res 04021102

Figure 1: TECHNOLOGY OPTIONS FOR SANITARY NAPKIN PRODUCTION

Simple die – press. Least cost model

Foot press die – Muruganandam model

Gandhigram model – multi‐napkin press, (4) hand operated

WOMAN – NGO HAS Pneumatic die press with multiple napkin pressed ‐4/6

Domestic mixer –Low cost capactity – 200g at a time

Muruganandam/WOMAN Model ‐500 g at a time 1HP motor

Gandhigram model 1/2 HP motor – capacity 2 kg

Girugambakkam‐ a high capacity, silent model. Cost effective

GIRUGAMBAKKAM MODELS of CORE FORMATION

Pulverisation Core formation

WOMAN NGO ‐UV STERILISING Machine

Dry auto clave‐ Sterilising machine

Girugambakkam fabricated sealing machine . 3 way sealing

SEALING

sterilisattion

Packing

Various Technology options for Production of Sanitary Napkins.

Basic Production Process: Basically the production of Sanitary Napkins involve the following stages. Figure 2:

The above production process is the same for all technologies be it manual processes or involving automation.

Step 1: Pulverisation: In this process, the wood pulp is pulverized using a pulverizing machine at

high speeds to make it voluminous and thus absorbent. Currently most sanitary napkin production processes use the major absorbent layer as the Wood Pulp. This step is one where manual processes have not been used. But automation can be carried out in a centralized place where pulverized wood pulp can be safely transported to smaller production units if access to power is a problem in remote rural areas. Some of the wood pulp also contains Super Absorbent Polymer (SAP) Gel.

Machines used: High end pulverizers are available for large scale volumes. But for a small but efficient unit, an ordinary kitchen mixie (dry grinding machine) can also be used. They are handy, safer and women are already accustomed to its use unlike heavy pulverizers. Another advantage of a mixie is that they can be operated with less power (700 Watt) as opposed to 1HP or 2 HP motor fitted machines which require higher electricity and also a good voltage level. During the process of pulverizing wood pulp, to increase the absorbing capacity of the napkin some times, 1% Super Absorbent Polymer (SAP) is also added. This increases the absorbent capacity of the napkins dramatically.

Step 2: Core Formation:

Once the wood pulp is pulverized, layers of absorbent material are arranged and the absorbent core is made. There have been many variations in the formation of the core with most units visited used only wood pulp which is the cheapest option to cut the cost of production. But to increase the comfort levels of the napkin, layers of cotton is also added (Thiruvidanthai Unit, Kancheepuram District, Tamilnadu) along with the wood pulp. Additionally a gel pad is also added as the third layer to have better quality of the napkin. The quantity of the absorbent layers vary according to the quality of the napkin pad. For a regular pad, 8 grams of wood pulp is used if the only absorbent layer is only wood pulp. If other layers like cotton pad and gel pad are also used, then the quantity of the layers is adjusted accordingly. .An optimum, good quality absorbent layer is made of 4 gms of Wood Pulp, 4 grams of cotton, and 4 grams of absorbent gel pad. However for post maternity pads (belted pads) higher quantities are used (15grams of wood pulp per pad). The wood pulp is packed into the Core forming die using manual presses or a core forming machine. Layers of pre‐cut cotton layer, gel pad are arranged above that. An impermeable layer is placed at the bottom. In some cases the impermeable bottom layer is secured using Super Glue to the above layers (Machinery from Jayashree Industries, Coimbatore: MSSRF Unit, Pondicherry). The layers of Gel pad, impermeable layer are to be cut in the standard sizes. Either they can be cut using a die cut machine or they can be cut manually.

Step 3: Covering Layer:

Once the absorbent layers are formed they need to be covered to secure the layers properly. This is done by inserting the layers into the covering layer which is either stitched or sealed by a Napkin finishing machine where the core layer is sealed using a heat sealing machine. Additional to the outer layer, one unit (Thiruvidanthai Unit, Kancheepuram District, TN) use an extra layer to secure the core layer. This is being done to ensure that the wood pulp and other absorbent layers does not move to the sides of the pad during transporting, handling, sorting etc.. Once the wood pulp moves to the sides during handling, the sanitary napkin fails. To prevent this, the core layer is covered by an extra layer of non‐woven permeable layer.

Step 4: Accessories Formation

For belt less and Wings model sanitary napkins, once the napkin is formed with the outer layer, to mark the absorbent layer for identification, super glue is applied on the bottom side (with the non‐permeable layer at the bottom) and a release sheet is affixed as a marker. For belt less napkins, when the release sheet is removed, the napkin can be used with as a panty‐liner.

Step 5: Sterilizing

The finished napkins are sterilized for removal of any harmful bacteria or infectious germs. There are two methods of sterilizing.

1. Autoclaving: In this process, the finished sanitary napkins are loaded into the dry autoclave (a hot oven). The napkins are heated 110 degress Celsius for a time of 20 minutes. In a 16” x 16” size autoclave, about 100 napkins can be sterilized at a time.

