavities corresponding to the number

of gobs to be formed in parallel. The gobs are delivered sequentially to the different sections via

a scoop and trough system (gob distributor and delivery). Typically IS machines are made up of

from 6 to 20 sections, depending on the volume and type of market served. One major advantage

of IS machines is the possibility of independently stopping the sections for adjustments or

replacing mould parts.

Automatic container manufacture can be used to produce bottles and jars of almost any

size, shape and colour. The simpler the shape the faster the production rate; lightweight round

beer bottles are produced at up to 750 /minute (on IS 12 section, quadruple gob machines). Rapid

cooling of the containers on the outside surface creates high differential stresses in the glass and

consequent fragility. To eliminate these the containers are passed through a continuous annealing

oven (lehr), where they are re-heated to 550°C then cooled under controlled conditions to

prevent further stresses being set up. Lehrs are heated by gas or electricity but once brought to

operating temperature the heat from the incoming containers provides the majority of the heating

energy. Once sufficiently cool all containers are inspected automatically with automatic rejection

9
for out of tolerance and other quality concerns. After inspection the product is assembled onto

pallets either in cartons or in bulk and packed and stored before distribution/shipment to the

customer. The overall efficiency of the production is measured as a "pack to melt" ratio, i.e. the

tonnage of containers packed (for distribution/shipment) as a percentage of the tonnage of glass

melted in the furnace. Installations making containers for foodstuffs and beverages generally

attain pack to melt ratios between 85 % and 94 %. Higher value perfume and pharmaceutical

products are subject to more stringent controls, and pack to melt ratios average around 70 %.

To improve the performance of the products, surface coatings can be applied either

immediately after forming, while the articles are still at a temperature over 500°C (“hot end

coating”), or after annealing (“cold end coating”). Practically always a combination of hot end

and cold end treatments are employed.

3. Further Treatments

Glass containers are conveyed through various inspection, packaging, unpacking, filling

and repackaging systems. To prevent damage between containers and to enable them to slide

through guide systems without damage; lubricating treatments can be applied to the product at

the cold end of the annealing lehr. The materials used are food safe oleic acid and polyethylene

based products applied by spraying a dilute aqueous suspension, or by contact with vapours.

These treatments do not, in general, give rise to significant environmental emissions.

Hot surface coatings, usually a very fine coating of tin oxide or titanium oxide can be applied to

the glass containers immediately after leaving the forming machine. In combination with

subsequent lubricating cold surface coating, this prevents glass surface damage during

subsequent handling. The metal oxide coating acts as a substrate to retain the lubricating organic

10
molecules on the glass surface, and this permits a high level of scratch resistance to be developed

with simple food safe lubricants. The hot end treatment also improves mechanical resistance.

The treatments themselves must be invisible and are thus extremely thin. The thickness of

the hot surface treatment is generally < 0.01 µm. To obtain uniform coatings of this thickness the

treatment is most frequently made by chemical vapour deposition (CVD), using the anhydrous

chlorides of tin or titanium, or specific organo-metallic compounds. Application by spray is also

employed. The quantity of material involved is in all cases low, in the order of 2 to 10 kg/day per

production line according to production speed. Once manufactured glass containers may in

certain cases go through a secondary process to add decoration and identity before being sent to

the customer. This can take the form of a pressure sensitive or heat shrink label or heat applied

ceramic decoration.

4. A Comprehensive List of Glass Bottle and Tumbler Manufacturing Processes

• The main ingredients for making glass are soda ash, sand and limestone

• These are mixed together and put in a furnace. The furnace is run on natural gas/fuel oil

and is heated to 1600C. The furnace run non-stop for 15 years

• The ingredients melt and mix together to make hot glowing soft material. The continuous

flow is cut by automatic shears to make ‘gobs’. These are hot blobs of molten glass

• The gobs are then shot down into the forming machine, where the glass is moulded. A

machine blows air down on to the glass forcing it into the base of the mould where there

is a plug which pushes into the soft glass forming the top of the bottle/tumbler (so the

bottle/tumbler is upside down).

