TIB DEVELOPMENT BANK LIMITED | BOARD MEMORANDUM.NO 208/3 OF 2015 APPLICATION FOR CREDIT: GLOBAL PACKAGING (1) LIMITED 10" June 2015 CnSHE TENDING AND TEASING [APPROVAL REQUIRED > Date, JUNE2015 Tx J pRM [BORROWER 7 GLOBAL PACKAGING(I LIMITED 1X1 [Boars NATURE OF BUSINESS = Ssablahed Boa. XT |New Credit cea Since |Ausitional IMinutaciucing PP woven bogs Lease facil jOverdrant Short term loan Sector: MimuTacuring eros 7 Wand Fring & Pachaging Co LTO GVA) anTNDC OY. PROPOSED PACKAGE fENcILITY TYPE, AMOUNT, MATURITY DATE, INTEREST RATE [ TD TS TOO oma 1% Long term ean 1,650,500) 3 057 95D [Snow texm 700,000] 1/330,000] Des w% “Toll 30.800), 4327-950] See |URPOSES (YT part mance purUhase of machinery and warehouse (Prefabricated mates) i) To Finance purchase of maw materials and meeting initial operation costs, iors Resolution accepting the Feies on dhe erms end conditions ofthe eter of offer |, Submission of « Board of Di 1 payincut of won-reundable appraisal Vee af 19 ofthe ttl facilities amount. (1ZS oquivalen 10 USD 23,305) Opening on accouny. wih TID und depositing at least TS 1 milion to met legal documentation fes and expenses age of compre ‘covers specified under general conditions. Tomson of evidence of compliance and having alt permits (4 Building pet) and other eathorization requisite ‘under laws andr th byw for implementation oF the projet Js Sunnicion of uadetaking wo me ll cost overrs of the projeet a exces of provided contingency and nochange of proest concept Submission of undertaking o complete constuction of he falar foundation based on specification ofthe supplier of machinery Appoint an iadependent project manager wha il be responsible wit the projest eonstrstion works J Submission of eoniact between the Borrower andthe project manager implementing the project. 1 Submission of undertaking eter coufieming thatthe company will out ll sales procoeds fom the project trough their account with TTB 1. Execution of sevurty docimentain and thes registaton with relevant authorities SECURITY + (7287000) APPRAISED | LOAN VAIAIE | _VALUE 2.906896) 183 aaargso| — 3542,360 rrems Lo | Debearure aver the plan and machinery to be purchases } Financial gurantee fom LAP Insurancy Company .Goarantoe of Amos Nseaga Gityami supported by a fest ranking egal mortgage over the landed property - : Jon Pict No, 367 Regent Estate 1.300.000 | 780.000 1 Guarantee from Wede Printing and Packoging Company Ltd _ 7 Tost Tana gael SF BOR Security Cover 130 acaneted Tian Debi over act To We Taal ny TOW Tan 5%, Financial goraniee 95% SSPrROVED BY Board 4 oe eth } RECOMMENDED Date 9 () (Daten , eG je Ma! | kung PM. Noni Prof, W. MaLyakorwa vSMETENDING AND LEASING [APFROWAL REQUIRED, Date: JUNE2O1S Tx 7 [enc BORROWER GLOWAT, PACKAGINGH) LIMITED LX 1 {pow NATURE OF BUSINESS = Esabtianed Bars] [eT New Creat snairuring PP woven bags tient Sinoe JAdgivonst Exposure Sate 11 [Lease tasty [CREDIT GRADE? Lo) |owrean xing 20ra|__( x_}_Jsiovt tem oon Sector: Manatactorng Divecrons + Wand Pring & Fashaging Co: LTD OW )and NDC WH). [PROPOSED PACKAGE [FACILITY TYPE AMOUNT [MATURITY DATE. T INTEREST RATE SD. [Taso Tena mt tam Tas0So0 3097S Snort Tem ; 706,00) 1 330,000] De a Tot 533050) aarrasa PURPOSE: (TS par france purchase of machinery and warehouse (Prefabricnea materials) (i) To finance purchase of raw materials and meeting intial operation costs \CONDITIONS PRECEDENT? 1, Submission of @ Board of Direstrs Reso 2 Payenet of non-refundable appraisal fe of 1% of the total facilities atmo 5 opening an account with TI and depositing t east TZS | milion to wet I |: Purchase uf comprchensive insuance cover a specified under general conditions Js Submission of evden of compliance and having all permits (e Building permit) an oter authorization requisite nde Laser the by-laws far implementation of the projet Jc Submission of wndertaking to mee al cost overuns of te projest in excess of provided contingency and nochange of project concept imission oF undertaking complete constuction ofthe Fclor foundation based on specification of the supplier of machinery spine un independent projest manager wha wil be responsible with the project constuction works 5 submission ofa contract etweun the Derrower and ts project manager implementing the project. Submission of uncertaking ltr eonfimtng thatthe company wil route all sais proves from the projet through tet aecount with TB 1 Bxveution of security documentation and thei ogsiration wi eleva authori, SECURITY: (728000) mn aeepling te facies on te erms nal cendt valent to USD 23,305) : APPRAISED [LOAN rrems VALUE__| VALUE debenture over the pit and machinery tobe purchased 2906896 — 1ASSA8 > inaacialguaranze from UAP Iasuraney Company Guarantee of Arnos Naenga Gityamssi supported bya first ranking legal mortgage over te landed property | Jon Plot No, 367 Rexsat Estate 1,500,000] 750,000 Guarantee irom Wande Printing and Packaging Company Ld | 7 4aar9s0 | 2542,360 Total asa STS Security Cover 130 [Discounted TactareDebenmurs ver asso Tbe Financed hy TUB fund $0% , Fnanclal gyn 95% [APPROVED BVstovestment Committee szcovnuennen come. DS IQELLSs 4p [oreo : Meo | y J marususi D. Matagonda MCungu P.a4. Noni Principat Jorticer MSL. AgDDF [chairmanGlobal Packaging (T) Limited - Joan Z, Murusuri Page 1 of 27 Originating Department: Project Finance a/O6/i5 16:48 APPLICATION FOR CREDIT (AFC) ‘= CUSTOMER DETALLS w TECHNICAL DESCRIPTION ‘= CREDIT DETAILS PLAN = COLLATERALS = SHAREHOLDERS = COVERAGE, 1» SHAREHOLDERS SUMMARY 1 SCHEDULE OF FACILITIES ‘= MANAGEMENT PROFILE «© EXECUTIVE SUMMARY «= FINANCIAL PROJECTIONS PURPOSE: = SECURITY ANALYSIS 1 PROJECT BACKGROUND _ _# COVERAGE: i: NVESTMENT COST AND FINANCING $ret App367S ‘© PROJECT IMPACT ASSESSMENT. 1 PROJECT RISK ANALYSIS. ‘OBSERVATIONS, CONCLUSION AND * RECOMMENDATIONS Rating Detais s Rating Results ‘COMMENTS “Giobal Pacing (1 Limited eects Guarantor / Other Capacies Related Parties with Easting Credts ‘Wand Printing and Packaging Company Lid NA, Nationa Development Corporation (NA) rity Type Limited uabilty Co ‘ru # 122696057 Business Activ prequcton of Polypropylene Woven Bags (Sack) Industry (NAICS) Manufacturing (2005) Address Global Packaging {T) Limited P.0,Box 63178 TAMCO Estate Pet 9, Dar s Salaam TANZANIA Web ste Maio Phone +255 (784) 667-683 Year Stated 9515 Curent Mgmt Since 2013 Bron / BU Customeriaccst Reatonship Manager Urvderwier Joan 2. Murusur (10073) Credle Analyst Revowed By Dandatna Mutagonda (10145) Last Revlew Expration Recuted ‘thority Customer Since Projet Finance> 28 (CREDIT DETAILS. Credit App: 675 cre “otal Exposure » 7254,942,574,000,00000 © ee ‘oral For Relationship 0.00. Total Secured 0.00 “otal unsecured 0.00 Total For atiates 0.00 Global Packaging (T) Limited 0.00 ‘usiness Account tang Term Loon Valid for 30/10/13 amouns i T2S ‘Amount Requested Existing Comritment 4,923,181,250.00, 0.00 3444 431,250.00 0.00" 1,478,750,000.00 0.00 0.00 0.00! 