2. UV Irradiation: In this method, the napkins are kept in a UV chamber and subjected to UV irradiation for about 3 minutes. Though this is a faster method, only few sanitary napkins can be loaded at a time as stacking too many napkins will be ineffective.

Step 6: Packaging:

Post sterilization, the napkins are immediately packed in covers. Normal packaging is either 8 napkins or 10 napkins. If the napkins are to be sold per piece, a small packing is done. Polyethylene is used for the packing of finished napkins in order to prevent the napkins from reabsorbing moisture. Single napkins are used in Napkin vending machines where napkins can be vended by dropping a Rs.2 coin into the machine. It has also been found that in rural areas, where women prefer to buy napkins in loose, single napkin packaging is a better option as women may find it unaffordable to buy a packet of 8 or 10 napkins at a time.

1. Break Even Analysis of Various Case Studies

1.1 The low investment, better technology Model. Case Study of Akshaya Unit, Thiruvidanthai Village, Kancheepuram District, Tamilnadu. (Investment required Rs.88,500)

The Akshaya Sanitary Napkin Production Unit is located in Thiruvidanthai Village on the ECR Road to Chennai near Kovalam in Kancheepuram District, Tamilnadu. The unit employs six women and a master tailor who also works in a Tailoring unit run by the same Federation. The master Tailor helps the women in cutting the layers in uniform size, in helping the women for the production of the Wings model of sanitary napkins which they have started recently. The unit is supplying sanitary napkins to 13 schools nearby and have installed napkin vending machines sponsored by the TVS Company Ltd under Shri Cheema Foundation under their CSR initiative.

FINANCIAL ANALYSIS

SANITARY NAPKIN PROJECT COST

S.no. Item of expense Units Machine description Amount (in Rs.)

A Fixed cost

A.1 Weighing scale 1 1g‐10kg. National Digital 3500

A.2 Pulveriser/mixer/dry grinder 1 Any simple model mixer for dry grinding

2000

A.3 Sterilising machine 1 Dry autoclave‐ 16”*16” 13600

A.4 Hand sealing machine 2 Premier 2300

A.5. iron box 1 For Hot sealing 600

A.6 ancillary instruments‐ 3000

Scissors, trimmers, inch tapes, pattern sheets, hand press machine dies, plastic scales, records,,

A.7: Semi Automatic Sewing Machine

1 8000

Tables, storage racks, electrification

10000

TOTAL Rs. 43,000

With a production of 1000 napkins / day (125 packets of 8 napkins/pack), following is the initial start up quantity of raw materials required for a unit.

Initial start up raw material investment

S.no.

Item of expense Qty Units Rate Amount (in Rs.)

1 Wood pulp – 50 kg 50 Kg. Rs. 60 Rs. 3,000

2 Gel powder – 3 kg 3 Kg Rs. 600 Rs. 1,800

3 Non woven blue 300 300 m roll 8.3 Rs. 2,490

4 Non‐woven –spun bond 1000 1000 m 10 Rs. 10,000

5 Releasing sheet – 1 ream 1000 sheets 0.8 Rs. 800

6 Gum 2kg 2 Kg. 140 Rs. 280

7 Cotton rolls‐50 50 Kg. 100 Rs. 5,000

8 Gel pad‐300m 300 M 16 Rs. 4,800

9 Non‐woven – inner wrap 1 1900 Rs. 1,900

10 LD sheet‐packing‐5 kg. 5 Kg. 195 Rs. 975

11 Packing Polyethylene covers 3125 Nos. 1 Rs. 3,125

TOTAL Rs. 34,170

Rounded off to: Rs.35000/‐

Raw Material Costs /Napkin.

VARIABLE COSTS/NAPKIN

s.no. Head of Variable cost Variable Cost/napkin (Rupees)

Variable cost

1 Absorbent layer 0.55

2 Covering material 0.35

3 Gum +adhesive sheets 0.1

TOTAL .Variable Costs (VC)./napkin 1

Production Volume:

The unit makes an average of 1000 napkins day, which means in a month of 25 working days, the production is 1000 x 25 days = 25000 napkins. With a variable cost of Rs.1/napkin, the raw material costs is Rs.25000/month.

Monthly raw material costs@ Rs.1 x 25000 napkins Rs.25000

Monthly Administgrative Expenses.

Rent, power, Maintenance Rs. 2500

Labour: 6 women @ 100/day + Part time superviser Rs.18000

Total Expenses/month Rs. 20500

WORKING CAPITAL (Raw material costs + Monthly Admin expenses) Rs. 45500

TOTAL INVESTMENT REQUIRED (WORKING CAPITAL + EQUIPMENT) Rs. 88,500

To arrive at the Fixed Costs per month, normal rates of interest (ROI) applied is 18%. As a special case, lower ROIs are also projected in case the Ministry of Health comes forward to subsidize this. Thus two scenarios of 7% ROI and 5% ROI are calculated.

