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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 principalshareholder 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: Recogniing that the maret "or ualit! 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 maret strateg!' ROCSIL noted

that there are ver! "ew (about %) genuine shoe dealers' 3ganda4s shoe maret 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 worshop and sales outlet in /iira town council.

,we!ogerere trading centre' ROCSIL will operate "rom ,we!ogerere trading centre until it

has acuired 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 maret /ampala and other maret in ma:or towns o" 3ganda' ROCSIL is

strategicall! targeting the great laes maret o" Rwanda- +emocratic Republic o" Congo-

and South Sudan marets in its maret e9pansion strateg!'

The products:he ma:or product o" ROCSIL Leather is shoes' Other product lines include

belts- wallets- bags and decorative accessories lie earrings- e! holders and mirrors'

ROCSIL Leather targets !oung and old st!lish clients- who are sensitive to "ootwear trends'

7anagement relies on customer "eedbac- 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 ualit!-

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 eep pro"it margin at minimum to help 3gandans access and

appreciate the products' ROCSIL initiall! targets the 3gandan maret in the "irst "ive

!ears' he compan! will consider maret e9pansion to the 5ast "rican region a"ter %

!ears o" a success"ul implementation in 3ganda'

ROCSIL4s mareting 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!'

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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 woring 10 hours per da! in the "irst

phase o" pro:ect implementation' he emplo!ees will be well remunerated and the salarieswill 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

mareting' 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 silled men

and women and created over 20 indirect :obs as suppliers- laborers and maret 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 maing machiner!' he compan! gets

"inancing "rom both euit! 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- lie an

investment grant- a donation or otherwise because o" limited securit!'

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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 lie 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 maing sills to 12

!ouths and we would lie to retain some o" them' ;e plan to train more rural based !outh

in leather products maing in the near "uture especiall! those that have made inuiries'

;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" reuired' ;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$112- /ampalael6 E2%?.==20@100$A=020@100$5mail6 alans'thesposFhotmail'comArocsilF"ilterb!pass'comBh!sicaL worshop address6 ,we!ogerere- in:a Road on #amboole :unction2y #llan 3insiima4%irector) R5C$I6 6eather