4,923,181,250.00 0.00 1,478,75,000.00 3,446 891,250.00 httn://ealive/creditauestCreditManaper/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuri Page 2 of 27 CoUATERALS check ow: 678 Valid for 3/10/13 anes in 125 Footed Makat omsed Marg Posner cotta Piiletceer ed ag Parameter acaet No, ot for Retosip 945519906250 620454890625 Tot for Ate 009 000 iba Packaging 1) 9,635390,062.50 6.204549 06.25 ester 1sen0%00009 rso9es000. fate RAE Ney pecunt 725 onc ae tnsaro fond 92318125000 assessom.00 AMIE RME tay hack USD “al Nate ba i000, Padang Pant samonaiase yereooyaneas S160” ney zcout Uso teen, ‘var Rate Son coverace Vali for 3/103 mounts In 125 cota Len ores GrutAourt——colawalancunt Las Uens—COvtOE Total for ltorsp oniei.asoan 96550008250 oo aa Global Packaging (T) Limited tong Tem Loan 3544 431,280.00, oar Packaging Plant Ast 3,232,008,812.50 0.00 ‘otal Non aloated Faciies(1) 4,48,750,000.09, 447 Insurance Bona 4,923,181 250.00 0.00 Resides 4,500,000,c00.00 0.00 http://eqlive/creditquest/Credit Manager/himl/PrfWebController.aspx? WCI=CreditMe... 02/06/2015Global Packaging () Limited - Joan Z, Murusuri Page 3 of 27 _ SCHEDULE OF FACILITIES Joan Z Murusut, 29/05/18 Facility 1: Long Term Loan Amount: TZS equivalent to USD 1,630,500 Facility H: Short term loan Amount: TZS equivalent USD 700,000 Borrower: Global Packaging (7) Limited (also referred to as "the company") Lender: TI8 Development Bank (also referred to as ‘the bank’ or IB’) Terms and Condition Purpose: To finance the following; 1. Purchase of warehouse (prefabricated materials) and meet installation costs. 2. Purchase of complete packaging plant, control panel, transformal and power generator Availability: For drawdown in Tanzania Shillings after fulfilment of conditions precedent, Disbursement: The funds shall be disbursed directly to the suppliers upon the Borrower's written instructions accompanied with relevant documents acceptable to the Lender. Procuremet All procurement of goods, works and consulting services financed by the bank will be conducted according to the bank’s rules and procedures for procurement of goods and works of, as appropriate, rules and procedures for recruitment of consultants, using the bank's standard bidding documents, Global Packaging Co. Ltd will be responsible for the procurement of goods, works and consulting services as appropriate, Repayment: The principal is repayable in seventy two (72) equal monthly instalments. Grace Period: ‘The first instalment shall fall due after a grace period of twelve (12) months counted from the date of first draw down. Tenure: The facility expires after eighty four (84) months including a grace period of twelve (12) months htin://ealive/ereditauest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuri Page 4 of 27 counted from the date of first draw down by which date the full amount shall have been repaid. Commitment fee: The Borrower shall pay a commitment fee of 2 percept per annum of the committed but un-deawn balance. Such commitment fee shall start to accrue after 60 days from the date of signing of the Credit Facility Agreement. Facility Short term loan Maximum limit: ‘ZS equivalent to USD 700,000 Purpose’ To finance purchase of raw material ( PP granules) and meet initial costs. Availability: ‘As Tanzania Shillings short term facility fer utilisation after purchase of the packaging plant and during installation of machinery upon fulfilment of conditions precedent. Disbursement: The funds shall be disbursed directly to the suppliers upon the Borrower's written instructions accompanied with relevant documents acceptable to the Lender Repayment: The principal is repayable in 15 equal monthly installments. The first installment will fall due after a grace period of three (3) months Grace period: Three (3) months from the date of first disbursement. Tenure/Expiry Date: The facility expires after eighteen (18) months including the grace period of three (3) months counted from the date of first draw down by which date the full amount shall have been repaid Terms and Conditions applicable to both Facilities Interest Rate: TIB base lending rate currently set at 159%plus 2% ie, 17% per annum charged daily on the outstanding amount and debited monthly from the account, The bank reserves the right to vary the applicable base rate with notice to the Borrower, During grace period the interest that will accrue will be capitalised for repayment in conjunction with the principal Penalty Rate: Any principal or interest amount that remains unpaid after due date shall be charged a penalty at the rate of 2% per month and remain payable on demand. Pre-payment Fee: 25% of the interest foregone. Appraisal Fee: Non-refundable fee of 1% of the approved facilities (i TZS equivalent to USD 23,305) payable http:/feqlive/creditquest/CreditManager/html/PrfWebController.aspx?WCl=CreditMe... 02/06/2018Giobal Packaging () Limited - Joan Z, Murusuri Page 5 of 27 upfront. Legal Documentation Fee: The Borrower shall meet costs associated with the preparation and registration of legal documents as follows:- 1, Deposit Tanzania shillings one million (TZS 1,000,000.00) in the Borrower's account with the bank upon acceptance of the letter of offer. 2. Pay actual costs of filing and registering the legal documents, payable to relevant authorities and/or third parties upon receipt of demand/fee notes in the event the deposited amount of Tanzania shillings one million is net sufficient Security: The facility shall be secured as follows: 1. ADebenture creating a first ranking charge over all the fived assets of the company, both moveable and immovable, present and future, where 50 ever and how so ever, including but not limited to land & development, plant and machinery, office furniture and equipment; And a first ranking floating charge over all the current assets of the company, both present and future, where so ever and how so ever, including but not limited to stocks, work in progress, goods in transit or about to be shipped, goods represented by documentary bills of exchange, ‘cash, bank balances, and book debts. 2, Financial Guarantee (i.e, bond) fram UAP Insurance Company, 3. Corporate guarantee of Wande Printing and Packaging Company. Conditions Precedent: Utilisation of the above facllities will be allowed after fulfiling the following 1. Submission of a Board of Directors Resolution accepting the facilities on the terms and conditions of the letter of offer. 