Fixed Costs ROI

18% 12% 7% 5%

Total Monthly expenses / month 20500 20500 20500 20500

Interest on Capital Equipment per month 645 430 251 179

Interest on Working capital per month 683 455 265 190

Depreciation @ 10% / month 358 358 358 358

Total Monthly Fixed Costs (FC) 22186 21743 21375 21227

FC/NAPKINS 0.89 0.87 0.85 0.85

VC/NAPKIN 1.00 1.00 1.00 1.00

Cost/napkin 1.89 1.87 1.85 1.85

Break Even Production Volume (BEPV)1 887 870 855 849

For the quality of the product, this was the best of the units visited as per the study.

1 Break Even Production Volume is calculated using the formula :

BEPV = Fixed Costs ÷{Contribution/napkin} where Contribution is defined as

Sale Price – Variable Price.

1.2 Unit set up with the machinery from M/s.Jayashree Industries, Coimbatore. : Unit of MS Swaminathan Research Foundation, Pondicherry.: (Investment required: Rs.1.55 lakhs)

This is a unit set up with the sponsorship of the Dr.MS Swaminathan Research Foundation, in Puducherry.. This unit is located on the Villianur‐Pathukkannu Road, in Puducherry at the village of Olaivaikkal. The unit has 5 women employed by the SHG Federation promoted by MSSRF. The unit has all the machineries installed by M/s. Jayashree Industries, Coimbatore, Tamilnadu. The unit has the following machinery. With the machinery costing about Rs.1.10 lakhs and with an approximate working capital requirement of Rs45000/ the total investment required is around Rs.1.55 lakhs. In the calculation of profit analysis current production volumes only are taken into account. As per the machine manufacturers, the daily production capacity is 1440 napkins but the unit was producing a maximum of only 500 napkins / day. One difficulty faced by the women was in the operating of the foot operated core forming machine. For each napkin, an average of three stampings are required to form the core layer. For about 1000 (or 1440 as mentioned by the machine manufactures), a woman has to stamp the machine a minimum of 3000 times per day. Women find this the most difficult task and hence a much decreased production rate.

Financial Analysis. CAPITAL EQUPMENT

No. Details Qty Rs.

1 Defibering M/c 1 No 20,500

2 Core forming M/c 1 No 5,800

3 Napkin Finishing M/c 1 No 28,500

4 Ultra Violet Treatment Unit 1 No 10,400

5 Other accessories (Storage etc.) ‐ 10,000

6 Weighing Scale (To Weigh Wood Pulp) 1 3500

7 Work Table 2 10000

8 Plastic Buckets and Trays, minor tools etc. 1000

9 Transport of machinery, erection, electrical work etc. 20,000

Total 109,700

Rounded off to: Rs.110,000/‐

Raw Materials The main New Material used for Sanitary Napkin manufacturing is the same as the one described in 5.1.

• Wood Fiber(Pulp) • Thermo Bonded Non woven (for Outer layer) • Poly Ethylene Film (Non permeable for bottom). • Release Paper • Super Glue • LLDPE 50 GSM ‐ Packing Cover (RAW MATERIAL REQUIREMENT)/ DAY

Like the earlier case study, the raw material cost / napkins is taken as Re.1 per napkin.

Production / month@ 500 napkinsday 12500

No. of women employed in the unit 4

Payment to women /Wages 4 women x Rs.100/day x 25 days.

10000

Supervision Costs Rs. 3,000

Rent, EB, Admin expenses Rs. 3,000

Total monthly expenses Rs. 16,000

Working Capital requirement /month

Raw material costs : 12500 napkinsx Rs.1 Rs. 12,500.00

Monthly Admin Expenses Rs. 16,000

Total Working Capital required Rs. 28,500.00

Total Investment Rs. 1,38,500.00

Note : With a minimum of 1000 napkins per day, the Working Capital Requirements will be Rs.45000 aprox and thus Total Investment required would be Rs.1.55 lakhs.

Fixed Costs

ROI

18% 12% 7% 5%

Monthly Admin Expenses Rs. 16,000 Rs. 16,000 Rs. 16,000 Rs. 16,000

Interest on Equipment Rs. 1,650.00 Rs. 1,100.00 Rs. 641.67 Rs. 458.33

Interest on Working Capital Rs. 427.50 Rs. 285.00 Rs. 166.25 Rs. 118.75

Depreciation on Equipment @ 10% 917 917 917 917

Total Fixed Costs Rs. 18,994 Rs. 18,302 Rs. 17,725 Rs. 17,494

FC/NAPKINS Rs. 1.52 Rs. 1.46 Rs. 1.42 Rs. 1.40

VC/NAPKIN 1.00 1.00 1.00 1.00

Production Cost/napkin 2.52 2.46 2.42 2.40

Break Even Production Volume/day 760 732 709 700

One can see that the production cost is much higher than the sale price which is Rs.2.00. For this unit to break even, it should produce a minimum of 760 napkins per day. However for lower ROI, this can be less as indicated in the table above. The basic problem of this unit is low productivity, inappropriate machinery which is the foot operated core forming machine which the women find it difficult to operate. With a hand operated core forming machine and increased productivity per woman, this unit can easily reach a productivity of about 850 napkins / day.

