ALL RIGHTS RESEVED

The intellectual rights vested in this document remain at all times the sole property of LIONARY (Pty)
Ltd

It is hereby understood that this document is CONFIDENTIAL.

LIONARY (Pty) Ltd t/a

MEGA TRADE

October Prepared by Boniface Molosi, P.O. Box 949, Gaborone,

Botswana. email: molosib@gmail.com
2019 mobile: (+267) 725-77777

Business plan to Manufacture Soap & Detergents Business Plan

MANUFACTURE OF SOAP AND DETERGENTS

TABLE OF CONTENTS PAGE

1
 PLAN BRIEF 3

I. SUMMARY 5

II. PRODUCT DESCRIPTION AND APPLICATION 6

III. MARKET ANALYSIS 7

IV. PLANT CAPACITY AND PRODUCTION PROGRAMME 10

V. MATERIALS AND INPUTS 11

VI. PRODUCTION AND TECHNOLOGY 13

VII. CAPITAL EQUIPMENT AND LOCATION 16

VIII. MANPOWER AND TRAINING REQUIREMENT 17

IX. FINANCIAL ANALYSIS 17

X. ECONOMIC BENEFITS 20

PLAN BRIEF

TITLE Manufacture of Soap and Detergents

BUSINESS NAME LIONARY (Pty) Ltd t/a MEGA TRADE.
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BUSINESS ADDRESS Industrial sites – Selebi Phikwe
BUSINESS IDEA Manufacture of Retail-Branded Soaps and
Detergents through Recycling Waste
Cooking oil and Beef fat.
MISSION STATEMENT To manufacture high quality branded
soap and detergent products that will
successfully compete with similar
imported and locally produced brands.

LOCATION DESCRIPTION Rented premises in Selibe Phikwe SPEDU

Business park; comprising Offices,
Production Area and Warehouse space

MANAGEMENT EXPERIENCE Promoter & Team have vast experience in

Sales, Marketing, Finance, Manufacturing
& Business Management

PRODUCTS Bathing Bar soap, Laundry bar soap, Hand

Sanitiser, Air Freshener and Various
Detergents ( floor wash, kitchen care,
bathroom & toilet cleaner, bleach, liquid
soap, auto cleaners),
EQUIPMENT REQUIRED Bar soap Plant, Heated Blending Tanks,
Amalgamator, Storage tanks, Packaging
units, Compressor, Stand by-Generator,
Water de-Ioniser, Wrapper, Vehicles,
Furniture, Office Equipment ,Lab
equipment

STAFF REQUIREMENT At Start-up : 12 people (1 x Business

Manager, 1 x Production supervisor, 1 x
Office manager, 1 x Lab technician, 4 x
Factory staff, 2 x Sales Reps, 1 x
Driver/messenger, 1 x Security)
TARGET MARKET Wholesalers, Distributors, Retail Chain
Stores, Convenience stores, Hotels,
Pharmacies, Restaurants, Government
departments, Health centres, Auto
industry, Direct Sales Clubs; Export
market
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MARKET POTENTIAL Local market estimated at over
P500Million per year ( CSO External
Trade Stats. Digest); Regional market
exceeds P100Billion per annum.

COMPETITION Imported Brands (Lux, Sanex, Sunlight,

Omo, Surf, Ariel) , Local products
(Kgalagadi Soap Industries
products,,Anba Chemicals, CapriChem,
KemTek),In-house Store
Brands(Choppies, Pick ‘n Pay, Sefalana,
Spar), Counterfeits

SALES STRATEGY Quality, price competitive products, Long

term supply contracts, Custom
manufacturing
MARKETING In-Store Product demonstrations, Specials
Promotions, Television Adverts, Radio
commercials, Newspaper Advertisement,
Magazine placements, Bill Boards, Event
Sponsorships, Social media platforms,
eCommerce functionality via website

COMPETITIVE ADVANTAGE Locally sourced Raw materials, SPEDU

incentives, Government Local
procurement policy, Reservations policy,

PROJECTED SALES Yr1 P5m, Yr 2 P8.9m , Yr 3 P10.7m,

Yr 4 P14m, Yr 5 P15.5m

LOAN REQUIRED P 3 800 000

LOAN PERIOD 7 Years

PROMOTER Mr. Bonnes M. Molosi (725-77777)

molosib@gmail.com

I. SUMMARY

This business plan envisages the establishment of a manufacturing plant for the
production of Soap and Detergents with a capacity of P 20million sales per
annum.
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The present local demand for the proposed products is estimated at over
P500million per annum with the regional export market potential estimated at
over P100Billion.