2. Payment of non-refundable appraisal fee of 1% of the total approved facilities (Le. TZS equivalent to USD 23,305). 3. Opening of a bank account with TI8 and depositing at least TZS 1.0 million to cover for the legal documentation expenses. Purchase of comprehensive insurance cover as specified under general conditions, Submission of evidence of compliance end having all permits (e.g. Building permit) and other authorization requisite under laws and/or the by-laws for implementation of the project. 6. Submission of undertaking to meet all cost overruns of the project in excess of provided contingency and ro change of project concept. 7. Submission of a letter that validates the joint venture between NDC and Wande Printing & Packaging Co. ttd 8, Submission of undertaking to complete construction of the factory foundation based ‘on specification of the supplier of machinery. 9, Appoint an independent project manager who will be responsible with the project construction works to be approved by the lender in the expense of the borrower. The project manager will oversee project implementation as per the submitted plan and verification of interim certificates before subsequent disbursements are effected. 10. Submission of a contract between the Borrower and the project manager implementing the project, 11, Submission of recent invoices from suppliers of packaging plant and warehouse, 12. Submission of undertaking letter confirming that the company will route all sales proceeds from the project through their account with TIB. 13. Execution of security documentation and their registration with relevant authorities. x?WCI ite... 02/06/2015 hit //colive/creditauest/CreditManager/html/PefWebController.asGlobal Packaging (T) Limited - Joan Z, Murusuri Page 6 of 27 Special Conditions: 1. The Borrower shall maintain an account with T18 and conduct all banking transactions through that account, for as long as any amount of principal, interest and charges on any TIS facility remains outstanding. 2. The Borrower hereby irrevocably authorises TIB to debit from time to time any account it may have with the bank, all or any amount due to TIB in connection with the facility 3. The Borrower shall submit to the bank annual land rent receipts (ie, Land rent to be paid on or before 30th June for each year) for as long as any amount of principal or interest remains outstanding, 4, The borrower shall obtain certification from Tanzania Bureau of Standards and always remain compliant. 5. The borrower shall obtain certification from National Environmental Management Council and always remain compliant 6. The borrower shail obtain certification from Occupation Safety and Health Administration and always remain compliant. Consent Clause: The Borrower agrees and authorises TIB or credit reference bureau approved by Bank of Tanzania (BOT) to: 1. Make inquiries from any bank, financial institution or BOT approved credit reference bureau in Tanzania to confirm any information provided by the Borrower. 2. Seek information from any bank, financial institution or BOT approved credit reference bureau when assessing the Borrower at any time during the existence of the Borrower's account. 3. Disclose to BOT approved credit reference bureau information relating to the Borrower's account maintained at the bank. General Conditions: 1. Insurance: The primary obligation to insure the assets of the Company (including those to be financed by and mortgaged to TI8) rests with the Borrower. In this respect, the Borrower shall keep all assets of the Company and those mortgaged to TIB insured against damage, fire and burglary throughout the loan tenure. The insurance shall be taken with a reputable insurer acceptable to TIB. The Borrower shall also submit to TI8 a list and values of the assets and any existing insurance policy (where applicable). The insurance to be taken shail specify the amounts insured, risks covered, period of cover and TIB shall appear as the loss payee. The renewed insurance cover shall reach the bank at least 14 days before expiry of the existing policies, failure of which the bank shail insure the assets and the cost thereof shall be treated as an additional loan to the company. 2. The Borrower shall submit to the bank quarterly returns on occupancy, sales, stocks and debtors in a format acceptable to the bank not later than the 30th day of the following quarter. 3. The Borrower shall submit six monthly management accounts within 30 days of the end of respective periods. 4, The Borrower shall submit audited financial statements within six months of the end of the accounting year. These audited accounts are to show no material deterioration from the corresponding management accounts submitted previously. 5. No further borrowing without the prior written approval of the bank, which shall not be unreasonably withheld, 6. No disposal of shareholders interest in the company without prior written approval of the bank, which shall not be unreasonably withheld 7._ No payment of dividends without the bank's written consent, which shall not be unreasonably withheld, hitp://eqlive/creditquest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuti http://calive/creditquest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe, Page 7 of 27 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuri Page 8 of 27 22/0635 Global Packaging (T) Limited (GPTL) has applied for an aggregate facility of TZS equivalent to USO 2,330,500 out of which TZS equivalent to USD 1,630,500 will be a tong term loan and TZS equivalent to USD 700,000 will be ashort term facility. The long term toan will part finance purchase of warehouse (prefabricated material} from Ando Roofing Products Ltd based in Dar es salaam, acquisition of polypropylene woven plant with 20 looming machineries from Fordah Industry Co. Ltd based in Taiwan and meet installation costs. The short term loan will finance purchase of raw material The long term loan will be repaid in eighty four (84) months including a grace period of twelve months while the short term loan will have a tenor of 18 months. Both facilities will be charged an interest of 17% per annum. GPTI is @ private company registered in Tanzania on 25th March 2013. GPTL is a joint venture between Wande Printing & Packaging Co. Ltd with 94% shareholding and National Development Corporation (NDC) with 6% shareholding. The company proposed project entails establishment of a factory for production of polypropylene packaging bags (PP woven bags) on Plot No. 9 at TAMCO Industrial Estate in