BUSINESS PLAN:

ESTABLISHMENT

AND

OPERATION

OF A

PVC SANDALS

MANUFACTURING PLANT

IN

KAMPALA, UGANDA

BY

GAGAWALA MEMBERS CLUB LIMITED

GAGAWALA MEMBERS CLUB LIMITED

P.O. BOX 34285,
KAMPALA,
UGANDA.
Cell Phone:
E‐Mail:

JANUARY 2020
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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
A. TABLE OF CONTENTS

S/NO. DESCRIPTION PAGE

PREFACE 1

1.0 EXECUTIVE SUMMARY 2

1.1 Project Description 2
1.2 Location and Site 3
1.3 Business Objectives 4
1.4 The Team 4
1.5 Financing Requirement for Business Expansion 5
1.6 Management Equity 5
1.7 Market Situation & Outlook 6
1.8 Marketing 6
1.9 Raw Materials & Inputs 7
1.10 Technology & Engineering 7
1.11 Project Organization and Manpower Requirements 8
1.12 Financial and Economic Evaluation 8
1.13 Project Socio-economic Impacts 10
1.14 Risks and Mitigating Measures 11

2.0 PURPOSE OF THE DOCUMENT 12

3.0 COMPANY PROFILE 13

3.1 Company Objectives 13
3.2 Vision Statement 13
3.3 Mission Statement 13
3.4 Core Values 14
3.5 Keys to Success 14
3.6 Culture 14
3.7 Company Summary 14
3.8 Company Ownership 14
3.9 Total Project Investment Cost 15
3.10 Management Principles 16

4.0 CRITICAL SUCCESS FACTORS 17

5.0 PRODUCTS AND SERVICES 18

5.1 Overview 18
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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
5.2 Product Description 18
5.3 Brief Description of the Project 18
5.4 Competitive Edge 19

6.0 TECHNICAL ASPECTS 20

6.1 Location 20
6.2 Plant Capacity & Production Programme 21
6.3 Raw Materials and Inputs 22
6.4 Technology and Engineering 23

7.0 MARKET ANALYSIS 27

7.1 Market Trends 27
7.2 Our Target Market 27
7.3 Our Competitive Advantage 28
7.4 Past Supply and Demand 29
7.5 Demand Projection 30
7.6 Pricing and Distribution 31
7.7 Environmental Analysis (SWOT 31

8.0 MARKETING PLAN/SALES & MARKETING STRATEGY 33

8.1 Sources of Income 33
8.2 Market Penetration 33
8.3 Sales Forecast 33
8.4 Marketing Strategy and Sales Strategy 34
8.5 Publicity and Advertising Strategy 36
8.6 Our Pricing Strategy 37

9.0 STRATEGIC PLAN 38

9.1 External Analysis 38
9.2 FIVE FORCES OF PORTER Framework 46
9.3 SWOT Analysis 52

10.0 HUMAN RESOURCE & ORGANIZATIONAL PLAN 54

10.1 Our Business Structure 54
10.2 Human Resource Requirement 58
10.3 Training Requirement 60
10.4 Personnel Plan 60

11.0 FINANCIAL PLAN/ANALYSIS 61

11.1 Basis of Presumptions & Key Project Assumptions 62
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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
11.2 Sources of Income 63
11.3 Break-even Analysis 63
11.4 Total Initial Investment Cost & Financing 64
11.5 Total Operating Cost 65
11.6 Cost of Goods Sold 66
11.7 Financial Performance 66
11.8 Basis of Preparation 66
11.9 The Vehicle 66
11.10 The Accounting System and Financial Control 67
11.11 Summary & Results 67

12.0 BUSINESS RISK ANALYSIS & MITIGATION STRATEGIES 71

12.1 General Business Risk Analysis 71
12.2 SWOT Analysis 74

13.0 SUSTAINABILITY AND EXPANSION STRATEGY 78

14.0 SOCIO-ECONOMIC ASPECTS 79

14.1 Project Economics 79
14.2 Economic Benefits 79

15.0 CONCLUSION & RECOMMENDATIONS 81

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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
B. LIST OF TABLES

T/NO. DESCRIPTION PAGE

1 Company Manpower Structure 8

2 Key Project Performance Parameters 9

3 Sources and Use of Initial Project Capital Investment Cost 16

4 Installed and Operational Capacity 22

5 Annual Production Programme 22

6 Annual Raw Material Requirements and Cost (100% Installed Capacity) 22

7 Annual Utilities Requirements and Cost 23

8 Machinery & Equipment and Estimated Cost 26

9 Import and Export of PVC Sandals (Pairs & Value in US$) 29

10 Projected Demand for PVC Sandals (Pairs) 30

11 Proposed GMC Ltd PVC Sandals Sales Projections 34

12 Social-Economic Data 41

13 Summary Table Analysis 45

14 Suppliers Force 47

15 Buyers Force 48

16 Manpower Requirement and Estimated Annual Labour Cost 59

17 Break-even Analysis in Project Year 5 64

18 Initial Project Investment Cost 65

19 Annual Operating Expense in Project Year 5 65

20 Project Sensitivity Analysis Results 69

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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document

21 Market Risk Management Plan for GMCL PVC Sandals Trading Operations 74

22 SWOT Analysis of GMCL (Internal Factors) 76

23 SWOT Analysis of GMCL (External Factors) 77

24 SWOT Analysis Matrix 77

25 Project Economics 78

26 Key Financial Modelling Assumptions 82

26-1 General Production and Pricing Assumptions 82
26-2 Economic Related Assumptions 82
26-3 Operating Expense Assumptions in Project Year 2 82
26-4 Financing Assumptions 82
26-5 Depreciation Rates 83
26-6 Cash Flow Assumptions 83
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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
C. LIST OF FIGURES

F/NO. DESCRIPTION PAGE

1 Projected Financial Performance Highlights 10

2 Samples of PVC Sandals for Manufacture by GMC Ltd 19

3 Precise Location – Buloba 21

4 PVC Sandals Production Process Flow 24

5 Pestel Analysis Framework 38

6 Uganda Precipitation Map 44

7 Porter’s Five Forces Framework 46

8 Gagawala Members Club Limited Organizational Structure 55

9 Market Risk Assessment Matrix 73

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GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
D. LIST OF FINANCIAL ANALYTICAL SCHEDULES

S/NO. DESCRIPTION PAGE

01: Key Financial Modeling Assumptions 82

02: Source and Structure of Project Financing 84

03/1: Calculation of Working Capital: I Minimum Requirements of Current Assets and Liabilities 85

03/2: Calculation of Working Capital: II Consolidated Annual Income Estimates 86

03/3: Calculation of Working Capital: III Annual Production Cost – Estimates 87

03/4: Calculation of Working Capital: IV Working Capital Requirements 88

04: Fixed Assets and Depreciation Allowances 89

05: Change in Total Investment Costs 90

06: Change in Total Assets 90

07: Projected Cash Flow Table 91

08: Projected Cash flow Table and Calculation of Present Value 92

09: GMCL Projected Annual Income Statement 93

10: Projected Balance Sheet 94

11: Business Ratios/Ratio Analysis 95

12: Projected Payback Period 97

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E. LIST OF APPENDICES

A/NO. DESCRIPTION PAGE

I PVC Sandals Making Machinery & Equipment 98

II PVC Sandals Making Machinery & Equipment Price Quotation 116

III Membership of Gagawala Members Club Limited 117

IV Gagawala Members Club Limited Certificate of Incorporation 118

 GAGAWALA MEMBERS CLUB LTD Business Plan Corporate Document
PREFACE

This Business Plan is prepared for the objective and purpose of procurement a UGX 6.0
billion medium-term loan finance facility for financing market expansion and business
growth of the Gagawala Members Club Limited PVC sandals manufacturing
company.

In this Business Plan we have covered the project profile, company profile & business
legal aspects, industry analysis, target market of theproduct, pricing, product,
promotion, distribution strategies for the product [PVC sandals] as well as the project’s
implementation plan, measurement and control strategies, financial analysis, business
risk analysis and mitigation plan and its socio-economic impact.

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1.0 EXECUTIVE SUMMARY

1.1 Project Description

Gagawala Members Club Limited [GMCL] is a fully-registered and duly-incorporated

Ugandan Company Limited by Guarantee. Gagawala Members Club Limited [GMCL]
specializes in the import-trading of PVC sandals and is now proposing to gear to fully-
fledged in-country manufacture and wholesaling of PVC sandals at a convenient
location near Kampala City.

This Business Plan envisages the establishment of a plant for the production of PVC
sandals with a capacity of 12.48 million pairs per annum at a rate of 40,000 pairs per day
of 8 working hours. Sandal is a light open shoe that is held on by straps across the
instep or around the heel or ankles, usually worn during warm weather.

Gagawala Members Club Limited [GMCL] will manufacture a wide range of PVC
sandals for men, women and children. We will be involved in manufacturing PVC
sandals in different forms such as men’s PVC sandals, men’s PVC casual sandals,
women’s flat PVC sandals, women’s dress PVC sandals, women’s PVC casual sandals,
men’s slider PVC sandals, women’s slider PVC sandals and kids’ PVC sandals. We are
set to services a wide range of clientele not just in Uganda, but also in other regional
markets of East Africa.

We are aware that there are several emergent shoes and footwear manufacturing
companies all around Uganda, which is why we spent time and resources to conduct a
thorough Business Plan and market survey so as to be well positioned to favourably
compete with all our competitors.

Gagawala Members Club Limited [GMCL] will ensure that all the PVC sandals that
leave our factory at Buloba are of the highest quality and highly durable and affordable.

We want to build a business with a wide range of clientele base cut across people of
different financial status. We have a CRM (customer resource management) software
that will enable us manage a one on one relationship with our customers no matter how
large the numbers of our customers’ base may grow to.

Gagawala Members Club Limited [GMCL] will at all times demonstrate her
commitment to sustainability, both individually and as a firm, by actively participating
in our communities and integrating sustainable business practices wherever possible.

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We will ensure that we hold ourselves accountable to the highest standards by meeting
our customers’ needs precisely and completely whenever they patronize our products.
We will cultivate a working environment that provides a human, sustainable approach
to earning a living, and living in our world, for our partners, employees and for our
customers.

Gagawala Members Club Limited [GMCL] is a youth-centred co-operative-styled

shoes and footwear enterprise that is owned by 30-strong Ugandan youth that all living
and working from Kampala, Uganda. This team has depth in terms of educational
qualifications, many years of combined trading experience and know-how in the local
shoe and footwear trading & manufacturing industry, plus the right blend of abilities,
energies and passion to succeed in the proposed PVC sandals manufacturing enterprise.

This particular Business Plan is for setting up of a fully-automated PVC sandals

manufacturing unit for various types of men’s, women’s, and children’s PVC sandals.
The proposed Gagawala Members Club Limited [GMCL] PVC Sandals Manufacturing
Unit would cater to the demand for men’s, women’s, and children’s PVC sandals,
belonging to the lower middle and middle-income groups. The focus of the business
would be to provide quality footwear, particularly PVC sandals in all sizes of (i.e. No. 3
to 12) at affordable prices. The PVC sandals manufactured by the unit will be directly
sold to wholesalers and retail outlets operating in major cities of Uganda.

The Business Plan also makes the case for Gagawala Members Club Limited [GMCL]
to procure a medium-term loan of UGX 6.0 billion to acquire PVC sandals
manufacturing plant & equipment as well as working capital that will enable it to scale
up from its present PVC sandals import trading activity to full-scale Uganda-based
manufacturing of a range PVC sandal products in order to match with the fast-paced
market demand for shoes and footwear in Uganda so as to be able to grow the scope
and volume of its PVC sandals manufacturing, trading and marketing business and
sustain its high-growth momentum.

1.2 Location and Site

Presently, Gagawala Members Club Limited operates from rented premises [300-500
square metres in size] in the Kikuubo commercial trading hub in downtown Central
Kampala where it has a monthly product volume sales turnover of about 4 million pairs
of PVC sandals. In the short-term however, Gagawala Members Club Limited
prospects to set up its own PVC sandals manufacturing plant at Buloba – 19 kms to the

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west of Kampala along the busy Kampala-Mubende-Fort Portal highway on the basis of
its close proximity to the targeted Kampala City urban market.

1.3 Business Objectives

Our fundamental objective is to improve on the efficiency and quality of our PVC
sandals supply chain management process as an exponential function of our market
expansion and business growth strategy in Uganda and the broader East African
regional market.

Our commitment to customer satisfaction is ongoing and through continuous

investment in our people and business, we are confident in maintaining and improving
our successful business practice.

The above objectives are to be achieved through:

o Emphasizing, enhancing and cementing our partnership with all our customers
and business partners like the farmers.
o Sharing our knowledge on quality requirements with customers and business
partners.
o Consolidating our position as a leader in innovation with a special emphasis on
efficiency, quality and clean environment.
o Working with and listening to our suppliers (farmers) with regard to quality and
process integration.
o Ensuring that all employees are trained in, understand, practice and feel part of
our quality management system.
o Establishment and maintenance of a quality management system and continued
improvement of its effectiveness.
o Compliance with all other relevant requirements.

1.4 The Team

The Gagawala Members Club Limited [GMCL] management team is comprised of its
30-strong team founders/promoters who are goal-driven, highly motivated Ugandan
youth who have marshaled considerable expertise and know-how in the marketing and
supply-chain distribution of the evolving shoes and footwear [especially PVC sandals]
market in Uganda. The Gagawala Members Club Limited [GMCL] knows about what
it takes to have a successful business. Our management has worked in the shoes and
footwear industry before or worked in the trading and merchandizing of shoes and
footwear. The one thing that makes our management work is they understand the

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needs of the customers and of the workers, incorporating it into the structure of the
company.

The Gagawala Members Club Limited [GMCL] PVC sandals enterprise is to all intents
and purposes a healthy-growing baby that has been raised in their hands, they know it
inside-out and are ready and willing to sacrifice whatever it takes and go to great
lengths to promote the GMCL brand of PVC sandals, grow shareholder value and also
become the most credit-worthy shoes and footwear manufacturing enterprise in
Uganda.

1.5 Financing Requirement for Business Expansion

The project seeks an investment capital financing of up to UGX 6.0 billion that will be
used to finance the following market expansion and business growth priorities:
a) To finance the purchase and installation of new PVC sandals manufacturing
equipment at the identified project site at Buloba – 19 kms to the west of
Kampala City, Uganda.
b) To increase the disposable working capital for Gagawala Members Club
Limited [GMCL] for the purchase of PVC sandals raw material supplies and
inventory stock.

The UGX 6.0 billion investment capital financing is being sought by Gagawala
Members Club Limited [GMCL] as a medium-term financing facility (for a loan tenure
of 5 years) and will be comprised of the following key components:
a) Acquisition and installation of PVC sandals manufacturing and packaging plant
equipment & machinery – UGX 3,700 million;
b) Provision for raw material purchase and margin money working capital – UGX
2,300 million.

1.6 Management Equity

The Management team of Gagawala Members Club Limited [GMCL] is investing up

to UGX 1,500,000,000 of its own existing assets as its equity contribution into the
proposed business scale-up project – which is approx. 20.0% of the Total Project
Investment Capital [including the UGX 6.0 billion medium-term loan]; UGX 500
million being the value of the planned 1 Acre land asset at Buloba in Wakiso District;
UGX 700 million being the value of the planned PVC sandals plant buildings and
infrastructure; UGX 50 million being the value of the existing and planned office
equipment, furniture, fixture & fittings; UGX 150 million being the market value of its

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planned goods transportation fleet comprising of 2 vehicles; and an additional UGX 100
million being the Company’s liquid assets comprising of cash-at-hand, stock-in-trade
and accounts receivable.

1.7 Market Situation and Outlook

The demand for children shoes is continuously rising due to the increasingly urbanized
population and changing life styles. Although, there are a number of local
manufacturers producing good quality shoes but still a huge demand exists for
potential investment in the footwear sector in Uganda.

The demand for PVC sandals is met through both local production and imports. The
present (2020) unsatisfied demand is estimated at 10,454,300 pairs. The unsatisfied
demand for sandals is projected to reach 13,342,630 pairs and 16,218,051 pairs by the
year 2025 and 2029, respectively.

The key drivers in the rapid growth of the Uganda shoes and footwear sector include: a
growing awareness, easier access and changing lifestyles; a surging demand in the food
and beverage sectors of the Ugandan economy; a rapid growth in the urban, semi-urban
and rural segments that now account for more than 50 per cent of total household
spending; rapid rural-to-urban migration that drives demand; a fast-rising middle class;
abundant agricultural raw materials and cheap labour; the fast-growing youth
population in Uganda who are key consumers of shoes and footwear; general high
population growth (especially in the urban areas), a well-educated workforce, and a
vibrant private sector.

1.8 Marketing

Aggressive above-the-line (ATL) marketing techniques will be used tap both the local
and foreign markets.

This will be done through:

 Direct sales outreach, Market segmentation by service line, territory or sectors.
 Massive outreach to potential markets or contracts by management.
 External sales force (partners) to negotiate viable deals or contracts that not only
map our profile but cover our living costs. Sales plan and budget departments
will be developed and facilitated and monitored or evaluated.
 Review and facilitate public relations campaign after the annual audit. Product
portfolio integration to realize viability of technical and product development.

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Local market and East African, Central and Southern African regions will be
tapped.

1.9 Raw Materials & Inputs

The major raw materials required for the manufacture of ladies leather sandals are PVC
granules, master batch (colour), fittings, buckles, buttons and lacers, plus packing
material. While some of the raw materials and related inputs required by the envisaged
plant will be sourced locally, other raw materials like PVC granules will be imported
from China. The total annual raw and auxiliary materials (carton boxes for packaging)
requirement and cost at full operation capacity of the plant at 100% installed
manufacturing capacity will be UGX 18,291.69 million.

The utilities required by the planned GMCL PVC sandals manufacturing plant are
electric power and water. The annual requirement for electric power and water at full
capacity operation of the plant along with the estimated costs are 4,992,000 kWh p.a.
and 12,480 cubic metres p.a. costing UGX 2,216.45 million and UGX 40.91 million
respectively

1.10 Technology & Engineering

The requisite plant machinery and equipment for manufacture of PVC sandals
comprise of the following pieces of plant equipment per set: Plastic Shoes Air Blowing
Moulding Machine; a Drying Machine; a Plastic Crusher; a Colour Mixer; an Air
Compressor; a Cooling Water Tower; and a Shoes Mould. Each set of plant machinery
and equipment costs US$50,000 landed cost price Kampala and Gagawala Members
Club Limited [GMCL] will invest in 20 sets of PVC sandals manufacturing plant
machinery and equipment to produce at optimum capacity of 40,000 pairs of PVC
sandals per day [i.e. 2,000 pairs of PVC sandals x 20 sets = 40,000 pairs of PVC sandals
per day]. The total cost of purchase of 20 sets 20 sets of PVC sandals manufacturing
plant machinery and equipment is therefore US$1,000,000 CNF Kampala.

Gagawala Members Club Limited [GMCL] will source and import all the 20 sets of
PVC sandals manufacturing plant machinery and equipment from China principally
from two leading suppliers of PVC sandals plant machinery and equipment being:
Dongguan Jinlei Shoe Machinery Company Ltd and Hongtaixin Machinery
Company Limited.

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1.11 Project Organization and Manpower Requirements

Gagawala Members Club Limited [GMCL] is owned by its 30-strong team of project
promoters and the Company’s management structure consists of 4 departments
including HR & Administration Department, Finance Department, Operations
Department, and Sales & Distribution Department. The key departments of the
company and numbers of staff in each department are summarized in Table 1 below:

Table 1: Company Manpower Structure

Department Management Nos. Staff Nos. Total Nos.
Executive Management Level 1 0 1
Finance Department 4 0 4
Administration & HR Department 1 0 1
Process Operations Department 3 31 34
Sales &Distribution Department 2 4 6
Others 0 4 4
TOTAL 11 39 50

1.12 Financial and Economic Evaluation

Although it is operating as a relatively modestly-sized business, Gagawala Members

Club Limited [GMCL] possesses strong growth prospects and is well poised to
improve the competitiveness of the shoes and footwear goods sector in Uganda.

Total capital outlay is UGX 7,500,000,000 and offers a net present value (@15% NPV
rate) of UGX 29,662,896,621. With capital investment, the business is forecasted to
generate annual revenue of UGX 50,565,060,000 by end of Project Year 5 financial year
end from an annual sales turnover of 12,480,000 pairs of PVC sandals. Between Project
Year 2 and Project Year 5, the estimated average net income margin will be UGX
11,373,573,756 per annum.

