1.

Executive Summary

This Business plan is prepared for ---------------------------, with the aim of providing the four
liters and sixteen liters of buckets for low, medium and large scale paint manufacturers. This
business will be established in -------------------------, with a capital expenditure of 650,000 USD
to produce the 4 and 16 liters buckets for paint manufacturing companies. This business proposal
should be considered for multiple important factors it will solve and some being.

 This business plan will reduce the import of this 4L and 16L buckets making it available
in the local market for paint manufacturers.
 The construction sectors rapid growth will undoubtedly make the paint manufacturing
industry grow hence the demand for this buckets growing with it.
 The flexibility of induction molding machine will allow us to also produce various
molded products further expanding our products and services.
 This project being a raw untapped local market and all I mentioned above are among the
various factors to be considered when taking this business proposal into consideration.

The business plans to produce 4L and 16L paint buckets with the aim to expand our services to
various molded plastic products such as recyclable cups, road cones, plastic bottles, trash cans,
mop heads and flower pots. Our company is committed to manufacturing molded plastic
products to low, medium and large scale manufacturers in need of specifically designed molded
appliances and components. In order to start the project we estimate the cost to be onwards of
total expenditure to be USD 275,000 and total working capital of USD 375,000 which we plan to
finance through bank loans.

An attempt has been made to assess, identify and measure crucial project valuation factors in this
feasibility study. The project background, the project marketing, the project technical,
organization and management, financial economic, social and environmental aspects have been
critically assessed. The feasibility study results reveal that this project will be economically
viable, financially liquid, socially desirable, environmentally sound and institutionally capable.
2. Project background and basic idea
 2.3 Background

When you take a look at human history the major way historians used to separate the ages of
human civilization is determined by what type of tools the for mentioned humans applied on
their daily activities. The Stone Age for example was a broad prehistoric period in which the
primary tools human used was made by sharpening stone. This tool however was inefficient, non
malleable, hard and brittle.

After a long and slow progression of human evolution (2.5mill) however this period ended in
2000BC with the brief but monumental process of metallurgy for fabrication of bronze entering
humans to a more advance era known as the Bronze Age. Bronze has proven to be a much better
companion than the stone in it the material nature being malleable, hard and easy to work around
since it can be melted and reshaped with ease.

The Bronze Age ended abruptly around 1200 B.C. in the Middle East, North Africa and
Mediterranean Europe. Historians don’t know for sure what caused the Bronze Age collapse, but
many believe the transition was sudden, violent and culturally disruptive. Major Bronze Age
civilizations, including Mycenaean Greece, the Hittite Empire in Turkey and Ancient Egypt fell
within a short period of time. Ancient cities were abandoned, trade routes were lost and literacy
declined throughout the region. https://www.history.com/topics/pre-history/bronze-age

The abrupt ending of the Bronze Age led to our most recent era the Iron Age. Iron was much
more common than copper and tin but had higher melting point than bronze. This meant they
couldn’t cast tools with iron the same way. By heating iron however they can make it softer and
use hammer to shape it. Overtime people developed ways to increase the temperature by using
bellows to pump oxygen. This allowed people to cast objects out of iron, and eventually carbon
was added to produce steel. Additionally they discovered that iron tools can be sharpened when
they lost their edge rather than needing to recast the object.

This seemingly minor advancement to the way we use tools has propelled human civilization to
unprecedented heights improving every aspect of human life from agriculture, military,
construction and so many factors. This minor advancement has tripled the life expectancy of
humans in a manner of centuries from 10 -12 yrs to 30-36 yrs
https://www.sciencedirect.com/topics/social-sciences/iron-age

The same case can be made for molded plastic products. Though a brief history in the grand
scale of human civilization, molded plastic products have managed to be used in every aspects of
human life from smart phones to syringes, to its wide use as insulation in grid systems this minor
advancement in our nonstop quest to reach for the stars has transformed the way we consume
products and give services.

And to think it all started in 1868; John W. Hyatt patented a process that produced a product he
called celluloid, which he used as a replacement for ivory in billiard balls. Just four years later, in
1872, he became the first to inject hot celluloid into a mold. He and his brother Isaiah patented
an injection molding machine that used a plunger to inject plastic through a heated cylinder and
into a mold. Some of the early products created using celluloid included collar stays, buttons and,
as the hairstyles of the day grew longer, hair combs.

