ETAGEGN ,BIRHANU AND FRIENDS CHEMICALS MFG LIQUID SOAP MFGEXPANSION

CONTENTS OF LIQUID SOAP MANUFACTURING PROJECT REPORT EBOOK

1. Introduction of Liquid Soap

2. Properties of Liquid Soap
3. Uses and applications of Liquid Soap
4. B.I.S. Specification of Liquid Soap
5. Market survey of Liquid Soap
6. Raw materials of Liquid Soap
7. Formulations of synthetic liquid hand soap
8. Liquid hand soap formulations of Liquid Soap
9. Process of manufacturing of Liquid Soap
10. Process flow sheet for liquid soap manufacturing
11. Raw materials suppliers of Liquid Soap
12. Cost of plant economics of Liquid Soap
13. Land & building of Liquid Soap
14. Plant and machinery of Liquid Soap
15. Fixed capital investment of Liquid Soap
16. Raw material of Liquid Soap
17. Salary and wages of Liquid Soap
18. Utilities and overheads of Liquid Soap
19. Total working capital of Liquid Soap
20. Cost of production of Liquid Soap
21. Profitability analysis of Liquid Soap
22. Break even point of Liquid Soap

1. INTRODUCTION
Detergents are any substance or preparation containing soaps and/or other surfactants
intended for washing and cleaning processes. Detergents may be in any form (liquid,
powder, paste, bar, cake, molded piece shape, etc.) and marketed for or used in
household, or institutional or industrial purposes. A detergent derives its cleaning ability
from its dual water-attracting (hydrophilic) and water repelling (hydrophobic) properties.

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When detergents are introduced into water these properties cause the detergent
molecules to aggregate into spherical clusters called micelles with the hydrophilic
components in the water and the hydrophobic components in air or dissolved in fatty
soils (dirt). This causes a reduction in interfacial tension which when combined with the
mechanical action of washing causes dirt molecules to be easily removed from the
fabric and into the wash water.
Population growth, particularly households with children, drives demand in the consumer
sector, while economic growth drives demand in the commercial sector. The profitability
of individual companies depends on efficient operations and effective sales and
marketing. Large companies have scale advantages in purchasing, manufacturing,
distribution, and marketing. Major companies in the consumer sector include divisions of
Proctor & Gamble (P&G), Unilever, and Dial. Major companies in the commercial sector
include divisions of Ecolab and US chemical. The industry is highly concentrated: the
top 50 companies hold almost 90 percent of the market. Small companies can compete
effectively by offering specialized products, providing superior customer service, or
serving a local market. A distinction must be made between developed and developing
countries because their needs are not the same. In developing countries soap remains
the main (and often only) detergent for almost all types of cleaning. In developed
countries, the range of products is much wider to meet specific consumer needs.

1.1. Uses of Detergent

1. Removes greasy
2. Emulsifying property
3. Protein & Fat remover
4. Cleaning & disinfecting property

1.2. Over View of Detergent Production

1.2.1. Composition of Laundry Detergents

Detergents are comprised of four major types of ingredients: builders, surface active
agents Surfactants), additives, and fillers. Although the chemical composition of
(phosphate and non-phosphate) detergents is continually being refined to maximize
washing efficiency, the main ingredients have remained relatively constant over the last
20 years.

