GYPSUM MANFACTURING PLANT 2

PROJECT PROPOSAL
0 G
2 c
EAST GOJJIAM
3

FOCAL ADDRESS
Owner: Shiferaw Emuye
Yetmen, 01 Kebele
Tele: +251-913668070
Fax: +258-913668070
Email:ytsegypsum14@gmail.com
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 PROJECT PROPOSAL COVER SHEET
Project Information
Project Title: Project Profile in Establishment of Gypsum and lime manufacturing Plant

Target product: Gypsum and limestone

Targeted developing country: - Ethiopia
Project geographic extension (m²): 5000
Total own equity funding: 9600000 Birr
Total requested loan funding: 22400000 Birr
Total funding: 32000000 Birr
Please select the type of project you are applying for:
Single-country Project
Multi-country Programme
Single-country Co-development and Transfer of Technology project
Multi-country Co-development and Transfer of Technology project
Applicant
Name of Organization: Shiferaw Gypsum and Limestone Manufacturing Plc.
Type of organization: Manufacturing Center
Project Contact: Mr. Shiferaw Emuye; owner of the company
E-mail address: ytsegypsum14@gmail.com
Telephone: +251913668070
Fax: +251913668070
Owner Bibliography
Mr. Shiferaw Emuye was born in April 1963 G.c at East Gojjiam Administrative Zone
specifically at Ytemen Town. He attended his Elementary up to preparatory Education at
Bichena Town and After that the owner was worked by his own business at East Gojjiam
Administrative Zone, Bichena City on different business center and worked for decays of
Year.Simuletinousely, now he plan formulation of “Gypsum and limestone
manufacturing industry “on his own birth city and prepared the project proposal.

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 Table of content
Content Page

Table Of Content 3
Executive Summary 4
1. Introduction 5
1.1. Background And History 5
1.2. Problem Statement 6
1.3. Project Objective 6
1.4. Scope Of Market 7
1.5. Out Puts And Competitors Overview 7
2. Project Location And Socio Economic Status 9
2.1. Demography 9
2.2. Physical Characteristics Information 9
2.3. Socio-Economic Information 9
2.4. Location 10
3. Market, Operation And Plant Capacity 11
3.1. Past Supply And Present Demand 11
3.2. Projected Demand 11
3.3. Plant Capacity And Production Programme 12
3.4. The Modern Uses Of Gypsum (Plasterboard) 15
3.5. The Market Of Gypsum And Gypsum Products 17
3.6. Implementation Schedule 18
4. Project Justification, Definition And Concept 19
4.1. Swot Analysis 19
4.2. Environmental Aspect 19
5. Raw materials 21
6. Organizations And Management 24
6.1. Organizational Structure 24
7. Financial Study 27
7.1. Project Capital And Financing 31
7.2. Financial Statements 34
7.3. Sensitivity Analysis 37
7.4. Risk Analysis 37
8. Monitoring And Evaluation 38
9. Conclusion And Recommendation 38

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 EXECUTIVE SUMMARY

Name of the Promoter: Shiferaw Emuye

Contact Address: 0913668070
Type of the Project: Gypsum cutting and processing factory
Type of Business: Sole proprietor ship
Project Location: Amhara Regional state surrounding Enemay woreda,Bichena City
Yetmen Administration

Source of finance: The total investment capital of the project is to be financed from
the promoter’s equity and bank loan.
Birr (30%) is contributed by the promoter Shiferaw Emuye
Birr (70%) is to be financed by local banks.
Man power requirement: 78 employee
Land requirement: The total area of 5000 m2 of land is required for the project

Profitability: The financial analysis of the envisaged project was carried out for the
following five years. Based on the 5 years financial projections using the income
statement, cash flow statement and financial internal rate of return (FIRR) and the
following results are obtained.

Income statement: According to the projected income statement the project will
generate profit beginning from the first year of operation. Based on the 5 years
financial projections the project average annual net profit after payment of bank
interest, depreciation and tax amounts to 4,497,833 per year

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 1. INTRODUCTION

1.1. BACKGROUND AND HISTORY

The mineral sector of Ethiopia has traditionally made a negligible contribution to the country’s
economy. However, rising production of gold and crude petroleum in recent years has increased
substantially the mineral sector’s influence on the national economy. Other mineral commodities
produced in Ethiopia included asbestos, cement, chromite, gravel, gypsum, limestone, marble, mica,
refined petroleum products, salt, and construction sand. Ethiopia was also known to have deposits
of barite, copper, iron ore, lead, nickel, silver, tungsten, and zinc. Ethiopia is now becoming more
and more investment friendly country. The Government is creating favourable condition that would
highly encourage the private Sector to be engaged in almost all areas of the economy. The country
with population of come 80 million offers significant domestic market for locally for Locally
produced goods and service the country is also a member of the common Market for eastern
and southern Africa Comes a offering huge benefit of Exporting commodities in preferential
tariff rates to a wider regional market.

Privet investment should be encouraged to increase form year to year and Investment
constraints have to be alleviated in order to pave development ways so That investment
sector happens to be determinant about factor of economic development of the country like
Ethiopia.it is usually considered as the engine of the economy .both private and government
Bodies in many ways have commonly agreed this idea .economic development in Any case
needs both efforts of the privet as well as the public sector. There are Investments that
could not be undertaken by privet sector due to its difficult nature I .e high initial capital
and long gestation period.

However, the passed command economy system and the lack of experience Between both
sides have made it so hard for a private sector to flourish .But now a day as Ethiopia
follows free market economy ‘the roll of private sector for the achievement of the economy
policy. Accordingly, the Ethiopia federal democratic government is encouraging investors to invest
their records to contribute to the development of the country in all sectors by avoiding all barriers
and facilitating all the mince for the investment. By taking this encouraging as an opportunity the
promoter project plan to establish Gypsum and limestone manufacturing project for the benefit
of the promoter, the district community as well as the country as a whole.