The original injection molding process remained by and large unchanged until 1946 when World
War II created a huge demand for inexpensive, mass-produced products. James Hendry built the
first screw injection molding machine and revolutionized the plastics industry. Suddenly all
kinds of things were possible that had been out of reach before, like adding color to virgin
material and pre-mixing before injection. Even today, roughly 95% of all molding machines now
use screws to efficiently heat, mix and inject plastics into molds.

Patent drawings for the Hendry injection molding machine.

A Short History of Injection Moulding (avplastics.co.uk)

1955-65 In the mid-1950s a number of highly useful new thermoplastics become available.
High-density polyethylenes produced by the Phillips process and the Ziegler process are
marketed and shortly followed by the discovery of polypropylene. Acetyl, ABS and
polycarbonates are also developed.
1956 W. H. Willert reciprocating screw plasticator patent issued – the next development from the
extrusion system (see fig.below). In reciprocating systems the screw moves backwards and
forwards during the mould cycle. After mixing, the screw stops turning and the entire screw
pushes forward, acting like a plunger for injecting material into a mold. During plastication, the
screw moves backward against the hydraulic back pressure.

Drawings for the Willert reciprocating injection molding machine.

1960s Polysulphones, the PPO-type materials, aromatic polyesters and polyamides introduced.

1970s James Watson Hendry went on to develop the first gas-assisted injection molding process,
which permitted the production of complex, hollow articles that cooled quickly. This greatly
improved design flexibility as well as the strength and finish of manufactured parts while
reducing production time, cost, weight and waste.
1972 Parts removal robots used in injection molding process.
1973 OAPEC oil crisis, First real point of considering dependency of plastics on oil and other
materials.
1979 Plastic production overtakes steel production.
1985 All-electric molding machine produced by Japanese firm.
1990 Aluminum molds first used widely in injection molding.

An example of a modern-day injection molding machine

Taking a closer look at Ethiopia our consumption of molded products has increased from during
the period 2001--2013 import of rigid plastic packing materials exhibits a significant growth. In
2002, import was only 73 tons and Birr 2.08 million in terms of volume and value, respectively.
However, in 2013 import has increased to 7,293 tons and Birr 342.59 million in terms of volume
and value respectively.

During the recent five years (2009--2013), in terms of volume, from the total import of rigid
plastic packing materials the great majority (on average 75.74%) is accounted by bottle
performs, followed by boxes, cases, creates and similar articles (16.34%), stoppers, lids, caps and
other closures of plastic (4.97%) and carboys, bottles, flasks and similar articles
(2.95%).Summary Feasibility Studies for Selected Sub sectors (ethiopianchamber.com)

From the above statistics we can conclude that Ethiopia’s consumption of rigid packaging plastic
products have been on an exponential increase nearly a 100 fold in the decades with virtually all
the demand being met through import.

Objective of the Business plan

Our objective will primarily be to provide the buckets needed for paint manufacturers with the
aim of reducing the imports and shortages this paint manufacturers face at affordable and
relatively lower prices than our competitors
With an environmentally friendly business model we plan to produce a recycling system for the
buckets we sell.

Once we achieve a stable growth we have plans to expand our business to not only paint
manufacturers but to other manufacturers in need of a molded products and to make products
used in our daily lives for example recycling bins, disposable cups, road cones, plastic appliences
so on and so on since the machine we import is a flexible setting allowing us to produce multiple
varieties and configurations of molded products.

Key to success

The key to success will rely on our ability to meet the demand and satisfaction of our
manufacturing customers, but we must also be aware that we are selling molded products and not
only buckets since the buckets selling to paint manufacturers market has a sizeable comparative
market to everyday used products like recycle bins, cones and many more… we must seize the
opportunity this flexible induction molding machine can give us.

Our objective should be to provide our customers good quality products at a reasonably lower
price while also adhering to specific standards and manufacturing qualifications.

In addition to providing quality molded products to our customers we must also be

knowledgeable of our paint manufacturing customers and the overall market shortcomings to
help out in our best manufacturing capabilities to fill these shortcomings.