Gagawala Members Club Limited [GMCL] seeks to promote its business scale-up
(industrial set up) program through the application of a UGX 6.0 billion medium-term
loan (5 years) at an annual interest rate of 12% p.a. The project’s IRR is 147.84%and the
pre-tax return on net worth improves from 85.88% to 39.64% between end of Project
Year 2 and end of Project Year 5. Incremental net income to invested equity capital
ratio (Return on Equity) is forecast to improve by an average of 54.32% p.a. between
end of Project Year 2 and end of Project Year 5.

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The business scale-up medium-term loan capital financial infusion of UGX 6.0 billion
will enable Gagawala Members Club Limited [GMCL] to significantly reduce the cost
of its goods to sales ratio. The major cost driver in the shoes and footwear goods
manufacturing, packaging and trading business is the cost of sales. With the capital
investment, the business is projected to maintain a constant projected cost of sales to
sales ratio of 48.22% between Project Year 2 and Project Year 5. In addition, Gagawala
Members Club Limited [GMCL] is expected to enjoy benefits of scale as the business
negotiates better trade prices with service providers and end-users alike. Company
financial performance highlights are depicted in Table 2 and Figure 1 below.

Table 2: Key Project Performance Parameters (UGX)

KPI/Year Year 2 Year 3 Year 4 Year 5
Sales 39,312,000,000 43,570,800,000 48,157,200,000 50,565,060,000
Operating Profit 15,568,178,240 17,419,359,216 19,416,737,844 20,387,574,736
Tax 4,004,453,472 4,613,807,765 5,267,021,353 5,612,272,421
Net Profit / [Loss] 9,343,724,768 10,765,551,451 12,289,716,491 13,095,302,315
Gross Margin 51.78% 51.78% 51.78% 51.78%
Operating Margin 39.60% 39.98% 40.32% 40.32%
Net Margin 23.77% 24.71% 25.52% 25.90%
Return on Investment 124.58% 143.54% 163.86% 174.60%
Fixed Assets Turnover 5.85 7.14 8.78 10.48
Debt Coverage Ratio 4.73 5.75 7.03 8.16
Times Interest Earned Ratio 21.62 32.26 53.94 113.26

Break-even Point (BEP): UGX 15,235,479,796 at a capacity utilization of 30.13%

Payback Period (Loan): 1.72 Years
NPV at 15%: UGX 29,662,896,621
IRR: 147.84%

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Figure 1: Projected Financial Performance Highlights
Sales Gross Margin Net Profit

60,000,000,000

50,000,000,000

40,000,000,000
UGX

30,000,000,000

20,000,000,000

10,000,000,000

0
PY 2 (2020) PY 3 (2021) PY 4 (2022) PY 5 (2023)

Year

1.13 Project Socio-economic Impacts

Gagawala Members Club Limited [GMCL] PVC sandals manufacturing enterprise will
generate quite a number of services that will be directly and indirectly linked to the
growth and expansion of the GMCL PVC sandals supply-chain distribution activities,
such as import-export/trading firms, transportation companies, auditing and legal
services. These services also play a key role in ramping up the growth of the Uganda
domestic gross domestic product (GDP) in the industrial and service sectors of the
economy – more especially in the shoes and footwear sub-sector.

In terms of job-creation, the project has already created employment for 30 Ugandans.
In addition to supply of the domestic needs, the project will generate UGX 19,497.56
million as cumulative total tax revenue over the five-year project analysis period.

The project can create additional industrial employment for 50 Ugandans. The
establishment of such a PVC sandals factory in Uganda will have a foreign exchange
earning effect through exports and foreign exchange saving effect to the country by
substituting the current imports. The project will also create backward linkage with
PVC sandals industrial raw material suppliers; plastic and textile sub sectors and also
generates income for the Government in terms of tax revenue and payroll tax. The
Gagawala Members Club Limited [GMCL] PVC sandals manufacturing project will
also have a positive value added impact in the shoes and footwear sub-sector and
generate a healthy net rate of return.
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1.14 Risks and Mitigating Measures

Any investment in Uganda is at risk of being negatively affected by the challenging

political and security environment. However, the risks are mitigated by the sponsors'
experience in the country and the project's ability to scale up or down with the market.
The development impact outweighs the risks.

Realization of benefits from the project relies on a sustained or improved security

situation, relative macroeconomic stability, and a continued pro-business policy
environment. Specific project-related risks include:
i. market risk,
ii. sales targets achievement risk,
iii. product quality and safety,
iv. management team risk,
v. regulatory and political risk,
vi. compliance with safety codes and regulations risk,
vii. foreign exchange and price risk,
viii. security risk,
ix. supplies risk, and
x. exit risk

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2.0 PURPOSE OF THE DOCUMENT

The objective of the Business Plan is primarily to facilitate potential entrepreneurs in

project identification for investment. The project Business Plan may form the basis of an
important investment decision and in order to serve this objective, the document
/study covers various aspects of project concept development, start-up, and
production, marketing, finance and business management.

The purpose of this document is to facilitate Gagawala Members Club Ltd who are the
potential investors in the PVC Sandals Manufacturing Plant in Kampala, Uganda by
providing them a general understanding of the business with the intention of
supporting potential investors in crucial investment decisions.

The need to come up with business plans and pre-feasibility reports for undocumented
or minimally documented sectors attains greater imminence as the research that
precedes such reports reveal certain thumb rules; best practices developed by existing
enterprises by trial and error and certain industrial norms that become a guiding source
regarding various aspects of business set-up and it’s successful management.

Apart from carefully studying the whole document, one must consider critical aspects
provided later on, which form basis of any Investment Decision.

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3.0 COMPANY PROFILE

3.1 Company Objectives

The objectives of Gagawala Members Club Limited for the first three years of
operation include:
 Firstly, to create a product that is custom-designed for each customer satisfying
their personal needs.
 Constant growth in sales throughout the life of the project.
 Secondly, to generate customer satisfaction so that at least 60% of our customer
base is repeat business.
 To maintain profit margins at 15-20% through close attention to expenses and
cost of goods sold.
 To develop a start-up business, surviving off of our own cash flow and profiting
solely after the third year.

3.2 Vision Statement

Our vision is to become the leading brand in the shoe and footwear manufacturing
industry in Uganda and to establish a one-stop shoe and footwear manufacturing
company.

VISION

To be one of the leading foot wear manufacturing organisations offering high quality
and unique product meeting world-class finishing standard.

3.3 Mission Statement

Our mission is to establish a world – class shoe and footwear manufacturing company
whose products will not only be retailed in Uganda, but also be exported to other
countries in Africa and the rest of the world.

MISSION

To provide quality and customized assortments of shoes to accommodate all varying

styles and shapes in regards to our customers liking to attract and maintain them.

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3.4 Core Values

 Perfect Finishing
 Integrity
 Timelines

3.5 Keys to Success

1. Professionalism– This is the main factor in this business. Customers come from
far distances to patronize professional fashion house.
2. Creativity – shoe making is a creative work and this separates boys from men
and girls from women.
3. Having a good retail outlet in a high-shopping area.
4. Quality product and good relationships with vendors.
5. Outstanding customer service.

3.6 Culture

Manufacturer
The values that Gagawala Members Club Limited strives to uphold are respect, time
management and family responsibility. We strive to provide outstanding service and
unique products that cannot be found within Uganda. We strive for excellence, no
matter how big or small relevant problems are. Determination and commitment are two
very important factors that reflect the Gagawala Members Club Limited shoes image.

3.7 Company Summary

Gagawala Members Club Limited is a retail cooperative enterprise that specializes in

creating, designing and merchandizing environmentally-friendly PVC sandals. The
company uses innovative ways to design, sell, and attract consumers to purchase the
Gagawala Members Club Limited footwear brand. Gagawala Members Club Limited
uses interactive promotional strategies to gain customer interest and sustain customer
loyalty.

3.8 Company Ownership

Gagawala Members Club Limited [GMCL] was first incorporated on the 24th October
2017 in the Republic of Uganda as a Company Limited by Guarantee [a private not-for-
profit company not having a share capital]. Gagawala Members Club Limited [GMCL]
is jointly owned and operated by a group of about 30 young Ugandans and presently
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focuses its business activities on the importation of Chinese-made PVC sandals that it
merchandises through the busy Kampala downtown Kikuubo trading area – which is
the premier trading hub for all categories of merchandise including fast-moving
consumer goods [FMCGs] in Uganda. Currently, Gagawala Members Club Limited
[GMCL] is able to import and sell up to 50 containers of Chinese-made PVC sandals
[equivalent to 4 million pairs of PVC sandals] per month and now seeks to build on this
strong product captive market presence by manufacturing and selling the same brand
of PVC sandals locally so as to increase on its profitability by eliminating the heavy
import duties bill that it incurs on PVC sandals imports from China.

Potential Investors:

Gagawala Members Club Limited [GMCL] is looking for a government-facilitated

medium term loan funding of UGX 6.0 billion, which is 80% of our start-up costs. We
are looking for the support of government youth entrepreneurship support funds
because Gagawala Members Club Limited is a youth-founded and youth-run footwear
manufacturing and merchandising enterprise and also our product [PVC sandals] are
environmentally-friendly and will reduce the amount of waste throughout Uganda.
This can be tied into waste management programs the government has put into place.
With the support of government-facilitated medium-term loan finance it will not only
assist our environment but Gagawala Members Club Limited will be seen as an
advocate for cleaning up our country.

We will take 20% of the start-up costs from our own savings which is UGX 1.5 billion.

Potential Investors % of start-up costs UGX amount for start-up costs

Government loan finance 80.00% UGX 6,000,000,000
Owners [GMC Ltd] 20.00% UGX 1,500,000,000
Total 100.00% UGX 7,500,000,000

3.9 Total Project Investment Cost

The total project investment cost of the proposed Gagawala Members Club Limited
PVC sandals manufacturing plant and supply & distribution enterprise is UGX 7.5
billion whose sources and use is displayed in Table 3 below.

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Table 3: Sources and Use of Initial Project Capital Investment Cost
S. No. Project Investment Component Share GMCL Equity Medium-term Total
Loan Financing
1 Land 6.67% 500,000,000 0 500,000,000
2 Plant Buildings & Infrastructure 9.33% 700,000,000 0 700,000,000
3 Plant Equipment & Machinery 49.33% 0 3,700,000,000 3,700,000,000
4 Office Furniture, Fixtures & Fittings 0.67% 50,000,000 0 50,000,000
5 Vehicles (2 Units) 2.00% 150,000,000 0 150,000,000
6 Company Liquid Assets 1.33% 100,000,000 0 100,000,000
a. Cash-at-Hand 0.53% 40,000,000 0 40,000,000
b. Stock-in-Trade 0.80% 60,000,000 0 60,000,000
c. Accounts Receivable (Debtors) 0.00% 0 0 0
7 Working Capital 30.67% 0 2,300,000,000 2,300,000,000
8 TOTAL PROJECT FUNDING 100.00% 1,500,000,000 6,000,000,000 7,500,000,000
9 %age of Total Project Funding 20.00% 80.00% 100.00%

3.10 Management Principles


 Aspire to becoming “a customer value creation company” through making every
operation customer-focused and market-oriented.
 Aspire to provide maximum safety, comfort and satisfaction of our customers
through shoe manufacturing and services focused on quality.
 Aspire for thorough compliance and nurturing of human resources through
business activities, and strive to become a company highly trusted by the society.

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4.0 CRITICAL SUCCESS FACTORS

Following are the factors critical for the success of this business venture;
 Development of attractive designs and good quality PVC sandals at competitive
prices.
 Develop strong linkages with suppliers for sourcing good quality raw materials
at competitive prices.
 Networking with footwear wholesalers / retailers for sale of product [PVC
sandals].
 Efficient management of stock to keep inventory cost at the minimum.
 Knowledge about the latest market trends.
 Induction of trained sales personnel for efficient customer handling.
 Increasing competition from Chinese products and strong competition with
similar type of manufacturers.

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5.0 PRODUCTS AND SERVICES

5.1 Overview

Gagawala Members Club Limited is in the shoe and footwear manufacturing industry
to manufacture a wide range of PVC sandals for men, women and children. We are set
to service a wide range of clientele not just in the Uganda, but also other regional
markets in eastern Africa and of course to make profits, which is why we will ensure we
go all the way to give our clients and potential clients options.

5.2 Product Description

PVC sandal is a light open shoe that is held on by straps across the instep or around the
heel or ankles, usually worn during warm weather. PVC sandal is footwear
characterized by softness and light weight. The product has been used by both men and
women who mostly dwell in urban areas. The main target users will be the urban
population.

5.3 Brief Description of the Project

Footwear manufacturing industry in Uganda can be broadly categorized into two main
segments i.e. Organized Sector (mainly includes big brands e.g. Uganda Bata, Crane
Shoes, Uganda Shoe Company, etc.,) and Informal/Unorganized Sector (mainly
comprising of labor intensive units having semi-mechanized manufacturing facilities).

This particular Business Plan showcases the basic details for setting up a fully-
mechanized PVC Sandals Manufacturing Unit. The major product line of the venture
includes different varieties of PVC sleepers and sandals in all sizes for adults, boys and
girls and children, starting from number 03 (European 21) and up to number 12
(European 46.5).

China made machinery is easily available in the local market and will be installed in the
proposed unit. Overall installed capacity of the unit will be to produce 40,000 pairs of
PVC sandals per day (24.96 million pairs annually). The product mix of open and closed
PVC sandals will mainly comprises of “A Grade” and “B Grade” pairs of PVC sandals.
The proposed venture will provide direct employment opportunity to 50 individuals
including the Owner/Manager. It is assumed that unit shall be established at Buloba (19
kms from Kampala) along the Kampala-Mubende highway on Gagawala Members
Club Limited’s own land and plant building to reduce the initial capital expenditures.

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5.4 Competitive Edge

Gagawala Members Club Limited excels in several different areas showing immense
differentiation from other competitors. Our one-of-a-kind design PVC sandals will
demonstrate how much detail is integrated in each PVC sandal, and how each PVC
sandal represents the kind of service we provide toward each customer by going above
and beyond to meet their needs. Along with our attention to detail, Gagawala
Members Club Limited will provide a feature that no other competitor provides: A
story. Our story will give each customer the feeling of “personalization” and
uniqueness that is particularly hard to find in a shoe.

Figure 2: Samples of PVC Sandals for Manufacture by GMC Ltd

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6.0 TECHNICAL ASPECTS

6.1 Location

Presently, Gagawala Members Club Limited operates from rented premises [300-500
square metres in size] in the Kikuubo commercial trading hub in downtown Central
Kampala where it has a monthly product volume sales turnover of about 4 million pairs
of PVC sandals.

In the short term however, Gagawala Members Club Limited prospects to set up its
own PVC sandals manufacturing plant at Buloba – 19 kms to the west of Kampala along
the busy Kampala-Mubende-Fort Portal highway on the basis of its close proximity to
the target Kampala City urban market. The PVC sandals making and merchandising
business will be successful because it is located in a high traffic area and serves a rapid
dynamic growth market of footwear products in Uganda given that Kampala city is still
the leading fast-moving consumer goods (FMCGs) product supply chain and
distribution nexus in the country and also for other neighbouring regional markets like
South Sudan, DR Congo, Kenya, Burundi and northern Tanzania.

Gagawala Members Club Limited plans to develop the Buloba industrial plant site into
an attractive production, storage/warehousing and sales & marketing outlet with
attractive design features to attract and retain customers (PVC sandals retail &
wholesale traders and break-bulk distributors), from far-and-wide who will be coming
to place direct ex-factory orders for the PVC sandals.

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Figure 3: Precise Location – Buloba

6.2 Plant Capacity & Production Programme

6.2.1 Installed & Operational Capacities

Based on the outcome of the market study, the envisaged GMCL manufacturing plant
will have a production capacity of 12.48 million pairs of PVC sandals per annum (i.e.
40,000 pairs of PVC sandals per day). This capacity is proposed on the basis of a single
shift of 8 hours per day and 312 working days per annum (26 days x 12 months).

It is assumed that the GMCL manufacturing plant comprising of 20 sets of PVC

sandals-making machines will be initially operate at 90% of feasible installed
manufacturing capacity based on the current footwear absorptive capacity of PVC
sandals in Uganda that currently consumes about 4.5 million pairs of similar imported
product per month (more than 4x the proposed PVC sandals manufacturing output of
the GMCL plant).This production capacity is thus estimated to be economically viable
and justifies the capitalas well as operational costs of the project.
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The details of operational and installed capacity according to product output are
provided in Table 4 below.

Table 4: Installed and Operational Capacity

PVC Sandals 20 Sets PVC Sandals PVC Sandals PVC Sandals PVC Sandals Output
Made/Set/Day (Pairs) Output/Day (Pairs) Output/Month (Pairs) Output/Year 1 (Pairs) (Year 1) @ 90%
2,000 40,000 1,040,000 12,480,000 11,232,000

6.2.2 Production Programme

Considering the time required for market penetration and skill development, the plant is assumed to start
production at 90% of its installed capacity which will grow to 95% in the second year and 100% in the third
year of operation. Full capacity production can be achieved in the third year and onwards. Details of annual
production program are shown in Table 5.

Table 5: Annual Production Programme

S. No. Description Unit of Measure Production Year
PY 1 PY 2 PY 3 & onwards
1 PVC Sandals Pair 11,232,000 11,856,000 12,480,000
2 Capacity utilization rate % 90 95 100

6.3 Raw Materials and Inputs

6.3.1 Raw & Auxiliary Materials

The major raw materials required for the manufacture of ladies leather sandals are PVC granules, master
batch (colour), fittings, buckles, buttons and lacers, plus packing material. While some of the raw materials
and related inputs required by the envisaged plant will be sourced locally, other raw materials like PVC
granules will be imported from China. The annual raw and auxiliary materials requirement and cost at full
operation capacity of the plant is depicted in Table 6.

Table 6: Annual Raw Material Requirements and Cost (100% Installed Capacity)
Description Qty Unit Rate @Unit Value (UGX)
(UGX)
PVC Granules 5,591,040 Kg 2,400 13,418,496,000
Master Batch (Colour) 109,824 Kg 4,600 505,190,400
Fittings, Buckles, Button and Lacer etc. 12,480,000 Pairs 200 2,496,000,000
Packing Material 12,480,000 Pairs 150 1,872,000,000
Total 18,291,686,400

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The only auxiliary material required for the envisaged plant is carton box for packing
the product. Thus, 124,800 carton boxes will be required at full production of the plant,
and the total annual cost is estimated at UGX 1.872 billion.

6.3.2 Utilities

The utilities required by the envisaged plant are electric power and water. The annual
requirement for electric power and water at full capacity operation of the plant along
with the estimated costs are shown in Table 7.

Table 7: Annual Utilities Requirements and Cost

S. No. Utility Unit of Measure Required Qty Unit Price, Total Cost
UGX/Unit (UGX)
1 Electric Power kWh 4,992,000 444 2,216,448,000
2 Water M3 12,480 3,278 40,909,440
Total 2,257,357,440

6.4 Technology and Engineering

6.4.1 Technology

1. Production Process

PVC Sandals making process needs some steps and of course raw materials. To cut and
shape the slippers the manufacturer needs machines. Alongside proper essential raw
materials are needed. There are few steps that can be followed.

 Step 1: Put the DOP oil and PVC resin powder into Drying Machine and start the
machine; the drying and mixing time need about 2-3 hours.
 Step 2: Put the dried and mixed material with the chemical pigment into Colour
Mixer and start the machine; it takes about 5-8 minutes.
 Step 3: Put the finished material into the Machine Hopper (Please, refer to Figure
4 below). Start the production process.
 Step 4: The No. 3 and No. 4 machines need to connect with the main machine, it
will supply the air and cycling cooling water for the machine and entire PVC
sandals production process.
 Step 5: The wasted material produced in the PVC sandals production process
will be crushed by the (Plastic Crusher). It can be re-cycled and re-used. You can
put the crushed material into the Drying Machine and re-use.

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 Step 6: Pack them properly with proper packaging process. The PVC sandals are
now ready to go to the market. Once the packaging and all are done, ship them
to the market for consumer trading.

Figure 4: PVC Sandals Production Process Flow

2. Packaging Process

Packaging process for the PVC sandals need a few simple steps. Firstly you need plastic
bags or covers to pack the slippers. Get these sheets or plastic bags from the market,
you can stick your company logo on it or leave it like it is.

After wrapping the PVC sandals in a plastic packet, pack them in a carton box. Also you
can use company stickers or logo on the carton box to show your brand name. Now,

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you need a big carton box to pack the lot of slippers and to send it to the market or to
the retailer. All these packaging materials are easily available in the market.

3. Environmental Impact

The envisaged plant does not have any emission of pollutants. Thus, the project is
environment friendly.