• Next air is blown into the gob from the plug so that it blows up (like a balloon) to fit the

mould producing a bottle/tumbler shape. This partly shaped bottle is known as a

11
 ‘parison’. This is passed to another ‘blow mould’ where air is blown into the glass to

make it hollow in the middle

• These are now jars and bottles; they are put on a ‘dead plate’, where cool air is blown

over them

• Once they have cooled they are taken out of the mould and put on a conveyor belt. They

are then coated twice. This helps strengthen the glass and also stop the glass from being

scratched easily when the bottles are being filled

• The bottles then travel to the ‘Lehr’ which is a long oven that heats the bottles/tumblers

up to 5500C and helps strengthen bottles/tumblers that have been weakened by the rapid

heating and cooling.

VI. THE MARKETING PLAN

A. MARKET STUDY

1. Past Supply and Present Demand

The demand for glass bottles and tumblers in Nigeria is met through both domestic production

and imports. However, data on imports of the products is not readily available since the external

statistics of the customs authority does not show the products separately. The volume of

domestic production of bottles and tumblers during 1996-2005 is shown in Tables 3.1.

Apparently, the quantity of glass bottles and tumblers produced in the country fluctuated from

year to year but, on the average, 14,353,000 bottles and 1,985,000 tumblers are produced during

the period under consideration.

12
Table 6.1

Year Glass Bottles Tumblers

1996 11706000 4180000
1997 11030000 880000
1998 18997000 2731000
1999 23134000 --
2000 16078000 --
2001 16233000 149000
2002 12362000 --
2003 2647000 --
2004 16658000 --
2005 14681000 --
Average 14353000 1985000
Source: CSA, Statistical Abstract, Various Issues

A survey conducted on some retailers and wholesalers reveals that the market share of

domestically produced glass bottles and tumblers roughly stood at 75% and 25% of the total

supply, respectively. Assuming the average annual domestic production for the period under

reference represents the domestic production capacity for the products and making use of the

above stated market share of domestic production of the products, the effective demand for glass

bottles and tumblers for the year 2006 is estimated at 19,137,000 and 7,940 pieces, respectively.

The demand for bottles comes from the beverage industry, the catering industry and other

commercial users of glass packing materials. Household, the catering industry and other

institutions like hospitals and boarding schools constitute the major users of tumblers. The

demand for the products is therefore estimated to grow at the rate of 5% annually. Thus the

present demand for glass bottles and tumblers (i.e. for 2007) is estimated at 21,099,000 and

8,754,000 pieces, respectively.

13
2. Demand Projection

For the reasons stated above, a 5% rate of growth is applied in projecting the demand for glass bottles

and tumblers. As stated above, the market share of domestically produced bottles and tumblers is

estimated at 75% and 25%, respectively. Assuming domestic producers will maintain their share, the

projected demand and the market share of the envisaged is shown in table 6.2

Bottles Tumblers

Year Projected Market Share of Projected Market Share of

Demand Envisage Plant Demand Envisage Plant

2007 21099000 5274750 8754000 6565500

2008 22153950 5538488 9191700 6893775
2009 23261648 5815412 9651285 7238464
2010 24424730 6106182 10133849 7600387
2011 25645966 6411492 10640542 7980406
2012 26928265 6732066 11172569 8379427
2013 28274678 7068669 11731197 8798398
2014 29688412 7422103 12317747 9238318
2015 31172832 7793208 12933645 9700234
2016 32731474 8182869 13580327 10185245
2017 34368048 8592012 14259344 10694508
2018 36086450 9021613 14972311 11229233
2019 37890773 9472693 15720926 11790695
2020 39785311 9946328 16506973 12380229
2021 417745577 10443644 17332321 12999241
2022 43863306 10965826 18198937 13649203

14
 3. Marketing Strategy: In order to facilitate rapid sale of the proposed products, this

company shall use a marketing strategy which allows buyers to purchase newly made

glass bottles and tumblers in exchange for cullet, however the cullet must have been well

sorted and cleaned and it worth twice the price of the new product.

