Plastic Abdu Ali (Repaired) Final of Final

Project Proposal for PVC Pipe and Irrigation Conduits manufacturing Factory
PROJECT PROPOSAL
FOR
PVC PIPE AND IRRIGATION CONDUITS PRODUCTS
MANUFACTURING FACTORY
PROJECT TO BE IMPLEMENTED IN BURAYU TOWN , OROMIA

SPECIAL ZONE
PROMOTER- Ali Mohammed Kiyar
FEBRUARY 2015
FINFINE, ETHIOPIA
1
TABLE OF CONTENTS
TABLE OF CONTENTS...............................................................................................................2
EXECUTIVE SUMMARY.............................................................................................................4
1. INTRODUCTION...................................................................................................................5
1.1. Project Justification......................................................................................................................6
1.2. Objective of the Project...............................................................................................................8
1.3. The Economic Significance of the Project....................................................................................8
2. The project............................................................................................................................10
3. LOCATION OF THE PROJECT AREA...............................................................................11
A. Location....................................................................................................................................11
Figure A. LOCATION MAP OF THE AREA................................................................................................12
4. MARKET STUDY, PLANT CAPACITY AND PRICING.................................................14
5. PLANT CAPACITY AND PRODUCTION PROGRAM.....................................................16
5.1 Plant Capacity............................................................................................................................16
5.2 Production program...................................................................................................................16
6. TECHNICAL STUDY...........................................................................................................17
6.1 Technology and Engineering......................................................................................................17
6.3.1. Technology..............................................................................................................................17
6.2 Engineering............................................................................................................................18
7. Raw Materials and Inputs........................................................................................................19
7.1 Raw materials............................................................................................................................19
7.2 Utilities.......................................................................................................................................20
8. OGANIZATION, MANAGEMENT AND MANPOWER...................................................20
8.1 ORGANIZATION AND MANAGEMENT........................................................................................20
8.1.1 MAN POWER REQUREMENTS WITH QUALIFICATIONS............................................................21
8.1.2 Skilled and Unskilled, Permanent and Temporary Employee...................................................21
8.2 ORGANIZATIONAL STRUCTURE..................................................................................................22
9 FINANCIAL REQUIRMENT AND ANALYSIS.................................................................26
9.1 Total Initial Investment Cost......................................................................................................26
9.1.1 Fixed Investment...................................................................................................................27
2
Project Proposal for PVC Pipes and irrigation Conduits manufacturing Factory
9.1.2 Initial Working Capital............................................................................................................28

9.1.3 Pre -Service Expense..............................................................................................................28
9.2 Annual Production Cost at Full Capacity....................................................................................28
9.3 Financial Analysis and Statements.............................................................................................30
9.3.1 Underlying Assumption...................................................................................................30
9.3.2 Source of Fund................................................................................................................31
9.3.3 Loan Repayment Schedule............................................................................................31
9.3.4 Depreciation Schedule...................................................................................................32
9.3.5 Revenue Projection.........................................................................................................32
9.3.6 Balance Sheet (beginning).............................................................................................33
9.3.7 Income/Loss Statement..................................................................................................33
9.3.8 Cash Flow Statement.....................................................................................................34
9.3.9 Profitability........................................................................................................................34
9.3.10 Pay-Back Period..............................................................................................................35
10 Land Use Plan and Activity Plan........................................................................................35
A. Land Use Plan................................................................................................................................35
B. Activities Plan................................................................................................................................35
11 ENVIRONMENTAL IMPACT ASSESMENT AND MANAGAMENT OF THE
PROJECT.....................................................................................................................................36
A. Environmental Impact Assessment Of The Project........................................................................37
B The Environmental Impact of Vinyl Chloride......................................................................................37
3
EXECUTIVE SUMMARY
1. Project Name PVC Pipe and Irrigation Conduits manufacturing Factory
2. Project Owner Ali Mohammed Kiyar
3. Nationality Ethiopian
4. Project location Burayu , Oromia Special Zone
5. Project Composition Manufacturing of different size and type of PVC Pipe and
Irrigation Conduits i.e The pipes are produced with varied sizes
ranging from 0.5” to 18”
6. Premises Required 10,000m2