1.3 Gandhigram Model, Dindigul. (Investment : Rs.2.10 lakhs)

Gandhigram Trust is a well established social service institution with a rich commitment for developing people friendly affordable technology with continuous, participatory R&D work with grassroot level technology dissemination. Gandhigram had developed an appropriate technology for production of sanitary napkins and they have been successful in producing very good quality sanitary napkins on par or even better than high cost sanitary napkins from leading MNC brands like Whisper, Kotex etc. The details of the unit which is being run by an SHG Federation supported by Gandhigram are given below and a business model of its working has been attempted at. The machinery has been fabricated at the Gandhigram Rural Workshop and this machinery has been successfully installed in many areas in Tamilnadu, Chattisgarh, Uttaranchal etc. The capital investment is about Rs.1.57 lakhs and the working capital requirement of about Rs.55,000/ the total investment required for the unit would be about Rs. 2.10 lakhs. CAPITAL INVESTMENT:” MACHINERY.

No. Details Qty Rs.

1 Wood pulp Grinding machine/Pulverizer with motor.

Drum size: 2”x1 ½ SS Drum with 2 mm metal sheet, Top cover and 18G Side Cover

1 No 49500

2 Core forming – Napkin Pressing Machine with Stand

(Hand operated: 4 pieces at a time) 1 No 25,500

3 Die Sets : 7” 2 No 3,000

4 Die Sets : 9” 2 No 3,500

5 Sealing machine : Impulse sealer with time and heat controller

1 No 17,000

5 Other accessories (Storage etc.) ‐ 10,000

6 Weighing Scale (To Weigh Wood Pulp) 1 3500

7 Work Table 2 10000

8 Plastic Buckets and Trays, minor tools etc. 1000

9 Dry autoclave for Sterilizing the pads: 16”x16” 1 13,600

Transport, Installation, Electrical works etc. 20,000

Total 156,600

Rounded off: Rs.1,57,000/‐

Raw Materials: Since the raw materials are the same , please refer to earlier units/sections.

No. of napkins / day 30000

Items Amount.(Rs.)

Raw material Costs: Rs.1.00/napkin 30,000.00

Labour Costs @ Rs.0.40 per napkin. 12,000.00

Total Variable Costs. Rs. 42,000.00

Working Capital requirement /month Amount (Rs.)

total Variable Costs @ x Rs.1.40 Rs. 42,000.00



Total Investment (Working Capital + Equipment Costs) Rs. 2,09,500.00

Variable Costs /Napkin Rs.1.40

Sale Price Rs.2.00

Contribution/Napkin. Rs.0.60

Fixed Costs

ROI

18% 12% 7% 5%







VC/NAPKIN 1.40 1.40 1.40 1.40



Given above is the detailed Profit analysis at various ROIs and various production volumes. With the unit producing 1200 napkins / day which is the current rate of production, the figures are given as highlighted.

Gandhigram model is found to be a good model and women find it easier to work with the core forming machine which is a hand operated machine. The machine can form 4 napkins at a time after the napkins are wrapped in non woven fabric and hot pressed at the centre (instead stitching an outer layer and inserting the layer into the outcover) to secure the layers and then also sealed at the sides. The women already get a decent wage structure of Rs100 to Rs.120 per day on piece rate basis at the rate of Rs.0.40 per napkin. One of the obvious problems with using high powered machinery was felt here as the women said that low voltage was causing problems for the machinery and they had to get the machinery repaired). Like the MSSRF (Jayashri Industry model), here also they use only wood pulp as the absorbent material with the Super Absorbent Polymer which is pre mixed in the wood pulp. The workmanship was found to be good. Gandhigram has already installed a few machines outside Tamilnadu.

1.4 Jayashree Industries, Coimbatore: Higher Investment Model (Investment: Rs2.79 lakhs)

Mr.Muruganantham of Jayashri Industries, Coimbatore have been supplying machinery for sanitary napkin production and is a well known entrepreneur. Over a period of time, the machinery have been improved and this model analysed here is based on a pneumatic core forming machine which can produce 6 napkin cores at a time. With 6 women who would make 250 napkins per day, the monthly production would be 37500 napkins. With about Rs2.15 lakhs for the machinery and installation and with one months’ working capital requirement of about Rs.64,000/ the total investment required would be about Rs2.79lakhs

S.No Description Unit Rate Total

1 De‐fiberation Machine 1 20,200 20,200

2 Soft touch sealing Machine 1 28,000 28,000

3 Belt napkin Making machine Length sealing.

1 20,500 20,500

4 Belt napkin making machine side sealing 1 17,500 17,500

5 Pneumatic Core forming Machine 1 25,500 25,500

6 Air compressor 1 18,000 18,000

7 Core Dies 2 1,875 3,750

8 U V Treat Unit 1 10,400 10,400

VAT 12.5% 17,981

Packing and Handling charges 2,500

Installation and Training Fees 3,000

Transporting, erecting, electrical wiring etc.

22,500

Other accessories (Storage etc.) 10,000

Weighing Scale (To Weigh Wood Pulp) 1 3500

Work Table 2 5000 10000

Plastic Buckets and Trays, minor tools etc.