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Surfactant
The surfactant or surface active ingredient performs the primary cleaning in detergents
through the reduction of interfacial tension. This consists of completely wetting the dirt
and surface of the item being washed, removing the dirt from the surface, and
maintaining the dirt in solution Basically, every surfactant is an organic compound
consisting of two parts: a hydrophobic portion, normally including a long hydrocarbon
chain, and a hydrophilic portion, which renders the entire compound sufficiently soluble
or dispersible in water or other polar solvent to sieve its intended use. Dodecyl Benzene
or linear alkyl benzene sulfonates (LABS) are important raw materials (surfactants)
required for the manufacture of synthetic detergents. Dodecyl benzene has no
biodegradable property so it causes pollution and sewage problems. The use of dodecyl
benzene is not encouraged nowadays. LABS surfactants are accepted as adequately
biodegradable.
Builder
Builder is a compound which works in synergy with the surfactant and is generally
employed in domestic laundry detergents. Un-built detergents require the surfactant to
perform the cleaning unaided and are mostly utilized by industries for washing of hard
surfaces. The function of the builder is inactivation of the hardness ions by
sequestration, precipitation or ion-exchange. Builders also counteract soil re-deposition
and provide pH buffering in the wash liquor. Phosphates had been widely used as
builders since 1947. Comprised of condensed or complex phosphates and sodium, the
most common phosphate used by the detergent industry was sodium tri-poly
phosphate. There was a move to phosphate-free detergents from the mid-1980s to the
mid-1990s all over Europe. Countries like Belgium, Germany, Ireland, Italy, Netherlands
and Austria have gone completely phosphate free. The rest European countries have
banned the use of phosphate based detergents in some affected localities. However, in
1995 phosphates remained un-banned and still widely used in Latin America and other
developing regions. They were also used in industrial applications and in dishwashing
detergents.
Fillers
All of the ingredients in a detergent are not active. In so-called conventional powders,
some ingredients do not play a part in wash performance. However, some of these

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components are necessary for the manufacturing process, such as water (in sufficient
quantity to hydrate the salts, particularly in phosphate formulas), and toluenesulfonate
(to reduce slurry viscosity), for example. In general, powders contain a certain quantity
of fillers. The most frequently used of these is sodium sulfate, which is cheap because
in general it is a by-product of chemical manufacture.
1.3. Liquid Detergent Production

Liquid detergents can be made from a variety of starting materials, but in every case the
plant is the same. A vessel equipped with a slow-speed stirrer is all that is required and
the stirrer should be positioned so that it is well under the surface of the liquid, so as not
to cause foaming. It is, however, necessary that the vessel be of a non-corrdible
material. Stainless steel is satisfactory, but expensive; concrete or asbestos cement
vessels are eminently suitable, and so are those of glass-fiber reinforced plastics. To
the user, the advantages are that they are instantaneously dispersed in water, the
material can be perfumed and be given a very attractive appearance. Liquid detergents
are produced through both batch and continuous blending processes. In the typical
blending process, dry and liquid ingredients are combined and blended to a uniform
mixture using in-line or static mixers. Liquid detergents are distinctive because of their
relatively high surfactant content (up to 40%). For reasons of solubility and stability, they
seldom contain builders and generally are devoid of bleaching agents. Liquid detergents
can be packed in a range of containers including glass bottles and drums, but plastic
bottles of various shapes and sizes are now normal for the domestic trade. Types of
polythene of varying rigidity are most usual. Some products are packed in rigid bottles,
but flexible squeeze bottles, with caps provided with a small hole, are virtually standard
for dishwashing liquids. Packaging lines can be very simple, with hand operations and
semiautomatic fillers; but with the very large tonnages now being produced by major
companies, the trend is to highly mechanized, high-speed, lines.
1.3.1. Raw Materials Used For Liquid Detergent
1. Linear Alpha Benzene Sulphonic Acid(LABSA)
2. Caustic Soda(NaOH)
3. Carbon methylcellulose (CMC)
4. Sodium Silicate
5. Photin (Optical Brightener)

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 6. Perfume
7. Water
1.4. Detergent Production in Ethiopia and Associated Problems

Synthetic detergents have been in the Ethiopian market for decades. However, similar to
other developing countries, soap has been mainly used in Ethiopia. Nowadays, the
demand for detergents is growing because of better awareness towards the
performance of detergents. In parts of northern Ethiopia where surface water is hard,
detergents are used widely due to their superior performance over soaps. It is expected
that the demand for synthetic detergents will continue to grow and this in turn will induce
growth in the industry. Factors contributing to this demand include the rapid population
growth, greater awareness, increased urbanization and expected growth in incomes.
In Ethiopia detergents are produced in four main factories: Repi Soap and Detergent S.
Co., East African Group Chemical Industry, Star Soap and Detergent Factory and
Geteshet Soap and Detergent Industry. Among these industries, Repi Soap and
Detergent S. Co. and Star Soap and Detergent Factory are located in Addis Ababa and
the other two are along the main road between Dukem and Debrezeit. Repi Soap and
Detergent S. Co. was established in 1974. The other three have been in business for
less than a decade. But this all four main factories couldn’t fulfill the demand as recent
studies shows there is 90,000 ton b/n the demand and the supply.