7. Total Initial Br. 81, 510, 787.70 from this amount 30% (24, 453,
Investment Cost
236.32) and 70%(57, 057,,551.00) loan
8. Employment Permanent 246 Casual 100 Total 346 employees

Opportunity
Skilled 146 Sami Skilled 100 Unskilled 100 Total 346
9. Benefits of the
project For The Value add, supply of quality product, employment, income
region/ country
generation, save foreign currency, technology transfer
and environmental protection through recycling.
4
1. INTRODUCTION
The project profile is planned to establish PVC pipeline and irrigation Conduits Manufacturing
plant. With the growth of industrial, commercial and household activities the demand of PVC
pipeline and Conduits has increased considerably. These items find their extensive use in
industrial, commercial and household activities.
PVC pipes are made out of a material known as polyvinyl chloride, a durable, strong this project-
like substance. Pipes are constructed from this material and used in various applications from
plumbing to construction. The pipe is designed to be universal. All pipes are designed around
specific requirements to ensure that multiple pipe sections will fit together. The ends of the pipe
can either be smooth or grooved (similar to a screw). Additionally, there are several different
pipe sizes ranging from very small (one-fourth inch) to very large (10 feet).
The general purpose of conduit, or duct, is to provide a clear, protected pathway for a cable, or
for smaller conduits, sometimes called innerducts. Advances in cable technologies, as well as the
expense of repairing sensitive cable materials like fiber optic cable, have driven preferences for
protective conduit over that of direct burial. Polyethylene (PE) conduit provides mechanical
protection to fragile cable materials like fiber optic and coaxial cables, as well as protection from
moisture or chemicals and even, in some cases, animals. Furthermore, the permanent pathway
provided by conduit also facilitates replacement projects or future installations of additional
cable or duct.
Buried conduit evolved from terracotta tile, cast concrete and Transit to this projects in the
1960s. Originally, PVC was utilized, but ultimately, PE has emerged as the material of choice
due to its distinct advantages in installation options, versatility and toughness.
PE conduit can be installed below ground by a variety of methods, including open trench,
plowing, continuous trenching and directional drilling. Also, its flexibility and availability in
continuous coiled lengths facilitates installation into existing conduits or ducts as inner duct. In
addition PE conduit provides many above ground or aerial options.
5
The use of piping infrastructure is a fundamental part of our built environment with many
thousands of kilometers of pipes of different types and sizes laid throughout the country. One of
the biggest areas of pipe use is in our urban residential environments for the delivery and
disposal of water and sewage. Various piping materials are available and utilized at different
stages of this whole process. In many situations, different piping materials and sizes can be
interchanged to provide the same solution. Deciding upon which material should be utilized
could involve many considerations.
.
1.1. Project Justification
As such, and once again, the a remarkable growth performances in the economy in general, and the speedy
expansion of the activities that are readily linked in terms of using piping systems of conduits products,
including the agriculture sector for irrigation, water supply and distribution as well as cable casings tends to
have resulted in a new revolution of the demand for rigid pipes and fittings to have steadily been gathering
momentum all along. This has in turn been reflected in an increased import demand for this project pipes and
booming of the this project industry with newly propagating manufacturing plants since the recent past. In
effect, the resultant outcome of the combined factors so mentioned coupled with favorable investment policy
environment in the manufacturing sector has resulted in huge demand sink, thereby by attracting new