Kibaha, Coast Region, ‘Therefore, the main business focus of the company will be manufacturing and selling of PP woven bags for agricultural and industrial commodities (i. packing fertilizers, animal feed, grains, cement, sugar, chemical resins, and seeds). The raw material used for production of PP woven bags is polypropylene granules (ie. Flat Yarn Grade, CaCo3 (Calcium Carbonate), white master batch and colour master batch). The material is by product of petroleum and will be imported from China, India and Dubai, The materials are available from multiple sources (i.e, From local suppliers and outside the country) The capital investment required for establishment of the proposed project is TZS 6.79 billion; the amount is required for construction of factory foundation, purchase of warehouse, purchase of machinery, office furniture, distribution vehicle, pre operations costs and initial working capital The packaging factory will have installed capacity of producing 16.2 million bags per annum (300 days) The role of NDC is to develop and stimulate industrialization through partnership with private sectors. To achieve this, NDC has provided land at TAMCO Industrial Estate as their equity contribution for the proposed project. ‘The company aims to target multiple customers; local industrial companies and agricultural sector in Tanzania that requires high quality packaging bags for their products. These include animal feed manufacturers, food processors, cement industries, farmers ete, Market projections indicate that demand for PP woven bags is high due to their many usages. In addition, demand for PP bags will increase in cement industry due to expected increase in production of cement in the country as commencement of new plant (ie, Kisarawe cement) to meet demand from the construction sector. Also a new plant is constructed in Mtwera Region (ie. Dangota Cement). Though there is market for PP bags, the company products will face competition from existing manufacturers of PP bags. The existing manufacturers have already established customer base. GPTL pian to compete in this industry by producing high-quality products that can be selling at a hutp://cqlive/creditquest/CreditManager/html/PrfWebController.aspx?WCl=CreditMe.,. 02/06/2015Global Packaging (T) Limited - Joan Z, Murusuri Page 9 of 27 competitive price; also by providing good services to customers and meet their expectation Projected financial analysis for the coming seven years shows that, the company will operate profitably. Projected sales revenues for the first year of operation are estimated at TZS 4.05 billion and will increase to TZS 9.88 billion in year 2022. Net profit will increase from TZS 210.61 million in year 2018 to TZS 1.56 billion in year 2022. However, the business will record losses in the first two years of operation. What contributed to the loss is the depreciation value, (See annexure 1), The project gives a positive Net Present Value of TZS 112.87 million: On the same basis, the project has an internal rate of retum of 19.47%, which is greater than the cost of capital. (See annexure If). Sensitivity analysis has been performed and indicates that the project is very sensitive with decrease in unit sales price. A decrease in unit sales price by 10% or below TZS 500 while other variables remaining the same, it results into negative NPV of TZS 1.29 billion and IRR of 12.10% below cost of capital. However, due to steady market for the company PP bags there is minimal possibility of decline in price. The proposed collateral that is debenture over all the company’s assets, mortgage over the landed property on Plot No. 367 Regent Estate and financial guarantee from UAP Insurance are viewed as sufficient and adequate to cover the proposed lending arrangement. The project isa start-up; however its future outlook is promising as the majority shareholders have been operating successfully another similar project under the name Wande Printing and Packaging Ltd, In view of the above, it is hereby recommended for approval. hito /fealive/creditauest/CreditManager/html/Prf WebController.aspx?WCJ=CreditMe... 02/06/2015Global Packaging (T) Page 10 of 27 PURPOSE an 2 Munir, LyoYIS GPTL is requesting for an aggregate facility of TZS equivalent to USD 2,330,500 out of which TZS equivalent to USD 1,630,500 will be a long term loan and TZS equivalent to USD 700,000 will be a short term facility. The long term loan will part finance purchase of factory warehouse (prefabricated material) from Ando roofing Products Ltd based in Dar es salam, acquisition of polypropylene woven plant with 20 looming machineries from Fordah Industry Co. tid based in Taiwan and meet installation costs. The short term loan will finance purchase of raw material and meet initial operating costs. The long term loan will be repaid in 72 months including @ grace period of 12 months while the short term loan will have a tenor of 18 months, oth facilities will be charged an interest of 17% per annum, The detailed breakdown of items to be financed by bank long term loan is shown on table below, Part A: Machinery and equipment Costin | Total Cost in Sirf Equipment aty foostin. | tee Flat Vain Making Machine with auxiliary equipment (Le water 1 [eniller, heat exchange and air compressor) - 309,50 309,509 2_ [Shuttles Circular loom! 20 11,309] 238,00 3 High Speed Lamination Machine - single extruder with its Idevices 1 218,75¢) 2 9} [Bag printing Machine - piece by piece double side 4 colour Aa eng mace 1 42,004 41,000] IHigh speed auto cutting & sewing machine with devices to Se Cann 2 48,904 97,800] 6 [Hydraulic baling press z 11,50 11,500] 7_[Pb/PE waste recycling machine 1 34,00 34,009] _[Seamiess bobbin 3,00 oil 14,030 | Manual Sewing Machine with Table and motorsingle i ay cea stitching) Testing equipment (tensile tester, electronic scale, thickness 10 Joauge, digital hand tachometer) one eu Total 981,660] Freight to Dar es salaam(40 fi containers) 40 4,00 40,000, Freight to Dar es salaam(20 ft containers) 1 25% 2.159 Subtotal 42,159 Total cost machinery and shipping 1,023,810] [Shipping insurance is 1.5% of cost machinery and freight 15,357] [rotal CIF 1,039,167 Part B: Other costs of machinery [S/n [item Qty [cost in usD | Total Cost in USD. http://cqlive/creditquest/Credit Manager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (1) Limited - Joan Z, Murusuri Page 11 of 27 1_ Port charges 1.25% of Cit 12,996 2 [Clearance charges for 40ft container 10 [3,000 30,004 3__ [Clearance charges for 20 ft container 1_|1500 1.509 4 _ [Delivery to the site per containers a_ [526 5,789] [5 [Estimated machinery installation cost 