Re Inforced Concrete Products MFG BD Future Galan

Construction Materials Production 202
PROJECT PROPOSAL
FOR
RE-ENFORCED CONCRETE PRODUCTS
MANUFACTURING
PROJECT TO BE IMPLEMENTED IN OROMIA REGIONAL

STATE, OROMIA SPECIAL ZONE SURROUNDING
FINFINE, GALAN TOWN
PROMOTER: SALAHADIN KHALID
March,2021
Finfine, Ethiopia
Promoter’s: - SElAHADIN kHALID Page 1

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Table of contents
I. Executive Summary
1. Introduction
1.1 Introduction............................................................................................................ 4
1.2 The project Description and Application.......................................................................5
1.3 General Description of the project area and Location...................................................6
1.4 Objectives of the produ................................................................................................ 7
2. General Market Study and Plant Capacity
2.1 Past Supply and Present Demand…...............................................................................8
2.2 Market Prospect…..................................................................................................10
2.3 Project Demand...........................................................................................................13
2.4 Pricing and Distribution..........................................................................................14
2.5 Plant Capacity and Production Programmed.............................................................15
2.6 Materials and Input….............................................................................................16
2.7 Land requirement and land use plan…..................................................................17
2.8 Technology and Engineering…...............................................................................18
3. Organization Structure, Management and Manpower
3.1 Man power Requirement............................................................................................22
3.2 Organizational Structure….....................................................................................23
3.3 Organizational Management duties and Responsibilities............................................24
4. Financial Requirement and Analysis
4.1. Total Initial Investment Cost…..............................................................................27
4.1.1. Fixed Investment.......................................................................................27

4.2. Initial Working Capital........................................................................................28
4.3. Financial Analysis and Statements.......................................................................28
4.3.1. Underlying Assumption.......................................................................................29
4.3.2. Source of Fund...........................................................................................................29
4.3.3. Loan Repayment Schedule.........................................................................................29
4.3.4. Annual depreciation schedule of the fixed asset ( birr)............................................29
4.3.5. Balance Sheet (Beginning)..................................................................................30
4.3.6. Net working Capital........................................................................................... 31
4.3.7. Production Cost.........................................................................................................32
4.3.8. Income Statement....................................................................................................33
4.3.9. Cash Flow Analysis...............................................................................................34
4.3.10. Profitability......................................................................................................... 38
5. Environmental Impact of the project
Promoter’s: - SELAHIDIN KLAHID Page 2

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I. EXECUTIVE SUMMARY
1. Project Title – Modern Construction Materials Production

2. Elements Construction materials (All cement
production) 1.1.Promoter – SELAHDIN KHALID
1.2.Status :- New
1.3.Nationality:-
Ethiopia
2. Project Location:- Oromia Regional State OSZSF Zone Galan Town
3. Land Area and Capital
3.1.
Premises Requirement: - 5,000 M2 (1hek)
4. Total Capital:- 43,000,000Ethiopian Birr
 Total Capital
4.1. Fixed Capital = 31,000,000 birr
4.2. Working Capital = 12,900,000 birr
4.3.Contingency = 4,300,000 birr
 Source Fund
4.4.Own Equity (30%) = 12,900,000birr
4.5.Bank loan (70%) = 30,100,000 birr
5. Planned Employment of the creation of the project
 The total manpower required for the plant will be
250 employees 5.1.Permanent Worker :- 100
 Skilled and
Unskilled 5.2.On
Temporary Basic :- 150
 Skilled and Unskilled
6. Project Benefits for the Regional/Country
 Add value to the economy, Source of Revenue to the government ,
Employment opportunity, Save Foreign currency, Benefit for the local
community, Stimulate the local economy and technology transfer

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1. Introduction
Ethiopia is one of the East African countries with the diversified climatic
conditions, natural scenery and resource bases This project envisages the
establishment of a plant for the production of prefabricated concrete with a
capacity of 140,000 m3 per annum.. Currently the country has a total
population of about 100 million of which more than 40 million is found in
Oromia regional state. Oromia is one of the regional states of Ethiopia with very
fertile land, very conducive weather condition both for crop production and
animal husbandry.
The government of the Ethiopia has been excreting its maximum effort to
expand investment opportunities in the country by designing different policies
and strategies that will facilitate investment through attracting both domestic
and foreign investors. Likewise, the Oromia regional state government has been
working day and night to make poverty history by making its door open to
investors both (domestic and foreign) to come and invest in the region.
Therefore, it is this ample opportunity and cumulative experience which makes

the owner of the project to envisage this concert construction materials
industry in oromia special zone surrounding finfine Zone in Galan town. The
owner has a deep-rooted experience in the field because he has been serving on
different managerial position from expert and technical manager to general
manager. Thus, it is these experiences which primarily motivated this investor
to develop the inception of this project idea.
Hence, being one of the concert construction materials production projects, it is

planned to provide: the soap that was imported from abroad. The present
economic policy of our country which is highly inviting the private sector to
work on import substitution is highly motivating the private sector to respond
to the government invitation, there by contributing their share to the
development process. The project is identified because; the highly growing
population of the country is in need of different concert construction materials.

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The major raw materials required are gravel, sand and cement which are
available locally. The present demand for the proposed product is estimated at
142,888 m2 per annum. The demand is expected to reach at 359,816 m2 by the
year 2020.

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The project is financially viable with an internal rate of return (IRR) of 19.28 %
and a net present value (NPV) of Birr 30.09 million, discounted at 8.5%.
The project creates backward linkage with:-
 Cement,
 Gravel and
 Sand producers and
 Forward linkage with the construction sector.
1.2. PRODUCT DESCRIPTION AND APPLICATION
Concrete is a combination of aggregates and paste. The aggregates consist of

fine and coarse aggregates. The paste is a combination of cement, water and
entrained air.
Aggregates make up about 75 – 85% of the volume of concrete; and the

paste 15 – 25%. Concrete is used in the construction of :-
 Buildings,
 Roads,
 Bridges and
 Other structural requirements.
II. Project Manager

Selahid Khalid have experience on construction production and others
business activities.