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 1.2. Problem Statement
In the Ethiopia there are some industries depend on earth products such as cement, marble, specially
the plaster (gypsum) industry - are considered one of the promising industries that have the all
inputs of raw material and technology and human resources, facilities, closeness to raw materials,
but suffer like other industries in Ethiopia from problems related to the plant location, plant layout,
selection of machinery and design of production lines, these aspects need to be carried out in correct
scientific manner which ensures the plant will achieve profitability through the production of items
with high quality and low cost.

Gypsum is usually white, colorless or grey, but can also be shades of red, brown and yellow. When
calcined, it is partially dehydrated and becomes a fine white powder - commonly known as the
„Plaster of Paris‟ - which hardens when moistened and allowed to dry. This form is known as
natural Gypsum. The gypsum process is quite simple: when Dihydrous Calcium Sulphate, also
known as crude Gypsum, is exposed to certain thermal processes, Calcium Sulphate phases with
little or no water of crystallization are produced, and these later combine with free water to again
form dehydrated set Gypsum. These processes, known as dehydration or rehydration, form the basis
of Gypsum technology.
Up the factory, starting from the market survey, use or renewable resource and labor opportunities,
determining the location, designing the production line, plant layout and preparation of production
programs, maintenance and management of the factory in the manner which reduces the problems
that occur later in the production stage is the main goal achievements of the proposed Gypsum
manufacturing project plant.

1.3. Project objective

The main objective of the project is aimed at to maximize the return on invested capital in the form
of profit for the promoter. However, its implementation will benefit the employee, the consumer
society and the government at different levels. In this respect the project is aimed to promote the
following objectives:-

 To maximize the return on invested capital through Gypsum and lime stone cutting and
processing factory
 To raise the significance and importance of the sector and thereby raising its contribution to
the national economic development,
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  To distribute Gypsum and lime cutting and processing factory for customer markets at
competitive prices,
 By raising the quality and volume of Gypsum and lime cutting and processing factory
 To provide gainful employment to a large segment of the population of the project area and
augment earning capacity at the grassroots level,
 Increase government revenue through the different forms of taxes, which in turn used to
facilitate social and economic development.
In general, the project is believed to have significant social and economic benefits that accrue to the
society, the region and the country beyond the financial returns to its owner.

1.4. Scope of Market

Due to shifting of globe to globalization and use of modern living standard and asehetetic values for
construction Gypsum and lime product is increased. This is bound to increase the demand of the
Ore, Gypsum and lime conversion products like gypsum, board and lime with the change of habit of
public for precautionary of hand on business. The production unit for Gypsum and lime shall be
only one player in this growing population of Eastern part of Ethiopia and eastern Africa

One of major scope of the market area is the modern lifestyle of common people in and around the
local area. The business diversification and electronic lifestyle is the great scope of marketing for
Gypsum and lime.

1.5. Out Puts and Competitors Overview

Demand and supply relationships are needed to understand the economics of Gypsum and lime
industry and to make forecasts of outputs. Here long run supply and demand elasticises were
derived with a nonparametric method exploiting the consequences of the weak axiom of profit
maximization. The project recognized about some inputs and more than three outputs. The Gypsum
and lime industry comprises that use calcite and ore raw materials and produce gypsum, lime and
boards (Figure below).

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Figure: Expected output products of the factory with full stand

Competitors Overview
There is no Gypsum manufacturing project near woreda even if have some on neighbouring
woredas of Dejen and still there is a huge gab between use of resources and supply and demand so
this project service is doing quality and clean services. In addition to the above, the failure stories
that i have observed from others and the comments collected from my customers will help me to
win my competitors. In conclusion, my service compared to the competitors looks like:

Close relation and building setup on customer need

Quality service
Market and product promotion strategy
Transparent and fair price will be bases to win the competitors
The owner long term experience and goodwill that he has achieved from his respected customers
will allow winning the competitor. In addition to the above, the failure stories that we have
observed from others and the comments collected from our customers will help us to win our
competitors.
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 2. PROJECT LOCATION AND SOCIO ECONOMIC STATUS

2.1. Demography

According to the National Population and Housing Census carried out in 2007, the population of the
town was 18,876. Out of these, 10,500 were males and 8376 were females.

2.2. Physical characteristics information

The built up area of Yetmen town is around 6361 ha excluding rural kebele and it has linear shape.
Its altitude is 2250–2860 m above sea level; major or dominant soil is black soil. It has Mean
Annual Temperature of 18ºC and Mean annual rainfall of 1,188 mm. The prevailing wind direction
is from East to West. The principal natural constraints for the physical expansion of the town is the
level topography of the land and flooding while manmade constrains are existence of  informal
settlement, high tension lines, rugged and steep slopes in valley kebele.

2.3. Socio-Economic information

Urban Economy and Role of the Town: The Bichena town serves as administration and full
infrastructure center. There are more than 23 manufacturing, 45 wholesale, 231 retail trade, 147
service trade, four fuel stations and three garages in the town. There are 12 banks and three micro
financial institutions giving financial services in the town.

The major investment opportunities in the town are: agro-industry processing and construction.
Bichena has economic linkages with the surrounding areas, towns, and Addis Ababa. The town gets
industry products, livestock supply, natural resources (fuel wood, charcoal) and surplus labor from
surrounding areas. The town gets industrial inputs from Addis Ababa.

Infrastructure: Regarding infrastructure, the town has asphalt and gravel roads connecting it to
different kebeles, woredas, zones, regions and Addis Ababa. In addition to these; the town gets 24
hours electric supply from the national grid, mobile and fixed telephone lines and internet services.
The main water supply source is potable underground water distributed with pipe network system
and 3 main public water points. The town has open ditch system to discharge storm water.