Also this company shall provide the opportunity for major Brewery companies to lease

the proposed products in substantial quantity for a specified period of time, on the term

and condition that broken/damaged bottles and tumblers will be reimbursed.

4. Pricing and Distribution

The prices of glass bottles and tumblers vary depending on size and quality. On the average, the

unit prices of a 330ml bottle and a 250ml tumbler are 200 naira and 150 naira, respectively.

Allowing margin for whole sale and retail, the unit factory gate prices of a bottle and a tumbler

for the envisaged plant are estimated at 185 naira and 140 naira respectively. The envisaged plant

is expected to distribute its product directly to users in the case of bottles. Tumblers can be

marketed through the existing wholesale and retail network

5. Major Competitors In Nigeria

• Beta Glass Company Plc

Iddo House, Iddo, Lagos, Lagos State
Tell: 01-7740844, 01-7747602, 01-7748073

• Sunglass Limited
Plot H8, Kudenda Industrial Area,, Kaduna, Kaduna State
062-236809, 062-236840

• West African Glass Industry Plc (WAGI)

134, Tran-Amadi Industrial Layout, Port Harcourt, Rivers State, Nigeria

084-234103, 01-233671, 084-234103

15
B. GLASS FURNACE CAPACITY AND PRODUCTION PROGRAMME

1. Glass Furnace Capacity

Glass furnaces are generally designed to melt large quantities of glass 24 hours a day and for 365

days a year over a period of about fifteen years and range in output from 20 tons of glass per day

to over 600 tons of glass per day. After which time they are rebuilt with either partial or total

replacement of the structure depending on its condition Glass making is a very energy intensive

process and the choices of energy source, heating technique and heat recovery method are central

to the design of the furnace and to the economic performance of the process. The same choices

are also some of the most important factors affecting the environmental performance and energy

efficiency of the melting operation. In general, the energy necessary for melting glass accounts

for over 75 % of the total energy requirements of glass manufacture.

Regenerative furnace: The regenerative Cross Fired Furnace provides similar then the End

Fired Furnace a low energy consumption and high flexibility in terms of pull change. However

this type of furnace can be built with bigger melting areas due to the shorter flame length

compared to the End Fired furnace. Therefore the Cross Fired Furnace is normally used for

furnaces with high capacity or if the existing building does not allow an End Fired Furnace.

The furnace can be used for container glass, table ware, cosmetic glass, pharmaceutical glass,

sheet glass, solar glass, sodium-silicate glass, tubing and lightning glass. According to the glass

quality, furnace capacity, raw material specifications and the type of glass each furnace is

perfectly designed and tailor-made according the requirements of the glass industry.

The regenerators, burner ports and burners are situated laterally. For each burner port a sectional

regenerator chamber can be designed together with a damper at the waste gas channel. Thus

enables a precise control of the tank temperature along the melting process inside the tank.

16
The special know-how and long term experience are used to design the furnace port neck, tank

superstructure, doghouse and burners to achieve the most economical furnace in terms of energy

and emission. Regenerators can be equipped with different types of checker works and qualities

to suit perfectly to the melting process and used raw materials to achieve long furnace lifetime.

A barrier wall incorporated into the melting end bottom and an additional step for a deeper

refining area increase the flexibility and the quality of the glass. The furnace can be operated

with Natural Gas, LPG, Coal gas, Biogas and Fuel oil. Additionally there is the possibility to

install special developed melting assistant devices like electrical boosting, bubbling system or

throat boosting.