The Soap Plant intends to use locally available raw materials ( Used Cooking oil,
Beef Fat, Soda Ash, Salt) in the manufacture of its anchor products.

The government, through the Selebi Phikwe Export Development Unit (SPEDU),
has approved a raft of incentives to assist businesses with the appetite to take up
manufacturing in order to mitigate the ever expanding import bill, create
employment, diversify the economy and boost exports. It is clear from the size of
the import bill (+/-P50billion ) that Botswana is a lucrative market for foreign
produced products. The market EXISTS!

The SPEDU incentives include the following :

- 5% corporate tax rate

- Zero customs duty on imported raw material inputs
- Duty/VAT relief on selected items
- Government procurement of at least 30% of production
- Minimum 50 years land lease
- Preferential ICT rates
- Assistance with licenses and permits

These incentives are clearly meant to encourage the setting up of viable

manufacturing operations in the SPEDU region. They remove the traditional
excuses and pave the way for serious, committed, innovative companies to
engage in manufacturing activities that will positively impact the economy of the
region and, by extension, that of Botswana.

MEGA TRADE intends to fully utilize these incentives to set up a facility to

manufacture branded soap and detergent products in Selebi Phikwe.

MEGA TRADE plans to manufacture the following products :

1. Soap ( Bathing bar soap, Laundry soap, Hotel Hospitality soap, Body
wash, Shower Gel, Liquid hand soap)

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 2. Detergents : Air freshener, floor wash, multi-surface cream, kitchen
cleaner, bathroom cleaner, toilet cleaner, disinfectants, dish cleaner, car
shampoo, engine cleaner, tyre dressing.
3. Body-Care : Bubble bath, Bath Fizz, body lotion, hand cream, hand
sanitiser, Lip balm

Our plan is to develop and manufacture branded products for the retail market
and later branch into the industrial/commercial sectors via brand extension.
The plant will initially create employment opportunities for 12 people. 10 more
people will be employed by the end of the third year of operation. The business
is capable of providing jobs for more than 50 people.

The total investment requirement is estimated at P 3.8 million, to cover working

capital, plant and machinery.

II. PRODUCT DESCRIPTION AND APPLICATION

Detergent and Soap, are terms applied to materials, the solutions of which aid in
the removal of dirt or other foreign matter from contaminated surfaces.

Soap is derived from the combination of fats or oils with an alkali solution. The
resulting reaction, saponification, produces what is commonly referred to as
soap.

A Detergent is a product formulated from chemical constituents termed

surfactants, which perform the primary cleaning and washing action by reducing
the surface tension of water , which in turn boost the cleaning power of the
surfactant and other additives.

Detergents have proved to be effective in ‘hard’ water and cool or cold water,
whereas traditional soap is often encumbered under both conditions. The major
use of soap and detergent is in households for washing clothes, utensils and
various other surfaces. They are suitable for manual and machine use.

III. MARKET ANALYSIS

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MARKET STUDY

1. Past Supply and Present Demand

The country’s requirement for soap and detergents has been met mostly through
imports and minimal domestic production. However, accurate data on domestic
production for domestic consumption of the products is not readily available.
Since imports are considered a proxy for demand gap (i.e. the gap between
domestic production and domestic demand), import data (Statistics Botswana
Trade stats) is used to estimate the demand for soap and detergents. The
following table indicates the magnitude of imports in this category.