Our goal should be to get our paint manufacturing customers the buckets they need in the local
market coherent to the quality standards of the international market, once we achieve this goal
we will expand our business to other molded products and solidify our position to get the lion
share over the market of molded products.

Market and Market study

. Project Marketing Concept Definition

The major needs and rationale of marking study that makes it valid both at strategic and
operational levels including the following:-
 A. Identifying sales opportunities and challenges, evolving sound strategy operational
strategies necessary to achieve the planed objective.
B. Making project-market relation transparent to all company stakeholders aimed at
promoting shared understanding.
C. Maintaining demand levels. To maintain the project existing and potential demand levels
in the background of project objective and available resources with the changing
marketing environment, prior knowledge of customer needs and requirements are very
important. Thus the marketing study enables to have knowledge of markets, customer and
their behaviors.
D. Outstanding and effective use of marketing mix. Marketing is a managerial process of -
market orientation with regard to investment decision. Without clear understanding of the
project, market volume, sales potential, the needs and requirement of customers, it is
hardly possible to determine production capacity, production program, production type,
design quality, quantity, price, placing and promotion decision. These are the major
determinants of activities and resources necessary as strategic and operational phases.
Hence marketing study plays significant role in the feasibility of any business investment
project.
Assessment of the marketing system

In this part an attempt has made to disclose and outline the major focuses of the study.
Accordingly, the target market structure, target customer groups, the situation of suppliers,
competition, the demand and supply situation and planed marketing strategy have been chosen.

The plastic molding manufacturing sector globally

The global injection molded plastics market size was valued at USD 258.2 billion in 2019 and is
expected to grow at a compound annual growth rate (CAGR) of 5.0% from 2020 to 2027.
Growing demand for plastic components from various end-use industries including automotive,
packaging, home appliances, electrical and electronics, and medical devices is anticipated to
drive growth. Modern innovations to minimize the rate of faulty production have enhanced the
significance of injection-molded technology in the mass production of complicated plastic
shapes. Volatile prices of major raw materials such as benzene, ethylene, propylene, and styrene
coupled with growing environmental concerns regarding their disposal are expected to hinder the
growth of the market for injection molded plastics over the forecast period. Companies focus on
developing injection molded plastics using bio-based counterparts to overcome such challenges.

Increasing construction spending, particularly in emerging markets such as Brazil, China, India,
Mexico, Russia, and South Africa is expected to drive product demand. Versatile properties of
finished products including better heat and pressure resistance make them more applicable to
various industries.

Government support in the form of tax benefits and financial incentives in China and India to
increase the Foreign Direct Investments (FDI) flow has helped develop the market for injection
molded plastics in these countries. In addition, they offer low-cost labor, which further reduces
the overall manufacturing cost for producers. However, this shift has resulted in overcapacity of
various plastics products, affected their prices.

However, slow down or halt in manufacturing activities to contain the spread of corona virus
pandemic has led to a decline in the consumption of injection molded plastics and negatively
impacted its demand in various applications across the globe. Manufacturers are experiencing
difficulties in running their production units owing to logistic restrictions and limitations on the
movement of people, which are further cascading the negative impact on the injection molded
plastics demand.

Raw Material Insights

In terms of revenue, polypropylene held the largest market share of more than 30.0% of the
overall demand in 2019, owing to its increasing consumption in automotive components,
household goods, and packaging applications. Growing polypropylene finished product
penetration in protective caps in electrical contacts and battery housings, food packaging is
anticipated to further drive its demand over the forecast period.
Polypropylene components are being widely used in food packaging and electrical contacts on
account of corrosion resistance and electrical insulation properties respectively. On account of
the aforementioned, the segment is expected to witness the highest growth over the forecast
period.

However, slow down or halt in manufacturing activities to contain the spread of corona virus
pandemic has led to a decline in the consumption of polypropylene and negatively impacted its
demand in various applications. Manufacturers are experiencing difficulties in running their
production units owing to logistic restrictions and limitations on the movement of people, which
are further cascading the negative impact on the product demand.

ABS emerged as the second major raw material for injection molded plastics of the overall
revenue in 2019. Rising ABS component demand in medical devices, automotive components,
electronic housings, and consumer appliances manufacturing is expected to drive its growth over
the forecast period.