6.4.2 Engineering

1. PVC Sandals Machinery and Equipment

 Slipper making business need a number of machines to start up. Firstly you need
a Sole Cutting Machine. These machines are used to cut the long PVC sheets into
pieces following the perfect shape and size. These machines are hand operated.
 After that a drilling machine is needed for the holes on the soles. That is drilling
machines are used to make holes on the slippers. Some of the drilling machines
can put the straps in to the holes.
 Not all the drilling machines are capable of fixing straps. To fix the straps you
can use hand tools. They are easy to use and do not need much skill. Through
these hand tools the straps are being fixed tightly to the sole.
 Finally you need a finishing machine. Finishing machines cut and shape the
slipper and the straps in a proper way. If you are using automatic machines then
finishing will be done by the single machine only.
 Other than these machines there are some dies like shape and size dies are
required for slipper making business. These dies can be fitted to the machines
you are using for the cutting. High quality machines have their dies with them,
some of the low quality machines do not have the dies, manufacturers have to
buy them and fix them separately.

With each set of PVC sandals-making machinery & equipment being valued at
US$50,000 Kampala CIF Price, the total cost of machinery and equipment comprising of
20 sets of PVC sandals-making machinery & equipment is estimated at US$1,000,000.
The list of plant machinery and equipment required for the project along with the
estimated costs are shown in Table 8.

The various types of PVC sandals making machinery and equipment that are supplied
by Dongguan Jinlei Shoe Machinery Company Ltd of China are displayed at the end
of this Business Plan in Appendix I on pages 98 to 115.

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Table 8: Machinery & Equipment and Estimated Cost1 (In US$)
Item No. Description Qty Unit Price (US$) Total Price2
(US$)
1 Plastic Shoes Air Blowing Moulding Machine 1 Set 36,000 720,000
2 Drying Machine 1 Set 2,600 52,000
3 Plastic Crusher 1 Set 2,300 46,000
4 Colour Mixer 1 Set 1,000 20,000
5 Air Compressor 1 Set 900 18,000
6 Cooling Water Tower 1 Set 1,000 20,000
7 Shoes Mould 1 Pair 2,000 40,000
8 Shipping to Mombasa 2,000 40,000
9 Freight to Kampala 1,500 30,000
10 Handling Costs 700 14,000
Total Costs 50,000 1,000,000

2. Land, Buildings and Civil Works

The cost of the identified 1 Acre industrial plot of land at Buloba is UGX500 million.
The total area of land required for the envisaged project is 4,000 m2, out of which 700 m2
will be the built – up area. The total cost of construction and civil works at the rate of
UGX 1,000,000 per m2 is estimated at UGX 700,000,000.

1 Based on Price Quotation by Hongtaixin Machinery Equipment Company Ltd. attached in Appendix II on page 116.
2 Total Price applies to 20 sets of PVC sandals making machines
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7.0 MARKET ANALYSIS

7.1 Market Trends

One common trend in the shoe and footwear manufacturing industry is that the
demand for its product is driven by fashion, demographics, and of course consumer
disposable income. The profitability of individual shoe and footwear manufacturing
companies depends on their ability to design and market shoe models that effectively
target consumers’ tastes and preferences.

Large shoes and footwear companies have economies of scale in distribution and
marketing and small scale shoes and footwear companies can compete successfully by
crafting customized shoes and footwear based in their client’s preference.

Going forward, shoes and footwear brands will have to position themselves to cater to a
stronger middle class market. It has been projected that by the year 2030, the majority of
the world’s population will be part of the middle class, primarily due to a drop in the
amount of people living in extreme poverty.

With this development, there will be influx of new consumers and this will put pressure
on product developers to meet their unfamiliar preferences and needs. Developed
economies placing their products in emerging markets will also have to adjust their
pricing strategies to compete with local low-price manufacturers.

Lastly, as part of marketing strategies, shoe and footwear manufacturing companies

now ensure that they have showrooms at different locations where they display their
shoes and footwear. As a matter of fact, it is even cheaper to purchase directly from
these showrooms established by shoe and footwear manufacturing companies as
against purchasing from shoe and footwear retail-cum-departmental stores. It is a
strategy that helps them increase sales and income for their business.

7.2 Our Target Market

Perhaps it will be safe to submit that the shoe and footwear manufacturing industry is
amongst one of the industry that has the widest range of customers; almost everybody
on planet earth need one form of footwear or the other. It is pretty difficult to find
someone in Uganda and of course in other places that don’t have shoes and other
footwear.

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In view of that, we have positioned Gagawala Members Club Limited PVC sandals
manufacturing company to service the clientele in Uganda and other regional markets
in East Africa. We have conducted our market research and feasibility studies and we
have ideas of what our target market would be expecting from us.

Gagawala Members Club Limited is in the shoe and footwear manufacturing industry
to manufacture a wide range of shoes and footwear for the following people;
 Men
 Women
 Children
 Babies

7.3 Our Competitive Advantage

A close study of the shoe and footwear manufacturing industry reveals that the market
has become much more intensely competitive over the last decade. As a matter of fact,
you have to be highly creative with your designs and market approach, customer
centric and proactive if you must survive in this industry.

We are aware of the stiffer competition and we are well prepared to compete
favourably with other leading shoe and footwear manufacturing companies in the
Uganda.

Gagawala Members Club Limited PVC sandals manufacturing company is launching a

standard shoe and footwear manufacturing company that will indeed become the
preferred choice of residence of Kampala and every other location where our
showrooms and outlets will be opened.

Gagawala Members Club Limited PVC sandals manufacturing company will be

located in an ideal location highly suitable for the kind of manufacturing company that
we want to run. We will have enough parking space that can accommodate well over 30
cars / trucks per time.

One thing is certain, we will ensure that we manufacture a wide range of PVC sandals
products in our factory at all times. It will be difficult for customers to visit our PVC
sandals showroom and not see the type of shoe and footwear that they are looking for.

One of our business goals is to make Gagawala Members Club Limited PVC sandals
manufacturing company; a one stop shoe and footwear manufacturing company. Our

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excellent customer service culture, showrooms, online store, various payment options
and highly secured facility will serve as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be
among the best within our category (start-ups shoe and footwear manufacturing companies)
in the industry meaning that they will be more than willing to build the business with
us and help deliver our set goals and achieve all our aims and objectives. We will also
give good working conditions and commissions to freelance sales agents that we will
recruit from time to time.

7.4 Past Supply and Demand

The requirement for PVC sandals has been met from domestic production and imports.
Uganda also re-exports some amount of PVC sandals to the regional market. The data
for import and export of the product is available from Uganda Revenue Authority.
However, the data for domestic production of PVC sandals is not available from the
UMA’s Report on Large & Medium Scale Manufacturing Industries Survey due to
aggregation problem. Hence, in order to analyze the unsatisfied demand for the
product the import and export data covering the period 2014--2018 is presented in
Table 9.

Table 9: Import and Export of PVC Sandals (Pairs & Value in US$)
Year Imports Exports
Pairs Value (US$) Pairs Value (US$)
2014 2,518,339 $2,160,457 108,438 $363,204
2015 3,269,993 $2,512,356 132,575 $470,985
2016 25,871,548 $15,827,399 194,538 $827,630
2017 6,247,800 $6,473,925 250,662 $510,843
2018 9,504,112 $8,365,853 191,378 $512,695
Source: - Uganda Revenue Authority

As can be seen from Table 9, the imported and exported quantity of PVC sandals in the
past five years do not show any trend and is characterized by huge fluctuations from
year to year. For instance, the imported quantity during years 2014--2018 ranged from
the lowest 2,518,339 pairs (2014) to the highest 25,871,548 pairs (2016) before declining
to 6,247,800 pairs in 2017 and peaking up slightly again to 9,504,112 pairs in 2018 with a
mean figure of 9,842,358 pairs.

Contrary to import, the exported quantity showed a rising trend from 2014-2017 before
dipping again in 2018. For instance, the exported quantity of PVC sandals started from
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a low 108,438 pairs in 2014 and rose steadily to 250,662 pairs in 2017 before declining to
191,378 pairs in 2018, with a yearly mean figure of 175,518 pairs.

In the absence of the trend in the data set, the average quantity imported in the past 5
years, which is 9,482,358 pairs, is assumed to reflect the unsatisfied domestic demand
for year 2018. By applying 5% annual growth rate current (year 2020) unsatisfied
domestic demand for leather sandals is estimated at 10,454,300 pairs.

The export market for PVC sandals is very wide if the product is produced with
attractive design and quality PVC. The highest quantity exported was in year 2016 and
year 2017, which amounts to 194,538 pairs and 250,662 pairs, respectively. Hence, due to
the various incentives provided by the government to exporting industries a substantial
amount of PVC sandals can be exported to neighboring African countries and other
parts of the world. For the purpose of this project, conservatively a current export
market demand for 10,000 pairs is assumed to exist.

7.5 Demand Projection

Demand for leather sandals depends on the increase in number of consumers,

urbanization and incomes. Considering the sustainable growth of gross national
product (GDP), population growth and new needs to arise, the unsatisfied demand for
local consumption is assumed to increase by 5% and exports by 15%. Based on the
above mentioned current unsatisfied domestic demand and export, future demand is
projected as shown in Table 10.

Table 10: Projected Demand for PVC Sandals (Pairs)

Year Domestic Export Demand Total Demand
Unsatisfied Demand
2020 10,454,300 232,123 10,686,423
2021 10,977,015 266,941 11,243,956
2022 11,525,866 306,983 11,832,848
2023 12,102,159 353,030 12,455,189
2024 12,707,267 405,985 13,113,252
2025 13,342,630 466,882 13,809,513
2026 14,009,762 536,915 14,546,676
2027 14,710,250 617,452 15,327,702
2028 15,445,762 710,070 16,155,832
2029 16,218,051 816,580 17,034,631

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The total unsatisfied domestic and export demand for PVC sandals will grow from
10,686,423 pairs in the year 2020 to 13,809,513 pairs and 17,034,631 pairs by the year
2025 and year 2029, respectively.

7.6 Pricing and Distribution

Depending on the design and the quality of leather, current retail price of PVC sandals
range from UGX 3,500 to UGX 5,200. This means, current average retail price is UGX
4,375. Allowing 25% margin for distributors and retailers the recommended factory gate
price is UGX 3,500.

PVC sandals are consumer items demanded by the majority of the urban population.
Taking this in to consideration the product has to reach the end users through
distributors and retailers of shoe throughout the country. As to export, the product will
be sold to agents of regional market buyers or arrangements will be made with
importers in the importing countries.

7.7 Environmental Analysis (SWOT)

Strengths:
- Our product is composed of recyclable goods and making it environmentally
friendly.
- Easy accessible because it’s in the heart of downtown Kampala.
- Free shipping for donated shoes. - Unique; no shoe is the same.
- Good quality shoe because it is handmade and other features are included such
as; non-slip grip, and a cushioned sole.
- Low overhead costs.
- Specialization and nice selling.

Weaknesses:
- Only available in Kampala.
- Risk of returned products.
- No brand awareness yet because it’s a new product and is in the production
stage.
- Slow start-up because there will be lack of customers, and large start-up costs.
- Lack of interesting stories from start-up.

Opportunities:
- Free publicity through bloggers and social media.

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- Constant demand for shoes – everyone needs them.
- Environmental trends are increasing.
- Expand into other markets by selling accessories, etc.
- Expand our retail locations, nationally, and eventually globally.
- Becoming a franchise.

Threats:
- Competitors in the area that are selling shoes.
- Established retail stores in malls because they’re already well known.
- Economic downfalls because people may not have money to be spending on high
quality items.
- Fraud; if someone gives us fake money, or products being stolen.
- Products being damaged from customers/suppliers.

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8.0 MARKETING PLAN/SALES & MARKETING STRATEGY

8.1 Sources of Income

Gagawala Members Club Limited is in business to manufacture and retail a wide

range of PVC sandals in Uganda for both domestic consumption and export. We are in
the shoe and footwear manufacturing industry to maximize profits and we are going to
go all the way out to ensure that we achieve or business goals and objectives.

In essence, our source of income will be the manufacturing and retailing of a wide
range of PVC sandals at affordable prices. Gagawala Members Club Limited will
generate income by selling the following PVC sandal products;

 Manufacturing of men’s PVC sandals

 Manufacturing of men’s PVC casual sandals
 Manufacturing of women’s flat PVC sandals
 Manufacturing of women’s dress PVC sandals
 Manufacturing of women’s PVC casual sandals
 Manufacturing of men’s slider PVC sandals
 Manufacturing of women’s slider PVC sandals
 Manufacturing of kids’ PVC sandals

8.2 Market Penetration

To penetrate the market we will try to take customers away from competitors but also
try to get new people to wear work or walking shoes. To add new people to the market
for PVC sandals we will try to show that you can wear nice, stylish PVC sandals for any
occasion that are also comfortable and reliable. To take customers away from
competitors we will show through price and non-price competition that our PVC sandal
shoes are more comfortable, medically better for your body and at the same time they
do not compromise your style of shoe.

8.3 Sales Forecast

One thing is certain when it comes to shoe and footwear manufacturing business, if you
are into the manufacturing or various types of shoes and footwear, you will always
attract customers cum sales and that will sure translate to increase in revenue
generation for the business.

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We are well positioned to take on the available market in Uganda and of course the
regional East African market and we are quite optimistic that we will meet our set
target of generating enough income / profits from the first six months of operations and
grow the business and our clientele base.

We have been able to critically examine the shoe and footwear manufacturing industry
and we have analyzed our chances in the industry and we have been able to come up
with the following sales forecast. The sales projection is based on information gathered
on the field and some assumptions that are peculiar to startups in Kampala – Uganda.

Below are the sales projection for Gagawala Members Club Limited PVC sandals
manufacturing company, it is based on the location of our business and other factors as
it relates to shoe and footwear manufacturing start – ups in Uganda;

Table 11: Proposed GMC Ltd PVC Sandals Sales Projections

Year Pairs of PVC Price/Pair (UGX) Sales (UGX)
Sandals Sold
Year 1 11,232,000 3,500 39,312,000,000
Year 2 11,856,000 3,675 43,570,800,000
Year 3 12,480,000 3,859 48,157,200,000

N.B: This projection is done based on what is obtainable in the industry and with the
assumption that there won’t be any major economic meltdown and there won’t be any
major competitor manufacturing or retailing same shoe and footwear products and
customer care services as we do within same location. Please note that the above
projection might be lower and at the same time it might be higher.

8.4 Marketing Strategy and Sales Strategy

Before choosing a location for Gagawala Members Club Limited PVC sandals
manufacturing company we conducted a thorough market survey and feasibility
studies in order for us to be able to be able to penetrate the available market and
become one of the preferred choice for consumers not only in Kampala, but also
throughout Uganda and the East African regional market. We have detailed
information and data that we were able to utilize to structure our business to attract the
numbers of customers we want to attract per time.

We will hire experts who have a good understanding of the shoe and footwear
manufacturing industry to help us develop marketing strategies that will help us

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achieve our business goal of winning a larger percentage of the available market in
Uganda.

In order to continue to be in business and grow, we must continue to manufacture and

sell the shoes and footwear that are available in our showrooms which is why we will
go all out to empower or sales and marketing team to deliver. In summary, Gagawala
Members Club Limited PVC sandals manufacturing company will adopt the following
sales and marketing approach to win customers over;

 Open/launch our PVC sandals manufacturing company and showroom in a

grand style with a party for all.
 Introduce our PVC sandals manufacturing company by sending introductory
letters alongside our brochure to organizations, households and key stake
holders in Kampala and other parts of Uganda.
 Ensure that we manufacture a wide range of PVC sandals
 Make use of attractive hand bills to create awareness and also to give direction to
our PVC sandals showrooms
 Position our signage / flexi banners at strategic places around Kampala
 Position our greeters to welcome and direct potential customers
 Create a loyalty plan that will enable us reward our regular customers
 Engage on road shows within our neighborhood to create awareness for our PVC
sandals manufacturing company and showroom.
 List our business and products on yellow pages ads (local directories)
 Leverage on the internet to promote our business
 Engage in direct marketing and sales
 Encourage the use of Word-of-mouth marketing (referrals)

Our professional team will also develop several strategies to achieve high sales volumes
and to retain loyal customers. We plan on achieving these by hiring 3 of only the top
shoes and footwear sales representatives that are able to build relationships with our
customers and help our product and services stand out from other competitors. They
will sell our PVC sandals products to the customers that walk into our store, by
informing and persuading them to purchase a pair. To further increase our customer
satisfaction, we plan on implementing a loyalty program where customers can collect
GMCL points, and later redeem discounts on future sales. We want to encourage
customers to donate their used PVC sandals, so we are offering a 10% discount for
every 5 pairs of shoes brought in.

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8.5 Publicity and Advertising Strategy

Despite the fact that our PVC sandals manufacturing company and showroom will be
well located, we will still go ahead to intensify publicity for the business. We are going
to explore all available means to promote our shoe and footwear manufacturing
company.

Gagawala Members Club Limited PVC sandals manufacturing company has a long
term plan of opening our showrooms in various locations all around Kampala and
other key cities in Uganda which is why we will deliberately build our brand to be well
accepted in Kampala before venturing out. As a matter of fact, our publicity and
advertising strategy is not solely for winning customers over but to effectively
communicate our brand.

Here are the platforms we intend leveraging on to promote and advertise Gagawala
Members Club Limited PVC sandals manufacturing company;

 Place adverts in local influential & popular newspapers, radio stations and TV
stations.
 Encourage the use of word-of-mouth publicity from our loyal customers.
 Leverage on the internet and social media platforms like; YouTube, Instagram,
Facebook ,Twitter, LinkedIn, Snapchat, Badoo, Google+ and other platforms to
promote our business.
 Ensure that we position our banners and billboards in strategic positions all
around Kampala.
 Distribute our fliers and handbills in target areas in and around our
neighborhood.
 Contact corporate organizations, households, landlord associations and schools
by calling them up and informing them of Gagawala Members Club Limited
PVC sandals manufacturing company and the shoes and footwear products we
manufacture and sell.
 Advertise our shoe and footwear manufacturing company and showroom in our
official website and employ strategies that will help us pull traffic to the site.
 Brand all our official cars and trucks and ensure that all our staff members and
management staff wears our branded shirt or cap at regular intervals.

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8.6 Our Pricing Strategy

Aside from quality, pricing is one of the key factors that gives leverage to shoe and
footwear manufacturing company, it is normal for consumers to go to places (shoe and
footwear manufacturing companies and showrooms) where they can get shoes and
other footwear at cheaper price which is why big players in the shoe and footwear
manufacturing industry like Uganda Bata, Crane Shoes, Uganda Shoe Company, Umoja
et al will always attract loads of corporate and individual clients.

We know we don’t have the capacity to compete with established shoe and footwear
brands likeUganda Bata, Crane Shoes, Uganda Shoe Company, Umoja, etc., but we will
ensure that the prices and quality of all the shoes and footwear products that we
manufacture and are available in our showroom are competitive with what is
obtainable amongst shoe and footwear manufacturing companies within our level.

 Payment Options

The payment policy adopted by Gagawala Members Club Limited is all inclusive
because we are quite aware that different customers prefer different payment options as
it suits them but at the same time, we will ensure that we abide by the financial rules
and regulation of Uganda.

Here are the payment options that Gagawala Members Club Limited will make
available to her clients;

 Payment via bank transfer

 Payment with cash
 Payment via Point of Sale Machine (POS)
 Payment via online bank transfer
 Payment via cheque
 Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our client
make payment for farm produces purchase without any stress on their part. Our bank
account numbers will be made available on our website and promotional materials to
clients who may want to deposit cash or make online transfer for the purchase of our
products.

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9.0 STRATEGIC PLAN

9.1 External Analysis

9.1.1 PESTEL Analysis Framework

It is used to perform an environmental assessment of macro variables such as Political,

Economical, Social, Technological, Environmental and Legal factors and its impact to
the company objectives. Although it might look that every single factor has the same
weight regarding its impact on strategic decision that is not always true.

For instance, in Gagawala Members Club Limited case, Technological and Economic
Factors have higher importance than Environmental, not because environmental issues
should be neglected, but due to the fact that they are considered a standard for any
company operating in this particular market

It is also necessary to explain the reasons behind each objective:

Figure 5: Pestel Analysis Framework

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A. Political Analysis

Uganda is a presidential republic, in which the President of Uganda is both head of

State and head of Government; there is a multi-party system. Executive power is
exercised by the government. Legislative power is vested in both the government and
the National Assembly. The system is based on a democratic parliamentary system with
universal suffrage for all citizens over 18 years of age.

In a measure ostensibly designed to reduce sectarian violence, political parties were

restricted in their activities from 1986. In the non-party "Movement" system instituted
by the current president Yoweri Museveni, political parties continued to exist but could
not campaign in elections or field candidates directly (although electoral candidates
could belong to political parties). A constitutional referendum cancelled this 19-year
ban on multi-party politics in July 2005. General elections are held every five years.

Type of Government: Republic.

