Samson Soap and Detergent Dukam 1 Hek 132 Mil

Soap and Detergent Manufacturing
PROJECT PROPOSAL
FOR
SOAP AND DETERGENT MANUFACTURING PLANT
ROJECT TO BE IMPLEMENTED IN SANDAFA TOWN TOWN,
O/S/Z/S/F ZONE, OROMIA REGION STATE
PROMOTER: RADA UNIVERSITY COLLEGE P.L.C
June, 2021
Finfine, ETHIOPIA
Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 1

Table of contents
EXECUTIVE SUMMARY
1. INTRODUCTION………...................................................................................................…..4
I.1. General Description of project Area……………………………………………………...5
1.1.1 Location Map of the Area ……………………………………………………..…...5
I.2. Objectives of the Project……………………………………………………………….…6
2. MARKET STUDY AND PLANT CAPACITY
2.1. Past supply and Present Demand…………………………………………………..….….7
2.2. Supply of Laundry soap…………………………………………………………………..8
2.3. The Production Process and Engineering………………………………………………...8
2.4. Selection of raw materials for soap manufacturing…………………………………...….9
2.5. Liquid Detergent manufacturing Process……………………….…………………….....13
2.6. Plant capacity and Production Programmed.…………………………….……….……..16
2.7. Land use plan of the planned project….………………………………………………...18
3. MANPOWER AND ORGANIZATIONAL MANAGEMENT
3.1. Manpower requirement with qualification and level of education……………………...19

3.2. Organizational Structure……………………………………………………………...…20
4. FINANCIAL REQUIREMENT AND ANALYSIS
4.1. Project capital and Source of finances..............................................................................21

4.2. Fixed Investment................................................................................…………………...22
4.3. Initial working capital estimation of the project...............................................................24
4.4. Annual depreciation schedule Fixed Asset..................................................................…26
4.5. Financial Statement…………………….......................................................…………....27
4.6. Basic Assumption’s......................................................................................................
….28
4.7. Financial Analysis .........................................................................................…………...28

5. PRE- ENVIRONMENTAL IMPACT ASSESSMENT/EIA/............................................

………….29
I. EXECUTIVE SUMMARY
1. Project Title – Soap and Detergent Manufacturing plant
2. Elements of Soap and Detergent (type soap and detergent liquids, solid and powder )
1.1. Promoter – RADA UNIVERSITY COLLEGE P.L.C
1.2. Status :- New(Project change Mining to soap and detergent)
1.3. Nationality:- Ethiopian
2. Project Location:- Oromia Regional State
OSZSF Zone
Sandafa Town
3. Land Area and Capital

3.1. Premises Requirement: - 10,000 M2 (1he.)
4. Total Capital: - 132,000,000 Ethiopian Birr
 Total Capital
4.1. Fixed Capital = 67,572,000 birr
4.2. Working Capital = 64,428,000 birr
 Source Fund
4.3. Own Equity (30%) = 39,600,000 birr
4.4. Bank loan (70%) = 92,400,000 birr
5. Planned Employment of the creation of the project
 The total manpower required for the plant will be 400 employees
5.1. Permanent Worker :- 100
 Skilled and Unskilled
5.2. On Temporary Basic :- 300
 Skilled and Unskilled
6. Project Benefits for the Regional/Country

 Add value to the economy, Source of Revenue to the government , Employment

opportunity, Save Foreign currency, Benefit for the local community, Stimulate the local
economy and technology transfer
1. Introduction
Our Ethiopia is one of the East African countries with the diversified climatic conditions, natural
scenery and resource bases. Currently the country has a total population of about 100 million of
which more than 40 million is found in Oromia regional state. Oromia is one of the regional
states of Ethiopia with very fertile land, very conducive weather condition both for crop
production and animal husbandry.
The government of the Ethiopia has been excreting its maximum effort to expand investment
opportunities in the country by designing different policies and strategies that will facilitate
investment through attracting both domestic and foreign investors. Likewise, the Oromia
regional state government has been working day and night to make poverty history by making its
door open to investors both (domestic and foreign) to come and invest in the region.
Therefore, it is this ample opportunity and cumulative experience which makes the owner of the
project to envisage this soap production industry in oromia special zone surrounding finfine
Zone in Sandafa own. The owner has a deep rooted experience in the field because he has been
serving on different managerial position from expert and technical manager to general manager.
Thus, it is these experiences which primarily motivated this investor to develop the inception of
this project idea.
Hence, being one of the soap and detergent production projects, it is planned to provide: the soap
that was imported from abroad. The present economic policy of our country which is highly
inviting the private sector to work on import substitution is highly motivating the private sector
to respond to the government invitation, there by contributing their share to the development
process. The project is identified because; the highly growing population of the country is in
need of different soap and detergents.

I.1 General description of project area

i. Location
The envisaged Soap and Detergent manufacturing projects is to be located in the Sandafa Town .
The envisaged town is one of the Capital City of north shoa side oromia special zone
surrounding finfine zone, growing city in the Country, From the Federal Capital of Ethiopia
surrounding 30 KMs North side. Currently the town is known for its multi-investment
development and establishment of industrial city.
According to the 1994 national census, the town had a population

I.2 Objectives of the Project
Currently the number of population of the country is alarmingly increasing and thus demands
huge soap and detergent of different types in their day to day operations. Hence this project has
the following objectives:
 To undertake the production of the soap, and other detergents though scientific methods
and modern technology.
 To serve as the source of government revenue through business income tax.
 To serve as a role model for other investors who wants to invest in similar business
undertakings.
 To contribute somewhat to the governments objectives of reducing the problem of un-
employment through creating employment opportunities to the citizens.
 To bridge the demand gap of soap in the country.
 To contribute in the import substitution policy of the government by locally producing
the soaps that will be imported earlier.
 To contribute some to the area of self sufficiency.