Application Insights
The packaging segment accounted for more than 30.0% of revenue share in the market for
injection molded plastics in 2019. The finished products used in packaging undergo various
development phases to cope up with regulatory guidelines and end-user requirements. The
increased shelf lives of food products, better performance towards wear and tear, and durability
are a few requirements injection molded plastics need to meet for packaging applications.

Injection-molded plastics hold immense potential, particularly in the medical and automotive
industry. The industry is expected to witness the highest growth in the medical devices and
components sector. Optical clarity, biocompatibility, and cost-effective method of production are
expected to drive the demand for injection molded plastics in the medical industry.
Stringent regulatory scenario regarding medical-grade polymer used in the healthcare sector is
anticipated to positively impact growth in the sector over the forecast period. Rising preference
for biodegradable polymers among medical device manufacturers is also anticipated to create
profitable opportunities in the medical industry over the forecast period.

A strong shift in trend towards replacing steel with plastics in the automotive industry is
expected to spur the growth of the market for injection molded plastics over the forecast period.
Government regulations in the recent past have forced automotive manufacturers to use plastics
instead of other materials such as iron and steel.

Automobile manufacturers have been focusing on reducing the overall weight of vehicles to
improve fuel efficiency. Increasing the use of plastics to replace metals and alloys in automotive
components is expected to drive demand for injection molded plastics from the automobile
segment, thereby providing immense opportunity in the market for injection molded plastics in
the future.

Regional Insights
The Asia Pacific accounted for the largest revenue share of more than 35.0% in the market for
injection molded plastics in 2019. Increasing infrastructure spending coupled with growing
automobile demand in countries such as China, India, Indonesia, and Malaysia is expected to
drive the market for injection molded plastics in the region.

Major end-use industries such as electronics and automobiles are shifting their manufacturing
base to Asia Pacific countries such as India, China, Indonesia, and Thailand owing to low labor
costs. Government incentives in the form of tax benefits are offered to manufacturers in these
regions. This factor increases the requirement for manufacturing various automotive and
electrical parts, which, in turn, is expected to drive product demand over the forecast period.

Europe was one of the prominent markets for injection-molded plastics with a total demand
estimated to reach USD 92.3 billion by 2027. Europe’s non-food and beverages packaging
applications include cosmetics and toiletries, pharmaceuticals, and household chemicals.
Increasing demand for electronic appliances such as laptops and cellular phones particularly in
the U.K., Germany, and France is expected to drive demand from consumables and electronics
applications. The growth of the automobile industry in Europe is expected to further drive the
regional demand over the forecast period.

Global Injection Molded Plastics Market Report, 2020-2027 (grandviewresearch.com)

Plastic injection molding sector in Ethiopia

During the period 2001--2013, local production of plastic packing materials has increased from
8,931 tons to 19,956 tons, registering an average annual growth rate of 8.44%. During the recent
five years (2009--2013) from the total local production of plastic packing materials the majority
is accounted by rigid plastic packaging materials (53.57%). The remaining 46.43% is accounted
by flexible plastic packaging materials.

During the period 2001--2013 import of rigid plastic packing materials exhibits a significant
growth. In 2002, import was only 73 tons and Birr 2.08 million in terms of volume and value,
respectively. However, in 2013 import has increased to 7,293 tons and Birr 342.59 million in
terms of volume and value respectively.

During the recent five years (2009--2013), in terms of volume, from the total import of rigid
plastic packing materials the great majority (on average 75.74%) is accounted by bottle
performs, followed by boxes, cases, creates and similar articles (16.34%), stoppers, lids, caps and
other closures of plastic (4.97%) and carboys, bottles, flasks and similar articles (2.95%).

Total supply or apparent consumption of rigid plastic packing materials exhibits a year to year
growth. The yearly average apparent consumption, which was about 4,600 tons during the period
2001--2003, has increased to a yearly average of about 17,300 tons during the period 2012--
2013. During the period under consideration (2001--2013) total supply of rigid plastic packing
material has registered an average annual growth rate of 12.79%.