Features

high furnace capacity up to 750 t/d

easy adjustable temperature profile along the furnace
low energy consumption
low emission values
high flexibility during production changes
high specific melting area load
long lifetime

Regenerative furnace will be used because of the following reasons:

• Regenerative furnace has a very high thermal efficiency, a modern regenerative container

furnace have an overall thermal efficiency of around 60 % (maximum 65 %), with waste

gas losses around 20 %, and structural losses making up the vast majority of the remainder.

• Regenerative furnace has a high production capacity, melting up to about 600 tons of glass

per day.

17
 • Significant reduction in SOx emissions when powered with natural gas because natural gas

is essentially sulphur free.

• Large volume of natural gas is readily available at cheap prices in Nigeria, which will be

used to power the furnace.

Based on demand projection shown is Table 6.2, and capital requirement, the envisaged glass

bottles and tumblers plant will have a capacity of producing 15 million pieces of glass bottles

and 6 million pieces of tumblers per annum. The proposed plant is an energy intensive unit

where large volume of natural gas is required in order to operate the glass melting furnace. Due

to the fact that the plant is required to operate continuously for 24 hours a day and for 365 days a

year, the proposed plant will operate three shifts a day.

2. Production Program

In order to provide adequate time for developing the skill of producing glass bottles and

tumblers, and develop market outlets at different locations of the country, it would be advisable

to start production at a lower level and gradually build up the scale of production. Accordingly,

the envisaged plant will start operation at 70% of its production capacity, during the first year of

operation, and then raise up production to 80%, 90% and lastly to 100% during the next

succeeding years. Table 3.3 below shows production program.

Table 6.3

Description Unit Production Year

2015 2016 2017 2018-2022

Glass Bottles Pcs 10500000 12000000 13500000 15000000
Tumblers Pcs 4200000 4800000 5400000 6000000
Capacity % 70 80 90 100
Utilization

18
VII. SWOT ANALISY

STRENGHT

• Silica sand, soda ash and limestone which are the major raw material in the

manufacturing of glass bottles and tumblers are abundantly available in Nigeria has a

total reserve of 99.40 million tons of silica sand, and 31 million tons of limestone deposit

in the southwest region of Nigeria alone, this implies that the raw this company will

source local raw materials at a cheaper price, also Nigeria has a proven reserve of 260

trillion cubic feet of natural gas, this also implies that natural gas will be available all

year round for the powering of the manufacturing plant.

• In glass production, the furnace is the major consumer of energy about 73-85% of the

total energy used by the company; however, this will be compensated by the cheap

availability of natural gas in the country.

• Also the market for these products in Nigeria has a lot of potential with little competition.

WEAKNESS

• Property 1. Glass bottle and tumbler production is an uninterruptible process. Glass

bottle and tumbler production continues 24 hours a day, 365 days a year. It is not possible

to stop the glass furnace that melts raw materials to produce liquid glass. Production has

to continue throughout the lifetime of the furnace, which is typically over 15 years.

Production cannot be interrupted even if process quality is not under control, in which

case nonconforming glass is broken and scrapped at the end of the production line.

• Property 2. Changeover costs associated with color changes are very high. Typical color

changeover times are 3-7 days. During color changeover, the entire production is

nonconforming and is scrapped.

19
 • Property 3. Thickness changeover can only be performed gradually. Since glass

production is a continuous process, thickness changeover has to be performed gradually.

In other words, if glass with two different thickness values is to be produced

successively, glass with all thickness values in between needs to be produced as well.

Furthermore, in order to allow for stabilization of the process, thickness has to be kept

constant at intermediate thickness levels for some minimum duration. Thickness

changeover times are on the order of hours.

OPPORTUNITY

• The present demand for the proposed product is estimated at 21 million bottles and 8.75

million tumblers per annum. The demand is expected to reach at 43.8 million bottles and

18.19 million tumblers by the year 2022.