2. Market Potential& Demand Gap

Soaps and detergents have good market potential in our country since they are inseparable in our
daily operation. The factors governing the demand are:
1. Increasing population of the country.
2. Rapid industrialization in the country.
3. Increase in the purchasing capacity of the people.
4. Durability of the product.
5. The expansion of hotels, industries and other sectors which need soap and detergents.
In Ethiopia though there are different soap factories, they are not satisfying the expanding
markets.
2.1. Past Supply and Present Demand
Laundry tasks are becoming easier with modern cleaner products. Washing clothes in water
even with agitation provided by hand or by machine will remove some but not all stains, dirt and
particular soils. Water alone cannot remove soils that are not water soluble, and water doesn’t
have the capability to keep removed soils suspended. Laundry soaps are therefore used in
washing clothes and retreating heavy soils or stains prior to washing. The supply of soaps in
Ethiopia is both from domestic production and import. The average import of soaps is about
57% while the domestic production covers 43%. Among the imported products, Indonesia is the
main supplier of soaps to the Ethiopian market followed by South Korea. Since the total supply
is dominated by imported products, at the right quality level and packaging there is abundant

demand for a new project to capture a reasonable share of the market. In the past decade the
annual average imported soaps volume was 21,560 tons with an annual average growth rate of
5%. On the other hand a linear trend equation on the same series reveals:
Y = 472.91X + 18,959
Estimating the current demand through applying the average annual growth rate and linear trend
approaches resulted in a current effective demand at 22,638 tons and 24,161 tons respectively.
In this study however a conservative estimate of 22,638 tons is considered as the current
effective demand unsatisfied by the present local production of laundry soap. Supply of soap is
presented in Table 1.1.
2.2 SUPPLY OF LAUNDRY SOAP IN TONS
Year Local Imported total Total

1997 14,342 22,404 36,746
1998 10,874 14,302 25,176
1999 26,146 20,438 46,585
2000 17,194 18,043 35,237
2001 14,766 25,738 40,505
2002 19,249 27,290 46,539
2003 11,632 22,808 34,440
2004 14,975 16,443 31,419
2005 16,825 24,634 41,459
2006 23,567 23,496 47,134
2007 35,795 27,141 62,936
2008 52,458 22,735 75,193
Source: CSA Annual Survey Manufacturing Industries Customs Authority
2.3 THE PRODUCTION PROCESS AND ENGINEERING
2.3.1 Production Process

The manufacturing of soaps and detergents is a complex process that involves different activities
and processes. The size and complexity of these processes and activities may range from small
manufacturing plants that employ a small number of people to those with hundreds and

thousands of workers. Products may range from all purpose products to that are used for a
specific application or requirement.
Soaps are generally divided into two classes and designated "hard," and "soft," the former being
the soda salts, and the latter potash salts, of the fatty acids contained in the material used.
According to their methods of manufacture, soaps may, however, be more conveniently

classified, thus:—
(A) Direct combination of fatty acids with alkali.
(B) Treatment of fat with definite amount of alkali and no separation of waste lye.
(C) Treatment of fat with indefinite amount of alkali and no separation of waste lye.
(D) Treatment of fat with indefinite amount of alkali and separation of waste lye.
2.4. Selection of Raw Materials for Soap Manufacturing

The first phase in the manufacturing of soaps and detergents is the selection of raw materials.
Raw materials are selected on the basis of various factors, including - cost, human and
environmental safety, compatibility with other ingredients, and the performance characteristics
and appearance of the final product. While the actual production process may vary from
company to company and manufacturer to manufacturer, there are some steps, which are
common to all types of cleaning products.
2.4.1. Saponification Process for Soap Manufacturing

Significations processes are chemical soap manufacturing processes that produce soap from fatty
acid derivatives. Significations process for soap manufacturing involves hydrolysis of esters
under basic conditions to form an alcohol and the salt of a carboxylic acid (carboxylates).
Saponifiable substances are the soaps and detergent ingredients that can be concerted converted
to soap. In Saponification soap manufacturing processe, vegetable oils and animal fats are used
for making soaps. Trieste’s or Triglycerides are the greasy materials derived from these diverse
fatty acids. Soap manufacturing is doen in a one-step or a two-step process. In the one-step soap

manufacturing process, the triglyceride is treated with a strong base, for example, lye, that
accelerates cleavage of the ester bond and releases the fatty acid salt and glycerol. This one step
soap manufacturing process is the key industrial method for producing glycerol. Sometimes
soaps may be precipitated by salting it out with saturated sodium chloride. For soap
manufacturing, triglycerides are highly purified but saponification process includes other base
hydrolysis of unpurified triglycerides.
2.4.2. Soap Manufacturing Processes for Different Soap Types