1000

Total 214,331

Rounded off to : Rs.2,15,000/‐

Raw Materials: Since the raw materials are the same , please refer to earlier units/sections.

Items Amount (Rs.).

Raw material Costs: Rs.1.00/napkin x 37500 napkin/month 37,500.00

Quantum of Production: 1500


Payment to women (6 womenx Rs.100 x 25 days) 15000

Supervision Costs Rs. 6,000

Rent, EB, Admin expenses Rs. 5,500

Total monthly expenses Rs. 26,500

WORKING CAPITAL /TOTAL INVESTMENT REQUIRED.


Total Raw Material Costs Rs. 37,500.00



Total Investment (Working Capital + Equipment) Rs. 2,79,000.00

Fixed Costs

ROI

18% 12% 7% 5%







VC/NAPKIN 1.40 1.40 1.40 1.40



The above table shows the Break Even Production Volume, Production Cost/napkin for various ROIs.

Note: With two shifts, the same unit can improve its efficiency much.

Observation:

The pneumatic core forming machine is definitely an improvement over the foot operated machine by the same machine manufacturer. But the added increase in the equipment costs is considerable

since pneumatic machine also requires a compressor to work with. The capital costs is going up, and also machinery maintenance costs which is not envisaged here. One option to increase the profitability of the unit would be to increase the number of women in the unit so that production goes up. This can be done by having more space for increased number of women or else to have two shifts of women working in the same unit. With increased machinery, the only option to have better profitability is to increase the number of women.

1.5 High investment Napkin Production Unit: Women NGO, Trichy/Pudukottai. (Value of Investment :

Women NGO is running 7 sanitary napkin production units in Tamilnadu. This study is based on discussion with the Chairperson of the NGO and from details provided by her through a telephonic discussion. Actual equipment wise expenditures were not available and thus the analysis is based on some general assumption.

Model 1: Total Investment: Rs.3.15 lakhs

Quantum of Production: 2800 napkins per day.


Payment to women Piece Rate of Rs.0.50/napkin.

Supervision Costs Rs.5000

Miscellaneous Fixed Monthly Expenses (Rent, Power, other misc. expenses) + Supervision Costs

Rs.15,200/month + Rs.5000 = Rs.20,200/‐.

Unlike other models, the payment is based on production of napkins per day and in reality, initial production volumes will be less in the beginning and as time goes, skill would improve and the production volumes would go up. The above figure of 2800 napkins / day is the stabilized average production capacity of the unit.

With the above details, a rough Break Even Calculation is arrived as given below.

Sl.No. Equipment Cost

1 Pulverizer: 175000.00

2 Pneumatic Core Forming Machine : 6 pieces at a time.

3 Sealing Machines, Minor tools.

4 UV Sterilizer

5 VAT @ 4% 7000.00

6 Erection Costs/ Electrical Wiring etc. 8000.00

7 Total Rs.190000.00

Variable Costs

No. Items Amount.

1 Raw material Costs: At 2800 Napkins/day x 25 days: 70000 napkins x Rs.1/napkin

70,000.00

2 Labour Costs @ Rs.0.50 x 70000 napkins. 35,000.00

3 Total Variable Costs. Rs. 105,000.00

Variable Costs/napkin = Rs.1.50.


total Variable Costs @ 70000 napkins x Rs.1.50 Rs. 1,05,000.00


Total Working Capital required Rs. 1,25,200.00

TOTAL INVESTMENT REQUIRED (Working Capital + Equipment costs) Rs. 3,15,200.00

ROI ROI ROI

Fixed Costs 18% 7% 5% 12%


Interest on Equipment Rs. 2,850.00 Rs. 1,108.33 Rs. 791.67 Rs. 1,900.00

Interest on Working Capital Rs. 1,878.00 Rs. 730.33 Rs. 521.67 Rs. 1,252.00

Depreciation on Equipment @ 10% Rs. 1,583.33 Rs. 1,583.33 1583.33 1583.33



VC/NAPKIN 1.50 1.50 1.50 1.50



With the current production capacity of 2800 napkins / day or 70000 napkins/month, the BEPV, Profit, Production Cost/napkin etc. given above.

Model 2: Total Investment of Rs.4.75 lakhs.

Quantum of Production: (1000 kg of wood pulp

With 8 gms of wood pulp /napkin.

5000 napkins per day.


Payment to women : Piece Rate of Rs.0.50/napkin.

Supervision Costs Rs.5000

Miscellaneous Fixed Monthly Expenses (Rent, Power, other misc. expenses)

Rs.15,200/month.

Break Even Calculation is arrived as given below.

Sl.No. Equipment Cost

1 Pulverizer: 250000.00

2 Pneumatic Core Forming Machine : 6 pieces at a time.

3 Sealing Machines, Minor tools.

4 UV Sterilizer

5 VAT @ 4% 10000.00

6 Erection Costs/ Electrical Wiring etc. 8000.00

7 Total Rs.268000.00

Variable Costs (Including labour Costs)

No. Items Amount.