IMPORTS OF SOAPS AND DETERGENTS

Year Imports (P) Quantity (Kg)

2010 350 951 438 26 919 172
2011 410 450 942 29 492 670
2012 462 768 510 29 061 961
2013 477 789 274 31 224 539
2014 452 519 912 33 713 555
2015 516 663 453 31 283 785
2016 499 739 369 39 641 987
2017 471 082 464 31 403 673

Source : (Statistics Botswana)

External Trade Stats

The foregoing report indicates that more than 30 000 000kg of Soap and
Detergent is imported into Botswana annually. At the height of our production in
Year 5 our plant makes 624 000kg of Soap and Detergent per year. A mere 2.1%
of imports in this sector.
With incisive, innovative and effective marketing strategies MEGA TRADE
could double production and claim 5% of the market.

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The Statistics Botswana report clearly indicates the magnitude of the import bill
in this sector. It clearly shows that there is space for innovative local producers to
operate in and assist the government policy on import substitution and thus the
reduction of the import bill.

2. Projected Demand

The major factors that affect the demand for detergent and soap include
income, brand recognition, competitive pricing.

The rate of urbanization in Botswana has continued to grow for the past decades.
As more people experience urbanization, their tastes and awareness of products
available to them is sensitised.

The import figures above suggest that the demand for soaps and detergents will
continue to grow . This will continue to be the case until such time that local
production is galvanized to stem the tide of imports.
As income levels increase, the demand for these products will continue to
increase.

3. Pricing and Distribution

The average retail price of different brands of imported and locally produced
laundry bar soap is P5.50 per 250g bar, bathing soap P6.00 per 200g bar, P14.00
per 150ml bottle of air freshener and P18.00 per 50ml bottle of hand sanitiser..
Allowing margin and rebates for wholesalers and retailers , the estimated factory
gate price of the products for the envisaged plant is set at :

Laundry Bar 250g - P 4.00

Bathing Soap 200g - P 4.00
Air freshener 150ml - P 8.00
Sanitiser 50ml - P10.00

These are market penetration pricing strategies. They are low enough to allow
our products to achieve recognition and market penetration in a fiercely
competitive industry.

MEGA TRADE intends to focus exclusively on the manufacture of Fast Moving

Consumer Goods and allow the large distributors to carry our products to market.

8
CA Sales, Global, Sefalana and other major distributors will be engaged as
partners to enable Mega Trade products to reach consumers within the country
and the region.

4. S.W.O.T. ANALYSIS

i. Strengths

a. Manufacture of high quality products

b. Government promotion of uptake of locally manufactured
products
c. Use of locally derived raw materials in anchor products

ii. Weaknesses

a. Industry dominated by huge multinational corporations

b. Reliance on imported raw material inputs in ancillary products
c. Exposure to currency fluctuations

iii. Opportunities

a. Growing middle class locally and in the rest of Africa

b. Growing emphasis on environmentally friendly products
c. Government support and incentives for manufacturers
d. Growing online customer base with increased opportunities for
e-commerce sales

iv. Threats

a. Reduced consumer spending in an uncertain economic climate

b. Rising input costs
c. Exchange rate volatility

5. COMPETITION

9
 The competition in the Soap and Detergent industry is fierce. The sector is
dominated by a few giant multi-national corporations including Unilever,
Proctor & Gamble, Johnson & Johnson, Colgate Palmolive and Reckitt
Benckiser. These are huge companies with serious deep pockets and brand
recognition. They have established their core brands for decades. These
ubiquitous brands include Sunlight laundry soap, Lux, Palmolive, Air-
oma, StaSoft, Vaselin and others. They own 80% of the soap and detergent
sector.

There are a few local manufacturers who scramble for the smaller part of
the pie. These include Kgalagadi Soap Industries (KSI), KemTek, Yarley
Cosmetics.
- KSI isthe oldest local manufacturer in the sector. They have been around
since 1989. Their flagship brand is Marang bar soap which is available in
most retail outlets. The company has recently gone through a
reorganization and subsequently expanded its brand offering. They have
added Foam bath, Dishwash liquid and Liquid hand soap to their list. But
most of their products are exported to Zimbabwe.
- KemTek specializes in manufacturing Cosmetic products. Most of their
products are available in local retail outlets. They export to South Africa
and Zimbabwe.
- Yarley is a small local manufacturer producing predominantly Hair care
products.

Retail chains also contract out the manufacturing of their In-house brands.
Spar, Pick ‘Pay, Choppies all have their own in-house brands. But the
manufacturing of these items is done outside Botswana.