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 2.4. Location
A project’s geographical location, topography, geotechnical conditions, remoteness and climate can
all affect Gypsum manufacturing plant project. To improve the economics of such locations,
modular and pre-assembled structures and plant facilities are used prior to transportation to site.
Local labour costs often dictate what material can be best used economically in a particular region.
Remote projects can suffer from difficulties in obtaining spare parts on short notice. A Gypsum
production Machine should accordingly provide for lay down and workspace for onsite equipment
refurbishment and repair. Where possible, equipment manufacturers should be encouraged to stock
and provide spare parts close to the machine operation. Good biological information is essential to
Cutting, sort, grading and crushing Machine sitting and design. The proposed project of a Machine
will planned to be located in Amhara regional state Enemay Woreda Yetmen small town which is
located 248 km from capital city and 325 km from regional city. The total land size the promoter
requesting for the implementation of the project is estimated at 3000 square meters. The place is
geo-center for the six Woreda; Yedwha, Dejen, Debrewerk, Motta, Mertule Mariyam and Debay
Tilatgin.

Figure: Neighbouring Woredas and Map location of project

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 3. MARKET, OPERATION AND PLANT CAPACITY

3.1. Past Supply and Present Demand

Gypsum and lime is a common type of hard staffordable natural stone. Although available in a
wide variety of colors it is usually white. Its massive, hard and tough nature makes a widespread
use as construction stone. Its application includes floor, tiles, bath rooms, gardens, steps and many
more. The extensive usage of Gypsum and lime as a dimension stone as well as flooring and tiles
for public and commercial buildings and monuments constitute the top demand sectors of the
Gypsum and lime market. Recently, application of natural stone in the rapidly developing urban
areas has increased.

Supply of Gypsum and lime is met mainly from the domestic producers. Although the
expanding building and construction sector has given rise to Gypsum and lime cutting
opportunities and it is a well known fact that more Gypsum and lime is produced, official
statistics is not available. Failing to assess the demand for Gypsum and lime based on the supply,
end use approach is applied.

The demand for Gypsum and lime primarily is concerned with the construction sector. According
to a study conducted on Problems and Prospects of Housing Development in Ethiopia with
particular emphasis on the city of Addis Ababa, the annual new dwelling units required is 29,272.
2
Assuming a minimum average consumption of 15.5m Gypsum and lime per housing unit, the
current effective demand for Gypsum and lime at Addis Ababa is estimated to be
2
1234453.678m . Further assuming this volume to cover 80% of the national consumption of
Gypsum and lime, the current effective demand for Gypsum and lime is estimated at
2
6423192.098m .

3.2. Projected Demand

The rapid development of urban areas, high-rise buildings, housing complexes, malls,
governmental and nongovernmental buildings make use of Gypsum and lime for both their
interiors and exteriors. Once limited to the wealthy, Gypsum and lime has now become a part of
the common people’s use because of the supply of Gypsum and lime from the new Gypsum and
lime industries. Turn depends on the overall economic development of the country. Therefore,

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 demand is projected at the annual GDP growth rate achieved in 20012/14 or 18.7%. Projected
demand is presented in Table below.

Table: projected demand for Gypsum and lime

Year Projected Demand

2008 208,811
2009 226,977
2010 246,724
2011 368,189
2012 491,521
2013 1,316,884
2014 1,344,453
2015 7,374,420
2016 8,406,995
2017 12,442,404

Pricing and Distribution

Considering the current retail price of the product and margin for distributors and

transportation cost a factory-gate price of Birr 380 per 100kg is recommended for the envisaged
plant. The product can be distributed through direct delivery to construction companies as well as
through the existing building material shops.

3.3. Plant Capacity and Production Programme

Plant Capacity
Based on the market study indicated above, the envisaged plant for manufacturing of Gypsum and
lime cutting plant with a capacity of 7500 ton per annum. The demand for Gypsum and lime is
directly related with the growth in the construction sector which in the plant is expected to operate
in 1 shifts of 8 hours per shift for a total of 300 working days a year. It’s anticipated that the plant
will run at 70%, 85% and 100% in the first, second and third years, respectively.

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Production Programme
The Gypsum and lime cutting and processing factory will start operation at a lower production
capacity to allow time for market penetration and skill development of workers. Thus, production
will start at 75% of installed capacity during the first year of operation, and then will grow to 85%
and100% of full capacity in the second year, and third year and then after. The details of
production programme are shown in Table below.

Table .Production programme

Year 1 2 3 and above

Annual production (ton pieces) 7500 13,560 18,678

Capacity utilization (%) 75 85 100

Production Process
The processing of Gypsum and lime dimension stones essentially involves the following
major operations: quarry opening; blasting; cutting; polishing and ornamenting.

Greding Powdering

Gypsum and
Cutting Packing
lime openining

Gypsum Production Process Description

A flow diagram for a typical gypsum process producing both crude and finished gypsum products is
shown in Figure below. In this process, gypsum is crushed, dried, ground, and calcined. Not all of
the operations shown in Figure below are performed at all gypsum plants. Some plants produce
only wallboard and many plants do not produce soil conditioner. Gypsum ore, from quarries and
underground mines, is crushed and stockpiled near a plant. As needed, the stockpiled ore is further
crushed and screened to about 50 millimeters (2 inches) in diameter. If the moisture content of the
mined ore is greater than about 0.5 weight percent, the ore must be dried in a rotary dryer or a
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heated roller mill. Ore dried in a rotary dryer is conveyed to a roller mill, where it is ground to the
extent that 90 percent of it is less than 149 micrometers (100 mesh). The ground gypsum exits the
mill in a gas stream and is collected in a product cyclone. Ore is sometimes dried in the roller mill
by heating the gas stream so that drying and grinding are accomplished simultaneously and no
rotary dryer is needed.
Table: physical properties of Gypsum