Manufacturing of soaps and detergents can be broadly categorized into five main types
I. Bar soap manufacturing
The manufacturing of soaps consists of a comprehensive range of processing and packaging

activities. The complexity the activities involved in soap manufacturing process may vary from
small plants that employ a few people to those with many hundred workers. Products may range
from all purposes and uses to those that for used for a specific application or requirement. The
first step in the manufacturing of bar soaps is the selection of raw materials. Raw materials are
selected on the basis of several factors, which may include human and environmental safety,
cost, compatibility with other soap ingredients, and the appearance and performance
characteristics of the final product. While the actual production process may vary from
manufacturer to manufacturer and company to company, there are some steps that are common
to all bar soaps.
II. Ingredients of Bar Soaps
The traditional bar soaps are made from oils, fats or their fatty acids that are reacted with
inorganic water soluble bases. The prime sources of fats are beef and mutton tallow, while
coconut, palm and palm kernel oils are the main oils that are used in soap manufacturing. The
raw materials of a bar soap can be pretreated to remove impurities and to achieve the desired
color, odor and performance characteristics desired in the finished bar
III. Chemical Process in Bar Soap Manufacturing
Bar soap can be manufactured by either using batch or continuous process. Soap was
manufactured by using batch kettle boiling method, until shortly after World War II, when

continuous processes were developed. Now days, continuous process of soap making are
preferred because of their speed, flexibility and cost economy.
IV. Industrial Bar Soap Making
The industrial soap making involves four basis steps -

 Saponification
 Glycerin Removal
 Soap Purification
 Finishing
These different steps involve various processing steps and operations in their own. A brief
description of these different steps is given below –
 Saponification
The saponification process involves the mixing of tallow (animal fat) and coconut oil with
sodium hydroxide and the application of heat. The process results in formation of soap,
which is a salt of long chain carboxylic acid.
 Glycerin Removal
Glycerin is more valuable than soap, and hence most of it is removed for its uses in more
expensive cosmetic products. Some of the glycerin is left in the soap to make it soft and
smooth. Soap is generally not very soluble in salt water, while glycerin is, hence the salt is
added to the wet soap thereby causing it to separate out into glycerin and soap in salty water.

 Soap Purification
In the soap purification stage, any remaining sodium hydroxide is neutralized with a weak acid,
like citric acid and two thirds of the remaining water is removed to obtain pure soap.
 Finishing
The final stage of industrial soap manufacturing process, finishing stage involves mixing of
additives, such as colors, preservatives, and perfume into soap, which is then shaped into bars
for sale.
V. Toilet Soap Manufacturing
Toilet soap generally has less water and more fatty material than laundry soap and because of
this, the base soap intended for manufacturing toilet soap usually has extra fatty acids that are
blended with preservatives before it is vacuum dried. These measures ensure that there is no
unreached caustic remains in the soap by the time it reaches the consumer, and also make the
soap softer. Additives, such as perfume, dye and opacifier are then mixed to the dried soap and
the mixture is milled to ensure even mixing. It is then plodded and extruded out as a continuous
bar, which is cut into billets and stamped ready for packaging and sale.
 Detergents Manufacturing Process
Detergents are manufactured using a synthetic surfactant in place of the metal fatty acid salts that
are used in soaps. Made in powder detergents, these detergents are sold as laundry powders, hard
surface cleansers, dishwashing detergents, fabric conditioners etc. Most of the powder detergents
have soap in their mixture of ingredients; however it generally functions more as a foam
depressant than as a surfactant.
 Chemical Processes
Powder detergents are manufactured using various processes, such as spray drying,
agglomeration, dry mixing or a combination of these. A brief description of these different
processes is given below –

 Spray Drying Process

The different stages / operations performed in a spray drying process, are -
 Dry and liquid ingredients are first combined into a slurry, or thick suspension, in a tank
known as crutched.
 The slurry is heated and then pumped to the top of a tower where it is sprayed through
nozzles (under high pressure) to create small droplets. The droplets fall through a current
of hot air, thereby forming hollow granules as they dry.
 Collected from the bottom of the spray tower, the dried granules are screened to obtain a
relatively standard size.
 After the granules have been cooled, heat sensitive ingredients, which are not compatible
with the spray drying temperatures (like bleach, enzymes and fragrance), are added.
Traditional spray drying process produces relatively low-density detergent powders.

Advancements in technology have enabled the soap and detergent manufacturers to reduce the
air inside the granules during spray drying to obtain higher densities. The high-density detergent
powders can be packed in much smaller packages than those needed previously.
 Agglomeration
Agglomeration is detergent powder manufacturing chemical technique that results in high-
density powders. The process involves blending of dry raw materials with liquid ingredients.
The technique involves machines, such as a liquid binder, rolling or shear mixing that causes
the ingredients to collide and adhere to each other, producing larger particles.
 Dry Mixing
Dry mixing is a detergent powder manufacturing technique, which is used to blend dry raw
materials. The technique may also involve the addition of small quantities of a liquid

2.5 Liquid Detergents Manufacturing Process

The liquid detergent manufacturing consists of a wide range processing and packaging
operations and the size and complexities of these operations may vary depending on factors, such
as the size of plant and the manufacturing process undertaken. Products may range from an all-
purpose laundry cleaner to specialty cleaner such as glass cleaner.
The first step in the manufacturing of liquid detergents is the selection of raw materials. Raw
materials are selected on the basis of several factors, such as human and environmental safety,
cost, compatibility with other ingredients and the form and he specific properties desired in the
final product. While the actual production processes may vary from manufacturer to
manufacturer, some processes and techniques are common for all. For manufacturing liquid
detergent, both the batch as well as continuous blending processes is used. Both batch and
continuous blending processes are used to manufacture liquid and gel cleaning products.
Stabilizers may be added during manufacturing to ensure the uniformity and stability of the
finished product. In a typical continuous process, dry and liquid ingredients are added and
blended to a uniform mixture using in-line or static mixers.
Recently, more concentrated liquid products have been introduced and a technique for
developing these products is through the use of new high-energy mixing processes in
combination with stabilizing agent. To make liquid detergent, the dry powder is simply mixed
back in with a solution consisting of chemicals and water, called as "solubilizers." These
chemicals help the water and detergent to blend together more evenly. The amount of light
reflected, in comparison to the amount reflected by a sample of the original fabric, is a measure
of the degree of cleanliness. A reflection rate of 98 % is considered as quite good and shows that
the detergent has cleaned properly.
2.5.1 Manufacture Process - Stages Involved

