1.

EXECUTIVE SUMMARY

The proposal is carrying out for the setting up of cement based manufacturing unit in Buee
town that produce cement concrete solid blocks, hollow blocks, paver tiles, terrazzo tiles,
grey mosaic tiles and color tiles mainly to supply the domestic demand in construction
material sector.

1.1 Location of the Project

The proposed project will be setup in Southern Nation, Nationalities and Peoples Regional
State, Gurage Zone in Buee Town Administration, which is near to the major sites of
construction (Addis Ababa) as well as sources of raw materials. Besides, Buee town being
the site of biggest ongoing power substation projects has also tremendous potential for
construction activities. The units for the manufacture of main raw materials viz stone
aggregates and sand also need to be promoted near the proposed project. Cement, in any
case, has to be transported from Addis Ababa. Keeping in view, the various parameters, these
sites have been short listed in the order of preference.

1.2 Project Objective

 To manufacture cement based products and to sell the products to potential
customers to maximize profit & make the project sustainable.
 To provide employment opportunity to the growing labor force of the project area by
employing permanent and temporary employees.

1.3 Main types of products

The project has been designed for the production of a variety of cement based products. The
unit shall have two manufacturing sections, the first for the production of cement concrete
blocks, hollow blocks and paving blocks and the second for the production of cement
concrete tiles and mosaic flooring tiles (terrazzo tiles).

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1.4 Financial Overview
In terms of financing, the Yarn Factory is seeking a total of Br 42,128,405.00 to finance its
capital expenditure requirements (Br 13,331,500.00,) and working capital (Br. 28,796,905). 

The proposed source of funding for the business is a bank loan of Br. 29,008,984.00 and
owner contribution of Br. 13,119,421.00 The proposed security for the bank loan is the all
assets of the farm. The business will approach Development banks of Ethiopia for assistance
with the required funds. The funds will be used to build a plant and purchase of machinery
and equipment and amount also covers the working capital requirements of the business.

The project is financially feasible that it will reach breakeven point at 18% of the capacity
and has a payback period of 3 years

1.5 Estimated Production

Cotton Yarn production in

Year Tonn
1st 6,400.00
2nd 7,200.00
3rd 7,200.00
4th 7,200.00
5th 7,200.00

1.6 Expected Beneficiaries:

 Permanent employee for day to day operation : 33.00
 Temporary employee during Construction : 15.00
 48.00

1.7 Socio-Economic benefit

 The project will create Opportunity to get employed in an organized plan for the
local society
 Sand and red ash producers prefer to deal directly with the unit and sell their raw
materials at better price
 Increase in income opportunity will provide access to community to provide better
education and health facilities and quality of life

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2. Background
The startup project is based on the idea that a prosperous market for cement base products
that present in local market. The anticipated Project” is initiated and owned by Mr.
Debebe Duressa Boku

2.1Company Profile
2.1.1 Project Name Debebe Duressa Boku Cement based Products Factory
2.1.2 Owner(s): Mr. Debebe Duressa Boku
2.1.3 Nationality: Ethiopian
2,1.4 Industry Construction industry
2.1.5 Full Address : Address: SNNPRS, Gurage Zone in Buee Town. Administration
Mobile: 0930069678
2.1.6 Status of the Project New
2.1.7 Proposed Site: Buee Town Administration
2.1.8 Specific location: Within the Industry area of Buee town Administration
2.1.9 Size of proposed land: 5,000 square meter
2.1.10 Total estimated 42,128,405.00
Investment
2.1.11Expected Source of Equity 30% Br. 13,119,421.00
financing Bank Loan 70% Br. 29,008,984.00
2.1.12 Legal Form of Sole proprietorship
organiz.ation
2.2 The Promoters
2.2.1 The Promoter’s
The owner was born in Ethiopian and currently has Ethiopia citizenship. In view of his
education he has completed Teacher teaching program.
Mr. Debebe Duressa has more than 12 years of experience in trade in his own business.
The promoters of the project have excellent understanding of the products and the
markets due to his experience in trading. Debebe also has several influential and
informative contacts that will support him in this business venture. In addition, he has
experience in receiving loans and has been successful in repayment.
Mr. Debebe Duressa is the man of decision as well as entrepreneur that knows what he
wants to accomplish and plan. There is also a boom in Ethiopia in the construction
sector and hence the promoters felt that they will be able to market the products easily.

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2.3 Economic Background and Potential in Relation to the Proposed
Investment

2.3.1 Potential
The availability of major raw materials for the project include cement, water, stone
aggregates and sand / stone dust /in Buee where the project is to be located. In addition to
this, the construction sector is relatively labor intensive with which Ethiopia has comparative
advantage. In this regard, UNCTD (2004) research indicates that many developing countries
have a comparative advantage in the production of cement based products, which often relies
on relatively simple technology and a comparatively large input of low-skilled labor.

The country is more preferable due to various opportunities to make the cement based
products sector grow at expected level. Among such factors, the political and social stability,
and macro-economic stability - rapidly growing economy, strategic location and low inputs
cost.

Urban areas suffer from inadequate housing stock and poor infrastructure. The rural scene
exhibits poor housing conditions too. In addition, Growing public awareness of the
advantages of the product coupled with increase in the government and financial institutions
support for housing which is a basic human necessity would ensure a healthy growth in the
demand of cement base products. Besides, construction industry is a growing a sector. The
demand for this product is always high in all cities and other urban centers due to
construction of residential apartments, commercial buildings and industrial buildings.

Potential for successful industrial backward linkages are illustrated by the fact that Ethiopia
has untapped raw materials that is suited for the production of cement based products. It used
in the forward construction industry. Together with foreign investors this potential is to be
tapped the coming years

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.
2.3.2 Role of the project for the National Economy
The construction industry in Ethiopia is the major sector where public and private sectors are
investing huge amount of fund. Construction sector is the third highest employer, after
textile and agriculture and accounts for 5% of GDP and 18% of the gross domestic
investment

The sector has direct linkages with cement and steel sectors as almost 100% cement and
50% of the steel goes into the construction. Thus even a moderate growth in the construction
sector can bring about positive impact on the core industries such as Cement, Steel, Mining
and many other industries such as Fixtures / Fittings, Paints and Chemicals, Bricks / Tiles,
Aluminum, Glass Plastics, Timber, Capital Goods, etc.

Expansion of economic infrastructure (buildings railways, roads, telecom, power, irrigation)

being critical towards achieving the country’s Growth and Transformation Plan (GTP).
Significant amount of the country’s budget is allocated to economic development through
financing infrastructures for development of educational and house projects, construction of
railways and road projects which increased road network density, construction of health
projects to increase access for water and sanitation infrastructure.

The construction industry of Ethiopia has contributed much in reduction of poverty, in

increasing employment expansion through small and medium enterprise development and job
creation through the construction of low cost houses in Addis Ababa which was subsequently
replicated to other regions.

Share of the Private sector in the value add of construction is also significant. The private
sector is investing its capital for acquisition of various fixed assets such as acquiring new
machinery and equipment and construction of new buildings and building maintenance
activities.

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It is envisaged that the development of any nation can be measured through the availability
of constructed buildings to cater for provision of decent shelter and the availability of
infrastructure facilities to cater for the movement of people, goods, and services.
Since the construction industry is a fundamental economic activity which permeates most of
the sectors of the economy it has a major role to play in achieving social economic
development. The sector also has indirect impact on the growth or stagnation of the overall
economy.

2.4 The Features of the construction Industry

Construction sector is one of the largest economic sectors of Ethiopia in terms of

employment. It directly and indirectly affects more than 40 allied industries which also
includes pre-fabricated construction material industry. Block making has a significant
position in the construction process particularly in the housing sector where prefabricated
blocks are used extensively with more than 40% of the total structure of the building.

Traditional construction has been relying on hand made bricks rather than concrete block
which have been a high cost option while selecting material for the house construction
both in urban and rural areas of the country. Concrete based construction is
comparatively new phenomena and historically has been employed in the urban areas
where technology and machinery was introduced due to mass demand of building
material and comparatively high average income.

Ethiopia concrete block industry is almost entirely unorganized and characterized by the
presence of a large number of small scale manufacturers which compete with one
another at the regional level. Concrete block industry in Ethiopia has recorded
considerable growth over the past few years, driven by the growth in infrastructure and
construction activities. Moreover, Ethiopia's rising population, increase in per capita
income, improved economic growth, industrialization, and rapid urbanization has
augmented the growth prospects of blocks and concrete block industry.

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Pre-fabricated construction block have different categories from smallest size of a brick to a
huge sized pre-cast concrete bridges. However, for the purpose of this proposal, we have
focused on the manufacturing setups where various types of blocks and terrazzo tiles are
manufactured with the help of automatic or semi-automatic plant and machinery.

This sector is largely unorganized and no statistics are available in terms of how many block
manufacturing units are working and their scale of operations. The cement based products
manufacturing sector can be divided into four categories:

2.4.1 Organized Sector – Machine Blocks

Organized sector constitutes few major players in big cities. All companies use imported
plants and machinery due to their large scale of operations. Standard blocks are generally
available in the sizes. Product quality is defined in PSI (per square inch pressure) which a
block can survive. Generally it depends on the use of block which varies from product to
product. Housing construction purpose block has a normal PSI of 400 and pavers are
manufactured with 5000 PSI strength.

2.4.2 Enterprises Sector – Machine Blocks

They are mostly owned by indigenous people. Small and medium enterprises are a very
diverse group, ranging from small establishments to medium-sized units, scattered
throughout the country. They are the only firms willing and able to undertake the small,
scattered projects, especially in rural areas, which are among the key components of
development required to satisfy the basic needs of people such as housing, health facilities,
sanitation and roads for geographical mobility.

