TABLE OF CONTENTS

INTRODUCTION
RESEARCH SUMMARY
MARKET EVALUATION
PROJECT SIZE
FINANCIAL ESTIMATE
FINANCIAL PLAN
MANPOWER AND MANAGEMENT
RAW MATERIALS
SCHEDULE OF LOAN REPAYMENT AND INTEREST CHARGES
DEPRECIATION AND AMORTISATION SCHEDULE
ESTIMATE OF OVERHEADS
SCHEDULE OF ANNUAL TURNOVER
INCOME AND EXPENSES STATEMENTS
5 - YEAR PROJECTED PROFIT AND LOSS STATEMENTS
5 - YEAR PROJECTED CASHFLOW STATEMENTS
5 YEAR PROJECTED BALANCE SHEET STATEMENTS
MACHINARY TECHNICAL DETAILS

Page 1 of 23

INTRODUCTION

Diapers is expected to see a constant value CAGR of 8% over a

forecast period of 5 years. Growth in the population and rising disposable
incomes and brand awareness will help to drive growth over the forecasted
period. It is expected that population growth will continue into the forecasted
period, whilst the economy is also expected to stabilize in the nearest future.
Manufacturers are expected to push their brands with price discounting and
advertising, which will ultimately stimulate growth in the forecast period.

Page 2 of 23

RESEARCH SUMMARY
The growth in the population in Nigeria, especially of children, caused rise in
demand for diapers in 2011, as this translated into new consumers. Urbanization
also helped to stimulate growth, as most working mothers took advantage of the
convenience which these products offer their fast-paced lifestyles, increasing
demand for products in the category. Growth in disposable incomes due to positive
economic growth also supported the average familys ability to buy diapers.
There is a considerable demand for disposable diapers to meet the need of
nursing mothers. Currently the demand is met majorly by imported products and
there is a big gap in the demand-supply level of diapers. One of the main
manufacturer of diapers in the country is based in Lagos (Wemy Industries) led
nappies/diapers in 2011 with a 22% share of value sales in the industry. Hence
leaving approximately 80% of the local share sales to intending companies that
want to enter the industry.
The plant recommended has a production rate of 400 diapers per minute.
The total capital investment for the projected factory including building
construction, supply of all equipment and working capital amounts to approximately
NGN 20 million at current prices. It proposed that this amount is funded by the
subscription of NGN 8 million equity capital and that the remaining is provided
through a loan payable over 2 years at an interest rate of 2.5% and overdraft facility
be secured for the working capital at an interest rate of 3%.
The total manpower requirement of the project is estimated at 17, out of
which 10 will be administrative staff.
Financial analysis indicates that the investment in diaper factory shall be
commercially profitable as shall be discussed in this report.

Page 3 of 23

MARKET EVALUATION
A woman of mid or high class whose family has prospered will have
earned the right to be held in general esteem. In this part of the world,
Nigerian women only feels truly fulfilled in marriage when she becomes a
mother.
Everywhere the birth of the first child is a more important event than
the setting up of the joint household and it is marked by a joyous occasion.
Generally, in our society it is believed that parents must provide a
better standard of living for their children than what they enjoyed. For this
reason parents strive to take good care of their children given the impression
that they are working only for their children.
There is silent competition between families to what the head of the
household provides the kind of home, the furniture, food, the mode of
dressing and the class of school a child attends.
A baby needs a good protection against diseases before he/she
reaches the age that they are properly immune. From the time of birth to the
age of two (2), a child is not able to tell his mother when he wants to stool or
urinate. He does it whenever he/she feels like, this is why every child needs a
constant covering so as to protect them from soiling the environment or the
mothers or nannys clothes.
Before the introduction of disposable diapers, towel nappies are the
commonly used ones. They have to be washed and sterilized constantly for
re-use. Apart from the inconvenience of keeping the nappies well, babies do
develop nappy rashes and its not generally hygienic for both the baby and
the mother. This is a major problem that mothers face.
A survey to ascertain the level of usage and preferred product by
among nursing mothers shows that there is high level of demand for
Page 4 of 23

HUGGIES product followed by PAMPERS product which are all imported into
the country. And the amount of usage indicates 100% dependency on
disposable diapers among mid and high level mothers, 60% dependency for
low level mothers. Thus showing that 98% of nursing mothers in the country
depend on disposable diapers for their new born baby less than two (2)
years.
Amongst the reasons given for preferring disposable diapers to terry
nappies are:

It is convenient to use and keep.