• Nigeria is a country occupied by people that love “Jollification”; an average Nigerian

likes enjoyment and pleasure, therefore beverage (alcoholic and non-alcoholic contained

in glass bottles) are major items used to meet this needs, hence serve as the main item for

entertainment in parties and sold in hotels and bars. In major cities in Nigeria, such as

Lagos, Ibadan, Abuja, Port Harcourt, etc. there exist about 10 large scale/ international

hotels, 1500 average to small scale hotels, 8000 club houses and bars, and countless joint

centers, all of which sell drinks, wines and beverages contained in bottles, and mostly

served by tumblers to their customers. This proves the high demand for the proposed

product, and profitability of this business.

20
 THREAT

• Financial losses that would be experienced during changeovers, either color and thickness

change overs, as Production cannot be interrupted even if process quality is not under

control, in which case nonconforming glass is broken and scrapped at the end of the

production line.

• Financial incurrence as a result of wide margin between product production quantity and

that of product sold, as production cannot be interrupted and more goods are produced

daily, hence the product have to be substantially subsidized or auctioned at lower price.

VIII. RAW MATERIALS AND INPUTS

A. RAW & AUXILIARY MATERIALS

The major raw materials required for manufacturing of glass bottles and tumblers are silica,

limestone, soda ash and cullet. In addition to raw materials, auxiliary materials like include

dolomite, ceramic colours (enamel), and packaging materials are required. Annual consumption

of these materials at full production capacity of the plant and their estimated cost is given in

Table 4.1 below. Thus, the total annual cost of raw and auxiliary materials at full capacity

production will be N 329,455,200 of which N349,600 is required in foreign currency, and the

remaining N 329,105,600 in local currency.

21
Table 4.1
RAW AND AUXILIARY MATERIALS

No Description Qty.(Tons) Cost in Naira ’000’

FC LC TC

A. RAW
MATERIALS

1 Silica sand 9190 -- 110,280,000 110,280,000

2 Limestone 2510 -- 5,020,000 5,020,000

3 Soda ash 2796 -- 100,656,000 100,656,000

4 cullet 2538 -- 101,520,000 101,520,000

Sub--total -- -- 317,476,000 317,476,000

B. Auxiliary Material

1 Dolomite 488 -- 4,880,000 4,880,000

2 Ceramic Color ( Enamel) 7.6 349,600 -- --

3 Packaging Materials As req 6,749,600 6,749,600

Sub-total 349,600 11,629,600 11,629,600

Total cost 349,600 329,105,600 329,455,200

B. UTILITIES

The major utilities required by the envisaged project are electricity, water and furnace fuel. The

annual requirement of utilities and associated cost is shown in Table 4.2. The total cost of

utilities is estimated at N 457,457,059.89

22
 Table 4.2 UTILITIES REQUIREMENT

No. Utilities Unit Qty. Total cost (Naira)

1. Electric power KWh 3,010,000 13,457,059.84
2. Water M3 180,000 9000000
3
3. Natural gas M 438,000 255,792,000
Grand Total 278,249,059.84

IX. TECHNOLOGY AND ENGINEERING

A. TECHNOLOGY

1. Production Process

Production of glass bottles and tumblers mainly involves cleaning, mixing, molding and packing.

These processes are discussed in brief as follows.

Cleaning and mixing: - The foreign matter and pieces of iron contained in the raw material will

be removed and weighed in proportion to the mixing ratio with auxiliary material. Then, the

mixture is proposed into molten, refined glass in the furnace at the temperature of approximately
0
1,500 c.

Molding: - The molten mixture is molded by bottle forming and tumbler forming machines and

cooled slowly in the annealing lehr.

Packing: - Going through inspection, the annealed product is packed and delivered. When

necessary, the bottle as well as the tumbler will be printed in ceramic colors by multi-color

decorating machine. After glazing, final inspection will be conducted for delivery.

23
2. Source of Technology

The technology required for bottles & tumblers is simple and widely applied for many years in

countries such as Western Europe, China, India & Korea. It would be possible to obtain the latest

technology for the manufacturing of bottles & tumblers from these countries.