2. MARKET STUDY AND PLANT CAPACITY

2.1. Past Supply and Present Demand

Liquid detergent is used for cleaning purpose; the country’s requirements of liquid
detergent are met through import and domestic production. The market is quite
dominated by imports. Some of the biggest detergents producing organization in the
country are Repi soap and Detergent S.Co., East African Group Chemical Industry, Star
Soap and Detergent Factory and Geteshet soap and Detergent Industry.
Recent study shows that there is about a total consumption of 85 million kg of detergent
and soap per year. This is an average consumption of 1.04kg per person. The newly

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built factory produces 5,000,000kg per year which will have a market share of 0.8% of
the total market demand. By increasing the demand, by decreasing the selling price of
the product, by doing a better advertisement we can compete with rest of detergent
factories and also the imported detergents will decrease by doing such activities.
2.2. Plant Capacity and Production Program
Plant Capacity
Based on the technology recommended the proposed plant will have a production
capacity of 5000 tonnes per annual, plant will operate three shifts, 24 hours a day and
for 300 days a year.
Production Program
The technology being used is not complicated production so that skill development is
easy and the market demand is large enough with market penetration so easy, the
capacity utilization rates of 100% starts in the first year and continues with that to the
end of the project life.
Table 2.1 Production program
Year 1 2 3
Capacity utilization 100 100 100
Production(tone) 5000 5000 5000

2.3 Raw Materials and Inputs

The major raw material is caustic soda and dodecyl benzene sulfonic acid (DDBSA).
Both these chemicals and other additives such as builders and colorants are imported
mostly from United Arab Emirates. Their availability and supply is guaranteed due to the
mushrooming of importers of commodity items and inputs for commodity item products.

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 3. TECHNICAL FEASIBILITY

3.1 Technology and Engineering

3.1.1 Flow Chart and Process Description

Flow Chart

Stage 1
CAUSTIC
LABSA Holding Tank SODA Preparation
Water line Mixer

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 (Builders &
Fillers)

Reactor
Stage 2

Stage 3
Product To Packaging
Holding tank
1. Process Description
The production process involves the following sub process:
- Mixing
- Laboratory Test
- Storage and packing

Mixing process: The liquid soap preparation is taking place within a Reactor after we
prepare the caustic Soda solution(37%) in a mixer, and pour this two mainly chemicals
which are the the caustic soda solution and Linear Alpha Benzene Sulphonic Acid
(LABSA). During the production process Neutralization reaction is taking place b/n the
chemicals caustic soda and LABSA mixed inside the reactor with including water to
produce paste the water added is used for as a coolant i.e. to reduce the heat loss and
also it’s taken as an ingredient. Then, builders:-SCMC, Na 2SiCO3, Photin, Perfume,

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triethanolamine, are added. The mixing totally takes 40minutes. All the operations are
done without any use of pump which is the most cost effective method which is done by
preparing stages and use a gravitational flow mechanism.
Packing and storage: the product is packed manually in plastic bottle as per the
requirement of the customers. The commonly used packages are 1-6kg.
3.2 Product Specification
To prepare 1400kg liquid detergent:
 Deodecyl benzene sulfonic acid (DDBS)(280.0kg)
 Sodium hydroxide (34.4kg)
 Sodium silicate
 Sodium carbon methyl cellulose(SCMC)
 Photine
 Perfume
 Triethanolamine
 Water

3.2.1 Process Steps for Liquid Detergent Production

1. Dissolve 34.4kg of caustic soda(NaOH) flakes in 51.6 litre of water.
2. Slowly add to the DDBS with slow agitation for about 10 minutes.
3. Check PH and adjust with 40% caustic soda solution at PH=8, total = 34.4kg
NaOH
4. Add the builders with slow mixing.
5. Slowly mix for further 30minutes (total 40minutes)
6. Pack into clear bottles or containers.