The whole process is summarized as following:

1. Extraction:- Gypsum is extracted from open air or underground mines, using specific drilling
machinery and non-polluting explosives. Rock size may reach up to 50 cm in diameter.
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2. Crushing:- Primary crushing aimed at reducing rocks to a size of less than 10cm, subsequently
easier to handle, is carries out in the quarry or at the entrance to the plaster manufacturing station.
3. Storage:- Rock that has undergone primary crushing is stored to ensure production continuity,
and optimal homogeneity between rock extraction batches.
4. Calcinations:- Calcium sulphate hemihydrate (CaSO4.1/2H2O) or the plaster is obtained through
the partial or total dehydration of gypsum at a temperature ranging from 120 to 400 degrees
centigrade. The structure and properties of the final product are directly dependent on the chosen
calcinations conditions (temperature, pressure, rapidity).
5. Grinding:- Following the calcinations process, the plaster is ground to obtain a powder. Particle
size distribution is an important factor in the product properties.
6. Packaging:- The packaging item chosen for the product should gives optimal protection and
guarantees the product quality all the way to end-user

Figure: gypsum process (Source: Mineral industries)

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 3.4. The Modern Uses of Gypsum (Plasterboard)
The modern use of gypsum as a building material was discovered in early when the invented of a
machine for producing plasterboards (also known as wallboards and dry walls) composed of several
layers of paper with gypsum in-between.

Output Uses
a. Plasterboards: Plasterboard is used for partitions and the lining of walls, ceilings, roofs and
floors. The properties of plasterboard can be modified to meet specific requirements, such as
fire resistance, humidity resistance, impact resistance, etc.
b. Decorative Plaster: Plaster powder, mixed with water, manually or through the use of silo
supplied spray systems, is used to create an effective and aesthetically pleasing lining for
brick and block walls, and for ceilings. Gypsum‟s adaptability in application lends itself to
molding and shaping. Since time immemorial, Gypsum has been used by skilled craftsmen
to create decorative plaster moldings.

c. Building plaster: Gypsum plaster is used for walls and ceilings.

d. Plaster blocks

e. Gypsum blocks are used for partitions and Gypsum tiles for ceilings.

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 f. Gypsum-based self-leveling screeds Anhydrite or Alpha-Hemihydrates are used in the
production of self-leveling floor screeds.
g. Gypsum Fiberboards: Gypsum fiberboard is used for partitions and the lining of walls,
ceilings, roofs and floors. Standard gypsum fiberboard offers good performance when it
comes to impact resistance, sound insulation and humidity resistance.
Other Uses
A non-toxic mineral, gypsum can be helpful to humans, animals, plant life, and the environment.
While the majority of gypsum produced in Ethiopia is used to manufacture gypsum panels or
building plasters, gypsum can also be used:
a) As a soil additive (sometimes called land plaster) to improve the soil’s workability and
receptivity to moisture, and to overcome the corrosive effect of alkalinity. Gypsum
specifically benefits such crops as alfalfa, corn cotton, wheat, and peanuts where substantial
amounts of sulfate sulphur are required.
b) As an additive in turbid water, particularly ponds, to settle dirt and clay particles without
injuring aquatic life.
c) To create surgical and orthopedic casts.
d) As a food additive. Gypsum (calcium sulfate) is recognized as acceptable for human
consumption by the Ethiopia Food and Drug Administration for use as a dietary source of
calcium, to condition water used in brewing beer, to control the tartness and clarity of wine,
and as an ingredient in canned vegetables, flour, white bread, ice cream, blue cheese, and
other foods.
e) As a color additive for drugs and cosmetics.
f) A primary ingredient in toothpaste.

3.5. The Market of Gypsum and Gypsum Products

Global Market
The gypsum market is forecast to grow at a compound annual growth rate (CAGR) of 9.9 % to
reach approximately 2.1bn birr by 2013-14, and 3.7bn birr by 2015, according to a new report by
analysts. 'The Future of Gypsum: Market Forecasts to 2014' reports that 252 Mt of gypsum is
expected to be consumed in the year 2013, with 33.9 % and 63.5 % being consumed in the
plasterboard and cement industries respectively. The market study reports that about 75% of
gypsum is used in wallboard manufacture in Ethiopia. In Amhara regions, bureau reported that one
of the major factors driving gypsum consumption is population growth, particularly in region and
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neighboring, as developing places move from traditional wet construction techniques towards dry
construction using materials such as prefabricated wallboard.
The Local Market financial crisis saw demand for gypsum drop in the construction industry by
around 20% in 20012. The decline slowed between 2012 and 2013 and rapidly increases in 2014
due to imported material fluctuation. This project and other cooperative company will investigate
on amending this importing material substitution and use surplus raw materials (7500 ton per year)
and encourage income generation (2,432, 000 birr) and employment opportunities (78 persons)

3.6. Implementation Schedule

The project implementation involves various activities like market surveys and tie-ups, procurement
of know-how, arrangement of premises/ land, building, preparation of project report, registration,
financing, purchase of machines, commissioning of project, recruitment of staff and training,
arrangement of power, procurement of raw materials, packing materials, trial production etc. in
order to implement the project efficiently and in the shortest period there is a need to initiate many
activities simultaneously as far as possible. This will not only cut the slack period but also will give
quick results and be cost effective.

Table 1: Implementation Schedule

Activity Implementation period

Jan Feb Mar Apri May Jun July Aug Sep Octo Nov
Market survey
Procurement of know-how/experts
Arrangement of premises
Obtaining quotations and
preparation of project report.
Registration and financing.
Recruitment of personnel and
training.
Obtaining power connection
Procurement of machines and
equipments.
Installation and electrification of
machinery.
Procurement of raw materials,

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 consumables, packing materials
etc.
Product development/trial
production.
Commercial production.