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1.3. General description of project area
I. Location
The envisaged concert construction materials plant projects are to be located in

the Galan Town. The envisaged town is one of the Capital City of east shoa side
oromia special zone surrounding finfine zone, growing city in the Country,
From the Federal Capital of Ethiopia surrounding 20 KMs East shoa side.
Currently the town is known for its multi investment development and
establishment of industrial city.
According to the 1994 national census, the town had a population

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1.4. Objectives of the Project
Currently the number of population of the country is alarmingly increasing and thus demands
huge concert construction materials plant of different types in their day to day operations. Hence
this project has the following objectives:
 To undertake the production of the concert construction materials plant though scientific
methods and modern technology.
 To serve as the source of government revenue through business income tax.
 To serve as a role model for other investors who wants to invest in similar business
undertakings.
 To contribute somewhat to the governments objectives of reducing the problem of un-
employment through creating employment opportunities to the citizens.
 To bridge the demand gap of concert construction materials plant in the country.
 To contribute in the import substitution policy of the government by locally producing
the soaps that will be imported earlier.
 To contribute some to the area of self sufficiency.

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2. MARKET STUDY AND PLANT CAPACITY

A. MARKET STUDY
2.1. Past Supply and Present Demand
Concrete is a composite building material made from the combination of aggregate (composite)
and a binder such as cement. The most common form of concrete is portland cement concrete,
which consists of mineral aggregate (generally gravel and sand), portland cement and water.
After mixing, the cement hydrates and eventually hardens into a stone-like material.
For a concrete construction of any size, as concrete has a rather low tensile strength, it is
generally strengthened using steel rods or bars (known as rebars). This strengthened concrete is
then referred to as reinforced concrete. In order to minimize any air bubbles, that would weaken
the structure, a vibrator is used to eliminate any air that has been entrained when the liquid
concrete mix is poured around the ironwork. Concrete has been the predominant building
material in this modern age.
Major advantage of concrete construction for buildings is the material's inherent properties of
heaviness and mass, which create lateral stiffness, or resistance to horizontal movement.
The source of supply for pre fabricated concrete is essentially from the domestic producers.
Although the expanding building and construction sector has given rise to demand for concrete,
official statistics is not available. Failing to assess the demand for prefabricated concrete based
on the supply, end use approach is applied.
One of the factors that indicate housing construction activity is trend in the provision of land by
the city administration. In this regard the city administration has provided a total of 10,000 plots
of land with a total land area of 76 million m2 during the period 1998 – 2005 to private residential
quarters, commercial buildings and real estate developers. (See Table 3.1).
From the total land provided during the period of analyses the largest share in terms of number
of plots is accounted by private residential quarter (93.9%). However, in terms of land area the
largest (52.79 %) is provided to real estate developers followed by commercial buildings (24%)
and private residential quarter (23%).

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A number of other building projects have also been planned as part of beautifying Addis. In
addition, the city government has planned for construction of modern road networks and
overpasses stretching from Pushkin Square to Kera junction road. The city government has also
emphasizes on the construction of highways for mass transportation, along with a number of
bridges and also on broadening and up grading of existing roads and highways. Similarly, it is
estimated that the urban population is likely to grow much higher than the present level resulting
in the additional requirement of housing facilities and commercial constructions.
The activities in all these sectors of construction shall generate a huge and long-term demand for
various construction materials. As the items proposed to be manufactured in the project are the
basic units for construction for any type of construction, there would be no problems in
marketing the products of the unit. Keeping in view, the boom in construction industry in the
capital, there is ample scope for setting up even few more units for the production of cement
products.

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LANDS PROVIDED BY THE CITY ADMINISTRATION FOR HOUSING AND REAL

ESTATE DEVELOPMENT (1998 - 2005)

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Year Purpose, Number of Plot and Land Area in m2
Commercial Real Estate Private Total

buildings Residential
Quarter
# of Land # of Land # of Land # of Land

Plot Area Plot Area Plot Area Plot Area
1998 5 3,000 2 1,951,000 184 28,000 191 1,982,000
1999 53 28,000 0 - 689 103,000 742 131,000
2000 27 21,000 2 356,000 1,690 268,000 1,719 645,000
2001 65 83,000 0 - 2,173 326,000 2,238 409,000
2002 61 40,000 0 - 4,131 619,000 4,192 659,000
2003 98 162,000 1 58,000 1,451 218,000 1,550 438,000
2004 186 1,199,000 5 670,000 359 47,000 550 1,916,000
2005 177 133,000 15 661,000 13 27,000 205 821,000
Total 672 1,669,000 25 3,696,000 10,690 1,636,000 11,387 7,001,000
% Share 5.9 23.84 0.22 52.79 93.9 23 100 100
Source: Land Administration Bureau of the Addis Ababa City Administration, 2006
During the period under review provision of land by the city administration for housing
construction activity has registered an average annual growth rate of 49.63% indicating the high
magnitude of housing demand and construction activity in the city both for commercial and
residential purpose.
Pre fabricated concretes are mainly used by high rise buildings. Accordingly, in order to estimate
the present demand for concrete based on end users method the present level of commercial
building construction is estimated first.