This sector mainly includes block yards where hand operated mechanical machines are used
to make concrete blocks which lay two and above blocks at a time. Small and medium
enterprises are vital for ensuring diversity and flexibility of the economy responsible for the
creation of employment and growth.

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2.4.3 Unorganized Sector – Machine Blocks
This sector mainly includes block yards where hand operated mechanical machines are used
to make concrete blocks which lay two and above blocks at a time. Therefore, their
operations are limited and usually work on the basis of area to area demand. Hundreds of
such setups could be seen in each area of the country where these setups are fulfilling the
local housing construction demand of blocks of three different sizes and strengths depending
upon the individual requirements of the customer. Standard blocks are generally available in
the sizes of As far as PSI is concerned, no defined standard could be found; however, 400
PSI is normal in this sector.

2.4 .4 Unorganized Sector – Hand Made Blocks

This sector is gradually shrinking and now operating on a very small scale in the low income
areas where concrete based structure is scarce. Single mold is used which lays only one block
at a time. Such blocks are easily breakable; therefore they are generally not preferred even by
the customers who have very limited capital to invest in house construction.

The current scenario of this sector shows that most of such block yard operators are
switching to machine made blocks option due to customer preference and production
limitations of the handmade blocks making process.

Generally, there have been a number of government led initiatives geared towards fostering
the
local production blocks sector. Despite such interventions, the state of the local blocks
production sector has remained poor. Thus, the sector continues to exhibit features that
include inadequate capacity, lack of working capital, low participation in work opportunities
and poor quality.

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2.5 Benefits

One of the significant benefits of this sector to the country is employment of the population
which is factorial in increasing the per capita income of the Ethiopian. Along with
employment generation, female incomes poverty reductions are also a major contribution of
this sector to develop sustainable livelihoods in the country.

Indigenous production of cement based products would lead to self-reliance for these items
in the field of construction materials sector and would provide a fillip to construction
industry.
There are not many medium and small scale units manufacturing units in Ethiopia. Setting
up of this unit would have a catalytic effect on growth of entrepreneurship in medium and
small scale sector
The setting up of the project would lead to generation of direct and indirect employment,
both for skilled and unskilled workers which would result into economic upliftment of local
population. This would also lead to up gradation of skills.

Finally, the project would lead to enhancement of economic activities in the field of
construction, transport of raw materials and finished goods, marketing and trade, repairs and
maintenance, etc.

The project will also generate income for the Government in terms of payroll tax and profit
tax in future.

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2.6 Past and present intervention

The brick was historically manufactured by an ancient method called the soft mud process in
which relatively moist clay is pressed into simple rectangular moulds by hands .To keep the
sticky clay from adhering to the moulds, the moulds may be dipped in water immediately
before being filled, producing brick with a relatively smooth, dense, surface know as water
struck brick.
The bricks manufacturing was slightly developed from the sift mud process to the dry press
process was used for the clay that shrinks while drying. Clay mixed was placed in steel
moulds and pressed by a machine.

The ancient blocks are replacing conventional building bricks gradually due to the inherent
properties like strength, size accuracy and insulation. These are used both for laying load
bearing and non- load bearing walls. The cost of blocks is very much compared to the cost of
red bricks and quite low, specially, in hilly regions where building bricks cannot be made
whereas red bricks have to be procured from distant places thus incurring extra heavy
transportation costs.

currently in use hollow block and burned block construction materials in our country are
expensive and take long time to manufacture and construct, which makes the selling price of
those hoses expensive and take long time to manufacture and construct, which makes the
selling price of those hoses expensive and unaffordable for the medium income society.

These early blocks were usually cast by hand, and the average output was about 10 blocks
per person per hour. Today, concrete block manufacturing is a highly automated process that
can produce up to 2,000 blocks per hour.

The simple concrete block will continue to evolve as architects and block manufacturers
develop new shapes and sizes. These new blocks promise to make building construction
faster and less expensive, as well as result in structures that are more durable and energy
efficient. Some of the possible block designs for the future include the biaxial block, which

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has cavities running horizontally as well as vertically to allow access for plumbing and
electrical conduits; the stacked siding block, which consists of three sections that form both
interior and exterior walls.

2.7 Justification of the project: why it is proposed?

Infrastructure is the building block of economic growth. It forms the foundation of an

economy, reinforces its structures and integrates it into productive system. It is economy’s
spinal cord that builds, shapes, nourishes, energizes & synergizes its existence, growth and
continued incremental progress. Government of Ethiopia has an ambitious program of
infrastructure development for which reasonable budget provisions has been made in five year
plan (GTP).

Ethiopia is passing through fast growing phase of development. Starting in early 2010,
Ethiopia embarked on planned economic development through successive five year plans.
Over the years, ever increasing generation of electricity by installation of new hydro power
projects has facilitated the establishment of new industries within the broad framework of
sustainable and environmental friendly development. As power, transport and other
infrastructure are the basic requirements for economic growth, the development of
infrastructure has also been in the focus of developmental programmes.

Over the years a number of roads, bridges, hospitals, schools, industry parks and commercial
and residential buildings have been built. This has resulted in a rapidly growing construction
industry.

A society becomes functional and productive only when it is empowered by social

infrastructure development such as housing, schools, hospitals, roads, bridges etc. Cement
concrete based products are essential for such development and hence products like cement
concrete blocks, hollow blocks, pavers and tiles etc. has been identified. The manufactures of
these products are environment friendly and could be commercially exploited profitably with
low investment.

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These items are extensively used in various activities of infrastructure development like hydro
electric power generation, roads, bridges, housing and commercial building which is part of
urban development. With a view to cut down the cost of raw materials in construction
industries and also to accelerate the pace of industrialization in Ethiopia, the government is
keen to promote industrial units for manufacture of construction materials.

Setting up of such projects would help in easy availability of construction materials at

economic prices, generation of employment opportunities, optimum use of natural and human
resource and above all accelerating the pace of industrialization in the country.

The construction sector as such contributes to 5% of Ethiopia GDP which is further likely to
grow. The establishment of industrial unit for the manufacture of cement based products is
most suited for development in private and public sector. The following factors contribute to
its growth:-

 Requires local resources such as natural & rivers sand, crushed stone aggregate &
cement etc. These raw materials are abundantly available across the country near to
the development activities.

 The industries could be set up near the source of raw materials and market
minimizing the transportation cost which is otherwise too heavy.

 A unit with selected machinery and equipment can produce various types of cement
based products required in the construction & infrastructure development activities
and thereby facilitating the industrial unit to market their production throughout the
year and attain regular margins and economics of production.

In view of the above, a project has been designed for the manufacture of various
cement based products viz cement concrete solid blocks and hollow blocks including
bricks, concrete paving blocks, cement concrete tiles and mosaic flooring tiles,
primarily to meet the domestic demands in Ethiopia.

In view of this background, Mr. Debebe Duressa has been interested to invest on
cement based products Factory to produce concrete blocks and tiles in Buee Town
Administration.

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2.8 Support for the Project

Dedicated institutes have been accorded an increasingly influential role in leading the
development of key industries in Ethiopia. Among these, Ministry of Works and Urban
Development Establishment, it provides research and development, testing and quality
evaluation services.
Vocational Training Centers, expansion and improvement of training institutes and
universities so as to address shortage of skilled manpower

Bureau of Standards and local authorities Ensure that at all times all respective professionals
and firms rendering services in the industry possess adequate competence

The Development Bank of Ethiopia (DBE) now provides long-term loans to construction
sector at subsidized rates of financing facilities for the construction sector enterprises to
access working capital in terms of credit, bonds, guarantees, training funds, and capital for
tools and equipment.

2.9 Project Objectives

 To manufacture cement based products and to sell the products locally and
maximaized profit
 To provide employment opportunity to the growing labor force of the project area by
employing permanent and temporary employees.
 To provide employment opportunity to the growing labor force of the project area by
employing permanent and temporary employees.

3 STUDY OF THE PROJECT SITE

3.1 Descriptions of the Area
The area identified for implementing the anticipated project is located in Buee Town
Administration , Gurage zone. The project area is 110 km long and is located north of Addis

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Ababa, connecting Hosana –Wolita- Arba Minch with very good road connection to Addis
Ababa.

3.2 Physical and Natural condition of Project Site

3.2.1 Topographic Features

The topographic features of the proposed project area are characterized by slightly to gently
sloping terrain. The topography of the project area generally indicates availability of
favorable opportunity for low cost installation of infrastructures and site development
requirements.

3.2.2 Climate
The agro- climatic zone of Buee Town Administration is categorized as weyna dega. The
annual rainfall varies from 900-1,200 mm and the annual average minimum and maximum
temperature varies from 15 to 26 degree centigrade.

3.2.3 Availability of utilities, Infrastructures and Other service

Road; The project area can be accessed by all-weather roads up to Buee Town. The area is
connected all sides with all-weather roads, so the project can transport inputs and output
easily.

Electric Power; Buee Town of the project area has access to hydroelectric power. Currently,
the government has setup additional power substation at Buee Town Administration. This
power station will help us to reduce the cost of operation with better efficiencies and will
ensure uninterrupted availability of power.

Water Resources; The water demand for the project includes all forms of water use such as
water required for production units, water required for workers, commercial use and
landscape irrigation. By now, access to safe drinking water is not a problem in the project
area.

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Telecommunication ; According to the data collected from the Bureau of Finance and
Economy, the town administration and all Peasant associations in the project area have
access to telephone services, such as, mobile telephone service, and wireless.