3.2.2 Equipment Used

1. Reactor
2. Mixer for NaOH preparation
3. PH meter
4. Balance

3.2.3 Basic Standard Design Parameter

Main Parameter:
 PH(8.0-9.0)

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  Viscosity (1.0-2.0) mpa.s
 Density (1.02-1.08)g/m

3.3 Material and Energy Balance

Reaction
C12H25C6H4SO3H + NaOH C12H25C6H4SO3 + H2O
(326g/mol) (40g/mol) (348.5g/mol)
Water must be added as a coolant and as an ingredient.
Four mixes per shift, three shifts per day, and twelve mixes per day.
For one batch (mixing) = 1400kg

3.3.1 Raw-Material Required for One Batch Process

DDBSA= 20% of product ¿ 0.2 ×1400=280.6 kg
326 g DDBSA=40 g NaOH
280.6 kg DDBS=? w
280.6 kg
W =40 g × =34.4 kg
326 g
W=NaOH=34.4kg
H 2 O=50 % of t h e product=0.5 × 1400=700.0 kg (51.6 kg for NaOH solution preparation)
Total builders=27.5 ×1400=385.0 kg
Na2SiO3 = 50 % total builders=192.5 kg
SCMC = 20 % total builders=77.0 kg
Photine = 10 % total builders=138.5 kg
Triethanolamaine = 10 % total builders=138.5 k g
Perfume = 10 % total builders=138.5 kg
Thus the amounts of the required raw materials annually will be:
12 mix
Annual consumption=raw material × × 300 days / year
day
DDBSA=280.6 kg /mix=1,010,160.0 kg / yr
NaOH =34.4 kg /mix=123,840.0 kg / yr
H2O ¿ 700.0 kg /mix=2,520,000.0 kg / yr
Total builders=27.5 % of product=27.5× 1400=385.0 kg /mix=1386,000.0 kg / yr
Na2SiO3 = 50 % total builders=192.5 kg /mix=693,000.0 kg / yr
SCMC = 20 % total builders=77.0 kg /mix=277,200.0 kg / yr

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 Photine = 10 % total builders=138.5 kg /mix=138,600.0 kg / yr
Perfume = 10 % total builders=138.5 kg /mix=138,600.0 kg / yr
3.3.1.1 Raw Material Cost

DDBSA=24.0 birr /kg=24,243,840.0 birr / yr

NaOH =15.0 birr /kg=1,857,600 birr / yr
Na2 SiO 3=5.0 birr /kg=3,465,000.0 birr / yr
SCMC=19.0 birr /kg=5,266,800.0 birr / yr
P h otine=94.0 birr /kg=13,028,400.0 birr / yr
Perfume=205.0 birr /kg=28,413,000.0 birr / yr
Triet h anolamine=75.0 birr /kg=10,395,000.0 birr / yr
Total raw material cost=86,669,640.0 birr / yr

3.3.2 Energy Balance

The energy releasing during preparation of 40% NaOH solution is so small, so we
neglect the energy balance system.

3.4 Equipment Design and Selection

3.4.1 Sizing of Storage Tanks and Reactor

40 % wt /wt=0.4=mass of NaOH /mass of solution=34.4 kg /mass of solution
Mass of solution=34.4 /0.4=86 kg of solution
Density of NaOH =2134 kg /m3
Mass of water =mass of solution−mass of NaOH=86−34.4=51.6 kg=51.6 litre of water
Density of water=1000 kg/m3
T −1=V (NaOH (40 %))=0.068 m3 0.1 m3 stainless steel
T −2=V (DDBS)=0.28 m 3 0.3 m3 plastic container
T −3=V (mixing)=1.6 m3 stainless steel
R−1=VR=1.6 m3 stainless steel
T −4=V h olding tank=1.5 m 3 plastic container e . g . Roto

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 4 Organizational/ Management Feasibility

With the size of the detergent plant the following organizational structure is
commensurate to successfully run the plant.
4.1 Organizational Structure

General
Manager

Production Finance and

and Technic Administration
Head Head

Production Quality Accounts

Supervisor/Head Head Head

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4.2 Man Power Requirement and Salary

Sr. No Description Req. No.