The different stages involved in soap manufacturing include -
 Soap premix manufacture - Liquid detergents contain a combination of soap and

synthetic surfactants. These are made first as a premix, after which other ingredients are
blended into it. This stage simply consists of neutralizing fatty acids with either caustic
soda (NaOH) or potassium hydroxide.

 Ingredient mixing - All ingredients except the enzymes are added and mixed at a high
temperature. The ingredients used in the manufacturing of liquid detergents are usually
sodium tripolyphosphate, caustic soda, sulphonic acid, perfume and water.
 Enzyme addition - In this stage, the mixture is cooled and milled, and the enzymes are
added in powder form.
2.5.2 Soap Packaging Process

The final stage of the detergents and soap manufacturing process is the packaging. In this stage,
the finished product is packed for final supply to consumer. During the packaging stage, bar
soaps are either wrapped or cartooned in single packs or multipacks. Detergents, including
household cleaners, dishwashing cleansers and laundry cleansers are packaged in cartons,
bottles, pouches, bags or cans.
2.5.3 Soap Packaging Benefits
Packaging is one of most important steps in soaps and detergents manufacturing and hence
should be given prime consideration by soap and detergents manufacturers. Some of the
important benefits of soap packaging include -
 Enhances the marketability of product

 Improves the appearance and attractiveness of product
 Increases the shelf appeal of product
 Increases the shelf life of product
 Reduces the waste during production
 Makes the product easy and convenient to use
 The product can be packed in different sizes to meet the varying demands of consumers

2.5.4 Soap Packaging - Factors to Consider

The selection of products and materials for packaging depends on the consideration of several
factors, which include - product compatibility and stability, cost, package safety, solid waste
impact, shelf appeal and ease of use.
2.6 Plant Capacity and Production Programmed
I) Production capacity
Based on the demand projection indicated above, the proposed plant will have production
capacity of 1000 tons of different soap per annum in its full operation. The unit is envisaged to
operate in single shift working eight hours a day for 312 days per year.
II). Production program and product description

Different Kinds of Soaps and detergents produced by the envisaged company are stated below
a. Novelty Soaps
Soaps that take the shape of various items, such as a rubber, duck or soap-on-the-rope, are
termed as novelty soaps. Their purpose is not only cleaning dirt and grime, but also providing
amusement and enjoyment. Manufactured especially for kids, such soaps are generally designed
in a novel manner to allure the kids.

b. Perfumed Soaps
With a few additional ingredients and perfumes, manufacturers are out with perfumed soaps.
Some even give the soaps a new design to fit their varied range of products, but the fact is that
these perfumes can be easily attained in the form of colognes and deodorants as well.
Furthermore, the basic idea behind using soap is to rinse the dirt off. By adding perfumes, the
soap counts as a potential source of skin irritation for allergic people.
c. Guest Soaps
Miniature soaps that are molded and shaped into attractive shapes are guest soaps. These are
basically meant for use by the guests either in the main bathroom or separate guest bathroom.
Flowers, sea shells and rounds are some popular and commonly used shapes for guest soaps.
d. Medicated Soaps
Medicated soaps are also similar to original soaps, the only difference being the addition of
antiseptics and disinfectants. While some are highly useful, others simple tag their soaps as
medicated for the sake of inducing customers to buy them.
e. Laundry Soaps
Formulated specially to clean grease, solid particles and organic compounds from clothes,
laundry soaps are mild disinfectants that are available in liquid, powder and gel forms. They can
be used in different conditions and water temperatures. However, they work best in hot or warm
water.
f. Kitchen Soaps
Kitchen soaps are further categorized into two: cleansers and dish detergents. Cleansers assist in
eliminating heavy oil or solid particles and hard-to-remove stains and hence, are prepared with
mild abrasives. Dish detergents, on the other hand, fight against tough grease and release the
solid dirt particles in the foam that is produced by the detergent. Dish detergents are of two
types, namely, machine dishwasher detergents and hand dishwashing detergent.

The plant is expected to operate at 70% and 80% of the installed capacity in the first and second
year of implementation, respectively and reach full capacity on the third year.
S/n Description Unit Year 1 Year 2 Year 3-10
1 Novelty soap (10%) Ton 98 112 145
2 Perfumed soaps (10%) “ 100 114 150
3 Guest soaps (20%) “ 191 218 300
4 Medicated soaps (20%) “ 200 229 300
5 Laundry soaps (20%) “ 189 216 277
6 Kitchen soaps (20%) “ 202 231 294
The percentage shows the share of each product line from the total production
2.7. Land use plan of the planned project.
No Description Plot in m2
3. MANPOWER REQUIREMENT AND ORGANIZATIONAL MANAGEMENT
1 Production plant
6,000
2 Raw material store 630
3 Quality control and standardization area
500
4 Product storage
800
5 Offices
500
6 Cafeteria Service
500
7 Waste disposal accumulation center
300
8 Research and Development center
400
7 Parking , green area and Fence
370
Total
4000

