BULHAR SALT

FACTORY
 Table of Contents

i. Summary
ii. Product description and application
iii. Market study and and plant capacity
a. Market study
b. Planet capacity and production program
iv. Materials and inputs
a. Materials
b. Utilities
v. Technology and engineering
a. Technology
b. Engineering
vi. Manpower and Training requirements
a. Manpower requirements
b. Training requirements
vii. Financial analysis
a. Total initial investment cost
b. Production cost
c. Financial evaluation
d. Economic benefits
 I. Summary

This profile envisages the establishment of a plant for the production of 5,365 tonnes of salt per
year.
The plant will generate employment opportunities for 29 persons.
The total investment requirement is estimated at $675,608 thousand, out of which about $310.6
thousand is for plant and machinery.

II. Production Description and application

Sea salt is salt that is produced by the evaporation of seawater. It is used as a seasoning in foods,
cooking, cosmetics and for preserving food. It is also called bay salt, solar salt, or simply salt.
Like mined rock salt, production of sea salt has been dated to prehistoric times.

III. Market study and plant capacity

A. Market study

A. Past supply and present demand

B. Demand projection
 C. Pricing and distribution

B. Plant capacity and production program

D. Production capacity

E. Production program

IV. Materials and inputs

A. Materials

Sea water which is free

B. Utilities

Ser. No. Description Qty Price Total

1 Salt harvester 2 $15,000 $30,000

2 Water tank truck 1 $44,000 $44,000

3 Salt carrier truck 2 $5,100 $10,200

4 Distribution truck 5 $3,400 $17,000

$101,200

V. Technology and engineering

A. Technology

1. Production process

Solar salt is made by an evaporation process. For developing solar salt, we start with brine (or a
salt water mixture).  That brine can be sea water.  It can be brine that we actually make by
pumping water down into an underground salt deposit to dissolve that salt.  We then take that
brine and we pump it into large outdoor ponds.  These ponds are exposed to sunlight, hence the
name solar salt.  The sunlight warms the pond.  The water evaporates, and it leaves behind a
purified salt crystal that we can harvest- that’s what we call solar salt.  Because solar salt is made
from a brine, we can rid solar salt of insoluble impurities.  The purity of solar salt is always
going to be higher than that of rock salt.  Solar salt purity is going to typically be greater than
99.5% sodium chloride. 

2. Source of the technology

B. Engineering

1. Machinery and equipment

Most of the required machinery and equipment for the processing of sea water salt plant are
imported. The total cost of machinery and equipment is estimated to be $310,600. These list of
machinery and equipment is given in Table 5.1.

Table 5-1

List of machinery and equipment

Ser. No. Description Qty Price Total

1 Belt conveyer 1 $10,000 $10,000

2 Salt washer 1 $7,000 $7,000

3 Salt crusher pulverizing 2 $10,000 $20,000

4 Stirring salt washer 2 $8,000 $16,000

5 Salt liquid pump 2 $1,000 $2,000

6 Countercurrent scrubber 1 $4,000 $4,000

7 Salt dryer 1 $54,000 $54,000

 8 Screw conveyer 2 $1,500 $3,000

9 Salt vibration machine 1 $5,000 $5,000

10 Salt screening machine 1 $99,000 $99,000

11 Bucket elevator 1 $2,500 $2,500

12 Salt storage 20 $500 $10,000

13 Packaging [Large] 1 $50,000 $50,000

14 Packaging [Small] 1 $13,000 $13,000

15 Sea water pump 1 $600 $600

$310,600

2. Land, building, and civil work

The plant will require a total land area of 1 km2 of which 1200m2 will be covered by the salt
ponds 24 to be exact, ranging 50m2. The factory and office buildings will be 560m2, and
remaining space will be reserved for further expansion. And the land was given to us by a lease
contract. building and civil works will be $90,000.

3. Proposed location

Considering the availability of infrastructures, the potential market for the product, availability of
transportation for the inputs and having distribution outlets, it would be suggested to locate the
plant at Bulhar.

VI. Manpower and Training requirements

A. Manpower requirements

the sea water salt plant requires 26 workers. The total estimated annual labour cost is $93,720.
The detail breakdown of manpower required for the plant is presented in Table 6.1.

B. Training requirements
Training is required for the production staff on process of technology, machine operation, and
maintenance. The training is expected to be given for a period of three and half weeks by the
machinery supplier at the project site. A total of $5,800. is allotted for executing the training
programme.

Table 6-1

Manpower requirements and annual labor cost

Ser. No Description No. Salary (USD)

Required Monthly Annual

A. Administration

1 Manager 1 1,100 13,200

2 Finance 1 850 10,200

3 Marketer 1 640 7,680

4 Accountant 1 360 4,320

5 Salesperson 2 400 9,600

Sub total 6 45,000

B. Production

10 Technical and production 1 1,000 12,000

head

11 Supervisor 1 400 4,800

12 General mechanic 2 390 9,360

13 Machine operator 3 150 5,400

14 Unskilled worker 13 110 17,160

Sub total 20 48,720

 Grand total 26 93,720

VII. Financial analysis

The financial analysis of the laundry soap project is based on the data presented in the
previous chapters and the following assumptions:-

1. Construction period 1.5 years

2. Source of finance 20% equity, 80% loan
3. Bank interest 10.5%
4. Land value based on estimated lease rate of the region
5. Repair and maintenance 0.4% of plant machinery and equipment
6. Raw material (local) 10 times a year
7. Work in progress 3 weeks
8. Finished products 30 days

A. Total initial investment cost

Table

Summary of the initial investment cost (USD)

No. cost items cost

1 land ——

2 building and civil work 90,000

3 plant machinery and equipment 310,600

 4 vehicle 101,200

5 pre-production expenditure (annual) 166,808

6 office furniture and equipment 6,000

total 675,608

B. Production cost

The annual production cost at full operation capacity of the plant is estimated at $223 thousand
(see Table).

Table

Annual production cost

items year

1 2 3

crude salt —— —— ——

labor 48,720 48,720 48,720

utilities 24,000 24,805 25,201

energy and power 49,088 45,871 52,060

maintenance and repair 600 950 1,120

administration overheads 45,000 45,000 45,000

total operating cost 167,408 165,346 172,101

Depreciation 51,760 51,760 51,760

total production cost 219,168 217,106 223,861

 C. Financial evaluation
1. Profitability

According to the projected income statement, the project will start generating profit in the first
year of operation. Important ratios such as the percentage of net profit to total sales, net profit
to equity (return on equity) and net profit plus interest to total investment (return on total
investment) will show an increasing trend throughout the production life of the project.

The income statement and other profitability indicators show that the project is viable.

2. Break-Evan analysis

The break-even point of the project is estimated by using income statement projection is 23%.

3. Pay-back period

The investment cost and income statement projection are used to project the pay-back period,
the project will fully recover the initial investment and working capital within 4 years time.

D. Economic benefits

The project can create employment opportunities for 26 person. In addition to supply of the
domestic needs, the project will generate $952.366 thousand in terms of revenue. Moreover,
the Regional Government can collect employment, income tax and sales tax revenue. The
establishment of such factories will have a foreign exchange saving effect to the country by
substituting the current imports.