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As can be seen from Table 3.1 during the period 1998 – 2005 the maximum number of plots
provided by the city administration for the construction of commercial buildings was 186 in year
2004 while the minimum was 5 in year 1998. However, during the period under consideration on
average 84 plots were annually granted for commercial building construction.
Even though during the same period plot of land provided for the construction of commercial
buildings shown a 172 % average growth rate, in order to estimate the present (2008) level of
commercial building construction it is conservatively assumed that commercial building
construction in Addis Ababa grows by 4% annually which is equivalent to the growth rate of
urban population.
Accordingly, by taking the average of 1998 - 2005 as a base and employing a 4% growth rate the
number of commercial building construction in Addis Ababa in the year 2008 is estimated at 94.
Moreover, in order to estimate the size of the commercial buildings, data on construction permits
in Addis Ababa is collected and analyzed. Table 3.2 shows the average building construction
permits given during the period 2000 – 2002 by type of building.
2.2. Market Prospect

According to current studies the products of the project have high demand as a result the project
will have a dependable all the year round market throughout the entire project's life. The
products produced by the project will be sold through direct sale channel to buyers. The project's
main market will be main cities of the country like Addis Ababa, Gelan, Galan Mojo, Bishoftu,
Adama and Awassa … etc.
Table 3.2

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AVERAGE BUILDING CONSTRUCTION PERMITS GIVEN DURING THE PERIOD

2000 – 2002 BY TYPE OF BUILDING.
Types of Building Average No. of Plots ( 2000- 2002) % share
3 Storey’s 53 46.90
4 Storey’s 32 28.32
5 Storey’s 10 8.85
6 Storey’s 9 7.96
7 Storey’s 3 2.65
8 Storey’s 2 1.77
9 Storey’s 2 1.77
10 Storey’s and above
2 1.77
Total 113 100
Source “Statistical Abstract” CSA.
As can be seen from the above Table the highest number of permits was for three storey type of
buildings followed by four storey’s and five storey’s.
Accordingly, assuming that the past trend in the type of commercial building construction in
Addis Ababa will also currently apply , out of the total 94 commercial buildings estimated to be
constructed in year 2008, the estimated share of building types is shown in Table 3.3.
NUMBER OF COMMERCIAL BUILDINGS ESTIMATED TO BE CONSTRUCTED IN YEAR 2008 BY BUILDING
Types of Building % Share Estimated Number of
Commercial Buildings
3 Storey’s 46.90 44
4 Storey’s 28.32 27
5 Storey’s 8.85 8
6 Storey’s 7.96 7
7 Storey’s 2.65 2
8 Storey’s 1.77 2
9 Storey’s 1.77 2
10 Storey’s and above 1.77 2
Total 100 94

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In order to estimate pre-fabricated concert requirements by the above buildings, it is assumed

that 50% of the commercial buildings will utilize concert.
Moreover, the determination of current demand is based on specifying consumption requirement

of concrete by the end users. Accordingly, the following consumption coefficients were
developed in consultation with knowledgeable professionals and by reviewing Building
Construction Manuals (see Table 3.4).
TABLE1:- CONSUMPTION COEFFICIENT BY BUILDING TYPE AND THE

CORRESPONDING DEMAND FOR CONCRETE
Floor Prefabricated
Area Wall Area (m2) Estimated Concrete Demand ( m2)
Houses Demand
Building Type that For
Use Concert
(m2) External Internal Concrete Flooring External Internal
3 Storey’s 900 486 812 22 19,800 10,692 17,864 48,356
4 Storey’s 1,200 648 1,083 14 16,200 8,748 14,621 39,569
5 Storey’s 1,500 810 1,354 4 6,000 3,240 5,416 14,656
6 Storey’s 1,800 972 1,625 4 6,300 3,402 5,688 15,390
7 Storey’s 2,100 1,134 1,896 1 2,100 1,134 1,896 5,130
8 Storey’s 2,400 1,296 2,167 1 2,400 1,296 2,167 5,863
9 Storey’s 2,700 1,458 2,438 1 2,700 1,458 2,438 6,596
10 Storey’s
and above 3,000 1,620 2,709 1 3,000 1,620 2,709 7,329
Total 15,600 8,424 14,084 47 58,500 31,590 52,798 142,888
Accordingly, as can be seen from the Table 3.4 the present (2008) demand for pre-fabricated
concrete in Addis Ababa is estimated at 142,888 m 2 but in this time 10,000 m2 find in to Galan
town
2.3. Projected Demand
The rapid development of high-rise buildings has created high demand for pre fabricated
concrete. The demand for pre fabricated concrete is directly related with the growth in the
construction sector which in turn depends on the overall economic development of the country.
Therefore, demand is projected at the annual average GDP growth rate achieved in the past few
years i.e. 8.%. The projected demand is presented in Table 3.5.
PROJECTED DEMAND FOR PRE FABRICATED CONCRETE

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Year Projected Demand (m2)

2009 154,319
2010 166,665
2011 179,998
2012 194,398
2013 209,949
2014 226,745
2015 244,885
2016 264,476
2017 285,634
2018 308,484
2019 333,163
2020 359,816
2.4. Pricing and Distribution
Based on current retail price of prfabricated concrte and allowing a profit margin for retailers and
distribution costs, factory-gate price of Birr 1,750 per m3 is recommended.
The products could be distributed to the end-users directly.
A) Socio-Economic Justification
In addition to its economic benefits the project will also contribute to Ethiopia and its citizens by:
 Creating employment opportunities to 51 workers at first stage and 125 at full

capacity;
 Introducing advanced technologies and methodologies;
 Introduce a full package service starting from production to deliver to final
destination of customers.
 Contributing income to the government by form of taxes; and
B) PAVER TILES & CURBSTONES
Pavement& curbstones of different sizes and shapes to be produced are used for the construction
of footpaths, gardens, and passengers waiting halls, bus stops, industry and other public places.
The product is commonly used in urban areas for the above applications. These materials are
considered as an ideal material for easy lying for footpath. It gives aesthetic look and fine finish.
It can also be used extensively for outside flooring of large public buildings and houses.