investments in various related activities as well.
It can thus be safely assumed that, the combined effect of both these factors readily vindicate the need for
venturing in the area of establishing a rigid pipes and fittings manufacturing plant domestically as a viable
move.
In active socio- economic environment, like the one currently exist in Ethiopia, the
development of industry and supportive manufacturing sector has a great role to make
the overall economic growth to be persistent.
The manufacturing of Pvc pipe and Irrigation Conducts through blow molding business
is a viable business provided that it is operated with a good business acumen that
involves having a thorough knowledge and experience of the product range, technical
6
requirements, operational procedures and also managing the jobs with the right type of
technical manpower. When these factors combine with good and effective business
development skills, the business is expected to give considerable profits which are
expected to grow over the years.
Besides, the numerous properties of these product have made it possible to virtually
make every product conceivable. Some properties of this project that distinguishes them
from other materials are:
 Attractive
 Hard
 Soft and rubbery
 Easy to clean
 Flexible
 Good insulators of heat or electricity
 Light weight
 Hygienic
 Easy to shape and color
 Economical and Recyclable
Apart from some of the properties of the project mentioned above, one important
feature of this project is that it is a non-rusting material which makes it a very usable
commodity especially in coastal areas where there is a lot of humidity.
As stated earlier, the use of this product is increasing all the time as they replace
materials such as metal, wood, paper, ceramics and glass in a wide variety of uses.
More over the overall demand and local supply gap that prevails in the market remains
largely unmet which also provides opportunities for entering in to this business.
The government of Ethiopia has a conducive investment polices and guidelines that
promote the private sectors involvement in the economic development through the
various investment and business endeavors.
7
1.2. Objective of the Project
The main objective of this factory is to manufacture, cost effective, market oriented,
client based and quality this project products for local market and international market.
1.3. The Economic Significance of the Project
The envisaged project deemed to contribute to the economic development of the nation
in general and the region in specific with following ways:
1. Value Add
In the production of this project based products from virgin resin and recycling wastage
as raw materials, the project will add value in the This project industry.
2. Contribute to the Nation’s Development
By supplying customer oriented, high quality and cost effective this project products, it
will satisfy the demand for different purposes like building construction, agriculture,
supply and sewerages of the citizens in particular and the nation in general.
3. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, payroll tax and VAT are collected from undertaking business
activities. Therefore, the project will serve as sources of revenue for both the region and
nation as a whole.
8
4. Employment opportunity
One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self employment or
employment in other organization. Hence, this project will hire 97 citizens.
5. Save/Generate the Country Foreign Exchange
Some types of the envisioned products(Produced by the project) are imported from
abroad. By producing in Ethiopia, the factory will save the foreign currency of the nation.
By minimizing the market demand and supply gab for these products, the factory will
help to reduce the nation’s foreign exchange cost to import these products. This will
save the foreign exchange resource of the nation.
Moreover, the nation can generate foreign currency when the factory start exports these
products to international market.
6. Benefit For The Local Community
As a corporate responsibility the company will engage in different development