Constitution: it was ratified in July 12, 1995 and promulgated October 8, 1995.

Branches: Executive--president, vice president, prime minister, cabinet. Legislative--

parliament. Judicial--Magistrates' Courts, High Court, Court of Appeals (Constitutional
Court), Supreme Court.

Political parties: 38 registered parties. Major political parties include the National
Resistance Movement (NRM, the ruling party), Forum for a Democratic Change (FDC),
Democratic Party (DP), Conservative Party (CP), Justice Forum (JEEMA), and Uganda
People’s Congress (UPC), among others.

National holiday: Independence Day, October 9.

The 1995 Constitution established Uganda as a republic with executive, legislative, and
judicial branches. The constitution provides for an executive president, to be elected
every 5 years. President Yoweri Museveni, in power since 1986, was elected in 1996 and
re-elected in 2001, 2006, and 2011. Legislative responsibility is vested in the parliament;
legislative elections are held every 5 years. Because of redistricting, the parliament
elected in February 2011 grew from 332 to 375 members, including 112 special seats for
women, 10 special seats for military, five for youth, and five for persons with
disabilities. The Ugandan judiciary operates as an independent branch of government

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and consists of the Magistrates Court, the High Court, the Court of Appeal (which also
sits as the Constitutional Court when required) and the Supreme Court.

B. Economic Analysis

Uganda has substantial natural resources, including fertile soils, regular rainfall,
substantial reserves of recoverable oil, and small deposits of copper, gold and other
minerals. Agriculture is one of the most important sectors of the economy, employing
72% of the work force. The country’s export market suffered a major slump following
the outbreak of conflict in South Sudan, but has recovered lately, largely due to coffee
harvest which account for 16% of exports, and increasing gold exports, which account
for 10% of exports. Uganda has a small industrial sector that is dependent on imported
inputs such as refined oil and heavy equipment. Overall, productivity is hampered by a
number of supply-side constraints, including insufficient infrastructure, lack of modern
technology in agriculture, and corruption.

Uganda’s economic growth has slowed since 2016 as government spending and public
debt has grown. Uganda’s budget is dominated by energy and road infrastructure
spending, while Uganda relies on donor support for long-term drivers of growth,
including agriculture, health, and education. The largest infrastructure projects are
externally financed through concessional loans, but at inflated costs. As a result, debt-
servicing for these loans is expected to rise.

Oil revenues and taxes are expected to become a large source of government funding as
oil production starts in the next three to 10 years. Over the next three to five years,
foreign investors are planning to invest US$9 billion in production facilities projects,
US$4 billion in an export pipeline, as well as in a US$2-3 billion refinery to produce
petroleum products for the domestic and East African Community markets.
Furthermore, government is looking to build several hundred million dollars’ worth of
highway projects to the oil region.

Uganda faces many economic challenges. Instability in South Sudan has led to a sharp
increase in Sudanese refugees and is disrupting Uganda’s main export market.
Additional economic risks include: poor economic management, endemic corruption,
and the government’s failure to invest adequately in the health, education, and
economic opportunities for a burgeoning young population. Uganda has one of the
lowest electrification rates in Africa – only 22% of Ugandans have access to electricity,
dropping to 10% in rural areas.

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C. Social Analysis

Understanding the social dynamics of the region that you decide to enter will enable
you to more efficiently communicate with the native people, target markets, build a
labour force and successfully manage teams. Your knowledge of the social aspects and
cross-cultural communications is paramount in small gatherings where certain
dignitaries and diplomats may be asked to attend. The total estimated population of
Uganda is 40,892,941 in mid-January 2020. The age structure of Uganda for 0-14 years is
47.84% (male 9,759,704/female 9,795,300) and the age structure of Uganda for 15-64
years is 50.2% (male 10,204,693/female 10,323,563). The population growth rate of
Uganda was 3.18% in the year of 2018. The birth rate was 42.4 births per 1,000
populations in the year of 2018. The death rate was 9.9 deaths per 1,000 populations in
the year of 2018. Total infant mortality rate was 54.6 deaths per 1,000 live births, for
male it was 63.3 deaths per 1,000 live births and for female it was 45.7 deaths per 1,000
live births in the year of 2018. The official languages are English and Swahili of Uganda.
These are the main religion like Roman Catholic 39.3%, Protestant 45.1% (Anglican
32.0%, Pentecostal/Born Again/Evangelical 11.1%, Seventh-Day Adventist 1.7%,
Baptist 0.3%), Muslim 13.7%, other 1.6%, none 0.2% (2014 census) of Uganda. The
literacy rate is 78.4% of the total population can read and write in Uganda. The
government of Uganda was spending 6.2% of GDP for health expenditures in the year
of 2016.

Table 12: Social-Economic Data

Population GDP [Current GDP % GDP per Inflation % Unemployment
‘000s Prices, Year] variation capita (US$) Rate 4th
(estimated) US$ millions Quarter/Year
[% of
Workforce]

2018 42,729 28,116 1.51% 658 2.6% 1.74%

2017 41,167 27,699 8.95% 646 5.6% 1.70%
2016 39,649 25,423 1.30% 613 5.5% 1.79%
2015 38,226 25,098 -9.81% 625 5.2% 1.87%
2014 36,912 27,829 8.23% 717 4.3% 1.89%
2013 35,695 25,713 5.18% 685 5.5% 1.91%
Source: Uganda Bureau of Statistics [UBOS]

D. Technological

Information and communications technology (ICT) has been instrumental in Uganda’s

development, connecting communities and businesses at both the local and
international levels. Although the sector does face some major challenges, ICT is a tool
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that promotes economic growth and offers opportunities for Ugandans to improve their
lives, he says.

ICT has played a critical role in the advancement of the country, with gains covering the
economic, social and cultural spectrum. The contribution spans primary growth sectors
including but not limited to health, education, agriculture, tourism and infrastructure,
such as transport.

For Uganda, ICT is a way to achieve development objectives, given operating

constraints such as a lack of infrastructure and human capacity. The government has
been working hard to digitize the country, and its efforts have borne fruit. ICT is one of
the most competitive and fastest-growing sectors in the country, largely driven by
telecommunications. Last year, Uganda advanced five places in the International
Telecommunication Union’s ICT Development Index, placing it twentieth in Africa and
second within East Africa. The improved ranking was attributed largely to the rollout of
ICT infrastructure by both the government and the private sector. For instance, the
estimated internet users in September 2017 were 18,148,923 (45.9% of the population),
while broadband fixed subscriptions were estimated at 145,765.

Technology has underpinned Uganda’s development by improving public and private

sector services delivery; providing better access to information, knowledge and
communication; creating jobs and reducing poverty; and spurring economic growth by
boosting exports. The ICT sector has grown 19.7% on average each year since 2013,
adding 2.5% annually to the country’s gross domestic product.

Though loosely regulated and informal, e-Commerce continues to rapidly grow in

Uganda due to the widespread use of “mobile money” (telephone-based financial
transfers) and the rapid growth of mobile phone usage. While there are only five
million bank accounts in Uganda, there are about 22 million mobile money accounts.

Currently, Uganda’s mobile money sector falls under the purview of the Uganda
Communications Commission (which is not mandated to regulate financial
transactions) and thus, is effectively unregulated. However, under the National
Payments Bill (currently before parliament), the BOU would regulate e-Commerce and
mobile money transactions. The bill proposes to give the BOU broad oversight
authority, including the power to block e-Commerce and mobile money transactions
when it deems necessary.

In 2018, the government enacted a 0.5 percent tax on mobile money cash withdrawals

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and a $0.05 daily tax on social media usage. One of Uganda’s largest
telecommunication and mobile money providers reported that its mobile money
transactions had declined by more than 50 percent as a result of the tax.

B2B/B2C sellers typically market their goods and services online, with consumers and
sellers connecting first by phone and then by physical meeting. Payments are typically
made in cash or by mobile money transfers. Although shopping directly from a website
is a relatively new phenomenon in Uganda, it is fast growing. One key advantage for e-
Commerce in Uganda is the expanding middle class with a growing taste for
U.S. consumer items (regarded as being of superior quality than those from China and
other countries). Young people (18 to 30) constitute the bulk of online sellers and
buyers.

Advertising in Uganda’s e-Commerce market remains largely unsophisticated and is

mainly limited to social media platforms. Facebook, Whatsapp, Instagram and Twitter
are the most commonly used online platforms in Uganda.

Ugandan law provides for the protection of intellectual property rights (IPR), but the
enforcement mechanisms are weak. The country particularly lacks the capacity to
prevent piracy and counterfeit distribution. As a result, theft and infringement of
intellectual property rights is common and widespread. Uganda does not track seizures
of counterfeit goods or prosecutions of IPR violations.

E. Environmental

Environmental analysis involves aggregating and analyzing weather patterns and

climate cycles. In the wake of the heated discussion about global warming,
environmental analysis has been brought to the forefront of the media, a place it usually
only occupies in times of disaster, like the tsunami in South East Asia or the Haitian
Earthquake. Environments vary drastically in different areas of the globe depending on
the biome or ecosystem of the region. While not a comprehensive list, some examples
are tundra, forests, deserts, grasslands, and wetlands. The location of Uganda situated
near East-Central Africa, west of Kenya, east of the Democratic Republic of the Congo.
The land area includes 197,100 sq km, the water area includes 43,938 sq km and total
area of Uganda is 241,038 sq km. The total land boundary of Uganda is 2,698 km. The
border countries of Uganda are Democratic Republic of the Congo 765 km, Kenya 933
km, Rwanda 169 km, South Sudan 435 km and Tanzania 396 km. Copper, cobalt,
hydropower, limestone, salt, arable land and gold these all are the natural resources of
Uganda. From the total land, 21.57% Arable land is use; in this land 8.92% Permanent

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crops are grown and others are 69.51% Uganda made a international agreements for
environment with Biodiversity, Climate Change, Climate Change-Kyoto Protocol,
Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Life
Conservation, Ozone Layer Protection, Wetlands.

Figure 6: Uganda Precipitation Map

F. Legal

Legal environments change between the district, city, state/province and national
levels. Complexities within certain industries can have a strong influence on the ease of
doing business, complicating administrative, financial, and regulatory processes,
among others. The constitution of Uganda includes the dates of adoption, revisions, and
major amendments. It was amended in 2005 and the amendments in 2005 removed
presidential term limits and legalized multiparty political system. The legal system of
Uganda is mixed legal system of English common law and customary law. International
law organization participation of Uganda includes information on a country's
acceptance of jurisdiction of the International Court of Justice (ICJ) and of the
International Criminal Court (ICCt); 55 countries have accepted ICJ jurisdiction with
reservations and 11 have accepted ICJ jurisdiction without reservations; 114 countries
have accepted ICCt jurisdiction. The judicial branch contains the name(s) of the highest
court(s) and a brief description of the selection process for members. The Court of
Appeal (judges are appointed by the president and approved by the legislature); High
Court (judges are appointed by the President).

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Table 13: Summary Table Analysis
PESTEL Result OVERALL
 Stability and commitment to a stronger EAC and political integration–
likely to increase investor confidence;
 There are concerns in relation to the turmoil’s in the horn of Africa
(Somalia), political tensions in the DRC and peace in Southern Sudan;
Political

 The market operates under a Competitive Economy Principles, no

entry barriers are imposed;
 There are no war treaties or any kind of conflicts between Portugal
and surrounding countries;
 Uganda benefits from the Free Trade Agreements (FTA’s);
 Uganda has been a member state of the United Nations (1963), AU
(1963), the Commonwealth (1962),EAC (1999), ACP (2000),
COMESA (1981)
 Uganda’s real GDP growth for the calendar year 2018 is about 6.1%
compared to 5.5% in 2019 due to internal & external shocks - with the
expected GDP growth rate being 7% p.a. over the medium term.
 Regional Market – EAC Common Market (Free Trade) and
Economical

Citizenship– removing/reducing barriers of trade and entry barriers in

the region – Conducive for businesses to do trade across borders by
both institutional and retail investors (cross listing).
 Increasing Income per Capita.
 Volatility in foreign exchange, interest rates and inflationary pressures.
 Commercial Bank lending rates were still relatively high though stable
in the 20% – 21% for 2018 and 2019.
 Future Oil industry and current exploration and development phases
will have positive boost to the economy with projection of double-digit
growth in annual GDP when production commences.
 Education Section: Approx 78.4% of the population is literate (can
read & write)
 Corruption is a major problem – Uganda ranked 32ndmost corrupted
country in the 2018 Transparency International Corruption Perceptions
Index rankings. Causing inefficiency in implementing programs
impacting on economy as well as causing donor fatigue
Social

 Poverty Levels: The proportion of the poor population reduced from

27% in 2016 to 21.4% in 2017. This increase in access to disposal
incomes impacts on the population’s/ individual investment power.
 40.89 Million Inhabitants; Unemployment rate ≈ 9.4%
 The rank of Uganda in Ease of Doing Business improved from 127 in
2018 to 116 in 2019.
 E-commerce on the rise in Uganda e.g. e-tax and e-banking
 ICT infrastructure improving but still a hindrance – there are many
options available to reduce transaction/ operational costs:- I pads,
Technological

Mobile money, etc

 Internet and email usage on the increase although speeds are slow -
but it works! Number of internet users is about 18.148 million (2017).
 A wide spread network of Universities is available, as well as high
number of specialized workers;
Industrial Machinery and technical support are available.

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• Strong Regulation regarding the environment issues is available;
• There is a high surveillance and penalties regarding Pollutions;
Environmental • Unpredictable weather patterns – implications on food/livestock
production & electricity generation;
• Tropical weather and fertile soils (best in the region) favours
agricultural farming;
• More sensitivity to protection of environment and carbon foot-print
world over.
• Unfavourable tax policy;
• Increased harmonization of laws to facilitate the regional integration of
the EAC Partner States;
Legal

• Industrial and Intellectual Property Rights are heavily protected under

National Rules;
• There are strong regulations concerning "How companies Operate",
competition, Financial services, and Labour Rights.

9.2 FIVE FORCES OF PORTER Framework

Figure 7 – Porter’s Five Forces Framework

9.2.1 The Basic Marketing System

A. Suppliers

Gagawala Members Club Limited aims to use the Ugandan Leather and Shoes cluster
in order to produce its main products. Such decision bears on the fact that Uganda has
one of the most competitive Shoe Making and Leather clusters within the East African
Community, while taking advantage of small logistic distance among producers and
supplier; another reason behind this strategic decision regards the high competition
among suppliers and the close relation that suppliers and customers create when
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performing a B2B (Business-To-Business) interaction. This allows the creation of a
Flexible Supply Chain that is deemed necessary to accommodate demand variability
required by some of Gagawala Members Club Limited Product Families.

As a conclusion, the main source of bargaining power is connected with the 2 main
families of products production complexity; on the other hand there is also the risk of a
supply chain vertical integration from the Shoe Manufacturing supplier. The Shoe
Makers suppliers and the 3D Software and Hardware Company are the most critical
ones.

Table 14: Suppliers Force

Market Concentration Low market concentration; High number of possible suppliers within industrial
Leather& PVC Footwear Cluster. Relatively small distance between suppliers and the
company;
Intensity of Competition High Competition among suppliers; High variety of suppliers independently from the
product Technical/Manufacture quality of the product.
Relationship Nature between Cooperative.
Suppliers
Specific Nature of the Product 3 main Product Families:
 Personalized & customized Products - highly complex requires a very flexible
network and capable suppliers to deliver Product Manufactured Quality
[specifications] and respect Lead Times; Straight Relationship Required & Process
Control;
 Customized Models – Medium complexity, requires a very flexible network and
capable suppliers to deliver Product Manufactured Quality [specifications] and
respect Lead Times. Control on suppliers operations is required;
 Standard Models – Low complexity; Doesn’t require a highly responsive and
reactive supplier; Control can be performed after production using Product
Inspection.
Importance of Supply Shoe Manufactures- High importance due to final product Outsourcing;
Leather Manufactures and Other Raw Materials [final Product suppliers] – Low
importance, controlled and chosen by the Shoe Supplier;
Hardware and 3D software suppliers - High importance due to straight connection
with Gagawala Members Club Limited “GMCL” concept.
Complexity of Supply High Complexity:
 “Personalized &Customized” Family of Products;
 3D software and hardware;

Average Complexity:
 “Customized Family” of Products;

-Low Complexity:
 “Standard model” Family of Products.

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B. Buyers

Gagawala Members Club Limited aims to start its operations in the Ugandan Market.
This market will follow a B2C (Business to customer) approach; due to this fact a Higher
relevance will be given to External Market Factors such Economy, Social, Technological,
Political and Environmental. On one hand a B2C market will allow to have a higher
number of potential customer, on the other hand this customers will be a source of
Turbulence and complexity regarding the final demand – an higher Marketing Effort
will be required in order to smooth final product demands and stabilize operations and
revenues.

Table 15: Buyers Force

Price Sensitivity Price sensitivity impact is highly connected with the Family of Products:
 “Customized” and “Personalized and Customized” families of Products Low Price
sensitivity;
 “Standard Models” families of products High Price Sensitivity.
Volume of purchase and On average 3.2 shoes per year.
incidence cost
Product Differentiation Cooperative.
Specific Nature of the Product  Personalized and/or Customized products – High differentiation regarding main
competitors;
 Standard models – Low differentiation, mainly on the shoe model design.
Switching Costs In order to analyses the switching cost, an easier way is through the Sales Channel
analysis:
- For internet re-buyers there is a High switching cost related with the size
uncertainty and possible risks connected with purchase in satisfaction and reverse
logistics;
- For store buyers:
 Standard Models Buyers- Very Low or neglectable switching costs;
 Personalizable and/or customizable models buyers – Medium switching costs
related with shoe comfort and design.
Threats of Upstream Integration Since the product is going to be sold in a B2C Market, there is a very low threat of
upstream integration;
Possession of Detailed No or low information regarding the Product creation and “back office processes”;
Information on the Product Selected Detailed information regarding the concept;

In case of Customer as Co-creator, “Non business critical information” will be provided

in a detailed way.

As a conclusion there is not a single expected buyer behavior. Due to the 3 families of
products available, it is possible to distinguish between 2 buyer behaviors. For the
standard models, we can expect low switching costs, low differentiation (mainly on
the shoe design), high price sensitivity and high competition. On those families of
products that allow a certain degree of Personalization &/or Customization a higher
switching costs is expected (mainly for online purchases), lower price sensitivity and

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lower competition due to the high product differentiation enable by Gagawala
Members Club Limited “GMCL” concept.

Despite these two main Buyer behaviors, there is a low risk of upstream vertical
integration.

9.2.2 Broader Competitive System

There is a high competition within the domestic shoes market. Due to a high sales
turnover performance VS price sensitivity, the customer tends to choose the products
that can have almost the same performance while paying less for them. Another main
advantage regards the designs. Since the shoes manufacturing quality is relatively the
same, for the Direct Competition companies, design represents the only factor of
differentiation among the products. These facts don’t allow for having a single and
irrefutable market leader. As a consequence, this increases the likelihood of having
more competition (Potential entrants) in the market.

A. Potential Entrants

Economies of Scale No need for economies of scale; High possibility to outsource the production.
Exclusive Product Differences Depending only on the Design and raw material quality; Usually the shoe sizes are
“Standard” meaning no difference within products.
Financial Requirements Medium- Low; high importance for Working Capital –ifoutsourced is used.
Product/Brand Loyalty Medium: Brand loyalty only happens when the customer is satisfied both with comfort
and design. For low-hand price sensitive shoes, there is a very low brand loyalty is
expected; Brand Recognitions is highly connected with Brand Loyalty.
Exclusive access to distribution Very Exclusive. A well-coordinated supply chain and distribution channels is highly
channels complex to achieve.
Institutional limitations No limitations.

B. Threat of Substitute Products

Performance/Price Ratio Medium-Low: Due to the concept proposed by GMCL, it is

expected an higher overall performance then the main
competitors [due to “Customization”], even though, since there is
a low brand loyalty, the Performance Price ratio is highly volatile
as a consequence of prices changes.
Customer Inclination to change Low-Medium: The design is the main driver for the change,
although production quality and comfort can be an intensive
anchor that might lead to higher brand loyalty.
Possible strategic advantages gain from substitution Low; It is very unlikely.

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It is very unlikely to have a product that fully substitutes shoes. Although there might
be other types of designs or purposes for the use, for instance football shoes, there are
no substitute products beside Flip-Flops– meaning that the range of substitute products
is quite limited.

C. Internal Rivalry

Growth Rate of the Market Stable Mature Market (Portuguese Market).