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The Paver tiles and curbstones are made both in natural cement color and different bright colors.
As per their application, they are made both in plain geometrical designs & interlocking. Paver
blocks are used for light, medium &heavy-duty applications provided that they are designed and
manufactured accordingly.
Light Usage: Sidewalks, walk ways, garden path, verandahs, swimming pool decks, road
pavements, footpaths, bicycle path etc.
Medium Usage: Hotel-driveways, restaurant, shopping mall/plazas, amusement parks, holiday’s

parking lots embankment, canal lining.
Heavy Usage: Inland container depots, industrial floor, ramps, petrol pumps, service stations,
factory compound, bus terminals & road sides etc.
In this case, Paver tiles are classified in different grades as per Indian Standards keeping in view
of the quantum of the load of traffic at their intended sites of use. The details are as under:
Grade Specific Traffic Recommended Application

compressive category minimum
strength of paver block
paver block thickness
at 28 days N/
mm2
M -30 30 Non traffic 50 mm Building premises monument,
landscape, public garden and park
drives.
M-35 35 Light traffic 60 mm Pedestrians shopping complexes,
car parks, office complexes,
driveways, farm site, local &
residential footways.
M-40 40 Medium 80 mm City streets, small & medium
traffic roads, paths.
M-50 50 Heavy traffic 100 mm Bus terminals, industrial
complexes houses, service
stations.
M-55 55 Very heavy 120 mm Container terminals, bulk cargo
traffic areas, airport pavements.
Note shall be taken that the grades of these products are specified according to the Indian
Standards due to lack of Ethiopian standards set for the products but widely used in the country.

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In general, the use of concrete paver tiles has many advantages over conventional tiles from its
peculiar characteristics mentioned hereunder.
 Quality control is possible with in house concrete testing laboratories.

 Easy installation without specialized equipment.
 Can be unlocked, removed & re-fixed to facilitate repairs.
 Sophisticated & attractive appearance.
 Maintenance free & economical.
 High compressive strength.
 Low water absorption.
 High abrasion resistance.
2.5. PLANT CAPACITY AND PRODUCTION PROGRAMME
1. Plant Capacity
The capacity of the plant is envisaged to be 144,000m3 per year. This is made on the basis of the
projected demand for concrete and the technology recommended.
2. Production Programmer
Concrete batching is based on straight forward and familiar technology. The plant can therefore
start operation at full capacity in the first year.
Accordingly, on the basis of single shift of 8 hours, the plant would produce about 144,000 m3 of
concrete per year.
2.6. MATERIAL AND INPUTS

A. RAW MATERIALS

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The raw material requirement of the plant at full capacity operation is provided in Table 4.1
below. Gravel can be sourced from Quarry and Gravel establishments; sand from Modjo, Koka,
etc; and cement can be acquired from cement factories or imported.
RAW MATERIAL REQUIREMENT AND COST
material Unit of Measure Qty/Year Cost (Birr)

1. Gravel m3 122,400 18,360,000
2. Sand m3 64,800 10,692,000
3. Cement Quintal 518,400 181,440,000
Total 210,492,000
The main raw materials required include cement, pumice, stone aggregates, fine and coarse sand, pigment
and water. The details are as under:
 Portland cement complying with Ethiopian standard 33, 43 & 53 is widely used in the manufacture of
hollow blocks.
 The stone aggregate should be hard preferably more than 5 on Moh’s hardness scale. It should be free
from deleterious matters. Grit size of 8 mm & less is mostly used.
 However in case of large size blocks the mesh size could be up to 12 mm.
 The natural sand & stone crush of size 2 mm & below is used. It should be free from clay dust &
deleterious matters.
 The water should be free from the matters harmful to concrete and reinforcement or matters likely to
cost efflorescence in the product.
 Additives and admixtures are used to accelerating the process of setting, water reduction, minimizing
of air en-trapping& as super plasticizers. Chemical additives are also used for imparting
waterproofing characteristics. Colors and pigments are also used for imparting color to the
products.To run the project smoothly, Portland cement shall be directly procured from the cement
companies. Stone aggregates, pumice and sand will be supplied in bulk by using own trucks. Other
materials such as pigments and additives can be procured from the local market or to be imported as
per requirement depending on the production programmer.
B. UTILITIES
Electricity and water are the utility requirements of the plant. These are outlined in Table 4.2
below.

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UTILITIES REQUIREMENT AND COST
Utility Qty/Year Unit Rate Cost (Birr)

Electricity (kWh) 240,000 0.4736 120,000
Water (m3) 28,800 3.25 115,200
Total 235,200
2.7. Land Use
No Description Land requirement (M2)

1 Production Hall/Workshop 5,000
2 Office Building 500
3 Guard house 500
4 Toilet and shower room 500
5 Warehouse 500
6 Raw material Store 1,500
7 End product Store 500
8 Show room 500
9 Parking and others 500
Total 10,000.00
2.8. TECHNOLOGY AND ENGINEERING

A. TECHNOLOGY
As mentioned above, the production of cement based products are normally undertaken by using
one the following type of process technologies mentioned.
 Manual process where in the mixing of various ingredients and casting of blocks and tiles
is carried out manually.
 Semi-automatic process using Semi automatic machines for mixing and casting operations.
 Fully automatic process.
1. Source of Technology
3. One full Automatic system concert block and paver production line with 1,500 plastic pallets

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 Brand- Pres Mekina, Model 2020, Model-PM 1200, Type-Double Banker , HS CODE-
847480900012
4. Address of Machinery Supplier is given below, Sany Industry Town, Economic and
Technological, Development Zone, Changsha, Hunan, China Zip Code: 410100 Fax 0086
731 4031527
2. Production Process
The aggregates-sand and cement-are poured out of the respective tanks onto bins in accordance
with predetermined proportions. These are conveyed into the mixer where water is added. After
the pre set of mixing, the resultant mix –the final product- is poured onto mixer trucks for use.
The process has no negative impact on the environment.
The manufacturing process of cement concrete hollow blocks mainly involves mixing and
casting of blocks. The concrete mix in respect of cement, pumice, aggregate and sand should be
suitably proportioned to gain required strength of block conforming to the standards. The factors
like quality of raw materials, grading, homogenous mixing, vibrio pressing and curing plays a
vital role in producing quality blocks. The coarse, fine & medium grade materials should
preferably be mixed in the ratio of 40:20:40 for obtaining better interlocking of grains. Vibration
& pressing action together helps in better dispersion of mixture and compaction. The amount of
water required for the mixture varies depending upon the grading of aggregated & capacity of
press machine.
Batching equipment is used for proportioning the ingredient accurately. Concrete mixer is used
for homogenous mixing and blocks are shaped in a vibrio compactor. Material handling is
carried out with the help of shovel loader, screw & belt conveyer and forklift etc. The blocks
after formation are stacked on pallets and carefully shifted to shed in a humid atmosphere to
develop initial strength in 12-24 hours. The blocks are stacked & sprayed with the water. The
spraying of water must be continued intermittently for a period of three weeks for complete
curing. The blocks are then allowed to dry for 10-15 days week before dispatch. As stated
above, keeping in view the size of the demand for these products in the capital, a full -automatic
process has been recommended in the project.