Educational Services; Buee Town has good access to educational services especially from
kinder Garden to high school

Health Services; the project area can access hospital service nearby Hospitals and Health
center which is 2 km far from project area

4. Market Overview
Housing is a big and complex problem in Ethiopia. It has two major facts - urban & rural.
More attention is paid to urban housing due to the growing pressure of population & the need
to meet the requirements of slum & pavement dwellers and urban renewal.

In the process, rural housing gets neglected. A great majority of Ethiopia population lives in
rural areas. The influx of population from villages to metropolis has become a burning
problem of the day. Rural & small town housings may slow down an excessive country - to -
town movement of people and hence the housing problems of major cities may be controlled.
Lack of housing in rural areas pushes the population to cities, thereby creating additional
housing problems.

The cement based products envisaged to be manufacture in the unit are the basic building
blocks of any construction viz housing and commercial buildings, industrial estates, road and
bridges, hydro electric power projects and any other type of construction. In Ethiopia,, the
construction becomes the major activity in various spheres of development, be it power, road,

15
urban infrastructure and housing, education, health, communication. Evidently, the
strengthening of infrastructure has become a focused sector for development in Ethiopia.

It could be observed that a lot of construction activities are either in the process of
implementation or planned to be taken up in near future both in public and private sector.
With the growing pace of development in infrastructure sector mainly power & roads and
increasing trend of urbanization, the construction activities are likely to gain further
momentum.

The five-year Growth and Transformation Plan emphasizes on construction of road network
including national highways, low cost houses, rural roads along with a number of bridges and
also on broadening and up-gradation 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. As
mentioned in the previously, hospital development, road constructions and urban
development constitute the main sectors requiring these construction materials.

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 construction, prima-facie, there would be no
problems in marketing the products of the unit.
There is already one unit near the project having facilities for the production of cement
concrete bricks and blocks and they have been able to successfully market their products.
Keeping in view, the boom in construction industry in Ethiopia, there is ample scope for
setting up few more units for the production of cement products.

4.1 Competitive Advantages

The cement products proposed to be manufacture by the unit constituent the basic building
blocks for any construction activity. The main competition would be from the cement
products produced at far of locations.

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The unit in Buee town is being recommended mainly for catering to the local demand of
house construction, factories buildings, government institutes and related construction
activities in the area and the competitive advantages would be as under: -
 Production of tailor made goods in terms of design and quality as per requirement of
the concerned authorities in government project and other private customers.
 Lower transport cost of finished goods from factory to construction site, the unit
being in Buee town which is around 110 kms from the project site in Addis Ababa..
 Value addition on local raw materials.
 Better inventory control management as the production can be planned as per
demand of the customers.
The unit being in vicinity to Addis Ababa, the products could be supplied at short notice to
customers including industry building near to the unit.

There is already one unit at Buee town for the manufacture of cement base products. The
proposed project is being recommended to be setup near to Buee town in view of the
upcoming private investment project.
It is envisaged that the proposed project shall be able to supply the hollow blocks and
pavement for the construction activities related to government and private project and other
construction projects at economical prices due to lower cost of transport of finished goods
from the manufacturing unit to the construction sites.

4.2 Target market and Marketing Strategy

The industrial units for the production of cement based products could be developed as a
cluster of a number of units manufacturing different products. In this cluster, a number of
units could be setup for manufacturing different products.
This would enable the individual units to achieve better economics of production since it
would be possible to transport the raw materials in bulk at an economical price and also to
market wide range of product from one center of production. The cluster approach would
also help in developing and refining the skills of manpower to be employed in these units
through joint programmes of training and demonstration.
The following strategy could be adopted by the unit for better market access.

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  Long term contract with government and none government project for supplying the
cement based products on mutually agreed terms and conditions as the project would
be the main buyer.
 Ensuring the quality and design of the products as per requirement of the project
authorities.
 Direct sales to construction projects in private sector.
 Sales of floor tiles through hardware stores.

All construction projects viz building construction in both in public and private sector, road
construction, house could be the target market for the project. In most of the private housing
construction, normally the competitors, their cost is quite high-priced on account of heavy
transport cost. The unit has to strive for a placement of wood house by cement concrete
bricks both on cost considerations as well as on advantages associated with the use of cement
bricks viz less consumption of cement in the construction for wall construction and
plastering.

The marketing team of the unit has to create awareness among the prospective buyers about
the advantages associated with the use of cement bricks. The unit also needs to market the
cement blocks and paver blocks to road construction agencies and contractors by offering
quality products at a competitive rate as compared to the blocks usually cast near the site of
construction.
This should be possible as the unit can avail the benefits of bulk purchase of raw materials
and supply the quality goods at competitive prices to the market. The unit also needs to have
some skilled peoples on contract basis that could educate and guide the supervisors, masons
and workers at construction sites in correctly laying the bricks with optimum use of cement
mortar and also in plastering of the constructed walls and surfaces, so as to achieve the best
results.

In summary, the proposed cement base product factory will adopt the following sales and
marketing approach to sell our quality cement base products

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  Introduce our cement base products brand by sending introductory letters to
Customers, in Addis Ababa - Sub- City- and other town in the country
 Advertise our cement base products in newspapers, TV and radio stations
 Engage in direct marketing and sales
 Encourage the use of Word of mouth marketing (referrals)

4.3 Pricing and Distribution

Distribution of cement base products to the domestic market is undertaken by long

established wholesalers, most of them located in 'Merkato'. The product will find its regional
market outlets through the contractors.
The envisaged plant is expected to sell its product to the whole seller at an average price of
54,208 Birr to customers

5. Product description and application

As mentioned above, the project has been designed for the production of a variety of cement
based products. The unit shall have two manufacturing sections, the first for the production
of cement concrete blocks, hollow blocks and paving blocks and the second for the
production of cement concrete tiles and mosaic flooring tiles (terrazzo tiles).

5.1 Hollow blocks

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The products proposed to be manufactured are hollow bricks of various dimensions from
Portland cement, aggregates (sand and stone chips) and water. The hollow blocks are made
with holes in the blocks for making it lightweight and cheaper. Moreover, the hollow blocks
have thermal as well as sound proof properties to a certain extent due to the air column
within it. Hollow blocks have better-insulating properties, more durable, easier to install
electrical and plumbing fixtures.
Normal size of the blocks is (40cm" x 20cm" x 20cm"). The products have a very good
demand in the construction market.

Now days, hollow concrete blocks are becoming

very popular. These blocks are being widely used in construction of residential buildings,
factories and multi-storied buildings. These hollow blocks are commonly used in compound
walls due to its low cost.

The hollow load bearing concrete blocks are made of standard sizes viz.

Hollow Blocks - 40 x 20 x 20 (cm)

Blocks of sizes other than mentioned above can also be manufactured as per the mutual
agreement between the buyer & manufacturer.

5 .2 Paver Blocks
Another products proposed to be manufactured are paver blocks of various dimensions from
Portland cement, aggregates (sand and stone chips) and water. The paving blocks of different
sizes and shape find application in pavements, footpaths, gardens, passengers waiting halls,
bus stops, industry and other public places. The product is commonly used in urban areas for
the above applications.
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Concrete paving blocks is an ideal material for easy laying of footpath. It gives aesthetic look
and fine finish. This also finds extensive use outside the large public buildings and houses.
The Paver blocks are made both in natural cement color and different bright colors. As per
the application they are made both in plain geometrical designs & interlocking. Paver blocks
are used for light, medium & heavy duty applications and these are designed and
manufactured accordingly.

5.3 Cement Concrete tiles and Mosaic flooring tiles (terrazzo tiles)

The cement concrete tiles are used both for laying floors inside & outside the buildings. The
mosaic flooring tiles are also known as terrazzo tiles. The natural occurring raw materials
like marble chips, stone chips, stone dust, sand, stone aggregate and cement is used in the
production of tiles. The construction of floor by laying these tiles is time saving. The repair

21
of damaged floor can easily be carried out by replacing the tiles. The colorful stone chips tile
is a good decorative flooring material. The promotion of these items will help in promoting
the use of natural resources

Cement concrete tiles proposed to be manufactured can broadly be classified in the following
categories:

 Plain Cement Tiles: In the manufacture of plan cement tiles no pigment or stone
chips viz marble chips & others are used.
 Plain Colored Tiles: The tiles have a plain colored wearing surface.
 Terrazzo Tiles (Chequered Tiles): Are also known as Mosaic Flooring Tiles.
The wearing surface is composed of stone chips in a matrix of ordinary or colored Portland
cement mixed with or without pigments and the surface is mechanically ground to achieve
the smoothness. The cement concrete flooring tiles are classified as below depending upon
their intended applications:
o General Purpose Tile: These are used for flooring in such places wherein normally
uses conditions are not quite heavy resulting in light load applications usage such as
office buildings, schools, colleges, hospitals & residential building.

o Heavy Duty Floor Tile: These are used for heavy traffic conditions such as footpath,
entrances & stair cases of public buildings.

The tiles are made in various sizes depending upon their use and usage conditions. The
details of the recommended sizes are as under:

Cement Concrete Flooring Tiles Cement Concrete

Terrazzo Tiles
22
200 x 200 x 20 (mm) 200 x 200 x 22 (mm)
250 x 250 x 22 (mm) 250 x 250 x 22 (mm)
300 x 300 x 25 (mm) 300 x 300 x 25 (mm)

6. TECHNICAL AND ENGINEERING STUDIES

The most important technical considerations for the production of cement-based products
include the following:
 Land and building
 Plant and machinery
 Raw materials viz Portland cement, stone aggregates, natural sand, stone crush,
synthetic and natural pigments
 Power
 Water
 Skilled and non-skilled workers

It has been envisaged in the project the land for the project would be available on lease basis
from Government. The building and the shed as per requirements has to be constructed for
the unit. There would be two production sections of the unit viz cement concrete block
manufacturing section and cement concrete tiles & mosaic flooring tiles section.