1 Raw material Costs: At 5000 Napkins/day x 25 days: 125000 napkins x Rs.1/napkin

125,000.00

2 Labour Costs @ Rs.0.50 x 70000 napkins. 62,500.00

3 Total Variable Costs. Rs. 187,500.00

Variable Costs/napkin = Rs.1.50.

Fixed Costs

ROI

18% 12% 7% 5%


Interest on Equipment Rs. 4,020.00 Rs. 2,680.00 Rs. 1,563.33 Rs. 1,116.67

Interest on Working Capital Rs. 3,115.50 Rs. 2,077.00 Rs. 1,211.58 Rs. 865.42

Depreciation on Equipment @ 10% Rs. 2,233.33 Rs. 2,233.33 Rs. 2,233.33 Rs. 2,233.33


FC/NAPKINS@5000napkins/day Rs. 0.24 Rs. 0.22 Rs. 0.20 Rs. 0.20

VC/NAPKIN 1.50 1.50 1.50 1.50



With the current production volume of 5000 napkins /day, and with different ROI scenarios, the Production cost, profit etc is given in the table above.

1.6 Haryana Model: (Total Investment : Rs.57,000) The NRHM Haryana has set up SHG based sanitary napkin production units which produced the “Mukti” brand sanitary napkins. This analysis is based on the presentation given by the Haryana team in the Orientation workshop for State NRHM Nodal Officers in Chennai on 2nd & 3rd November 2010. This model is a highly successful one and altogether 120 units have been set up with each unit employing only 3 women. Machinery / Equipment for the Sanitary Napkin Production Unit. Most of the operations carried out are manual processes. This unit uses ready to use wood pulp pads which are cut into the standard sizes. Therefore there is no need for a pulverizer for the unit. Following are the equipment being used in the unit. The machinery procured by this unit is extremely cheaper compared to other units as they have the advantage of having their location very near to major equipment manufactures.

1. Dry Oven: For sterilizing the napkins. 2. Electric Cutter : For cutting the pads, sheets. 3. Electric Ceiling Machine : For sealing the pads, packs. 4. Electric Iron: For wings model napkins. 5. Simple & Zigzag Scissor : 6. Big & Small Tables 7. Measuring Tape / Scale 8. Gloves, Masks & Aprons

Cost of machinery.

Machine/Equipment Nos. Rate Cost (In Rs.)

Sealing Machine 2 1150 2300

Cutting Machine 1 4900 4900

Sterilizer/Dry Autoclave (14”x14”) 1 4500 4500

Electric iron 2 1000 2000

Stand 1 4000 4000

Table 1 3000 3000

Total 20700

Raw Materials and their costing per napkin.

Material Quantity Rate Cost per Napkin

(In Rs.)

Gel Paper Per kg. 87 0.26

Wood Pulp Per kg. 88 0.26

Micro Dot Per mtr. 7.45 0.37

Releasing Sheet Per seat 4 0.03

Barrier Film Per kg. 120 0.03

Glue Per kg. 100 0.02

Envelope Per Envelope 0.75 0.08

Wastage 0.02

Marketing Expenses etc. 0.05

Transportation 0.07

Vat Tax 0.05

Total Variable Costs / napkins 1.24

Rounded off Rs.1.25

The wood pulp sheets are costlier than the wood pulp, but the unit gains by reduction of labour as well as pulverizer. Each unit makes 20,000 pads per month with only 3 women /unit which means with three women, the daily production capacity is 800 napkins per day. Since wages was not specified (other than a margin of Rs.0.65), it is assumed that the women get a minimum wages of Rs.0.50 per napkin. The napkins are sold for Rs.1.90 per napkin. There is a social marketing cost of Rs.0.25 which makes the total cost to be Rs.2.15 out of which NRHM gives a subsidy of Rs.1.0 and the consumer gets the product for Rs.1/napkin. The social marketing cost is not considered here in the financial analysis and it is not part of the production expenses.

Daily Production 800

Working days/month 25

Monthly Production (800 napkins x 25 days) 20000

Raw Material Cost/napkin Rs.1.25

Assuming Labour charges of Rs.0.50/napkin: Variable Cost Rs.1.75

Total Variable Cost/month Rs. 35000

Variable Cost/napkin : Rs.1.75

Fixed Costs.

As per the presentation, as of date, there has not been any fixed costs for the units as the units are operating from common places or individual houses. But for a business plan, it is necessary to fix some minimal rent, electricity charges etc. so that it does not become a burden for the community or any individual. A minimal projection is given below taking into account no expenditure is incurred at present.

Monthly Administrative Expenses.

