Pencil Manufacturing Project Report

Pencil Manufacturing Project Report, Business Plan


Hello friends, we are here today with a new topic called “pencil manufacturing project report and business plan in India”. The pencil is a lead substance inserted into wood or placed in a metal holder used mainly for drawing or writing. Pencil is a useful tool and is seen in all schools and also by various corporate offices. The pencils are made from smooth wood and lead. As we are aware, pencils are common in learning institutes and for many forms of office works, like scribbling, writing, computing, sketches, by artists, and several other places. Irrespective of the kind of carbon in pencils we have soft, moderate, and hard categories.

Because of the smooth and simple handling of the pencils, the pencils are seen in different sectors such as copying, drawing, sketching, etc. Colored pencils are very useful in drawing and painting. The main advantages for the advent of pencils can be the high lifespan, erasable, easy copying, less wear and tear, available in almost every color. Now, let’s get into the details of the Pencil Manufacturing Project Report.

A step-by-step guide to Pencil Manufacturing Project Report and Business Plan

Pencil Manufacturing Project Report and Business Plan
Pencil Manufacturing Project Report and Business Plan (pic credit: pixabay)

Market potential of Pencil Manufacturing Business

India is expanding and growing in literacy level with 1.5 million schools and more than 315 million students. India standards to be the highest in students. In this era of digital advancements and various tools, their need has not been reduced and they are still growing per year. Pencils are mandatory in any student’s life. Indian education system still keeps it obligatory about the usage of pencils till the fourth standard. The writing instrument segment in India is projected to have about 2600 crores of rupees, which is huge. This sector is estimated to grow at a rapid pace year by year. The pencils which are sold mainly on the market are obtained and manufactured from wood and others are prepared using paper and polymer.

Business plan for starting Pencil Manufacturing unit

A business plan will give the structure of the business and highlight the various steps will you take to initiate, operate, and sustain your business, the investment information, necessary expenses, resources needed, required staff, ROI, risks and troubles, and many minutes and essential aspects related to a business. A business plan is also useful to showcase your business in front of any capitalists and secure funds for your business. 

Basic requirements for starting Pencil Manufacturing Business

Here we have mentioned the aspects to be considered before you plan to initiate your pencil manufacturing venture:

  • Raw materials needed for pencil manufacturing
  • Equipment and tools needed to manufacture the pen
  • Area to accommodate your manufacturing unit
  • Funds to purchase machinery, raw materials, and lease space for business
  • Working staff and pencil manufacturing experts
  • Networking to create a market to sell your products
  • Managing the business and ROI

License, registrations, and permissions required to start Pencil Manufacturing Business in India

To start a small-scale pencil manufacturing business unit, you need to apply for the below list of registrations and licenses. It is suggested to verify the regular of your state and do the registrations accordingly.

  • Register your organization with the Registrar of Companies
  • Get Trade License through your local municipal authority
  • Also, obtain the MSME Udyog Aadhaar Registration for the business
  • Get for GST done
  • It is very important to apply and obtain NOC from State Pollution Control Board
  • Trade License
  • Shop License
  • VAT registration.
  • IEC number
  • BIS Certification
  • Trade Mark registration
  • ISO certification

Machinery required to start Pencil Manufacturing Business Unit

You can begin wooden pencil manufacturing in two methods. One is by obtaining a lead or by manufacturing a lead at your unit itself. Com

only wooden pencils are prepared through a fully automatic machine. The machine is integrated with a Ball mill, Kneading Machine, Filter press, automatic shaping, and grooving Machine Gluing Machine for slats; Painting Machine, Embossing Machine, End cutting Machine, Dyes, cutters, tools, and other miscellaneous machinery.

Raw materials required to start Pencil Manufacturing Business Unit

The necessary raw materials are wooden slates (6 Ply), ball clay, graphite (improved variety), glue, paint, driers, varnishes, lacquers, pigments, binders, sandpapers, etc. Pencils are usually packed in cardboard cartons. You must obtain the same for packaging materials.

Area required to set up the Pencil Manufacturing Business Unit

Depending on the plant size, you will require a commercial cover space. Generally, you can begin a small-scale pencil manufacturing business in around 1500 sq. ft. area. You will require a power and water connection. Also, verify if transportation is possible.

If you don’t have to own any area, then it’s better to use a rental space and initiate the business. It reduces the overall project expenses and you can use the money for business growth and marketing purposes.

Arranging project costs required to start Pencil Manufacturing Business

After preparing the business plan, you will have to look for capital. There are various Government subsidy schemes allotted nowadays for small-scale start-ups. So, you must search for them carefully and apply them one by one. If you don’t have investment or savings, then you can apply either for a mudra loan or a specific loan for the machinery hypothecation or get some overdraft facility to set up Pencil Manufacturing Business in India.

Procedure to start Pencil Manufacturing Business

In case if you miss this: Papad Making Project Report.

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Procedure to start Pencil Manufacturing Business (pic source: pixabay)

The process starts with finely parted Graphite and clay. These are set apart and are wet ground to obtain the desired fineness of the mix. After grinding, the sludge passes to the filter section. Excess water is separated using a hydraulic dewatering press, then the plastic mass is pressurized progressively by the extruder at an extrusion pressure of around 800 to 2000 PSI, and at last, it is sent through the final lead as a continuous string.

The die head is moulded onto a joint with a string that is coiled to top the dye to prevent it from expelling out so a shallow metal dish is carried on the board. After this, the lead is uncoiled, which is done manually and then cut into 60mm lengths.  

The extruded leads are placed in between the boards and kept for air drying. Now the dried leads are organized in bundles in Graphite boxes for firing in a kiln with 80-100ºC (temperature) having a slow monitored rate of heating.

The hot products are then cooled using air. The cooled leads are placed in boiling wax to remove grittiness and to enhance toughness and impart smoothness. The leads obtained from the boiling wax bath are arranged into a packet and placed in a rectangular plastic container (dimensions as stated here 65 x 15 x 5mm). Then about 20 plastic containers are kept in a 3mm thick cardboard flexible box for sending to distributors and retailers.

You may also check this: How To Start A Candy Making Business In India.

Pencil Manufacturing Project Report/ Economics of Pencil Manufacturing Business

Capital Expenditure: Rs. 7,00,000

Working Capital: Rs. 1,75,000

Total Project Cost: Rs. 8,75,000

Raw Material: Rs. 2,40,000

Labels and Packing Material: Rs. 30,000

Wages (3-Skilled & 4-Unskilled): Rs. 4,00,000

Salaries Manager-1: Rs. 1,20,000

Administrative Expenses: Rs. 75,000

Overheads: Rs. 60,000

Miscillaneous Expenses: Rs. 25,000

Depreciation: Rs. 70,000

Insurance: Rs. 7,000.


CE loan: Rs. 91,000

WC loan: Rs. 22,750

Total Interest: Rs. 1,13,750

Working Capital Requirement

Fixed cost: Rs. 3,18,000

Variable cost: Rs. 7,52,750

Requirement of WC per cycle: Rs. 1,78,458.


If you are not confident enough about pencil making business on a large scale, it is recommended to start from home initially and get an idea about your immediate market. Currently, some brands sell good pencil-making machines online. The market potential of pencils is growing daily. If planned appropriately, with proper analysis and forecast, you can gain a lot of money from pencil making venture. That’s all folks about Pencil Manufacturing Project Report and business plan in India.


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