4. PROJECT JUSTIFICATION, DEFINITION AND CONCEPT

This proposal deals with the Project for manufacturing gypsum and lime making. This project may
be converted into different items for daily use such ceiling, board, tiles and wall coat products etc.
Now a days there is a good market for Cash register and roller paper since the products of paper are
ecofriendly, free from destructive chemicals and non-Toxic. It’s also an employment generative
activity. It’s one of the preferred industries since investment is comparatively lower than any such
allied industrial units. At the same time this factory unit has potential to generate good profits. It
needs around 5000 meter square land to construct a work shed and any one can run the unit with
about 78 persons.

4.1. SWOT Analysis

Strength – Eco friendly, nontoxic, bio degradable gypsum fiber contained product. Its uniqueness
is its strength because of its texture, feel and color. Linkage between supplier and manufacturer
seems to be high too.

Weakness- Price of gypsum is comparatively high than normal homemade papers.

Opportunity –Gypsum may be converted into different products from a well decorative board and
wall coat folders. The main opportunity for the project is available raw materials near the proposed
project. A particular section of people are the customer of these products and they value these
products a lot. First producer in country, region and place

Threat – These are labor, land and financial intensive units and in order to sustain them, continuous
market demand should be there to meet the financial need of these units as well as the labors
working in these units. Generally, it was made by sifting bulk Gypsum stack on to a screen to cut
and roll and letting each individual sheet of powder pack and rolling.

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 4.2. Environmental aspect
The manufactured products from this industry are eco-friendly in nature. It gets recycled easily.
People are concerned over cutting of trees keeping that in mind these papers are better options.
Further, the use of diverse materials depends on the development of environment friendly
processes. One area of research will be the usage of biotechnology for lignin removal using
organism such as white rot fungi.

Emission and Air pollution

The particulate matter (PM) is the dominant pollutant in gypsum processing plants; several sources
may emit gaseous pollutants also. The primary sources of PM emissions include rotary ore dryers,
grinding mills, calciners, and board end sawing operations. Other significant PM sources include
the following:
 Scoring and chamfering
 Plaster mixing and bagging
 Conveying systems
 Storage bins
Uncontrolled PM emissions from these sources are not well quantified. The major sources of
gaseous emissions include dryers and calciners. Other sources of PM emissions resulting from
gypsum processing that may not be classified as part of the plant operations are primary and
secondary crushers, screens, stockpiles, and roads. If quarrying is part of the mining operation, PM
emissions may also result from drilling and blasting. Gaseous emissions from gypsum processes
result from fuel combustion and may include nitrogen oxides, sulfur oxides, carbon monoxide, and
carbon dioxide
(CO2). Processes using fuel include rotary ore dryers, heated roller mills, impact mills, calciners,
and board drying kilns. Although some plants use residual fuel oil, the majority of the industry uses
clean fuels such as natural gas or distillate fuel oil.
Control Technology: For control of PM, fabric filters are the most prevalent type of technology.
Particulate matter emissions from some gypsum sources may be controlled with electrostatic
precipitators (ESP‟s). These sources include rotary ore dryers, roller mills, kettle calciners, and
conveying systems. Although rotary ore dryers may be controlled separately, emissions from roller
mills and conveying systems are usually controlled jointly with kettle calciner emissions. Moisture
in the kettle calciner exit gas improves the ESP performance by lowering the resistivity of the dust.

20
Equipment for controlling gaseous pollutants is generally not used in gypsum processing. In large
part, this is due to the use of clean fuels by the industry. It is important to note that emission control
devices are frequently needed to collect the product from some gypsum processes and, thus, are
commonly thought of by the industry as process equipment and not as added control devices
Gypsum recycling
Gypsum recycling is the process of turning gypsum waste into recycled gypsum hereby generating
a raw material that can replace virgin gypsum raw materials in the Gypsum Industry. Gypsum waste
primarily consists of waste from gypsum boards. A gypsum board is a wall or ceiling panel made of
a gypsum core with paper lining around it. Such boards are also referred to as plasterboards,
drywall, wallboards and gypsum rock. Gypsum waste main also in future will plan for gypsum
blocks and plaster, among others

Inspection and quality control

Gypsum and lime manufacturing project has potential to gain widespread acceptance. Provided
material is produced and delivered with a high level of consistency, quality and precision. Quality
control aspects are more important for the gypsum and lime units than the rest of the similar
industry. As a part of quality control a unit should at least lay down specifications for purchase of
raw materials, should inspect production procedure and should control quality parameters.
Acceptance procedures for Pure gypsum, lime, ore can only ensure whether the product to be
produced will be suitable for down line processes till the finishing stage or not. The unit will
employ a trained supervisor to take care of quality checks.

5. MATERIALS AND INPUTS

Raw Materials
For the purpose of this project profile, Gypsum and lime shall be produced from moist ore of stone
mill derived from gravels and calcites, and crushing them into flexible powders. Most of this
materials of ore can be found in the area of the project location. The total cost of raw materials is
estimated at Birr 5.87 mill /year (Figure 2) (Appendix Table 6).

List of raw material

No. Raw material Unit Amount

1. Lime rock ton 1000
2. Gypsum rock ton 5500
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 3. Paper ton 1000
4. Modified starch glue ton 500
5. Desulfurized or phosphor ton 3500
gypsum
Total 10000

Utilities
The major utilities required by the plant are electricity, water, lubricants and oils. Electricity is used
as source of motive power for production equipment, and as sources of lighting and to supply outlet
sockets. Water is used for processing and personal use. Oils and lubricants are required for
production equipment. The effluent discharged from gypsum plant contains only very insignificant
quantity of chemicals. The total chemicals used are lesser than 3.5 % of the total weight. The waste
water effluent will be treated before discharge to nearby agro forms or drainage.

