Development Bank of Ethiopia

Hawassa Branch
Project Follow-up Format for Operational SME Projects

Name of Project : Daite Trade Work plc

Type of Project: Gravel production (Mining)

Loan Number :AA17195TT62K

Follow-up No: 01 for operational year : 2021/22

Date of Project Visit :14/09/2021

Reporting Date:15/09/2021

I. Background
1.1. The Client (Contact Person)
 1.1.1. Name: -Ato Ermiyas Dimato (General Manager)
1.1.2. Address:-
Region: - Sidama regional state Sub-city/Zone: -Tula
Town: -Hawassa Kebele: -Gemeto Gale
Sub-city:- Tula House No._________
Tel. Office________ Res.__________
Fax__________ P.O. Box________
E-mail_________ Web site
Tel (Mob):- 09-16-82-30-27
1.2. The Project
1.2.1. Name of the project: -Daite Trade Work PLC
1.2.2. Type of the project: -Gravel production (mining)
1.2.3. Address
Region: - Sidama regional state Sub-city/Zone: - Tula
Town: -Hawassa Kebele: -Gemeto Gale
Sub-city:- Tula House No._________
Tel. office ________ Res.__________
Fax_______ P.O.Box ________
Email________ Web site
Tel (Mob):- 09-16-82-30-27
1.3. Form of Organization: - private limited company /PLC
1.4. Commercial Registration certificate
 Licensing agency: -SNNPRS Mining and energy agency.
 License Number ፡-SNN\SSM\529\2011
 License Date :- 16/09/2011 E.C
 Registration Number ፡- SNNPR/BTIUDB/2/0000961/2006
 Date Registered ፡- 2/2/2017
 Tax Identification Number (TIN): -0004042939
 VAT registration Number ፡-
1.5 .Objective of the project: - The main objective of the company is to produce quality
gravel or aggregate to supply for different kinds of construction like House building,
Road building etc.
II. Equity and debt Information

2.1. Debt
2.1.1. Amount Approved: -19,715,011.72
2.2.2. Amount Disbursed: -18,598,318.26

2.2.3. Date Acceptance certificate signed: - 17/09/2010E.C and 17/12/2011.E.C

2.2.4. Date Operation started: - 17/09/2010 E.C and 17/12/2011.E.C
 Planned Actual Variation
Sr. Descripti Equity DBE loan Total Equity DBE loan Total Equity DBE Loan Total
No on
1 Capital
goods - 19,715,012 19,715,012 3,943,002.34 18,598,318.26 22,541,320.60 3,943,002.34 (1,116,693.74) 2,826,308.60

2 Working
capital 2,612,536 - 2,612,536 2,612,536.00 - 2,612,536.00 - - -

Total 2,612,536 19,715,012 22,327,548 6,555,538.34 18,598,318.26 25,153,856.60 3,943,002.34 (1,116,693.74) 2,826,308.60

Debt equity
ratio 12% 88% 100% 26% 74% 100%

2.2. Investment and Working Capital Expenditure as at: - 15/09/2021

Reason(s) for variation: the ratio of capital goods to the total planned investment cost is (88:12) which is less than the ratio set on the
lease financing policy 20% (80:20) and the promoter contributed 20% (birr 3,943,002.34) of the planned cost of capital goods.
*The working capital of the project was considered as advanced payment due to the forwarded circular which state that all lease
financing loans should block 20% of the machinery cost.
*Actual cost of capital goods claim has been received; as result the branch disbursed the loan and signed amended loan contract
agreement.
 2.3. Credit Information as at (date):- Sep 15, 2021

Due (Birr) Not due (Birr) Commitment

Loan Number Financing Principal Interest Principal Interest Balance
Institution (Birr)

AA17195TT62K DBE
Hawassa - - 14,118,755.4 47,174.61 -
branch 1

Total - - 14,118,755.4 47,174.61 -

1

2.4. Lease payment (In’ Birr)

Sr. Description Date Principal Interest Advance Total
No
1 Payment up to last 09/06/2021 4,024,736.51 4,820,107.49 - 8,844,844.00
follow-up report
2 Payment after last 09/06/2021- 691,136.16 419,361.98 19,501.86 1,130,000.00
follow-up report 15/09/2021
Total (Payment to
4,715,872.67 5,239,469.47 19,501.86 9,974,844.00
date) 15/09/2021
3 Planned payment to- 15/09/2021
9,955,342.14
date (total demand) 4,715,872.67 5,239,469.47