A Administrative
1 General Manager 1
2 Secretary 1
3 Finance and admin. Head 1
4 Sales person 1
5 Purchaser 1
6 Accountant 1
7 Cashier 1
8 Store keeper 1
9 Driver 3
10 Guard 4
11 Cleaning and messenger 1
Sub total 16
B Production and Quality
1 Production and technical head 1
2 Production supervisor 3
3 Quality head 1
4 Chemist 3
5 Operator 3
6 Electrician 3
7 Packing workers 114
Sub total 128
Grand total 144

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 5 PLANT LOCATION AND SITE
5.1 The Location Option

The major factors to be considered during selection of the appropriate location for a
given plant are proximity to the source of raw materials, and to major sales and
distribution centers. Availability of developed infrastructure is also an important
criterion for selection of location. In view of the foregoing scenarios the possible
options for considering location of the detergent plant can be Addis Ababa where the
plant can acquire raw materials easily and distributes its product to the market.
In addition to this the attitude of people living in Addis Ababa towards the use of
detergents is high in comparison with the regional towns and urban areas and also
the consumption is relatively high.

5.2 Selection of Site

Site of the project is a place commonly named “Shegole” is preferred. The advantage of
establishing the plant at this location is the accessibility to the plant by the owners and
ease of delivery of the product from the plant to Merkato. In addition to that the
acquisition of land in the Shegole area is relatively easy.

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 6 ENVIRONMENTAL AND SOCIAL IMPACT ASSESSEMENT
The liquid soap production as we can see from the process it doesn’t have any
discharges all the chemicals used will converted to liquid soap during the mixing
process and this shows that no impact for the environment as well as for the
community.

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 7 FINANCIAL ANALYSIS
An acceptable plant design must represent a plant that can produce a product which will
sell at a profit initially; sufficient capital must be committed to contract all aspects of the
facility necessary for the plant. Since net profit equals total income mines all expenses,
it is essential that a chemical engineer be aware of the various types of costs
associated with each manufacturing steps.
7.1 Investment Cost

The total investment cost of the Detergent Plant is estimated at Br 6.38 million. The capital
cost estimate includes pre-investment cost, cost of machinery supply, errection and
commissioning, and engineer’s estimate of construction costs.
For detail refer table 7.1 & table 7.2 below

Table 7.1 Estimated Purchased Equipment Cost

Designatio
n Item Purchased cost(Birr)
T-1 Storage tank 163,585.39
T-2 Storage tank 19,040.00
T-3 Mixing tank 107,485.39
T-4 Holding tank 107,485.39
R-1 Reactor(neutralizer) 916,004.20
Total 1,313,600.37

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Table 7.2 Fixed Capital Investment Estimation
Items Cost(Birr)
Direct costs 3,367,593.67
Purchased equipment cost ( PEC) 1,313,600.37
Purchased equipment installation = 7% FCI 334,371.00
Instrumentation and controls = 3% FCI 143,301.86
Piping(installed) = 5.5% FCI 262,720.07
Electrical (installed) = 8% FCI 382,138.29
Buildings (including services) = 7.5% FCI 358,254.65
Yard improvements = 2.5% FCI 119,418.22
Service facilities (installed) = 8% FCI 382,138.29
Land(purchase not required) = 1.5% FCI 71,650.93
Indirect Costs 1,409,134.94
Engineering and supervision = 7.5% 358,254.65
Construction expenses = 8% FCI 382,138.29
Contractor's fee = 4% FCI 191,069.14
Contingency = 10% FCI 477,672.86
Fixed Capital Investment 4,776,728.62
Working capital = 25% TCI 1,599,308.00
Total Capital Investment 6,376,036.61

Fixed Capital Investment estimate

PEC
FCI=
0.275
Solid fluid processing TCI =4.87∗PEC

7.2 Operating Cost Estimates

The operating cost estimates include raw materials, utilities, labor cost, depreciation,
loan interest, insurance expenses, and maintenance costs. The
details of these costs are attached under in table 7.3, 7.4.