23
Persons having sufficient experience in the production of these products have to be employed
as production supervisor so as to ensure the manufacturing of quality goods. Experienced
machine operators would also be needed for main machine for hydraulic presses. The
operators can also be trained by the machine manufacturers at the site of the factory during
installation and commission of the machine.

6.1 Raw materials and consumables

6.1.1 Raw materials for cement concrete blocks
The main raw materials required include cement, stone aggregates, fine and coarse sand,
chemical additives and water. The major raw materials for the project include cement, stone
aggregates and sand / stone dust. All these raw materials are available in Ethiopia and the
cement could be directly procured from the cement companies. The stone aggregates, stone
dust and river sand is also available in near to the project area. Marble stone, chips and
powder is also available in Ethiopia. The pigments and additives will be purchased from
importer. The details are as under:
Cement
Portland cement that complying with Ethiopia Standard, Cement should always be stored
in dry place, off the floor and should be use within three months of the date of
manufacture. Never use cement that has lumps in it and only use cement from a well
known brand that has an SABS mark of approval on it.
Aggregate
Aggregate is the stone, sand and ash you want to vibrate and compact down and bind
together with the cement. A good aggregate is an aggregate that is free from chemicals,
clay and organic material. A good aggregate will bond well with the cement paste and not
react with it. As a rule of thumb the denser you’re finished block or block the stronger the
block or block will be. You must choose your aggregates according to your needs.
To achieve a dense block with an aggregate that can be vibrated and compacted down
easily you need to have an aggregate with evenly graded particles ranging from fine dust
up to larger stone of around 9mm.Blending different aggregates often produces the best
results

24
Water
Only clean clear potable water should be used in the manufacture of the blocks and blocks.
Any organic material in water will prevent the cement from setting. Never use salty or
break water. It is advisable to get your water tested for impurities. Chemical additives are
also used for imparting water proofing characteristics. Colors and pigments are also used
for imparting color to the products.

6.1.2 Raw materials for cement concrete tiles and mosaic flooring tiles
(terrazzo tiles)
The details of raw materials used for plain cement tiles, plain colored tiles and terrazzo tiles
are as under:
 White or Grey colored Portland cement of various grades confirming to Ethiopia
Standard are used.
 Stone crush of 6 mm & below is normally used for backing layer. It should be free
from soft, honey combed particles & deleterious matters. For the wearing layer the
aggregate consists of marble or stone chips of similar character & hardness, Marble
powder & Dolomite powder is also used.
 Synthetic or natural pigments are used in the concrete mix to obtain colorful tiles of
desired shades. It should provide durable colors and should be free from matters
deleterious to concrete pigments either singly or in combination. It is recommended
to use pigment to a maximum of 9% by weight of cement used in the top layer
concrete. The pigment should be finer than cement (fineness between 2-15 m2/kg). It
should be free from zinc compound and organic dyes.

6.2 Annual requirement of raw materials

The annual requirement of various raw materials along with their prices has been given in the
chapter 9 relating to cost presentation.

25
26
6.3 The Plant
6.3.1 Selection of technology

The basic process involved in the manufacture of cement concrete blocks includes mixing of
cement, stone aggregate and sand in appropriate proportion and casting of blocks. The
manufacturing process for paver blocks and cement concrete tiles and mosaic flooring tiles
also involves similar operations. For the manufacturing of cement concrete blocks, manual,
semi-automatic and automatic processes of operation are used. The major item of machines
for automatic, semi automatic & manual process are similar except that in case of automatic
machines, the transportation of raw material, mixture, charging of press & shifting of green
product from one machine to the other is carried out with the help of material handling
equipments such as shovel loader, conveyer belt, screw conveyer & fork lifter etc. Keeping
in view, the size of demand for these products in Ethiopia, a semi automatic process has been
taken into consideration in the proposed project. The plant would have following two
manufacturing sections.
 Hollow blocks and Paver blocks section
 Mosaic tiles and Colored tiles section

6.3.2 Process Technologies used

As mentioned above, for the production of cement products normally following type of
process technology are used
 Manual process wherein the mixing of various ingredients and casting of block and
bricks is carried out manually.
 Semi-automatic process using semi-automatic machines for mixing and casting
operations.
 Fully automatic process.

6.3.3 Factors influencing the choice of technology

27
A number of factors need to be taken into considerations while deciding the choice in favour of a
process technology. These factors mainly include
 Factor inputs
 Market findings viz size of market and recurrence of repeat demand
 Purchasing power of consumers and prevailing price spectrum
 Future projections of market demand
 Availability of skilled manpower and support facilities
 Availability of infrastructure and transport facilities
 Environmental considerations
Technology recommended
As stated earlier, the project is based on semi-automatic process technology wherein for
mixing and casting semi-automatic machines are proposed to be used. Keeping in view, the
relatively small size of demand in Ethiopia, the semi-automatic operations are most suited
and this would offer the following main advantages.
 Low capital cost
 Common mixing plant for all the products
 Facility for easy change of modes
 Feasibility for production of low volumes of a specific size and design of the
product.

6.3.4 Details and specification of machinery and equipments:

A). For cement concrete block manufacturing section:
1. Particulars of Machine
Hydraulically operated stationary
block making machine with:-
Hydraulic system - 5 HP
Mould vibrator – 2 HP x 2
Ram vibrator – 1.5 HP x 1
Moulding area – 860 x 600 (mm)
Pallet feeder – hydraulic x 1
Mix feeder – hydraulic x 1
Mix feeder bin - hydraulic x 1

28
 Moulds:-
2. 200 x 200 x 400 (mm) cavity block ram & mould
3. 150 x 200 x 400 (mm) cavity block ram & mould
4. 100 x 200 x 400 (mm) cavity block ram & mould
5. 200 x 200 x 400 (mm) solid block ram & mould
6. 150 x 200 x 400 (mm) solid block ram & mould
7. 100 x 200 x 400 (mm) solid block ram & mould
8. Paver block mould
(or mould of any size as per market demand)
9. Pallet stacker
10. Pan mixer of 500 kg. capacity with 15 HP motor
11. Mix conveyor with 2 HP motor
12. Platform electronic weighing scale 500 kg. capacity
13. Water dosing pump with 2 HP motor
14. Wheel barrows with pneumatic wheels
15. Pallet truck 1500 kg. capacity
16. Pallet truck capacity 500 kg. with pneumatic wheels
17. Pallets size 900 x 650 x 250 (mm)
18. Skip loader
19. Color mixer 100 kg. capacity 7 HP

B). Cement concrete tiles and mosaic flooring tiles section:

Particular of Machine
20 Hydraulic press (Cap. 150 kg/ sq. cm) with pressure gauge
21 Hydraulic double piston pump with 5 HP motor combined with safety valve, capable of feeding 4
to 5 presses, ram vibrator 1.5 HP, mould vibrator 2 Hp
22 Leveling (grinding) machine complete with all attachments grinding capacity
4 tiles at a time (5 HP)
23 Semi polishing machine with 2 HP motor for sample polishing for testing
24 Mould with 1 set of extra mould
25 Pallets
26 Tipping borrows

6.4 Plant capacity and production program

6.4 .1 Production Capacity

In both the manufacturing sections, an appropriate product mix of most commonly used
items has been taken into considerations while calculating the production capacity of the unit.
The annual production capacity of both the sections has been taken for the manufacture of

29
blocks & tiles.
For the purpose of financial analysis product mix has been taken into consideration on the
basis of single shift working for 300 days in a year. 100 days of production has been taken
for the manufacture of each item mentioned below. 90% of installed machine capacity has
been taken as the production capacity of the plant at optimum. The product mix along with
quantity of each item of production per annum is as given under.

Cement concrete blocks and paver blocks:

Solid blocks 390 x 190 x 140 200, 000 nos

Hollow blocks 390 x 190x 190 200, 000 nos
Paver blocks 225 x 112 x 80 600, 000 nos

Cement Concrete tiles and Mosaic flooring tiles:

Grey mosaic tiles 300 x 300 x 22 300,000 00 nos

Grey mosaic tiles 250 x 250 x 22 300,000 00 nos
Colored tiles 250 x 250 x 22 250,000 .00 nos
6.5 Process of manufacture
6.5.1 Cement concrete blocks
The manufacturing process of cement concrete blocks mainly involves mixing and casting of
blocks. The concrete mix in respect of cement 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, vibro 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.

30
PAN MIXER SKIP LOADER

VIBRO-HYDRAULIC PRESS

Batching equipment is used for proportioning the ingredient accurately. Concrete mixer is
used for homogenous mixing and blocks are shaped in a vibro 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 24-36 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 four week before dispatch
As stated above, keeping in view the size of the demand for these products in Ethiopia, a
semi-automatic process has been recommended in the project.

31
6.5.2 Paver Blocks
The manufacturing process for Paver blocks is similar to the process employed for block
making and the raw material used are also same. However, for various raw materials and
their quality the corresponding Ethiopia Standard may be referred to. The pavers are made
both in the natural color and in a range of other shades. The top layer of the Paver is laid with
the coloring material.
Synthetic or natural pigments are used in the concrete mix to obtain colored Paver blocks of
desired shades. It should provide durable colors and should be free from matters deleterious
to concrete pigments either singly or in combination. It is recommended to use pigment to a
maximum of 9 percent by weight of cement used in the top layer concrete. The pigment
should be finer then cement (fineness between 2- 15 m2/kg). It should be free from zinc
compound and organic dyes.