It absorbs excrete well and keeps babys skin dry.
While travelling disposable diapers are better for use.
It shows a high level of decency and neatness, as it involves disposing
without soiling the hands or polluting the air.

DEMAND
Disposable diapers are in five different sizes (Mini 3 5 Kgs, Normal 4
10 Kgs and Maxi 9 18 Kgs). New born babies use averagely 7 diapers per
day. This reduces gradually up to three a day by the time they are 2 years
old.
According to the last census hold 2006, the population of children
under 2 years is 18.01% of the total national population. In 2012, estimated
population growth rate stands at 3%, hence the population of children under
the age of 2 years will be 26,051,351.22 (26 million).

Projected National Population

0 2 years population

No of diapers per baby per day

144,644,743.07

144 million

26,051,351.22

26 million.
=

7
Page 5 of 23

Demand for diaper per annum

=
=

7 x 312 x 26 million

14.2 billion pack of 12

From survey, it is discovered that the use of disposable diapers has

spread to some of the interior villages thereby providing a wider market for
the industry. Approximate population of nursing mothers that use disposable
diapers can be estimated to be 80% of the total population.
Therefore, the annual demand will be:
Total demand

Estimated users =
=

14.2 billion packs

80
14.2 billio n
100
11.36 billion

SUPPLY
Currently the demand is met by import. Unfortunately there is no
available statistical data to show the level of import.
The only factory in the country that produces a close substitute is in
Lagos. From my survey the product does not satisfy the need of the
consumers. Despite the import and the close substitute there is still a big
gap in the demand supply level of diapers.

CONCLUSION
There is a ready market for this product but care must be taken to
produce the same quality product that will compete well with the imported
ones.
The product is very expensive now because it is scarce, the prices at
which the company will sell must be competitive and must be at a price that
the target market can afford. In this case, our target market are the mid and
Page 6 of 23

low level nursing mothers that cannot afford the imported product. At the
same time working to compete with the international market.
The products should be well advertised on daily national newspapers
before they are available in the market. Samples of the product shall be
distributed to Clinics and Hospitals as part of awareness

Page 7 of 23

PROJECT SIZE
Production Process
The production process is a simple and straight forward procedure. One
of the features of the machine is that it has a single manufacturing process
from raw materials to final product.
(The detailed manufacturing process is in section 17 of this report)

Production Plan
The plant opted for has a capacity on full production on a single 8
hour shift of 350 - 400 pieces per minute. The annual capacity on full
production will be 5.0 million packs of 12 which is however, still far below the
annual demand level which is 4.6 billion packs of packs of 12.
The initial output has been planned for 60% for the first year, 70% for
second year, 80% for third year and 90% for the fourth and fifth years. From
the second year of production, the factory will operate on double shift.
The machine recommended is capable of producing all four style of
diapers.

Page 8 of 23

FINANCIAL ESTIMATE
CAPITAL INVESTMENT
We have estimated the total investment of Capital which would be required
to set up and operate the size of the plant envisaged to be # 18,600,000.00
out of which # 3,000,000.00 is for working capital. The details are as
follows:-

Accommodation (Rented)
Plants & Machinery
Utilities
Working Capital
Preliminary Expenses
TOTAL
Accommodation:

NAIRA
800,000.00
14,000,000.00
2,500,000.00
3,000,000.00
1,000,000.00
18,600,000.00

A ware house of approximately space of 40x25x4M (L X W X H) is sufficient

for the machines and equipment, and also room for expansion.
Machinery and Equipment
The plant will be purchase from potential suppliers based in China. The
provision of #12,000,000.00 made for the plant is based on estimate
received from the group, inclusive of local handling and installation.
Utilities
The provision of #2,500,000.00 is to meet the cost of Furniture, Generator
(120KVA) and Vehicle etc.
Preliminary and Pre-production Expenses
These cover expenses incur for company registration, loan documentation,
and other legal charges, feasibility study and other miscellaneous expenses.
Working Capital