S.No Expenses Value (Rs)

1. Rent 1000

2. Electricity & other miscellaneous charges. 200

Total 1200


total Variable Costs @ x Rs.1.50 Rs. 35,000.00



TOTAL INVESTMENT REQUIRED Rs. 56,900.00

Fixed Costs

ROI

18% 12% 7% 5%


Interest on Equipment Rs. 310.50 Rs. 207.00 Rs. 120.75 Rs. 86.25





VC/NAPKIN 1.75 1.75 1.75 1.75



The unit sells the napkin at a rate of Rs.1.90 and after deducting the variable costs of Rs.1.75, the unit gets Rs.0.15 per napkin towards margin. The various BEP Volumes are given above. Thus with the above figures, the unit need to produce at least 594napkins per day (ROI: 18%) to break even and 518, 455 and 429 napkins / day at 12%, 7% and 5% ROIs respectively. .

The profitability of this unit can be considerably improved by having more women working in a unit either in the same shift or in two shifts so that the burden of the fixed costs are reduced per napkin and thereby giving a higher profitability.

1.7 Girugambakkam Unit, Chennai: Low Investment mechanized Unit.(Rs.1.88 lakhs)

The Girugambakkam Unit is being run by Mrs.Nagalakshmi who has been extensively training SHGs in Tamilnadu. She is a very good entrepreneur and has been innovating the sanitary napkin production processes by simple but effective machinery which were gender‐friendly, low cost and easy to operate. This unit was studied as part of the NHSRC Orientation workshop held at Chennai and the analysis is based on discussion with Mrs.Nagalakshmi who is running the unit.

Machinery /Equipment used in the Unit.

Machine/Equipment Nos. Rate Cost (In Rs.)

Pulverizer : 5 Litre capcity 1 13500 13500

Central Sealing Machine 1 5000 5000

Hand operated Core Forming machine with dies

2 6500 13000

Sterilizer/Dry Autoclave 1 16000 16000

Sub Total 47500

Sealing Machine 2 1150 2300

Electric Iron 1 500 500

Stand /Tables/Storage Systems/minor tools 15000 15000

Total 65300

Production Volume of the unit.

No. of women working in the unit. 10

No. of napkins produced per day per woman 300

Total napkins produced per day by 10 women = 10 x 300 3000

Monthly Projected Production @ 25 days 75000

Items Amount.

Raw material Costs: At 3000 Napkins/day x 25 days: 70000 napkins x Rs.1/napkin

75,000.00

Labour Costs @ Rs.0.40 x 70000 napkins. 30,000.00

Total Variable Costs. Rs. 1,05,000.00

VC/Napkin Rs.1.40

Sale Price Rs. 2.00

Contribution Rs. 0.60

Working Capital requirement /month Amount (Rs)

total Variable Costs @ x Rs.1.40 Rs. 1,05,000.00


Total Working Capital required Rs. 1,23,000.00

TOTAL INVESTMENT REQUIRED Rs. 1,88,300.00

BREAK EVEN PRODUCTION VOLUMES (BEPV).

With various ROI scenarios of 18%, 7% and 5%, the Break Even Production Volumes are calculated.

Fixed Costs

ROI

18% 12% 7% 5%


Interest on Equipment Rs. 979.50 Rs. 653.00 Rs. 380.92 Rs. 272.08

Interest on Working Capital Rs. 1,845.00 Rs. 1,230.00 Rs. 717.50 Rs. 512.50




VC/NAPKIN 1.40 1.40 1.40 1.40



Observation: The hand operated core forming machine is an efficient and cheap alternative to foot operated, or electric operated pneumatic machines The pulverizer Mrs.Nagalakshmi has innovated is also a much better technical option compared to high end, high HP and RPM machines which are noisy and cumbersome to operate.

1.8 High Investment Sanitary Napkin Production Units: Kottakkuppam Village, Villupuram District, Tamilnadu. (Value of Investment: More than Rs.4.0 lakhs).

Two Sanitary Napkin Production Units – Star Magalir Munnetra Sangam and Payithammal Magalir Munnetra Sangam were also included in the study. These two SHGs are promoted by the NGO Kalvikendra and these units were initiated as part of the Tsunami Rehabilitation Project with grants/loans from the government. The two SHGs share a common work place though their operations are separate. They have installed machinery designed by the National Institute of Fashion Technology (NIFT) but most of the machinery is not being used by the women for various reasons. Most of the operations carried out by the women are by manual methods including the core formation of napkins. The groups are producing a variety of models of sanitary napkins from regular, compact napkins, post maternity pads etc. They use the common (Tamilnadu) government brand as also their own brand for belted pads for post maternity use, named as “Easy Care” which seems to have a good market in hospitals etc. They are supplying napkins to various medical stores, schools etc. and have a visible presence in the district in sanitary napkin production. There are about 5 women each from the two SHGs who regularly come and work in the two units. The units also hire women outside their SHGs for production and is paying Rs.0.60 per belted pad . Acoording to them regular pads are not as profitable as the belted pads as they are able to sell each pad for Rs.3 per piece, where as the regular pad can be sold only for Rs.2 per piece. They also felt that the margin from sanitary napkin production and sales was meager and government should come up with some subsidy scheme to give some extra income for women who work.

Though a high investment has been made, since those machines are not being used (except for sealing and sterilizing, other machines are sparingly used), these units have not been included in the detailed business model study.