The recent proliferation of imported cheap counterfeits from the East Asia
has caused a lot of concern in the industry. These illegal products could
distort the market if the authorities do not act swiftly to stop their entrance
into Botswana.

IV. PLANT CAPACITY AND PRODUCTION PROGRAMME

1. Plant Capacity

A plant with annual capacity of 500 tons per year of laundry soap, bathing soap
and detergent is envisaged on the basis of a production schedule of 264 working
days per annum and a single shift of eight hours a day. The plant capacity is
determined by considering both existing and unsatisfied demand and economy
of scale limitations.
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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 35%, and will grow to 50% and 60% in the second
and third year respectively. Beyond year 3 the plant will be operating at near
maximum capacity.

Year 1 2 3
Capacity utilization (%) 35 50 60
Production (tons) 187 260 300

V. MATERIALS AND INPUTS

A. RAW AND AUXILIARY MATERIALS

According to Statistics Botswana, the country imports 20 million litres of

Cooking oil per annum at a cost of P250 million. 70% of this quantity ends up as
waste cooking oil after use. The disposal of this used oil into the sewerage
system, landfills and dangerous human re-use poses serious environmental
hazards.
MEGA TRADE has acquired proprietary rights to a RE-CYCLING system that
cleans the used cooking oil via re-filtration and brine wash. The end result is
clean, CHEAP feedstock suitable for use in the manufacture of laundry soap.

LAUNDRY BAR SOAP

Raw materials required for the production of laundry bar soap are Used cooking
oil, caustic soda and soda ash . Used cooking oil, which accounts for 70% of
inputs is readily available from restaurants, hotels and local oil collectors. Soda
ash will be acquired from BotAsh in the Sua Pan. Caustic soda will be imported
from South Africa or China. Packaging material for the soap is required and will
be sourced both locally and from foreign suppliers.

BATHING SOAP

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The raw material inputs for bathing soap includes Beef Tallow, caustic soda in
addition to emmolients, soothers, moisturisers and fragrances. Beef tallow is
available from BMC and local butcheries. The rest of the ingredients are
imported items.
Packaging for bathing soap is very important as it is usually the first thing that
catches the prospective customers’ eye and influences purchasing.

DETERGENT LIQUID

Detergent liquid covers a wide array of products. We will initially concentrate on

producing simple water-based products like Air freshener and Hand sanitizer.
These are low cost-high return items.
The basic formulation for detergent liquids is similar for most products in this
category. The difference is usually colour, smell, consistency and the addition of
a specific active ingredient.
The main raw material inputs are surfactants, foamers, thickeners, colourants,
fragrance, alkali and acid. These are all imported ingredients. Water forms 80%
of most detergents.

Retail consumer detergents involve a lot of care and attention to detail. The
branding and packaging has to be of the right quality in order to appeal to
consumers and thus challenge traditionally entrenched imported brands. Once the
production plant has gained enough traction, the manufacture of several selected
branded retail products will commence.

The core Raw materials like Waste Cooking oil, Beef Tallow, Soda ash and Salt
will be sourced locally as and when required. The rest of the inputs will be
imported from China and South Africa on a 6-monthly basis.

B. UTILITIES

The envisaged plant will be set up in a manner that will optimize the use of
utilities.
Electricity, gas, water, telephone are the basic utilities required for the plant.
The total cost of utilities is estimated at P 50630 per month.

Water P 4000
L P Gas P 15000
Electricity P 26880
TeleComm P 4750

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VI. PRODUCTION AND TECHNOLOGY

Over a period of 10 years, the promoter has developed over 30 proprietary

chemical formulations for detergents and body care products (see Appendix).
These formulations were developed under Hast & Bast Investments (Pty) Ltd.
which is wholly owned by Mr. Boniface Molosi (Promoter).

The proprietary formulations were developed, at substantial cost, with the

assistance of a qualified chemist and were then tested in the market. Hast & Bast
successfully won several tenders for the supply of detergents to institutions like
Botswana Defence Force (SSKB), Botswana Prison Service, University of
Botswana, Kweneng District Council, Ramotswa sub-council, Kanye council,
Tlokweng sub-district council, Cleaning services companies, fuel stations and
restaurants (see Appendix ). The acceptance of our products by these various
organisations proved to us that they were of suitable standard and quality.
Unfortunately lack of funds and resources curtailed the Hast& Bast project. But
we were of the opinion that we were on to something that needed to be
investigated further.