Page 9 of 23

Has been calculated on the basis of

3 months stock of raw material
2 Months salaries

FINANCIAL PLAN
Based on the estimated capital cost, we would recommend the financing to
be as follows:-

Equity
Loan
Overdraft

Percentage
30.5
37.2
32.3

Amount (Naira)
6,100,000.00
7,440,000.00
6,460,000.00

It is estimated that the loan will be secured at 2.5% interest rate repaid
over two years. The working capital will be financed through bank overdraft
at 3% interest rate.

Page 10 of 23

MANPOWER & MANAGEMENT

The labour force to meet planned initial production is as follows:-

Factory Labour:
No of
Persons
Supervisor
Laboratory Scientist
45,000.00
Operators
Packers

2
4
6
13

Annual
Rate
40,000.00
1
45,000.00
25,000.00
15,000.00

Total
Cost
80,000.00
100,000.00
90,000.00

315,000.00
Add: 20% Benefits
63,000.00
378,000.00
Management and Office Personnel
Directors
Manager
Secretary
Accountant
Marketer
Drivers
36,000.00
Cleaners

Add 20% Benefits

2
1
1
1
1
2
10

Based on Shares held

100,000.00
100,000.00
20,000.00
20,000.00
80,000.00
80,000.00
60,000.00
60,000.00
2
18,000.00
10,000.00

20,000.00
316,000.00

63,200.00
379,200.00

Page 11 of 23

Management
The Investors should be fully active in the management of the project. The
potential machinery supplier will provide technical assistance and train the
local staff. Their fees is inclusive in the machinery cost

RAW MATERIALS
The raw materials required by the project are listed below with indications of
the sources from which they will be procured.

Items
Composite backsheet
Hydrophobic N.W(S)
Hydrophilic non-woven(S)
SAP
Polyethylene film
ADL
Elastic Tape(waistband)(S)
Frontal Tape without adhesive(S)
Side tape
Frontal Tape(hook)
Side tape(Loop)
Leg cuf Elastic(spandex)
Leg Cuf glue
Hot melt Bonding Adhesive
Fluff Pulp(Treated)
Upper Tissue Paper(S)

Sources

Adequate arrangements should be made to keep as much as three months

requirement as stock.
The cost of all the raw material per 1000 diapers can be estimated to be
439.5 Naira, which will include cost of the raw materials and transportation
costs to the factory.

Page 12 of 23

SCHEDULE OF LOAN REPAYMENT AND INTEREST CHARGES (IN NAIRA)

YEA
R

LOAN SUM

LOAN
REPAID

INTEREST ON
LOAN

OVERDRAF
T

INTEREST ON
OVERDRAFT

TOTAL INTEREST
CHARGES

7,365,600.
00

3,682,800.0
0

184,140.00

6,460,000.
00

193,800.00

379,800.00

3,682,800.
00

3,682,800.0
0

92,070.00

92,070.00

Page 13 of 23

DEPRECIATION AND AMORTISATION SCHEDULE

Page 14 of 23

ESTIMATE OF OVERHEADS
Management
Non factory labour
Maintenance and Spares
Power (Power grid & Diesel)
Marketing and Distribution
Insurance
General administration

FIXED

VARIABLE

792,000.00

158,000.00

Page 15 of 23

SCHEDULE OF ANNUAL RETURNS

The plant capacity is 5,000,000.00 packs of 12
YEAR

EFFICIENCY RATE

NO OF PACKS

60%

3,000,000

UNIT FACTORY
PRICE
900.00

70%

3,500,000

900.00

80%

4,000,000

900.00

90%

4,500,000

900.00

90%

4,500,000

900.00

TOTAL
REVENUE
2,700,000,00
0.00
3,150,000,00
0.00
3,600,000,00
0.00
4,050,000,00
0.00
4,050,000,00
0.00

Page 16 of 23

INCOME AND EXPENSES STATEMENTS

Below is the summary of the projected results for the first three years of
operation.
YEAR
Sales