Machinery and Equipment

The main structural part of the machine is greder, crusher and powder mill this determines majorly
the equipment and instruments used in the fabrication of the project also the method of fabrication
which is gypsum determines the equipment and instrument used for fabrication. The total cost of
machinery and equipment for the planned capacity is calculated in table at end of chapter in
machinery list.

No. Machinery/ equipment Specification

1
Model name: Izb50
Type: powder
Driven type: pneumatic
Capacity: 5000set/month

Greding machine

22
2
Model name: izt345
Type: gravel crush
Crush degree: fine grinding
Strength: 100-250 mpa
Capacity: 4000 ton /month

Crusher machine
3 Model: powder making machine
Automatic grade: automatic
Degree: fine grinding
Capacity:17000 ton/year

Mill line machine

4 Model name:HGM
Material : mineral
Application: mine
Speed : 20-22r/min
Capacity 4500 ton/month

Grinding machine
5 Model name:mzb50
Packing material : composite
Packing: bag
Material type : powder
Forming function: filling
Capacity 1000set/day
Bagging machine

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Land, Building and Civil Works
Total land requirement is 5000 square meters. Land lease cost for 60 years, at the rate of Birr 200
per m2. The total built-up area for production building, offices, and other utility buildings is about
250 square meters. At the rate of Birr 1000 per m2 considering that the building are constructed by
EGA sheet roof, HCB wall, and cement tile floor , the total investment on land, building and civil
works is estimated in annex table (the detailed drawing and cost estimation will done on day time
price on before development of project).

Figure :Land, Building and infrastructure exterior architecture plan of plant

6. ORGANIZATIONS AND MANAGEMENT

6.1. Organizational Structure
24
The organizational structure of the project is designed by including all the necessary personal under
the right division. At the top of the organizational structure, there will be a general manager with
the responsibility of supervising the overall activity of plant. Depending up on the nature of the
center and the amount of work to be performs under each will be supervised by the unit head that is
accountability for general manager

CEO

Adviser G/Manager Internal Auditing

& Inspection
Coordinator
Manager

Secretary

Sales& technical Marketing Admin &

Unit finance Unit
Unit

As clearly shown the organizational structure, the integrated projected center has CEO three
Departments under the general manager, Addition and the internal Auditing and inspection. The
departments are the production Department, the marketing department and the general service
department under each department there are different sections which are undertaking different
activities

Management

25
As to the management of the project is concerned the owner will be responsible for the overall
project planning, co-ordination and implementation. After project implementation the promoter
serves as a top management body and frequently visits and supervises the organization.

Cattle fattening farm a business man who has a long year experience in managing business
activities. Therefore, the extensive experience he has enables him to organize and properly manage
the envisaged Granite cutting and processing factory

Manpower Requirement
For smooth and efficient operation of the organization, it has been anticipated that each units will
have adequate number of qualified and experienced manpower. The labor component of the Jute
and Granite cutting and processing factory G/manager will hire qualified and experienced in
management whose main responsibility is to coordinate the overall activity of the project.

The distinct units have their own operational teams under them. To fill in all these work units with
the required manpower the project needs 78 workers, For smooth operation of the project,
employees will be given on job training, clear duties and responsibilities under the direct
supervision of their respective units.

Table 6.1: Manpower Requirement

Monthly Annual
S/n Description of Job Qualification No.
salary Salary(Br)

1 General Manager CEO 1 5,000.00 60000

2 Secretary Ba in secretarial 1 3,000.00 36000

Production & Technical 1

3 bsc in marketing
Head 4,000.00 48000

4 Commercial Head bsc in marketing 1 4,000.00 48000

10 Sales person diploma in marketing 2 2,000.00 48000

Store Keeper diploma in 1

12
accounting 2,000.00 24000

17 Laboer no skill 16 1,500.00 288000

18 Mechanic diploma 1 1,500.00 18000

26
 19 Worker daily Any 48 2000 96000

21 Guard 8th graduate 4 2,000.00 96000

22 cleaner 8 th grade 2 1,500.00 36000

   Total   78 798,000

7. FINANCIAL STUDY
General
Financial analysis of the proposed project of Gypsum cutting and processing factory will be
projected to test the financial visibility if the investigated organization. Quantifying both project
cost and benefits over the assumed project life, which is five years, made the project visible.
Besides it has been tried to make a realistic forecasting of costs and the benefits based in current
market price of all necessary materials. Once the anticipated stone cutting operation has been
attained both projects cost and revenue is estimated to be consumed to be compensated by
increasing in sales revenue

Investment cost
The cost of the project is classified as fixed incitement cost and initial working capital.

With regards to fixed investment cost of the project, the land lease, building and civil works cost,
machinery and equipment cost office furniture costs and fuel costs will be required. As to working
and operating cost a brief illustration will be given as to utilities, salary expense, maintenance cost
and depreciation cost and the other related costs

Fixed costs
Fixed cost that include Land development, Building and civil work, machinery equipment and
vehicles and office furniture estimated birr 22,108,000

Table land development

S/n Description Qty Total Price (Br)

1 Land clearing and leveling 3500 m2 350,000

27
 2 Water well drilling  - 60,000

3 Water reservoirs 1 38,000

  Total - 448,000

Table List of machinery and equipment’s and cost

S/n Description Quantity Total Cost (Br.)

1 Greading 1 940,000

2 Crusher 2 1,500,000

3 Mill Line 1 5,670,00

4 Bagging 1 1,200,000

5 Grinding 2 3,550,000

Total 12,860,000

Table : Procurement of Vehicles and furniture’s

S/n Description Qty Unit cost Total Cost (Br.)

