LION ENERGY COMPANY LIMITED

Business Plan
For

Biomass Briquettes Production Expansion

1
1.0 INTRODUCTION
This business plan contains certain forward-looking statements which relate to future events
orfuture performance. These forward-looking statements are based upon the Author’s
expectationsand assumptions as to a number of factors, and the Author believes that he has a
reasonable basisfor making such forward-looking statements. These forward-looking statements
are made as ofthe date of this document and are based upon information then available. If the
Author’sexpectations and assumptions prove to be incorrect, or factors change, then actual results
coulddiffer materially from the forward-looking information contained this document. In
addition,Forward-looking statements, by their nature, involve risks and uncertainties which could
causeactual results to differ materially from those contemplated by the forward-looking statements.

The risks and uncertainties include those attendants with carrying on a wood Briquettes
manufacturing business and carrying out major capital expenditure projects with respect to
construction of a wood Briquettes plant, risks related to selling prices, shipping costs, foreign
exchange rates, and other risks described in this document. Accordingly, readers should not place
undue reliance on forward-looking statements and information, which are qualified in their
entirety by this cautionary statement.

It is known and understood that a large part of the information is either common knowledge or
LION ENERGY COMPANY previously compiled general data. It is also known and understood
that with the completion of this business plan, LION ENERGY COMPANY is free to utilize all
non-proprietary information in any future studies or reports.

The figures and percentages used throughout this business plan are subject to change depending on
the conditions of future markets, supply and demand, dollar value, local, state, and national economic
status, and other unforeseeable variables. All information provided will be true to the best of Lion
Energy Company knowledge and any oversight or misrepresentation is unintentional. All information
is presumed to be the most up-to-date information available as of the official publication date of each
individual study. Direct research should be done for the most current information when looking for
specific costs/prices in months/years following the publication of this plan. New technology and
innovative practices are constantly being discovered and the most efficient systems and methods today
could be outdated in the near future. This study is written to provide the most accurate information
possible.

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 1.1 Contact Information
Name of Project Champion: Yusuf Nawab Mulla

Location of Business Premise: Lugoda Street, Gerezani, Ilala, Dar es

Salaam--------------------

Telephone land line number: -----------------------------Mobile: +255784400888

Postal Address: 747 Dar es Salaam, Tanzania.

Vision, Mission, Objective and Core Values

Our Mission

“To understand our client’s needs and provide lasting solutions with exceptional customer service
to help fulfilfulfill the vision for their Energy and environment”

Our Vision

To Be The LeadingAlternative EnergyCompany in East andCentral Africa ByProviding Quality

EnergyProducts and Solutionswhich are EnvironmentFriendly by 2025, alongwith
unequalledcustomer service.”

Our Objective

To Innovate, Develop and Serve Tanzania and The Regional Markets with the Most Efficient
Energy Solutions which are Practical, Friendly to Our Environment and Affordable

Our Values

“Our values serve as a constitution for our actions Integrity – to build our relationships through
honesty, loyalty and trust Satisfied Clients – to create value that exceeds the cost of our products
Lion Energy (T) Limited Quality – to only ever provide quality products Accountability – accept
responsibility for our actions.”

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 Executive Summary

2.0 EXECUTIVE SUMMARY OF THE PROJECT

The purpose of this business plan is to raise TSH 1,254,000,000/= for the expansion
development of a Biomass Briquettes manufacturing, while showcasing the expected
financials and operations over the next Three years. Lion Energy Company, Biomass
Briquettes Manufacturer. (“The Company”) is Tanzanian based corporations that
produces and sell large inventories of Biomass Briquettes that are used as source of energy
for heating in manufacturing industries.

Biomass Briquettes are widely used for any type of Thermal Application like steam
generation in boilers, heating purpose, drying process & gasification plant to replace
existing conventional fuel like coal, wood & costly liquid fuel like FO, Diesel, Kerosene etc.
as well as Corporate hostels, Hospitals, Restaurants, Jails, Function Halls, Caterers, Base
Kitchen etc.

Use of Eco-Friendly Briquettes as a fuel to save non-conventional fuels has shown very

promising results.

Bio coal briquette made by briquetting press is a forth coming fuel of the world. It’s a high
excellence asset towards inexpensive, ecological & progressive environmental company
policy.

2.1 Project Rationale and Drivers

The project rationales are highlighted below:
 Promoting the Forestryindustry
 Provide a source of renewableenergy
 Expand current productrange
 Provide a competitiveadvantage
 Economicbenefits
 CSR activities

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2.2 Directors and Shareholders
Directors % Shareholding Nationality

ShahdadNawabMulla 50 Tanzanian
Yusuf NawabMulla 50 Tanzanian

Driven by a unique team of professionals who poses years of vast experience in biomass
briquettes production coupled with local experience and global relationships in the design,
consulting, investment and trading; Lion Energy company is emerging as a solid and
trusted local and regional player in the biomass energy generation. Lion Energy is a
company renowned for bringing a new air in the field of Biomass Briquettes as a reliable
Manufacturer and Supplier of these products. The company is located in Lushoto and Dar
es Salaam. The company has its links to the clients all over the countries and has the strong
client base in different industries. The company was established in the year 2017 and since
then it has never looked back and reached new heights of success under the supervision of
its Board of Directors.

Its founders and board members have led some of the region's most prestigious and high-
profile projects earning them their name amongst decision makers and investors alike.

Production operations

Demand; Lion Energy is already in the Biomass Briquettes production and the increasing
demand, particularly from industrial customers has called for an inevitable expansion of
the production line and enhancement of distribution facilities. The rising demand for
heating energy for boilers have been influenced by Government authorities move to the
public to stop use of wood fuel and alternatively use of renewable energy e.g. Briquettes,
and LPG etc. The current market that we have under saved is shown below,

Customer name Tonnage required per Tonnage

month Supplied

5
 Atox Textile Mills Ltd
1,000 621
Bidco Oil & Soap Ltd
120 30
Wakulima Tea 60 30
Mikoani Edible Oil and Detergent Ltd
60 30
Learn Solutions (Pepsi)
240 120
Ambals Laundromat Ltd
120 60
Schools
30 20
Pwani Oil - Mombasa Kenya
1,000 -
 Total
2,630 911

Infrastructure;The Company is pillared by its state-of-the-art infrastructure required for meeting

the standards ofquality and quantity with perfection.

Machines;The manufacturing unit is facilitated with the 3 latest machineswhich ensure processing
with perfection. The machines are regularly up graded to meet the required high production
capacity.The company is establishing more facilities to reach the market. Lion Energytechnical and
operational. Lushoto production is largely affected by dyer unit low capacity. See table below;

No.
mach
Location ine Capacity Average output/month  

No. No. No. No.