Degree of Differentiation Low. Based on design and shoe comfort. If the customers
wants a product with a certain degree of differentiation, it must
be Engineered to order following a total customization
process- Niche market for high hand, high price (luxury)
products.
Nº of companies and Concentration Low concentration. There is not a single irrefutable market
leader, it is very volatile due to the low brand loyalty.
Level of diversity between competitors Low. Based on the design and production quality.
Incidence of fixed costs High. Due to the market proposal and business model, the
competition economic activity requires high volumes of finished
product Stock.
Exit barriers There are no strong exit barriers. Highly dependent on the
competitor cost structure; Usually the finish products and raw
material stocks accumulated due to a push supply chain
strategy.

There is a high competition among shoe brands. Due to a high sales turnover
performance VS price sensitivity, the customer tends to choose the products that can
have almost the same performance while paying less for them. Another main advantage
regards the designs. Since the shoes manufacturing quality is relatively the same, for the
Direct Competition companies, design represents the only factor of differentiation
among the products. These facts don’t allow for having a single and irrefutable market
leader. As a consequence, and taking into consideration the possibility to outsource the
production, likelihood of having more competition (Potential Entrants) in the market
increases.

The main factor of differentiation will be created within the supply chain, even if the
design and quality cannot be neglected. A cooperative and flexible approach will
allow a fast adaptation to the market turbulence, as well as, it will create the necessary
conditions to follow a pull strategy, reducing the stocks all over the supply chain,
enabling to have a more competitive product. This is the crucial effort that Gagawala
Members Club Limited [GMCL] wants to pursuit with its key suppliers.

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D. Internal Analysis

Since GMCL is a Start-up company the internal analysis will be based on Porter’s Value
Chain:

Porter’s Value Chain

Firm infrastructure Low Fix-Costs, having the biggest incidence in case of
technologypurchases; The biggest effort is connected with the Working
Capital required to develop prototypes, shoes production and other
variable costs.
Human Resource Management Since GMCL is a startup company, there is a small need for human
resources (6/5 employees). Due to this fact there is no great deal of
complexity related with human resource management. GMCLwill follow a
team work approach, where everyone can contribute with his ideas and
have a direct impact on the decisions and final outcomes.
Technology Development Required technology, for instance all the 3D software and scanners, will
be provided by an external company. GMCL will only use such
technology. A high effort will be given in order to create Shoe Designs
following a Modular Design operational concept.
Procurement Due to cooperation and a mutual trust relationship with suppliers along
the supply chain, procurement will represent an Advantage. All the
suppliers are well established and succeeded companies within the
shoemaking and leather cluster.
Inbound Logistics Operations Outbound Logistics Marketing & Sales Service
Provided by the Production will be Depending on the In house, it will be the CRM will be provided
suppliers; all the raw outsourced; Designs freights and shipment main effort and focus in house. Facing the
materials are and Point of Sale quantities. Thereis of GMCL. idea of higher service
purchased by the management will be Outsource possibility level promotion.
Outsourced company, operated by GMCL. or partnership with
GMCL only controls the key suppliers.
the quality.

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9.3 SWOT Analysis

Strengths: Opportunities:
- Key Suppliers Know-how and willingness to become - Start Up Company (government economic incentives).
business partners. - Low Investment in labour force.
- Supply Chain connections. - -Access to premium designs and fashion trends.
- GMCL concept. - -Government incentives to Exporters.
- Less inventories [due to the new market approach].
- Comparative advantage for Online Sales niche market.

Threats: Weaknesses:
- Potential competition increase. - Low Know-How related with Product manufacturability.
- Lack of differentiation. - Lack of Brand awareness.
- Highly dependent on the Supply Chain relationship. - Investment Costs.
- Need of Scale Economies.
- Decouple point between Push and Pull Strategy.

From the SWOT analysis we can have a big picture regarding the Threats, Weaknesses,
Opportunities and Strengths that characterize Gagawala Members Club Limited
[GMCL].

The main idea with this analysis is trying to promote strategies that will minimize
weaknesses and threats and maximize opportunities and strengths in order to become
more competitive in the market. From the graphic above we can understand that the
major Weaknesses regarding the “Investment Costs” and lack of “Know How”. Which
for a startup company is deem essential, in particular for GMCL, that aims to compete
in a mature market, a strong know how regarding the manufacture procedures and
processes is incredible relevant.

On the other hand GMCL should give a close attention to 3 main, more significant,
Threats - “Need of Scale Economies”, “Lack of differentiation”, “High dependence on
the supply chain”; Since the 3 main threats may create a high risk to jeopardize the
overall company operations and sustainability.

When analyzing the Strengths, we can pay attention to two main characteristics. The
“GMCL PVC sandals concept” itself, which can be a factor of differentiation within the
Ugandan Market, and the “key suppliers know-how and wiliness to become business
partners”, a crucial characteristic necessary to implement a Pull strategy and allow the
required flexibility that GMCL requires to fulfill is customers’ orders while applying
the “New Market Approach”.

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Opportunities – Regarding this factor of analysis, the major opportunities are related
with government incentives. This particular incentives allow to have a smaller initial
investment and risk- for instance lower credit rates or wages governmental
contributions, while taking advantage of certain entrepreneurial programs that provide
the start-up capital (up to UGX 200 million depending on the companies degree of
innovation and potential economic impact for surrounding communities); Besides this
economic incentives, GMCL can use a particular set of resources that allow access to
main designs and trends, allowing to be a step further than its competitors, in aspects
regarding fashion.

As a conclusion GMCL must realize a strategy that will optimize Strengths and
Opportunities while decreasing the possible risks and negative impacts that might
appear from Threats and Weaknesses. The main Threats and Weaknesses that are
connected with lack of Know-how and Supply chain relationships Risks are lso taken
into consideration.

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10.0 HUMAN RESOURCE & ORGANIZATIONAL PLAN

10.1 Our Business Structure

Gagawala Members Club Limited PVC sandals manufacturing company do not intend
to build up a shoe and footwear manufacturing business like the usual small-scale shoe
and footwear craft shops around the street corner; our intention of starting up and
successfully growing a shoe and footwear manufacturing company is to build a
standard and one stop shoe and footwear manufacturing company in Kampala,
Uganda.

Although our shoe and footwear manufacturing company might not be as big as
Uganda Bata, Crane Shoes, Uganda Shoe Company, Umoja et al, but we will ensure that
we put the right structure in place that will support the kind of growth that we have in
mind while setting up the business.

We will ensure that we hire people that are qualified, honest, customer-centric and are
ready to work to help us build a prosperous business that will benefit all the stake
holders (the owners, workforce, and customers). As a matter of fact, a profit-sharing
arrangement will be made available to all our senior management staff and it will be
based on their performance for a period of ten years or more.

In view of that, we have decided to hire qualified and competent hands to occupy the
following positions;

 Chief Executive Officer (Owner)

 Factory Manager
 Human Resources and Admin Manager
 Merchandize Manager
 Sales and Marketing Manager
 Shoes and Footwear Designers and Making Experts
 Accountants / Cashiers
 Customer Services Executive

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Figure 8: Gagawala Members Club Limited Organizational Structure

CEO

Sales &
Admin & HR Merchandise
Marketing Factory Manager Finance Manager
Manager Manager
Manager

Shoe & Footwear

Client Service Quality Control Production Designers and
Stores Manager
Purchasing Company
Executives [4] Manager Supervisors [3] Making Experts
[8]
Managers [2] Accountant

Plant
Workers
[10]

Casual
Labourers
[10]

Roles and Responsibilities

Chief Executive Officer – CEO:

 Increases management’s effectiveness by recruiting, selecting, orienting, training,

coaching, counseling, and disciplining managers; communicating values,
strategies, and objectives; assigning accountabilities; planning, monitoring, and
appraising job results; developing incentives; developing a climate for offering
information and opinions; providing educational opportunities.
 Creating, communicating, and implementing the organization’s vision, mission,
and overall direction – i.e. leading the development and implementation of the
overall organization’s strategy.
 Responsible for fixing prices and signing business deals.
 Responsible for providing direction for the business.
 Creating, communicating, and implementing the organization’s vision, mission,
and overall direction – i.e. leading the development and implementation of the
overall organization’s strategy.
 Responsible for signing checks and documents on behalf of the company.
 Evaluates the success of the organization.
 Reports to the board.

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Admin and HR Manager

 Responsible for overseeing the smooth running of HR and administrative tasks

for the organization
 Maintains office supplies by checking stocks; placing and expediting orders;
evaluating new products.
 Ensures operation of equipment by completing preventive maintenance
requirements; calling for repairs.
 Updates job knowledge by participating in educational opportunities; reading
professional publications; maintaining personal networks; participating in
professional organizations.
 Enhances department and organization reputation by accepting ownership for
accomplishing new and different requests; exploring opportunities to add value
to job accomplishments.
 Defining job positions for recruitment and managing interviewing process
 Carrying out staff induction for new team members.
 Responsible for training, evaluation and assessment of employees.
 Responsible for arranging travel, meetings and appointments.
 Oversee the smooth running of the daily office activities.

Factory Manager:

 Responsible for managing the daily activities in the shoe and footwear
manufacturing factory.
 Ensures that proper records of shoes and footwear are kept and warehouse does
not run out of finished products.
 Ensure that the factory is in tip-top shape and easy to locate.
 Interfaces with third – party suppliers (vendors) of raw materials (leather,
synthetic leather, rubber, shoe soles, fabrics, gum, shoe polish and shoe dyes et
al).
 Control shoe and footwear distribution and supply inventory.
 Supervise the workforce in the shoe and footwear manufacturing factory.

Merchandize Manager

 Manage vendor relations, market visits, and the ongoing education and
development of the organizations’ buying teams.
 Help to ensure consistent quality of shoe and footwear making raw materials are
purchased and used for the manufacturing of shoes and footwear.

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 Responsible for the purchase of shoes and footwear raw material for the
organizations.
 Responsible for planning sales, monitoring inventory, selecting the merchandise,
and writing and pricing orders to vendors.
 Ensures that the organization operates within stipulated budget.

Sales and Marketing Manager

 Manage external research and coordinate all the internal sources of information
to retain the organizations’ best customers and attract new ones.
 Model demographic information and analyze the volumes of transactional data
generated by customer purchases.
 Identify, prioritize, and reach out to new partners, and business opportunities et
al.
 Identifies development opportunities; follows up on development leads and
contacts; participates in the structuring and financing of projects; assures the
completion of development projects.
 Responsible for supervising implementation, advocate for the customer’s needs,
and communicate with clients.
 Develop, execute and evaluate new plans for expanding increase sales.
 Document all customer contact and information.
 Represent the company in strategic meetings.
 Help increase sales and growth for the company.

Shoe and Footwear Designers and Making Experts

 Responsible for designing and manufacturing of men’s PVC sandals.

 Responsible for designing and manufacturing of men’s PVC casual sandals.
 Responsible for designing and manufacturing of women’s flat PVC sandals.
 Responsible for designing and manufacturing of women’s dress PVC sandals.
 Responsible for designing and manufacturing of women’s PVC casual sandals.
 Responsible for designing and manufacturing of men’s slider PVC sandals.
 Responsible for designing and manufacturing of women’s slider PVC sandals.
 Responsible for designing and manufacturing of kids’ PVC sandals.

Accountant / Cashier:

 Responsible for preparing financial reports, budgets, and financial statements for
the organization.

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 Provides managements with financial analyses, development budgets, and
accounting reports; analyzes financial feasibility for the most complex proposed
projects; conducts market research to forecast trends and business conditions.
 Responsible for financial forecasting and risks analysis.
 Performs cash management, general ledger accounting, and financial reporting.
 Responsible for developing and managing financial systems and policies.
 Responsible for administering payrolls.
 Ensuring compliance with taxation legislation.
 Handles all financial transactions for the organization.
 Serves as internal auditor for the organization.

Client Service Executive

 Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone)
provide the client with a personalized customer service experience of the highest
level.
 Through interaction with customers on the phone, uses every opportunity to
build client’s interest in the company’s products and services.
 Manages administrative duties assigned by the human resources and admin
manager in an effective and timely manner.
 Consistently stays abreast of any new information on the organizations’
products, promotional campaigns etc. to ensure accurate and helpful information
is supplied to customers when they make enquiries.

10.2 Human Resource Requirement

The total manpower requirement of Gagawala Members Club Limited PVC sandals
manufacturing company is 50 persons. Details of manpower required and annual
labour cost are indicated in the Table 16 below. The total annual cost of labour is
estimated at UGX 1,087,200,000.

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Table 16: Manpower Requirement and Estimated Annual Labour Cost (UGX)
S. No. Job Description No. of Salary
Persons
Rate Monthly Annual
1 CEO 1 5,000,000 5,000,000 60,000,000
A. SALES & MARKETING DEPARTMENT
2 Sales & Marketing Manager 1 3,000,000 3,000,000 36,000,000
3 Merchandize Manager 1 3,000,000 3,000,000 36,000,000
4 Client Service Executives 4 1,500,000 6,000,000 72,000,000
Sub-Total 6 12,000,000 144,000,000
B. OPERATIONS DEPARTMENT
5 Factory Manager 1 3,000,000 3,000,000 36,000,000
6 Quality Control Manager 1 3,000,000 3,000,000 36,000,000
7 Stores Manager 1 2,000,000 2,000,000 24,000,000
8 Production Supervisors 3 1,500,000 4,500,000 54,000,000
9 Shoe & Footwear Designers/Making Experts 8 1,500,000 12,000,000 144,000,000
10 Production Plant Operators 10 1,200,000 12,000,000 144,000,000
11 Casual Labourers 10 300,000 3,000,000 36,000,000
Sub-Total 34 39,500,000 474,000,000
C. ADMINISTRATION & HR DEPARTMENT
12 Administration & HR Manager 1 3,000,000 3,000,000 36,000,000
Sub-Total 1 3,000,000 36,000,000
D. FINANCE DEPARTMENT
13 Finance Manager 1 3,000,000 3,000,000 36,000,000
14 Purchasing Managers 2 3,000,000 6,000,000 72,000,000
15 Company Accountant 1 3,000,000 3,000,000 36,000,000
Sub-Total 4 12,000,000 144,000,000
E. OTHERS
16 Drivers 2 1,200,000 2,400,000 28,800,000
17 Security Guard 2 800,000 1,600,000 19,200,000
Sub-Total 4 4,000,000 48,000,000
TOTAL 75,500,000 906,000,000
18 Employee Benefits (20% of Basic Salary) _ 15,100,000 181,200,000
GRAND TOTAL 50 90,600,000 1,087,200,000

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10.3 Training Requirement

Four skilled workers, a design expert and a mechanic should be given a 3 weeks on–
the–job training by the advanced technician of the equipment supplier in the
manufacturing technology and maintenance of equipment. The total training cost is
estimated at UGX 50 million.

10.4 Personnel Plan

Gagawala Members Club Limited PVC sandals manufacturing company will need to
hire employees for the retail location and for the manufacturing location. We will need
employees in our retail location to sell the PVC sandals to our customers, to organize
the PVC sandals, and maintain the store.

To work in our retail location, the type of qualifications that will be looked for will be
reliable, outgoing and detailed orientated employees. Background in fashion and selling
is a necessity and each potential employee must have experience in customer service,
retail and must be able to work both independently and in a team. Our designers must
have 3 years of experience in fashion and shoes to meet our job criteria. Rate of pay for
employees will vary depending on the position. All employees have the opportunity for
a raise. Employees will want to work for our company based on our culture, and the
working environment we have created. Employees will be able to expand their
knowledge by attending training sessions and fashion shows, while gaining experience
in the retail and fashion industry. While employed at Gagawala Members Club
Limited PVC sandals manufacturing company, we will be offering 20% discount as well
as incentives such as employee of the month recognition and prizes based on
performance.

To further assist Gagawala Members Club Limited PVC sandals manufacturing

company with financial advice and issues, we have decided to hire an accountant who
will manage our taxes, and bookkeeping, and a lawyer who will ensure all company
agreements, partnership disputes and legal action are duly followed up and discharged
successfully. We have chosen not to hire any mentors, advisors or board of directors at
this point in business. Gagawala Members Club Limited PVC sandals manufacturing
company will be managed, organized, and run by its 30 owners. They have known each
other for almost3 years now and provide unique collective skills in this shoes and
footwear business that will provide valuable insights and success in the future.

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11.0 FINANCIAL PLAN/ANALYSIS

In order to develop a comprehensive investment case for Gagawala Members Club

Limited’s progression of the PVC sandals manufacturing and trading enterprise and its
subsequent development, a detailed financial model was created. The model builds
revenue and cost forecasts, as well as associated capital expenditures, relying on
historical performance and considering expected changes in the business. The model
was designed with the following key objectives:

 Provide flexibility to test and alter assumptions and inputs in the future.
 Identify and capture the key input levers that drive financial requirements and
return.
 Identify and assess the expected financial and economic results.

The key variables used in the model are:

 Inputs: High-level capital inputs such as equipment cost, building infrastructure

cost, additional working capital requirements, and capital structure. Cost of
capital: Calculations of the discount rate for the proposed operations, taking into
consideration key determinants such as risk-free rate, marginal risk premium,
and debt-equity structure.
 Historical financial performance: Considering behavior of historical cost and
revenue drivers, including production volumes and growth in cost elements.
 Market size: Sizing the shoes and footwear market in Uganda and projecting
market share for Gagawala Members Club Limited [GMCL].

The main outputs of the model include:

 Debt: Breakout of the schedule for debt repayments, including principal and
interest portions. The debt can be used to finance acquisition of fixed assets.
 Pro forma financials: Income statement, balance sheet, and cash flow statements,
including key performance measures.
 Outputs: Summary of the key return metrics and capital requirement.
 Development benefits: Estimates of the number of shoes and footwear
consumers involved in the consumption of PVC sandals and anticipated
improvement in their livelihoods.
 Sensitivity Analyses: Estimates levels of change in projected financial
performance of the business following potential changes in key cost and revenue
drivers.
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11.1 Basis of Presumptions & Key Project Assumptions

1) The basis for calculation of production capacity is on single shift, working of 26 days per month on
75% efficiency.
2) Break-even Point for the scheme has been calculated on full capacity utilization.
3) Rate of interest has been taken @ 12% on an average. This, however, is likely to change
depending upon the location of the project.
4) The cost of land and building has been calculated as per the prevailing market prices and these
rates are likely to vary from place to place.
5) The cost of machinery and equipment as indicated in the scheme is approximate ruling at the time
of preparation of the scheme. The entrepreneur may check the exact price for specific make and
model of the machine selected.
6) Labor wages has been considered as per the prevailing market rates and the minimum wages
fixed by the authorities.
7) Non-refundable deposits, cost of preparation of project report etc. may be considered under pre-
operative expenses.
8) The provision made in other respects visa-verse; raw materials, utilities, overheads etc. is drawn
on the basis of standard variation and output. The cost indicated against each is approximate
based upon local market conditions and observations. The entrepreneur may find out the exact
cost from the concerned sources.
9) The operative period of this project is estimated to be about 5 years considering technology
obsolescence.
10) Calculations are based on the processing, packaging and sale of PVC sandals only.

The financial analysis of the Gagawala Members Club Limited [GMCL] PVC sandals manufacturing and
trading enterprise is based on the data presented in the previous sections and the following assumptions:-

Scaling up period 1 year

Source of finance 20.00% equity
80.00% loan
Medium-term Loan interest 12% p.a.
Discount cash flow 15.0%
Accounts receivable 30 days
Raw material local 30 days
Work in progress 9 days
Finished products 18 days
Cash-in-hand 15 days
Accounts payable 30 days

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11.2 Sources of Income

The Gagawala Members Club Limited [GMCL] PVC sandals manufacturing and
trading enterprise is established with the aim of maximizing profits in the shoes and
footwear sector in Uganda and we are going to go all the way to ensure that we do all it
takes to generate enough incomes from both our basic product and services offerings
and our complimentary services.

The Gagawala Members Club Limited [GMCL] PVC sandals manufacturing and
trading enterprise will generate income by offering the following services and products;

1. Men’s PVC sandals

2. Men’s PVC casual sandals
3. Women’s flat PVC sandals
4. Women’s dress PVC sandals
5. Women’s PVC casual sandals
6. Men’s slider PVC sandals
7. Women’s slider PVC sandals
8. Kids’ PVC sandals

11.3 Break-even Analysis

The Gagawala Members Club Limited [GMCL] PVC sandals manufacturing and
trading enterprise Break-even Analysis figures are linked to the main financial analysis
spreadsheets (i.e. Schedules 01-12) that are appended to this Business Plan.

