Feasibility study For Establishing a plastic bottle caps Factory

An - Najah National UniversityFaculty of Engineering

Industrial Engineering Department

Prepared by:

Maram Abd ElhaqNajah Emoor

Leena MaqboulShahd Abu Baker

For Palestine

Plastic industry

Company

Supervised by:

Eng.Nidal Dwaikat

Establishing a plastic Bottle caps Factory

The main objective of the Project is to represent the economic feasibility

of Establishing Plastic Bottle caps Factory for the First time in West

Bank.

Methodology

Financia

l Stud

y

Market study

Market study

Main Consumers

كوكا • الوطنية المشروبات شركةكوال

Target market

) مياه ) جريكوالمشروبات شركة تابع

الوطنية) عصائر ) كابيشركة تابع

الوطنية المشروبات

Top Drink(عصائر)

الحديثة النور شركةالمياه .لتكنولوجيا

( وعصائر (مياه فلسطين شركة ( ينابيع البيئية للتنمية

بيتا((مياه)

الفردوس شركة(مياه)

البالستيكية العبوات وبيع نفخ مصنعTick plast

الهندسية الشركةللتعبئة المتحدة

والتغليف

الجيبور شركة(مياه)

Survey

Demand sizeName of company Province type Demand (millions)

الوطنية المشروبات شركة( كوال , عصائر, مياه كوكا )

Ramallah neck28 24

)مياه(جريكو المشروبات شركة تابع

الوطنية

Ramallah neck30 12

( عصائر ( كابيالمشروبات شركة تابع

الوطنية

Ramallah neck30+neck38 18

Top Drink(عصائر)

Ramallah neck30 25

الحديثة النور شركةالمياه .لتكنولوجيا

( وعصائر (مياه

Talkarm Neck 28 5

للتنمية فلسطين شركةبيتا (البيئية )ينابيع

(مياه)

Nablus Neck 28 5

الفردوس شركة(مياه)

Jenin Neck 28 4.5

الجيبور شركة(مياه)

Qalqelia Neck 28 5

العبوات وبيع نفخ مصنعالبالستيكية

Tick plast

Ramallah Neck28 0.5

واوالده الرجوب شركة Hebron Neck 28 4المتحدة ا الهندسية لشركة

والتغليف للتعبئةNablus Neck 28 + Neck30 24

Product SegmentProduct Segment

Cap Size

Annual consum

ption (million

s)Neck 28 58

Neck 30 58

Neck 38 10

Market share

Our study suggests to cover

a percentage of nearly 40%

from the whole market demand

and that indicates to produce 50,800,000

cap

Competitors

The main suppliers for plastic bottle caps

Supplier Country

Koksan company

Turkey

Amraz company

Israel

Netstal company

Swiss

Technical Study

Product specification

Beverage Drinks

coke Drinks water Bottle

Cap type

Weight

Size

Usag

e

Neck 38

Neck 30

Neck 28

1.85 2.55 3.7

Capacity of project

Type Percent# of caps /

year

Neck 28 46% 23460000

Neck 30 46% 23460000

Neck 38 8% 4080000

Manufacturing Process

Injection Molding Process

Mold

Injection molding machine

Raw material

(HDPE)

MoldsMolds are

typically made of steel or aluminum. The mold has

many components, but can be split into

two halves. The two main components of

the mold are the mold core and

the mold cavity.

Raw Materials

AMRAZ KOKSAN SABIC

HDPE

Injection molding machine

Procedure:

Clamping.

Injection.

Cooling.

Ejection.

The process cycle for injection molding is very

short, typically between 2 seconds and 2 minutes.

Injection Molding Machine

Hopper Dryer

Water Chiller

Auto loader

Pallet wrapping machine

Machines

ExpensesConstitue

nt costsOperation

al costs

Constituent costAssets Cost($)

Building 238805

Machines & Equipments 174818

Transportation 36111Furniture and required

tools12091

Contingency Reverse20.000 ( 3% of

Constituent Cost)Land price 127750

Land preparation 8000

Total costs 617575

Land and construction cost

Land area Cost/m^2 Total cost

1500 $85 $127750

Construction cost Cost ($)

Buildings 232505

License 6300

Land preparation 8000

Total 246805

Machines and Equipment

Machine Model Price ($)Injection Molding

Machine100 Kg/hr 36923

Hopper Dryer 75Kg 1172Auto loader 350Kg/hr 1015

Water Chiller 5 hp 3386Mixer Machine 50Kg 1386

Granulator Pc-300 1936Strapping Machine 3000

Total 48,818

Injection auxiliaries molding machines

Molds Price($)

Neck 28 42000Neck 30 42000Neck 38 42000Total 126000

Molds

Operational costsTotal operating

costCost ($)

Manpower 40,667

Raw material 172760

Electrical consumption 16576

General operating cost 68745

Total 289748

Raw material cost

Raw material

sQuantity

Price/quantity

($)

Total cost($)

HDPE 43 ton 1100 47300Tincture 43 kilo 40 1720Cartons 6517 2.5 16293Plastic Bags

6517 0.088 574

Shrink 217 kilo 3.33 723Total 66610

Raw material

sQuantity

price/quantity

($)