Per Tot Per Total
    Hr Hrs day al Hr Hrs day Total Prodn

Mafinga - 1 1 1.2 24 30 864 1.2 20 28 672 672.00

Mafinga - 2 1 1.2 24 30 864 0.8 16 22 281.6 281.60

Lushoto 1 1 24 30 720 0.6 8 20 96 96.00

Staffs;areproperly trained to be in line with the technological advancements. They areskilled

enough to make the best use of the technological aids in the processing and marketing the products.

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Theprofessionals are highly skilled and qualified and have deep insight in the field of green
energyfrom collecting, production, quality assurance, marketing and financial management.

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 2017&2018. (Amount in Tanzania Shillings)

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Dec-17 Dec-18
Actual in Shs'000 3 + 9 Forecast

Revenue 1,686,825,000 2,122,663,857

Cost of sales 389,812,500 736,968,675

Gross profit 1,297,012,500 1,385,695,182

Staff costs 313,200,000 334,566,180

Administrative expenses 383,700,000 239,435,600
Distribution costs 54,000,000 28,800,000
Depreciationand amortization 205,672,000 205,672,000
Interest on Loan -
Operating profit 340,440,500 577,221,402

Profit before income tax 340,440,500 577,221,402

Income tax expense 102,132,150 173,166,421

Profit after income tax 238,308,350 404,054,981

Dividend proposed -

Profit for the year 238,308,350 404,054,981

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2.3 Breakdown of Uses of Requested Amount

BASIC PARAMETERS ADOPTED FOR CALCULATIONS UNDER THE PROJECT:

Rated project period 36months

Planned Briquettes processing capacity – 6,600 kg per hour, 24 working hour per day, 30
working days permonth.

The currency of Project parameters calculation –Tanzanian shillings

Credit required for project implementation is Tsh.1, 254,000,000 /=Credit resources under
the project are necessary in order to ensure:

 Creation of all facilities for construction of Briquettes processingplant;

 Preparation of projectdocumentation;
 Construction and installationworks;
 Purchase of equipment forplant;
 Purchase of loading and transport vehicles,

FUNDING SOURCES OF PROJECT. INVESTMENTPATTERN

Investment costs of the company (investments) for purchase of tangible and intangible
assets are shown in the Investment section of business plan.

Total project costs amount to Tsh.1, 254,000,000 /=Project will be financed by credit
(investment) capital in full amount. Areas of investment according to the Project directions
are shown in the followingtable.

Expenditure Amount (TSH)

Working Capital 570,000,000

CapeX Facility - 

Briquetting Plant - 3 Units 364,800,000

Truck and Trailer 319,200,000

Total 684,000,000

Source: Lion Energy Company Analysis

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PROJECT DESCRIPTION
Project Concept, Goals andObjectives
Each enterprise at the beginning of its activities should have the clear understanding of its
needs in financial, material, labor and intellectual resources, the sources of their receipt,
and the skills of precise calculation of efficiency of their use it process of its operation.
Commercial enterprises may not be stable and successful in the market economy without
clear and efficient planning of their activities, without permanent collection and
accumulation of information about the status of target markets, positions of their
competitors, and their own prospects and capacities. Despite the variety of business forms
there are the key provisions applicable actually to all areas of commercial activity and to
any company. They are necessary in order to be prepared in advance and to avoid potential
difficulties and threats, in order to mitigate in such a way the risks on the way to achieve
the fixedobjectives.

Project Objective
Implementation of this Project is to organize operation of the enterprise basing on
production, promoting and selling biomass fuels – Briquettes and Pellets from wood
wastes. The Company involved in the manufacturing Biomass Briquettes from, ‘mimosa’
vegetable tanning used in tanning of leather products. Mimosa extract is obtained from the
bark of Black Wattle trees (Acacia mearnsii) for Lushoto plant Mimosa or wattle bark
contains about 30% tannin. The tannin extract is exported to Asia. The spent bark has
other uses. Lion Wattle has accumulation of spent bark in excess of 504,000 tons over the
period of 20 years. Lion Energy Company is acquiring the spent bark from Lion Wattle for
the Briquetting Plant. That intends to use the raw material - its own biomass, available
from its own Wattle production. The production facility will be installed on total surface of
3 ha land, owned by the Initiating company.

The Initiating Company is also operating a Mafinga Plant that uses agro forest wastes from
Sao hill operations where Lion Energy has signed and entered into contract to operate and
make use of forest wastes to produce Briquettes.

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Main Project Tasks are as follows:

 Selection of competitive and marketing-promising location of the future enterprise.

 Creation of competitive enterprise with powerful productionbasis.
 Development of interconnected areas of activity of thecompany.
 Production of high-quality products with use of the advancedtechnologies.
 Involvement of high-skilled professionals in thisarea.
 Achievement of good financialresults.
 Ensuring systemic quality control of manufacturedproducts.
 Increase of company’svalue.
Main Tasks in the Implementation of the Project

The main tasks in implementation of this project are as described below:

Attraction of immediate loan of about TSH1,254,000,000/=of investment capital for

acquisition of equipment (machinery) for additional production and enhancement of
marketing and distribution facilities.

Within 5 months after attraction of financing - construction and putting in operation of

additional line of production of Briquettes with capacity of 6,600 kg perhour.

Capacity will be increased to meet an actual (immediate) increase in customer demand and
anticipated (future) increase in customer demand. By Purchasing of NewEquipment

Repayment of financial resources attracted for implementation of investment project in

time due and in fullamountIncrease of efficiency of business of the enterprise and its
marketvalue. Implementation of project will allow:

 To sale Briquettes to consumer: population, enterprises, organization in Tanzania;

 To come into market and win positions on Tanzania market on the basis of
Briquettes;
 To make profit from activity of establishedenterprise;
 To meet consumer demand in assortment of offeredproducts;
 To increase market value of enterprise inmid-term.

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The following terms and conditions of credit (investment) receipt are preferable:

 Credit line of total amount of TSH 1, 254,000,000 /=Credit interest rate –6.5% P/A
 Period of credit line use –36 months.
 Grace period - 6months.
 Pledge for the loan – Briquettes Stock, pledge ofequipment.