The project’s commercial break-even level (profitability break-even) in Project Year 5 is

calculated below:

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Table 17: Break-Even Analysis in Project Year 5 (In UGX)
Items VC FC TC
Salaries and Wages 943,927,425 314,642,475 1,258,569,900
Raw Materials 14,255,879,602 4,751,959,867 19,007,839,469
Packing Materials 1,625,305,500 541,768,500 2,167,074,000
Utilities (Electricity + Water) 1,924,361,712 641,453,904 2,565,815,616
Fuel Costs 481,090,428 160,363,476 641,453,904
Servicing Charges (2.5% of Capex) 88,751,250 44,375,625 133,126,875
Office & Administration Expenses 926,100,000 463,050,000 1,389,150,000
Sales & Marketing Expenses 1,685,502,000 842,751,000 2,528,253,000
Consumable Stores 129,654,000 64,827,000 194,481,000
Miscellaneous Expenses 194,481,000 97,240,500 291,721,500
Depreciation 0 427,500,000 427,500,000
Financial Expenses 0 180,000,000 180,000,000
TOTAL 22,255,052,917 8,529,932,347 30,784,985,264

Sales Value of Production = UGX 50,565,060,000

Break-even Sales = 8,529,932,347 = 8,529,932,347 = 8,529,932,347

1 – 22,255,052,917 1 –0.4401 0.5599
50,565,060,000

Break-even Sales = UGX 15,235,479,796

Capacity utilization required to Break-even = UGX 15,235,479,796 x 100 = 30.13%

UGX 50,565,060,000

Margin of Safety = 100% – 30.13% = 69.87%.

11.4 Total Initial Investment Cost & Financing

The total investment cost of the project including working capital is estimated at UGX
7,500 million. The major breakdown of the total initial investment cost and financing
plan is shown in Table 18 below.

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Table 18: Initial Project Investment Cost (UGX)
S. No. Project Investment Component Share GMCL Equity Medium-term Total
Loan Financing
1 Land 6.67% 500,000,000 0 500,000,000
2 Plant Buildings & Infrastructure 9.33% 700,000,000 0 700,000,000
3 Plant Equipment & Machinery 49.33% 0 3,700,000,000 3,700,000,000
4 Office Furniture, Fixtures & Fittings 0.67% 50,000,000 0 50,000,000
5 Vehicles (2 Units) 2.00% 150,000,000 0 150,000,000
6 Company Liquid Assets 1.33% 100,000,000 0 100,000,000
a. Cash-at-Hand 0.53% 40,000,000 0 40,000,000
b. Stock-in-Trade 0.80% 60,000,000 0 60,000,000
c. Accounts Receivable (Debtors) 0.00% 0 0 0
7 Working Capital 30.67% 0 2,300,000,000 2,300,000,000
8 TOTAL PROJECT FUNDING 100.00% 1,500,000,000 6,000,000,000 7,500,000,000
9 %age of Total Project Funding 20.00% 80.00% 100.00%

11.5 Total Operating Cost

The annual total operating cost in Project Year 5 (PY 5) is estimated at UGX 30,177.49
million (see Table 28). The raw material purchase costs account for 69.99 per cent,
while packaging materials and utilities collectively account for 15.68 per cent of the
annual operating cost.

Table 19: Annual Operating Expense in Project Year 5 (UGX)

Items Cost %
Cost of Sales (UGX)
Raw Materials 19,007,839,469 62.99%
Packing Materials 2,167,074,000 7.18%
Utilities (Electricity + Water) 2,565,815,616 8.50%
Fuel Costs 641,453,904 2.13%
Sub-Total Cost of Sales 24,382,182,989 80.80%
Selling General & Admin Costs (UGX)
Salaries & Wages 1,258,569,900 4.17%
Servicing Charges (2.5% of Capex) 133,126,875 0.44%
Office & Administration Expenses 1,389,150,000 4.60%
Sales & Marketing Expenses (5% of Sales) 2,528,253,000 8.38%
Consumable Stores 194,481,000 0.64%
Miscellaneous Expenses 291,721,500 0.97%
Sub-Total SGA Costs 5,795,302,275 19.20%
Total Operating Expenses 30,177,485,264 100.00%

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11.6 Cost of Goods Sold

The Cost of Goods Sold (COGS) for this PVC sandals manufacturing and trading
enterprise include the direct variable expenses like purchase of industrial raw materials,
payments for utilities, payments for fuel and packaging material expenses. These are
calculated as part of working capital estimation and are reflected in Schedule 03/3.

11.7 Financial Performance

Income for the Gagawala Members Club Limited [GMCL] PVC sandals
manufacturing and trading enterprise is realized from the pricing margins realized on
the sale of its PVC sandals products as explained in Schedule 01: Key Financial
Modeling Assumptions on page 82. Net Income has been calculated by taking into
account all the operational cost and gross income for the shoes and footwear goods
being sold on the domestic market.

The stabilized average income realized by the Gagawala Members Club Limited
[GMCL] PVC sandals manufacturing and trading enterprise is presented in Schedule
09: GMCL Projected Net Annual Income Statement on page 93.

Summarized income and expenditure forecasts have been compiled and are set out in
Schedules 03/3, 07, and 09 respectively. These projected financial figures are based on
the assumption that the PVC sandals manufacturing and trading enterprise continues
operating efficiently and effectively.

Taxation has been provided at the company income tax rate of 30%.

11.8 Basis of Preparation

The generation of cash is crucial in sustaining any business, but for the purposes of this
Business Plan the forecast profit and loss account has been prepared on the cash basis of
accounting.

For the purposes of illustration all receipts and payments have been reflected on a
“cash” basis.

11.9 The Vehicle

As a medium-sized but highly promising PVC sandals manufacturing and trading

enterprise, it is imperative that Gagawala Members Club Limited [GMCL] employs
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the most transparent, ethical and responsible CEO and subordinate Departmental
Managers to run the business.

To this end, we would suggest the following governance mechanisms: -

A small but efficient Board of Directors be instituted to guide and control the company.
Only people who have the necessary time to devote to the business should be
considered.

Sound accounting and internal controls to be followed.

By running a business through a company the most efficient tax mechanism can be
planned and staff can be remunerated and employed on an incentives-driven basis.

11.10 The Accounting System and Financial Control

An up-market software accounting package has been acquired and is currently being
used in order that the financial condition of the business can be regularly monitored.

We see control over expenditure as a most important issue. The following methods of achieving
sound financial control will be implemented.

Annual operating budget is regularly approved.

Monthly management accounts are always prepared on a timely basis and any capital
expenditure and all major running expenditures are usually approved by the Board.

Audit is always done by a reputable firm of auditors with expertise in the industry that
can offer high quality business solutions.

11.11 Summary and Results

11.11.1 Profitability

According to the projected income statement, the project will start generating profit in
the first year of operation (Project Year 2). Important ratios such as profit to total sales,
net profit to equity (Return on equity) and net profit plus interest on total investment
(return on total investment) show an increasing trend during the life-time of the project.

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The income statement and the other indicators of profitability show that the project is
viable.

Profitability is shown by:

An Internal Rate of Return (IRR) after tax of 147.84%.
A Net Present Value (NPV) of UGX 29,662,896,621 at a discount factor of 15%.
The Company is shown to have an average gross profit margin of 51.78% between the
first operating year of the project (Project Year 2) and the fourth operating year (Project
Year 5). The operating effectiveness of the enterprise is reflected in the four year
operational period operating margin that averages at 40.06% - Schedule 09: GMCL
Projected Net Annual Income Statement on page 93 refers.

11.11.2 Payback Period

The investment cost and income statement projection are used to project the pay-back
period. The project’s initial investment will be fully recovered within 2 years (1.72
years).

11.11.3 Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 147.84% and the
net present value at 15% discount rate is UGX 29,662.90 million.

11.11.4 Liquidity

The PVC sandals manufacturing and trading enterprise will require a medium-term
credit financial infusion in the year of investment (i.e. Scaling-up Investment Year of
Project) to procure capital equipment and finance essential working capital that the
Company does not have to be able to finance business portfolio growth to satisfy the
surging market demand for its PVC sandals products in Uganda and neighboring
regional markets.

Basing on the forecast attainable levels of the PVC sandals manufacturing and trading
enterprise’s operational output, the project is shown to generate a strong cash flow
position which though starting out from a modest financial position of UGX 4,571.46
million in the first year of operation (Project Year 2) to post a very strongly positive and
cumulative cash flow return of UGX 49,375.62 million by the fourth year of operation
(i.e. Project Year 5) – Schedule 07 on page 91 refers.

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The Company is thus able to comfortably cover its medium term debt obligations right
from the first year of operations. The Debt Service Coverage Ratio is 8.16 in Project
Year 5 (project end-point) and the Times Earned Ratio is 113.26 – Schedule 11: Ratio
Analysis on pages 95-96 refer.

11.11.5 Leverage

The project has a sound capital structure with a debt to net worth ratio in the first
operational year (i.e. Project Year 2) of the project of 0.39 that gradually improves to
almost zero (0.03) by the fourth operational year (i.e. Project Year 5) of the project when
practically all the principal debt and interests shall have been fully discharged. The
project financing facility is therefore adequately secured and there shall be no recourse
to additional collateral or security provisions – Schedule 11: Ratio Analysis on pages
95-96 refer.

11.11.6 Sensitivity Analysis

The assumptions on which the financial projections are based reflect current conditions.
A Sensitivity Analysis of the project has, however, been carried out to examine the
impact of possible changes in critical variables on the Gagawala Members Club
Limited’s [GMCL’s] performance. The results of the sensitivity analysis are presented
in Table 20 below.

Table 20: Project Sensitivity Analysis Results

DSCR
Change IRR ROI PY 2 PY 3 PY 4 PY 5
Sensitivity Case

Base Case 147.84% 151.65% 4.73 5.75 7.03 8.16

Selling Prices -10% 110.48% 109.27% 3.49 4.26 5.22 6.05
Operating Costs +10% 143.37% 146.69% 4.57 5.58 6.82 7.91
Cost of Sales +10% 129.82% 131.21% 4.13 5.03 6.16 7.14

The sensitivity analysis above shows that this PVC sandals manufacturing and trading
enterprise is most sensitive to changes in unit selling prices (decline by 10%).

The key drivers in the rapid growth of the Uganda shoes and footwear sector include: a
growing awareness, easier access and changing lifestyles; a surging demand in the
shoes and footwear sector of the Ugandan economy; a rapid growth in the urban, semi-

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urban and rural segments that now account for more than 50 per cent of total household
spending; rapid rural-to-urban migration that drives demand; a fast-rising middle class;
ready availability of industrial raw materials and cheap labour; the fast-growing youth
population in Uganda who are key consumers of shoes and footwear; general high
population growth (especially in the urban areas), a well-educated workforce, and a
vibrant private sector.

With such a huge latent market demand for shoes and footwear that are high value-
added and packaged for wide market supply and distribution by Gagawala Members
Club Limited [GMCL], it will have the effect of cushioning the Company from
unexpected price distortions and any other unexpected negative market phenomena
that tends to play havoc on most other highly-traded primary and industrial goods.

Legend:
IRR: Internal Rate of Return
ROI: Return on Investment (Project Year 5)
DSCR: Debt Service Coverage Ratio

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12.0 RISK ANALYSIS & SWOT ANALYSIS

12.1 General Business Risk Analysis

o Risk: Inexperienced management team

Mitigation: Gagawala Members Club Limited [GMCL] has on board an experienced
management team that is has been steadily growing in confidence, skill and marketing
know-how in the area of shoes and footwear goods over the last 3 years that the
Company in active business. This will continue to greatly help GMCL in anchoring the
production, sales and marketing of its PVC sandals within the Uganda domestic
market.

o Risk: Non-achievement of sales targets

Mitigation: Failure to achieve sales targets will have significant consequences on the
business’ financial projections and thus its ability to meet its financial obligations. In
recognition of this, the business’ financial projections have been prepared based on a
conservative sales estimate that takes unforeseen implementation problems into
account. Secondly, going by the present high market demand trends for shoes and
footwear in Uganda, there is every indication that consumer spending power is well
disposed towards purchase of shoes and footwear as these are daily necessity goods
where the current market supply is much less than market demand and therefore
greatly diminishes and negates this risk.

o Risk: Market risk – There is currently no regulatory regime for the shoes and
footwear market in Uganda. There are also significant price volatilities since
supply and demand levels are subject to availability and seasonality.
Mitigation: Market data show that there is a ready and fast-growing market for shoes
and footwear (especially PVC sandals)across the country, and that as household and
business income increases, consumers would tend to shift to locally manufactured
goods through adoption of the BUBU (Buy Uganda Build Uganda) Policy. The
consultant validated GMCL’s expectations and fast-expanding market opportunities,
and the market forecast was used as the basis for the company's financial model.

o Risk: Regulatory and political risk – The regulatory environment in Uganda is

still developing.
Mitigation: Given Gagawala Members Club Limited’s [GMCL’s] capacity for high
quality supply of PVC sandals to meet the growing domestic, regional and international
market demand, and the growing market presence of the sponsors [GMCL], the risk of
regulatory and political interference is manageable.

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o Risk: Failure to comply with safety codes and regulations

Mitigation: Gagawala Members Club Limited [GMCL] will provide continuous
education to its staff and clients. In addition, the strict enforcement of safety standards
by the regulatory bodies is also expected to mitigate this risk. Gagawala Members Club
Limited [GMCL] will also secure comprehensive insurance coverage for all its plant
installations and PVC sandals supply chain distribution assets in Uganda.

o Risk: Environmental and Social

There may be a lack of a regular and reliable supply of PVC sandals to the Gagawala
Members Club Limited’s [GMCL’s] countrywide market network sales agents in
Kampala and other up-country towns throughout Uganda which may be situated
hundreds of kilometers from the main PVC sandals manufacturing plant at Buloba near
Kampala in Wakiso District.
Mitigation: To mitigate this risk, Gagawala Members Club Limited [GMCL] will
always ensure that there is a continuous PVC sandals supply and replenishment
deliveries to guarantee adequate PVC sandals stocks at its key supply and distribution
terminal in Kampala.

o Risk: Foreign currency

Mitigation: For the domestic market, the business will generate revenue in local
currency; its import purchases are however denominated in US dollars. A sharp
depreciation in the value of the local currency against foreign exchange would therefore
affect the repayment of the loan as more local currency would be needed. To mitigate
this risk, the net sales, operating income and net income forecasts of Gagawala
Members Club Limited [GMCL] are calculated taking into account currency
depreciation, inflation trends and the tax rates in the country.

o Market Risks Assessment Matrix

Lastly, a risk analysis was done revealing market risks and ways of mitigation these
risks. Market risks exist in three categories namely; customer risk, competitor risk and
supplier risk. However, in this analysis, we used the risk assessment matrix to identify
risks of highest priority down to the lowest ones. This enables us to assess the impact of
the risks on the business start-up.

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Figure 9: Market Risk Assessment Matrix

Fire outbreak in the Late delivery of

High
(Severity of potential consequences)
warehouses/plant Health risk through accidents and products to Highest
Medium machine breakdown sikcness customers priority
Impact

Theft of business ideas by Medium

competitors NEMA regulations priority
Low

Lowest
Advancement in technology priority
small medium high

Likelihood

A market risk management plan was developed to help recognize and rationally
respond to both the most obvious risks and the unanticipated occurrences irrespective
of the magnitude in a cost effective manner. The risk management plan is shown in the
table below.

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Table 21: Market Risk Management Plan for GMCL PVC Sandals Trading Operations
Priority Risk factor Type Likelihood Severity of Mitigation tactics
potential
impact
1 Late delivery of Operational High Large - Increase production capacity.
products to - Improve products supply chain
customers logistics.
2 Health risk Operational Medium Large - Health Insurance.
- Protective gear
- Visible signs
- Mandatory regular checks
3 Machine Technology Small Large - Maintenance
breakdown - Insurance of plant machines
- Train local engineers
- Maintain inventory of machine
parts to avoid having to spare
parts at short notice
4 Fire outbreak in Operational Small Large - Install First Aid kit
storage - Install fire extinguisher
warehouses - Fire drill start training
- Emergency exit points
5 Theft of business Competition Medium Medium - Protect exhibits,
ideas measurements and
ingredients during
presentations
6 Advancement in Technology Medium Low - Upgrade for particular
technology machine parts

12.2 SWOT Analysis

Gagawala Members Club Limited [GMCL] is in business to become one of the leading
shoe and footwear manufacturing companies in Uganda and we are fully aware that it
will take the right business concept, management and organization – structure to
achieve our goal.

We are quite aware that there are several large and small scale shoes and footwear
manufacturing that are right now either doing business or are emerging in Uganda and
even in the same location where we intend locating ours, which is why we are
following the due process of establishing a business.

We know that if a proper SWOT analysis is conducted for our business, we will be able
to position our business to maximize our strength, leverage on the opportunities that

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will be available to us, mitigate our risks and be welled equipped to confront our
threats.

Presented in the following sub-sections below is a summary of the SWOT analysis that
will help Gagawala Members Club Limited PVC sandals manufacturing company
create a business model that will help it achieve its business goals and objectives;

12.2.1 Strength

Our core strength lies in the high quality of our finished shoes and footwear, the power
of our team and the state-of-the-art and well–equipped shoe and footwear
manufacturing factory that we propose to set up in this Business Plan. We have a team
of highly motivated and experienced shoes and footwear salespeople and marketers as
well as support staff members that can go all the way to produce top notch PVC
sandals.

We are well positioned in the heart of Kampala and we know we will attract loads of
clients from the first day we open our PVC sandals manufacturing company for
business.

12.2.2 Weakness

A major weakness that may count against us is the fact that we are a new shoe and
footwear manufacturing company and we don’t have the financial capacity to compete
with multi – million dollars shoe and footwear manufacturing companies such as
Uganda Bata, Crane Shoes, Uganda Shoe Company, Umoja et al when it comes to
manufacturing shoes and footwear at rock bottom prices. So also, we may not have
enough cash reserve to promote our shoe and footwear manufacturing company the
way we would want to do.

12.2.3 Opportunities

The fact that we are going to be operating our shoe and footwear manufacturing
company in Kampala provides us with unlimited opportunities to sell our PVC sandals
products to a large number of individuals and corporate organizations.

We have been able to conduct thorough feasibility studies and market surveys and we
know what our potential clients will be looking for when they visit our shoe and
footwear manufacturing workshop or showroom; we are well positioned to take on the
opportunities that will come our way.
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12.2.4 Threats

Just like any other business, one of the major threats that we are likely going to face is
economic downturn. It is a fact that economic downturn affects purchasing / spending
power. Another threat that may likely confront us is the arrival of a new shoe and
footwear manufacturing company in same location where ours is located. So also,
unfavourable government policies may also pose a threat for businesses such as ours.

Tables 22 – 24 illustrate the SWOT Analyses of the Company that highlight its
strengths, weaknesses, opportunities and threats.

12.2.5 SWOT Analysis (Internal Factors)

A SWOT Analysis helps marketers and others active in the supply chain and
distribution network systems to clearly identify a firm’s strengths, weaknesses,
opportunities and threats. Gagawala Members Club Limited [GMCL] has also
conducted on other market competitors to determine how best to attract and retain
customers.

Table 22: SWOT Analysis of GMCL (Internal Factors)

Internal Factors Strengths Weaknesses
Management Having a competent and experienced Low/limited size of management team
management team and operational reduces chances of moving fast into the
workers. targeted market, because of slow speed
Well-organized management structure with and lack of depth in decision-making.
a well-trained management team.
Marketing Distribution of products into the market Limited capacity/resources in setting up this
through a wide range of identified marketing supply chain and distribution network.
channels.
Personnel Having a competent, capable, skilled and The gap will be quite big and palpable if
motivated workforce that is reliable and skilled and experienced employees left the
productive. Company.
Finance Improved revenues through increased Limited workforce and poor quality products
product sales turnover. owing to limited resources that may slow
down the scope and quality of Company
growth relative to its market share.

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12.2.6 SWOT Analysis (External Factors)

Table 23: SWOT Analysis of GMCL (External Factors)

External Factors Opportunities Threats
Consumer/Social Stability of the upcoming market is highly Low-priced products may be proof that the
projected. quality of the products is still quite low.
Introduction of new product lines is quite
favorable owing to emergence of new
markets.
Competitive Differentiated products and prices make the Products like that of Gagawala Members
Company to be quite unique and distinctive Club Limited [GMCL] have been
in the market. introduced into the market by other
competitor companies.
Technological Breakthrough in introduction of new
production technologies and technological
innovations is a highly recommended
course of action for the Company to pursue
in order to improve the quality and
competitiveness of its products.
Economic Improved household disposable incomes in Consumers opting for other competitor
Uganda make it possible for the Company products since they have more disposable
to delve deeper into the shoes and footwear income.
goods market.
Legal/Regulatory Regulatory measures are necessary to
ensure market fairness and avoid over-
exploitation by other market competitors.

12.2.7 SWOT Analysis Matrix

Table 24: SWOT Analysis Matrix

Strengths Opportunities
 Improved marketing techniques like that of Bata.
 Rising growth of urban areas like Entebbe, Masaka,
Mbarara, Mukono and Wakiso (Kira) that are near
Kampala City.
Weaknesses Threats:
 Maintaining a loyal client base and high-class  Faulty products
markets.  Uncontrollable price fluctuations.

