10. PROFILE ON PRODUCTION OF GLASS BOTTLES AND TUMBLERS PDF

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110. PROFILE ON PRODUCTION OF GLASS BOTTLES AND TUMBLERS 110-2 TABLE OF CONTENTS PAGE I. SUMMARY 110-3 II. PRODUCT DESCRIPTION & APPLICATION 110-3 III. MARKET STUDY AND PLANT CAPACITY 110-4 A. MARKET STUDY 110-4 B. PLANT CAPACITY & PRODUCTION PROGRAMME 110-7 IV. RAW MATERIALS AND INPUTS 110-...

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110. PROFILE ON PRODUCTION OF GLASS BOTTLES AND TUMBLERS

110-2 TABLE OF CONTENTS

PAGE

I.

SUMMARY

110-3

II.

PRODUCT DESCRIPTION & APPLICATION

110-3

III.

MARKET STUDY AND PLANT CAPACITY

110-4

A. MARKET STUDY

110-4

B. PLANT CAPACITY & PRODUCTION PROGRAMME

110-7

RAW MATERIALS AND INPUTS

110-8

A. RAW & AUXILIARY MATERIALS

110-8

B. UTILITIES

110-9

TECHNOLOGY & ENGINEERING

110-10

A. TECHNOLOGY

110-10

B. ENGINEERING

110-11

MANPOWER & TRAINING REQUIREMENT

110-13

A. MANPOWER REQUIREMENT

110-13

B. TRAINING REQUIREMENT

110-15

FINANCIAL ANALYSIS

110-15

A. TOTAL INITIAL INVESTMENT COST

110-15

B. PRODUCTION COST

110-16

C. FINANCIAL EVALUATION

110-17

D. ECONOMIC BENEFITS

110-18

IV.

V.

VI.

VII.

110-3

I.

SUMMARY

This profile envisages the establishment of a plant for the production of glass bottles and tumblers

with a capacity of 5 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 at 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 Birr 27.62 million, out of which Birr 19.06 million is required for plant and machinery.

The project is financially viable with an internal rate of return (IRR) of

23

% and a net

present value (NPV) of Birr 16.14 million discounted at 8.5%.

II.

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 cc to 1,000 cc. Typical sizes are 50,100,250,330,500,630,750 and 1,000 ccs.

Tumblers are flat bottom, straight clear drinking glass without handles. They are usually produced as 250 cc glasses.

110-4

III.

MARKET STUDY AND PLANT CAPACITY

A.

MARKET STUDY

1.

Past Supply and Present Demand

The demand for glass bottles and tumblers 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, 14353000 bottles and 1985000 tumblers are produced during the period under consideration.

Table 3.1 DOMESTIC PRODUCTION OF GLASS BOTTLES AND TUMBLERS ('000 PIECES)

Year

Glass

Tumblers

Bottles 1996

11706

4180

1997

11030

880

1998

18997

2731

1999

23134

-

2000

16078

-

2001

16233

149

2002

12362

-

2003

2647

-

2004

16658

-

2005

14681

-

14353

1985

Average

Source: CSA, Statistical Abstract, Various Issues

110-5

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 19137000 and 7940 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 21099000 and 8754000 pieces, respectively.

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 Tables 3.2.

110-6 Table 3.2 PROJECTED DEMAND FOR GLASS BOTTLES AND TUMBLERS (PIECES)

Bottles

Tumblers

Market Year

3.

Share

Market

of

Share

Projected

Envisaged

Projected

of Envisaged

Demand

Plant

Demand

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

12317757

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

41774577

10443644

17332321

12999241

2022

43863306

10965826

18198937

13649203

Pricing and Distribution

The prices of glass bottles and tumblers vary depending on size and quality. On the average, the unit prices of a bottle and a tumbler are Birr 5 and Birr 3, respectively. Allowing margin for

110-7 whole sale and retail, the unit factory gate prices of a bottle and a tumbler for the envisaged plant are estimated at Birr 3.50 and Birr 1.5 , 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.

B.

PLANT CAPACITY AND PRODUCTION PROGRAMME

1.

Plant Capacity

Based on demand projection shown is Table 3.2, and capital requirement, the envisaged glass bottles and tumblers plant will have a capacity of producing 5 million pieces of glass bottles and 6 million pieces of tumblers per annum.

The proposed plant is an energy intensive unit where large quantity of fuel oil is required in order to operate the glass melting furnace. Such a plant is required to operate continuously for 24 hours a day and for 350 days a year. Therefore, the proposed plant operates three shifts a day.

2.

Production Programme

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 programme.