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BASELINE TARGETED MARKET INFORMATION (MARKET SITUATION
ANALYSIS)

General Briquette’s industry in Tanzania is in its initial stage of development, growing

continuously, but still very slowly. There are some wood industries that have already
started wood Briquettes production, mostly using their own wood by-products. Until now,
there is little production of Briquettes in the country. It is noted that some companies are
starting their involvement in the market by installing Briquettes producing equipment
produced by Turkey, China Brazil, etc. In the recent months, SAO Hill Industries Ltd has
signed contracts to process its waste wood for supply of sustainable carbon and wooden
Briquettes with Tanzanian companies and Lion Energy Co Ltd. SAO Hill Industries has
installed a processing plant for production of wood Briquettes from wood waste. The
contracts signed are intended to utilize the full capacity of the plant.

The wood waste comes from saw milling and other processing of trees from forest
plantations, either government plantations or from Green Resources' own certified
plantations. The processed wood waste will be used for industrial heating and residential
cooking. Using wood waste from plantations has major environmental benefits compared
with the use of charcoal produced from natural forest and other thermal fuels. Using waste
from forest plantations is sustainable as greenhouse gases are absorbed in the forest
plantations in the same amount as they are emitted.

Briquettes consumption

However, general Briquettes consumption in Tanzania, especially in industries, shows

continuously and rapid growing as a result of the costs, operational characteristics and
environmental issues as well.

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Biomass Briquette Competitive Market

 With the rising demand and widely application of briquette in more and more field
nowadays, the competition of briquette market is becoming more and more fierce.
 Briquettes are consumption goods that means consumers must trust in their reliable
availability.
 Briquettes are also a competitive good to traditional solid fuels. The price per unit of
energy competes with the range of other traditional fuels.
 In general, briquettes can easily substitute wood in traditional boilers heating.
 Briquettes and pellets show big advantages when used in industrial boilers.
 The characteristics of briquettes and their marketing shall be adapted to the
targeted market.

The machine-made charcoal made by briquette machine has replaced the charcoal made
by traditional earth kiln, which greatly reduces the production cost and improves the
economic profits.

In a competitive market place the success of Briquettes is linked to its performance

compared with the competition. A number of key performance features upon which choices
of fuel appeared to be being made:

 Energy content,
 Prices,
 Heat intensity,
 Length of burn,
 Extinguish ability and
 Level of smoke production.

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The Resources for Briquettes Production

When it comes to biomass – the resources for Briquettes production, the situation is
satisfactory. Tanzania, as part of East Africa region, unlike other regions in the world, has
a high potential for exploitation of energy from biomass. Tanzanian forest resources and
cultivated lands have high potential but are still much underutilized.

Market potential for Briquettes

Market potential for Briquettes consumption is much higher than the actual consumption
today, and indicates great possibilities for domestic production and sale ofBriquettes.

Quality standards

Quality standards are not applied in the Tanzanian Briquettes production industry, but the
production plants follow a certain production procedure provided by Briquettes Sizing
equipment manufacturers. However, they are not certified officially. In addition, none of
the companies assure the quality of their logistics and products.

State policies

State policies in general do not provide supportive frameworks for bioenergy development.

General conclusion is that the Government needs to undertake big steps to support this
industry in order this fuel to be used in the energy sector.

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5.0 MARKETING AND SALES PLAN
The market target for the biomass briquettes is mainly industrial, where Biomass Briquette
is widely used for any type of thermal application like steam generation in boilers, in
furnace & foundries, for heating purpose drying process and in gasification plant replacing
conventional solid fuels like Coal and Firewood and liquid fuels like Diesel, Kerosene,
Furnace Oil (FO), etc.

Various Industries where Biomass Briquettes can be used:

Ceramic and refectory Industries Solvent Extraction Plant

Spinning Mill Lamination Industries

Chemical Units Leather industries

Dyeing Plants Milk plant

Others Ind. having thermal application Food processing Industries

Gasifier Sys. in thermal Vegetable plants

Textile Unit Brick making units

Biomass Briquettes are a forthcoming fuel of the world. An upcoming use of Briquettes is
in Bio-Gasifiers for thermal applications and electricity generation. It’s a high-quality asset
towards economical, ecological, and environmental conservation.

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5.1 Description of the products/services to be offered
The product to be produced, marketed and sold is Biomass Briquettes. Generally,
Briquettes industry in Tanzania is in its initial stage of development, growing continuously,
but still very slowly. Every year millions of tons of agricultural wastes and forest residues
are generated. These are either wasted or burnt inefficiently in their loose form causing air
pollution. These wastes can provide renewable source of energy by converting in to high
density fuel briquettes without addition of any binder. Briquettes have high specific density
(1200 Kg/m3) and bulk density (800 Kg/m3) compared to 60 to 180 Kg/m3 of loose biomass.
... Compared to fire wood or loose biomass, briquettes give much higher boiler efficiency
because of low moisture and higher density.

Nowadays, the major raw material for Briquettes production is wood residues from wood
industries (furniture producers, building materials, etc.). At the moment, large quantities
of biomass are unused. Following the growing demand of Briquettes, these raw materials
will be considered as potential raw material for wooden and wood and forestry wastes
Briquettes production. In Tanzania, wood residues are used unprocessed, as they leave the
industrial operation. These materials are often used in boilers directly by the producing
company or by companies near the production site. Nowadays, with the development of
wood raw material for Briquettes production, these residues become more important,
which means that the economic profit of the company would be higher if residues were sold
as raw material for raw material for Briquettes production.

Compared to firewood or loose biomass, briquettes give much higher boiler efficiency
because of low moisture and density. Briquettes produced from briquetting of biomass are
fairly good substitute for coal, lignite, firewood and offer numerous advantages:

 Briquettes are cheaper than coal

 Oil, coal or lignite once used can´t be replaced
 High sulfur content of oil and coal, when burnt, pollutes the environment.
 There is no sulfur in briquettes.
 Bio mass briquettes have a higher practical thermal value and much lower ash
content (2-10% compare to 20-40% in coal).
 There is no fly ash in burning briquette
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  Briquettes have a consistent quality, have high burning efficiency are ideally sized
for complete combustion. Combustion is more uniform compared to coal and boiler
response to changes in steam requirements is faster due to higher quantity of
volatile matter in briquettes.
 Briquettes are clean to handle and can be packed in bags for ease of handling and
storage.

Briquetted fuel has some shortcoming also. It can´t withstand direct contact with water
hence storage facility for keep briquettes required. Maximum attainable temperature is
1000`C due low carbon content. Burning capacity per unit volume of furnace is low
compared to coal.