Please find here below the machinery supplier address:-

A. ITTFLYGT, Srl
Fax: 02-9019990
E-Mail:ittlypt. Italia@flygt.com
Country of orgin: Italy
B. Muhak Co., LTD
Add: 4G9-6, Pong-amdong,
Hoewon-gu,masan-
Kyongnam
Tel: 0551-293-3161
Fax: 0551-296-2200
Home page: www.muhak.co.kr.

C. For Furnace Construction and Optimization:

TECO (Toledo Engineering Co) Inc,

Toledo OH, USA. Tel: +1 419 537 9711.
Fax: +1 419 537 1369. Email: form on website.
Website: www.teco.com

B. ENGINEERING

1. Machinery and Equipment

The required machinery and equipment for the production of glass and tumblers plant will be

acquired through import. The total machinery and equipment cost is estimated at 9.12 billion

naira, out of which about 9.08 billion naira will be required in foreign currency. The detailed list

of machinery and equipment is given in Table 5.1.

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Table 9.1 MACHINERY AND EQUIPMENT REQUIREMENT & COST

Description Unit Qty.

A. Machinery
1. Raw material preparation plant Set 1
2. Melting furnace Pcs 1
3. Forming machine Pcs 1
4. Annealing lehr Pcs 1
5. Decorating and packing machine Set 1
6. Compressor Pcs 2
7. Boiler Pcs 1
8. Generator Pcs 2
9. Pumps Pcs 1
B. Installation costs
1. Oil system Set 1
2. LPG system Set 1
3. Electrical system Set 1
4. Cooling system Set 1
C. Equipments
1. Office furniture Set 6
2. Vechicles Pcs 2

2. Land, Building and Civil Works

2 2
The envisaged plant will require a total land area of 4,000 m , out of which 2,000 m will be

covered by factory and office buildings, stores, etc. The total cost of building and civil works,
2
estimated at a rate of 21,712 naira per m , will be 43.424 million naira. Cost for holding of land

at a lease rate of 50 naira per square meter for 80 years of lease is estimated at 16,000,000 naira.

Therefore, the total cost for land holding, building and civil works will be 59,424,000 naira.

25
3. Proposed Location

Badagry and Ilaro which are found in Lagos and Ogun State respectively are considered as the

potential sites for the envisaged project due to their access to raw materials. From the above

locations, Ilaro; specifically Plot 5 Olorulekan Street along Fadare Village, off Oja-Odan Road,

Ilaro, Ogun state Nigeria will be selected location of the envisaged plant. This location provides

cheaper land lease charge and access to raw materials, Moreover, the location is a place where

workers can conveniently commute or take up their lodgings in view of the fact that the plant is

operated for 24 hours a day.

X. MANPOWER AND TRAINING REQUIREMENT

A. MANPOWER REQUIREMENT

The total manpower requirement of the envisaged project is 76 persons. The proposed manpower

and the estimated annual labour cost are indicated in Table 10.1.

Table 10.1 MANPOWER REQUIREMENT AND LABOUR COST)

Sr. Description Req. Montly Salary Annual Salary

No, Qty. (Naira) (Naira)
1 General Manager 1 100,000 1200000
2 Executive secretary 1 45,000 540000
3 Plan and Statistics Head 1 55,000 660000
4 Production and Technical manager 1 65,000 780000
5 Commercial and Marketing 1 55,000 660000
Manager
6 Financial Manager 1 60,000 720000
7 Administration Manger 1 65,000 780000
8 Personnel 1 48,000 576000
9 Secretary 3 30,000 1,080,000
10 Glass Technologist 1 55,000 660,000
11 Production workers 30 18,000 6,480,000

26
12 Technicians 10 25,000 3,000,000
13 Sales man 4 20,000 960,000
14 Store Head 1 25,000 300,000
15 General Accountant 2 40,000 960,000
16 Finance and Budget Accountant 2 40,000 960,000
17 General Service 15 15,000 2,700,000
Sub-Total 76 23,016,000
Employees Benefit (25% BS) 1,292,808
Training Cost 283,200
Total 24,592,008

B. TRAINING REQUIREMENT

Training is required for technical staff and operators for a period of at least one month. It is

recommended that machinery supplier will provide on-job training or arrangements can be made

with Addis Ababa Glass and Bottle Factory. A total of N500,000 is allotted to execute the

training program.