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III. Key Success & Risk factors and SWOT Analysis
A. Key success Factors
Macroeconomic Level Success Factors

 There is a conducive, secure and stable economic and political environment of the country

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 Positive growth trend of economy in the country in the past consecutive years
 Different incentive are availed by the government of Ethiopia to attract investment in the
country such as tax exemption, tax holidays , availing credit fund to finance investment
projects particularly in priority and export oriented projects, availing land at reasonable price
or free of charge and export credit guarantee are some of the incentives provided.
 There is improvement in basic infrastructural facilities such as telecommunications, road
network, electricity and water supply and there is a relatively low electric cost in the county
 There is a comparatively lower trainable labor cost in the country and thus production cost
for labor intensive industries is relatively low
Sector Level Success Factors

 Manufacturing industry is one of the priority areas in the government industrial
development strategy and enjoys every advantage that is rendered for the priority sectors.
 The experience of the project manager across different sectors will undoubtedly lead
the project to succeed.
 The overall economic growth, construction of different houses by individuals, investors
and government.
 Growing demand of concrete hallow blocks and paver blocks in the local market
 Few numbers of producers of hallow blocks and paver blocks using traditional ways in the
sector.
Firms Level Success Factors

 Capacity- The project will have net cash flow of 529,507.00 during first year and
6,303,761.00 discounted at a 10% discount rate at the end of fifth year indicating that it can
meet its financial obligations from the project itself. The project manager of the company
also well experienced in various businesses and qualified with BA in management. Hence, he
can run the business successfully.
 Competence- In order to achieve the objectives of the company, the organizational structure
of the company has been arranged comprising of qualified and experienced management
personnel. Hence, the general manager’s experiences abet to run the business to be
competitive and profitable.

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3.1. Risk factors

 Foreign currency shortage due to imported machinery and equipment’s
 There are similar products produced in the industry informally in the local market and
hence the factory may face fierce competition
 Frequent power interruption.
3.2. SWOT Analysis

Strength Opportunities
 The structure of the company system  Conducive investment environment
 Company having qualified and low energy cost
management system.  Increased demand of the product
 Most of the utilities are availed related with country development
 Consume raw materials from local  80% Credit facility and
market near to the factory. government investment incentives
 We bought our land having sufficient  Cheap trainable labor, utilities and
eclectic power and drilled water power cost
 There is no well-organized hollow  Import all machinery, equipment and
block and pavement bricks free from any import tax and custom
manufacturer in the country. duty
 The technology in not easy to imitate.  No strong competition
 Unsatisfied market
Weaknesses Threats
 New to the market  Lack of foreign currency
 Current instability of the country
3. MANPOWER, OGANIZATION STRUCTURE AND MANAGEMENT

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3.1 Man Power
At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the plant. It is always true that Organization and Management
of the project plays a key role and bear direct impact on the success and profitability of the
project. The opportunities of being serviced by well skilled professionals well enable the
company to evaluate the internal weakness and strength of the company as well as to assess the
global opportunity and risks in the world market so that the company can cope up with the
dynamics of the market situation.
Therefore, it must particularly to the project under consideration, to give especial affection to
select and recruit the appropriate total manpower requirement for the plant will be employees at
full capacity.
I) Permanent Workers :- 100

 Skilled :-50
 Unskilled:-50
II) Temporary Workers:-150
 Skilled :-100
 Unskilled:-50

2
3.2. Organizational Structure
The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be manager with the
responsibility of supervising the overall activity of the plant. Depending up on the nature of the
center and the amount of work to be performs; there exist auxiliary units under the general
manager.
Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by the owners.
Owner
General Manager
Executive
Secretary
Production
Department Admin & Finance Commercial
Department Department
Pre- Packing
treatment
Admin. & Financial
Inspection HRM
Marketing Sales
Fig: Organizational
Structure
Hence the following section deals with the duties and responsibilities of some departments.

2
3.3. Organizational Management Duties and responsibilities
1. General Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
plant so as to achieve the short and long run objectives of the organization.
2. The Manufacturing Department
Duties and responsibilities:-
It is the core department of the project center and has the following responsibilities.
 Use modern manufacture, processing and technologies that will enhance the quality
of those products.
 Produce quality product that will enable the center competent both in the domestic
and international market.
 Use appropriate technology to manage its products.
 Control on the quality of raw materials, inputs, quality of the product and also the
overall production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final products
3. Administration and Finance
Department Duties and responsibilities:-
 Will plan, organize direct and control the financial transaction of the plant by using the
entire necessary document.
 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.

2
 Will control the human and non human resources of the plant, which include: effective
handling of the different inventories of the machineries, equipments, raw materials,
finished products, and devise strategies of controlling against fraud and damage.
 Manage and execute The promoter national and international procurement procedure
 Administer and control The promoter logistic resource
 Effectively administer the promoter Procurement process domestically as well as
internationally.
 Manage the public relation of The promoter/factory with external parties/stakeholders
 Provide and manage general supportive service to the plant.
4. Commercial Department
Duties and responsibilities:-
 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing ...
 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of The
promoter
All workers have responsibilities on each activity they assigned for.