1 Computers and accessories Ls - 50,000

2 Sino truck 1 1,250,000 1,250,000

3 Loader 1 1,650,000 1,650,000

4 Office furniture .. .. 50,000

Total 3,050,000

Table Summary of Fixed asset

S/n Description Estimate Cost birr

1 Land development 448,000

28
 2 Building & Constructions 5,750,000

3 Machinery and equipment 12,860,000

  vehicles and office furniture 3,050,000

Total 22,108,000

Production costs
Production cost of the project includes direct production and overhead costs. The major cost item
under this category includes cost of material and labour inputs, fuel and lubricants, repair and
maintenance, employee salary and benefits, insurance, office supplies and other miscellaneous
expenses; the total estimated production cost is birr 7,032,300

Table: Raw materials

Description Qty in tones Unit Cost Birr/ton Total cost

Gypsum 4000 750 3,000,000

Ore 1000 670 670,000

Paper 500 1200 600,000

Lime 2000 800 1,600,000

Total 7500 5,870,000

Table: Utilities

Sr. Description Unit of Qty. Unit price Cost ('000 Birr)

No Measure (Birr)

1 Electricity kWh 39,000 1.4 54600

2 Water m3 5,400 5.5 29700

3 Oil and lubricants Kg 450 10 4500

29
   Total       88,800

 Employee benefits : It includes medical expense, uniform and other incentive package and
assumed to be 25 % of annual salary expense = birr 175500
 Travel expense: It is assumed to be 10% of annual salary expense i.e. birr 70200
 Repair and maintenance
Cost estimate/ year
Item
% Price

Land development 2 6960

Building & Constructions 2 15000

Machinery and equipment 3 99570

Vehicles & furniture’s 5 152500

Total - 274,030

 Insurance: It is assumed to be 1% of fixed investment cost = birr 74670

 Office supplies: Including stationery and sanitary supplies annual cost of birr 50,000 is
considered.
 Miscellaneous expense: It includes cost of land rent, telephone and postage, audit, legal and
license fees and other miscellaneous expenses. The total annual cost of these cost
components is estimated to be birr 45,000 /year.
Table: Determination of Initial Working capital requirement
S/n Cost item Annual cost

1 Raw materials  

1.1 Raw materials 5,870,000

1.2 Utilities 88,800

Sub total 5,958,000

30
 2 Administrative costs  

2.1 Salary and wage 798,000

2.2 Employee benefits 175500

2.3 Travel expense 70200

2.4 Repair and maintenance 274,030

2.5 Insurance 74670

2.6 Advertizing expense 23600

2.7 Office supplies 50000

2.8 Miscellaneous expense 45000

Sub total 1,511,000

Initial W.C. requirement 7,469,000

Contingency 2,423,000

7.1. Project Capital and financing

Project Capital
The total investment capital of the project is estimated at birr 32 mill of which birr 6,467,000 is for
fixed investment items while the remaining balance of birr 4,203,800 will be initial working
capital. The detail of investment capital of the project is given below:

Table: Project capital

S/n Item Investment capital (Br.)

1 Land development 448,000

2 Building & Constructions 5,750,000
3 Machinery and equipment 12,860,000
31
 4 Vehicles and furniture 3,050,000
Sub total 22,108,000
5 Working Capital 7,469,000
Contingency 2,423,000
Total 32,000,000

Financing
The total investment capital of the project is to be financed from the promoter’s equity and bank
loan. Out of the total capital (30%) is contributed by the promoter, while the remaining balance of
(70%) is to be financed by local banks. The bank loan will be repaid based on the following terms
and conditions:
 Installment period/ term = 5 years
 Interest on loan (including service charge) = 10 %
Table: Loan Repayment Schedule

Principal Interest Year ending

Year
Repayment Payment Balance

0 - - 22,400,000

1 4,480,000 1,746,956 17,920,000

2 4,480,000 1,597,565 13,440,000

3 4,480,000 1,448,174 8,960,000

4 4,480,000 1,298,783 4,480,000

5 4,480,000 896,000 0

Depreciation of fixed investment items

The straight-line method has been used to depreciate/amortize all fixed items of the project. The
depreciation rate applied for all fixed assets is given below:

Table : Depreciation Schedule

32
 Annual Depreciation
S/n Item Original Value
% Amount (Br.)

1 Land development 448,000 10 44,800

2 Building & Constructions 5,750,000 10 575,000

3 Machinery and equipment 12,860,000 10 1,286,000

4 vehicles and furniture 3,050,000 10 305000

Total 22,108,000 2,210,00

Table: Summary of project Annual production costs

S/n Cost item Year 1

1 Direct cost  
1.1 Raw materials 5,870,000
1.3 Utilities 88,800
Sub total 5,958,800
2 Administrative costs
2.1 Salary and wage 798,000
2.2 Employee benefits 175500
2.3 Travel expense 70200
2.4 Repair and maintenance 274,030
2.5 Insurance 74670
2.6 Advertizing expense 23600
2.7 Office supplies 50000
2.8 Miscellaneous expense 45000
Sub total 1,511,000
Total cost working capital 7,469,000
Note: Production costs are assumed to increase by 5% annually.

33
 Revenue projection
The project will collect its revenue from the provision of outputs.The selling of intended output has
estimated based on the current market price of similar service provision in district. The annual sale
program is formulated based on proposed plant capacity considered the problem of market penetration
and skill development of production at the initial stage of the production period