Lionary (Pty) Ltd will inherit, at cost, all the proprietary formulations developed
by Hast & Bast. Thus the company will hit the ground running and will not have
to start from scratch with the development of its own formulations. This will go a
long way into assisting the manufacturing processes in the early stages of
operation.

1. Production Process

Laundry Bar Soap and Bathing Soap

The manufacturing process for laundry bar soap and bathing soap are similar.
Both soaps are produced using the same plant. The difference is in the
constituent ingredients and the refining process.
The bar soaps are produced using either the batch process system or the
continuous process. Our preferred method will be the batch process as it allows

13
for the introduction of manual semi-skilled labour into the process which in turn
leads to more employment.

The production process involves the following phases :

Saponification : - Oils, fats and alkali bases are mixed together at high
temperature. The resultant reaction produces soap. The soap is neutralized under
high heat and poured into forming moulds to dry.

Mixing : - The dried soap is fed into the mixing chamber. Additional oils,
colouring and fragrances are added as the soap is being thoroughly amalgamated.

Plodder : - The mixed soap is put through a compactor. Air pockets are
removed.

Extruder : - The compacted soap is forced through a sized aperture and

run through a long chamber to create consistency in size and shape.

Cutting : - Soap is cut to predetermined lengths.

Stamping : - Shape moulds are used to shape the soap according to

customer preferences

Packaging : - There are various packaging units used depending on the

end product and its eventual destination.

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Liquid Detergents

Liquid detergents are produced via blending of de-ionised water and the various
raw materials specific to the product. The blending takes place in a number of
motorised chemical blending pots.

Stainless steel Single wall Mixer : - This mixer is used for cold
water blending where there’s no need for heat application to assist in product
formulation

Oil- Jacketed Blender : - The machine is fitted with heating coils in

its walls which are filled with industrial oil. It is used for products that require
the application of heat to catalyse the chemical reaction which turns the raw
materials into a specific end product.

Heavy Duty Blender : - There are products whose end result is a

thick gel. The heavy duty blender is used to mix those high viscosity products.

2. Technology

15
It is important to identify suitable potential suppliers of production equipment
and accessories. A number of issues have to be taken into account in selecting a
supplier. These include experience, availability of machinery, reliability, back up
services, competitive prices.
We have identified the following companies as our potential suppliers :

Zhauns – South African company

BFOSA – South African company
Jones Industrial – South African company
Jagdish Industrial – India
Kaifeng Jasun Industries - China

Three of these companies are located in South Africa. For balance and
comparison we have also included companies from India and China. These
entities make their own machinery and can custom manufacture for clients
depending on their specific requirements. They offer back-up repair and
maintenance services. Modifications to equipment , as production capacity
increases, is readily available from these companies. They also offer competitive
prices, installation and training.

VII. CAPITAL EQUIPMENT AND LOCATION

1. Machinery and Equipment

The list of machinery and equipment required by the envisaged plant is given in
Table A in the Appendix. The total cost of machinery and equipment with the
envisaged capacity is estimated at P 1 036 450.

2. Proposed Location

The proposed manufacturing facility will be located in Selibe Phikwe within the
SPEDU business hub.
Selibe Phikwe is a full fledged urbanized location with all the requisites for a
manufacturing operation. Production, warehousing and office facilities are
readily available at reasonable rates. Water, electricity, gas and communications
facilities needed for the establishment and operation of the Soap and detergent
plant already exist in the proposed location. Road and Rail access from
production plant to the market is of sufficient and acceptable standard.

