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A CONCEPT NOTE FOR ROCSIL LEATHER PRODUCTS MANUFACTURING

PROJECT
Robust Consulting Services International Limited (ROCSIL) was established in 2011 and
incorporated in anuar! 2012 with the Registrar o" companies under Registration #umber
1$2%1&' ROCSIL is a private liabilit! compan! limited b! shares' (he principal
shareholder is )llan #insiima with $2* '(he Compan! has % shareholders and )llan is the
current +irector' (he compan! has a registered o""ice on plot % ,un!on!i +rive- ,ugolobi.
/ampala' ROCSIL is a !outh initiative started in 2010 to challenge !outh povert!'
The Concept: Recogni0ing that the mar1et "or 2ualit! shoes in 3ganda is high- and
dominated b! a "ew !et incompetent leather products dealers- ROCSIL decided to enter the
Leather products manu"acturing sector with an aggressive mar1et strateg!' ROCSIL noted
that there are ver! "ew (about %) genuine shoe dealers' 3ganda4s shoe mar1et is
dominated b! unauthentic- cheap imported products "rom mainl! china and (hailand' (he
"ew authentic products are supplied b! ,ata Shoe Compan! and "ew importers o" mainl!
second hand products "rom 5urope'
The operations6 ROCSIL set up a Leather products manu"acturing unit in 7a! 2018' (he
compan! operates in rented premises as wor1shop and sales outlet in /iira town council.
,we!ogerere trading centre' ROCSIL will operate "rom ,we!ogerere trading centre until it
has ac2uired its own land to e9pand and build its own manu"acturing "acilit! and
warehouse' (he current production location is centrall! located to easil! access 3ganda4s
central mar1et /ampala and other mar1et in ma:or towns o" 3ganda' ROCSIL is
strategicall! targeting the great la1es mar1et o" Rwanda- +emocratic Republic o" Congo-
and South Sudan mar1ets in its mar1et e9pansion strateg!'
The products: (he ma:or product o" ROCSIL Leather is shoes' Other product lines include
belts- wallets- bags and decorative accessories li1e earrings- 1e! holders and mirrors'
ROCSIL Leather targets !oung and old st!lish clients- who are sensitive to "ootwear trends'
7anagement relies on customer "eedbac1- suggestions- and sales reports to maneuver
ROCSIL leather brands- and st!les'
The Market6 ROCSIL targets speci"ic niches- generall! "ocusing on suppl!ing high 2ualit!-
genuine leather products with particular "ocus on customer satis"action' ROCSIL di""ers
"rom other shoe dealers because ROCSIL Leather will onl! produce "rom leather raw
materials- and will 1eep pro"it margin at minimum to help 3gandans access and
appreciate the products' ROCSIL initiall! targets the 3gandan mar1et in the "irst "ive
!ears' (he compan! will consider mar1et e9pansion to the 5ast )"rican region a"ter %
!ears o" a success"ul implementation in 3ganda'
ROCSIL4s mar1eting strateg! is that ROCSIL Leather outlets represent %0* o" the sales
base and Suppl! to ;holesale agents represent %0* o" compan!4s sales'

Production capacity6 (he manu"acturing unit under e9pansion is capable o" producing
1-000 pairs o" shoes per da! on a single 10.hour shi"t basis at "ull plant capacit!'
<owever- in case o" overwhelming orders- the production capacit! can be increased easil!
and can simpl! be doubled b! operating on two shi"ts in a single da!' Currentl!- we can
produce 100 pairs per da! on single shi"t basis'
Management: ROCSIL Leather currentl! emplo!s $ sta""' ,! the end o" ne9t !ear- ROCSIL
will have recruited seventeen (1=) "ull time emplo!ees wor1ing 10 hours per da! in the "irst
phase o" pro:ect implementation' (he emplo!ees will be well remunerated and the salaries
will be increased ever! !ear to match in"lationar! tendencies' (he human resource will be
revised as the pro:ect grows to include other positions especiall! in production and
mar1eting' (he pro:ect is headed b! a +irector who doubles the >eneral 7anager' ,! the
%
th
!ear o" the pro:ect- ROCSIL Leather is pro:ected to emplo! over 2% !oung s1illed men
and women and created over 20 indirect :obs as suppliers- laborers and mar1et agents'
Financial investment: ROCSIL Leather pro:ects to invest 3g9$&8-21%-=00 (3S+1&%-&%2)
b! the %
th
!ear o" investment' In the "i9ed capital e9penditure- the pro:ect will have
installed eight (&) state o" the art leather products ma1ing machiner!' (he compan! gets
"inancing "rom both e2uit! and credit "inancing "rom a viable "inancial institution' ROCSIL
directors are presupposed to invest $0* o" the total investment and ?0* to be sought as a
loan that will be "inanced com"ortabl! in a "ive !ear period' )pparentl!- the compan!
directors have pre"erred 100* "unding elsewhere rather than credit "unding- li1e an
investment grant- a donation or otherwise because o" limited securit!' <owever- choice o"
a loan is also a viable option as the pro:ections indicate a 2 !ear pa!bac1 period' So "ar-
the directors have invested Ugx25,362,000, a "igure much less than the pro:ected
investment in the "irst !ear (see investment plan)'
Return on Investment: (he net pro"it in the "irst !ear was pro:ected to be
3g9@$?-?22-000 (3S+8?$-000) but due to less investment than planned- the compan!
operated below brea1even'' In !ear 2nd and 8rd !ear o" operation- the net pro"it is
pro:ected at 3g91-20?-8$%-000 (3S+$?8-000) and 3g91&=$-?1?-000 (3S+=21-000)
respectivel! (assuming that the investment schedule is "ollowed)'
Machinery and tools required by ROCSIL Leather manufacturing project
Machinery Qty Unit Price Ugx!" Total #mount Ugx!" Total #mount U$%"
<!draulic Cut and press machine 1 2?-000-000 2?-000-000
10-000
SmootheningAscoring machine 1 $-%00-000 $-%00-000
1-=81
Bost bed single needle machine 1 11-2%0-000 11-2%0-000
$-82=
S1iving 7achine 1 @-0%2-000 @-0%2-000
8-$&2
Bost ,ed +ouble #eedle 7achine 1 @-22$-000 @-22$-000
8-%$&
(oe shapingAmolding machine 1 20-%$0-000 20-%$0-000
=-@00
Cig 0ag 7achine 1 1=-2%0-000 1=-2%0-000
?-?8%
Shoe lasts %0 %0-000 2-%00-000
@?2
Dinishing machine 1 ?-=?0-000 ?-=?0-000
2-?00
)ssorted tools- numbering) 1 %-000-000 %-000-000
1-@28
su& total ''()*+,)***
-.)'*,
7oto vehicle 1 20-000-000 =-?@2
Total Machinery cost '.()*+,)***
/*)+01
Key Available Not available
Source: ROCSIL Leather Business Plan and 2013201! "inan#ial Re$ort