14,175) [rotal 64,454] Part C: Warehouse and installation costs Cost in Item luso 5°42"9 supply, installation cost of warehouse (55*42"9 prefabricated Imaterials excluding civil works) uel 2[800KVA Transformer 22,790 3[Control paneliswitch changer/gean) 3421] 4 Generator 800 KVA cummins 101,053] 3[Total 449,114) 5% contingency of the total cost(a+b+c) 77,631] 526,753] ‘The detailed breakdown of items to be financed by bank short_term loan of USD 700,000. Item Costin USD _| 1 Raw materia(PP, CaCO3 master batch, white and colour master batches) 615,000 2[ intial salaries expenses 55,000 3| Utility cost 30,009 Total 700,000) http://calive/creditquest/CreditManager/html/PrfWebController.aspx?WCl CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuri Page 12 of 27 PROJECT BACKGROUND. Global Packaging Limited (GPTL) is a private company registered in Tanzania on 25th March 2023. The company was established to carry on among others the business of manufacturing and selling of all packaging materials such as sacks, supermarket bags ete, The company is a joint venture between Wande Printing & Packaging Co. Ltd and National Development Corporation (NDC). Therefore, the shareholders of the Global Packaging Company are Wande Printing & Packaging Co, Ltd with 94% shareholding and National Development Corporation with 6% shareholding. The proposal project: The Company proposed project entails establishment of a factory for production of polypropylene packaging bags (PP woven bags) on Plot No. 9 at TAMCO Industrial Estate in Kibaha, Coast Region. The main business focus of the company wit! be manufacturing and selling of PP woven bags for agricultural and industrial commodities. What drove the company to venture in this line of business is the growing demand of PP bags and the profitability. PP waven bags are the most commonly used bags in the packaging industry. They are used in packing fertilizers, animal feed, grains, cement sugar, chemical resins, seeds atc. The capital investment required for establishment of the proposed project is TZS 6.79 billion; the amount is required for construction of factory foundation, purchase of warehouse, purchase of machinery, office furniture, distribution vehicle, pre operations costs and initial working capital. The packaging factory will have installed capacity of producing 16.2 million bags per annum (300 days) Selection of project manager to implement the project: The selection of project manager who will be responsible with the project construction works will be done through competitive bidding and the company will advertise to the oublic. Key factors that will be used in evaluating and selecting the project manager are delivery capability and experience as well as price offered, Current project status: The project is a start-up. NDC has provided land on long term lease basis at TAMCO industrial estate in Kibaha while Wande Printing & Packaging Company Limited will be responsible for establishment and running of the envisaged packaging factory including meeting constructicn cost. Wande Printing & Packaging is also responsible for raising fund and construction of the factory foundation. The fund will be sourced from existing business and banks. Banking Relationship: The company is currently not banking with any bank; however, the majority shareholder Wande Printing and Packaging Co. Ltd is banking with Exim bank and Stanbic bank, Wende Printing and Packaging Co. Ltd also has relations with financial institution namely Grofin where it has facility with outstanding balance of TZS 2.8 billion Experience of TIB in lending to packaging projects. The bank so far has financed two packaging projects namely Harsho Packaging Company Ltd and Techpack Tanzania Ltd, Performance of both projects is good, This indicates that the business is lucrative and worth investing, hutp:/leqlive/ereditquest/CreditManager/html/Prf WebController.aspx?WCI=CreditMe.., 02/06/2015Giobal Packaging (T) Limited - Joan Z. Murusuri Page 13 of 27 Joan Z Murusuri, 29/05/15 Products: The company main product will be Polypropylene bags/sacks ("PP woven bags" or “viroba”). The range of products includes PP woven polypropylene sacks and bags with inner polythene liners and or lamination coating; Woven polypropylene sacks and bags without inner liners or lamination; Woven sacks with block bottom and valves, PP bags ere used for various purposes such as fertiizer bags, cement bags, sugar bags, cereals bags, animal feed bags, sand bags (e.g. for the mining companies), safari bags and many other usages. PP bags are also used as packaging materials in retail stores and supermarkets. The company’s PP bags will be manufactured with various colours and sizes to suit various uses depending on the market demand, Advantage of using PP bags include; 1L. Long life due to durability 2, Water proof due to lamination 3. Flexible and high strength 4, Can be stored in an open air due to UV -stability Targeted market: GPTL targeted market is local market specially industrial companies and agricultural sector in Tanzania that require high quality packaging bags for their products. These include animal feed manufacturer, food processors, cement industries, farmers, chemical and sugar industries. Market opportunity for PP bags: The market analysis conducted indicates that the market for PP Bags/sacks has increase especially in the agricultural sector. The analysis was based on production and consumption of maize and rice in the country, The company will also produce PP bottom sacks which are mainly, used in the cement industry. At present, Tanzania expects to double its cement production in the next coming years as new plants are commissioned to meet demand from the construction sector. Currently, Tanzania has an estimated production capacity of 3.5 million tonnes per annum shared mainly among the big producers including Twiga, Tanga and Mbeya Cement firms. But the coming of other players (Le. Kisarawe cement, Dangota cement) the production capacity is estimated to increase to 8.65 million tonnes annually.(source: IPP Media). Therefore, there is potential market for GPTL products. Table below show potential market for 50 kilogram bag for maize and rice. GPTL estimated market of PP bags based on maize and rice production (a) Production of maize for the past five Demand of PP [Demand of PP Maize IRice Years leroduction [Production my (Maize in 50|bags (Maize in zove/2003] 3,326,200] 867,619. 66,524,001 17,352,380] eoo9/2010 4,475,416] 1,699,825 89,508, 32 33,996,500] [2010/2013] 86,816,461 29,228,160) hito://calive/creditauest/CreditManager/html/PrfWebContraller.aspx?WCI=CreditMe... 