3.1 Manpower Requirement and Salary

Workers can be motivated in a number of ways: humane treatment, good working environment,
increased responsibility, other incentives (e.g., profit sharing, awards for deserving workers,
bonus and providing facilities, such as transport allowance, medical allowance, lodging, etc). If
these are given, their costs should be calculated and included in computing actual labour cost or
as overheads.
N Description of Required Level of Uni Require Tw Monthl Annual

o manpower qualificatio educatio t d o y salary
n n Number shif (Br.) salary
t (Br.)
1 General Manager Managemen BA & No 1 2 20,000 40,000 480,000
t above
2 Chemistry BA & “ 1 2 15,000 30,000 360,000
Production Head above
3 Admin.& Finance Accounting BA “ 1 2 10,000 20,000 240,000
head
4 Human resource /HR/ Dip. “ 1 2 8,000 16,000 192,000
head
5 Regional manager managemen BA. “ 2 4 8,000 32,000 384,000
t
6 Merchandising Economics BA. “ 3 6 5,00 30,000 360,000
0
7 Public Relation Public BA. “ 2 4 5,00 20,000 240,000
Relation 0
8 Production TVET Dip. “ 15 30 3,00 90,000 1,080,000
workers 0
9 Accountant Accounting Dip. “ 3 6 5,000 30,000 360,000
10 Marketing manager marketing BA “ 2 4 3,500 14,000 168,000
11 Cashier Accounting Dip. “ 3 6 3,000 18,000 216,000
12 Maintenance TVET Level III “ 2 4 4,000 16,000 192,000
workers
13 Security workers Literate 8th “ 3 6 2,500 15,000 180,000
14 Logistic and TVET Dip. “ 3 6 3,500 21,000 252,000
Procurement
workers
15 Store keeper TVET Level I “ 3 6 2,000 12,000 144,000
16 Cleaner/Janitor Literate 4th “ 3 6 1,500 9,000 108,000
17 Driver Literate 8thand> “ 2 4 1,500 6,000 72,000
18 Dairy Labor grade 10 150 300 1,500 450,00 5,400,000
complete 0
Total 200 400 102,000 869,00 10,428,00
0 0

3.2. Organizational management and Organizational Structure for Soap and Detergent
Manufacturing
Owner/s
General
Secretary Manager
Production Admin. & Marketing &

Dept. Finance Dept. Sales Dept.
Hence the following section deals with the duties and responsibilities of some departments.
1. Manager and Others Employees

Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the plant
 She/he will devise policies and strategies that will enable the plant to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
factory so as to achieve the short and long run objectives of the organization.

4. Financial Requirement and Analysis

4.1. Project capital and sources of finances
The project capital estimations are done based on procurements, building and civil works, and
routine operating expenses. The fixed costs are estimated from machineries and equipment
procurement and buildings and civil works and variable costs (working capitals) are estimated
from routine day to day activities of the project. Both costs are estimated in the following sub-
sections.
TABLE 5: SUMMARY OF FINANCIAL REQUIREMENT
No Description Cost
1 Fixed Investment Birr cent

1.1 Land, Building and Construction 19,772,000 00
1.2 Machines and Equipment’s 35,000,000 00
1.3 Vehicles, Motors and related 10,300,000 00

Utensils
1.4 Office Equipment and 00
2,500,000
Technology
Total Fixed Investment Cost 0
2 Operating Expense
2.1 Raw Materials Purchase 50,000,000 00
2.2 Salary Expense 10,428,000 00
2.3 Other Operating Expense 2,500,000 00
2.4 Pre-operating Expense 1,500,000 00
Total Operating Expense 0 00
Total Investment Cost 132,000,000 00

4.2. Fixed Investment

TABLE 6: Estimated costs of Land, Building and Civil works for Soap and Detergent
No Particulars Unit Size Unit cost Estimated total cost

required (Br.) (Br.)
1 Production plant M2 10,000,000
1,667
6,000
2 Raw material store “ 3,000,000

4,762
630
3 Quality control and standardization “ 750,000

1,500
area 500
4 Product storage “ 3,000,000

3,750
800
5 Offices “ 500,000
1,000
500
6 Cafeteria Service “ 400,000

800
500
7 Waste disposal accumulation center “ 300,000

1,000
300
8 Research and Development center “ 400,000

1,000
400
9 Parking , green area and Fence “ 1,370,000

3,703
370
Total 19,722,000
1,972
10,000

TABLE 7: Estimated costs of Machines for Soap and Detergent manufacturing
Modern machinery JET “SWING” Saponification, Cooling and Finishing Plant 1,000 kg/h total
planned 35,000,000.00 eth. birr
S/ Description Q.ty A B C D E Total Birr