When we take a look at the paint bucket manufacturing sector in Ethiopia with the exception of
Nefas silk paint factory the rest manufacturers get their buckets from imports, the suppliers being
from Dubai and alibaba.com.

Major customers of the product

The paint manufacturing sector has been growing exponentially in the recent years, just a decade
ago there were 3 paint manufacturers in Ethiopia now the sector has at least 9 manufacturers with
their annual production ranging from 60 thousand tons to a modest 2 thousand tones in which
nearly 53.2 % consisting of super plastic and quartz paint products.

Let’s take a look at the major manufacturers the first one being Nefas silk located in Addis
Ababa which posses 74,693,000 birr in annual revenue and sells all his products to the local
market. The factory is now utilizing its full capacity producing 60 thousand tons and does in fact
import all its raw materials from the global market. As for the buckets Nefas silk produces it
themselves with their injection molding machine so I wouldn’t count on us tapping that market
but the demand for paint products is increasing so I wouldn’t take them out of the market share
either.

The second major manufacturer of paint products is Kadisco paints and adhesive industry Share
Company which is located in Addis Ababa, Ethiopia and is part of the Paint & Coating
Manufacturing Industry. This company has 110 total employees across all of its locations and
generates $26.47 million in sales (USD). This company has annual revenue of 163,819,000 birr
at utilization of 74.02% producing 20 thousand tons. It imports 80% of its raw materials and sells
100% of its products to the local market.

The third major manufacturer is Zemilli paints factory which has annual revenue of
108,854,000birr at a capacity utilization of 90.91% producing 9thousand tons annually.100% of
the products is sold at the local market and import of raw materials being 100%

The fourth one to look at is Rainbow Paint Factory which has annual revenue of 4,532,000 birr
with 60.37% of its capacity utilized and an estimated annual production at 2thousand tons. 100%
of its products are sold at the local market. It imports 92.4% of its raw material for their
production.

The rest are Bright Paints Factory PLC, Derba paint manufacturing, Kanedas Paints Factory,
Mural paints and chemicals PLC, Thehay Paints Factory all estimated to have an annual
production of 2 thousand tons.

We plan to provide our services to these manufacturers since their production is heavily reliant
on the import of these raw materials and some of the above mentioned companies are not
utilizing to their fullest potential. With the exception of Nefas silk we can provide as a start the
4L and 16L buckets to this paint manufacturers in the local market coherent to the quality and
standards of the international market.

Demand and supply analysis

Demand Analysis

Before we take a look at our main target groups demand for our main products buckets let us first
examine the driving force and revenue behind the paint and adhesive industry that is the
construction and infrastructure spending sector.

The growth of infrastructural facilitate by itself is part of development. As a stimulant for

growth, it creates up and downward linkages so as to create value chains. It generates job
opportunities for hundreds of thousands.

The booming of the sector triggers the expansion of industries such as cement, aluminum foils,
tin, glasses, paints, wood and metal works. Previously, most of these inputs were imported from
abroad but now they are being substituted by local yields. This has enabled the nation to save
hard currency which would have been earmarked for importation. The sector is also integrated
with agricultural practices. For example, the bamboo tree which is strong enough to be used for
construction is cultivated in Benshangul-Gumuz State on over 40 thousand hectare of land.
Ethiopia Making the Construction Sector a Springboard (ethiopiaconstruction.com)

If we take a look at the housing market and the real state sector Macroeconomic statistics provide
the broadest basis for tracking trends in the real estate sector. Real Estate and Construction are
two of the 18 sectors according to which Ethiopia‘s national income (GDP) statistics are
reported. Taken together, these two sectors accounted for 14.9 percent of GDP in 2008/09, with
real estate comprising 9.1 percent and construction comprising 5.8 percent. According to GDP
sector data, real estate and construction sector grew—in real terms—by an annual average of
14.1 and 10.4 percent per year respectively in the past five years to 2008/09. This is somewhat
above the average annual growth rate of real GDP during this period (11.4 percent), indicating a
rise in the share of these activities within the overall economy. In fact, of the average 11.4
percent real GDP growth in the last five years, construction and real estate taken together
provided 1.5 percentage points of the overall growth rate. Put differently, had it not been for
growth in these two sectors, real GDP growth would not have reached the double-digit growth
rates recorded over the past five years. Sector Report--Real Estate.pdf (ethioconstruction.net)

Addis Ababa, Ethiopia’s capital city is expanding at a rate of 3.3% each year, creating a housing
void that needs to be filled. In fact, affordable housing is something of a nationwide priority for
the Ethiopian government, although at present much of the house building activity is centered on
the capital. 
 