Table: Description of revenue projection

Quantity ton Unit price/ Total

Description
S/N /year ton Revenue/year

 1 Finishing output gypsum 8000 2016 8,125,000

2 Finishing output lime 6000 1928 5565700

3 Board with recycling 4000 2164 4,655,000

  Total revenue 18000 18,345,700

7.2. Financial statements

Annual Projected Profit/loss statement

Shiferaw Emuye Gypsum and lime cutting and processing factory

Projected profit/loss statement

Table : Project Profit/loss statement

Description Year 1

Revenue 18,345,700

Less: Production costs 7,469,000

Gross Income 10,876,700

Less: Interest on loan 1,746,956

Less: Depreciation 2,210,000

34
Profit before tax 6,919,744

Less: Income tax (35%) 2,421,911

Net Profit 4,497,833

Note: Sales revenue is assumed to increase by 5% annually

Projected cash flow statement

Shiferaw Emuye Gypsum and lime cutting and processing factory

Projected cash flow statement

Table : Project cash flow Statement

Description 0 Year 1
Cash Inflow  
Equity 9,600,000  
Bank loan 22,400,000  
Revenue 18,345,700
Depreciation 2,210,000
Total Inflow 32,000,000 20,555,700
Cash Out Flow
Fixed Cost 22,108,000
Initial W.C 7,469,000
Contingency 2,423,000
Tax 2,421,911
Loan Repayment 4,480,000
Total Out flow 32,000,000 34,926,611
Net Inflow - 1,571,222
Cumulative balance - 2,926,611

Viability and other measurement

Shiferaw Emuye Gypsum and lime cutting and processing factory

35
 Financial IRR computation

Table: Financial IRR computation

Year 0 Year 1

Gross income 18,345,700

Total costs 32,000,000 29,577,000

Gross profit -32,000,000 10,876,700

Less: Profit tax 2,421,911

After tax net benefit -32,000,000 4,497,833

DF at 35% rate 1 0.96

Present Value 32,000,000 3,867,500

Net present Value 3,867,500 -

DF at 30% rate 1 0.95

Present Value 32,000,000 3,650,800

Net present Value 3,650,800 -

 NPV (Net Present Value)

It is a method of calculating the expected net gain or loss from project by discounting rate of all
expected future cash inflow and outflows to the present point in time In the above table shows that
NPV at 30% and 35 % discount rate is 3,867,500 birr and 3,650,800 birr respectively, this figure is
positive value or NPV>0 it is indicate that accepted the project until 30 % and 35 % of discount rate

 Payback Period (PBP)

The payback period is the amount of time required for a firm to recover its initial investment in a
project, as calculate from cash inflow. The investment cost and income statement projection are
used to project the pay-back period

PBP = Initial investment Cost

36
 Profit + Depreciation + Cont.

4.04= 4 Years

The payback period = 4 is less than the maximum acceptable payback period (5) therefore accept
the project.

 IRR
The internal rate of the project is the rate of discount that radios the present value of the
investigated project to zero. In calculating the IRR, the discount rate can be adjusted until the NPV
becomes Zero or at least as to zero. Hence, the IRR of this project is calculated as follows

After tax IRR = 30 + 5 (3,867,500 birr and 3,650,800 birr)

= 63.0%

IRR=63.0% of the project returns its initial investment cost within its life

7.3. Sensitivity Analysis

Sensitivity analysis is variant of scenario analysis in which each scenario represents a change in
only one variable, rather than a number of variables. For the proposed project, the sensitivity of the
project has been computed at 30% and 35% for sales reduction, operating cost increase and
investment cost increased accordingly, as described in table the result shows that IRR at 63.0%
operating cost increase and 30 and 35% investment cost increase and 30% service sales reduction.
Predicting among these sales reduction is more sensitive to the project and it should further expand
after the project proposed life time because in this case NPV equal zero at IRR=63.0

7.4. Risk Analysis

The major risk of this project shall be high market price fluctuation and turnover the skilled and
trained man power. These risks can be mitigated. The high staff turnover may be lessened by
creating conductive working atmosphere and providing some benefits. For this project, 25% benefit
is proposed for the permanent employees

Characteristic (Personal) Risk: This is the most important risk, which should be seriously
considered? As to this company, the promoter have sufficient years of work experience in both
government and private organization (leading private business by engaging themselves), so
personal risk is minimum under this context
37
Business Risk: The fate of the business is generally found to be dependable. The demand- supply
analysis exhibits the need of the service of the business organization. According to the overall
demand the effect of competitors in the sector would not be an immediate alarming threat at least
for the coming few years. In additional to this. Long year experience of the owner in the field will
help to react against any adverse situation in the business. However, the reaction of competitors
should be attended. In additional to an advanced promotional work and sustainable goodwill
development by creating new and best quality products with good service deliveries

Construction Risk: Construction risk is one of the most important areas of risk that need great
consideration during project implementation. In the case of Gypsum and lime manufacturing
cutting and processing factory, the construction work of the proposed building will be made by
phase with self response supervision. Hence, there is no as such serious risk related to construction
work.

All the identified risks, which are related to the universally accepted lending policy, are to the
acceptable level that keeps the lender’s interest in safe position. Furthermore, the quality of the
assets of the company is dependable and the projected finical reports show that the company will
have a capacity to pay the principal and interest without any problem with in short period of time.

8. MONITORING AND EVALUATION

Monitoring and Evaluation (M&E) has long been recognized as a vital aspect of development
projects generally and of industrial and services projects in particular.   The monitoring of project
performance consists of the tracking of human, physical and financial resources and the recording
of how they are converted into outputs (project goods and services), and in turn, outcomes and
impacts.

9. CONCLUSION AND RECOMMENDATION

Conclusion: The Project is found to be operationally profitable & has significant socio-economic
benefits. According to the projected income statement, the envisaged project starts earning profit from
the first year of production. The income statement and other profitability indicators show that the
project is viable. The project is believed to have significant social and economic benefits that accrue

38
to the society beyond those financial returns to its owner. The most remarkable social benefits can
be expressed in terms of job creation that leads to reduction in the level of unemployment.

Recommendation: The project directly employs 30 persons; therefore, considering the attractive
financial and economic benefits the project is to produce, the promoter has made the necessary
preparation hoping that all the concerned offices & financial institutions should give their support to
facilitate the implementation of this plan.

GYPSUM AND LIME

MANUFACTURING FACTORY
PROJECT PROPOSAL

39