N Kg/h m3/h Kcal/h kW m3/h
Start to End Soap and detergent by category
(liquid, solid and powder) all machine
1 Oil Constant Level Tank 1 30 - - - -
2 Oil Filters 2 - - - - -
3 C. Soda Constant Level Tank 1 - - - - -
4 Caustic Soda Filters 2 - - - - -
5 Water Constant Level Tank 1 - - - - -
6 Main 3-heads Dosing Pump 1 - - - 1.1 -
7 JET 1 50 - - - -
8 Reactor 1 100 - - - -
35,000,00
9 Platform for Reactor 1 - - - - -
0
10 Discharge & Recycle Pump 1 - - - 0.75 -
11 Drum Flaker (Chill Rolls) 1 - - 5,000 5,75 -
CC/500
12 Elevating Conveyor 1 - - - 1.5 -
13 Duplex Vacuum Plodder M- 1 - - 16,000 N/A -
300 –Second-hand, Fully
Rebuilt
14 Perfume Dosing Unit 1 - - - 0.5 -
15 Easycut Soap Cutter 1 - - - 2.5 -
165 Engraving Rolls 1 - - - - -
17 Water Chiller IPE301-TR 1 - - - 27.5 -
Smart
18 Electrical Control Panel 1 - - - - -
19 Piping, Valves and Fittings 1 - - - - -
20 Instruments 1 - - - - -
21 Engineering 1 - - - - -
Total 35,000,00
0

TABLE 8: Estimated costs of, Vehicles, and related Utensils for Soap and Detergents
No Particulars Unit Qty Unit cost (Br.) Total cost (Br.)
Pick Up No 2 1,900,000 3,800,000
1
Isuzu No 4 1,200,000 4,800,000
2
Mini Bus for service No 2 850,000 1,700,000
1
Total 10300000
TABLE 9: INITIAL WORKING CAPITAL ESTIMATION OF THE PROJECT
The raw material for this product will be used primarily from domestic and foreign market.
While only small amount of raw materials will be imported from abroad. The initial working
capital is estimated to be 64,428,000.00 birr
Estimated costs of Raw Materials Purchase for different category products with chemicals
No Descriptions Unit Total Cost (Br.)
1 o Palm fatty acid

o Caustic soda (>98% NaOH)
o Sodium Chloride Number/
o Bleaching earth Lit/
o Fats and Oils Pack
o Alkali (Caustic and Carbonated)
6.1. Caustic soda 50,000,000
6.2. Carbonate of soda or soda ash

6.3. Caustic potash (potassium hydrate)
6.4. Carbonate of Potash
o Additives and others
Total 50,000,000.00

i. ESTIMATED COSTS OF SALARY EXPENSE
As indicated in part 4.1 (manpower) of this study, the total cost of salary and wages is estimated
to be 10,428,000.00 Birr for Soap and Detergent manufacturing project
ii. OTHER OPERATING EXPENSES
Operating costs are recurrent costs occurring every time and are calculated as follow;
Table10: Estimated costs of Project operating costs for Soap and Detergent plant
S/N Years of Operations

Cost Component I II III-XI
1 Input expenses 700,000 729,400 875,280
2 Salary and wages 400,000 416,000 499,200
3 Property insurance 500,000 520,000 624,000
4 Repair and maintenance 200,000 208,000 249,600
5 Utilities 100,000 104,000 124,800
6 Stationery and postage 10,000 10,400 12,480
7 Audit and license 10,000 10,400 12,480
8 Uniform working clothes 10,000 10,400 12,480
9 Expenses on fuel and lubricant 200,000 202,000 222,200
10 Pension pay 10,000 10,400 12,480
11 Miscellaneous 10,000 10,400 12,480
Total 2,150,000 2,231,400 2,500,000

TABLE 11: Estimated costs of Pre-operating Expense

No Description Cost
1 Project proposal and EIA 50,000
2 Licensing fee and others 50,000
3 Promotion and Advertisement 850,000
4 Staff Capacity Building 400,000
5 Others Contingency 150,000
Total 0
b. Estimated costs of Bank Loan Repayment Amortization for Soap and Detergent
manufacturing plant
Principal Total Annual

Year Interest (10%) Remaining Balance
Payment Payment
0 0 0 0 92,400,000
1 9,240,000 9,240,000 18,480,000 83,160,000
2 9,240,000 8,316,000 17,556,000 73,920,000
3 9,240,000 7,392,000 16,632,000 64,680,000
4 9,240,000 6,468,000 15,708,000 55,440,000
5 9,240,000 5,544,000 14,784,000 46,200,000
6 9,240,000 4,620,000 13,860,000 36,960,000
7 9,240,000 3,696,000 12,936,000 27,720,000
8 9,240,000 2,772,000 12,012,000 18,480,000
9 9,240,000 1,848,000 11,088,000 9,240,000

10 9,240,000 924,000 10,164,000 0
c. Estimated costs of Depreciation for Soap and Detergent manufacturing plant
Amount of
values of Rate of
Depreciation
No Capital Assets Capital assets depreciation
estimated
(Br.) (%)
(Br.)
1 Land, Building and Construction 19,772,000 5 988,600
2 Machines and Equipment’s 35,000,000 15 5,250,000
3 Vehicles and Motors 10,300,000 15 1,545,000
4 Office Equipment 2,500,000 20 500,000
Total 67,572,000 8,283,600
4.3 Financial Statement

4.3.1. Income Loss Statement
RADA University college p.l.c. soap and detergent production Profit /loss statement,
projected
For year ended june, 2021
Revenue Year 1 Year 2 Year 3-10

Sales 70,900,000 77,990,000 141,800,000
Sales expenses (5%)* 3,545,000 3,899,500 7,090,000
Purchase of Raw Material 50,000,000 50,000,000 50,000,000
Gross profit 17,355,000 24,090,500 84,710,000