XI. FINANCIAL ANALYSIS

The financial analysis of the glass bottle and tumblers project is based on the data presented in

the previous chapters and the following assumptions:-

Construction period 1 year

Source of finance 100 % loan
Tax holidays 3 years
Bank interest 30%
Discount cash flow 30%
Accounts receivable 30 days
Raw material local 30 days
Work in progress 2 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days

27
A. TOTAL INITIAL INVESTMENT COST

The total investment cost of the project including working capital is estimated at 4.6 billion

naira, of which 97.3 per cent will be required in foreign currency.

The major breakdown of the total initial investment cost is shown in Table 11.1.

Table 11.1 INITIAL INVESTMENT COST

Sr.
No. Cost Items Total Cost
(Naira)
1 Land lease value 16,000,000
2 Building and Civil Work 43,424000
3 Plant Machinery and Equipment 4,540,000,000

4 Office Furniture and Equipment 1,180,000

5 Vechicles 11,404,000
6 Pre-production expenditure 1,600,000
7 Working capital 53,078,855.653
Total investment cost 4,666,686,855.653333
Foreign Share 302,080

* N.B Pre-production expenditure includes interest during construction (N1,000,000) training (N500,000 ) and
N100,000 as 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 815,804,667.89 naira (see

Table 11.2). The material and utility cost accounts for 95.4 per cent, while repair and

maintenance take 0.3 per cent of the production cost.

28
Table 11.2 ANNUAL PRODUCTION COST AT FULL CAPACITY ( Naira)

Items Cost %
Raw material and Inputs 329,455,200 51.72
Utilities 278249059.84 43.68
Maintenance and Repair 2,000,000 0.3
Labour Direct 24,592,008 3.86
Factory Overheads 500,000 0.078
Administration Costs 1,000,000 0.015
Total Operationg Costs 635,796,267.84 99.82
Depreciation 800,000 0.13
Cost of Finance 350,000 0.05
Total Production Cost 636,946,267.84 100

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.

29
 Cash flow for four years

Price
Products Produced Income Total income – Profit
per
Qty. (Naira) Annual Cost at (Naira)
Unit
full capacity
(Naira)
2015 Bottles 185 10,500,000 1,942,500,000 2,530,500,000 -
1,893,553,732.16
Tumblers 140 4,200,000 588,000,000 636,946,267.84

2016 Bottles 185 12,000,000 2,220,000,000 2,892,000,000 -

2,255,053,732.16
Tumblers 140 4,800,000 672,000,000 636,946,267.84

2017 Bottles 185 13,500,000 2,497,500,000 3,253,500,000 -

2,616,553,732.16
Tumblers 140 5,400,000 756,000,000 636,946,267.84

2018 Bottles 185 15,000,000 2,775,000,000 3,615,000,000 -

2,978,053,732.16
Tumblers 140 6,000,000 840,000,000 636,946,267.84

Total profits 9,743,214,928.64

Total Profits –Total Initial Investment Cost: N 9,743,214,928.64 – N 4,666,686,855.653333

= N 5,076,528,072.986667

30
 Net Present Value (NPV)

Time Project Discount DR + 1 (DR + 1) ^ NPV of Cash Flow{ Cash

Period Rate(DR) T Flow / (DR + 1) ^ T}

(T)

----- 4,666,686,855.653333 0.30 -- -- (4,666,686,855.653333)

2015 1,893,553,732.16 0.30 1.30 1.30 1456579793.969231

2016 0.30 1.30 1.69 1334351320.804734

2,255,053,732.16
2017 0.30 1.30 2.20 1189342605.527273
2,616,553,732.16
2018 0.30 1.30 2.86 1041277528.727273
2,978,053,732.16
NPV 354,864,393.3751777

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 = 9.97%

Sales –Variable Cost

3. Pay Back Period

The investment cost and income statement projection are used to project the pay-back period.