110-8

Table 3.3 PRODUCTION PROGRAMME

Description

Production Year

Unit 2008

2009

2010

2011-2022

Glass Bottles (' 000)

Pcs

3,000

4,000

4,500

5,000

Tumblers ('000)

Pcs

4,200

4,800

5,400

6,000

Capacity Utilization

%

70

80

90

100

IV.

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 Birr 5,293,011 of which Birr 78,865 is required in foreign currency, and the remaining Birr 5,214,146 is in local currency.

110-9

Table 4.1 RAW AND AUXILIARY MATERIALS

Description

No.

Cost in Birr (‘000)

Qty. FC

LC

TC

A. RAW MATERIAL

1

Silica sand

9,190

-

454.90

454.90

2

Limestone

2,510

-

303.71

303.71

3

Soda Ash

2,796

-

4194.00

4194.00

4

Cullet

2,538

55.836

55.836

Sub – total

-

-

5,008.446

5,008.446

B. AUXILIARY MATERIAL

1

Dolomite

488

-

134.200

134.200

2

Ceramic Color ( Enamel)

7.6

78.865

-

-

3

Packing Materials

71.5

71.5

78.865

205.0

205.0

78.865

5,214.146

5,293.011

Sub-total

Total Cost

As req -

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 Birr 12,363,036.

110-10

Table 4.2 UTILITIES REQUIREMENT

No.

Utilities

Unit

Qty.

1.

Electric power

KWh

3,010,000

1,425,536

2.

Water

M3

180,000

990,000

3.

Furnace oil

lit

1,750,000

9,947,500

Grand Total

VI

TECHNOLOGY AND ENGINEERING

A.

TECHNOLOGY

1.

Production Process

Total Cost (Birr)

12,363,036

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 1,5000c.

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.

110-11

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. [email protected] Country of orgin: Italy

B. Muhak Co., LTD Add: 4G9-6,Pong-amdong, Hoewon-gu,masanKyongnam Tel: 0551-293-3161 Fax: 0551-296-2200 Home page: WWW.muhak.Co.kr.

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 Birr 19.061 million, out of which about Birr 17.280 million will be required in foreign currency. The detailed list of machinery and equipment is given in Table 5.1.

110-12 Table 5.1 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

1. Oil system

Set

1

2. LPG system

Set

1

3. Electrical System

Set

1

4. Cooling system

Set

1

1. Office furniture

Set

6

2. Vehicles

Pcs

2

B. Installation costs

C. Equipments

2.

Land, Building and Civil Works

The envisaged plant will require a total land area of 4,000 m2, out of which 2,000 m2 will be covered by factory and office buildings, stores, etc. The total cost of building and civil works, estimated at a rate of Birr 2300 per m2, will be Birr 4.6 million. Cost for holding of land at a lease rate of 0.1 Birr per square meter for 80 years of

110-13 lease is estimated at Birr 32,000. Therefore, the total cost for land holding, building and civil works will be Birr 4.632 million.

3.

Proposed Location

Konso s/ woreda and Surma woreda which are found in Konso s/ woreda and Benchmaji zone respectively are considered as the potential woredas for the envisaged project due to their access to raw materials.

From the above woredas, Karat town, the center of Konso s/ woreda, is selected to be the location of the envisaged plant. Moreover, the location of the plant should be at a place where the workers conveniently commute or take up their lodgings in view of the fact that the plant is operated for 24 hours a day.

VI.

MANPOWER AND TRAINING REQUIREMENT

A.

MANPOWER REQUIREMENT

The total manpower requirement of the envisaged project is 76 persons. manpower and the estimated annual labour cost are indicated in Table 6.1.

The proposed

110-14

Table 6.1 MANPOWER REQUIREMENT AND LABOUR COST)

Sr.

Description

No.

Req.

Monthly

Annual Salary

Qty.

Salary (Birr)

(Birr)

1.

General Manager

1

3,000

36,000

2.

Executive Secretary

1

1,000

12,000

3.

Plan and Statistics Head

1

1,800

21,600

4.

Production and Technical Manager

1

2,500

30,000

5.

Commercial and Marketing Manager

1

2,300

27,600

6.

Finance Manager

1

2,300

27,600

7.

Administration Manager

1

2,500

30,000

8.

Personnel

1

1,500

18,000

9.

Secretary

3

800

28,800

10.

Glass Technologist

1

1,800

21,600

11.

Production Workers

30

400

144,000

12.

Technicians

10

600

72,000

13.

Sales man

4

500

24,000

14.

Store Head

1

500

6,000

15.

General Accountant

2

450

10,800

16.

Finance and Budget Accountant

2

450

10,800