An — Najah National University Faculty of Engineering

An - Najah National University Faculty of Engineering Industrial Engineering Department Feasibility study For Establishing a plastic bottle caps Factory Prepared by: Maram Abd Elhaq Najah Emoor Leena Maqboul Shahd Abu Baker For Palestine Plastic industry Company Supervised by: t g. Nidal Dwaika En

Establishing a plastic Bottle caps Factory The main objective of the Project is to represent the economic feasibility of Establishing Plastic Bottle caps Factory for the First time in West Bank.

Methodology Market study Technical Study Financial Study

Market study

Main Consumers • ﺷﺮﻛﺔ ﺍﻟﻤﺸﺮﻭﺑﺎﺕ ﺍﻟﻮﻃﻨﻴﺔ ﻛﻮﻛﺎ ﻛﻮﻻ ﺷﺮﻛﺔ ﺍﻟﺠﻴﺒﻮﺭ )ﻣﻴﺎﻩ( ﺍﻟﺸﺮﻛﺔ ﺍﻟﻬﻨﺪﺳﻴﺔ ﺍﻟﻤﺘﺤﺪﺓ ﻟﻠﺘﻌﺒﺌﺔ ﻭﺍﻟﺘﻐﻠﻴﻒ ﻣﺼﻨﻊ ﻧﻔﺦ ﻭﺑﻴﻊ ﺍﻟﻌﺒﻮﺍﺕ ﺍﻟﺒﻼﺳﺘﻴﻜﻴﺔ Tick plast ﺷﺮﻛﺔ ﺍﻟﻔﺮﺩﻭﺱ )ﻣﻴﺎﻩ( Target market ﺷﺮﻛﺔ ﻓﻠﺴﻄﻴﻦ ﻟﻠﺘﻨﻤﻴﺔ ﺍﻟﺒﻴﺌﻴﺔ)ﻳﻨﺎﺑﻴﻊ ﺑﻴﺘﺎ( )ﻣﻴﺎﻩ( ﺟﺮﻳﻜﻮ )ﻣﻴﺎﻩ( ﺗﺎﺑﻊ ﺷﺮﻛﺔ ﺍﻟﻤﺸﺮﻭﺑﺎﺕ ﺍﻟﻮﻃﻨﻴﺔ ﻛﺎﺑﻲ )ﻋﺼﺎﺋﺮ( ﺗﺎﺑﻊ ﺷﺮﻛﺔ ﺍﻟﻤﺸﺮﻭﺑﺎﺕ ﺍﻟﻮﻃﻨﻴﺔ Top Drink )ﻋﺼﺎﺋﺮ( ﺷﺮﻛﺔ ﺍﻟﻨﻮﺭ ﺍﻟﺤﺪﻳﺜﺔ ﻟﺘﻜﻨﻮﻟﻮﺟﻴﺎ ﺍﻟﻤﻴﺎﻩ. )ﻣﻴﺎﻩ ﻭﻋﺼﺎﺋﺮ(

Survey

Demand size ) Demand (millions type Province Name of company 42 82 neck Ramallah ﺷﺮﻛﺔ ﺍﻟﻤﺸﺮﻭﺑﺎﺕ ﺍﻟﻮﻃﻨﻴﺔ ﻛﻮﻻ , ﻋﺼﺎﺋﺮ , ﻣﻴﺎﻩ( )ﻛﻮﻛﺎ 21 03 neck Ramallah )ﻣﻴﺎﻩ(ﺟﺮﻳﻜﻮ ﺗﺎﺑﻊ ﺷﺮﻛﺔ ﺍﻟﻤﺸﺮﻭﺑﺎﺕ ﺍﻟﻮﻃﻨﻴﺔ 81 83 neck 30+neck Ramallah ﻛﺎﺑﻲ )ﻋﺼﺎﺋﺮ( ﺗﺎﺑﻊ ﺷﺮﻛﺔ ﺍﻟﻤﺸﺮﻭﺑﺎﺕ ﺍﻟﻮﻃﻨﻴﺔ 52 03 neck Ramallah Top Drink )ﻋﺼﺎﺋﺮ( 5 82 Neck Talkarm . ﺷﺮﻛﺔ ﺍﻟﻨﻮﺭ ﺍﻟﺤﺪﻳﺜﺔ ﻟﺘﻜﻨﻮﻟﻮﺟﻴﺎ ﺍﻟﻤﻴﺎﻩ )ﻣﻴﺎﻩ ﻭﻋﺼﺎﺋﺮ( 5 82 Neck Nablus )ﻳﻨﺎﺑﻴﻊ ﺑﻴﺘﺎ(ﺷﺮﻛﺔ ﻓﻠﺴﻄﻴﻦ ﻟﻠﺘﻨﻤﻴﺔ ﺍﻟﺒﻴﺌﻴﺔ )ﻣﻴﺎﻩ( 5. 4 82 Neck Jenin ﺷﺮﻛﺔ ﺍﻟﻔﺮﺩﻭﺱ )ﻣﻴﺎﻩ( 5 82 Neck Qalqelia ﺷﺮﻛﺔ ﺍﻟﺠﻴﺒﻮﺭ )ﻣﻴﺎﻩ( 5. 0 82 Neck Ramallah 4 82 Neck Hebron ﻣﺼﻨﻊ ﻧﻔﺦ ﻭﺑﻴﻊ ﺍﻟﻌﺒﻮﺍﺕ ﺍﻟﺒﻼﺳﺘﻴﻜﻴﺔ Tick plast ﻭﺍﻭﻻﺩﻩ ﺷﺮﻛﺔ ﺍﻟﺮﺟﻮﺏ 42 03 Neck 28 + Neck Nablus ﺍﻟﺸﺮﻛﺔ ﺍﻟﻬﻨﺪﺳﻴﺔ ﺍﻟﻤﺘﺤﺪﺓ ﻟﻠﺘﻌﺒﺌﺔ ﻭﺍﻟﺘﻐﻠﻴﻒ