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VIII. MANPOWER AND TRAINING REQUIREMENT

A. MANPOWER REQUIREMENT

The plant will require 15 employees in the first year of operation. The number
will increase to 23 by the third year. The monthly payroll costs is initially
estimated at P51 980 . (see Table xx - Appendix)

 Business Manager – responsible for the general management of the Plant

 Production Supervisor – schedule, monitor and manage the production
processes
 Office Administrator – responsible for administrative, personnel and
financial issues of the company
 Laboratory Technician – Quality control specialist
 Sales Representatives – Ensures company products are visible and
available to customers
 Factory Staff – responsible for the transformation of raw materials into
finished goods
 Driver Messenger – ensures delivery of raw materials and finished goods;
runs office errands
 Security Guard – secures the plant, premises and company property.

B. TRAINING REQUIREMENT

We have selected modular plant and machinery which is simple to operate. It

does not require any complex skills and lends itself to a more labour intensive,
semi-skilled environment. On site training programs are, therefore, believed to be
adequate for key production, maintenance and quality control personnel.
Personnel from machinery and technology suppliers will carry out the training
during the plant commissioning and performance testing period. The total cost of
training is estimated at P30 000.

IX. FINANCIAL ANALYSIS

17
The financial analysis of the soap and detergent project is based on the data
presented in the previous sections and the following assumptions:-

Source of finance CEDA Loan

Loan period 7 years
Interest charge 7.5%
Repayment Holiday 12 months
Accounts receivable 60 days
Accounts payable 30 days
Raw material (Local) 14 days
Raw material (import) 75 days
Finished goods 30days
Cash In Hand 180days

A. TOTAL INITIAL INVESTMENT AND OPERATIONS COST

The total initial investment cost of the project including working capital is
estimated at P3 800 000.

The analysis of the total investment cost is as follows :

1. Factory Plant & Equipment - P 1 036 450 (Table A)

2. Office Furniture & Equipment - P 141 660 (Table A)

3. Raw materials - P 1 309 842 (Table B)

4. Payroll - P 311 880 (Table C)

5. Marketing & Promotions - P 149 400 (Table E)

6. Vehicle Expenses - P 190 710 (Table D)

7 Utilities - P 303 780 (Table F)

8 Operational Overhead - P 354 000 (Table G)

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B. PRODUCTION COST

We have adopted a staggered approach to our production schedule. Year 1 the

plant will operate at 35% capacity. Year 2 capacity will go up to 50%. Year 3
60%. Beyond year 3, the plant will operate at near full capacity.

The annual operation cost at these various operation capacities is indicated as :

Year 1 - P 5 581 056

Year 2 - P 8 616 378
Year 3 - P 9 903 708
Year 4 - P 12 617 010
Year 5 - P 13 978 873

C. IMPLEMENTATION SCHEDULE

1. Registration of Business - 14 days

2. Acquisition of Business licence - 2 weeks

3. Warehouse lease - 2 weeks
4. Utilities connection (water, electricity, tel) - 1 month
5. Machinery/Equip Order and shipping - 3 months
6. Warehouse prep for machinery installation - 1 month
7. Purchase of Raw materials and supplies - 3 weeks
8. Machinery Installation and testing - 1 month
9. Training of Production staff - 2 weeks
10.Partitioning for office space - 1 week
11.Trial Production run - 1 week
12.Commencement of Production - 6 months

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D. FINANCIAL EVALUATION

Income statements
Cashflow Statements
Balance Sheet
Break-Even Analysis
Rate of Return

Projections for the above financial statements have been prepared for a period of
5 years. They are attached in the Appendix.

The investment cost and income statement projections are used to project the
pay-back period. The project’s initial investment will be fully recovered within 7
years.

X. ECONOMIC BENEFITS

The government of Botswana has created several policies to address economic

diversification and encourage government and private sector entities to purchase
goods produced locally. The Economic Diversification Drive (EDD), Local
procurement programme and Reservations policy are meant to address the
current economic quandary.

The stubborn import bill has remained above P50billion indicating that the
various government policies meant to arrest it are yet to bear fruit.

The economy of the SPEDU region suffered a catastrophic decline

with the closure of the BCL mine. The mine was the biggest employer in the
region and the largest contributor to the local economy. The region desperately
needs businesses to set up and offer employment and economic opportunities to
its people.

The soap and detergent project will contribute towards reduction of the import
bill through import substitution. The project will initially create employment for

20
15 people and by the fifth year that figure should rise to 30 employees. The
project can be scaled up to create employment for over 60 people.

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