Expenses
Salary Expense 10,428,000 10,949,400 10,974,400
Operating Expenses 2,500,000 2,500,000 2,500,000
Pre-operating Expense 1,500,000 0 0
Deprecation Building 5,250,000 250,000 250,000
Deprecation Vehicles 1,545,000 195,000 195,000
Deprecation office Equip 500,000 330,000 330,000
Deprecation machine 5,250,000 220,000 660,000
Lease Expense 150,000 150,000 150,000
Interest Expense 9,240,000 8,316,000 924,000
Total Expense 36,363,000 22,910,400 15,983,400
Profit Before Tax -19,008,000 1,180,100 68,726,600

Tax(30% ) (19,008,000) 354,030 20,617,980

Net Profit 0 826,070 48,108,620
*sales expenses include all costs pertinent to sales that include: promotional costs,
transportation of products, commissions and other sales discounts.
4.3.2. Cash Flow Statement
Particulars Year0 Year I Year II Year III-XI

A. Cash Inflow 0
· Own equity 39,600,000
· Bank loan 92,400,000
· Depreciation 0 8,283,600 8,697,780 9,132,669
· Net profit 0 826,070 48,108,620
Total inflow 132,000,000 8,283,600 9,523,850 57,241,289
B. Cash outflow 0
· Fixed capital 67,572,000
· Working capital 64,428,000
· Loan repayment 0 9,240,000 8,316,000 924,000
Total outflow 132,000,000 9,240,000 8,316,000 924,000
Net inflow (A-B) 0 -956,400 1,207,850 56,317,289
Cumulative balance 0 -956,400 1,207,850 56,317,289
4.3.3. Project Viability Analysis
Payback period of the project as clearly shown in the cash flow statement the envisaged project
will return its initial financial outlay within 2 years of operation.
4.3.4. Internal Rate of Return of the project
The Internal Rate of Return (IRR) is the discount rate that generates a zero net present value
for a series of future cash flows. This essentially means that IRR is the rate of return that makes
the sum of present value of future cash flows and the final market value of a project (or an
investment) equal its current market value. Internal Rate of Return provides a simple ‘hurdle
rate’, whereby any project should be avoided if the cost of capital exceeds this rate.

Internal Rate of Return is the flip side of Net Present Value (NPV), where NPV is the
discounted value of a stream of cash flows, generated from an investment. IRR thus computes
the break-even rate of return showing the discount rate, below which an investment results in a
positive NPV. Hence the IRR of this project is 25%
5. Environmental Concern of Soap and Detergent Manufacturing

Soap and Detergent is designed as a product to be used once and then flushed down the drain, so
as expected, the environmental implications of soap manufacturing process are not nearly as
important as its several other chemical processes. The two prime areas of concern include
 Safe transport and containment of the raw materials

 Minimization of losses during production
Therefore, it becomes a prime responsibility of all soap & detergents manufacturers that not only
they use natural and/or such ingredients that are not harmful to environment but also take care
while transporting these raw materials as well as minimize their ill effects during soap
manufacturing process
V.1. Steps for Environment Safety during Soap Manufacturing

The three prime soaps detergents ingredients by volume & cost are perfumes, caustic and oil.
Oils & perfume are insoluble in water and if spilled can create problems, although the oils do
solidify at room temperature. These products are transported through trained carriers, and the
equipment and systems for pumping from the truck are designed carefully. Perfumes are bought
in lined steel drums that are adequately robust, and flammable perfumes are not used in the
manufacturing of soaps. All the storage tanks are surrounded by bunds to catch the contents of
the tank, in case it rupture or valve get failed. When the storage systems are designed, the
different safety features (like access to tank and valve) are designed in, as well as processes to
deal with the product in case it end up in the bunded area.
Inside the plant, all the process and operational areas are also bunded, and the trade waste is
piped to an interception tank before draining to the council's trade waste system. The contents of
the interception tank are consistently monitored for alkalinity or acidity, and are designed to

maintain solids or light phase chemicals in right amount. If in the case, a spill is observed in the
plant itself, a part of the interception tank can be isolated off and the consequences of the spill
neutralized before the waste is dumped. In various cases and applications, however, potential
problems can be detected and stopped before they actually happen. At times, an off-spec product
can be recycled and blended rather than dumped, and even the wastewater can be reprocessed
minimize the discharges from the plant. In some cases, the manufacturing method itself can be
closely monitored to ensure that any losses or wastes are kept to a minimum. Consistent
measurement of key characteristics, like - electrolytic levels and the moisture both assure that the
end product is being designed to specifications and the technique is functioning properly as it
was designed to. Hence by following these simple tips, losses in the plant can indirectly be
minimized by monitoring the process.
V.2. Environmental Implications of Soap and Detergents

The manufacturing of detergent powders has some specific environmental issues, which are not
associated with other industries. These critical environmental issues of detergent manufacturing,
include -
 Dust control
 Volatile organic emissions
Dust present during production and transfer of the bulk powdered detergent (and powdered raw
materials) can be a serious problem. Dry and wet cyclones are used to separate out most of the
dust and all the emissions are carefully monitored. If the level of dust exceeds the acceptable
limits, suitable remedial action should be taken. Dust levels in emissions should be kept below
50 mg m-3.
V.3. Eco Friendly Soaps and Detergents

Many soap and detergents manufacturers now make environmental friendly products, thanks to
the rising awareness of the general population as well as safety norms introduced by
governments of many countries. Apart from natural soaps, there are biodegradable soaps and
detergents that can be called eco friendly cleaning products.