In the production process of Paver blocks, the raw materials are mixed in suitable grade &
ratio. After homogenous mixing, it is compacted with the help of suitable die in a Vibro-
pressing machine. For colored layer of blocks, the pigment is separately mixed in a counter
current mixer with fine grade aggregate. The mixture of desired colour is uniformly spread
over the top layer of the block with the help of a front feed drawer. In case of non automatic
process, the mixture is spread manually before compaction. The paver blocks are sifted in a
shade with the help of pellet stacker/forklift. After initial development of strength in a period
of 24-36 hrs, the blocks are stacked & subjected to water spraying and misting for curing.
After three weeks of curing, the blocks are allowed to dry before dispatch.
The process for the manufacture of cement concrete blocks and paver blocks involves
the following 5 stages;
(1) Proportioning
(2) Mixing
(3) Compacting
(4) Curing
(5) Drying

32
(1) Proportioning:

The deteBirri nation of suitable amounts of raw materials needed to produce concrete of
desired quality under given conditions of mixing, placing and curing is known as
proportioning.

(2) Mixing

The objective of thorough mixing of aggregates, cement and water is to ensure that the
cement- water paste completely covers the surface of the aggregates. All the raw
materials including water are collected in a concrete mixer, which is rotated for about 1
½ minutes. The prepared mix is discharged from the mixer and consumed within 30
minutes.

(3) Compacting

The purpose of compacting is to fill all air pockets with concrete as a whole without
movement of free water through the concrete. Excessive compaction would result in
foBirration of water pockets or layers with higher water content and poor quality of the
product. Semi-automatic vibrating table type machines are widely used for making
cement concrete hollow blocks. The machine consists of an automatic vibrating unit, a
lever operated up and down metallic mould box and a stripper head contained in a
frame work.

(4) Curing

Hollow blocks removed from the mould are protected until they are sufficiently
hardened to peBirrit handling without damage. This may take about 24 hours in a shelter
away from sun and winds. The greatest strength benefits occur during the first three
days and valuable effects are secured up to 10 or 14 days. The longer the curing time is
peBirritted the better the product.

(5) Drying

Concrete shrinks slightly with loss of moisture. It is therefore essential that after curing is
over, the blocks should be allowed to dry out gradually in shade so that the initial drying

33
 shrinkage of the blocks is completed before they are used in the construction work.
Hollow blocks are stacked with their cavities horizontal to facilitate thorough passage of
air.

6.5.3 Cement concrete tiles and mosaic flooring tiles

Basically, the manufacturing process of tiles is also similar to production of blocks. Cement,
coarse & fine aggregate are mixed in a ratio of 1:4 for the backing layer. A homogenous
mass is obtained with the help of a suitable mixes by adding required quantity of water. The
mixture for wearing layer is separately prepared using marble chips, colored stone chips,
marble dolomite powder with grey or white cement. The selection of pigment, marble or
colored chips etc. is made to produce distinctive designs & deep color shades.
The pressing of the tiles is done in a Vibro-press in two successions for molding the backing
& facing layers.
Suitable iron moulds are fitted with the bottom plate of the press. The facing mixture is first
spread into the mould to a thickness of about 6.5 mm & then backing mixture is filled to
form a thickness of 15.5 mm. It is pressed to form the shape at a pressure of around 150
kg/sq. cm. The tiles are ejected from the moulds and stacked in shade for 24 hours to develop
initial strength. It is then sprayed with water alternatively immersed in water for curing. After
two weeks, the cured tiles are stacked in shade for drying and then ground & polished to
make the top surface smooth. The tiles are finally finished manually for any minor visual
defect and packed for dispatch.

6.6 Process and quality control

The products proposed to be manufactured by the unit are the basic construction materials
and it is desirable that they are manufactured as per quality standards. Accordingly, a
common testing laboratory for both the sections is purposed for the testing of raw materials
and finished products and also to ensure in process quality control. The laboratory will be
equipped with the following equipments to carry out the various tests as per standard
procedure. The details of the tests which need to be carried out and the list of equipment is as
given below:

34
6.6.1 Physical Tests:
o Visual inspection for defect like crack, chipping, open course, sponginess
o Dimensions, flatness of tiles surface, perpendicularity, straightness
o Density
o Moisture absorption
o Drying shrinkage
o Water absorption
o Compressive strength
o Modulus of rupture
o Abrasion resistance

6.6.2 Testing Equipments:

 Steel scale, calipers, rectangle, vernier scale, magnifying glass etc
 Balance with accuracy up to 2nd place of decimal
 Electronic platform type weighing machine
 Vibrating screen set (for grading of raw material)
 Equipment for determination of porosity and water absorption
 Glass apparatus like beaker flask, test tube, etc
 Universal testing machine
 Micro meter gauge, dial gauge
 Abrasion testing machine
 Drying oven
 Rapid moisture testing equipment

6.7 Technical know-how

The manufacturing process for the production of cement based products is relatively simple
and involves two major operations viz mixing of cement, stone aggregates and sand in
suitable proportion and casting of the mix in the form of blocks of requisite size. The ratio of

35
the ingredients in the mix has to be suitably adjusted to impart the required strength to the
block depending on its uses. These ratios are well known for various standard products.
Proper mixing, Vibro pressing and proper curing are play major role in the quality of the
products. Besides, design of the product is another aspect which needs to be looked into.
With a view to produce quality goods at economical cost, experienced people in the
production of similar products need to be employed. The basic details of the technology and
machine operations are also provided by the machine manufacturers. The machine suppliers
also train the operators and skilled workers at our own factory or at the site of installation of
our machines.
A provision has been made in the project for process and quality control laboratory and the
finer technological details viz ratio proportion of ingredients and curing time could be
adjusted keeping in view the local conditions and the test results of the products.

6.8 Vehicles and Office Equipment

6.8.1 Vehicles

The proposed setup would require vehicles to carryout transportation of raw material and
finished products. Besides, dumping and loading vehicles for the transportation of finished
product to the stacking points would be a pre-requisite.
In this regard the promoter realized that providing trucking services shall take a competitive
stand and position itself as cement base products Production Company of choice and maintain
key assurances such as customer satisfaction and trustworthiness. Details of required vehicles
have been provided in the following table:
Table .12 Vehicles
Type quantity Total Birr

Sino truck- Material Transportation 1 2,000,000.00

Fork Lifter -Finished goods transportation

1 1,000,000.00
2% registration fee 60,000.00
Total 3,060,000.00

36
6.8.2 Equipment & Furniture’s
The factory has to be equipped with the necessary office equipment and furniture for the
administrative and finance staffs as well as for market integration of input supply and
finished product. The details related costs are shown in the table below.

Table 6: Estimation of the Cost of Office Equipment & Furniture’s

Description Unit Quantity Unit Cost Total cost
Table pcs 5 1,000.00 5,000.00
Chair pcs 5 1,000.00 5,000.00
Cup board pcs 2 500.00 1,000.00
Shelf pcs 3 2,000.00 6,000.00
Cash box pcs 1 3,500.00 3,500.00
Calculator pcs 5 200.00 1,000.00
Computer with printer pcs 2 10,000.00 20,000.00
Total      
41,500.00

6.8.3 Requirement of power and fuel for the Plant

It is estimated that 45 KWH power connections would be required for the production unit
including the power requirement for production machines and general purpose lighting.
The cost of the power has been calculated on the basis of Br. 1.45 per unit.

6.8.4 Fuel Consumption –Vehicles

 Table 11 Annual Fuel Consumption at full capacity
Fuel Consumption
KM/day km. distance /litter price Total
200 6 20 200,000
5% oil & Lubricant 10,000

Total 210,000.00

37
6.9 Human Resources Plan
The key to the success of the company lies in its people whose skills, expertise and talent
help in company to achieve and sustain its market position. The Proposed project believes
that employees are the key to achieved targeted goals and are the primary source of
competitive advantage.

6.9.1 Organization Structure

The proposed project uses the organizational structure fits to carry out its activities. The
highest management body in the project is general manage. The highest executive body of
the project management organ is Debebe Duressa which is privately owned. All section
heads of the project are accountable to the manger. Production section head, Testing and
quality control and Finance and administration section heads need to report the manager.

Plant supervisor, machine operators and unskilled workers need to report to production
section heads. Laboratory technical is needs to report to Testing and quality control section
heads. And all others, sales person, accountant, Drivers and guards need to report to financial
and administration section heads. The organizational structure of the project will be made up
of the following:
Production section
Testing and quality control
Finance and administration section
Plant supervisor
Machine operator
Unskilled workers
Laboratory technician
Sales person
Accountant
Drivers
Guards

38
 Proposed project Organization Structure

G/
Manager

Production Testing and Finance and

Section quality control Administration

Plant Machine Unskilled Sales Guard

Laboratory Accountant Drivers
supervisor Operator Workers person

6.9.2 Manpower Requirement and Annual Salary

Accordingly, the total annual labor cost for the envisaged Plant is estimated at Birr
1,186,812.00. Manpower requirement for the project & the corresponding labor costs are
shown in below
Table 7 Manpower Requirement and Annual Salary

No Description Required Monthly Annual salary

number salary (Birr)

39
1 Factory Manager (Owner) 1
2 Production Head 1 5,000.00 60,000.00
3 Plant supervisor 1 4,000.00 48,000.00
4 Machine Operators 2 4,000.00 96,000.00
5 Un skilled workers 19 2,500.00 570,000.00
6 Testing and Quality Control Head 1 4,000.00 48,000.00
7 Laboratory technician 1 3,000.00 36,000.00
8 Finance and Administration Head 1 3,000.00 36,000.00
9 Accountant 1 3,000.00 36,000.00
10 Sales man 1 3,000.00 36,000.00
11 Driver 1 3,000.00 36,000.00
12 Driver assistance 1 2,000.00 24,000.00
13 Guard 2 1,800.00 43,200.00
33 1,069,200
Employee Benefit( 11%) 117,612.00
Grand Total 1,186,812.00

40
6.9.3 Training Requirement
The factory management should arrange for on- job training with the machinery suppliers
before and during the installation & commissioning of the machineries at the premises of the
supplier for about 7 days. Similarly maintenance and quality assurance personnel should be
given a practical training on their respective fields of engagement. Training should also be
given to machine operators & visual quality control workers on the various types of products
defects and their remedies in the production process.
The duration of such training shall be 6-8 weeks long. As a result all key production
personnel will have the opportunity for being familiar with the operation of machineries and
the technology. The total cost of training project personnel to smoothly and effectively
operate the plant is estimated at Birr 600,000.

