Investing in Woven Sacks Production

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SMALL BUSINESS SOLUTIONS

Uba Godwin

The National Bureau of Statistics (NBS) released the inflation figure for May 2016 on June 18.
The Economic Intelligence Group forecasts headline inflation rate (year-on-year) rose to 14.7% in May 2016 from 13.7% recorded in April 2016. The inflation rate has been on an increase since 2015.
The upward momentum in headline inflation in May reflected increases in both foods and core consumables.
With a 51.8% weighting in the inflation basket, the food component has been responsible for a sizeable amount of overall price pressure. Specifically, increases in the prices of cereals, fruit, meat, fish, dairy, tubers, tomatoes, and vegetables are the main culprits behind the acceleration
The review of petrol pump price is likely to have mounted further pressure on May inflation numbers, driven by the transport component and the electricity, gas and other fuels components, which together contribute 23.2% to the CPI weighting.
Continued weakness in the Naira, following the announcement of the deregulation of the downstream petroleum sector has also placed significant pressure on the inflation rate. This will have filtered into consumer prices as some firms may have sourced scarce foreign exchange (FX) from the parallel (black) market to import intermediate goods to maintain operations.
The regulation of foreign exchange market by Central bank of Nigeria, which saw Naira depreciating further against other major currencies with dollar exchanging for N358 to a Dollar is a an indication that Nigerian economy is due for reformation. Nigeria must change to a producing nation rather than its massive consuming status at present. We must invest into Agriculture, small and medium scale manufacturing industries; diversify into other solid minerals and technology.
Packaging is one of the requirements in agriculture and industrial projects. Here we discussed the production woven sacks which are very important for industrial projects developments.

HDPE/PP packing materials have become popular on account of their inertness to chemical, moisture and resistance to fungus and rotting. They are light in weight and withstand stringent conditions than conventional bags. Compared to jute the prices are stable and competitive.

Market Potential

The major users of HDPE/PP woven sacks are fertilizer, sugar, animal feeds, and cement. Starches, pesticides, detergents and many other industrial bulk items are also being packed in woven sacks. HDPE strips also used for deck chairs, etc. PP strips used for marine rope manufacturing.
With the introduction of circular looms, cost of production has come down drastically and making these sack more preferable now. Demand is ever growing with more and more factories preferring woven sacks for packaging. 90% of the production is consumed in the domestic industry while a little is being imported to border countries. With small and medium scale industries/ agricultural projects springing up, the demand also increases.
The market cuts across the whole parts of the country and neighboring African countries.

Manufacturing Process

First the tape is produced through the tape extrusion machine.
This tape is fed to knitting machine to form cloth on circular weaving machine.
Cloth thus formed is cut to required dimensions and stitched to size.
Printing is also done as per requirement and plan according to IS standards to meet customers’ requirements.

Location of the Project
The project can be located in any part of the country either in the Northern and Southern Nigeria.

Project Estimation
Unit runs on single shift 25days per month; Wastage of raw materials estimated is around 2%; Number of bags per kg depending on the density used; uninterrupted power availability is assumed, therefore there should adequate arrangement for power generating set and other alternatives to power..
450MT production capacity is estimated to be economically viable for a small scale industry.

Raw-Materials
40T HDPE/PP granules; printing accessories; packing accessories. These raw materials are all available within the country.

Utilities
The project requires 300kva generator set, 11kva transformer; Electricity & water

Financial Implications
The cost of the project depends wholly on the scale the investors want to run for a start. Generally, the feasibility studies will be carried out, putting the proposed location into consideration in determining the actual cost of establishing the proposed project. You can run the project on small, medium and large scale.

Investment Analysis
Payback Period: Within 2years
Rate of Returns on Investment: 40.4 %
Break Even Point : B.E.P 55.0%
Profitability: The project is very profitable and raw materials could be obtained within the country.

Detailed structure of the production processes, Including personnel and manpower requirements, Plant layout, Raw materials sourcing, Marketing Techniques etc, will be embodied in a Comprehensive Feasibility Report for interested investors.

Uba Godwin
Global Trust Consulting,
56, Ishaga Road (1st floor),Surulere, Lagos
Tel: 08034494437, 08023664368, 09093939140
E-mail: ubagodwin@yahoo.com