02/06/2015Global Packaging (I) Limited - Joan Z. Murusuri Page 14 of 27, fzon1/2012| 5,240,003) 1,128,326 104,800,020) 22,566,520] 2012/2013] 5,173,666 1,307,308 103,473,320, 26,146,160} {b] Production projection of maize/rice for next five years Demand of |Demand of peeaasdted Maize Rice IPP bags [PP bags eae ears ductionfpreduction maize 50 (rice so freeded for production|production |(maize ice 50 ated gs) Kgs lice [2015/2036] 5,504,786 1,673,058] 110,095,720] 33,461,160] 143,556,880 bore/20i7| 5,827,163] _ 1,778,557] 136,543,260] 35,571,140] 152,114,400 [2017/2018] 6,180,603] 1,877,526] 123,612,060) 37,550,520] 161,162,580 feo18/2019| 6,482,887] 1,969,084] 129,657,740] 39,381,680] 169,039,420 [2019/2020] 6,781,854] _ 2,031,023] 135,637,080] 40,620,460] 176,257,540 Total average 160,426,164 Base on the projected maize and rice production, the average annual demand of PP bags is estimated at 160.42 million bags, The company will supply 10% of the demand and the rest will be ‘met by local suppliers and imported bags from the foreign suppliers. Competition: The Company expects to face the competition from other existing manufacturers of PP bags. Below is a list of competitors; 1, Azam PP Bags -This supplies mainly to Azam companies and Bakhresa Group of companies in Tanzania, Rwanda, DRC, Zambia and Uganda. The external consumers of the products include the sugar companies which have some affiliations as well.The company installed capacity is to produce 5,000,000 bags per month. 2, Tansack Ltd (pee pee)- Based in Tanga. Tansack manufactures PP bags and sells via agents in Dar es salaam. The agents take orders for the small millers and sell in small quantities to them at a premium. The plant has capacity of producing 30,000 bags per day. 3. Tukuyu Packing ~ Based in Mbeya, this deals with provision of the packaging materials for tea growers and other manufacturers 4. Hill Packaging Company - this company is based in Mapinga Bagemoyo. the company manufacture PP bag for its own use (animal feed } as welt as for sell. he company installed capacity is to produce 100,000 bags per day. 5. Harsho Packaging Company Ltd - This is based in Moshi and manufacture PP bag mainly for Its own product (animal feeds). The company installed capacity is to produce 3,600 tons of plastic bags per year. 6. Techpack Tanzania Ltd - Supplies packaging materials mainly to the cement companies.The company installed capacity is to produce 5,000,000 bags per month. 7, Pee Pee (T) Ltd - Supplies packaging materials mainly to small and medium enterprises. http:/Ieglive/creditquest/CreditManager/html/PrfWebController.aspx? WC! editMe... 02/06/2015,Global Packaging (T) Limited - Joan Z, Murusuri Page 15 of 27 The company is based in Tanga The company competitive advantage ‘The company competitive advantage to compete with the above competitors will be; 1. Quality product at competitive price 2. Fast and site delivery (to the customer) 3. Good customer services including provision of branding services to meet customers’ requirement. Marketing strategies: The company plans to promote its product through quality consistence and affordable price. The company also plans to use exhibition e.g Nane Nane and Sabasaba Trade Fair. It will also capitalize on the network of the Wande Printing and Packaging Co, Ltd to promote its product. Selling Price: The planned selling price for one bag of 50 kilogram is TZS 500. The price to be charged is reasonable and expected to attract more customers and hence increase sales volume. hup://calive/creditquest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuri Page 16 of 27 PHYSICAL AND PRODUCTION RESOURCES. Plant location Ms Global Packaging (7) Limited is planning to establish polypropylene packaging bags (PP) production plant. The plant will be located on Plot No. 9 at TAMCO Industrial Estate, Kibaha District Council, Pwani Region owned by National Development Corporation. The location is convenient for the project as its along Morogoro road, 36 km from Dar es Salaam City. The plant will be supplied by a power from TANESCO. However the company will purchase a standby generator to avoid chances of interrupted power supplies. Machinery and Equipment The machineries and equipments that will be used for production of polypropylene packaging bags (PP woven bags) includes flat yarn machine, shuttles circular loom, high speed lamination machine, bag printing machine, high speed auto-cutting & sewing machine, hydraulic balling press, PP/PE waste recycling machine, seamless bobbin, manual sewing machine and testing equioment. The machinery and equipment will be imported from Fordah Industry Co. Ltd, the foreign manufacturer based in Taiwan. The total cost of all machineries is estimated at USD 1,039,167 C&F Dar es Salaam. ‘The machineries have capacity of producing 54,000 bags per day based on the two shift production per day. Raw materials The raw materials that will be used for production of polypropylene packaging bags are Poly- propylene granules (Flat Yarn Grade}, CaCo3 (Calcium Carbonate), white master batch and color master batch. The raw materials is by product of petroleum and will be imported from China, India and Dubai, Production Process ‘The production of PP woven bags involves three main stages which are tape making, weaving and bag making. Tape Making: The tape is produced by automatic machinery which weighs the raw materials and using heat and high pressure before extruding the resin into sheets of film. The sheets of film are then cut into strips using blades. The PP strips are then stretched and annealed to produce the tape that is to be used for weaving the bags. Weaving: The series of winding machines with capacity of holding up to 3 kilograms of tape are used to wound the tape into bobbins. The machines are equipped with both mechanical and electronic tension regulators. The tape bobbins are placed on the circular looms which produce the high strength fabric used for making bags. Bag Making: The high strength fabric/ rolls are loaded onto an automatic bag making machine which cuts the fabric to required length, folds and sews it into bags. Printing: The bags are then inserted into a three colours printing machine of flexographic type before bailing Bailing: The hydraulic bailing press is used to make bundles of 500 or 1000 bags by pressing the bags, pack and dispatch hittp://eqlive/creditquest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Giobal Packaging (T) Limited - Joan Z, Murusuri Page 17 of 27 INVESTMENT COST AND FINANCING PLAN a ae Joan Z Murusunl, 09/04/15 eee 5 Investment and Financing Plan: ‘The total investment cost is estimated at TZS 6.79 billion; out of which the company equity is ZS 2.37 billion and bank finance is TZS 4.42 billion, The company equity comprises of existing equity and adcitional equity. The company existing equity is TZS 267 million which is cost of land. The proposed invest ment plan is as broken down in the table below: Item tia ee toan — [Total Land 267,000] 267,009 ‘onstruction costs for the foundation. C287,061f 7 987,061] [External work and drainage T8764 18,768 Provision and prime costs 106,535 105535 IDay works, insurance & cost of providing sureties 187,75: 187,759] lOffice furniture 35,760, 35,760] [hwo commercial vel 180,000) [Pre operation costs. 