activities on the surrounding areas ( The project area ). This will better worse the
community and contribute for the development of the nation.
7. Environmental benefits
The factory uses both virgin resins and recycling of wastage this project materials, the
factory will benefit the region as well as the region in environmental conservation.
8. Stimulate The Local Economy
9
This factory has positive externality in the zone that will encourage the economic
movement of local economy. There will be economic relationship and transactions
among different actors.
9. Technology Transfer
By producing this project products locally the project will train and develops the capacity
of the technical staffs. By doing this, the company will add value in technology transfer
for the nation/region in this area.
2. The project
2.1. Project Description
This is a project on the establishment of a rigid this project pipes and fittings manufacturing plant made of
polyvinyl chloride (PVC) to be used at four major areas, namely, water supply, drainage, electrical
conduits and tube wells. PVC pipes are long hollow cylinder shaped this project products used for
discharging fluid, gas etc. Rigid PVC pipes have super resistance to corrosion. They are nontoxic and in
no way react with the fluid being transported nor affect the taste, flavor and color. Since they have large
tensile strength, they are not subject to pressing or denting by pressure. They are light and this makes
transporting them and subsequent piping relatively easy. PVC is undoubtedly a very versatile thermothis
project material commercially available in a variety of compounded form to cover a wide range of flexibility
and hardness for host of applications. Its physical strength and resistance to water and most of chemicals
makes its popular this project for wide variety of products.
The pipes are produced with varied sizes ranging from 0.5” to 18”.
2.2. Objectives
The objective of this profile is to provide the basic information on the market, technical and financial viability of
investing on a rigid PVC pipes and fittings manufacturing plant , having installed production capacity of
8,000 metric tons per annum (equivalent with 900 km of pipes) per annum of varied product mixes
ranging from a diameter of 2” to 24” which are most commonly used in Ethiopia.
10
3. LOCATION OF THE PROJECT AREA
A. Location
The factory is located in Oromia regional state, Finfine speicale zone, Burayu Town, a
specific the land available by the Town administration , which is around 18 km far from
the center. The main justifications behind the selection of this location are:
 Strategically located to the central and largest market of the nation (Addis Ababa)
 Relatively advanced development in infrastructure (Power, Water, Telephone
internet, road etc.
 All road to the nearest market outlets
 Availability of huge skilled labor force
 Conducive investment policy and governance
 Environmentally fit to this project products manufacturing
11
Figure A. LOCATION MAP OF THE AREA
12
13
4. MARKET STUDY
4.1 Present Demand and Supply
Generally speaking, the this project manufacturing industry is structured around three major product
types, namely, PE, PVC and conduits. Based on the information obtained from Investment Agency, as of
2010/11, the number of factories that manufacture this project pipes comprised six big factories (Bruh
Tesfa, Ethio-this project, APF, GIW, Excel this project, Techplast, and Natran) and two small ones. Once
again, the pipes are used and applied in four major areas: water supply, drainage, conduits and tube
wells whereby their variegated range in diameter and standard is categorized as,
 Pressure pipes(for water supply, distributing purposes, including indoor uses and tube
wells)
 Non pressure pipes (basically for drainage/ sewerage, irrigation and as conduits) .
Essentially thus, our market demand determination assessment for rigid PVC pipes and fittings is based
on consumption estimates of potential users of pipes which basically includes, agricultural sector(state
and private farm development using irrigation), water resources commission(water supply and sewerage
authorities) and construction sector.
As it turns out now, the demand for rigid PVC pipes and fittings is met through local production and import
sources.
Based on the data obtained from Ethiopian Revenue and Customs Authority, and CSA the four year
average domestic production and import of this project pipes (including HDPE and PVC) for the years
2007-2012 was computed at 7628 tones. Assuming the sum of these sources as a closer proxy of the
total domestic consumption, average apparent/effective demand for rigid PVC pipes and fittings is thus
estimated at 7628 ton per annum of the years 2007 – 2012.
4.2 Projected Demand
Importantly, the trend on the effective demand of rigid PVC pipes and fittings of all product mixes has
shown a yearly average growth rate of 13.4 percent for the years aforementioned. Hence, this average
14
growth rate is adopted as a predictor of the domestic demand projection exercise, taking the year 2012
(7628 ton) as a base year of projection.
Accordingly, while current effective demand of 2012 has stood at 7,628 ton, it is expected to grow to
12,614.3 tons when the project becomes operational in 2016.
4.3 Pricing and Distribution