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Table7.3 Operating Labor Cost

Monthly
Sr. No Description Req. No. Salary Annual Salary
A Administration
1 General Manager 1 15,000 180,000
2 Secretary 1 3,000 36,000
3 Finance and admin. Head 1 6,500 78,000
4 Sales person 1 3,500 42,000
5 Purchaser 1 3,500 42,000
6 Accountant 1 4,000 48,000
7 Cashier 1 900 10,800
8 Store keeper 1 800 9,600
9 Driver 3 2100 25,200
10 Guard 4 2400 28,800
11 Cleaning and messenger 1 500 6,000
Sub Total 16 42,200 506,400
B Production and Quality
1 Production and technical head 1 6,500 78,000
2 Production supervisor 3 10,500 126,000
3 Quality head 1 4,000 48,000
4 Chemist 3 12,000 144,000
5 Operator 3 3,600 43,200
6 Electrician 3 7,500 90,000
7 Packing workers 114 79800 957,600
Sub Total 128 123,900 1,486,800
Total 144 166,100 1,993,200
Employee benefits(10% of salary) 16,610 16,610
Grand total 144 182,710 2,192,520

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Table 7.4 Total Product Cost Estimate
Items Cost(Birr)
A) Direct Production Costs 90,395,686.03
1) Raw materials 86,669,640.00
2) Operating labour (OL) 2,192,520.00
3)Direct supervisory and clerical labour(15%
OL) 328,878.00
4)Utilities 1,099,560.00
5)Maintenance and repairs (2% FCI) 95,534.57
6) Operating supplies (10% maintenance) 9,553.46
B) Fixed Charges 544,547.06
1)Depreciation 477,672.86
2)Local taxes(1% FCI) 47,767.29
3)Insurance(0.4% FCI) 19,106.91
C)Plant overhead cost 50%(OL +maintenance +
DS &CI 1,308,466.29
D)General Expenses(GE) 1,212,789.50
Administration (20% OL) 438,504.00
Distribution and selling 219,912
Research and development 219,912
Financing(interest) (5% FCI) 334,461.50
Annual Total Product Cost(TPC) 93,461,488.87

Plant
Manu facturingCost ( MC )=Direct product cost+ ¿ c h arges+ ead
h
birr
MC=90,227,644.56+544,547.06+1,308,466.29=92,248,699.38
year
birr
General expense ( ¿ )=1,212,789.5
year
birr
Total product cost ( TPC )= MC+ ¿=92,248,699.38+ 1,212,789.5=93,461,488.88
year

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7.3 Pay Back Period and Economic Evaluation

The project starts to generate surplus cash in the 2nd year. The project is feasible
with the financial internal rate of return (IRR) of 80.5% which is substantial compared
to the bank interest rate, and a Net Present Value (NPV) of Br.22.73 million at a
12% discount rate. The work-outs are shown hereunder.

Gross earnings:
birr
Sellin price=20
kg

birr
Total Income=20 ×5,000,000=100,000,000.00
year
Assuming that the plant life time is 10 years by straight line method.
FCI 4,776,728.6 birr
Depreciation= = =477,672.86
10 10 year
Gross profit =total income−total product cost−depreciation
¿ 100,000,000−93,461,488.88−477,672.86
birr
¿ 6,060,838.26
year
birr
Tax=15 % Gross profit =15 % ×6,060,838.26=909,125.739
year
birr
Net profit=Gross profit −tax=6,060,838.26−909,125.739=5,151,712.52
year
Net profit 5,151,712.52
Rate of return ( ROR )= ×100 %= × 100 %=80.80 %
total capital investment 6,376,036.61
total capital investment 6,376,036.61
Payback period ( PBP )= = =1.23765 y ear
net profit 5,151,712.52

OR Using cash flow table

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Items Year 0 Year 1 Year 2 Year 3 The sum of Year 4 to 10
Discount Factor(12%) 1 0.8929 0.7972 0.7118 0.63552 -0.321973
5,151,712.5 5,151,712.5
Cash flow (CF) -6,376,036.6 2 5,151,712.52 2 7×5,151,712.52
9,079,100.5
Cumulative cash flow -6,376,036.6 -1,224,324.1 3,927,388.04 6 45,141,088.2

1,224,324.09
PBP=1+ =1+ 0.23765 year
5,151,712.52
PBP= 1 year and 3 months.
CF 0 NC F 1 NC F 2 NC F 3 NC F 4 NC F 5 NC F 6 NC
Net present value ( NPV )= 0
+ 1
+ 2
+ 3
+ 4
+ 5
+ 6
+
( 1+ 0.12 ) ( 1+0.12 ) ( 1+0.12 ) ( 1+0.12 ) (1+ 0.12 ) ( 1+0.12 ) ( 1+0.12 ) ( 1+ 0.