4 Recovery rate 100% 100% 100.19%

Comments on Lease recovery rate: the lease recovery rate of the promoter is excellent
compared to the plan and the total loan recovery is 100% and the branch communicated the
promoter as to done repayment periodically and kept its performance.
 2.5. Status of Insurance policy purchased /renewal/

S. Type of Insurance Policy Number Sum Insured Period of Insurer

N List of capital Goods Coverage Company

1 Stone crushers plant with its CPM 3021113050002218 5,811,061 25/09/2021- EIC
steel structure 24/09/2022

2 Stone crushers plant with its Burglary insurance 3021122010001719 EIC

steel structure (30% of machinery 1,743,318 16/10/2020-
cost) 15/10/2021
3 Doosan excavator with CPM 3022113050001418 11/07/2021- EIC
Hydrolic breaker (2) & 1 14,800,000 10/07/2022
Wheeled loader

4 Doosan excavator with Burglary insurance 3022122010002319 EIC

Hydrolic breaker (2) & 1 (30% of machinery 4,440,000 16/10/2020-
Wheeled loader cost) 15/10/2021
 III. Evaluation of Project Performance
3.1 Production and Sales

3.1.1. Quantity produced in 2021/22 Operational/production Year

Sr. No. Type of product Planned/m³/ Actual/m³)/ Variance

(6,232
1 Aggregate (00) 6,871.75 638.80 .95)
(6,618.0
2 Aggregate (01) 8,017.00 1,398.96 4)
3,720.4
3 Aggregate (02) 8,017.00 11,737.40 0
(9,130.5
Total 22,905.75 13,775.16 9)
Source: Appraisal study and promoter’s production & sales record.
Reasons for variation: the team has analyzed that the variation stated in the above table
was because of market problem.
3.1.2 Sales Revenue

Sr. Type of Quantity sold (qt/lt/kg/m³) Price per unit Total revenue (Birr)
No product (Birr)
Planned Actual Variance Plann Actu Planned Actual Variance
ed al

1 Aggregate 320. (6,550.99

(00) 6,871.75 76 ) 494 400 3,394,672.25 128,304.00 (3,266,368.25)

2 Aggregate
(01) 8,017.00 838.90 (7,178.10) 494 400 3,960,450.75 335,560.00 (3,624,890.75)

3 Aggregate 11,470.4 3,453.4

(02) 8,017.00 6 6 494 400 3,960,450.75 4,588,184.00 627,733.25

4 others - - - - - -
12,630.1 (10,275.63
Total 22,905.75 2 ) 11,315,573.75 5,052,048.00 (6,263,525.75)

Note: qt- quintal, lt- litter and kg-kilogram, m³meter cube

Source: Appraisal study and promoter’s production & sales record
Reasons for variation: the team has analyzed that the variation stated in the above table
was because of market problem. As a result the production & sales of the project has not
achieved with compared to the plan.
 3.2 Market & Marketing Arrangement
3.2.1 Briefly discuss market & marketing arrangements in comparison to the plan Vs
actual.
The product is marketed to those contractors and individual consumers as per the
aggregate type they demand with a price charge at the production site. The transport cost
will be covered by the purchaser of the product. Concerning the marketing of gravel is
that the product is demanded anywhere in which there is construction activity. After all it
has been observed that the promoter has a good will of sustaining its project in a
profitable manner by using appropriate marketing strategy by using both quality
advantage and pricing mechanism.
3.3. Technical Status
3.3.1. Machinery
No Description Brand Capacity Cost
Planned Actual planned Actual variation planned Actual variation
1 Shambo SHAMBO 73.07m³p 8,215,011.00 7,741,320.60 (473,690.40
brand )
er hr
Crushing and
screening
plant
2 Crawler DOOSAN DOOS 9,700,000.00 12,600,000.00 2,900,000.00
Excavator AN
with
hydraulic
breaker
3 XCMG XCMG XCMG 1,800,000.00 2,200,000.00 400,000.00
Wheel Wheel Wheel
Loader Loader Loader