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13.0 SUSTAINABILITY AND EXPANSION STRATEGY

The future of a business lies in the numbers of loyal customers that they have, the
capacity and competence of the employees, their investment strategy and the business
structure. If all of these factors are missing from a business (company), then it won’t be
too long before the business close shop.

One of our major goals of starting Gagawala Members Club Limited [GMCL] is to
build a business that will survive off its own cash flow without the need for injecting
finance from external sources once the business is officially running. We know that one
of the ways of gaining approval and winning customers over is to manufacture durable
and quality shoes and footwear and to retail our wide range of quality shoes and
footwear a little bit cheaper than what is obtainable in the market and we are well
prepared to survive on lower profit margin for a while.

Gagawala Members Club Limited [GMCL] will make sure that the right foundation,
structures and processes are put in place to ensure that our staff welfare is well taken of.
Our company’s corporate culture is designed to drive our business to greater heights
and training and re–training of our workforce is at the top burner.

As a matter of fact, a profit-sharing arrangement will be made available to all our

management staff and it will be based on their performance for a period of six years or
more. We know that if that is put in place, we will be able to successfully hire and
retain the best hands we can get in the industry; they will be more committed to help us
build the business of our dreams.

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14.0 SOCIO-ECONOMIC ASPECTS

14.1 Project Economics

All the figures in this financial model have been calculated for estimated sales of UGX
39,312.00 million in the first year of operation (PY2). Sales turnover is then projected to
grow to UGX 43,570.80 million in Project Year 3 (PY3); UGX 48,157.20 million in
Project Year 4 (PY4); and UGX 50,565.06 million in Project Year 5 (PY5).

The following table shows internal rate of return, payback period and net present value
of the proposed venture.

Table 25: Project Economics

Description Details
Internal Rate of Return (IRR) 147.84%
Payback Period (Years) 1.72
Net Present Value @ 15% (UGX) 29,662,896,621

14.2 Economic Benefits

The proposed business plan of setting up of the Gagawala Members Club Limited
[GMCL] PVC sandals manufacturing plant will have the following socio-economic
benefits:
 In an ocean of volatile industries, the shoes and footwear industry represents an
island of stability during times of economic uncertainty. Among the various
industries that characterize the modern global economy, the Shoes and Footwear
Industry is amongst the most resilient to economic shocks. Unlike other industries,
the shoes and footwear sector is not prone to mass layoffs or substantial dips in
profit when the economy slows down. This is due to the nature of the goods
themselves.
 It is easier for people to cut back consumption on luxury products during
recessions, however, this does not hold true for essential goods like PVC sandals
and other forms of shoes and footwear. In effect, buyers shift consumption to more
economic-alternatives of the same product. Consequently, the demand for these
goods remains relatively stable. As the middle class grows in Uganda and incomes
continue to rise, the shoes and footwear industry will witness an increase in their
customer base locally, thus reaping the rewards of social progress and upward
economic mobility.

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 Economically speaking, Gagawala Members Club Limited [GMCL] will bear a
positive NPV and a constant growth in terms of Financial Statements and Figures.
 PAYE taxes paid by the employees of Gagawala Members Club Limited [GMCL]
contribute to the local government budgets as well the national budget.
 Company tax will be regularly paid to the local and central government to boost
public expenditure on the provision of goods and services.
 The forex earnings in hard currency out of the exportation of PVC sandals by
Gagawala Members Club Limited [GMCL].
 There are a number of services that are directly and indirectly supported by the
growth and expansion of the GMCLPVC sandals supply-chain distribution
activities, such as import-export/trading firms, transportation companies, auditing
and legal. These services also play a key role in ramping up the growth of the
Uganda domestic gross domestic product (GDP).
 The business growth and market expansion of the shoes and footwear supply-
chain distribution enterprise will create a strongly positive net effect of increasing
the production and supply-chain distribution of shoes and footwear goods in
Uganda.
 Profits from the Gagawala Members Club Limited [GMCL] shoes & footwear
goods supply-chain distribution enterprise will be either paid out as dividends or
used for additional capital expenditure or contributions to the community as
corporate social responsibility (CSR) contributions.
 The business growth and expansion will result in employment of many Ugandan
youth directly and indirectly. Directly those that will be employed by Gagawala
Members Club Limited [GMCL] and those industrial raw material suppliers who
supply raw materials like PVC granules, packaging cartons, etc. hence contributing
to poverty alleviation in Uganda.

The project has already created employment for 30 Ugandans in its present import
trading activities and expects to create an additional 50 industrial employment
opportunities for Ugandans at its proposed PVC sandals manufacturing plant at
Buloba. In addition to supply of the domestic needs, the project will generate UGX
19,497.56 million as cumulative total tax revenue over the five-year project analysis
period. The market growth of such a shoes and footwear enterprise also possesses
significant potential to earn hard currency for Uganda through exports – especially to
neighboring Kenya, DR Congo and South Sudan.

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15.0 CONCLUSION & RECOMMENDATIONS

Gagawala Members Club Limited [GMCL] is a young shoes and footwear trading
company that has ambitions to scale up its growth by setting up an in-country PVC
sandals manufacturing plant within a fast-growing albeit increasingly competitive
market that demands marketing savvy and product standardization through
certification, branding and unique packaging that defines product and company
identity, creates consumer recognition, ensures quality and consistency and builds
relationships besides enhancing customer trust and reputation. Over the last three years
since Gagawala Members Club Limited [GMCL] opened up its shoes and footwear
import-trading business, it has done well and exhibited a resilient and dynamic
enterprising spirit to be able to set up a strong and reliable PVC sandals sales agency
network in some high-consumption shoes and footwear areas of Kampala metropolis
and up-country supported by the nucleus company composition of 30 directors and has
also steadily built up company assets.

The proposed PVC sandals manufacturing and sales Business Plan seems feasible with
the time to Payback the required investment being less than 1.8 years and the overall
financial indicators showing it to be a feasible and prosperous business.

It is also worth noting that better industrial infrastructure facilities in Uganda will
improve their supply chain. The shoes and footwear sector is also likely to benefit from
growing demand in the market. Because of the low per capita consumption for almost
all the products in the country, shoes and footwear companies have immense
possibilities for growth. And if the companies are able to change the mind-set of the
consumers, i.e. if they are able to take the consumers to branded products and offer new
generation products, they would be able to generate higher growth in the near future.

It can thus be concluded from the foregoing business analysis and financial modelling
in the Business Plan that scaling up the business operations of Gagawala Members
Club Limited [GMCL] through access to financing to set up a PVC manufacturing
plant in Uganda and scaling up its marketing network and boost growth will make it a
more commercially viable and important player in industrial value-addition and import
substitution for Uganda. It is further recommended that an early decision to facilitate it
with the requisite medium-term loan financing of UGX 6.0 billion be expedited such
that a full-scale implementation of its PVC sandals manufacturing plant follows the
fastest track possible for the benefit of the project promoters, the industrial sector, the
shoes and footwear industry and market, and the Ugandan economy at large.

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Schedule 01: KEY FINANCIAL MODELLING ASSUMPTIONS

Table 26-1: General Production and Pricing Assumptions

Production Programme Average Units Production Year [PY]
Price (UGX)
Year PY2 PY3 PY4 PY5
PVC Sandals produced & sold p.a. 3,500 Pairs 11,232,000 11,856,000 12,480,000 12,480,000
No. of working days 26 days/month 312 days 312 days 312 days 312 days
Capacity Utilization rate 90% 95% 100% 100%
Sales prices growth rate p.a. 5% 5% 5% 5%

Table 26-2: Economic Related Assumptions

Inflation rate p.a. 5%
Wage growth rate p.a. 5%
Electricity growth rate p.a. 5%
Operating Expenses growth rate p.a. 5%

Table 26-3: Operating Expense Assumptions in Project Year 2 (In UGX)

Raw Material Purchase Costs Please, refer to Table 6 on page 22 for details 14,777,717,760
Packaging Material Costs Please, refer to Table 6 on page 22 for details 1,684,800,000
Utilities (Electricity & Water) Please, refer to Table 7 on page 23 for details 1,994,803,200
Fuel Costs @ 25% of Electricity Costs 498,700,800
Salaries & Wages Please, refer to Table 16 on page 59 for details 1,087,200,000
Servicing Charges 2.5% of capital investment (CAPEX) costs p.a. 115,000,000
Office &Administration Expenses UGX 100,000,000 p.m. 1,200,000,000
Sales & Marketing Expenses 5% gross sales revenues p.a. 1,965,600,000
ConsumablesExpense UGX 14,000,000 p.m. 168,000,000
Sundry & Miscellaneous Expense3 UGX 21,000,000 p.m. 252,000,000
Annual operating costs growth rate p.a. 5%

Table 26-4: Financing Assumptions

Interest rate on medium-term finance 12%
Debt (Medium-Term Loan) UGX 6,000,000,000
Gagawala Members Club Limited [GMCL] Equity UGX1,500,000,000
Debt tenure (Years) 5
Grace Period (Years) 1
Annuity payments per Year 1

3 These cover the hidden and incidental costs of doing business including casual labour.
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Table 26-5: Depreciation Rates
Building and infrastructure 2.5%
Plant Machinery & Equipment 10%
Miscellaneous Fixed Assets 10%
Office Furniture & Equipment 20%
Vehicles 20%

Table 26-6: Cash Flow Assumptions

Accounts Receivable Cycle (In Days) 30
Accounts Payable Cycle (In Days) 30
Initial cash at hand (UGX) 40,000,000
Working Capital (UGX) 2,300,000,000

Exchange Rate: - UGX 3,700 = US$ 1

Inflation Rate: Assume Uganda remains a non-hyperinflationary economy

[up to 5% p.a.] over the ten year financial analysis period.

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Schedule 02: Source & Structure of Project Financing (In UGX)
S. No. Project Investment Component Share GMCL Equity Medium-term Total
Loan Financing
1 Land 6.67% 500,000,000 0 500,000,000
2 Plant Buildings & Infrastructure 9.33% 700,000,000 0 700,000,000
3 Plant Equipment & Machinery 49.33% 0 3,700,000,000 3,700,000,000
4 Office Furniture, Fixtures & Fittings 0.67% 50,000,000 0 50,000,000
5 Vehicles (2 Units) 2.00% 150,000,000 0 150,000,000
6 Company Liquid Assets 1.33% 100,000,000 0 100,000,000
a. Cash-at-Hand 0.53% 40,000,000 0 40,000,000
b. Stock-in-Trade 0.80% 60,000,000 0 60,000,000
c. Accounts Receivable (Debtors) 0.00% 0 0 0
7 Working Capital 30.67% 0 2,300,000,000 2,300,000,000
8 TOTAL PROJECT FUNDING 100.00% 1,500,000,000 6,000,000,000 7,500,000,000
9 %age of Total Project Funding 20.00% 80.00% 100.00%

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Schedule 03/1: CALCULATION OF WORKING CAPITAL: I Minimum
Requirements of Current Assets and Liabilities

(a) Accounts receivable: 30 days at total production costs minus depreciation

and interest

(b) Inventory:

Cost of Sales: 30 days

Salaries & Wages: 30 days

Production Operations: 60 days at total operating expenses

Building & Eqpmt maintenance: 90 days

Work in progress: 9 days at total cost of sales

Finished products: 18 days at total cost of sales

© Cash-in-hand: 15 days, see separate calculations at the bottom of

Schedule 03/4.

(d) Accounts payable: 30 days of 10% total operating expenses

N.B.: All the local cost price factors for cost of sales, operational costs and working
capital are indicated in US dollars for the ease of computational and financial analysis.

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Schedule 03/2: Calculation of Working Capital: II Consolidated Annual Income Estimates(In UGX)
ACCOUNT HEAD YEAR OF OPERATION
Year 1 2 3 4 5
Output % of Installed Capacity 90% 95% 100% 100%
PVC Sandals Production
1 Plant Set Pairs/Day 1,800 1,900 2,000 2,000
20 Plant Sets Pairs/Day 36,000 38,000 40,000 40,000
Total PVC Sandals Output Pairs/Annum 11,232,000 11,856,000 12,480,000 12,480,000
Market Price [UGX]
PVC Sandals UGX/Pair 3,500 3,675 3,859 4,052
Sales Income [UGX]
PVC Sandals UGX 39,312,000,000 43,570,800,000 48,157,200,000 50,565,060,000

Total Annual Income (UGX) 39,312,000,000 43,570,800,000 48,157,200,000 50,565,060,000

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Schedule 03/3: Calculation of Working Capital: III Annual Production Cost Estimates (In UGX)
ACCOUNT HEAD YEAR OF OPERATION
YEAR 1 2 3 4 5
Operating Costs (UGX)
Cost of Goods Sold
Raw Materials 14,777,717,760 16,378,637,184 18,102,704,256 19,007,839,469
Packing Materials 1,684,800,000 1,867,320,000 2,063,880,000 2,167,074,000
Utilities (Electricity + Water) 1,994,803,200 2,210,906,880 2,443,633,920 2,565,815,616
Fuel Costs 498,700,800 552,726,720 610,908,480 641,453,904
Total Cost of Goods Sold 18,956,021,760 21,009,590,784 23,221,126,656 24,382,182,989
SG&A
Salaries & Wages 1,087,200,000 1,141,560,000 1,198,638,000 1,258,569,900
Servicing Charges 115,000,000 120,750,000 126,787,500 133,126,875
Office & Admin. Expenses 1,200,000,000 1,260,000,000 1,323,000,000 1,389,150,000
Sales & Marketing Expenses 1,965,600,000 2,178,540,000 2,407,860,000 2,528,253,000
Consumable Stores 168,000,000 176,400,000 185,220,000 194,481,000
Miscellaneous Expenses 252,000,000 264,600,000 277,830,000 291,721,500
Total SG&A 4,787,800,000 5,141,850,000 5,519,335,500 5,795,302,275
Total Operating Expenses 23,743,821,760 26,151,440,784 28,740,462,156 30,177,485,264

Financial Costs (UGX)

Interest Medium Term Loan 720,000,000 540,000,000 360,000,000 180,000,000
Depreciation 427,500,000 427,500,000 427,500,000 427,500,000
Total Financial Costs 1,147,500,000 967,500,000 787,500,000 607,500,000

Total Production Costs 24,891,321,760 27,118,940,784 29,527,962,156 30,784,985,264

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Schedule 03/4: Calculation of Working Capital: IV Working Capital Requirements (In UGX)
X Y Requirements (UGX)
Minimum days Coefficient of
of coverage turn-over YEAR OF OPERATION
Item 2 3 4 5

I. Current assets
A. Accounts receivable 30 12 1,978,651,813 2,179,286,732 2,395,038,513 2,514,790,439

B. Inventory
a) Cost of Sales 30 12 1,579,668,480 1,750,799,232 1,935,093,888 2,031,848,582
b) Salaries & Wages 30 12 90,600,000 95,130,000 99,886,500 104,880,825
c) Production Operations 60 6 3,957,303,627 4,358,573,464 4,790,077,026 5,029,580,877
d) Maintenance & Repair 90 4 28,750,000 30,187,500 31,696,875 33,281,719
e) Work-in-Process 9 40 473,900,544 525,239,770 580,528,166 609,554,575
f) Finished Products 18 20 947,801,088 1,050,479,539 1,161,056,333 1,219,109,149

C. Cash-in-hand (from V below) 15 24 147,591,667 145,971,250 144,644,813 143,627,053

D. Current assets _ _ 9,204,267,219 10,135,667,487 11,138,022,114 11,686,673,219

II. Current Liabilities

A. Accounts payable 30 12 -197,865,181 -217,928,673 -239,503,851 -251,479,044

III. Working Capital

A. Net Working Capital 9,006,402,037 9,917,738,814 10,898,518,262 11,435,194,176
B. Increase in Working Capital _ 911,336,776 980,779,449 536,675,913

IV. Total Production Costs _ _ 24,891,321,760 27,118,940,784 29,527,962,156 30,784,985,264

Less: Cost of Goods Sold _ _ 18,956,021,760 21,009,590,784 23,221,126,656 24,382,182,989

Sales Expenses _ _ 1,965,600,000 2,178,540,000 2,407,860,000 2,528,253,000
Depreciation _ _ 427,500,000 427,500,000 427,500,000 427,500,000
15 24 3,542,200,000 3,503,310,000 3,471,475,500 3,447,049,275
V. Required Cash Balance _ _ 147,591,667 145,971,250 144,644,813 143,627,053

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Schedule 04: GMCL Fixed Assets and Depreciation Allowances (In UGX)
Year 1 2 3 4 5
Initial Dep Dep Dep Dep
Asset Value Allowance Allowance Allowance Allowance

Buildings &Infrastructure 700,000,000 17,500,000 17,500,000 17,500,000 17,500,000

Machinery & Equipment 3,700,000,000 370,000,000 370,000,000 370,000,000 370,000,000

Office Equipment& Furniture 50,000,000 10,000,000 10,000,000 10,000,000 10,000,000

Vehicles 150,000,000 30,000,000 30,000,000 30,000,000 30,000,000

TOTALS 4,600,000,000 427,500,000 427,500,000 427,500,000 427,500,000

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Schedule 05: GMCL Change in Total Investment Costs (In UGX)
Period Scaling Up Requirements (UGX)
Year 1 2 3 4 5 Total

1. Fixed Investment Costs 5,200,000,000 0 0 0 0 5,200,000,000

a) Initial fixed investment costs 5,200,000,000 0 0 0 0 5,200,000,000
b) Replacement 0 0 0 0 0 0
0
2. Pre-Operational Expenses 2,300,000,000 0 0 0 0 2,300,000,000
0
3. Working Capital increase 0 9,006,402,037 911,336,776 980,779,449 536,675,913 11,435,194,176
0
Total Investment Costs 7,500,000,000 9,006,402,037 911,336,776 980,779,449 536,675,913 18,935,194,176

Schedule 06: GMCL Change in Total Assets (In UGX)

Period Scaling Up Requirements (UGX)
Year 1 2 3 4 5 Total

1. Fixed Investment Costs 5,200,000,000 0 0 0 0 5,200,000,000

a) Initial fixed investment costs 5,200,000,000 0 0 0 0 5,200,000,000
b) Replacement 0 0 0 0 0 0

2. Pre-Operational Expenses 2,300,000,000 0 0 0 0 2,300,000,000

3. Current Assets increase 0 9,204,267,219 931,400,268 1,002,354,627 548,651,106 11,686,673,219

Total Investment Costs 7,500,000,000 9,204,267,219 931,400,268 1,002,354,627 548,651,106 19,186,673,219

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Schedule 07: GMCL Projected Cash Flow Table (In UGX)
Period Scaling Up Requirements (UGX)
Year 1 2 3 4 5 *Sal values Total
Costs (UGX)
A. Cash inflow 7,500,000,000 39,312,000,000 43,570,800,000 48,157,200,000 50,565,060,000 189,105,060,000
1. Financial resources total 7,500,000,000 _ _ _ _ 7,500,000,000
2. Sales revenue total _ 39,312,000,000 43,570,800,000 48,157,200,000 50,565,060,000 181,605,060,000

B. Cash outflow -7,500,000,000 -34,740,542,451 -29,664,648,817 -33,157,838,136 -34,666,408,790 12,565,194,176 -127,164,244,018

1. Total assets schedule
including replacements -7,500,000,000 -9,204,267,219 -931,400,268 -1,002,354,627 -548,651,106 12,565,194,176 -6,621,479,043
2. Operating Costs (Cost of Goods
Sold) _ -23,743,821,760 -26,151,440,784 -28,740,462,156 -30,177,485,264 0 -108,813,209,964
3. Debt Service
a) Interest _ 720,000,000 540,000,000 360,000,000 180,000,000 0 1,800,000,000
b) Repayments _ 1,500,000,000 1,500,000,000 1,500,000,000 1,500,000,000 0 6,000,000,000

4. Corporate tax _ -4,004,453,472 -4,613,807,765 -5,267,021,353 -5,612,272,421 0 -19,497,555,011

5. Dividends 4% on equity _ -8,000,000 -8,000,000 -8,000,000 -8,000,000 0 -32,000,000

C. Surplus / deficit 0 4,571,457,549 13,906,151,183 14,999,361,864 15,898,651,210 12,565,194,176 61,940,815,982

D. Cumulative cash balance 0 4,571,457,549 18,477,608,732 33,476,970,596 49,375,621,806 61,940,815,982

*Salvage values: Land: 500,000,000; 90.0% of buildings: 630,000,000; Working Capital: 11,435,194,176 12,565,194,176

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Schedule 08: GMCL Projected Cash flow Table and Calculation of Present Value (In UGX)
Year 1 2 3 4 5 *Sal values Total
Scaling Up