NPV =−6,376,037+ 4,599,743+ 4,106,914+3,666,887+3,274006 +2,923,220+2,610,018+2,330,373+ 2,080,690

OR
Using cash flow table
Items Year 0 Year 1 Year 2 Year 3 t The sum of Year 4 to 10
DF 1 0.892857 0.797194 0.71178 0.63552 -0.321973
Cash 5,151,712.5
flow -6,376,036.6 2 5,151,712.52 5,151,712.52 7×5,151,712.52
PV -6,376,037 4,599,743 4,106,914 3,666,887 16,734,781
NPV NPV=∑ PV =22,732,288 birr

7.4 Internal Rate of Return (IRR):

The project is feasible with the financial internal rate of return (IRR) of 80.5%.

Refer annex B

7.5 Sensitivity Analysis Result

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Sensitivity analysis has been carried out for the key variables (the investment cost, raw
material cost and selling price) to see its effect on the feasibility of the project.
Assuming other things remain constant as can be seen from table shown on the Annex
A a 5 % increase in raw material cost decreased the NPV to birr 1,919,919 which
shows paying special attention to the raw materials cost and a 10% increase in initial
capital investment yielded an NPV of birr 22,094,684 which is still higher. A 5%
decrease in selling price decreased the NPV to birr 10,725,564 which is still good.
Refer annex A
7.6 Break-Even Analysis

¿ cost per year

Break−even Point=
se lling price per kg−variable cost per kg
¿ cost per year =Labour Cost +¿ Charges+ Plant Overheads+ General Expenses
¿ Cost =2,192,520+544,547.06+1,308,466.29+1,212,789.5=5,258,322.85 birr
Direct Production Costs per year 90,395,686.03 birr
Variable Costs per unit = = =18.079 birr /k g
Units Produced per year 5,000,000 kg
Selling Price=20 birr per kg
5,258,322.85 birr
BEP= =2,737,284 kg
( 20−18.079 ) birr /kg
At the level of production of 2,737,284 kg per year of detergent which is 54.74% of the
plant capacity the plant makes no profit or loss. At this level of production and sales
revenue exactly covers costs and there is no profit or loss. Since this level of production
is almost 50% of the plant capacity the project can be deemed very good.

8 CONCLUSION
Liquid detergent is nowadays required in bulk amount to satisfy the need of the society.
The raw material which is necessary to make liquid detergent is available relatively
unlike other manufacturing plant. The market and the availability of raw material attract
the design of the liquid detergent manufacturing plant. From environmental point of
view, it is insignificant hazardous comparing with other chemical industries (because of
no dust particle and waste treatment).
The project is also feasible with the financial internal rate of return (IRR) of 80.5% which
is substantial compared to the bank interest rate, and a Net Present Value (NPV) of
Br.22.7 million at a 12% discount rate.

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Moreover the project can create employment opportunity for 144 persons, in addition to
supply of the domestic needs the project will generate 0.91 million in terms of tax
revenue for the government. The establishment of such factory will have foreign
exchange saving effect to the country by substituting the current imports.
Therefore:
- The raw materials are easily available in different countries to import.
- There is no product which makes the environment polluted.
- The availability of labour and the growing population are the rationalities
that make the demand of liquid detergent industries worth mentioning.
- The economic evaluation proved that the project is acceptable and
feasible.

Therefore, it is recommended to install liquid detergent processing factory to get

maximum profit thereby benefiting the society as well.

9 REFERENCE
1. SKOOG- Analytical Chemistry
2. COULSON AND RICHARDSON’s – Chemicla engineering series
4th edition, Volume Six.
3. MCMURY- Organic Chemistry 3rd Edititon
4. PETERS AND TIMMERHAUS – plant design and economics for
chemical engineers
5. ROBERT H.PERRY – Perry’s Chemical Engineer’s Handbook

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6. Encyclopedia of Chemical Technology

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