paint prod demo

8/13/2019 Paint Prod Demo

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ENTERPRISE PLANNING IMPLEMENTATION

Feasibility Report:Paint Production Factory in Ibadan.

Client: cl ssifiedIbadan


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DECORATIVE COATINGS INDUSTRY

Report on Paint production in Oyo State.


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FEASIBILITYSTUDYREPORT

FORTHEOPERATIONSOF***PAINTCOMPANY

INTHEARCHITECTURAL&DECORATIVE

COATINGSINDUSTRY


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1.INTRODUCTIONThechemicalindustryincludessmall,medium,andlargecompaniesthatengageintheproductionofindustrial

chemicals.Thisindustryiscentraltomodernworldeconomy,convertingrawmaterials(oil,naturalgas,air,water,

metals,andminerals)intomorethan70,000differentproducts.

Chemicalsareusedtomakeawidevarietyofconsumergoods,aswellasthousandsofinputstoagriculture,

manufacturing,construction,andserviceindustries,eventhechemicalindustryitselfconsumes26percentofits

ownoutputasinput.Polymersandplastics,especiallypolyethylene,polypropylene,polyvinylchloride,polyethyleneterephthalate,polystyreneandpolycarbonatecompriseabout80percentoftheindustrysoutput

worldwide.

Theindustryproducesmanychemicals,suchaspetrochemicals,inorganicandorganicchemicals,fertilizers,paints,

pharmaceuticals,soapsanddetergents,syntheticfibers,essentialoils,cosmeticsandpersonalcareproducts.The

chemicalindustryprovidesinputstomanyothersectors,suchasautomotive,leatherproducts,glass,textilesand

paperproducts.

Fromtimeimmemorial,thechemicalindustryhasbeenconcentratedinthreeareasoftheworld,WesternEurope,

NorthAmericaandJapan(theTriad).TheEuropeanCommunityremainsthelargestproducerareafollowedbythe

USAand

Japan.

ThetraditionaldominanceofchemicalproductionbytheTriadcountriesisbeingchallengedbyfeedstock

availabilityandprice,labourcost,energycost,differentialratesofeconomicgrowthandenvironmentalpressures.

InstrumentalinthechangingstructureoftheglobalchemicalindustryhasbeenthegrowthinChina,India,Korea,

theMiddleEast,SouthEastAsia,Nigeria,Trinidad,Thailand,Brazil,Venezuela,andIndonesia.


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1.1BackgroundThesizeoftheNigerianeconomyasmeasuredbythecountrysGDPhasincreasedbyacompoundannualgrowth

rate(CAGR)of20.68%(innominalterms)between2001and2006.PresentGDPisatN24,825,000,000whilethe

NigerianGDPpercapitaisatN167,700.Anoticeabletrendintheeconomysgrowthpatternistheincreasing

contributionofthenonoilsector,particularlytheagriculturalandmanufacturingsectorstothenationsGDP.

Itisexpectedthatintheyearsahead,otherkeysectorssuchasconstruction,consumergoodsandtourismmay

beginto

play

more

important

roles

in

overall

economic

growth

and

development.

As

the

on

going

economic

reformscontinuetotrickledownintoothersegments,andbaringanyunforeseencircumstances,weexpectamuch

morebalancedandselfsustainingeconomyinyearstocome.

CommercialproductionofpaintcommencedinNigeriain1962byBergerPaints.Beforenow,severalkeypaint

industryplayershasalsobeenincorporatedsuchasDNMeyer,InternationalPaintsWestAfricaandCAPPlc.Berger

PaintsNigeriaPlcwasincorporatedon9thJanuary1959asBritishPaints(WestAfrica)Limited.

Bergercommencedbusinesson15thMarch1961byimportingpaintsfromNewcastleHeadquartersofBritish

PaintsintheUnitedKingdom.Atonetime,oneoftheownersofBritishPaints(UnitedKingdom)wasCelanese

Corporationof

the

USA,

but

later

divested.

Celanese

Corporation

(USA)

showed

interest

in

the

running

of

the

British

PaintsaswellasitssubsidiariesworldwideincludingBergerPaintsNigeriaLimited.

Duringthisperiod,distributionofimportedpaintsbythecompany,inNigeria,wasdonethroughtheoutletsofPZ,

BrossetteandVYBmainlybecauseoftheirstrongdistributionnetworkacrossthecountry.Localmarketforpaints

wasgraduallydevelopedandthisbuiltuptheconfidenceoftheexpatriateownerstoventureintopaint

manufacturingaftercriticallylookingintothepotentialofNigerianmarket.


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Withtheacquisitionof6.5acresoflandedpropertyandconstructionofasmallfactoryaswellasemploymentof

fortyNigeriansplusfiveexpatriates,localpaintmanufacturingcommencedinMarch1962atthepremisesofBritish

Paints(WestAfrica)onObaAkranAvenue,Ikeja.