Condominium construction is the main focus and a collection of ongoing developments are
scattered across the capital – all with different price points but each with affordability in mind.
The 40/60 program, where tenants pay for 40% of an apartment’s cost and the government
contributing the remaining 60% is making solid progress.
More than 1,290 apartment blocks, standing between 7-9 storeys tall have been completed in
various locations throughout Addis Ababa. 38,790 total condominium units are being built in 13
different sites in the city. 80,000 further apartment blocks are planned under the 40/60 scheme
over the next five years.
 

Outside the affordable housing sector, more high-end developments are planned. China’s
Sinomark Real Estate is developing a 21-tower residential complex in Addis Ababa. The Chinese
developers have stated this will be “the biggest real estate project in Ethiopia”, and will feature
swimming pools, a commercial zone and sports centers. Costs are expected to reach over $194
million.

The country has also been experiencing increased urbanization; the country’s urban population
was 21.2 percent in 2019, with an urbanization rate of 4.9 percent. Rapid urbanization has
outpaced urban investment needs and development of infrastructure and service delivery. This
has resulted in a backlog of housing about 1.2million houses. Majority of housing supplied in the
country’s main cities has been through the Integrated Housing Development Program (IHDP),
which has built about 400 000 condominiums indicating a significant housing gap. The
government responded to this by introducing a 10year development master plan set out to build
4.4million houses of which the private sector will build 80percent.
This above factors will result in the booming of the manufacturing sectors providing services for
the construction sector and hence will have a trickling down effect on the sectors providing
services for the manufacturing sector.

Taking a closer look at our main target group the paint manufacturing sector has 6 medium and 3
large scale manufacturers having an annual production of 101 million liters in which 53.2%
consists of super and quartz paint manufacturing each consisting of 32,239,200 liters of super
and the remaining 21,492,800 of quartz this will put the annual demand for quartz paint buckets
at 1,343,000 and if we assume 25%of the super paint produced require 4L buckets that will put
the demand for 4L buckets at 2,014,950 and if our production capacity can utilize 100% of the
super and quartz paint buckets production we can estimate the demand for this buckets to be
slightly under 10,000,000. This will give the total market size for these buckets to be around 250
million birr annually.

Supply analysis

A typical injection molding machine operates 24 hrs a day and has an output of one bucket in 15
seconds so if we were to assume our manufacturing process operates 24 hrs a day 6 days a week
and 50 weeks a year with the 16 & 4L injection molding machine we can produce 864,000
buckets a year of each amounting to a total of 1,728,000 buckets annually. Assuming we operate
the molding machine 12 hrs a day that will put our annual production of buckets total 864,000. If
we were to operate at 60% of our maximum capacity the first year then we can produce a bucket
of total 1,036,800.

Now let’s look at the supply side of raw materials. The raw material used for the manufacture of
paint buckets is HDPE (high density poly ethylene). The material is one of the most durable and
versatile thermoplastics used on a very large scale in today’s market for plastics. It is used to
produce a variety of different kind of materials such as bottles, automotive parts, furniture etc.
due to its suitable properties. Basic properties which the polymer possesses are as follows:

 The materials have the large strength to density ratio.

 They are translucent and waxy in appearance.
 The resins are easily flexible and highly weatherproof.
  They have good low-temperature toughness quality.
 They are strongly resistant to chemicals and do not corrode away easily
 High-density polyethylene plastics are lightweight, readily available and economical in
nature.
 They have low moisture absorption.
 The materials are easy to weld using thermoplastic welding equipment
 It is non-toxic and non-staining along with this it also meets FDA and USDA certification
for food processing.

This polymer has a tensile strength of 0.20 – 0.40 N/mm2 and a density of 960kg/m3. High-
density plastics have several distinguishing properties which make it ideal for the packaging
industry. It is stronger than standard polyethylene and is a strong barrier against moisture, also
maintains its solid state at odd temperatures.