Total cost($)

HDPE 60 ton 1100 66000Tincture 60 kilo 40 2400Cartons 6517 2.5 16293Plastic Bags

6517 0.088 574

Shrink 217 3.33 723Total 85990

Raw materials

QuantityPrice/

quantity($)

Total cost($)

HDPE 43 ton 1100 47300Tincture 43 kilo 40 1720Cartons 6517 2.5 16293Plastic Bags

6517 0.088 574

Shrink 217 kilo 3.33 723Total 66610

Neck28 Neck 30

Neck 38

Total

$1727

60

Cost Per item from raw material

We consider unit item equal to 1000 capsConsidering 3%

waste

TypeAnnual

quantity(caps)

Annual cost ($)

cost/item ($)

Neck 28 22756 66610 2.9

Neck 30 22756 85990 3.8

Neck 38 3958 20160 5.1

General Operating Cost

General operating cost

Cost ($)

Maintenance 9050

Insurance, Advertising,

Communications33638

Depreciation 26057

Total 68745

Cont…..

MaintenanceFixed assets Maintenance (%) Cost ($) Maintenance

cost($)Building 2% 232505 4650

Machinery and equipment

2% 174818 3496

Furniture 2% 9,091 182Transportation 2% 36111 722

Total 9050InsurancePosition Staff required Annual salary Percentage Value($)General manager

1 36000 0.5% 180

Engineers 1 30000 0.75% 225Accouters 1 21600 0.5% 108

Labors 3 43200 5% 2160Guide and

service1 15600 5% 780

Total 3453

Cont………

Depreciation

Assets Depreciation Cost($)Depreciation

Cost ($)

Machinery and equipment

7% 174818 12237

Buildings 4 % 232505 9300Transport 10 % 36111 3611Furniture 10% 9,091 909

Total 26057

Advertising $20000

Communication and Services $8333

Annual Production cost

Item

Annual production

cost for neck 28($)

Annual production

cost for neck 30($)

Annual production

cost for neck 38($)

Manpower 18707 18707 3253Raw

material 66610 85990 20160

Electrical consumptio

n7625 7625 1326

General operating

cost31623 31623 5500

TOTAL 124564 143944 30239

Production cost / unit item

TypeQuantity (Caps)

Total cost ($)

Item cost ($)

Neck 28 22756 124564 5.5

Neck 30 22756 143944 6.3

Neck 38 3958 30239 7.6

Facility Layout

Financial Analysis

Basic assumptions

The financial study covers 15 years from the project operational life.

Internal rate of return (IRR) is calculated at 100% equity ratio.

Net present value (NPV) is calculated at 5% discounted rate.

A strategic plan for increasing production at a rate of 5% and operational cost at rate of 2%.

Direct and Indirect CostsOperational cost

Cost ($)

Direct operating cost

Raw materials

172760

Electrical consump

tion16576

Indirect cost

Manpower

40667

General operating

cost68745

Total 298748

Selling Price

TypePrice

/item ($)Neck 28 7.7

Neck30 8.9

Neck38 10.7

Profit

Margin Is

40%

Cash Flows

VAT 15%

Financial Indicators

Payback period (PBP)

The period required to recover the

original investment

outlay through

the profits earned by

the project.

Which is found 4 Years

Cont. ….

Internal rate of return (IRR)

is the discount rate that makes

the net present value

(NPV) of all cash flows

(both negative and positive) from a particular investment

equal to ZERO.

Which is NPV = F/

(1+i) n = 0.

And Found IRR= 30%

Cont. ….

Net present

value(NPV)The Present value of an

investment’s future Net cash flows minus the

initial investments.

Which is

NPV= F/

And found Positively

$1,605,50

4.

Cont. ….

Rate on investment

(ROI)The rate on return is the

average of the simple rate of return along

the project life period

ROI37%

Cont. ….

Break even point (BEP)

The point at which sales

revenue equal production cost

(The Point at which the

project neither makes profit

nor suffers loss)

Item Units (caps) Cost ($)

Neck 28

13120 100543

Neck 30

1274 13629

Neck 38

10009 88637

Total 2440320280

9

Sensitivity

analysis

Increasing operating cost 4%.

Decreasing operating cost 4%.

Decreasing Sales 4%.

Increasing Sales 4%.

First Case : Increasing operating cost 4%.

IRR= 29%

NPV=$1320749

PBP= 4.5 years

Second Case : Decreasing operating cost 4%.

IRR= 32%

NPV=$1721559

PBP=3.5

Third Case : Decreasing Sales 4%.

IRR= 28%

NPV= $ 1390406

PBP= 5 years

Fourth Case : Increasing Sales 4%.

IRR= 33%

NPV= $ 1827521

PBP= 3.2 years

Sensitivity factors changes effects on IRR

Recommendation

Our recommendation based on the Positive Financial

results which encourage to Perform this project.

And so we recommend Palestine Plastic Industrial

Co. to Establish the Factory which will gain a good

market share.