31,38 51,380] VAT 337,41 337,410 Project management fee 200,006 200,004 upply & installation of warehouse building 553,014) 553,01 prefab. materials) A Machinery and installation costs 2,096,880 | 2,096.88 30) [Transformer 4330) 433° Power generator 192,000|_ 192,004] [Switch changer (control panel) 65,000] 65,00 [Total 267,000)2,104,673_| 2,950,195] 5,321,861 [Contingency 1147510] 147,51 jorking capital 4,330,000] 1.330.000) IGrand total 267,000] 2,104,673 | 4,427,705] 6,799,378] Usb 1=1900 From the bove analysis, the debt to equity ratio is 65% : 35%. The debt to equity ratio is slightly below the acceptable bank's threshold ratio of 60% to 40%, However, we recommend approval of the project on exception basis due to the reason that the project evidence a prospective business in terms of profits. Further, there is potential market in packaging materials, htto:/Icalive/creditaues/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuti Page 18 of 27 Oviners ype Ounershia % Voting % Since ISK Rang \Wiande Printing and Packaging Company Lis Ordinary Shareholder 94.00% 94.00% 2013 na Nationa Development Corporation Ocdnary Shareholder 6.00% 6.00% © 2013, na SHAREHOLDERS SUMMARY Global Packaging (7) Limited is a joint venture between M/S Wande Printing & Packaging Ltd (94%) and National Development Corporation (NDC) (6%). The joint venture agreement between Wande Printing and packaging was signed on 21st March 2013. Letter to validate the joint venture is one of the conditions precedent. Under this proposed project, NDC has provided industrial plot for construction of factory ouilding as equity contribution and purposely for promoting industrial development in Tanzania while Wande Printing and Package Ltd is responsible for construction of infrastructure, purchase of machinery and running of the envisage project. Profile of M/S Wande Printing & Packaging Ltd. M/S Wande Printing & Packaging Ltd is a private company registered in Tanzania in year 2010. The company is dealing with manufacturing of packaging materials (plastic bags/plastic films) and printing of label, stickers etc. The shareholders of the company are Mr. Joseph Otieno Wasonga (82.4%), Mrs. Anna Wande Joseph (11.8%) and Elias Juma Wasonga (5.8%). Promoters of Wande Printing and Packaging Co. Ltd have over three years experience in manufacturing and marketing of all kind of plastic film material, label and stickers.The Managing Director Mr. Joseph Otieno Wasonga is a holder of Advanced Diploma in Sales and Marketing, Financial Status Of Wande Printing & Packaging Ltd (000) Items. Audited 2012 ‘Audited 2013 [gt Sept 2014 Revenues 1,845,629] 2,446,724] 2,642,765] Gross profit 697,493 884,719] 1,048,247 Net profit after tax 132.661, 210,949] 300,861] Total asset 3,483,829 3.576,387| 3,638,852] Current assets 327,055 484,412] 613,332 Total liabilities 3,136,488 3,020,096] 2,779,699] Current lability 154,468 140311 149,957] Net worth 347,34) 358,291 359,153 Profit Margin, 72% 8.6% 14 National Development Corporation (NDC): The National Development Corporation (NDC) is an industrial development and promotion ‘organization established in 1962 as Tanganyika Development Corporations (TDC) by an Act of Parliament to fill the gap of financing critical development projects and take over the colonial development corporation (CDC) formed in 1950. In 1965, NOC was reestablished by the government to catalyze economic development in all sectors of the economy. After the Arusha Declaration, another role was added to NDC that of a holding corporation under the Public Corporation Act 1969 http://eqlive/creditquest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuri Page 19 of 27 that came to an end in 1992 under the Public Corporation Act, 1992 as amended. The NOC was given a broad mandate as a development and promotion institution to stimulate industrialization in partnership with private sector under the cabin memorandum No. 6/1996 of 1996. MANAGEMENT PROFILE - 1__16/0uss The Board. The board of Directors will comprise of five (5) Directors of whom at least on (1) shall be nominated by each of the patties (ie. Wande Printing and Packaging Co. Lid and NDC) . However, NDC will be represented by two (2) Directors. The Board's main objective is to protect the interests of all shareholders of the company, as well as all major issues concerning the company. Management: The company will be under the management of professionals led by the Managing Director The management team will be involved on issues concerning strategic decisions which impact the company direction and sustainable operations. Recruitment of the management team and other staff will be effected after commencement of company operation. htty://calive/creditquest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z.. Murusuri Page 20 of 27 FINANCIAL PROJECTIONS Bean. Morvsurl, 14/0415 Financial Projections Financial projections have been prepared for the coming seven years of operations. Below are assumptions used in estimating the financial projections; Assumptions: 1. Source of revenues will be selling of various PP bags. However, for this analysis bags of S¢Kg was used as a base for projection 2. The installed capacity is to process 54,000 bags per day which is 16.2 million per annum 3, Itis anticipated that the company will start with 50% utilization equivalent to 8,100,000 of bags per annum. 4, Increase in capacity utilization is estimated at 10% annually 5, The projected sales price will be TZS 500 for one bag. 6. It was estimated that the project will start operation in June 2016, 7. Raw materials used are PP granules (Flay yarn grade, CaCo3, white master batch and colour master batch). 8, Raw material will be imported from China, India and Dubai, The price per ton is USD 2,000 for flat yarn grade and USD 700 for CaCo3, 9. Price of white master batch and colour master batch is USD 1,800 and 4,000 respectively. 