Intensepaintexportactivitiesstemfromthemanufacturerswhosenationalmarketsarefairlymature,with

GermanyemergingasthechiefexporterandtheUSAsecond.Thetop10exportersaccountfor75%ofworldpaint

trade,asseenbelow:

Asimilaranalysisbasedonpaintimportsshowsamorefragmentedpicture,withCanadaemergingasthemost

activepaintimporter,Chinasecond,followedbytheUSA,FranceandtheUK.Insharpcontrasttoexports,thetop

25countriesaccountfor75%ofpaintimports.Otherexamplesofglobalpaintindustryactivitiesinclude:

1. KenyanpaintsuppliesaredominatedbytheUSA2. TheNigerianmarketdrawsheavilyonsuppliesfromEurope,withtheNetherlandsaccountingfor42%of

Nigerianpaintimports

3. UgandatakesmorethanhalfofitspaintimportsfromGermanyandtheUKThetotalestimatedmarketforEmulsionPaintsinNigeriaisabout1billiongallonsperannumwhilethetotal

marketforallpaintproductstotals1.4billiongallonsperannum.ThepaintindustryinNigeriapresentlyhasover

1,000operators.Theseoperatorsarebroadlycategorizedintothree.Thefirstcategorymadeupofaboutseven

companiescalledthepremiumpaintmakersorGradeAmanufacturersofpaints.Thisgroupconsistsof:

1. AfricanPaints2. BergerPaints3.

Chemical

and

Allied

Products

Plc

4. DNMeyerPlc5. InternationalPaintsWestAfrica6. PremierPaints7. NigerianGermanChemicals


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ThenthereareSecondtiermanufacturers.Thesearethemediumsizedcompanies,theyhavebeenaroundfor

sometime,buttheydonthavetheiroperationsandmarketshareasbigasthoseofthepremiumpaintmakers.

Thelastcategoryiscalledthethirdtierproducersmadeupofpaintmanufacturerswhomaybedoingthatintheir

bedroomsandtheirgarages.Andtheirfocusisjustonemulsion,whichisbasicallythedecoratives.Thesehavetheir

marketshare,buttheproblembasicallyinthisclassificationisstickingtoquality.Themajorityoftheoperatorsin

theindustryrelegatequalitytothebackground.Thisisattestedtobythenumberofadulteratedproductsandsub

standarditemsinthemarket.

ArchitecturalandDecorativepaintproductionhasincreasedfromlessthan50percentofproductiontoover55

percent.

Other

significant

trends

are

the

decline

in

solvent

thinned

Architectural

and

Decorative

paint

from

12

percentto8percentandconverselytheriseinWaterthinnedfrom37percentto48percent.Therehasalsobeen

anincreaseinTimberFinishesfromlessthan1percenttoover5percentandadecreaseinthinnersfrom14

percentto10percent.

Thepaintindustryhasbeenexposedtotheproducersofsubstandardproductsandadulteratedproductsoverthe

years.Severalcategory2playershavemadethemistakeoffollowingthisfailurestrategybyproducingsub

standardproducts.


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2.TECHNICALANALYSIS2.1CertificationRequirementIntendingmembersoftheAssociation,whichshouldbeamanufacturingoutfit,arerequiredtoobtainand

completeApplicationforMembershipFormfromtheundersignedandpaythefeesstipulatedbelow:

1. ApplicationForm N500.002. RegistrationFee N2,5003. Annualsubscription basedonturnoverrange4. SpecialDevelopmentLevy basedonturnoverrange5. SalesTaxLegalLevy

N20,000 fordirectlyaffectedLagosbasedcompanies

N10,000 forothercompaniesinLagosState

6. LandUseChargeLevy N20,0007. BuyMadeinNigeriaProducts N10,0008. LegalLevy(MemberoutsideLagos) N10,000

IntendingmembersmayberequiredtopayBranchduesasmaybestipulatedbyeachbranch.Thecompany's

CertificateofIncorporationshouldbeattachedtothecompletedApplicationForm

2.2StaffStructureTheorganizationalstructureforthePaintFactoryisaHybridstructure(oftheMechanisticandOrganic,buttending

moretowardsMechanistic)withaDivisionaldesign.Themechanisticstructureimpliesthattherewillbeseveral

levelsofhierarchyinstafffunctions.Itinvolvescentralizedcontrolandauthority,highcomplexityand

formalization,clearlydefinedtasks,verticalcommunicationlinks,andobediencetosupervisors.

TheorganizationaldesigninthepaintfactorywillworkasaFunctionalGroupwheredifferentspecializedgroups

carryoutdistinctactivities.ItinvolvesGroupingbytask(eachgroupdoessomethingdifferent).

Advantages1.Allowstaskspecializationandexpertisetodevelop

2.Donthaveredundancyoffunctionsacrossgroupsthatoccursindivisionaldesign


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2.3StaffRequirementThestaffrequirementforapaintproductionwillrequirebetween20and30employees.Thestafffunctionsare

describedbelow:

1.Manager:Hecontrols,overseesanddirectstheadministrative,operativeandcommercialaffairsofthefactory.

Atthemediumscalelevelofoperationsofthefactory,hedealswiththeemploymentandtrainingofstaff,

weighingoftheirskillsandabilitiesandalsoreviewstheirpaymentscales.

2.Accountant/FinancialController:Heexamines,records,managesandreportsthefinancialactivitiesofthe

accountofthecompanyi.e.theinflowandoutflowofcompanyincomeandexpenditure.

3.Clerk: Heassiststheaccountantandthemanagerinadministrativetasks,records,andfilingofdocuments,

receipts,invoicesandotherbusinessdocuments.HeactsbothasasecretaryandanassistanttotheManager.

4.Salesman:Theyworkdirectlywiththemanageronthecommercialsideoftheorganization.Theyget,retainand

maintaincustomersandretailersforthesalesanddistributionoftheproductsofthefactory.