Investment Costs -7,500,000,000 _ _ _ _ _ -7,500,000,000

Net Profit after Tax* _ 9,343,724,768 10,765,551,451 12,289,716,491 13,095,302,315 _ 45,494,295,025
Depreciation _ 427,500,000 427,500,000 427,500,000 427,500,000 _ 1,710,000,000
Interest Add back
Mid-term Loan _ 720,000,000 540,000,000 360,000,000 180,000,000 _ 1,800,000,000
NET CASH FLOWS -7,500,000,000 10,491,224,768 11,733,051,451 13,077,216,491 13,702,802,315 12,565,194,176 54,069,489,201

Discount Factors at 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5674 _

PV at 12% -6,696,750,000 8,363,604,385 8,351,586,023 8,310,571,080 7,774,970,034 7,129,491,175 33,233,472,697
NPV at 12% 33,233,472,697
Discount Factors at 15% 0.8696 0.7561 0.6575 0.5718 0.4972 0.4972 _
PV at 15% -6,522,000,000 7,932,415,047 7,714,481,329 7,477,552,389 6,813,033,311 6,247,414,544 29,662,896,621
NPV at 15% 29,662,896,621

Internal Rate of Return = 147.84%

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Schedule 09: GMCL Projected Annual Net Income Statement [5 Years] in UGX
Year Scaling Up 2 3 4 5

Income _ 39,312,000,000 43,570,800,000 48,157,200,000 50,565,060,000

Cost of Sales _ 18,956,021,760 21,009,590,784 23,221,126,656 24,382,182,989

GROSS PROFIT _ 20,355,978,240 22,561,209,216 24,936,073,344 26,182,877,011

Less: Operating Costs

(excl. Cost of Goods Sold) _ 4,787,800,000 5,141,850,000 5,519,335,500 5,795,302,275

OPERATING PROFIT _ 15,568,178,240 17,419,359,216 19,416,737,844 20,387,574,736

Loan Finance Interest @ 12% p.a. 720,000,000 540,000,000 360,000,000 180,000,000

Less: Annual Repayments (Loan Finance) _ 1,500,000,000 1,500,000,000 1,500,000,000 1,500,000,000

NET PROFIT/LOSS BEFORE TAX 0 13,348,178,240 15,379,359,216 17,556,737,844 18,707,574,736

Corporation Tax 30% 0 4,004,453,472 4,613,807,765 5,267,021,353 5,612,272,421

NET PROFIT/LOSS _ 9,343,724,768 10,765,551,451 12,289,716,491 13,095,302,315

Accumulated Net Profit (Loss) _ 9,343,724,768 20,109,276,219 32,398,992,710 45,494,295,025

Net Profit Margin _ 23.77% 24.71% 25.52% 25.90%
Gross Profit Margin 51.78% 51.78% 51.78% 51.78%
Rate of Return on Investment _ 124.58% 143.54% 163.86% 174.60%
Operating Profit Margin _ 39.60% 39.98% 40.32% 40.32%

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Schedule 10: Projected Balance Sheet (In UGX)
CAPITAL EMPLOYED: YR.1 YR.2 YR.3 YR.4 YR.5
Share Capital 200,000,000 200,000,000 200,000,000 200,000,000
Retained Earnings 9,343,724,768 20,109,276,219 32,398,992,710 45,494,295,025
Shareholder's Equity/Deficit 9,543,724,768 20,309,276,219 32,598,992,710 45,694,295,025

Long-Term Liabilities 6,000,000,000 6,000,000,000 4,500,000,000 3,000,000,000 1,500,000,000

6,000,000,000 15,543,724,768 24,809,276,219 35,598,992,710 47,194,295,025

EMPLOYMENT OF CAPITAL: `

Buildings & Infrastructure 700,000,000 682,500,000 665,000,000 647,500,000 630,000,000

Plant Machinery & Equipment 3,700,000,000 3,330,000,000 2,960,000,000 2,590,000,000 2,220,000,000
Office Equipment & Furniture 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000
Vehicles 150,000,000 120,000,000 90,000,000 60,000,000 30,000,000
LONG-TERM ASSETS: 4,600,000,000 4,057,500,000 3,665,000,000 3,272,500,000 2,880,000,000
CURRENT ASSETS: 1,400,000,000 12,404,089,949 21,902,204,892 32,925,996,561 44,745,774,069

Accounts Receivable 1,978,651,813 2,179,286,732 2,395,038,513 2,514,790,439

Stock (Inventory) 7,078,023,739 7,810,409,505 8,598,338,788 9,028,255,728
Bank Balance and Cash 147,591,667 145,971,250 144,644,813 143,627,053
Other Current Assets 3,199,822,731 11,766,537,406 21,787,974,448 33,059,100,850

CURRENT LIABILITIES: 917,865,181 757,928,673 599,503,851 431,479,044

Accounts Payable 197,865,181 217,928,673 239,503,851 251,479,044
Current Portion of Long-term
Liabilities 720,000,000 540,000,000 360,000,000 180,000,000

NET CURRENT ASSETS: 1,400,000,000 11,486,224,768 21,144,276,219 32,326,492,710 44,314,295,025

TOTAL CAPITAL 6,000,000,000 15,543,724,768 24,809,276,219 35,598,992,710 47,194,295,025

TOTAL ASSETS 6,000,000,000 16,461,589,949 25,567,204,892 36,198,496,561 47,625,774,069

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Schedule 11: Ratio Analysis (In UGX)
Period Scaling Up
Year 1 2 3 4 5
Sales Growth 5% 5% 5%

Percent of Total Assets

Accounts Receivable 12.02% 8.52% 6.62% 5.28%
Inventory 43.00% 30.55% 23.75% 18.96%
Other Current Assets 19.44% 46.02% 60.19% 69.41%
Total Current Assets 75.35% 85.67% 90.96% 93.95%
Long-term Assets 24.65% 14.33% 9.04% 6.05%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 5.58% 2.96% 1.66% 0.91%

Long-term liabilities 36.45% 17.60% 8.29% 3.15%
Total Liabilities 42.02% 20.57% 9.94% 4.06%
Net Worth (Total Capital) 94.42% 97.04% 98.34% 99.09%

Percent of Revenues
Revenues 100.00% 100.00% 100.00% 100.00%
Gross Margin 51.78% 51.78% 51.78% 51.78%
SG&A 12.18% 11.80% 11.46% 11.46%
Net Profit (after Interest & Tax) 23.77% 24.71% 25.52% 25.90%

Main Ratios
Current 13.51 28.90 54.92 103.70
Quick 5.80 18.59 40.58 82.78
Total Debt to Total Assets 36.45% 17.60% 8.29% 3.15%
Pre-tax Return on Net Worth 85.88% 61.99% 49.32% 39.64%
Pre-tax Return on Assets 81.09% 60.15% 48.50% 39.28%

Business Vitality Profile

Revenue per Employee $786,240,000 $871,416,000 $963,144,000 $1,011,301,200

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Schedule 11: Ratio Analysis. Continued (In UGX)
Additional Ratios
Net Profit Margin 23.77% 24.71% 25.52% 25.90%
Return on Equity 97.90% 53.01% 37.70% 28.66%

Activity Ratios
Accounts Receivable Turnover 1.99 2.00 2.01 2.01
Collection Days 30 30 30 30
Inventory Turnover 3.35 3.35 3.34 3.34
Accounts Payable Turnover 1.20 1.20 1.20 1.20
Payment Days 30 30 30 30
Total Assets Turnover 2.39 1.70 1.33 1.06
Fixed Assets Turnover 5.85 7.14 8.78 10.48

Debt Ratios
Debt to Net Worth 0.39 0.18 0.08 0.03
Current Liability to Liability 0.15 0.17 0.20 0.29
Debt-Service Coverage Ratio 4.73 5.75 7.03 8.16

Liquidity Ratios
Net Working Capital $9,006,402,037 $9,917,738,814 $10,898,518,262 $11,435,194,176
Interest Coverage [Times Interest
Earned Ratio - TIE] 21.62 32.26 53.94 113.26

Additional Ratios
Assets to Revenue 0.42 0.59 0.75 0.94
Current Debt / Total Assets 4.37% 2.11% 0.99% 0.38%
Acid Test 5.80 18.59 40.58 82.78
Sales/Net Worth 2.53 1.76 1.35 1.07

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Schedule 12: Projected Payback Period (In UGX)
YEAR/ITEM 2 3 4 5

Net Profit 9,343,724,768 10,765,551,451 12,289,716,491 13,095,302,315

Interest 720,000,000 540,000,000 360,000,000 180,000,000
Depreciation 427,500,000 427,500,000 427,500,000 427,500,000
"Profit" 10,491,224,768 11,733,051,451 13,077,216,491 13,702,802,315

Year Amount paid Balance of Balance of

back from Total Equity
"profits" Investment Investment

1 0 -7,500,000,000 -1,500,000,000
2 10,491,224,768 2,991,224,768 8,991,224,768
3 11,733,051,451 14,724,276,219 20,724,276,219
4 13,077,216,491 27,801,492,710 33,801,492,710
5 13,702,802,315 41,504,295,025 47,504,295,025
6
7
8
9
10

Payback Period = 1.72 Years

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APPENDIX I: PVC SANDALS MAKING MACHINERY & EQUIPMENT
Appendix I.1: Rotary Plastic Sole Injection Moulding Machine

10.0

Features:
 This machine is used to produce various kinds of one colour out soles for sports shoes, leisure
shoes, slippers, sandals, men’s and ladies shoes in general, etc.
 It is suitable for all kinds of thermoplastic raw materials, foaming or non-foaming, such as PVC
and TPR.
 Machine operation is controlled by fully-automated computer and PLC; saving labour and
improving productivity.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.2: Rotary Two Colour PVC/TPR Sole Injection Moulding Machine

Features:
 This machine is used to produce various kinds of two/three colour out soles for sports shoes,
leisure shoes, slippers, sandals, men’s and ladies shoes in general, etc.
 It can be used to inject first model for 1 / 2 colour EVA material.
 It is suitable for all kinds of thermoplastic raw materials, foaming or non-foaming, such as PVC
and TPR.
 Machine operation is controlled by fully-automated computer and PLC; saving labour and
improving productivity.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.3: Rotary 1/2/3 Colour PVC/TPR Sole Injection Moulding Machine

Features:
 This machine is used to produce various kinds of two/three colour out soles for sports shoes,
leisure shoes, slippers, sandals, men’s and ladies shoes in general, etc.
 It can be used to inject first model for 1 / 2 / 3 colour EVA material.
 It is suitable for all kinds of thermoplastic raw materials, foaming or non-foaming, such as PVC
and TPR.
 Machine operation is controlled by fully-automated computer and PLC; saving labour and
improving productivity.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.4: Rotary TPU/TR Injection Moulding Machine

Features:
 This machine is used to produce various kinds of two/three colour out soles for leather shoes,
leisure shoes, slippers, sandals, men’s and ladies shoes in general, etc.
 It is suitable for all kinds of thermoplastic raw materials, foaming or non-foaming, such as PVC,
TPR, TPU, TR, etc.
 Machine operation is controlled by fully-automated computer and PLC; saving labour and
improving productivity.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.5: Rotary PVC Upper Injection Moulding Machine (1/2/3 Colour)

Features:
 The machine adopts the newest and special horizontal clamping device, it supplies a strong
clamping force and makes sure the quality is perfect
 It is suitable to produce crystal shoes, jelly shoes and short-height rain shoes in PVC/TPU/TR.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.6: Rotary Jelly Shoes Injection Moulding Machine (Horizontal)

Features:
 This machine adopts the newest and special horizontal clamping device, it supplies a strong
clamping force and ensures that the quality is perfect.
 It is suitable to produce crystal shoes, jelly shoes and short-height rain shoes in PVC/TPU/TR.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.7: Rotary Jelly Shoes Injection Moulding Machine (Vertical Screw)

Features:
 This machine adopts the newest and special horizontal clamping device, it supplies a strong
clamping force and ensures that the quality is perfect.
 It is suitable to produce crystal shoes, jelly shoes and short-height rain shoes in PVC/TPU/TR.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves time of mould change and extends the cooling time.
 This machine is not controlled, die thickness, direct injection, to ensure that the quality is perfect.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.8: Automatic Rotary PVC Boots Injection Moulding Machine (1/2/3 Colour, Horizontal)

Features:
 This rain boots machine is used to make all kinds of different heights of PVC/TPR boots and rain
boots. It is the most ideal and efficient injection moulding machine for the rain boots industry at
present
 The injection system is controlled by two-section pressure, screw temperature is controlled by
four section PID.
 This machine is controlled by a fully-automated computer and PLC; the seals and hydraulic parts
are imported from Taiwan.
 It uses strong air pressure to assist the workers to take out the products from the mould.
 It uses the strong and double-clamping cylinder which is specially-designed for this machine.
 Disc drives by fully-automatic two section speed, it is more stable and fast.
 It adopts the newest device of fully-automated open-close mould, this device will save labour and
improve production efficiency.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.9: Dual Density Two-Colour Plastic Injection Moulding Machine

Features:
 This machine is used to produce various kinds of one/two colour out soles for leather shoes,
leisure shoes, men’s and ladies shoes in general, etc.
 It is suitable for all kinds of thermoplastic raw materials, foaming or non-foaming, such as PVC,
TPR, TPU, TR, etc.
 This machine has the advantage of occupying small space area, the machine needs only one
motor and saves energy; to produce two colour products, only need one worker, it saves labour
for you.
 It can produce double density (double hardness) sole and satisfies different sole requirements.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.10: (Automatic Slide Type) Vertical Plastic Injection Moulding Machine Series

Features:
 This machine can use all kind of thermoplastic raw material such as PVC, TPR, TPU, TR, ABS,
ASR, PP, PE, TPE, etc.
 It is used to produce soles, PVC straps, plastic hardware, accessories, mobile shell and cover.
 For footwear, it can be used to produce samples, colour test, and so on, it is more convenient.
 It uses less energy consumption, no pollution, fast injection, strong clamping force, simple
installation, easy operation, less labour and it is safe and reliable.
 (Automatic slide type). This machine adds a slide in-out device; it can use two mould pieces
together which raise the production output and labour intensity.
 (Automatic slide type). This machine has strong applicability, it can use the mould of rotary
machine and injection moulding machine. The automatic operating device, it has an automatic
open mould device thus saving labour.
 This series has different models, items and configurations.

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Appendix I.11: Rotary PVC Shoes Air Blowing Moulding Machine (1/ 2 Colour)

Features:
 This machine is used to produce various kinds of one/two colour out soles for slippers, sandals,
short-height boots, and it is special for production of plastic-type sports shoes and leisure shoes.
 The well-inter-connected oil circuit by electric control can reduce waiting time, speed up
production rate, and promote productivity.
 Air-blowing system device with air release function of mould makes the products light-weight, soft
with gloss surface and high value.
 Injection pressure and speed of each station can be controlled individually according to different
materials and moulds by PLC and touch-screen system; it can use different moulds within the
same machine. It can save the time of mould change and extends the cooling time.
 Servo system is selectable to save electricity.
 This series has different models, items and configurations.

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Appendix I.12: Rotary TPU/PP Insole Moulding Machine

Features:
 Machine operation is controlled by fully-automated computer and PLC; saving labour and
improving productivity.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production; the injection pressure, volume and time is controlled by double proportional pressure.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine.
 It saves time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.13: Rotary Jelly Shoes Injection Moulding Machine (Triangle Mould)

Features:
 This machine adopts a special triangle clamping mould device which ensures that the quality is
perfect.
 It is suitable for production of one/two colour outsoles in PVC/TPR material and it is specialized
for producing crystal shoes, jelly shoes and short-height rain shoes.
 The oil and electric circuit is controlled independently, to reduce the waiting time and ensure fast
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.14: Rotary Jelly Shoes Injection Moulding Machine (1/ 2 Colour, Triangle Mould)

Features:
 This machine is used to produce various kinds of one/two colour out soles for leather shoes,
leisure shoes, men’s and ladies shoes in general, etc.
 It is suitable for all kinds of thermoplastic raw materials, foaming or non-foaming, such as PVC
and TPR. It has a special triangle clamping mould device which ensures that the quality is
perfect.
 Machine operation is controlled by fully-automated computer and PLC; saving labour and
improving productivity.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine. It saves the time of mould change and extends the cooling time.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).

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Appendix I.15: Rotary Jelly Shoes Injection Moulding Machine (1/ 2/3 Colour, Horizontal)

Features:
 This machine is used to produce various kinds of one/two colour out soles for leather shoes,
leisure shoes, men’s and ladies shoes in general, etc.
 This machine adopts the newest and special horizontal clamping device, the combination of
horizontal and vertical clamping supplies strong clamping, force and ensures that the quality is
perfect.
 It is suitable to produce crystal shoes in single colour, double density, blowing, jelly shoes and
short-height rain shoes in PVC/TPU/TR.
 The oil and electric circuit is controlled independently, to reduce the waiting time and speed up
production.
 The injection volume of each station can be set independently; it can use different moulds on the
same machine.
 Servo system is selectable to save electricity; auto opener is also selectable to save labour;
(these two items can be selected by the customer).
 This machine has normal mould and triangle mould models for the customer to choose from.

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Appendix I.16: Automatic Rubber Sole Hydraulic Moulding Machine

Features:
 The series machines are made of high-quality steel plate & FC45 steel casting moulding.
 This machine uses the world-famous brand in hydraulics. This machine is controlled by PLC
system. This system may control different parts independently and avoid interference. This
machine is reliable and high-performance.
 Movement of machine body: rapid, silent & running smoothly.
 Bumping times & bumping timing can be set, at the specified time which can be manually
operated and tested for user convenience.
 Pressure relief, air damage & lowering, etc. can be separately adjusted without being controlled
by time or to pre-setting continued actions to fully automatic.
 Oil-hydraulic concentrated circuit; few wiring and branching wires are few too. It is equipped with
a cooler to maintain oil temperature & pressure balance, the oil never leaks and the machine’s
longevity can be extended.
 With emergency lowering of the switch, immediate breaks can be made for light touch to improve
operator safety and quality of finished goods.
 Servo system is selectable to save electricity.

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Appendix I.17: Vertically-Pressed Type Dual Colour Sole Injection Moulding Machine

Features:
 This machine can produce TR/TPR/TPU and other thermoplastic material.
 Vertically-pressed hydraulic-mould close system, quick mould-lock system.
 0-900-1800 turnover structure available with several production moulds, mono-colour sole can be
made.
 The mould thickness can automatically adjust between 80-200 mm.
 Integration of electric control box and hydraulic system.
 Touchable screen man-machine interface, making operation convenient.

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Appendix I.18: Model Dld Big Moulding Plate Upside-Down Toggle-Type Full-Auto Eva
Injection Moulding Machine

Features:
 Touching controlled man-machine interface, visible result in easy operation.
 Easy mould thickness adjustment, effortlessly adjustable within 100-220 mm.
 Toggle mechanism design, quick mould opening and low noise.
 Optimized design on the injection speed and injection pressure, able to improve productivity.
 430 mm of fixation mould opening stroke unchanged due to different heights of mould, able to
produce double-deck moulds
 4 mm is compensated in the station by the balance system.
 Temperature and material plasticization more steady by 4-1 heating zones of PID control on the
barrel.
 Large injection volume enables production of footwear products and other EVA expanded
products come after mould opening, such as: EVA toy, car seat back rests.
 Larger mould holder design is applicable on various moulds with a high degree of compatibility.

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APPENDIX II: PVC SANDALS MAKING MACHINERY & EQUIPMENT PRICE QUOTATION

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APPENDIX III: MEMBERSHIP OF GAGAWALA MEMBERS CLUB LIMITED
S. No. NAME
1 WAMALA GODFREY
2 NDAGANO WILBER
3 KALUNGI MAUREEN
4 MUTABARUKA INNOCENT
5 JJUUKO ZAAKE
6 MUTYABA JOHN
7 MURUNGI JACKIE
8 BUREGEYA FRED
9 KATUMBA LAWRENCE
10 KYAZZE GEORGE
11 NALUMENYA JOSEPH SEBOWA
12 KATALI ROGERS
13 NSABA VALENCE
14 SEWALI HARUNA
15 MUGISHA PETER
16 LUTAYISIRE JOHN
17 TUMWEBAZE JOEL
18 KABERUKA EDWARD
19 NGABO FLORENCE
20 NTALE ROBERT
21 NTALE PASSY
22 NGABONZIZA MOSES
23 KAWUKI GODFREY
24 KALEMA GERALD
25 KAYINAMURA HASSAN
26 NDYAMAGYE LOUISA
27 MUSHEGA FRED
28
29
30

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APPENDIX IV: GAGAWALA MEMBERS CLUB LIMITED CERIFICATE OF INCORPORATION

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