Feasibility study on the establishment of a cornflakes manufacturing plant in Uganda.

Abstract

This report analyses the feasibility of establishing a cornflakes manufacturing plant in Uganda. The conclusion was drawn from the data that was collected and analyzed which included the data about the annual demand of cornflakes, the market study, the production possibility and the availability of raw materials to sustain the plant. The research emphasizes the availability of the main raw material (maize) in plenty and also the other inputs such as cocoa in enough amounts. Form the research it is also clear that there is a potential and growing market for cornflakes in Uganda. From the market study done, almost all the past eight years all the consumed cornflakes in Uganda was imported which is a clear indicator of a potential market. Also from the market study done, the package size of the product was identified as 450g, the most suitable price of this product also was identified which was market oriented; UG Shs 4,700. The financial analysis was done in this research and the results were so favorable i.e. the Return on Investment (ROI) was found to be 1.10, the profitability index was 6.74 which is greater than 1, the Internal Rate of Returns was found to be 30.12%, the Net Present Value (NPV) was positive and the payback period was found to be 2 years and 7 months. From the results obtained, conclusions were drawn. It was therefore concluded that the project generates profit as per the profitability index and the Returns on Investment and therefore from the IRR and NPV results the project is feasible and should be able to attract investors.