5.FactoryWorkers:Theyarecasualstaffthatoperatetheproductionlineforeachtypeofpaintbyensuringeach

productionprocessisproperlycarriedout.Theyalsomaintaintheinputandoutputscheduleoftheequipment.

Theyare

responsible

for

the

proper

utilization

of

the

equipment.

Some

workers

are

responsible

for

the

packaging

of

thefinishedgoodsfordistribution.

6.Supervisor:Hiscoreresponsibilityistodesignformulaefortheproductandstatetheusesofthemachinesinthe

industrialchemicalprocesses.Hesupervisesthefactoryworkersandassiststhemanagerinoverseeingthe

processesofproductioninthefactory.

7.QualityControl/TestingOfficer:Heisprovidesqualitycontrolformixingratesandstandardsfortheproduced

paintthroughinspection,testingandanalysis.

8.Technician:Hemaintainsandrepairsthemachinesandfactoryequipmenttoensuretheyareconstantlyin

optimalworking

condition.

9.Drivers:Theytransportrawmaterialstothefactoryandfinishedgoodsoutofthefactory.

10.Cleaner:Theymaintaincleanlinessandhygieneinandaroundthefactoryandadministrativeoffice.


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2.4EquipmentNeededThetypesofequipmentlistedbelowarerequiredforapaintfactorymajoringinanyofthe3productlineslisted

below:

1. OrdinaryEmulsionlocallyknownasEmulsion2. HighEndEmulsionlocallyknownasTexcote3. LacquerlocallyknownasGlossy

S/No Equipment Unit UnitPrice,N Price,N1 45HPMotorEngine 1

2 5HPMotorEngine 1

3 ElectricpropellerMixer+MixingTank 1

4 AttritionMill+MixingTank 2

5 RollerMill 2

6 BeadMill/SandMill 2

TOTAL

4,090,000

2.5RawMaterialsPaintiscomposedofpigments,solvents,resins,andvariousadditives.Thepigmentsgivethepaintcolor;solvents

makeiteasiertoapply;resinshelpitdry;andadditivesserveaseverythingfromfillerstoantifungicidalagents.

Hundredsofdifferentpigments,bothnaturalandsynthetic,exist.

2.4.1ListofRawMaterialsandtheirPrices

Thefollowingtableswilldiscussthelocalandinternationalpricesoftherequiredandfrequentlyusedrawmaterials

inpaint

production

(see

Section

7Appendix

for

acomprehensive

list

of

all.

The

following

list

is

abrief

list

of

the

commonlyusedrawmaterials.Thetablescontainthepricesofthechemicals,inorganicpigmentsandthenorganic

pigments(moreexpensive).

1. TitaniumDioxide(usedbyeverypaintcompanyinNigeria)2. PVA(PolyVinylAlcohol)3. AlkylResin4. Calcium(locallysourced)orPotassiumCarbonate5. Pigments6. KetoneandMethylIsobuthylKetone(MIBK)7. Toluene8. Natrosol9. Cans10.Cartons11.Labels


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CHEMICALNAMEPriceperTon

PolyVinylAlchohol(PVA) 300,000

MIBK 153,000

PotassiumCarbonate 96,000

TolueneIG 48,000

TolueneNG

51,000

Natrosol 330,000

PRODUCTNAME ICINAMEPriceperTon

InorganicPigmentsBlackCarbonBlack(Indian) 335,000

CarbonBlack(imported) PB7 580,000

Syn.BlackOxide PB11 336,000

BlueUtramarineBlue PB29 240,000

PrussianBlue PB27 960,000

GreenChromocyanineGreen PG48 642,000

ChromiumOxideGreen PG18 495,000

OrangeBasicLeadSilicoChromate PY21 345,000

MolybdateOrange PY104 606,000

RedSyn.RedOxide PR101 144,000

WhiteTitaniumDioxideRutile PW6 495,000

TitaniumDioxideAnatase PW6

ZincOxide PW4 195,000

ZincPhosphate PW36 414,000

YellowPrimeroseChrome PY34 414,000

LemonChrome PY34

MiddleChrome PY34

ZincChrome PY36

Zinctetroxychromate PY36 519,000

Bariumchromate PY31 399,000

Syn.YellowOxide PY42 144,000


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OrganicPigements ICINAME PriceperTonBenzidineYellowDHG PY12 1,446,000

BenzidineYellowG PY14 1,539,000

BenzidineYellowGR PY13 1,836,000

BenzidineYellowHR PY83 4,584,000

CarbazoleVioletRL PV23 13,794,000

HansaYellow10G PY31,503,000

HansaYellow5G PY74 1,803,000

HansaYellowG PY1 1,566,000

LakeScarletCTL PR53:1 1,086,000

MonoazoF5RK PR170 5,319,000

PermanentRedF4R PR8 1,848,000

PermanentRedFGR PR112 3,948,000

PermanentRedH2BM PR48:4 2,565,000

PhthalocyanineBetaBlue PB15:3 1,320,000

PhthalocyanineBlue PB15:2 1,500,000

PhthalocyanineGreen PG7 1,305,000

PyrazoloneOrangeG PY13 1,704,000

RedBordeauxFRR PR12 2,784,000

RedCarmineFBB02 PR146 7,698,000

RedToluidine PR3 1,467,000

RubineTonerCABO2 PR57:1 1,229,000

SignalRed PR48:4 1,503,000

PleasenoteICImeansImperialChemicalIndustries(ICI)isaBritishchemicalsubsidiaryofaDutchconglomerateand

one

of

the

largest

chemical

producers

in

the

world.