Conclusion

1. The Akshaya model had a better quality of the sanitary napkin as they used a judicious mix of various absorbent layers which included cotton pad, wood pulp with added SAP gel powder and also the absorbent gel sheet.

2. In terms of machinery, the best unit was the Girugambakkam unit which had highly innovated machinery which were cheaper, cost and power efficient, less noisy compared to costlier high HP motor based pulverizers. The ideal mix of machinery for a unit can thus be a pulverizer, hand operated core forming machine, central sealing and hand operated sealing machine and dry autoclave. Additionally if the covers also need to be sterilized, a UV Sterilizer could also be added.

3. Some of the automation has been found to be non gender friendly. This is especially true for the foot operated core forming machine where the production volumes were found to be largely reduced due to women finding it very difficult to operate the same.

4. In Kottakkuppam, an imported machine of Rs.3.0 lakhs was found which was used only for the die‐cutting of absorbent layers. They also had expensive machineries for foot operated sealing which were not used. Alternatively simple die cutting machines costing around Rs.15000/‐ can be used for uniform cutting of layers and shapes.

5. It was also found that the role of machinery in sanitary napkin production though helped drudgery reduction to some extent it escalated the fixed monthly costs of the unit and thus had a negative impact on the profits. The higher the investment, the higher fixed costs and higher the production cost of the napkins.

6. Production volumes mainly depend on the skill of the women, and also the motivational levels of women getting good payments for the process.

7. There is a definite need for a supervisory role in the Sanitary Production unit which is quite critical for the unit to succeed. These functions include, sourcing of raw materials and not getting cheated while purchasing the raw material since unless trained and experienced similar looking but cheaper material would be sent by the suppliers. There is also other important elements like inventory control , taking stock of orders and production volumes, minor R&D work for innovative or new products etc. , keeping track of the production rate, quality, packaging etc. Other important issue at a later stage will be the maintenance of the machinery once the warranty period is over and when problems of the machines surface.

8. While promoting sanitary napkin production by women SHGs, utmost care should be given to see that a high degree of hygiene is maintained inside the unit. Wearing of hand gloves, face masks is a must and the training of SHG women and subsequent supervision of production should address this issue as prime important.

9. The best suggested technology for the production of sanitary napkins is a combination of different absorbent layers containing wood pulp, cotton pad and absorbent gel pad (4 grams of wood pulp, 2gms of cotton pad and 2 grams of absorbent gel pad) with multiple covering and heat sealing. Also the use of 1% of Super Absorbent Polymer while pulverizing the wood pulp (though the wood pulp comes pre mixed with SAP), increases the overall absorbing quality of the sanitary pad. Using only wood pulp tends to increase the irritability, heat etc. and a cotton pad increases the comfort levels considerably. But the use of cotton pads

increases the cost of production and is not practiced by almost all units except the Thiruvidanthai village unit in Kancheepurak district.

10. As for rural areas with problems of electricity, common facility centres can be thought of for centralized wood pulp pulverization, stitching of outer layer etc. after which the material can be distributed to common workplaces where women can form the Core layers, outer covering etc which is the most labour intensive work. The finished napkins can be brought back to the Common Facility Centre where the napkins can be sterilized and packed. In this way, more women can be employed and larger volumes of production can be achieved.

11. It was found that the margin per sanitary napkin was very low. But with proper training, skill enhancement and proper supervision during production, women can be given a minimum wages of Rs.100/day. The profit analysis calculation have pointed to the fact that a daily production of about 900 pads for a low investment unit is adequate for break even of the unit, where as for a higher investment unit with automation, the Break even production has to be higher.

12. The production costs for the sanitary napkins units for various models have been presented. If the government has a buy back arrangement, a minimum cost of Rs.2.25 can be fixed so that the SHG women are not put into any form of exploitation.

13. Also it is felt that a insurance scheme can be introduced to all the SHG women who are engaged in sanitary napkin production as there are cheap but meaningful insurance schemes and healthy policies available. Govt of India can make it mandatory that all Sanitary Napkin Production units offer life and health insurance coverage to the women working in the units.

14. Taking into account to the fact that quality and uninterrupted power is still a problem in many rural areas, the Girugambakkam Unit, the Akshaya Unit and the Hayrana Unit are the best opted units for replication. If one want to have minimum machinery for core formation, the Girugambakkam core forming machine is the ideal one which does not require electric power. Interestingly the Kottakkuppam Units, though they had extensive machineries designed by the National Institute of Fashion Technology (NIFT) for core formation of the napkin, engage manual labour for core formation and do not use the machinery which they have.

15. Women prefer to work sitting and they find it uncomfortable to work while standing like the foot operated machinery for sealing, napkin formation etc.

16. Incentive schemes for promotion of Menstrual Hygiene along with extensive awareness creation would pave the easy adoption of good MHM measures by women and adolescent girls. Here the social marketing incentive of the Haryana Model is a good example.

17. One also has to think of distribution/marketing strategy for the sanitary napkins and vending machines are found to be a good option. Models ranging from Rs.6500 to Rs.10,000/‐ are available for vending of Sanitary napkins by dropping a Rs.2 coin into the machine.

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