Asia is the leading region in the production of high-density polyethylene. It occupies a share of
36% in the global production capacity of the polymer. China is the leading country in the
production of the polymer in Asia. The second largest region in the production of the polymer is
North America with a share of 20% followed by Middle-East at 17%. Middle-East and China are
the fastest growing regions in addition to new production capacity.

Some of the prominent leading players in high-density polyethylene market are Abu Dhabi
Polymers Ltd. Borealis AG, Reliance Industries Ltd. National Petrochemical Co, PetroChina
Company Limited, LyondellBasell Industries N, The Dow Chemical Co. Honam Petrochemical
Corporation, Total S.A. and Ineos Group Ltd etc. HDPE Production Capacity, Price and Market
(plasticsinsight.com)

The market price for this HDPE granule ranges from 600 – 800 $ per ton. We estimate it will
take 251.1 ton to produce 864,000 4L buckets and 568 ton to produce 864,000 16L buckets. That
amounts to 200,880$ worth of granule to produce 4L buckets and 454,392$ worth of granule to
produce the 16L buckets getting the total purchase of raw HDPE granule annually of 655,272$.

Demand and supply gap

If we take closer look at the demand and supply gap we can clearly see that the demand is much
greater than the supply. The market need for the 4L buckets are 2,014,950 assuming it takes 25%
of super paint products of which we can provide 42 % of the amount needed if our operation
capacity is at 100%. Whereas the market need for the 16L buckets are 1,343,000 of which we
can provide 64.3 % of the market similarly assuming we operate at 100%. But if we take it to a
more modest number and assume we operate at 60% in the first year of production then we can
provide 30% of the total demand for these buckets.

From the above figures we can conclude that the demand is not being met through the local
market and with this solid investment we can reduce the load of import for these two products by
65%in the next 5 years if we were to go on par with our vision and stay committed to our goals.

Local versus Import market for buckets

With the exception of Nefas silk Paint Factory currently there are no paint bucket manufacturers
in Ethiopia and in the case of Nefas silk the operation and production of paint buckets is mainly
used for only their products and doesn’t reach outside their factory walls.

So with this investment and our company push to specialize in the mass production of buckets
and other molded products we will pretty much guarantee our lion share of the local paint
buckets. The investment will help offset the demand not being met for the many paint
manufacturers and customers in need of molded plastic products on our ever growing market
place.

With our lion share of the local market this business endeavor will be extremely profitable while
helping our paint manufacturers in their shortage of buckets from the local markets and with our
environmentally business plan to integrate our manufacturing process via the recycling process
we can outpace any competitor we will encounter may it be the present or the future.

Taking a look at the international market our price setting for the bucket we sell is 10 cents lower
than the lowest price with the same quality. Not to mention this business endeavor will help
tackle the devaluation of the national currency and our reliance on the import market for our
manufacturing process.
Incentives/Interventions

The macro economic performance in the past seven years has been very positive and the GTP
indicates a very good prospect, with a minimum of 11% GDP growth per annum, for the future.
Although the incentive packages that are currently given seem to be adequate, the government is
planning to give additional incentives for the manufacturing sector, particularly to export
oriented and import substituting projects. Priorities will be given to the manufacturing sector in
support provision in the areas of licensing, land and finance allocation, training and the like.

The expansion of Universities as well as Technical, Vocational Education and Training (TVET)
in all parts of the country provides good opportunity in the supply of skilled and semi-skilled
technical personnel. Health service provision and development of infrastructures such as roads,
energy and communication are also showing a rapid improvement in the country. The
advancement of science and technology in the world and the spread of same in the country will
favorably influence the smooth operation of the envisaged project. To encourage investment a
number of incentives are granted to investors which include; exemption of customs duty for
importing capital goods and spare parts for investment and raw materials for production of
export goods, income tax holidays and the permission of losses to carry forward during tax
holiday period. Ethiopia also provides different guarantees with respect to repatriation of capital,
profit and against expropriation and nationalization. Accordingly, it can be concluded that
Ethiopia is ideal for investment.