It

is

based

in

Slough,

UK.

It

produces

paints

and

specialty

products(includingingredientsforfoods,specialtypolymers,electronicmaterials,fragrancesandflavours).

Itemploysaround29,000peopleandhadaturnoverofjustover4.8billionin2006.TheCompanywasoncea

constituentoftheFTSE100IndexbutsinceJanuary2008ithasbeenasubsidiaryofDutchchemicalsgroupAkzo

Nobel,whichisintheprocessoffullyintegratingthetwocompanies.

TheCompanywasfoundedinDecember1926bywayofthemergeroffourcompaniesBrunnerMond,Nobel

Explosives,theUnitedAlkaliCompany,andBritishDyestuffsCorporation.ItestablisheditsHeadOfficeatMillbank

inLondonin1928.

CompetingwithDuPontandIGFarben,thenewcompanyproducedchemicals,explosives,fertilisers,insecticides,

dyestuffs,nonferrousmetals,andpaints.Initsfirstyearturnoverwas27m.Inthe1920'sand30'stheCompany

playedakeyroleinthedevelopmentofnewchemicalproducts,includingthedyestuffphthalocyanine(1929),the

acrylicplasticPerspex(1932),Duluxpaints(1932,codevelopedwithDuPont),polyethylene(1937)and

PolyethyleneterephthalatefibreknownasTerylene(1941).


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2.6UsesofRawMaterialsPrimePigments

Theprimepigmentscontributecolor/opacity(hidingpowder)tothepaint.Thebasicwhitepigmentistitanium

dioxide,selectedforitsexcellentconcealingproperties,andblackpigmentiscommonlymadefromcarbonblack.

ThemajorprimepigmentusedinbuildingpaintsistitaniumdioxideorTitan.Titaniumdioxideisawhitepigment

anditsimportanceisduetothefactthat85%ofbuildingpaintsaremanufacturedinwhite.Titaniumdioxidehasa

highrefractiveindexwhichmeansitbendslightandhence,addstohidingpower.Titaniumdioxidepigmentsused

inpaintsareinorganicallycoatedtoenhanceitsdurabilityandotherpropertiesforuseinthepaintindustry.

Otherpigmentsusedtomakepaintincludeironoxideandcadmiumsulfideforreds,metallicsaltsforyellowsand

oranges,and

iron

blue

and

chrome

yellows

for

blues

and

greens.

Other

prime

pigments

are

mainly

used

to

add

colour.Thesefallintotwomaingroups:

1.EarthpigmentsEarthpigmentswhicharemanufacturednaturallyorsyntheticallyandtendtoberelativelyinexpensive.

2.OrganicPigmentsThesearemanufacturedbychemicalprocessesandarebrightredsandyellows.Howevertheycanbeextremely

expensive.Theynormallyprovidepoorhidingpower.

Extenders

Extendersare

mainly

used

to

modify

the

gloss

level

of

paints

as

the

more

pigment

in

apaint

film,

the

flatter

the

sheenwillbe.DuetothehighcostofTitaniumDioxideanditsfineparticlesize,extendersareusedtolowerthe

sheenorgloss.Extenderscanalsobeusedtoaddbodytopaintandtoincreaseisfillingproperties.

Themainextendersusedare:

CalciumCarbonate Barytes Talc Diatomaceousearth.


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Howthepigmentaffectsgloss:

GLOSS FLATLayerofresinontopofpigment.Resinreflectslight

back.Noextenderspresent.

Pigmentprotrudingthroughresin

diffuseslight.

Resinor

Binder

Thebindercanbethoughtofasgluewhichholdsthepigmentstogetherandsticksthemtothesurface.Itsother

majorfunctionistoprovidemanyofthephysicalfilmcharacteristicssuchasdurabilityandflexibility.

Twodistinctgroupsofbindersexist,thosethatarefoundinoilbasedpaintsandthoseusedinwaterbasedpaints.

SolventorCarrier

Solventsarevariouslowviscosity,volatileliquids.Theyincludepetroleummineralspiritsandaromaticsolvents

suchasbenzol,alcohols,esters,ketones,andacetone.Thenaturalresinsmostcommonlyusedarelinseed,

coconut,andsoybeanoil,whilealkyds,acrylics,epoxies,andpolyurethanesnumberamongthemostpopular

syntheticresins.

Thesolventorcarrierinpaintservestoallowtheresinandpigmentstobeappliedtoasurface.Itevaporatesafter

applicationanddoesnotformpartoftheappliedfilm.Inwaterbasedpaints,thecarrieriswater.Inoilbased

paints,thecarrierisusuallyaturpslikesolvent.Duetothevarioustypesofturpslikesolventswhichhavedifferent

dryingtimes,thesolventinoilbasedpaintscanaffecttheapplicationpropertiesanddryingoftheappliedproducts

Note:Eventhoughthecarrierinwaterbasedpaintsiswater,thesepaintsresistwateroncethefilmhascured.However,

theyshouldnotbeappliedinsituationswheretheywillbeexposedtomoistureimmediatelyafterapplication,eg.

whenrainorcondensationareimminent.

Additives

Therearemanydifferentadditivesusedinthemanufactureofpaintinordertodetermineitsfinalperformance,

characteristics.Forexample,ZincOxideisusedtoresistmildew,toprovideUVprotection,toinhibittanninstaining

andtoaddstrengthtothefinalfilm.