5.1 Competitive Advantage of Biomass Briquettes

i)The existing fuel at which briquettes are aimed is competing is coal, which is often of poor
quality and whose supply, particularly to smaller industries, may be irregular. It is also
expensive; the price it may cost over 93US$/t while fuel wood was reported to be …….
35US$/t.

ii) The target fuel with which briquettes compete is wood used in industry, an area of fuel
use which has grown considerably in the last few years, the wood supply is not of consistent
quality however, in particular it may contain up to 50% moisture. There is also a good deal
of cheating by wood fuel suppliers.

First, it is necessary to keep capital costs down to a minimum by purchasing cheap, though
obviously reliable, machines raw material and not over-engineering the rest of the plant.
Capital costs are also minimized by working the machine for more time

Second, it helps to have a fuel against which to compete which may be of unreliable quality
and suffers from irregular delivery. This may enable a premium to be charged for
briquettes.

5.1 Customer Demographic Profile

Biomass briquette is commonly made of green waste and other natural materials. These are
generally used to create power, heat, cooking fuel, and work industrial boilers with a
specific end goal to make power from steam. The most recognized usage of briquettes is in
emerging economies, where energy sources are not as generally accessible. These
compacted or strong compounds contain different organic materials, including rice husk,

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bagasse, ground nutshells, city strong waste, rural waste, or other wastes with high
nitrogen content.

The demand for fuel in emerging economies and improved renewable energy source appeal
drive the biomass briquette market. However, low energy output when compared to others
industrial fuels and limited awareness hamper the market growth.

The global biomass briquette market is segmented based on type, application, and
geography. Based on type of biomass briquette, the market is divided into sawdust
briquettes, agro waste briquettes, and wood briquettes. On the basis of application, it is
categorized into power generation, thermal energy, and others. By geography, it has been
analyzed across Tanzania

5.1 Potential and Forecast Production Growth

Table 5.6.1 The load growth over time

Year Potential load Percentage Future load Estimates

Increase in load

38,102 13.7% 44,150

Year 1

44,150 12.05% 50,198

Year 2

50,198 10.75% 56,246

Year 3

5.1 Promotion plan

Advertising is a continuous process telling your buyers about products. Some examples
include having a press release, sponsoring a civic event or activity, and an ad in the
newspaper or radio, billboards or posters, flyers, etc. Promotional activities offer added
incentive for the customer to buy your products.

 Buyers of large quantities can receive discounts or a gift.

 Some fuel briquettes can be exchanged for the delivery of raw materials.
 Pro-environmental conservationists can be included in marketing briquettes.

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  Conducting open air cooking demonstrations (e.g. in market centres)

 Participating in shows and exhibitions.

Market Target
The Three-Year Sales Forecasts

YEAR NUMBER OF TONS TO UNIT PRICE IN SALES IN TSH

BE SOLD TSH

YEAR 1 37,247 178022.93 6,630,820,239

YEAR 2 43,934 185943.86 8,169,257,923

YEAR 3 49,982 186204.77 9,306,887,040

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6.0 OPERATIONS PLAN

6.1 The Business Structure

Lion Energy Company (T) Limited was established in 2017 and has since experienced
continued, substantial growth to become an integral business partner, within many supply
chain processes.

Briquettes are rapidly becoming recognized for its many cost saving benefits for industrial
manufacturers and processors by providing an alternative method to recycling organic
residual wastes. Lion Energy Company (T) Limited is affiliated to Lion Wattle (T) Limited.

6.2 Management Expertise ;Having an experienced CEO to oversee everything from

workforce hiring to raw material procurement to final product sales and shipping is
essential to an efficiently operating plant. It is more beneficial to have an effective
administrator/ manager than it is to have experience in the wood Briquettes industry.
Having someone to oversee the entire operation in an efficient manner is critical.

6.3 Marketing Manager; having an effective marketing manager is as important as having

a competent plant manager. While the plant manager is responsible for producing a high-
quality product, the marketing manager is responsible for making sure there is a paying
consumer base to whom to distribute the product. This person is responsible for
establishing a dealer network that is capable of utilizing all of the plant’s briquette
production. Having a person experienced in the wood Briquettes industry, although not a
must, would be highly recommended.

6.4 Contractor; Selecting a contractor with a proven record in briquette plant

construction/layout is essential. There are numerous contractors who claim expertise in
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Briquettes plant construction/design, but there are very few with proven legitimate track
records. It is highly recommended to go through the bidding process with a request for
references and proof of successful operating Briquettes plants that they have constructed.

6.5 Plant Manager Expertise ;Having a plant manager with experience in producing
quality Briquettes from Biomass waste is recommended; at the very least bringing in an
experienced consultant to train a plant manager is a necessity.

5.2 Human Resources Policy of Project

Managerial personnel of direction will ensure general management of the enterprise,
starting from the period of its organization and actual beginning of production, including
management of current production and financial activities of the enterprise.
Administrative and production personnel will be formed to ensure beginning of full-scale
operation of the enterprise. It is planned to involve such personnel from population
residing in the region of production site.

5.3 Regulatory issues

Electricity and Water Utility Regulatory Authority (EWURA) is an autonomous, multi-
sector regulatory authority established by the Energy and Water
UtilitiesRegulatoryAuthorityAct.ItisresponsibleforthetechnicalandeconomicregulationofTa
nzania’s electricity, petroleum, natural gas andwater.

21
EWURAhasabroadspectrumofpowerscomprehensiveoflicensing,tariffreview,monitoring
performanceandstandardswithregardstoquality,safety,healthandenvironment.Itismandated
to
makesureconcurrenceisreal,andprotectconsumers,promotingaccesstoregulatedservicesforth
e entirepopulation,includinglowincome,ruralanddisadvantagedconsumers. But for the
Biomass Briquettes production the mandatory requirement are business license and
Environmental and Social Safeguard clearance from the National Environmental
Management Council (NEMC).

5.4 Insurance and Risk Reduction Strategy

Taking into account financial and economic instability in the world and in Tanzania, in
order to reduce riskiness of project, company can form reserve fund, in which it will be
necessary to deduct 5 – 10 % of net profit for coverage of negative consequences, which can
be caused by abovementioned risks.