1
2,700,000,00
0.00

DEDUCT: Operating Costs

Materials
Labour
Variable Overheads

8,633,972.00
378,000.00

2
3,150,000,00
0.00

3
3,600,000,00
0.00

Gross Profit
LESS Fixed Overheads
Net Profit before Interest &
depreciation

Page 17 of 23

5 YEAR PROJECTED PROFIT AND LOSS STATEMENTS

YEAR
CAPACITY
UTILISATION
SALES REVENUE

1
60%

2
70%

3
80%

2,700,000,000.
00

3,150,000,000.
00

3,600,000,000.
00

4
90%

5
90%

Deduct: Direct costs

Materials
Labour
Variable Overheads
Indirect Costs
Fixed Overheads
Depreciation
Interest Charges
Total Costs
PROFIT BEFORE TAX
TAX
PROFIT AFTER TAX

Page 18 of 23

YEAR
CASH INFLOW
Equity

1
2
60%
70%
2,700,000,000 3,150,000,000
.00
.00

3
80%
3,600,000,000
.00

4
90%

5
90%

Loan
Profit before
tax
Depreciation
Total
CASH
OUTFLOW
Fixed Assets
Preliminary
Expenses
Working
Capital
Tax
Loan
Repayments
ANNUAL
SURPLUS/DEFI
CIT
CUMMULATIVE
SURPLUS

5 YEAR PROJECTED CASHFLOW STATEMENTS

Page 19 of 23

Page 20 of 23

5 YEAR PROJECTED BALANCE SHEET STATEMENTS

YEAR
FIXED ASSETS
At cost lessdepreciation
CURRENT ASSETS
Working Capital
Cash

LESS: CURRENTLIABILITIES
Tax Payable
Overdraft
NET CURRENT
ASSETS
NET ASSETS
FINANCED BY:
Equity
Loan
Retained Earnings

Page 21 of 23

TECHNICAL DETAILS OF THE MACHINE

Introduction of equipment:
1Synthesize advantage from both home and abroad same model machine
to design and manufacture. The production line enjoys fully functioning,
Steady performance and easy operation.
2This line can produce both economic type products and high-grade
products. Change a few spare parts, this production line can produce L, M, S
and XL baby diaper.

Function and characteristic:

1. Cotton core adopts big web wheel form, release cotton.
2. Pulp wrapped by toilet paper (wet strength paper) (clip one layer toilet
paper in the middle), to avoid cotton core broken;
3. Pulp fiber dissolution adopts saw type high-speed fiber dissolution
machine, which suitable for treated pulp, semi-treated pulp, untreated pulp
(bursting strength 1100) .Fixed with automatic elevator;
4. The tension of two side elastic can be adjusted.
5. Front waist tape, left and right waist tape move, re-sticks strongly.
6. Main driving adopts right-angle box, differential housing and synchronous
belt. Right-angle box and right-angle box connected by star coupling.
Equipment run steadily.
7. The convey of raw material adopts adsorption convey forming. Conveyer
belt adopts conducting bar forming, it will avoid the convey excursion caused
by temperature.

Page 22 of 23

Main parameter:
Model
Designed production
speed
Stable production
speed
Specification
Power
Power supply
Rate of spoiled

Size of machine
Weight

CIL-BD-150A
150 pcs/min

CIL-BD-300A
300 pcs/min

100-120 pcs/min (take M

size as sample)

200-250 pcs/min (take M

size as sample)

XLLMS
About 90Kw(excluding hotmelt adhesive )
380V/50HZ
2 %( Excluding the fault
of adhesive applicator
malfunction and material
feeding)
(LWH):about
18M1.5M2.2M
About 30T

XLLMS
About 110Kw(excluding
hot-melt adhesive )
380V/50HZ
2 %( Excluding the fault
of adhesive applicator
malfunction and material
feeding)
(LWH):about
20M2.2M2.8M
About 35T

Page 23 of 23