Someofthemorecommontypesofadditivesare:

Fungistats:preventthegrowthofmildew, Coalescents:helpproduceauniformfilm(waterbasedpaints) DryersAntiskin:assistinoxidationforoilbasedpaints Incanpreservatives:preventbacterialattack, Thickeners:modifyviscosity,enhanceapplicationpropertiesofwaterbasedpaints, Wetedgeadditives:preventpaintfromdryingtooquickly waterbasedpaints, Surfactants:unusedtomaintaindispersionofpowdersandresinsinwaterbasedpaints.


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2.7OperationsandProcessesinPaintProductionPaintmanufactureisarelativelysimplebatchprocess.Basically,thisisaphysicalprocesswhererawmaterialssuch

aspigment,apigmentvehicle,binder,solventsandadditivesaremixedinquantitiesrangingfrom1,000litersto

20,000liters.Thisprocessisnotcapitalintensive,whichaccountsforthelowcostofentryintolowtechnology

paintmanufacture.

Further,theplantismultipurposeratherthanspecialized,whichmeanssmallproducerscanmanufacturearange

ofpaints.

A

small

paint

company

may

manufacture

under

approximately

100

different

trade

names

and

yet

account

forlessthan1%ofthetotalpaintsalesinthecountry.Capacitycanbeincreasedbytheadditionofdiscreteplant

units.Paintproductionisconstrainedbymarketsizeandrangeofproducts,whichhasresultedinbatchproduction

ratherthan24hourcontinuousshift.

1.Makingthepaste:{Stage1inthediagrambelow}Pigmentmanufacturerssendbagsoffinegrainpigmentstopaintplants.There,thepigmentispremixedwithresin

(awettingagentthatassistsinmoisteningthepigment),oneormoresolvents,andadditivestoformapaste.


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2.Dispersingthepigment:{Stages2&3inthediagram}Thepastemixtureformostindustrialandsomeconsumerpaintsisnowroutedintoasandmill,alargecylinderthat

agitatestinyparticlesofsandorsilicatogrindthepigmentparticles,makingthemsmalleranddispersingthem

throughoutthemixture.Themixtureisthenfilteredtoremovethesandparticles.

Insteadofbeingprocessedinsandmills,upto90percentofthewaterbasedlatexpaintsdesignedforuseby

individualhomeownersareinsteadprocessedinahighspeeddispersiontank.There,thepremixedpasteis

subjectedto

high

speed

agitation

by

acircular,

toothed

blade

attached

to

arotating

shaft.

This

process

blends

the

pigmentintothesolvent.

3.Thinningthepaste:{Stage4inthediagram}Whethercreatedbyasandmilloradispersiontank,thepastemustnowbethinnedtoproducethefinalproduct.

Transferredtolargekettles,itisagitatedwiththeproperamountofsolventforthetypeofpaintdesired.

4.Canningthepaint:{Stages5&6inthediagram}Thefinishedpaintproductisthenpumpedintothecanningroom.Forthestandard8pint(3.78liter)paintcan

availabletoconsumers,emptycansarefirstrolledhorizontallyontolabels,thensetuprightsothatthepaintcanbe

pumpedinto

them.

Amachineplaceslidsontothefilledcans,andasecondmachinepressesonthelidstosealthem.Fromwirethatis

fedintoitfromcoils,abailometercutsandshapesthehandlesbeforehookingthemintoholesprecutinthecans.A

certainnumberofcans(usuallyfour)arethenboxedandstackedbeforebeingsenttothewarehouse.


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3.MARKETANALYSIS3.1CompetitionThePaintCompaniesinNigeriacanbeclassifiedinto4categories.ThefirstcategoryaretheGradeAcompanies.

Therearesevencompaniesinthiscategory.Theycommandbetween7to10%ofthetotalpaintmarketinNigeria

(whichisvaluedatN1,600,000,000,000orN1.6trillionor1.6billiongallonsperannum).Eachofthesecompanies

experiencesyearlyrevenueofN3billionormoreandtheyareallquotedontheNigeriaStockExchange.

A CompanyName Location1 AfricanPaint Lagos

2 BergerPaintsNigeriaPlc Ikeja,Lagos

3 CAPPaint Ikeja,Lagos

4 DNMeyerPlc. Ikeja,Lagos

5 IPWA IkejaLagos

6 NigerianGermanPaint Lagos

7 PremierPaint Lagos

TheGradeBcategoryofcompaniesenjoyannualrevenueofbetweenN500milliontoN3billion.Theyperformwel

insalesbecauseofsuperiorregionaldistributorshipandpricing.TheycomesecondtoGradeAcompaniesinterms

ofquality.

B CompanyName Location1 AskarPaintsNig.Ltd. Ibadan,Oyo

2 ApexPaintsLimited Abeokuta,Ogun

3 BanexInd.Limited WuseAbuja

4

BillandChemical

&

Paints

Industries

Limited Ogba,Lagos

5 ChemstarPaintsIndustries(Nig)Plc. IkejaLagos

6 ChoicePaintsNigeriaLtd. Aba,Abia

7 CowriePaintsLtd. Benin,Edo

8 EaglePaints(Nig.)Ltd. IkejaLagos

9 HomeCharmPaintsNigeriaLtd. Aba,Abia

10 InternationalPaintsWestAfrica IkejaLagos

11 NnencoPaintsNigeriaLtd. Okigwe,Imo

12 PeaCockPaintsLtd Etinan,AkwaIbom

13 PortlandPaints&ProductsNigPlc. Alausa,Lagos

14

Premier

Ifo,Ogun

15 PresidentpaintsNig.Ltd. Agege,Lagos

16 SellerPaintsNig.Ltd. LagosIsland,Lagos

17 Theo&TheoPaintsCo.Nig.Ltd. Aba,Abia

TOTAL


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GradeCcompaniesaremediumsscalecompaniesandsomesmallscalewithdominancewithinastateorsome

states.Theyalsopossessdistributorsandmaybeobtainedatsomestrategicretailordistributionpoints.Their

annualrevenuefallswithintherangeofN50milliontoN500million.