6.10 Land, Buildings and Civil Works

6.10.1 Location Site and Land

Location of the plant is determined on the proximity of raw materials, availability of

infrastructure, availability of skilled and semi skilled labour, land, and other necessary
infrastructures and distance to potential market outlet. In view of this, the envisaged plant
will be established in Gurage Zone at Buee town administration industrial zone.

41
6.10.1.2 Land Requirement

Cement based products production project is estimated to require a total area of one 5,000 m2
which will be used for stockpiling of raw material, production of blocks, cement storage and
storage of finished product. Since heavy machinery and vehicles i.e. dumper, fork lifters etc.
would be used which require open space for the movement as well as there will be frequent
movement of heavy transportation and delivery vehicles; therefore, large land requirement is
being recommended. Moreover, the space would also be used for machinery installation,
storage and vehicle parking and different services necessary for the project.

Urban land permit by lease is on negotiation base. The Recommended size of the intended
project, approximately 5,000m2 of land is required with future expansion and other
requirements the total cost of land, at the rate of Birr 87 per m2 for 40 years of land holding
is estimated at Birr 435,000. Out of this amount 10% down payment birr 43,500 will be paid.
The remaining balance Birr 391,500.00 will be paid within 40 years after the end of grace
period. The details Land Use Plan is shown below
Table 4. Land Use Plan
DESCRIPTION DIMENSION AREA
S/N M*M Meter squire
1 Cement & general stores building 30*10 300.00
2 raw material shed 75*20 1,500.00
3 Main Working Shed 20*20 400.00
4 Curing Chamber /shed / 50*20 1,000.00
5 storage of finished product/ Shed/ 60*20 1,200.00
6 Office 10*3 30.00
7 Rest Room 10*3 30.00
8 Toilet & Shower 4*3 12.00
9 Security Guard Room 7*4 28.00
10 Inner Roads, Parking and Unloading Area 50*10 500.00
Total 5,000.00

6.10.1.3 Building and Civil works

42
This complex will consist of separate buildings /sheds for different purposes The site should
have provision for stockpiling aggregates and storing cement, a production area, a stacking
area, staff facilities, an office, and access between different areas and facilities. The total
estimated cost for building, sheds and civil works will be 1.5 million birr.

6.11 IMPLEMENTATION SCHEDULE

The following reflects our plans for implementing selected, improved management practices,
and outlines our anticipated timelines for completion.
Particular Time
Arrangement of Land Oct, 2020
Application of Loan from Bank January, 2021
Procurement of Tech. know how/ Feb, 2021
transfer of technology
Finalization of Building Contracts March,2021
Placement of Orders for Building March ,2021
Material
Placement of Orders for Machinery March 2021
Construction of Manufacturing March, 2021
premises
Delivery of Machinery May, 2021
Erection, Commissioning of Plant & June, 2021
Machinery & Utilities
Procurement of Raw Material and May to June 2021
Trial Runs
Training for workers June 2021
Commercial Production July, 2021

43
 7 . SOCIO-ECONOMIC STUDY

Cement based products production project is important in economic and social terms, in the
short-run by providing incomes, jobs, especially for women, and income for the government.
In the long-run by providing country the opportunity for sustained economic development in the
country with appropriate policies and institutions to enhance the dynamic effects of construction
industry.

7.1 Social Aspects

 As the project requires labour for undertaking its operational activities, people will have
the opportunity of being employed in the project. In this regard, the project will create
new employment post for about 33 individuals on permanent basis and for up to more
than 15 casual labourers during construction.

 The expected increase in income of the permanent & temporary employees would
eventually contribute to good health & nutrition in the family and allow them to access
better education for their children, improve sanitation and provide for the necessities in
the household. This improves employment, income and nutrition values of the family of
the producers and the other demanders/consumers.

The setting up of the project would lead to generation of direct and indirect employment,
both for skilled and unskilled workers which would result into economic up lift of local
population. This would also lead to up gradation of skills.
There are employment opportunities in the project for persons with managerial, technical,
financial and marketing capabilities. The employment of such people in the local industry would
provide them an option to have an employment in private sector in Ethiopia and also reduce the
migration of qualified manpower.

44
7.2 Economic Benefit for the Country
This Proposed project will have economic benefits, both to the national economy of the country
at large, and the region in particular in which the project is to be established.

The specific direct benefits will include;

 The construction industries are very important for a handful of countries, in terms of
trade, GDP and employment and have contributed significantly in the country. The

 The establishment of the project has a profitable venture it will contribute to the increase
of Regional and Federal government revenue through corporate, payroll and other taxes.

 It is believed that the construction industry would play major role in the industry
development strategy of the nation due to its advantages such as its labour intensiveness,
ability to mobilize the masses up to the micro level, long chain characteristics of the
sector which could pull many players along the value chain

 Aside from the increase in income of the owner, the project would activate the economy
especially in the continuous production and supply of cement base products. Being
efficient in terms of business returns and thus considered as a role model, we hope, this
project will also encourage other entrepreneurs in the country to engage in construction
materials processing industry.

 Provision of physical and social infrastructure, thereby creating conducive and suitable
environment for regional development.
 There are not many medium and small scale units manufacturing units in Ethiopia.
Setting up of this unit would have a catalytic effect on growth of entrepreneurship in
medium and small scale sector.
 Indigenous production of cement based products would lead to self-reliance for these
items in the field of construction materials sector and would provide a fillip to
construction industry.

45
Setting up of more units to meet the requirement of construction materials would have a
multiplier effect on the growth of construction industry in Ethiopia It is important here to
mention that above benefits can only be listed but these cannot be quantified based on a single
unit with small investment. However, as mentioned above, if a number of such units in
construction material sector or any other sector of economy are setup, these would have a
significant impact on overall economy of Ethiopia.

46
8. Environmental Consideration

8.1 Environmental aspect of manufacturing process

The manufacturing process involved in the production of cement based products are basically
mixing of various ingredients viz cement, 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 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 suspended particulate matter 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.

8.2 Waste generated and mitigation measures

In the manufacturing process of cement based products, no solid, liquid or gaseous wastes are
generated. However, as mentioned above, during handling of cement, stone aggregates and sand,
dust particles flow in the air resulting in higher level of suspended particulates matter (SPM).

In order to reduce the SPM, various methods could be used viz covering of mixing bins, used of
exhaust fan, sprinkling of water and use of dust collectors. Besides, there would be some waste
of metal scrap, wooden scrap, broken bricks, stone aggregates, etc during construction phase of
the project.
The waste generated during construction phase is mainly used for earth filling & flooring. The
details of the waste generated during construction phase and project operation phase along with
mitigation measures are given below.

47
Waste generated during construction phase and mitigation modes

The details of the waste generated during construction phase and the mitigation
measures are as under:

. . Impact on
No Type of waste/scrap Quantity Mitigation measures Environment

Around 2-3 % of the steel used in Sold to trade channels No adverse

1 Metal scrap
construction for reprocessing
impact
Around 5-7% of the wood used in No adverse
2 Wooden scrap Used as fuel.
construction.
impact
Clay stones, Depending upon on the No adverse
3 Used for earth filling
topography of the construction site
mounds impact
Brick stone cement 5% of the quantity used Used for flooring No adverse
4 aggregate and earth filling. impact
Waste generated during project operation phase and mitigation modes

The details of the waste generated and the mitigation measures are as under:

S. . Type of Quantity Mitigation measures Impact on

No waste/scrap Environment
Nil Nil Not applicable No adverse
1 Liquid effluents
impact
Nil No adverse
2 Gaseous effluents Not applicable
impact
Solid effluents or Small SPM can be checked by No adverse
3 Waste sprinkling of water,
impact
quantity covering of mixing bins
* During handling and use of dust
of raw materials, collectors.
there is likely to be
higher level of
SPM in the air in
the production shed.

9. Operation
9.1 Operations and Sales
48
The financial forecast is based on duration of 10 years of activity, which starts in 2022 and ends
in 2032. All forecasted values are based on assumptions. The forecast is based on the following
criteria:
9.1.1 Product mix
For the purpose of financial analysis product mix has been taken into consideration on the basis
of single shift working for 300 days in a year. 100 days of production has been taken for the
manufacture of each item mentioned below. 90% of installed machine capacity has been taken as
the production capacity of the plant at optimum. The product mix along with quantity of each
item of production per annum is as given under.
Cement concrete blocks and paver blocks:

Solid blocks 390 x 190 x 140 100, 000 nos

Hollow blocks 390 x 190x 190 200, 000 nos
Paver blocks 225 x 112 x 80 100, 000 nos

The average net sales price for solid blocks, hollow blocks and paver blocks is estimated to be
Birr 12.00, 10.00 and 16.00 respectively during the first year of operation, the following years
the average sales price is assumed to increase of 5 per cent per year.