2
5. Salary Expense
The total number of manpower, manpower list, qualification, and salary and sex composition are
listed in the table below.
Monthly
SN Description No Qualification Salary Annual Salary
1 General Manager 1 BA in Business Management 10,000.00 120,000.00
2 Production Manager 1 BSC in industrial Engineering 5,000.00 60,000.00
3 Supervisor 1 BSC in Production 4,000.00 48,000.00
Technology
4 Secretary 1 Diploma In Secretarial Science 2,000.00 24,000.00
5 Public Relation 1 Dip in Social Science 4,000.00 48,000.00
Officer
6 Personnel 1 Dip in HRM 4,000.00 48,000.00
7 Planning Officer 1 Dip in Economics/Statistics 4,000.00 48,000.00
8 General service 1 Dip in management 5,000.00 60,000.00
9 Color Operator 1 Diploma in Chemical Engineer 4,000.00 48,000.00
10 Hydraulic 1 10+2 in general Mechanic 5,000.00 60,000.00
Technician
11 Machine Operators 4 10+2 in general Mechanic 5,000.00 240,000.00
12 Marketing head 1 BA in Marketing management 5,000.00 60,000.00
13 Purchaser 1 Diploma in Purch. & Suppli 5,000.00 60,000.00
mgt
14 Administer 1 Dip in Management 5,000.00 60,000.00
15 Sales person 3 Diploma in sales management 5,000.00 180,000.00
16 Finance head 1 Dip in Accounting 5,000.00 60,000.00
17 Accountant 1 Diploma in Accounting 5,000.00 60,000.00
18 Electrician 1 10+2 in general electricity 5,000.00 60,000.00
19 Cashier 1 10+2 in bookkeeping 3,000.00 36,000.00
20 Cleaner 4 Unskilled 3,000.00 144,000.00
21 Driver 2 10 completed 3,000.00 72,000.00
22 Gardner 2 Unskilled 2,500.00 60,000.00
23 Guards/Security 4 Basics 2,000.00 96,000.00
24 Helpers and laborers 214 10 completed 1,395.00 3,247,560.00
Grand Total 250 4,999,560.00
B. TRAINING REQUIREMENT
The production supervisor and skilled workers require few weeks training on machine operation
and production technology. Training is assumed to be entertained during the erection and
commissioning period and the cost is in built there and hence about Birr 25,000 is sufficient to
cover expenses associated with the training programmed.

2
4. FINANCIAL REQUIREMENT AND ANALYSIS
4.1. Total Initial Investment Cost
The total cost of money that is required to estimate the envisaged modern construction materials
is to be birr 43,000,000.
Table Total Initial Investment Capital

No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 12,900,000 0.00
1.2 Machines and Equipment’s 8,548,200 0.00
1.3 Vehicles and Motors 5,600,000 0.00
1.4 Office Furniture and Equipment 3,500,000 0.00
Total Fixed Investment Cost 0 0.00
2 Operating Expense 0.00
2.1 Raw Materials Purchase and Products 3,735,000 0.00
2.2 Salary Expense 5,000,000 0.00
2.3 Other Operating Expense 4,000,000 0.00
2.4 Pre-operating Expense 12735000 0.00
Total Operating Expense 1,000,000 0.00
Total Investment Cost 43,000,000 0.00
4.1.1. Fixed Investment
Building and Construction
No Description Land requirement (M2) Unit cost in Br. Total Cost in Br.
1 Production Hall 2,000 2650 13,250,000
2 Office Building 500 1000 1,500,000
3 Guard house 200 1000 500,000
4 Toilet and shower room 200 1000 500,000
5 Warehouse 200 1100 550,000
6 Raw material Store 400 1200 600,000
7 End product Store 500 1200 600,000
8 Show room 500 1100 550,000
9 Parking and others 500 1000 500,000
Total 5,000.00 8,550,000

2
4.1.2. Required Machinery

A. Total Cost Machinery and Equipment for modern construction materials
Sr. Description Qty. Cost in birr
No.
1 Aggregate filler 3
2 Weighing filler 3
3 Aggregate temporary 1
storage/hopper/filler
4 Cement weighing equipment 1

8,548,200
5 Mixer 1
6 Water supply and measuring 1

system
7 Compressor 2
8 Electric control system 1
Grand Total 8,548,200
4.1.3. Vehicles
SN Description Qty Unit Price Total Price(Birr) Remark
1 Pick Up model 20/21 1 2,200,000 2,200,000 Duty Free
2 Service Bus 2 1,300,000 2,600,000 Duty Free
3 Mini Bus 1 800,000 800,000 Duty Free
Total 4,300,000 5,600,000

2
4.1.4. Office Equipment’s

SN Description Qty Unit cost (Br). Total cost (Br).
1 Managerial chair with tables 3 10,000.00 30,000.00
2 Secretarial chairs with table 1 50000 5,000.00
3 Office Chairs with tables 6 1,350.00 8,100.00
4 Computer with printer 5 20,000.00 100,000.00
5 Shelf 1 3,500.00 3,500.00
7 Telephone machine set 2 1,500.00 3,000.00
8 Filing Cabinets 2 2,000.00 4,000.00
9 Machine Assembly, chair and table 2,000,000
10 Decoration(Carpet & Curtain) 7,500.00
11 Reserved 1,339,000
Total 3,500,000.00
4.2. INITIAL WORKING CAPITAL
The initial working capital is established to be 26,351,800.00 birr
4.2.1. Material and Inputs
A. Raw and Auxiliary Materials
The major raw materials and auxiliaries required for the production of modern construction
materials shown in Table 4.1 below. All the raw and auxiliary materials are to be imported.
Material Unit of Qty/Year Cost (Birr)

Measure
1. Gravel m3 150 15,000 2,250,000
2. Sand m3 165 20,000 3,300,000
3. Cement Quintal 354 26,000 9,204,000
Total 14,754,000