Product Segment Cap Size Annual consumption (millions) 8% 46% Neck 28 Neck 30 Neck 28 58 Neck 30 58 Neck 38 10 46% Neck 38

Market share Our study suggests to cover a percentage of nearly 40% from the whole market demand that indicates to produce 50, 800, 000 cap

Competitors The main suppliers for plastic bottle caps Supplier Country Koksan company Turkey Amraz company Israel Netstal company Swiss

Technical Study

Product specification Cap type Weight 1. 85 Size Neck 28 Usage Beverage Drinks 2. 55 3. 7 Neck 30 Neck 38 coke Drinks water Bottle

Capacity of project Type Percent # of caps / year Neck 28 46% 23460000 Neck 30 46% 23460000 Neck 38 8% 4080000

Manufacturing Process Mold Injection molding machine Raw material (HDPE) Injection Molding Process

Molds are typically made of steel or aluminum. The mold has many components, but can be split into two halves. The two main components of the mold are the mold core and the mold cavity.

Raw Materials Pigments Raw material main suppliers HDPE Ø AMRAZ Ø KOKSAN Ø SABIC

Injection molding machine Procedure: ØClamping. ØInjection. ØCooling. ØEjection. The process cycle for injection molding is very short, typically between 2 seconds and 2 minutes.

Machines Hopper Dryer Auto loader Injection Molding Machine Water Chiller Pallet wrapping machine

Expenses ØConstituent costs ØOperational costs

Constituent cost Assets Cost($) Building 238805 Machines & Equipments 174818 Transportation 36111 Furniture and required tools 12091 Contingency Reverse 20. 000 ( 3% of Constituent Cost) Land price 127750 Land preparation 8000 Total costs 617575

Land construction cost Land area Cost/m^2 1500 $85 Total cost $127750 Construction cost Cost ($) Buildings 232505 License 6300 Land preparation 8000 Total 246805

Machines and Equipment ØInjection auxiliaries molding machines Machine Injection Molding Machine Hopper Dryer Auto loader Water Chiller Mixer Machine Granulator Strapping Machine Total Model 100 Kg/hr 75 Kg 350 Kg/hr 5 hp 50 Kg Pc-300 Price ($) 36923 1172 1015 3386 1936 3000 48, 818 ØMolds Price($) Neck 28 Neck 30 Neck 38 Total 42000 126000

Operational costs Total operating cost Cost ($) Manpower 40, 667 Raw material 172760 Electrical consumption 16576 General operating cost 68745 Total 289748

Raw material cost Neck 30 Neck 28 Raw materials Quantity HDPE 43 ton Price/quantity ($) 1100 Tincture 43 kilo 40 1720 Cartons 6517 2. 5 Plastic Bags 6517 Shrink 217 kilo Total cost($) Raw materials Quantity price/quantity ($) Total cost($) 47300 16293 HDPE Tincture Cartons 60 ton 60 kilo 6517 1100 40 2. 5 66000 2400 16293 0. 088 574 Plastic Bags 6517 0. 088 574 3. 33 723 Shrink Total 217 3. 33 723 85990 Total 66610 Raw materials Neck 38 Quantity HDPE Tincture Cartons Plastic Bags Shrink Total 43 ton 43 kilo 6517 217 kilo Price/quantity ($) 1100 40 2. 5 0. 088 3. 33 Total cost($) 47300 1720 16293 574 723 66610 otal T 2760 $17