Alternative method for risks reduction: cooperation with insurance companies for maximal
insurance coverage of possible risks. With regard to this project it is reasonable to transfer
to insurance financial and resource risks. Insurance of these risks will oblige insurance
company to make insurance payments as full or partial compensation for loss of profit
(additional expenses) of company. For the purpose to prevent risks the relevant decisions
may be adopted to take the following measures:

 Thorough development and preparation of the documents concerning cooperation

of the parties directly involved in project implementation, and cooperation with
organizations involved.
 Preparation of long-term contracts for supplies of necessary materials, raw
materials and other products for the stable prices. Selection of producers and
development of supply schemes for the raw material and consumables in advance. It
is possible to work out the scheme of alternative supplies in case of fault to perform
obligations by main suppliers.
 Permanent marketing researches aimed at detection of new ways to attract clients
and improvement of methods to ensure the clients’ tolerance.
 Systematic diversification of suppliers, decrease of number of intermediaries
between the enterprise and its suppliers, conclusion of long-term and mutually
profitable contracts with them (benefits, discounts, priority in supplies of

22
 consumables).
 Regular control
of quality of the
supplied raw
and other materials,
rejection of low-
quality raw material;
 Development
and implementation
of appropriate
system of quality
control of products
destined for
sale.
 Systematic
monitoring of
business
activities of the
enterprise;
complex
assessment of strong and weak points of the enterprise and its structural
departments.
 Formation and correction of business strategy and tactics in long and medium term.
 Reasonable price policy and analysis of price offers of the other enterprises.

5.5 Business Premises

5.5.1 Location
The proposed business is located in Mafinga, Lushoto and Dar es Salaam; Tanzania.

Geographical location: Tanzania,

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 Geographical coordinates: 6°00′S 35°00′E

Business Location map

5.5.2 Service provision process

The Project foresees expansion establishment ofComplex consisting of plant for production
of Briquettes.

The product: Briquettes from wood and forestry wastes According to the national or
international standard of quality.

The assets list Investors (own assets):

1) Land with a total surface of 1 ha;

2) Agricultural equipment/machines: tractor & trailer, combine

5.5.3 The raw material

Tanga, LushotoFactory;The raw material used in Tanga, Lushoto District are within
production area it is local wood and forestry wastes from wattle extraction in Tanga,
Lushoto District. The company is involved in the manufacture of ‘mimosa’ vegetable
tanning used in tanning of leather products. Mimosa extract is obtained from the bark of
Black Wattle trees (Acacia mearnsii). It takes approximate 7 years for the tree to be
harvested and the bark strips, which is then chipped and processed under controlled
condition to extract the optimum amount of tannin with the lightest of colours. Mimosa or
wattle bark contains about 30% tannin. The tannin extract is exported to Asia. The spent
bark has other uses. Lion Wattle has accumulation of spent bark in excess of 504,000. Lion
Energy Company is acquiring the spent bark from Lion Wattle for the Briquetting Plant.

Mafinga Factory. SAO Hill Industries Ltd has signed contracts to process its waste wood
for supply of sustainable carbon and wooden Briquettes with Tanzanian companies and
Lion Energy Co Ltd. SAO Hill Industries has installed a processing plant for production of
wood Briquettes from wood waste. The contracts signed are intended to utilize the full
capacity of the plant.

24
5.5.4 Machinery and Equipment

5.5.5 Jumbo Brq 9075 Model

The most outstanding and flagship products from our products portfolio have been
JUMBO-9075 MODEL armed with cutting technology and engineered to deliver maximum
output. Certain innovations made in its design and production make it exceptionally cost
effective and technically superior.
Specifications
Production 1200-1800 Kgs.Hr Depends on
Capacity : raw material
Finished Product 90mm Diameter
Size :
Briquette Length 100mm To 350 mm
Finished Product Cylindrical
Shape
Raw - Material Size up to 25 mm
Electricity / Power  
Required power 88.5 HP / 66.37 KW
connection
Practical used Amp. 75 –85 Amp (Approx)
Load
Power consumption 30 – 40 Units / Hr.

Production Capacity
Depending upon the bulk density and moisture content of the raw material used, below
mentioned are some of the examples
Sugarcane Baggasse 1000 to 1300 Kgs / Hr
(Approx.)
25
Operating Parameters

 Input bulk density 140 to 200 kg/m3.

 Moisture contents : 8-12 %
 Briquetting pressure – 1200 kg/cm2 for Binderless Briquetting.

Features Of Jumbo-Brq 9075 Model

 Maximum production capacity.

 Heavy structure with Standard design.
 Raw material acceptability up to 25mm size. (does not require powdery form of raw
material).
 Easier operating system.
 Delivers finished products high-density with 90mm diameter.
 Cost effective by giving Lowest production cost per MT.
 Lower energy consumption and to direct feeding of raw material without hammer
mill
Lower maintenance cost.
 No loss of production and air pollution due to direct feeding system.
 Special Sensor system installed to indicate temperature of the machine.
 Siren system indicates any major or minor problem in the machine.
 Dust does not enter Main Body.

The line consists of the following:

 BRIQUETTES press, Belts

 Fly wheel, Die Holder
 Hopper;Electric panel
 Gear box, Powered by electric motors
 Screw Conveyor Multiple briquette machines mounting
 Electrical motor
 Main Motor

5.6 Suppliers

List down equipment suppliers

1. SREE ENGINEERING WORKS

2. JAY KHODIYAR MACHINE TOOLS

3. SIMBA MOTORS (T) LTD

26
 4. MOTORRAMA (T) LTD

5. NOBLE MOTORS

5.7 Compliance with Safety and Health Issues

Requirements for workers having access and involved in production process:

Personnel involved in production processes of plant should know process guidebook and
labor safetyguidebook.

Only the persons, who have passed preliminary medical examination for employment and
regular medical examinations in process of their work, have access towork.

Labor and fire safety training of personnel ismandatory.

Only the persons with necessary professional experience have access to work with
equipment used at theplant.

HR policy of the enterprise should be aimed at optimum delegation of powers and

formation of responsibility for taken decisions. The enterprise should have well-balanced
personnel remuneration system.

Managerial objective in human resources management and HR policy is to achieve

efficiency in the following functionalareas:

 Appropriate HR (determination of skills, knowledge and competence required for

performance of job duties; HR planning, attraction andselection);
 Personnel training and development (personnel training, professional training,
development of professional skills, personnelattestation);
 Regulation of labor relations and relations inside theteam;
 Improvement of labor remuneration system (including non-material remuneration
and bonus system at theenterprise);

27
 Guarantee of labor safety and health (labor safety and industrial safety system,
mandatory medical control at the moment of employment and regular control
during the period of work).
 Management of the company should conduct regular activities aimed at personnel
motivation for work.

SWOT ANALYSIS OFPROJECT

Strengths Opportunities

 Advanced and competitive  Opportunity to become

location of facilities from leader among national
marketing point ofview. companies-producers
 Implementation of this ofBiomass Briquettes.
project with modern  To provide company with
technologies and equipment skilled and qualified
for production of Briquettes. personnel.
 High actuality and  Improvement of product and
reasonability of Biomass price policy taking into
Briquettes production. account particularities of
 Steady and stable demand on different regions ofsale.
Briquettes among industrial  Cost optimization and
facilities and people in taxplanning.
Tanzania.  Increase of market value of
theenterprise.