Investment and Financing, (Ugx)

ITEM Total (Ugx) Total (USD) Available (Ugx)
Land 20,000,000 -
Buildings and civil works 50,000,000 19,231 1,4000,000
Plant and equipment 116,687,000 44,880
Working capital margin 228,520,000 87,892 11,062,000
Motovehicle 20,000,000 7,692 -
sub total 435,207,000 167,387 -
Contingency (10%) 43,520,700 16,739 -
Total investment 478,727,700 184,126 -
FINANCING PLAN Financing plan (%) -
Term loan 60% 287,236,620 110,476 -
Equity 40% 191,491,080 73,650 -
Total financing 100% 478,727,700 184,126 25,362,000
Re%uired invest&ent 'total less available() Ugx478,727,700-Ugx25,362,000= Ugx464,711,700
Projected Income Statements

Investment Year (in Ugx)
Item FY-1 FY-2 FY-3 FY-4 FY-5
Sales 1,614,000,000 2,661,600,000 3,882,000,000 5,275,200,000 6,841,200,000
Less cost of sales 904,476,000 1,348,860,000 1,814,152,800 2,227,169,568 2,716,012,894
Less operating expenses (excl. interest) 294,546,207 453,695,957 638,899,628 850,165,254 1,087,501,352
Income before tax and interest 1,004,070,207 1,766,435,957 2,706,746,828 3,898,195,686 5,212,688,458
Less total interest 57,447,324 43,085,493 28,723,662 14,361,831 -
TAXABLE INCOME 946,622,883 1,723,350,464 2,678,023,166 3,883,833,855 5,212,688,458
Less corporate tax (at 30%) - 517,005,139 803,406,950 1,165,150,156 1,563,806,537
INCOME AFTER TAX 946,622,883 1,206,345,325 1,874,616,216 2,718,683,698 3,648,881,921
INCOME AFTER TAX (USD) 364,086 463,979 721,006 1,045,648 1,403,416.12
Source* ROCSIL Leather Business $lan+ ,inan#ial ,ore#asts -une. 2013
Conclusion: (he compan! directors are !ouths and have so "ar invested 3g92%-8?2-000
out o" the pro:ected 3g9$=&-=2=-=00' (he directors are committed to the "uture o" the
business- however- we are challenged b! the "act that the! are not earning enough to re.
invest in the compan!' ;e have so "ar created :obs "or $ !outh- (8 !oung men and one
woman) and we would li1e to create over 1= permanent :obs b! mid.201% over 2% :obs b!
end o" the investment period' ;e have o""ered "ree Leather products ma1ing s1ills to 12
!ouths and we would li1e to retain some o" them' ;e plan to train more rural based !outh
in leather products ma1ing in the near "uture especiall! those that have made in2uiries'
;e welcome an! "orm o" support granted to our e""orts towards achieving this dream'
(he business has a detailed investment plan that we are "ollowing and an )nnual
(2018A201$) Dinancial Report that can be availed "or cross e9amination i" re2uired' ;e
ensure environmental conservation and we operate in legal spheres o" an! business' Our
compan! Registration #umber is 1$2%1& and (rading Licence number is %%&'
Contacts: )llan #insiima (ROCSIL Leather +irector)
,o9 #umber6 2$112- /ampala
(el6 E2%?.==20@100$A=020@100$
5mail6 alans'thesposFhotmail'comArocsilF"ilterb!pass'com
Bh!sicaL wor1shop address6 ,we!ogerere- in:a Road on #amboole :unction
2y #llan 3insiima4%irector) R5C$I6 6eather