Cement Concrete tiles and Mosaic flooring tiles:

Grey mosaic tiles 300 x 300 x 22 300,000 00 nos

Grey mosaic tiles 250 x 250 x 22 200,000 00 nos
Grey mosaic tiles 250 x 250 x 22 100,000 .00 nos
. The average net sales price for grey mosaic, grey mosaic small and colored tiles is estimated to
be Birr 30.00, 28.00 and 33.00 respectively during the first year of operation, the following years
the average sales price is assumed to increase of 5 per cent per year.

The major source of revenue for the project would be the Cement concrete blocks and paver and
blocks and Cement Concrete tiles and Mosaic flooring tiles
.The sales plan o for the project years will be depicted in the following table.

Projected Sales Plan

49
Revenue Projected Years
  1 2 3 4 5
Solid blocks 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Sales price 12.00 12.60 13.23 13.89 14.59

Revenue 1,200,000.00 1,260,000.00 1,323,000.00 1,389,150.00 1,458,607.50

Hollow blocks 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00

Sales price 10.00 10.50 11.03 11.58 12.16

Revenue 2,000,000.00 2,100,000.00 2,205,000.00 2,315,250.00 2,431,012.50

Paver blocks 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Sales price 16.00 16.80 17.64 18.52 19.45

Revenue 1,600,000.00 1,680,000.00 1,764,000.00 1,852,200.00 1,944,810.00

Grey mosaic tiles 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00

Sales price 30.00 31.50 33.08 34.73 36.47

Revenue 9,000,000.00 9,450,000.00 9,922,500.00 10,418,625.00 10,939,556.25

Grey mosaic tiles 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00

Sales price 28.00 29.40 30.87 32.41 34.03

Revenue 5,600,000.00 5,880,000.00 6,174,000.00 6,482,700.00 6,806,835.00

Grey mosaic tiles 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Sales price 33.00 34.65 36.38 38.20 40.11

Revenue 3,300,000.00 3,465,000.00 3,638,250.00 3,820,162.50 4,011,170.63

Total Revenue 22,700,000.00 23,835,000.00 25,026,750.00 26,278,087.50 27,591,991.88

cont.
  6 7 8 9 10
Solid blocks 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Sales price 15.32 16.08 16.89 17.73 18.62

Revenue 1,531,537.88 1,608,114.77 1,688,520.51 1,772,946.53 1,861,593.86

Hollow blocks 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00

Sales price 12.76 13.40 14.07 14.77 15.51

Revenue 2,552,563.13 2,680,191.28 2,814,200.85 2,954,910.89 3,102,656.43

Paver blocks 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Sales price 20.42 21.44 22.51 23.64 24.82

Revenue 2,042,050.50 2,144,153.03 2,251,360.68 2,363,928.71 2,482,125.15

Grey mosaic tiles 300,000.00 300,000.00 300,000.00 300,000.00 300,000.00

Sales price 38.29 40.20 42.21 44.32 46.54

Revenue 11,486,534.06 12,060,860.77 12,663,903.80 13,297,098.99 13,961,953.94

Grey mosaic tiles 200,000.00 200,000.00 200,000.00 200,000.00 200,000.00

Sales price 35.74 37.52 39.40 41.37 43.44

Revenue 7,147,176.75 7,504,535.59 7,879,762.37 8,273,750.49 8,687,438.01

Grey mosaic tiles 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Sales price 42.12 44.22 46.43 48.76 51.19

50
Revenue 4,211,729.16 4,422,315.61 4,643,431.39 4,875,602.96 5,119,383.11

Total Revenue 28,971,591.47 30,420,171.04 31,941,179.59 33,538,238.57 35,215,150.50

9.3 Production Cost

The production cost includes; salary &wage, water, electric power, cement, sand, red
ash,supplies, Insurance, maintains, fuel and oil, promotion, etc. Annual production cost
requirement with the corresponding estimated cost will be Birr 9,888,613.00 in the first year.
Cost of each items is presented below:
 The costs for cement, sand and red ash are estimated to amount 30 per cent of revenues of
cement base products.
 During the years of operation it is foreseen to spend 3 per cent of the revenues on
marketing.
 The maintenance costs for the hotel project are foreseen to be 10 per cent of total
revenues.
 Power and energy costs are assessed with 2 per cent of total revenues per year.

51
  Water costs are foreseen to be 1. 05 per cent of the total revenues.
 Insurance is assumed at 2 per cent of asset value.
 The salary is estimated to increase by 5 percent each year.
 Fuel and oil is 4 percent of the revenue.

Projected Cost Production

Projected Years
Description 1 2 3 4 5 6 7
cement, sand and red ash
Salary and Benefits
Marketing
Maintains
Electric power
Fuel and Oil
Water
Insurance
Total

10. FINANCIAL BUDGET OF THE INVESTEMENT

10.1 Investment Cost
The total initial investment cost required for the project is 42,128,405.00 The items and cost
breakdown is shown in the following table.

Table 11 Investment Cost Schedule

52
 Description Unit Total Investment cost
Plan Building & Sheds Birr 1,500,000.00
Machinery & Equipments Birr 4,000,000.00
Vehicles 3,060,000.00
Furniture’s and Office equipment Birr 41,500.00
Sub-total Birr 8,601,500.00
Pre- Production Expenditure * Birr 687,000.00
Initial Working Capital Birr 2,711,500.00
Total Birr 12,000,000.00

* N.B Pre-production expenditure includes training (Birr 600,000 thousand ) and Birr 87,000
thousand costs of registration, licensing and formation of the company including documentation,
commissioning expenses, etc.

10.2 Financing Structure

Total Initial Investment

Cost Equity Contribution Debt Finance
Item Unit Amount % Amount % Amount
Plan Building & Sheds Birr
Machinery & Equipments Birr
Vehicles Birr
Furniture’s and Office equipment
Sub-total
Pre- Production Expenditure * Birr
Initial Working Capital Birr
Total Birr

10.2.1 Required Loan

As indicated in the above table, it is planned that the promoter would contribute 30% of the total
investment cost and the remaining 70% would be financed by Bank.
It is proposed that the loan of birr 29,008,984.00 will be cover the cost of Machinery &
Equipments and working capital

10.2.2 Loan Repayment

The 30 % bank financing, which is birr 29,008,984.00 would be payable within 10 years at quarterly
repayments with 11.5% annual interest rate. Loan repayment schedule as shown below

Table 12 : Loan Repayment Schedule

53
   0.02875  
Year Quarter Interest 0.02875 Repayment Balance
0         29,008,984
1 1St   834,008.29 725,224.60 28,283,759.40
  2nd   813,158.08 725,224.60 27,558,534.80
  3rd   792,307.88 725,224.60 26,833,310.20
  4th 3,210,931.92 771,457.67 725,224.60 26,108,085.60
2 1St   750,607.46 725,224.60 25,382,861.00
  2nd   729,757.25 725,224.60 24,657,636.40
  3rd   708,907.05 725,224.60 23,932,411.80
  4th 2,877,328.60 688,056.84 725,224.60 23,207,187.20
3 1St   667,206.63 725,224.60 22,481,962.60
  2nd   646,356.42 725,224.60 21,756,738.00
  3rd   625,506.22 725,224.60 21,031,513.40
  4th 2,543,725.28 604,656.01 725,224.60 20,306,288.80
  1St   583,805.80 725,224.60 19,581,064.20
4 2nd   562,955.60 725,224.60 18,855,839.60
  3rd   542,105.39 725,224.60 18,130,615.00
  4th 2,210,121.97 521,255.18 725,224.60 17,405,390.40
  1St   500,404.97 725,224.60 16,680,165.80
5 2nd   479,554.77 725,224.60 15,954,941.20
  3rd   458,704.56 725,224.60 15,229,716.60
  4th 1,876,518.65 437,854.35 725,224.60 14,504,492.00
  1St   417,004.14 725,224.60 13,779,267.40
  2nd   396,153.94 725,224.60 13,054,042.80
6 3rd   375,303.73 725,224.60 12,328,818.20
  4th 1,542,915.34 354,453.52 725,224.60 11,603,593.60
7 1St   333,603.32 725,224.60 10,878,369.00
  2nd   312,753.11 725,224.60 10,153,144.40
  3rd   291,902.90 725,224.60 9,427,919.80
  4th 1,209,312.02 271,052.69 725,224.60 8,702,695.20
8 1St   250,202.49 725,224.60 7,977,470.60
  2nd   229,352.28 725,224.60 7,252,246.00
  3rd   208,502.07 725,224.60 6,527,021.40
  4th   187,651.87 725,224.60 5,801,796.80
9 1St   166,801.66 725,224.60 5,076,572.20
  2nd   145,951.45 725,224.60 4,351,347.60
  3rd   125,101.24 725,224.60 3,626,123.00
  4th   104,251.04 725,224.60 2,900,898.40
  1St   83,400.83 725,224.60 2,175,673.80
10 2nd   62,550.62 725,224.60 1,450,449.20
  3rd   41,700.41 725,224.60 725,224.60
  4th   20,850.21 725,224.60 0
29,008,984.00

54
 11. Financial Analysis
11.1 Profitability

Profit maximization is the overriding factor in most management decisions. Thus, an economic
profitability analysis is necessary to determine whether investing in a Yarn processing plant will
result profit in the long run. Considering the implementation of the project as planned, the
project will remain profitable right from the beginning. According to the projected income
statement, the company will generate a net profit of Birr 3,499,690 during the first year and Birr
11,559,20 in the second year birr 18,987,700 in the third year, birr 27,446,720 in the fourth birr
and in the fifth year reach to Birr 37,055,220 . The income statement and the other indicators of
profitability show that the project is viable. Projected p/L statement shown below