Weaknesses Threats

 Establishment of  Threats of failure or delay in

delivery of materials; change
newbusiness.
of price for Biomass
 Long-term period for Briquettes production.
 Threat of delay or failure to
projectimplementation.
receive all necessary
 Approval documents and approval documents for
project implementation.
permissions are binding
 Threat of error or
andobligatory. breakdown of production
process.
 Decrease in prices caused

28
 bycompetitors
 or general tendency of price-
cutting on market of bio-
energy.

Conclusions Regarding Effectiveness of Project

This business plan includes substantiation of efficiency of investment in creation of modern

Saw Dust Briquettes processing plants with capacity of 6,600 Kgs.Hr kg per hour. Strategic
objective of implementation of this Project is to organize operation of the enterprise basing
on production, promoting and selling biomass fuels -Biomass Briquettes

The Project will be financed by credit (investment) of TSH 1,254,000,000/=capital in full

amount.
This project is characterized by high positive value of exponents with regard to activity and
efficiency. Within 3 years of project it is planned to attain the following results:

Net profit – TSH 5,299,127,069/=

Gross cash flow – TSH 24,424,725,202/=

Earned revenue with account for discount in the amount of 23.66 % will exceed
investments on amount of TSH 4,045,127,069/=(NPV).

Return on investment is expected in 3 years.

Cost-effectiveness and investment attractiveness of project will be decreased by reduction

of production capacities load, increase of manufactured products cost, and also reduction
of prices for manufactured products. At the same time, in accordance with optimistic
forecasts, project profitability and investment attractiveness will grow.

Project success criteria certify that project has “margin of safety” that can guarantee
timely return on investment even in case of negative deviations of actual data on project
implementation from calculated data.

29
Establishment of such company in Tanzania Country is very reasonable step and is
considered to be extremely timely and cost-effective project. Gross cash flow has positive
value within whole project period that reflects balance of profit and loss items of project.
Net Present Value of project (NPV) is positive that confirms reasonability of its
implementation.

5.0 FINANCIAL PLAN

Initial data for financial calculations are conditionally divided into following groups:

Prerequisites for calculation of necessary investment

on project investment was drawn up on the basis of information provided by company-

initiator of project.

Prerequisites for shaping production and sales plan

Stated in table below prerequisites for shaping production and sales plan under project
were provided by company-initiator of project.

Parameters of production and sales by average in a project period

Working conditions of plant for production of Briquettes

Sale price of Briquettes, TSH 183,390/Ton

Processing volume (Briquettes), tons/day 122.63

Processing volume (Briquettes), tons/hour 5.1

hours per day 24
operational working days per year 336
operational working days per month 30
Processing volume (Briquettes), tons/month 3,679
Processing volume (Briquettes), tons/year 44,148

30
PRE-REQUISITES FOR COSTING UNDERPROJECT

Cost of raw material - biomass

Expenditures connected with purchase of raw materials for production are calculated on
the basis of material volume necessary for briquettes production and market prices for
such materials.

Biomass volume per month, tons 4,414.8

Biomass volume per year, tons 52,977.6
Price of biomass, TSH /ton 68,220
Transport costs from biomass suppliers to the 0
production facility, TSH /ton

Transport costsTransport costs are equal to TSH 68,220 /Ton or 36% of selling price p.

Administrative Expenses Administrative Expenses are equal to TSH 55,368,152/=per

month. TSH 664,417,827/=per year 8.26- % of sales volume TSH 8,035,655,067/= per year

Staff CostsStaff Costs expenses were calculated on minimal sufficiency level necessary for
effective functioning of company. Staff Costs expenses amounts to TSH 77,366,570/=per
month, TSH 928, 398, 840/= per year of sales volume TSH 8,035,655,067/=11.55 % of sales
volume per year.

Marketing expendituresDimension of marketing expenditures is determined as per cent of

sales and marketing specialists point it out as the most effective method of advertisement
budget planning. Thus, in the process of marketing expenditures calculation, taking into
account corresponding market targeted for company, and also operating expenditures, this
item of budget amounts to ……………% of sales volume that will ensure enough level of
company’s profitability.

Consumption of electric energy byequipment

Expenditures related to electric energy consumption are 30–40 Units / Hr. calculated upon
actual electric energy consumption of the equipment and currenttariffs 230/Unit.

Sales Forecast for the Project

31
Total sales volume for 3 years of project is planned to be on the level of TSH24,
106,965,202/=

32
Lion Energy Company (T) Limited
Management Accounts
For the period ended
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Dec-17 Dec-18 Dec-19 Dec-20 Dec-21
Actual in 3 + 9 Forecast projected projected projected
Shs'000
Revenue 1,686,825, 2,122,663,85 7,102,199,18 8,360,060,57 9,497,689,44
000 7 8 6 0
Cost of sales 389,812,5 736,968,67 2,547,708,79 3,005,112,93 3,418,796,16
00 5 6 7 0
Gross profit 1,297,012, 1,385,695,18 4,554,490,39 5,354,947,63 6,078,893,28
500 2 2 9 0
Staff costs 313,200,0 334,566,18 669,132,36 896,637,36 1,219,426,81
00 0 0 2 3
Administrative expenses 383,700,0 239,435,60 478,871,20 641,687,40 872,694,87
00 0 0 8 5
Distribution costs 54,000,0 28,800,00 34,560,00 41,472,00 49,766,40
00 0 0 0 0
Depreciation and amortization 205,672,0 205,672,00 287,032,00 287,032,00 287,032,00
00 0 0 0 0
Interest on Loan - 65,136,16 46,039,90 18,235,45
2 9 3

33
Operating profit 340,440,5 577,221,40 3,019,758,67 3,442,078,96 3,631,737,73
00 2 0 0 9
Profit before income tax 340,440,5 577,221,40 3,019,758,67 3,442,078,96 3,631,737,73
00 2 0 0 9
102,132,1 173,166,42 905,927,60 1,032,623,68 1,089,521,32
Income tax expense 50 1 1 8 2
Profit after income tax 238,308,3 404,054,98 2,113,831,06 2,409,455,27 2,542,216,41
50 1 9 2 7
Dividend proposed 528,457,76 602,363,81 635,554,10
- 7 8 4
Profit for the year 238,308,3 404,054,98 1,585,373,30 1,807,091,45 1,906,662,31
50 1 2 4 3