Cost Per item from raw material We consider unit item equal to 1000 caps Considering 3% waste Type Annual quantity(caps) Annual cost ($) cost/item ($) Neck 28 22756 66610 2. 9 Neck 30 22756 85990 3. 8 Neck 38 3958 20160 5. 1

General Operating Cost General operating cost Cost ($) Maintenance 9050 Insurance, Advertising, Communications 33638 Depreciation 26057 Total 68745

Cont…. . ØMaintenance Fixed assets Maintenance (%) Cost ($) Maintenance cost($) Building 2% 232505 4650 Machinery and equipment 2% 174818 3496 Furniture Transportation Total 2% 2% 9, 091 36111 182 722 9050 ØInsurance Position General manager Engineers Accouters Labors Guide and service Total Staff required 1 1 1 3 1 Annual salary 36000 30000 21600 43200 15600 Percentage 0. 5% 0. 75% 0. 5% 5% 5% Value($) 180 225 108 2160 780 3453

Cont……… ØDepreciation Assets Depreciation Cost($) Depreciation Cost ($) Machinery and equipment 7% 174818 12237 Buildings Transport Furniture Total 4% 10% 232505 36111 9, 091 9300 3611 909 26057 ØAdvertising $20000 ØCommunication and Services $8333

Annual Production cost Item Annual production cost for neck 28($) for neck 30($) for neck 38($) Manpower 18707 3253 Raw material 66610 85990 20160 Electrical consumption 7625 1326 General operating cost 31623 5500 TOTAL 124564 143944 30239

Production cost / unit item Type Quantity (Caps) Total cost ($) Item cost ($) Neck 28 22756 124564 5. 5 Neck 30 22756 143944 6. 3 Neck 38 3958 30239 7. 6

Facility Layout

Financial Analysis

Basic assumptions Ø The financial study covers 15 years from the project operational life. Ø Internal rate of return (IRR) is calculated at 100% equity ratio. Ø Net present value (NPV) is calculated at 5% discounted rate. Ø A strategic plan for increasing production at a rate of 5% and operational cost at rate of 2%.

Direct and Indirect Costs Cost ($) 250000 200000 172760 150000 16576 100000 50000 ost er al o per atin gc ow ner Ge mp nsu l co ica ctr Ele 298748 wm ate 68745 Ma np tio ls n 0 ria 40667 Ra Operational cost Direct operating cost Raw materials Electrical consumption Indirect cost Manpower General operating cost Total

Selling Price Type Price /item ($) Neck 28 7. 7 Neck 30 8. 9 Neck 38 10. 7 rgin Is ofit Ma Pr 40%

Cash Flows VAT 15%

Financial Indicators Payback period (PBP) The period required to recover the original investment outlay through the profits earned by the project. Which is found 4 Years

Cont. …. Internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows (both negative and positive) from a particular investment equal to ZERO. Which is NPV = F/ (1+i) n = 0. And Found IRR= 30%

Cont. …. Net present value(NPV) The Present value of an investment’s future Net cash flows minus the initial investments. Which is NPV= F/ And found Positively $1, 605, 504.

Cont. …. Rate on investment (ROI) The rate on return is the average of the simple rate of return along the project life period ROI 37%

Cont. …. Break even point (BEP) The point at which sales revenue equal production cost (The Point at which the project neither makes profit nor suffers loss) Item Units (caps) Cost ($) Neck 28 13120 100543 Neck 30 1274 13629 Neck 38 10009 88637 Total 24403 202809

Sensitivity analysis ØIncreasing operating cost 4%. ØDecreasing Sales 4%. ØIncreasing Sales 4%.

First Case : Increasing operating cost 4%. IRR= 29% NPV=$1320749 PBP= 4. 5 years

Second Case : Decreasing operating cost 4%. IRR= 32% NPV=$1721559 PBP=3. 5

Third Case : Decreasing Sales 4%. IRR= 28% NPV= $ 1390406 PBP= 5 years

Fourth Case : Increasing Sales 4%. IRR= 33% NPV= $ 1827521 PBP= 3. 2 years

Sensitivity factors changes effects on IRR 34% 33% 32% 31% IRR 30% 29% 28% 27% 26% Equity 100% Inc op 4% Dec op 4% Inc sales 4% Dec sales 4%

Recommendation Our recommendation based on the Positive Financial results which encourage to Perform this project. And so we recommend Palestine Plastic Industrial Co. to Establish the Factory which will gain a good market share.