10. Operating cost is estimated at 12.02% of total revenues. \e repayment period is projected to be 6 years, ‘The summary of income projection for the next seven years from financial modelling is shown on table below: (Annexure 1) zs (000) Item 2016 [2017 | 2018 | 2019 (2020 _—|2021 2022 Revenue 4,050,000] §,112,720| 6,275,012] 7,544,357 | 8,928,746 | 9,393,041 [9,883,479 | Net profit after tax | -155,213| -90,515| 210,616] 560,779 | 981,792 _| 1,267,733 | 1:568,543 The project NPV and IRR (annexure I) Based on the assumptions above and projected income, the project gives a positive Net Present Value of TZS 112.87 million. On the same basis, the project has an internal rate of return of 19.47%, which is greater than the cost of capital Sensitivity Analysis. Sensitivity analysis has been performed and indicate that the project is very sensitive with decrease in selling price. If unit sales price decrease by 10% from TZS $00 to TZS 450 while other variables remain the same, it results into negative NPV of TZS 1.29 billion and IRR of 12.10%. hitp://eqlive/creditquest/CreditManager/html/PrfWebController.aspx?WC1=CreditMe.,. 02/06/2015Global Packaging (‘T) Limited - Joan Z. Murus ri Page 21 of 27 assis The proposed facility will be secured by the following securities [ Security: (TZS ‘000') [s/n | tems Appraised | Loan | value value 1 | *Debenture creating first ranking charge over all assets of the | 2,906,896 | 1,453,448 compan} 2 | Financial guarantee from UAP Insurance Agency 4,427,950 | 3,542,360 3 | Guarantee of Amos Nsenga Gityamwi supported by a first | 1,500,000, 750,000 ranking legal mortgage over the landed property on Plot No. | | 367 Regent Estate, Kinondoni Municipal in Dar es salam. [4 | Guarantee of Wande Company Led Total 8,834,846 | 5,745,808 Security cover 129 Discounted factor: Debentures (50%) Financial guarantee from UAP(80%) & mortgage 50% *Debenture value comprises of propylene manufacturing plant and equipment to be financed by TIB ‘The value of the proposed security is TZS 8.83 billion. covers the proposed loan by 1.29 times which threshold of 1.25, The discounted value of the assets/collaterals within the TI8 accepted minimum coverage coverace Vall for 3/20/13 Amounts 725 citer ‘ven oer cieteseoint | Colatralamont Les oruens _ Coee “etl fr Relator ‘oanaey2s0d0| 965519000055, co 128 Global Packaging (1) Limited Long Term Loan 5444,431,250.00 oar Packeging Plant 1st 3,232,008,812.50, 00 “otal Nonrallocated Faciites(2) 1,978,790,000.00 Ba? Insurance Bord 4,923,281 250.00) 00! Resident 4,500,000,000.00, 00 hito://cative/creditauest/CreditManager/html/PrfWebControlleraspx?WCl=CreditMe... 02/06/2015Global Packaging (T) Limited - Joan Z. Murusuti Page 22 of 27 _ PROJECT IMPACT ASSESSMENT. ean 2 Muysun, o2narees Economic Benefits The project will contribute to the economic development as it will create permanent jobs and temporary jobs. The creation of these jobs will contribute to the national economy and welfare growth. The project will also contribute to the government's coffer through taxes and other levies. Environmental Impact Assessment The project has no environmental hazards. However, the company will be required to carry out an environmental impact assessment on the proposed project. Liquid and solid waste disposal control: At the factory site waste treatment system will be installed, Furthermore, the company will recycle most of the solid waste products in the factory in attempting to reduce factory costs. Fire protection: The project premises will be equipped with adequate fire protection system at the factory. Portable fire extinguishers as well as fire hoses connected to the main water supply will be installed. http:/feqlive/creditquest/CreditManager/html/PrfWebController.aspx?WCl=CreditMe... 02/06/2015Global Packaging (T) imited - Joan Z, Murusuri Page 23 of 27 ores Possible risks Credit risk ‘There is the risk that the company will not honor its financial obligations including servicing of the proposed loan. The mitigation of this risk is that the factory machinery can be repossessed in case of default. In addition, the facility will be 100% cover by payment bond from UAP, Market risk: ‘There is the risk that products will not be in demand by customers due to the following reasons: {) The company may produce low quality products. (ji) Products can be sold at higher prices so that customers cannot afford and (il) inaccessibility of the targeted market. To mitigate this risk, the company will comply with principles and regulations regarding standards and specification of raw materials and other production inputs in order to produce high quality polypropylene packaging bags during the production process. On the supply side, the company will produce polypropylene bags as per orders received from the customers. Furthermore, the products will be sold to the targeted customers who can easily be accessed by the company due to the availability of good infrastructures and transportation services. Management risk: There is the risk that management will fail to perform in the production and marketing of the processed products due to lack of knowledge, skills and experiences in the production of polypropylene packing bags. To mitigate this risk the company has in place the strong and experienced management team. The majority shareholder of Global Packaging (T) Limited ie, Wande Packaging Limited has experience of more than three years in the business of manufacturing of packaging material (plastic bags) and printing of label, sti ers etc Business/Operational risk: There is the risk that the cash flow or income from the business undertaken by the company will be affected by low quality of products and shortage of markets. To mitigate this risk the company has considered all factors which can cause negative impact to the cash flow or income from business operation including conducting market assessments of the products. Non delivery of raw materials by supplier There is a possibility that raw materials will not be delivered to the client. This is mitigated by a company to deal with a strong supplier with whom majority shareholder (Wande Printing and Packaging Co. Ltd) has sufficient experience and trust whereby LCs will be used for importation. In adcition supplier will be required to ship raw materials and submit original shipping documents that are in line with terms and conditions of letters of credit to be established by TIB. The bank will therefore release funds only after checking the shipping documents and being satisfied that are in line with terms and conditions of the letters of credit, hitn://calive/creditauest/CreditManager/html/PrfWebController.aspx?WCI=CreditMe.,. 05/06/2015