34
Lion Energy Company (T) Limited
 
Management Accounts
 
For the period ended 31 December 2018
 
STATEMENT OF FINANCIAL POSITION

2017 2018 2019 2020 2021

Shs Shs Shs Shs Shs
ASSETS  
NON-CURRENT ASSETS  
Property plant and equipment 2,903,248 3,381,576 3,094,544 2,807,51 2,520,48
,000 ,000 ,000 2,000 0,000
12,057,836 11,563,220 10,541,466 8,893,71 7,210,95
Inventories - Biomass ,623 ,662 ,771 6,025 2,236
14,961,084 14,944,796 13,636,010 11,701,228 9,731,43
,623 ,662 ,771 ,025 2,236

CURRENT ASSETS  
3,447,457 3,447,457 3,447,457 3,447,45 3,447,45

35
Inventories - Biomass ,627 ,627 ,627 7,627 7,627
Inventories - Stoves 220,000 198,000 178,200 160,38 144,34
,000 ,000 ,000 0,000 2,000
34,583 93,078 107,85 122,62
Inventories - Briquettes - ,325 ,689 3,112 7,512
221,875 597,254 692,05 786,85
Trade and other receivables - ,832 ,781 7,434 9,834
1,131,017 3,704,793 6,933,53 10,334,691
Cash and Cash equivalents - ,570 ,108 5,128 ,725
3,667,457 5,032,934 8,020,784 11,341,283 14,835,978
,627 ,354 ,205 ,302 ,699
18,628,542 19,977,731 21,656,794 23,042,511 24,567,410
Total assets ,250 ,016 ,976 ,326 ,934
EQUITY AND LIABILITIES  
500,000 500,000 500,000 500,00 500,00
Share capital ,000 ,000 ,000 0,000 0,000
Advance towards share Capital 17,500,862 17,500,862 17,500,862 17,500,862 17,500,862
,000 ,000 ,000 ,000 ,000
238,308 404,054 1,989,428 3,796,51 5,703,18
Retained earnings ,350 ,981 ,283 9,737 2,050
Dividend proposed   528,457 602,36 635,55
- ,767 3,818 4,104
Total equity 18,239,170 18,404,916 20,518,748 22,399,745 24,339,598
,350 ,981 ,051 ,555 ,155
 

36
Non CurrentLibilities  
Bank Loan   1,254,000 896,363 481,19 38,226
,000 ,816 7,530 ,788
Liabilities  
Trade and other payables 389,371 241,946 126,381 46,266 151,15
,900 ,335 ,560 ,692 2,142
Borrowings
- - -
Total liabilities 389,371 241,946 126,381 46,266 151,15
,900 ,335 ,560 ,692 2,142
Total equity and liabilities 18,628,542 19,900,863 21,541,493 22,927,209 24,528,977
,250 ,316 ,427 ,777 ,085
- - - -
0 76,867,699 115,301,549 115,301,549 38,433,850
 
- - - -

Lion Energy Company (T) Limited

Cash flow projection
For the period of ended - 2018

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 TOTAL_2
018
Inflow Shs Shs Shs Shs Shs Shs Shs Shs Shs Shs Shs Shs Shs
Briquettes sales 26,0 68,6 107,49 119,15 122,64 133,17 160,03 192,32 213,06 219,2 221,1 221,7 1,804,7
70,660 52,738 8,021 1,606 7,682 6,745 6,063 1,139 6,942 90,683 57,805 17,941 88,025
Transport income 8,0 8,0 8,0 8,0 8,0 8,0 8,0 8,0 8,0 8,0 8,0 8,0 96,0

37
 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000
Loan facility 1,254,0 1,254,0
00,000 00,000
Total Cash inflow 34,0 76,6 115,49 127,15 130,64 141,17 168,03 200,32 221,06 1,481,2 229,1 229,7 3,154,7
70,660 52,738 8,021 1,606 7,682 6,745 6,063 1,139 6,942 90,683 57,805 17,941 88,025
Cost of Sales 31,6 41,0 43,9 44,7 45,0 56,6 73,4 78,5 80,0 80,5 80,6 80,6 736,9
00,800 81,040 25,112 78,334 34,300 02,290 79,087 42,126 61,038 16,711 53,413 94,424 68,675
Staff Costs  
Salary 18,9 18,9 18,9 18,9 18,9 18,9 25,3 25,3 25,3 25,3 25,3 25,3 265,3
00,000 00,000 00,000 00,000 00,000 00,000 26,000 26,000 26,000 26,000 26,000 26,000 56,000
Other Allowances 2,0 2,0 2,0 2,0 2,0 2,0 2,6 2,6 2,6 2,6 2,6 2,6 28,0
00,000 00,000 00,000 00,000 00,000 00,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
NSSF 1,8 1,8 1,8 1,8 1,8 1,8 2,5 2,5 2,5 2,5 2,5 2,5 26,5
90,000 90,000 90,000 90,000 90,000 90,000 32,600 32,600 32,600 32,600 32,600 32,600 35,600
SDL 85 85 85 85 85 85 1,1 1,1 1,1 1,1 1,1 1,1 11,9
0,500 0,500 0,500 0,500 0,500 0,500 39,670 39,670 39,670 39,670 39,670 39,670 41,020
WCF 18 18 18 18 18 18 25 25 25 2 2 2 2,6
9,000 9,000 9,000 9,000 9,000 9,000 3,260 3,260 3,260 53,260 53,260 53,260 53,560
Sub total 23,8 23,8 23,8 23,8 23,8 23,8 31,9 31,9 31,9 31,9 31,9 31,9 334,5
29,500 29,500 29,500 29,500 29,500 29,500 31,530 31,530 31,530 31,530 31,530 31,530 66,180
Administrative  
Exps
Audit/Consultance 30 30 30 30 30 30 40 40 40 4 4 4 4,2
Fee 0,000 0,000 0,000 0,000 0,000 0,000 2,000 2,000 2,000 02,000 02,000 02,000 12,000
General Exps 1,0 1,0 1,0 1,0 1,0 1,3 1,3 1,3 1,3 1,3 1,3 13,0
00,000 - 00,000 00,000 00,000 00,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000
Travelling 2,0 1,0 2,0 50 50 67 67 67 6 6 6 10,0
&Accomodation 00,000 00,000 - 00,000 0,000 0,000 0,000 0,000 0,000 70,000 70,000 70,000 20,000
Electricity & Water 7,8 7,8 5,4 5,8 7,8 7,8 10,4 10,4 10,4 10,4 10,4 10,4 105,1
00,000 00,000 00,000 00,000 00,000 00,000 52,000 52,000 52,000 52,000 52,000 52,000 12,000
Repair &maint. - 2,0 40 1,3 1,5 1,5 2,0 2,0 2,0 2,0 2,0 2,0 18,7
Buildings 00,000 0,000 00,000 - 00,000 00,000 10,000 10,000 10,000 10,000 10,000 10,000 60,000
Repair &maint. - 1,5 1,5 1,5 1,5 1,5 1,5 2,0 2,0 2,0 2,0 2,0 2,0 21,0
Motor vehicles 00,000 00,000 00,000 00,000 00,000 00,000 10,000 10,000 10,000 10,000 10,000 10,000 60,000
Fuel & Lubricants 1,7 1,7 1,7 1,7 2,3 2,3 2,3 2,3 2,3 2,3 21,2
65,000 - 65,000 - 65,000 65,000 65,100 65,100 65,100 65,100 65,100 65,100 50,600
Insurance 1,5 1,5 1,5 1,5 1,5 1,5 2,0 2,0 2,0 2,0 2,0 2,0 21,0
00,000 00,000 00,000 00,000 00,000 00,000 10,000 10,000 10,000 10,000 10,000 10,000 60,000
Rent 1,1 1,1 1,1 1,1 1,1 1,1 1,5 1,5 1,5 1,5 1,5 1,5 15,7
25,000 25,000 25,000 25,000 25,000 25,000 07,500 07,500 07,500 07,500 07,500 07,500 95,000