Project location
Organization and management

Project functional unit

Financial plan

Project cost

The project cost consists of machinery, purchase of HDPE granules, common Ancillaries,
transportation, customs and the rent of facility for operation.
We plan to import two injection molding machine for the manufacture of 4L and 16L buckets
with a total capital expenditure of 275,000 USD and total working capital of 375,000 amounting
the total project cost of 650,000 USD.

Security of loan
the loan will be needed to purchase raw material and to import the 4L and 16L injection molding
machine

Revenue determination

The revenue that the business is expected to generate comes from selling the buckets to paint
manufacturers since we will be substituting an already existing import market with a brand new
local one. At the first year we expect to operate at a production capacity of 60 %.

The production capacity is expected to increase 10% each year and we plan to produce at full
capacity in the coming 5 years. The following table shows the amount of revenue generated from
the selling of these buckets.

Revenue projection for the coming 5 years,

2021, at 60% of our total capacity

No Description Unit price Quantity Total income
1 4L bucket 0.60 $ 518,400 311,040 $
2 16L bucket 1.80 $ 518,400 933,120 $
Total 1,036,800 1,244,160 $
2022, at 70% capacity and 3.2% raw material price increase
No Description Unit price Quantity Total income
1 4L bucket 0.62$ 604,800 374,976$
2 16L bucket 1.86$ 604,800 1,124,928$
Total 1,209,600 1,499,904$
2023, at 80% capacity and 3.2% raw material price increase
No Description Unit price Quantity Total income
1 4L bucket 0.64$ 691,200 442,368$
2 16L bucket 1.92$ 691,200 1,327,104$
 Total 1,382,400 1,769,472 $
2024, at 90% capacity and a 3.2% raw material price increase
No Description Unit price Quantity Total income
1 4L bucket 0.66$ 777,600 513,216$
2 16L bucket 1.98$ 777,600 1,539,648$
Total 1,555,200 2,052,864$
2025, at 90% capacity and 3.2% raw material price increase
N Description Unit price Quantity Total income
o
1 4L bucket 0.68$ 864,000 587,520$
2 16L bucket 2.04$ 864,000 1,762,560$
Total 1,728,000 2,350,080$

Operating expense forecast

The operation expense mainly includes the purchase of raw material which we expect to cost a
maximum of 800$ per ton of white HDPE granule. First year we will import 491.5 tons for
reaching 60% of production capacity.

The following table shows our raw material purchase with assuming 3.2% increased cost of raw
material in the next 5 years and 10% increase in production capacity each year and with 30%
import tax of raw materials.

2021, at 60% of our total capacity

N Description Unit price Quantity Total cost
o
1 4L bucket 800$/ton 150.66 ton 120,528$
2 16L bucket 800$/ton 340.8 ton 272,640$
30% + total 491.46 ton 511,118.4$
2022, at 70% of our total capacity, and a 3.2% increase in the cost of raw material
N Description Unit price Quantity Total cost
o
1 4L bucket 825.6$/ton 175.77 ton 145,115.71$
2 16L bucket 825.6$/ton 397.6 ton 328,258.56$
30 % + total 573.37 ton 615,386.55$
2023, at 80% of our total capacity and 3.2% increase in cost of raw material
N Description Unit price Quantity Total cost
o
1 4L bucket 852$/ton 200.88 ton 171,149.76$
2 16L bucket 852$/ton 454.4 ton 387,148.8$
30% + total 655.28 ton 725,788.13$
2024, at 90% of our total capacity and a 3.2% increase in cost of raw material
N Description Unit price Quantity Total cost
o
1 4L bucket 879.26$/ton 226 ton 198,712.76$
2 16L bucket 879.26$/ton 511.2 ton 449,477.71$
30% + total 737.2 ton 846,647.61$
2025, at 100% of our total capacity and a 3.2 increase in cost of raw material
N Description Unit price Quantity Total cost
o
1 4L bucket 907.4$/ton 251.1 ton 227,848.14$
2 16L bucket 907.4$/ton 568 ton 515,403.2$
30% + total 819.1 ton 966,226.74$

During the preparation process there will be a discard product and its account 3 to 14 % of the
total product so for our purpose we consider 7% of the cost of goods sold are considered as
discard expense. Transportation cost including the transitory expense expected to be 2% of the
total sales revenue.