V.4. Biodegradable Soaps & Detergents:

In recent times, there has been seen a strong move among the soap and detergent manufacturers
to use biodegradable ingredients in place of environmentally hazardous biologically stable
detergents used in the past. The sulphonic acid and nonionic detergents that are used to produce
both liquid and powder detergents have found to be completely biodegradable and comply with
the relevant environmental standards and guidelines. The nonionic surfactants are ethoxylated
long chain alcohols and the sulphonic acid is produced from a highly linear alkylbenzene,
primarily dodecylbenzene. The sodium lauryl ether sulphates that are used in liquid detergents,
soaps and shampoos are highly biodegradable as they made from either natural or synthetic
linear C12 - C15 alcohols.
V.5. Eco-Friendly Household Cleaning Products

Eco-friendly soaps and detergents are ones that make lesser use of chemical ingredients. The
non-addition of additives, like perfumes, color and brightening agents decreases the toxicity of
detergents. Minimal packaging also helps in reducing the harm to environment. Non-petroleum
surfactants or vegetable oil soaps can be used to replace synthetic surfactants; Sodium citrate and
sodium bicarbonate can be used to replace builders like phosphates; and the use of dyes and
fragrances can be reduced or eliminated.
The use of detergents can never be a completely non-polluting activity. The consumers need to
understand that the small detergent products can also be the least polluting ones and must press
for the implementation of labeling standards and regulations so that they can avail of
environmentally friendly cleaning products. The use of detergents free from non-essential
additives like perfumes, color and brightening agents in minimal packaging will go a long way in
assuring healthier and cleaner environment.
5.6 Environmental/Health Sustainability

The Soap and Detergent manufacturers can contribute to the enhancement of human health and
quality of life by adopting responsible formulations and through the production and sale of
environment friendly cleaning products & ingredients. Some initiatives, which soap and
detergent manufacturers can take for environment / health sustainability, are -

 To only market products, which have proved to be safe for humans and the environment
 While production, the manufacturers should carefully consider the potential health and
environmental effects, exposures and releases, which will be associated with the
production, transportation, use and disposal of different cleaning products
 To encourage and promote transparent communication of safety and handling

information
 To facilitate basic research to resolve uncertainties around human and environmental

safety when they arise
 To follow the spirit and intent of all national laws and regulations
5.7. Future Development& Exist Strategies

Every business undertakings be it large or small should have to have future development plan. It
is a plain fact that business activities are undertook in a dynamic and turbulent environment.
Hence, to overcome or minimize the risks of uncertain future businesses should devise effective
strategies that enable them to be successful in their operation. Likewise the project center has
devised strategies to overcome the future risk of operation. The first strategy is diversification of
its activities to different other business forms. The second future development plan of the project
is expanding its branches in many other parts of the region. The third strategy of the center is
making a joint venture with other similar business undertakings either in the domestic country or
from abroad. The final strategy of the center is selling to other organization or individuals.
5.8. Summary
As clearly the income statement shows, the promoter of the project has sufficient amount of
money that enables him pays the bank loan with in short period of time and invests in other
business of his interest. In general, the financial statement of the project shows that the project
under discussion will cover its entire investment costs with in short period of time. Hence the
promoter of the project has along term plan of engaging in other agro processing business
enterprises. Such as juice processing and selling both in the domestic and foreign market.


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Soap and Detergent Manufacturing

ROJECT TO BE IMPLEMENTED IN SANDAFA TOWN TOWN,

O/S/Z/S/F ZONE, OROMIA REGION STATE

PROMOTER: RADA UNIVERSITY COLLEGE P.L.C

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 1

3. MANPOWER AND ORGANIZATIONAL MANAGEMENT

3.1. Manpower requirement with qualification and level of education……………………...19

4.1. Project capital and Source of finances..............................................................................21

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 2

5. PRE- ENVIRONMENTAL IMPACT ASSESSMENT/EIA/............................................

3. Land Area and Capital

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 3

 Add value to the economy, Source of Revenue to the government , Employment

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 4

I.1 General description of project area

According to the 1994 national census, the town had a population

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 5

I.2 Objectives of the Project

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 6

2. Market Potential& Demand Gap

1. Increasing population of the country.

2. Rapid industrialization in the country.

3. Increase in the purchasing capacity of the people.

4. Durability of the product.

2.1. Past Supply and Present Demand

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 7

2.2 SUPPLY OF LAUNDRY SOAP IN TONS

Year Local Imported total Total

2.3 THE PRODUCTION PROCESS AND ENGINEERING

2.3.1 Production Process

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 8

According to their methods of manufacture, soaps may, however, be more conveniently

(A) Direct combination of fatty acids with alkali.

2.4. Selection of Raw Materials for Soap Manufacturing

2.4.1. Saponification Process for Soap Manufacturing

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 9

2.4.2. Soap Manufacturing Processes for Different Soap Types

I. Bar soap manufacturing

The manufacturing of soaps consists of a comprehensive range of processing and packaging

II. Ingredients of Bar Soaps

III. Chemical Process in Bar Soap Manufacturing

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 10

IV. Industrial Bar Soap Making

The industrial soap making involves four basis steps -

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 11

 Detergents Manufacturing Process

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 12

 Spray Drying Process

Traditional spray drying process produces relatively low-density detergent powders.

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 13

2.5 Liquid Detergents Manufacturing Process

2.5.1 Manufacture Process - Stages Involved

 Soap premix manufacture - Liquid detergents contain a combination of soap and

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 14

2.5.2 Soap Packaging Process

2.5.3 Soap Packaging Benefits

 Enhances the marketability of product

Promoter’s: - RADA UNIVERSITY COLLEGE PLC Page 15

2.5.4 Soap Packaging - Factors to Consider