2
4.2.2. Expense
As indicated in part three of this study, the total cost of salary and wage is estimated to be
5,000,000 birr.
4.2.3. Other Operating Expenses
SN Description Annual Cost in Br. Assumption Used
1 Property Insurance 30,091.95 10% of Fixed investment cost
2 Audit and Legal Fee 10,000 10% of Salary
3 Uniforms 1,600 1% of FC
4 Telephone, Fax and Postal 1,000 1000per month
5 Cleaning Gods Supplies 2,000.00 70*60br
6 Repair and Maintenance 50,229.88 900 per month
7 Advertisement 2,000.00 1000 per month
9 Stationery and other office 1,000.00 700 per month
supplies
10 Electricity 1,000.00 0.45*150,000W per year
11 Water 5,00.00 2*1000 m3 per year
12 Fuel 90,000.00 6500 lit*20 per year
13 Oil and lubricant 1,000.00 10% of fuel cost
14 Miscellaneous Expense 1,000.00 3,000 br month
15 Other related reserved 3,200,000
Total 4,000,000
4.2.4. Pre -Service Expense
SN Description Cost in br.
1 Project proposal 10,000.00
2 Licensing fee and others lizi payment 2,450,800
3 Promotion and adverting 50,000
4 Workers capacity Building 50,000
5 EIA 40,000
Total 2,616,800

2
4.1. Financial Analysis and Statements
4.1.1. Underlying Assumption

The financial analysis of the envisioned Modern construction materials product is based on the
data provided in the preceding sections and the following assumptions.
A. Construction and Finance
 Construction Period..............................................................................................18 Months

 Source of finance..........................................................................30% equity and 70% loan
 Bank interest rate...........................................................................................................10 %
 Tax holidays.............................................................................................................2 years
 Operating costs increase by…..........................................................................................2%
 Operating costs and raw material increased by…...........................................................5%
 Utilities and operation expense...................................increase 3% per annum after 2ndyear
 Wages and Salary increase…………………………Increase 3% Per annum after 2nd year
 Sales..................................................................increase by 5 % per annum after 2nd year
B. Depreciation
 Building…................................................................................................................5%
 Machinery and Equipment.......................................................................................15%
 Office Furniture........................................................................................................20%
 Vehicles.....................................................................................................................15%
C. Working Capital
 Accounts Receivable.............................................................................................30 days
 Raw material Local.................................................................................................30 days
 Work in progress…...............................................................................................5 days
 Finished Production..............................................................................................30 days
 Cash in hand...........................................................................................................5 days
 Accounts payable....................................................................................................30 days
4.1.2. Source of Fund

SN Description % share Amount(in birr)
1 Owners Share 30 12,900,000
2 Bank Loan 70 30,900,000
Total 100 43,000,000

2
4.1.3. Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Payment Remaining Balance
0 0 0 0 30,900,000
1 3,100,000 3,100,000 10,640,000 47,880,000
2 3,100,000 4,788,000 10,108,000 42,560,000
3 3,100,000 4,256,000 9,576,000 37,240,000
4 3,100,000 3,724,000 9,044,000 31,920,000
5 3,100,000 3,192,000 8,512,000 26,600,000
6 3,100,000 2,660,000 7,980,000 21,280,000
7 3,100,000 2,128,000 7,448,000 15,960,000
8 3,100,000 1,596,000 6,916,000 10,640,000
9 3,100,000 1,064,000 6,384,000 3,100,000
10 3,100,000 532,000 5,852,000 0
4.1.4. Annual depreciation schedule of the fixed Asset ( birr)
Amount of
Rate of
values of Capital Depreciation
No Capital Assets depreciation
assets (Br.) estimated
(%)
(Br.)
1 Land, Building and Construction 12,900,000 5 1,100,000

2 Machines and Equipments 18,548,200 15 2,782,230
3 Vehicles and Motors 5,600,000 15 840,000
4 Office Equipment 3,500,000 20 700,000
Total 49,648,200 5,422,230

2
4.1.5. Balance Sheet (Beginning)
Asset
Current Asset Value in Br
Cash 3,551,800
Inventory of raw material and input 22,800,00
Total Current Asset 26,351,800
Fixed Asset
Land, Building and Construction 12,900,000

Machineries and Equipment 18,548,200
Office Equipment 3,500,000
Vehicles 5,600,000
Total Fixed Asset 49,648,200
Total Asset 43,000,000
Liability
Account Payable 30,900,000

Owner Equity
Capital 12,900,000
Total Liability and Owners Equity 43,000,000

0
Promoter’s: - Page 37
0
0
Construction Materials Production
C. FINANCIAL EVALUATION
1. Profitability
Based on the projected profit and loss statement, the project will generate a profit through
out its operation life. Annual net profit after tax will grow from Birr 11.13 million to Birr
11.20 million during the life of the project. Moreover, at the end of the project life the
accumulated cash flow amounts to Birr 133.27 million.
2. Ratios
In financial analysis financial ratios and efficiency ratios are used as an index or yardstick
for evaluating the financial position of a firm. It is also an indicator for the strength and
weakness of the firm or a project. Using the year-end balance sheet figures and other
relevant data, the most important ratios such as return on sales which is computed by
dividing net income by revenue, return on assets ( operating income divided by assets),
return on equity ( net profit divided by equity) and return on total investment ( net profit
plus interest divided by total investment) has been carried out over the period of the
project life and all the results are found to be satisfactory.
3. Break-even Analysis
The break-even analysis establishes a relationship between operation costs and revenues.
It indicates the level at which costs and revenue are in equilibrium. To this end, the
break- even point of the project including cost of finance when it starts to operate at full
capacity ( year 3) is estimated by using income statement projection.
BE = Fixed Cost = 27 %
Sales – Variable Cost
4. Payback Period
The pay back period, also called pay – off period is defined as the period required to
recover the original investment outlay through the accumulated net cash flows earned by
the project. Accordingly, based on the projected cash flow it is estimated that the
project’s initial investment will be fully recovered within 7 years.
Page 1
171-2
5. Internal Rate of Return
The internal rate of return (IRR) is the annualized effective compounded return rate that
can be earned on the invested capital, i.e., the yield on the investment. Put another way,
the internal rate of return for an investment is the discount rate that makes the net present
value of the investment's income stream total to zero. It is an indicator of the efficiency or
quality of an investment. A project is a good investment proposition if its IRR is greater
than the rate of return that could be earned by alternate investments or putting the money
in a bank account. Accordingly, the IRR of this porject is computed to be 19.28 %
indicating the vaiability of the project.
6. Net Present Value
Net present value (NPV) is defined as the total present ( discounted) value of a time
series of cash flows. NPV aggregates cash flows that occur during different periods of
time during the life of a project in to a common measuring unit i.e. present value. It is a
standard method for using the time value of money to appraise long-term projects. NPV
is an indicator of how much value an investment or project adds to the capital invested. In
principal a project is accepted if the NPV is non-negative.
Accordingly, the net present value of the project at 8.5% discount rate is found to be Birr
30.09 million which is acceptable.
D. ECONOMIC BENEFITS
The project can create employment for 32 persons. In addition to supply of the domestic
needs, the project will generate Birr 20.92 million in terms of tax revenue. The project
creates backward linkage with cement, gravel and sand producers and forward linkage
with the construction sector.
Promoter’s: - BD Future Business Group PLC Page 2