38
Printing and 25 25 25 25 25 25 33 33 33 3 3 3 3,5
Stationery 0,000 0,000 0,000 0,000 0,000 0,000 5,000 5,000 5,000 35,000 35,000 35,000 10,000
Bank Charges 40 40 40 40 40 40 53 53 53 5 5 5 5,6
0,000 0,000 0,000 0,000 0,000 0,000 6,000 6,000 6,000 36,000 36,000 36,000 16,000
Proposed Dividend  
 
Sub total 19,6 14,2 14,5 13,8 17,6 17,6 23,6 23,6 23,6 23,6 23,6 23,6 239,4
40,000 75,000 40,000 75,000 40,000 40,000 37,600 37,600 37,600 37,600 37,600 37,600 35,600
Loan Repayment
- - -
Distribution Cost  
Transport and 2,4 2,4 2,4 2,4 2,4 2,4 2,4 2,4 2,4 2,4 2,4 2,4 28,8
related costs 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000 00,000
 
CAPEX  
Briquetting Plant - 364,8 364,8
3 Units 00,000 00,000
Truck and Trailer 319,2 319,2
00,000 00,000
Total Capex 684,0 684,0
- - - - - - - - - 00,000 - - 00,000
Total expenditure 77,4 81,5 84,6 84,8 88,9 100,47 131,44 136,51 138,03 822,4 138,6 138,6 2,023,7
70,300 85,540 94,612 82,834 03,800 1,790 8,217 1,256 0,168 85,841 22,543 63,554 70,455
Net Receipts over - - 30,8 42,2 41,7 40,7 36,5 63,8 83,0 658,8 90,5 91,0 1,131,0
expenditure 43,399,6 4,932,80 03,409 68,773 43,882 04,955 87,846 09,883 36,774 04,841 35,261 54,387 17,570
40 2
Openning cash - - - 24,7 66,4 107,18 143,77 207,58 290,6 949,4 1,039,9
book balance - 43,399,6 48,332,4 17,529,0 39,740 83,622 8,577 6,423 6,306 23,080 27,921 63,182 -
40 42 33
Closing cash book - - - 24,7 66,4 107,18 143,77 207,58 290,62 949,4 1,039,9 1,131,0 1,131,0
balance 43,399,6 48,332,4 17,529,0 39,740 83,622 8,577 6,423 6,306 3,080 27,921 63,182 17,570 17,570
40 42 33

39
Lion Energy Company (T) Limited
Cash flow projection
For the period of Four years - 2019-2021

Inflow Dec-19 Dec-20 Dec-21

Briquettes sales Shs Shs Shs
Transport income 6,630,820,239 8,169,257,923 9,306,887,040
Loan facility 96,000,000 105,600,000 116,160,000
Total Cash inflow 6,726,820,239 8,274,857,923 9,423,047,040
Cost of Sales 2,547,708,796 3,005,112,937 3,418,796,160
Staff Costs
Salary 530,712,000 711,154,080 967,169,549
Other Allowances 56,160,000 75,254,400 102,345,984
NSSF 53,071,200 71,115,408 96,716,955
SDL 23,882,040 32,001,934 43,522,630
WCF 5,307,120 7,111,541 9,671,695
Sub total 669,132,360 896,637,362 1,219,426,813
Administrative Exps
Audit/ConsultanceFee 8,424,000 11,288,160 15,351,898
General Exps 26,080,000 34,947,200 47,528,192
Travelling &Accomodation 20,040,000 26,853,600 36,520,896
Electricity & Water 210,224,000 281,700,160 383,112,218

40
Repair &maint. - Buildings 37,520,000 50,276,800 68,376,448
Repair &maint. - Motor vehicles 42,120,000 56,440,800 76,759,488
Fuel & Lubricants 42,501,200 11,288,160 15,351,898
Insurance 42,120,000 56,440,800 42,120,000
Rent 31,590,000 42,330,600 57,569,616
Printing and Stationery 7,020,000 9,406,800 12,793,248
Bank Charges 11,232,000 15,050,880 20,469,197
Proposed Dividend
Sub total 478,871,200 641,687,408 872,694,875
Loan Repayment 422,772,346 461,206,195 461,206,195
Distribution Cost
Transport and related costs 34,560,000 41,472,000 49,766,400
CAPEX
Briquetting Plant - 3 Units
Truck and Trailer
Total Capex
Total expenditure 4,153,044,701 5,046,115,902 6,021,890,443
Net Receipts over expenditure 2,573,775,538 3,228,742,020 3,401,156,597
Openning cash book balance 1,131,017,570 3,704,793,108 6,933,535,128
Closing cash book balance 3,704,793,108 6,933,535,128 10,334,691,725

41
Profit generation is reflected in table and also on figure in accordance with forecast calculations of profit and loss.

The table presents stage-by-stage formation of operating profitability with account for Different factors:

Gross profit Margin (%) –gross margin – reflects operating profitability with account for cost of
manufacturedproducts.

EBITDA Margin (%) – reflects operating profitability with account for all operating expenses before amortization,
interest andtaxes.

Ordinary Income Margin (%) – reflects operating profitability with account for operating expenses and
amortization before interest andtaxes.

Return on sales (%) – margin on sales –reflects operating profitabilitywith

42