Sludge: palm karnel sludge (sludge)is the residue of palm karnel oil. It is produced when palm karnel oil( pko) that is just coming off the machine is allowed to cool off and settle. The bottom of the oil that is normally muddy, after the clean oil is removed, is the sludge.
Companies that produce pko have sludge as one of their by products and they sell a ton for between 50,000 to 70,000 naira. 
A ton of sludge (1000kg) yields about one and half drum of oil after production. A drum of oil(225litre) is currently sold for 60,000 naira. So, if one buys a ton of sludge for 60,000 naira and sells the output of 1.5 drums of oil, they make 90,000 naira from sales and 30,000 naira as profit. Assuming one spends 30,000 naira to transport 5 tons of sludge to the factory for production, the unit cost of transportation per ton will be 6000 naira, bringing the total cost for each ton of sludge to 66,000 naira.

Production:
Materials:
Locally fabricated oil press machines are used for extracting oil from palm karnel sludge. Each machine costs about 150,000 naira to build. And, each machine has the capacity to exhaust one ton of sludge in one week.
Each press machine requires one hydraulic jack(32 tons trailer jack), some sawn timber and an empty drum to operate.
A locally made mixer is also attached to each machine. Each mixer costs about 25,000 naira to build.
From the above, assuming five machines are installed in the factory, it will take about one week to use up 5 tons of sludge. And, from this machine capacity, 20 tons of sludge can be used up in one month, yielding about 30 drums of oil. Now, if 66,000 naira multiplied by 5(ie. 330,000 naira), is spent for procuring 5 tons of sludge, and 1,320,000 naira for 20 tons , one can realise 1,800,000 naira from the sale of 30 drums of oil(@60,000 per drum)and a gross profit of 480,000 naira monthly.

Labor: 

Production is labor intensive. One worker usually operates only one machine. That means 5 workers are needed to operate 5 machines.Each worker takes home 25,000 naira monthly. They work from
Monday to Saturday and work overtime on Sundays for which each worker is paid 1000 naira.
The estimated total cost of direct labor every month for a 5 machine factory is about 125,000 naira.

A supervisor is also needed for work supervision and record keeping, and he/she will be paid about 30,000 monthly.

Sales:

Sales is the easiest part in this business. Customers are business customers, soap manufacturers - mostly tablet soap. Now, the secret of high sales in this is the
price advantage over the higher grade of pko. Pko prduced directly from palm karnel is of higher grade than the pko from sludge and are usually more expensive in the market by almost 20%. Soap manufacturers, like most business people, are always looking for ways to reduce cost without compromising on quality, and so they go for this low grade of pko(sludge oil). The quality of their soap when they use this low grade of pko is almost same with that of the high grade, and so if you are one of them and you buy the high grade only for your soap production, you would soon find yourself out of business due to competition in the market.
So, the market is big and the demand is huge. Competition among sludge oil producers are almost non existent as the total output cant satisfy total market demand. 

My purpose for making this analysis is to attract investors and possibly increase my current factory of only two machines to 10 machines or more and take advantage of the very high demand for this product. 

Investors will benefit from the existing resources of the business - customers, raw material sources, location, management, etc.
With about 2.5 million naira, eight more machines and can be built and what is left will be used as running capital. This sum will also represent 30% equity of the business.

Profit analysis for a 10 machine factory:

It requires one machine to produce 1.5 drum of oil using one ton of sludge in one week.
10 machines will use up 10 tons in one week and 40 tons in one month.
So, 40 tons will give 60 drums of oil in one month.
The cost of 40 tons of sludge is 2,400,000 naira (@ 60,000 a ton)
The Cost of transportation for 40 tons is about 200,000 naira (@ 50,000 for 10 tons)
The Cost of labor for one month is 250,000(@ 25,000 per machine) plus 30,000 for the supervisor, bringing it to 280,000 a month.

Total cost for 40 tons of sludge in one month : 2,400,000 + 200,000 + 280,000 = 2,880,000 naira

Total sales : 60 drums x 60,000 naira = 3,600,000

Net profit = 3,600,000 - 2,880,000 = 720,000 naira 

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