171-3
E. Environmental aspect of manufacturing process

Although separate document is expected in relation to major environmental aspect, the unit has to
comply with major rules and regulations during construction and start up of the operation. The
manufacturing process involved in the production of cement based concrete products are basically
mixing of various ingredients viz cement, pumice, stone aggregate and sand, the conversion of
raw material mix into the form of paste followed by casting of the mix in requisite shape and
sizes. There are no solid, liquid or gaseous effluents generated during the manufacturing process.
However, while preparing the mix of cement, stone aggregates and sand, some dust particles get
floated in the air causing higher level of suspended particulate matter (SPM) in the air. This could
be checked and controlled by providing appropriate coverings to the mixing bins, use of exhaust
fans and sprinkling of water on sand and stone aggregates as also during mixing operations. A
provision of dust collector would further minimize the SPM in the air and improve the working
conditions in and around the manufacturing unit. The wearing of mask by workers to protect them
from inhaling of dust particles is also recommended.
Promoter’s: - BD Future Business Group PLC Page 3

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Construction Materials Production 202

RE-ENFORCED CONCRETE PRODUCTS

PROJECT TO BE IMPLEMENTED IN OROMIA REGIONAL

PROMOTER: SALAHADIN KHALID

Promoter’s: - SElAHADIN kHALID Page 1

4.1. Total Initial Investment Cost…..............................................................................27

4.1.1. Fixed Investment.......................................................................................27

Promoter’s: - SELAHIDIN KLAHID Page 2

1. Project Title – Modern Construction Materials Production

Promoter’s: - SELAHIDIN KLAHID Page 3

Therefore, it is this ample opportunity and cumulative experience which makes

Hence, being one of the concert construction materials production projects, it is

Promoter’s: - SELAHIDIN KLAHID Page 4

Promoter’s: - SELAHIDIN KLAHID Page 5

The project creates backward linkage with:-

1.2. PRODUCT DESCRIPTION AND APPLICATION

Concrete is a combination of aggregates and paste. The aggregates consist of

Aggregates make up about 75 – 85% of the volume of concrete; and the

 Other structural requirements.

II. Project Manager

Promoter’s: - SELAHIDIN KLAHID Page 6

1.3. General description of project area

The envisaged concert construction materials plant projects are to be located in

According to the 1994 national census, the town had a population

Promoter’s: - SELAHIDIN KLAHID Page 7

1.4. Objectives of the Project

Promoter’s: - SELAHIDIN KLAHID Page 8

2. MARKET STUDY AND PLANT CAPACITY

Promoter’s: - SELAHIDIN KLAHID Page 9

Promoter’s: - SELAHIDIN KLAHID Page 10

LANDS PROVIDED BY THE CITY ADMINISTRATION FOR HOUSING AND REAL

Promoter’s: - SELAHIDIN KLAHID Page 11

Year Purpose, Number of Plot and Land Area in m2

Commercial Real Estate Private Total

# of Land # of Land # of Land # of Land

1998 5 3,000 2 1,951,000 184 28,000 191 1,982,000

1999 53 28,000 0 - 689 103,000 742 131,000

2000 27 21,000 2 356,000 1,690 268,000 1,719 645,000

2001 65 83,000 0 - 2,173 326,000 2,238 409,000

2002 61 40,000 0 - 4,131 619,000 4,192 659,000

2003 98 162,000 1 58,000 1,451 218,000 1,550 438,000

2004 186 1,199,000 5 670,000 359 47,000 550 1,916,000

2005 177 133,000 15 661,000 13 27,000 205 821,000

Total 672 1,669,000 25 3,696,000 10,690 1,636,000 11,387 7,001,000

% Share 5.9 23.84 0.22 52.79 93.9 23 100 100

Promoter’s: - SELAHIDIN KLAHID Page 12

2.2. Market Prospect

Promoter’s: - SELAHIDIN KLAHID Page 13

AVERAGE BUILDING CONSTRUCTION PERMITS GIVEN DURING THE PERIOD

Types of Building Average No. of Plots ( 2000- 2002) % share

Promoter’s: - SELAHIDIN KLAHID Page 14

In order to estimate pre-fabricated concert requirements by the above buildings, it is assumed

Moreover, the determination of current demand is based on specifying consumption requirement

TABLE1:- CONSUMPTION COEFFICIENT BY BUILDING TYPE AND THE

2.3. Projected Demand

PROJECTED DEMAND FOR PRE FABRICATED CONCRETE

Promoter’s: - SELAHIDIN KLAHID Page 15

Year Projected Demand (m2)

 Creating employment opportunities to 51 workers at first stage and 125 at full

B) PAVER TILES & CURBSTONES

Promoter’s: - SELAHIDIN KLAHID Page 16

Medium Usage: Hotel-driveways, restaurant, shopping mall/plazas, amusement parks, holiday’s