C CompanyName Location1 AcelandPaints Ejigbo,Lagos

2 AdamsonCoatings&PaintsLtd. Ikeja,Lagos

3 AdmiralPaints IfakoIjaya,Lagos

4 AdvancecoatingTechnologyNig.Ltd. Isolo,Lagos

5 BaluxPaintsnigeriaLtd. Kano,Kano

6 BestPaintsIndustriesLtd. Apapa,Lagos

7 CamelitePaintIndustryLtd. AbeokutaExp.Way,Ogun

8 CeliatPaintsLtd. Ikeja,Lagos

9 ChiamsPaints&ChemicalsLtd Aba,Abia

10 ClovertexpintsLtd. OsisiomaIndustrialArea

11

DelmanPaints

companies

Ltd.

Lagos

Island,Lagos

12 EbonyPaints(Nig)Ltd Enugu,EnuguState

13 EbethsPaintsInternational Portharcort,Rivers

14 EmtaPaints IpajaLagos

15 GeneksNig.Ltd. OluObasanjoWay,Abuja

16 GraduatePaints Ogba,Lagos

17 HeritagePaintsLtd. DopemuLagos

18 KobakPaintsLtd. OrileIganmu,Lagos

19 LydolinePaintsLtd. IfakoAgege,Lagos

20 MaricentChemicals&MfgCo.Ltd. Wuse,Abuja

21 MikaluxPaintsandChemicals LagosIsland,Lagos

22

NewGemini

Paints

Ikeja,

Lagos

23 SacluxPaintsPlc. Deidei,Abuja

24 SandtexPaints Wuse,Abuja

25 SikkensCarPaintsLoylessLtd EbuteMetta,Lagos

26 SloakPaintnigeriaLimited Rumuene,PortHarcourt

27 StarPaintsIndustriesLtd. ApapaLagos

28 TopCharmPaints Akowonjo,Lagos

29 Weather HeadPaintsLtd. Suleja,Abuja

30 ZumaPaints&ChemicalCompanyLtd. Idu,Abuja

TOTAL


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TheGradeDcompaniesaremadeupofcottagelevelandsmallscalecompanies.Theysurvivemainlyonbuilding

andprojectcontractsastheirfundingdoesnotpermittieddowncashwithdistributorsandtheirmarketingand

salesstructureisnotasorganizedastheotherGradecompanies.TheiryearlyrevenueisusuallyunderN50million.

D CompanyName Location1 AgintuChemicalandAlliedProductsLtd Uralla

2 AlliedPaintsLtd. Lagos

3 AlphacOdinsInd.Co.Ltd. Enugu

4

AmaluxPaints

Lagos

5 AutomobileChemicalInd.Nig.Ltd. Lagos

6 BenGeorgeChemicalInd.Ltd Lagos

7 BeneplasticInd.Ltd. Lagos

8 BiluxInternationalPaintsNig.Ltd. Lagos

9 DewabodNig.Ltd. Lagos

10 DilimerioPaintsMfg.Co.Ltd. PortHarcort

11 DruckerInd.Nig.Ltd. Otta

12 Ezeyeama&SonEnterprises Umuahia

13 FabexPaints Ibadan

14 FredKarleInd.Nig.Ltd. Lagos

15 GranplastChemicalsNig.Ltd Aba

16 Hegemeyer Lagos

17 HenkelChenicalNig.Ltd. Lagos

18 InnoContinentalInLtd. Enugu

19 KavitexInd.Ltd. Lagos

20 KoramaCloverInd.Ltd. Aba

21 MandisPaintsInd.Nig.Ltd. Onitsha

22 MercityChemicalInd.Ltd. Awka

23 MayluxIndustriesNig.Ltd. Aba

24 MacoChemicalInd.Ltd. Onitsha

25 NewHarnonPaintNig.Ltd Orlu

26 NigerPaintsLtd. Anambra

27 NigerChemicalLtd. Anambra

28 NimcoNigeriaLtd. Ogun

29 PeggyChemicalInd. Lagos

30 PhinaPaintInd.Ltd. Akwa

31 PurecleanIndustriesltd. Lagos

32 RainbowPaintandIndustry Ilesha

33 RojenicaNig.Ltd. Onitsha

34 SalexPantsandChemicalsInd.Ltd. Lagos

35 SamborosIndustriesLtd. Nnewi

36 SellarPaintsNigLtd. Lagos

37 ShaEkaChemicalandInd.Nig. Agbor

38 SunnyPaintsLtd. Lagos

39 UnionAdhesiveandChemicalCompany Lagos

40 WuraPaintilesNig.Ltd. Lokoja

TOTAL


20/25

3.2MarketSizeTheTotalEstimatedMarketforallpaintproductsinNigeria(gloss,texcote,emulsion,redprimer,etc)isvaluedat

1.6billion(1,600,000,000)gallonsorN1.6trillion(N1,600,000,000,000)perannum.