Total 19,715,011.00 22,541,320.60 2,826,309.60

Reasons for variation: No variation has been seen on brand of the purchase capital
goods because of all the procured machineries and accessories have been done based on
the customer’s preferences. However as it can be seen from the final claim the cost of
machinery has shows increments from the plan which is the amount of fluctuation on the
buying rate of foreign exchange and associated cost of machinery.
 3.3.2. Maintenance of machinery
Frequency of maintenance of machinery
plan Actual Variation
1 1 0
Reasons for variation: - The promoter has maintained the machinery.
3.3.3 Capacity Utilization
Year Description (machineries) Planed Actual Variation
1 Shambo brand Crushing and screening plant

2 Crawler Excavator with hydraulic breaker 60% 36% (24%)

3 XCMG Wheel Loader

Reasons for variation: As we have observed on the field visit the project has been
commenced production even if some problem encountered on Market problem and we
have seen that the promoter has good take care on the proper utilization of machineries.
Beside the 3rd years planned capacity utilization on the study is 60% and planed and
actual production is taken three month performances.
3.4. Availability and price of Utilities
Utilities Availability Price (tariff)
(Not/Available) Planned Actual variation
1 Telephone, postage & internet Available 20,000 - (20,000)
Reasons for variation:-the promoter cannot avail the actual data on time for this follow
up report.
3.5. Availability of Raw Material
Availability Price
Type of raw materials (Not/Available) Planned Actual variation
1 Basalt stone Available - - -
Reasons for variation
*The team has not found the planed in appraisal study and actual data on time for this
follow up report.
 3.6. Management and Human resource
3.6.1. Management of the project
The overall management of the project falls under the responsibility of the general
manager, Ato Ermiyas Dimato, who has more than 10 years working experience on
managing Daite trading PLC and his business. He controls the technical, production and
marketing managers and Over all activities of the company. He could effectively and
efficiently manage the project with the assistance of all other management skillful
employees.
3.6.2. Human resource
Briefly discuss on the availability of skilled/unskilled labor force required by the project.
Even though the project planned to create job opportunities for about 19 employees,
however as the team observed during field visit the project is currently running by 43
permanent and temporary employees.
IV. Financial Performance
4.1. Investment cost
Sr. No Item Plan (Birr) Actual (Birr) Variance (Birr)

1 Capital goods 19,715,012.00 22,541,320.60 2,826,308.60

2 Working Capital 2,612,536.00 2,612,536.00 -

Total 22,327,548.00 25,153,856.60 2,826,308.60

Comments on variation (if any):-Due to the data on actual cost of capital goods the
occurrence of variation on capital goods reveals that the associated cost of machine and
the increment amount of fluctuation on the buying rate of foreign exchange. Besides in
the appraisal study the financial analysis indicate that the total working capital
requirement of project is Birr 2,612,536.00 whereas as per the lease financing policy the
promoter should contribute 20% (birr 3,943,002.40) of the cost of capital goods of the
project.
 4.2. Financial Results
4.2.1. Profitability (Income Statement)
Sr. No Description Projected (Birr) Actual (Birr) Variation (Birr)
1 Sales Revenue 43,904,427.00 7,041,367.24 (36,863,059.76)
2 Operating Cost 4,367,168.00 4,648,162.37 280,994.37
Profit before Depreciation 39,537,259.00 2,393,204.87 (37,144,054.13)
PBIT* 37,171,458.00 171,014.89 (37,000,443.11)
PBT** 35,711,286.00 (3,096,973.74) (38,808,259.74)
Net profit/loss 23,212,336.00 (3,096,973.74) (26,309,309.74)
Source: Appraisal study and promoter’s financial statement for Sene 30, 2012 E.C
* stands for profit before interest and tax
** stands for profit before tax
Reasons for variation: the team has analyzed that the variation that was stated in the
above table was because of the projected income statement in the appraisal study is above
the current performance of the project. The team also recommends to perform for the
project owner based on the appraisal study.
4.2.2. Liquidity (Cash flow)
Sr. No Description Projected (Birr) Actual (Birr) Variation (Birr)
1 Cash inflows 19,217,689.00 - (19,217,689.00)
2 Cash outflows 5,856,071.00 - (5,856,071.00)
Net cash in/out flow 13,361,619.00 - (13,361,619.00)
Cumulative cash balance
Source: Appraisal study
Reasons for variation: the team has not found the data regarding cash flow.
4.2.3. Asset and Capital Structure (Balance Sheet)
Sr. No Description Projected (Birr) Actual (Birr) Variation (Birr)
Assets
Current Assets 48,927,609.00 3,184,092.88 (45,743,516.12)
Total Current Assets 48,927,609.00 3,184,092.88 (45,743,516.12)
Fixed Assets  
machinery 14,983,409.00 12,587,683.27 (2,395,725.73)
 Total Net fixed Assets 12,617,607.00 12,587,683.27 (29,923.73)
Total Assets 61,545,216.00 15,771,776.15 (45,773,439.85)
Liabilities And Capital  
Liabilities  
DBE loan 12,023,034.00 14,069,815.55 2,046,781.55
Total Liabilities 12,023,034.00 14,069,815.55 2,046,781.55
Capital 49,522,182.00 1,701,960.60 (47,820,221.40)
Total Liabilities and 61,545,216.00 15,771,776.15 (45,773,439.85)
Capital
Source: Appraisal study and promoters financial statement for Sene 30, 2012 E.C
Reasons for variation: the team has analyzed that the variation that was stated in the
above table was because of the projected balance sheet in the appraisal study is above the
current performance of the project. The team also recommends to perform for the project
owner based on the appraisal study.
V. Project Impact Assessment
5.1. Impacts
5.1.1. Socio-Economic Benefits
Its contribution to the nation income in absolute value has been increasing significantly,
the sectors can create job opportunity for many people every year and it has been the
potential revenue for the government in the form of taxes.
Sr. no Benefits Plan Actual Variation
1 Employment creation 19 45 26