Debebe Duressa
PROJECTED PROFIT AND LOSS STATEMENT (000)
REVENUE Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
CAPACITY 80% 90% 90% 90% 90%

55
SALES 346,931 425,424 463,713 505,447 550,936.87
404,632.3
OPERATING COST 337,318.86 2 432,641.68 462,625.13 494,722.47
GROSS MARGIN 9,612.34 20,792.06 31,070.86 42,821.57 56,214.40
DEPRECIATION 1,333.15 1,333.15 1,333.15 1,333.15 1,333.15
AMORTIZATION 68.70 68.70 68.70 68.70 68.70
Profit before
INT&TAX 8,210.49 19,390.21 29,669.01 41,419.72 54,812.55
2
INTEREST EXP. 3,210.93 2,877.33 2,543.73 ,210.12 1,876.52
PR/ BEFORE TAX 4,999.56 16,512.88 27,125.29 39,209.60 52,936.03
TAX EXPENSE
30% 1,499.87 4,953.86 8,137.59 11,762.88 15,880.81
Net Income 3,499.69 11,559.02 18,987.70 27,446.72 37,055.22

11.2 Project Liquidity

Many profitable companies go bankrupt because of cash flow deficiencies. That is why our
main concern will be to have sufficient cash on hand to meet our payment obligations, and be
prepared for unexpected needs of cash. Our conservative projections indicate that our
business is able to generate positive cash flows and sufficient cash reserves. In addition to
normal cash inflows and outflows, we will focus on establishing sufficient cash reserves for
contingencies. That includes a possible line of credit with our bank, which could be used in
slow sales periods as well. This is a good way to control the cash flow risk. The following
tables show the projected cash flow.
Debebe Duressa
Projected Cash Flows Statement
beginning 1Yr 2Yr 3Yr 4Yr 5Yr

Cash from Operation            

Cash Sales   346,931 425,424 463,713 505,447 550,936.87
Equity 5,000.00          
New Long term 28,109.90          
Liability

56
Sub total cash rec 33,109.90 346,931 425,424 463,713 505,447 550,936.87
             
             
Expenditure            
Operational Expense 14,091.40 337,318.8 404,632.3
6 2 432,641.68 462,625.13 494,722.47
Profit Tax Paid Out     1,499.87 4,953.86 8,137.59 11,762.88
Principal Repayment   2,900.9 2,900. 2,900.9 2,900.9 2,900.9
0 90 0 0 0
Purchase f/ Assets 13,331.50          
Payment of Interest  
3,210.93 2,877.33 2,543.73 2,210.12 1,876.52
Pre production exp. 687.00          
             
Cash Spent 28,109.90 343,430.69 411,910.42 443,040.17 475,873.73 511,262.76
             
Net Cash Flow 5,000.00 3,500.51 13,513.97 20,672.38 29,572.96 39,674.11
Beg. Balance   5,000.00 8,500.51 22,014.48 22,014.48 51,587.44
Cash Balance 5,000.00 8,500.51 22,014.48 42,686.86 51,587.44 91,261.55

11.3 Pay Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project’s initial investment will be fully recovered within 3 years.

11.4 Internal Rate of Return and Net Present Value

The company’s Net Present Value is Birr 2,412,613. Internal Rate of Return is 18%. Since the
company has positive NPV and IRR is 18%, the prospect of project is profitable for investment.

11. 5 PROJECT MONITORING AND EVALUATION

Monitoring of the project will be carried out as a continuous process to provide qualitative and
quantitative information & data on the management and technical aspects. The monitoring
system will not only focus on providing data on inputs, outputs and effects but also considers the
processes involved in project implementation. The information so generated in the process will
be used to improve management through guiding management decisions to ensure effective
implementation of the project.

57
The monitoring tool will be monthly report; business report will be done a regular manner. As a
result monthly reports on the progress business implementation will be prepared from bottom to
top level of management, and a follow up activities according to the schedule.

Habtamu Yarn Factory will conduct evaluation of the project at the end of each phase of the
project implementation. The project management shall establish indicators for monitoring and
evaluation to verify the success of the investment. The result of the evaluation should be
incorporate in to the next project planning and lessons learned from experience.

Monitoring and evaluation

General Monitoring and evaluation will be an on going activity throughout the project life. Monitoring
will be routinely done through meetings monthly reports, check lists, and support supervision visits.
These reports shall indicate the constraints and challenges in the implementations and necessary
adjustments that had been taken. Progress evaluation will be done through use of monthly quarterly
reports, steering committee meetings, annual report, registry records, work pans indicating planned and
accomplished activities, functional accountability for project resources including equipment, facilities,
assets and activities.
Progress monitoring and evaluation will help the project team to assess the extent to which
implementation is meeting the set objectives. This will enable the project team to revisit the objectives
and priorities and to find ways and means of improving the performance and better resource used

12. CONCLUSIONS
The future prospect of Yarn factory in Ethiopia is bright since the entry of private firms in the
textile production businesses will have a significant development indicating the profitability.
Investing in textile industry for long-life textile production in Ethiopia is a promising opportunity
for textile investors. Investing on yarn processing in Ethiopia is a profitable business since
financially viable with having a high internal rate of return. The textile processing investments
could increase capacity in textile products into a range of markets including export to EU & USA
and other destinations options.

58
 The financial results show that the project is profitable, although there will be some
dependence on bank for long term loans.
 The proposed Yarn project is a viable and could target the identified niche market in the
short term and the export market in the long term.
 The strength of the proposed project lies on its strategy aimed at exploiting the interaction
between value addition technologies and opportunities offered by different market players.
 Product quality will be enhanced by introducing other attributes preferred by consumers
It is therefore concluded that the proposed project is financially viable. The demand for
Cotton yarn is strong and growing, a situation that will ensure adequate cotton yarn
production levels and sufficient return to investment.

13. Key assumptions

The financial analysis of the project where based on the data presented in the previous chapters
and the following assumptions:-
All buildings and construction costs needed for the project are taken from engineers’ estimation
reports or bill of quantities.
Depreciation Rates
Building infrastructure 10% straight line
Machinery and Equipment 10%

59
 Other furniture and other equipment’s 10%
Amortization
Pre-operating cost 10%
Land lease hold amortized over the lease period of 40 years.

The investor will contribute 30% of his own capital as equity and secure a term bank loan (70%
of the total capital payable in 10 years) to finance the project
 Interest rate: 11.5% per annum on declining balance and due on quartile basis.
 Sales price will increase by 5%

ANNEXES

PLANT AND MACHINERY

SN NOS COST
Particulars

1 Concrete block making machine 2

2 Concrete mixer with motor and other 1
accessories
3 Rams and Moulds for Diff. Sizes 20
4 Tipping Barrows 7 cu. ft. capacity 2

5 Tipping Barrows 4 cu ft. capacity 2

15% CST, Cartage & Installation charges
etc.
Total Cost of Machinery & Equipment

60
Bore well with over head water tank
PRODUCTION CAPACITY
The plant and machinery proposed in the project has a production capacity of
800000 Nos. of cement concrete hollow blocks of size 100X200X400 mm. At 75%
utilisation of the capacity, productions of 600000 Nos. of blocks have been taken
into consideration.
Cement concrete hollow blocks are usually of the following three dimensions:
100X200X400 mm, 150X200X400 mm and 200X200X400 mm. Although hollow
blocks of all the three sizes could be made using the same machinery and
equipment proposed in the project, for computation purpose only one size viz
100X200X400 mm is considered in the sales turnover.
Hollow blocks of other sizes could also be made depending on the user
requirement. With the given set of machinery and equipment used in making the
hollow blocks, solid blocks could also be made with the help of additional mould
sets only.
UTILITIES
Electrical Power requirement: 25 HP power for industrial purpose is required.
Water: water used in making concrete should be free from acids, alkalis, oil,
dissolved carbon dioxide and decayed vegetable matter. Generally, water suitable
for human consumption is considered adequate for concrete mixing.
Working with the proposed plant and machinery, the project will be capable of producing 17,000
pieces of concrete blocks at 50% capacity utilization with double shift of 08 hours a day. Annual
increase of 5% in capacity utilization is assumed over the projection period. All projections are based
on 16 working hrs a day with 26 days a month.
Based on our discussions with the industry experts and entrepreneurs it is assumed that the sales
price will increase with a nominal rate of 10% on all product categories during the projected period.

S.No Particulars Nos Rate (Rs) Amount

(Rs)

61
1. Office table 2 1.200 2,400
2. Chairs 6 450 2,700
3. Almirah 1 5,200 5,200
4. Stools 4 225 900
5. Fans 2 750 1,500
6. Type Writer 1 7,300 7,300
Total Cost of Fixtures & Furniture
20,000

Pre-operative Expenditure Rs.50,000/-

(A) Raw material per month

S.No. Particulars Quantity Rate (Rs) Amount (Rs.)

1. Cement 3000 bags 130/- 3,90,000
2. Sand 12000 cu.ft 2.50 30,000
3. Stone Chips 27000 cu ft. 5/- 1,35,000
Total
5,55,000

S.NO Particulars Cost

1 Electricity charges for 3000 K W H

2 Water charges L.S.

Total

Other expense per month

62
 Stationery

Telephone

Traveling expenses

Advertisement and publicity

Repair and Maintenance

Insurance

Misc. expenses

Total

SN

63
 Raw Materials

Salary and Wages

Utilities

Other Expenses

Working capital requirement Total

for 3 months

64