3.3MarketSegments1.

EmulsionPaintSegment:ThetotalmarketforemulsionpaintinNigeriais1billiongallonsperannumorN500billion.Theemulsionmarketisthemostaffordableandthemostactive.Severalcompanieshavedifferentproducts

forthissegmentwhichincludesOrdinaryorLightEmulsion,DeepEmulsion,Texcote,Vinyletc.

2.LacquerorGlossPaintSegment:Thetotalmarketforlacquer(glossy)paintsis400milliongallonsperannumorN800billion.Theglossypaintmarketissecondonlytothatofemulsion.

3.Wood,Furniture,Marine,andotherIndustrialandArchitecturalcoatingSegment:Thetotalmarketfortheremainderofthepaintmarketis200milliongallonsperannumorN300billion.

3.4MarketShareThefollowingchartshowsthemarketsharesofthedifferentcompaniesintheirclassifiedgrades.Eachpieshows

theGrade,thenumberofcompaniesinthatgradelevelinNigeriaandthemarketshareoftheN1.6trillionturnover

perannumeachgradecontrolspresently.

TheindividualleadersintheGradeAcategory,suchasBerger,CAPandMeyercommandupto0.8to0.9%ofthe

totalNigerianpaintmarkettotalingbetweenN10toN15billion.

TheGradeDcompanieshavebeenallotteddifferentnumberofcompaniesovertheyearswithsomeindustry

spokesmenquotingupto800companies.However,thenumber400statedheredescribescompanieswhichhave

beenproducingpaintfornotlessthan3consecutiveyearsinexcessof10,000gallonseveryquarteroftheyear.

Mark et Share via Grade Classif ication

Grade A, 7

companies

6%

Grade C, 30

companies18%

Grade B , 17

companies

13%

Grade D,

400

companies

63%

Grade A, 7

companies

Grade B, 17

companies

Grade C, 30

companies

Grade D,

400companies


21/25

Someofthesecottagescaleorsmallscalepaintcompaniesproduceabout1,000gallonsofpaintonaweeklybasis.

WhencontrastedwithacompanylikeAskarwhichproduces80,000gallonsonaweeklybasis(morethansome

GradeDcompaniescanproduceinayear)thecriticaleffectofeconomicsofscaleinthePaintIndustryis

adequatelyilluminated.

3.5CurrentDemandDifferentcompanieshavetheirvaryingmarketdemandvaluesdependingontheirsales,marketpenetration,

distributioncoverage,pricingandbrandacceptability.ThefollowingcasestudydepictsthedemandforAskarPaints

inNigeria:

1.AskarPaints,Ibadan:

AskarisaGradeBPaintcompanyinIbadan,OyoState.ItisasubsidiaryofOduagroupofcompanies,whichisco

ownedbythestategovernmentsofOyo,Ekiti,Ondo,Ogun,OsunandLagos.Itsfactoryoperatesataproduction

capacityof60,000to70,000cansanddrumsofpaintsweeklywhichequals80,000gallonsweekly.

Throughadistributionnetworkof22majordistributorsinOyoStateand8otherdistributorsinLagosandEkiti

state,its

weekly

sales

totals

52,000

gallons

weekly

for

the

following

products:

i. 10,000cans(1gallonor4litercan)ofemulsionpaint(Texcote,LightandDeepEmulsiontypes).ii. 5,000drums(5gallonor20literdrum)ofemulsionpaint(Texcote,LightandDeepEmulsiontypes).iii. 10,000cans(1gallonor4litercan)ofglossypaint.iv. 7,000cans(1gallonor4litercan)ofspecialpaint(redprimeroroilpaintformetalandwood).

With30distributorsover3states,eachdistributorwillbeachievingsalesof1,000to2,000gallons(500to1000

cans)ofpaintweekly.

2.FabexPaints,Ibadan:

FabexisaGradeCpaintcompanyinIbadan,havinggrownfromasmallscalefactorytoitspresentmediumscale.

ThoughitsrevenuestillhoversbetweenN30millionandN50million,ithasestablisheditsbrandinthemarketin

Ibadanandplanstodolikewiseinneighboringtowns.

Throughitsdistributorsandnetworkofcontractors,Fabexpaintsachievesthefollowingmonthlysales:

i. 20,000litersor5,000cansofemulsionpaint.

ii. 10,000litersor2,500cansoftexcoteandmattpaint.

iii. 1,200litersor300cansofglosspaint.

This

sales

capacity

allows

Fabex

to

achieve

monthly

sales

range

of

N5,000,000

to

N8,000,000.


22/25

3.6ProductPricingThetablebelowshowsacomparisonofpaintproductsfromavailablebrandsintheNigerianpaintmarket.The

commonbrandsintheSouthsouthregionarelistedsuchasChemstar,Meyer,DuluxandBerger.Thereisa

compositionofGradeA,BandCcompaniesandtheirdifferentpricing.Asuggestedpricehasbeenincludedinrow

9foranewstartupcompany.