2 Tax settlement 12,498,950 - (12,498,950)

Reasons for variation: - as per the data obtained from the project manager the project
hired 45 permanent and temporary workers. The promoter didn’t pay tax because of it
faces a loss in Sene 30, 2012 E.C and the customer submitted confirmation letter from
Ethiopian revenue and customs Authority Hawassa branch office.
5.1.2 Briefly discuss on the negative impact brought about by the project
&mitigation measures taken (if any)
Negative Environmental impact
The mining activity will result some potential impacts on the environment during the
mining process. The activity by its nature is destructive. Mitigation of the pollution and
other environmental deterrent is very necessary action unless, the result will be
irreversible damage to the ecological cycles and balance in nature upon which all life
depends.
 Air, liquid &solid waste: during operation dust is created by processing
Machineries the air emission is dust that comes during crushing the stone.
Mitigation measures

 Minimizing the negative impact of the project on the environment the company
has taken the environment and social impact assessment study and the company is
willing to take the mitigation measurement and rehabilitation action.
VI. SWOT Analysis

Strength Weakness

1. Experience of the management on different 1. Absence of generator in the case of

business sector. power cut.
2. The selection of a good capacity crushing 2. Absence of having proper record
machine. system.
3. Good lease repayment track record.
Opportunities Threats
1.The fast growth of the construction sector in 1.The electricity power interruption
relation with the expansion urban areas in the may occur
country in general and specifically like Modjo to 2. Decrease in demand due to the
Hawassa high way express road construction, pandemic Covid-19 which affects the
yirgalem industry park construction etc in the overall business operation.
project area. 3. The slowing of construction
2. Availability of the resource for the production of activities.
gravel.

VII. Advice provided to the customer (written action plan agreed and signed by
both the Bank and the customer)
Based on the observation from the field visit, the team was provided advices to the
promoter on the following view points:-
 To maintain record keeping and to provide financial reports about the whole
activities of the project and should be presented to the bank.
 Upgrade its operating capacity to its maximum level.
  Finally, we have discussed to keep up excellent performance of meeting the lease
repayment schedules as per the agreed lease contract frequently and timely.
VIII. Conclusions and Recommendations

8.1 Conclusions (major risks/problems identified under all issues raised):

 As we have observed on the field visit the project currently performance is good;
however, power interruption and shortage of market is the major problem that
affects the daily operation of the project. As a result the promoter is unable to
operate at better capacity and generates sufficient income.
 Although the above bottle necks have reduced the project performance, the
current recovery rate of the project is 100% which depicts very good
performance. Hence, currently the lease is under to cur status.
8.2 Recommendations (including actions to be taken with time table):
 The project operational work is on a good progress. Moreover, the project has
started the normal operation and the promoter has currently paid the rent as well
as the service charge as per the agreement signed; therefore, credit team
recommends that the promoter should have the same trend to pay the rent and the
service charge during the given period and continue its commitment as well as
servicing the machinery on time as per the lease contract signed and attempt to
operate the project at its maximum capacity.
 Name and signature of the team:

Name Position Signature Date

1. W/Mariam Medalo Team leder ………….. 15/09/2021
2. Edget Legamo Sr.Loan Office ………….. 15/09/2021
3. Kedir Gojam Sr.Loan Office ………….. 15/09/2021
3. Gossa Mengesha Sr.Loan Office ………….. 15/09/2021
4. Habtu Girma Sr.Loan Office ………….. 15/09/2021
5. Melkamu Shawul Loan Office ………….. 15/09/2021
6. Getenet Andarge Loan Office ………….. 15/09/2021
7. Bekele Tiruneh Loan Office ………….. 15/09/2021
8. Mekides Getahun Loan Office ………….. 15/09/2021
9. Fikrte Gurara /CP/ Loan Office ………….. 15/09/2021
10. Melisew Shitahun Jr. Loan Office ………….. 15/09/2021

IX. Decision made/action taken by Branch Manager

_____ _____

Name of A/Branch Manager: Ato Teshome Getaneh

Signature:

Date: 15/09/2021
Annex I
Inventory of capital goods as per the commissioning report as at 15/09/2021

Ser. List of capital goods Purchased Existing

No Qty/No. Qty/No.

1 Crushing and screening plant 1 1

2 Excavator with Hydraulic breaker 2 2

3 XCMG Wheel Loader 1 1

 Development Bank of Ethiopia

Hawassa Branch

Summary of lease Follow-up

Reporting date: September 15, 2021

1. Project Profile:- Daite Trade Work PLC

a. Name of the project: - Daite Trade Work PLC

b. Type of the project: - Gravel production (Mining)
c. Specific location of the project:-Hawassa city, Tula Sub city,Gemeto Gale Kebele
d. Date of the project Visit:- 14/09/2021
e. Stage of the project:- Operational
f. Date of loan contract signed:- 02/10/2009 E.C
g. Date of loan Repayment Rescheduled contract signed:- Nil
h. Balance in commitment (if any):- Nil
i. Loan position as at:- September 15, 2021

Due (Birr) Not due (Birr) Commitmen

Loan Number Financing Principal Interest Principal Interest t Balance
Institution (Birr)

AA17195TT DBE - - 14,118,755.41 47,174.61 -

62K Hawassa
branch

Total - - 14,118,755.41 47,174.61 -

2. Conclusions and Recommendations

2.1 Conclusions (major risks/problems identified under all issues raised):

 As we have observed on the field visit the project currently performance is good;
however, power interruption and shortage of market is the major problem that
 affects the daily operation of the project. As a result the promoter is unable to
operate at better capacity and generates sufficient income.
 Although the above bottle necks have reduced the project performance, the
current recovery rate of the project is 100% which depicts very good
performance. Hence, currently the lease is under to cur status.
2.2 Recommendations (including actions to be taken with time table):
 The project operational work is on a good progress. Moreover, the project has
started the normal operation and the promoter has currently paid the rent as well
as the service charge as per the agreement signed; therefore, credit team
recommends that the promoter should have the same trend to pay the rent and the
service charge during the given period and continue its commitment as well as
servicing the machinery on time as per the lease contract signed and attempt to
operate the project at its maximum capacity.
 Name and signature of the team:

Name Position Signature Date

1. W/Mariam Medalo Team leder ………….. 15/09/2021
2. Edget Legamo Sr.Loan Office ………….. 15/09/2021
3. Kedir Gojam Sr.Loan Office ………….. 15/09/2021
3. Gossa Mengesha Sr.Loan Office ………….. 15/09/2021
4. Habtu Girma Sr.Loan Office ………….. 15/09/2021
5. Melkamu Shawul Loan Office ………….. 15/09/2021
6. Getenet Andarge Loan Office ………….. 15/09/2021
7. Bekele Tiruneh Loan Office ………….. 15/09/2021
8. Mekides Getahun Loan Office ………….. 15/09/2021
9. Fikrte Gurara /CP/ Loan Office ………….. 15/09/2021
10. Melisew Shitahun Jr. Loan Office ………….. 15/09/2021

IX. Decision made/action taken by Branch Manager

_____ _____

Name of A/Branch Manager: Ato Teshome Getaneh

Signature:

Date: 15/09/2021