The project’s initial investment will be fully recovered within 3 years.

31
4. Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 34 % and the net present

value at 30% discount rate is 354.8 million naira.

D. ECONOMIC BENEFITS

The project will create employment for 76 persons. In addition to supply of the domestic needs,

the project will generate 101.7632 million naira 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.

E. REGISTRATION WITH CORPORATE AFFAIRS COMMISSION (C.A.C)

Following the requirement of the Corporate Affairs Commission (C.A.C), the following names

will be submitted for approval by the body

i. Niglaz Nig. Ltd.

Ii. Glassmacar Nig. Ltd.

Iii. Glassbott Nig. Ltd.

And upon the approval of either of the three, it will now be disclosed in the letter headed

paper of the industry, the following

o Name of the industry which will be the approved one among the above listed ones

o Address: Plot 5 Olorulekan Street along Fadare Village, off Oja-Odan Road, Ilaro,

Ogun state Nigeria.

o Incorporation number as given by Corporate Affairs Commission RC______

32
XII. ENVIRONMENTAL ISSUES

The major environmental challenges for the glass industry are emissions to air and energy

consumption. Glass making is a high temperature, energy intensive activity, resulting in the

emission of products of combustion and the high temperature oxidation of atmospheric nitrogen;

i.e. sulphur dioxide, carbon dioxide, and oxides of nitrogen. Furnace emissions also contain dust

and lower levels of metals. It is estimated that in 1997 the glass industry emissions to air

consisted of: 9000 tonnes of dust; 103500 tonnes of NOx; 91500 tonnes of SOx; and 22 million

tonnes of CO2 (including electrical generation). See table 11.3 below;

Table 11.3: A summary of the main pollutants,

Sector/Activity Pollutants

• Materials handling Dust, crystalline silica

• Melting process Dust, CO, NOx, SOx, HF, HCl, Heavy metals

• Hot-end coating or treatment Dust, organic and inorganic tin, HCl, SOx

A. Pollution Control Scheme

Emissions can be minimized and residual levels of pollution can be treated with standard

techniques. Such as

• The use of an electrostatic precipitator or bag filter operating, where appropriate, in

conjunction with a dry or semi-dry acid gas scrubbing system for dust management.

• Furnace design that gives optimum Low NOx emissions, staged firing, and flue gas

recirculation will be used to reduce NOx emissions in terms of both concentration and mass.

33
 With these techniques, levels of NOx can be controlled to 500-800 milligrams per cubic

3
meter (mg/m ).

• Natural gas will be used to power the furnace to reduce SOx emissions.

• Other efficient furnace design modifications, such as modifications to the burner design and

firing patterns, higher pre-heater temperatures, pre-heating of raw material, etc. will be used

to optimize furnace performance while minimizing the levels of emissions to the

environment

• The use of outside sourced cullet and recycled glass will also be used to reduce energy

requirements (estimated at two percent savings for each 10 percent of cullet used in the

manufacture of melt) and thus air emissions (up to 10% for 50% cullet in the mix).

• The amount of heavy metals used as refining and coloring or decolorizing agents, as well as

potassium nitrate, will be minimized to the extent possible.

• The use of Particulate matter reduction techniques, for example, through enclosing

conveyors, through pelletizing raw material, through reducing melt temperatures, and by

blanketing the furnace melt with raw material.

• Reductions in wastewater volumes are possible through closed cooling water loops and

improved blow-off techniques.

34

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