S/No

Company

Name

Product

Name

MARKETPRICE(NAIRA)OrdinaryEmulsion OrdinaryEmulsion

Texcote/HighEndEmulsion

Glossy/LacquerPaint RedPrimer

5liter 20liter 20liter 5liter 5liter1 Askar Sunshine 600 3,000 8,500 2,000 2,400

2 Apex Betalux 1,600 7,500 7,500 2,800

3 Berger Luz 1,900 9,500 10,000 3,000

4 CAP Dulux 3,500 12,000 13,500 3,500

5

Chemstar

Finecoat

600

2,800

4,000

1,600

6 Eagle Eagle 500 4,500

7 Meyer Meyerlux 1,800 8,000 2,300

8 President President 900 4,500 6,500 2,200 2,200

9 TAF Taflux 900 4,500 6,000 2,000 2,100

Therearedifferentreasonsforthewidedisparitiesinpricingfromthedifferentcompanies.CompaniessuchasCAP

(Dulux)andBergeremphasizeonqualityemployingamixtureofrawmaterials,importedandlocallysourced,and

aimedatthepremiumcustomerswhoseekqualityanddurabilityaboveprice.Furthermore,thesecompanieshave

beenestablished

for

more

than

30

years

and

have

operations,

depots

and

distribution

over

the

country

with

long

standingcustomerrelationships.

OthercompaniessuchasChemstar(Finecoat)andPresidentemploypricingastheirpenetrationstrategyandsellto

themiddletierofthetargetmarket.WithpricesaslowasN600pergallon,ascomparedtoN1,600ormorefor

otherbrands,thewidegapinpricingmakesthemapreferredchoiceforeverydayusersofpaintandthosewith

lowerpurchasingpower.

Othercompaniesyet,suchasAskar,leverageontheirrelationshipwithStategovernmentsandparastatalsand

positionthemselvesasthepreferredsupplierofpaintproductsfortheconstructionprojectsofsuchorganizations.


23/25

4.FINANCIALANALYSIS4.1TwoYearRevenueForecastAnewpaintfactory,Ibadanwillachievetherevenueforecastinthetablebelowaccordingtotheassumptions

madeundersection4.2FinancialIntelligenceofthisreport.S/No Period No.of

Distributors Revenue,N1 Month1 1

2 Month2 1

3 Month3 2

4 Month4 2

5 Month5 2

6 Month6 3

7 Month7 4

8 Month8 4

9Month

9

4

10 Month10 5

11 Month11 5

12 Month12 5

TOTAL 21,416,00013 Yr2,Quarter1 7

14 Yr2,Quarter2 10

15 Yr2,Quarter3 12

16Yr

2,

Quarter

4

15

TOTAL 44,836,000

4.2FinancialIntelligenceAnewpaintfactorywillachieveaturnoverofN21millionwithinitsfirstyearofproductionanddoublethis

turnoverbytheendofthesecondyear.Itwilldothisbygrowingitsdistributorsfrom1toabout15.Thefollowing

assumptionsalsohold:

1.The

factory

will

have

adaily

production

capacity

of

1,440

liters

of

emulsion,

960

liters

of

texcote

and

matt,

and

160litersofglosspaints.

2.Paintproductionisnotadailyconsistentoperation.Thereforeactiveproductionwillbeforsomeworkingdaysin

themonth,whilesalesandmarketingwillworkhardtopushsalesandreconcilepayments.

3.Therewillbefluctuationsintherevenueduetoseveralfactorssuchasweatherandcompetition.

4.Theprojectedrevenueinthe2ndwillshowanincreaseinrevenueofmorethan200%basedonalarger

distributionnetworkandoperationalefficiency,nothigherproductionfigures.


24/25

4.3CapitalCostsandFinancialForecastsNo. Description Value(N)

1 Building&Land

2 Equipment

3 Accessories

4 TotalStartUpCost 18,039,3005 1styearSalaries

6 1yrConsumables

7 1yrRawMaterials

8 Utility

9 Marketing

10 1stYearTotalCosts 14,815,35011 1stYearTotalSales 21,416,00012 1stYear'sNetProfit 6,590,650

TheestimatedprofitinthefirstyearwillbeN6,590,650.Theestimatedprofitforthe2ndyearwillbeN13,440,000.

Breakevenwillbeachievedbythe3rdor4thyearofoperationsbymaintainingconsistentmarginsontheproduction

costs. Inaddition,consistentquality,adherencetosafetymeasuresandpractice,andensuringawideningreach

throughitsdistributionnetworkwillcomplementeffortsofthesalesandmarketingteam.


25/25

7.CONCLUSIONThereisareliableandfavorablepremiseforthesetupofthenewstartuppaintfactoryinIbadan.Theconstruction

industry,particularlythehousingsectorshallcontinuetowitnessinvestmentsinthecomingyears.Basedonall

researchfindingsanddataanalysis,thesetupofanewfactoryinIbadanwillbeaviablebusinessventure.

ThestartupcapitalforthisventurewillbeN18,039,300;thisincludespurchaseof1acreoflandandtheconstructionofawarehouse,equipmentpurchase,andpurchaseof1yearssupplyofrawmaterials,and

consumablessuchaslabelingandpackagingcontainers.

ThenewpaintfactorywillachievetotalsalesofN21,416,000inthefirstyearofoperationandwouldhavespentN14,815,350oncostofoperationstherebyyieldinganetprofitofN6,590,650inthefirstfinancialyear.However,cautiousconsiderationshouldbeputinplaceinthechoiceoflocationforthisbusiness,oneffective

qualitycontrolandcontinuoustrainingforthefactoryworkerstoassuremaintenanceofquality,whichwill

engendertrust,commitmentandbrandloyaltyfromthe ofcustomers.

Formoreinformationonthisbusiness,pleasecontact:

classified,

Jericho,Ibadan.

Tel.No:

classified

Email:

paint prod demo

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