A quick survey of the prevailing ex-factory and retail price of HDPE pipes at Addis Ababa indicates that it
is averaged at Birr 52.00 per kg. To stand out the competition as a new entrant to the industry, the
recommended price for the new project is, therefore, Birr 45.00 per kg. The products will be distributed
through the existing outlets and direct delivery to major distributors .
It would be important to examine the possible level of price based on the competitor’s
action. In this connection, the existing average retail prices of similar factory were
assessed for the benefit of comparison. Based on the existing price in the market the
envisioned factory stetted the price as follows;
Table Pricing of the Factory
Product Price of the

company in Birr
Water Cans 1.5 liter 7
Water Cans 2.5 liter 12
Oil Cans 1 liters 5
Oil Cans 2 liters 7
Oil Cans 3 liters 15
Oil Cans 5 liters 23
Vaseline Cans 20 gram 0.8
Vaseline Cans 50 gram 1.5
15
5. PLANT CAPACITY AND PRODUCTION PROGRAM
5.1 Plant Capacity
Based on the assumption of machine capacity , employee 2 shift systems per 8 hrs and
300 working day in year the factory will produce a total of different this projects as
indicated in the table below: .
Based on demand projection indicated in the market study, and related technical considerations, the
suggested plant capacity is 8000 tons (900 km) per annum. The plant is envisaged to operate in three
shifts of 24 hours a day for 300 working days a year.
5.2 Production program
Considering the gradual growth of demand and the time required to develop the
required skill the rate of capacity utilization during the first, second and third year of
production will be 55%, 80% and 100% respectively. Full capacity utilization will be
reached during the third year of operation.
The plant is expected to operate 75% and 85% of the installed capacity in the first and second years,
respectively. The plant will reach full capacity on the third year. The rationale behind such production
build-up is that the production equipment is new, and operators usually take some time to develop the
specific skills and knowhow.
Table Production programme
Description Year
1 2 3_10
Capacity utilization 55 80 100
(%)
Water Cans 1.5 liter 165,000.00 240,000.00 300,000.00
Water Cans 2.5 liter 137,500.00 200,000.00 250,000.00
Oil Cans 1 liters 82,500.00 120,000.00 150,000.00
Oil Cans 2 liters 110,000.00 160,000.00 200,000.00
Oil Cans 3 liters 165,000.00 240,000.00 300,000.00
Oil Cans 5 liters 165,000.00 240,000.00 300,000.00
16
Vaseline Cans 20 gram 330,000.00 480,000.00 600,000.00

6. TECHNICAL STUDY
6.1 Technology and Engineering
6.3.1. Technology
6.3.1.1. Type and Production Process of Technology
Rigid PVC and blends of polymer are used for extrusion of pipe and for molding articles. PVC resin is fed
into a twin screw extruder, where it is this project and forced through a die to form a pipe. The sizing of
pipe is done through calibration equipment. The pipe is then cooled off by passing it through a water bath.
The Haul off unit is responsible for pulling the pipe. A rotary cutter can be employed to cut the pipe into
standard predetermined lengths. Typically manufacturing process consists of the following steps:
17
Extrusion process:
PVC resin granules are fed into twin screw extruder through a hopper and a dosage feeder, are heated in
different stages. Dosage feeder controls the feed rate to extruder. Material is heated, compressed, air
vented by vacuum and metered in the extruder barrel before entering into die. PVC pipe dies have many
parts/die sets, which can be changed to produce different diameter pipes with, desired wall thickness. Die
has thickness control bolts for control of circumferential thickness of pipes. The resulted melted paste is
passed through the die to obtain a very unstable hot end product. At this point the product is viable to
damage due to unsuitability for which it needs cooling down.
Calibration and hauling off:

Exact diameter of pipe is formed in the water bath where calibration bush is installed. Cooling water and
vacuum is applied for exact control of pipe diameter according to standards. The pipe is continuously
balanced by the haul off speed through which minimum thickness of pipe is controlled. The obtained
product needs to be cooled down immediately to strengthen it. For this purpose the pipe/product
is passed through the room temperature water. The cooling provides strength and toughness to the
product.
Printing:
After the product has been prepared as per the requirements the brand name, size, density is printed on
to the pipe. In normal practices the text is printed three times on a single pipe. Sometimes the printing is
done after the product has been prepared and tested per the customer’s requirements.
Cutting:
The pipes need to be cut into appropriate sizes. Cutting is done either manually or automatically. The
cutter cuts the pipe at pre-determined lengths.
Pipe testing:
A sample of each batch is tested for opacity, gravity, toughness, heat reversion and hydrostaticity
6.3.1.2. Source of Technology

The source of technology is countries like Korea, India, China and USA. The source suggested for this
Plant is of Indian origin, with following address:

M/s Kabra Extrusion Technik Ltd.,
402, Lalita Complex, Opp. HDFC, Navrangpura,
Ahmedabad – 380009.
Phone: 079-26564828, Fax: 079-26427281.
6.2 Engineering
6.2.1 Machinery and Equipment
The major machinery and equipment required for the production of rigid PVC pipes and fittings is listed below
is given as a turnkey, at a CIF Addis Ababa cost of Br. 41.86 million.
18
Table 1. List of This project extrusion Machinery and Equipment requirement, and cost
No. Item Unit Quantity
Pipe Making Section
1 Twin screw extrude pcs 1
2 Molding dies pcs 1
3 Cooling unit pcs 1
4 Take-off unit Pcs 1
5 Cutting machine Pcs 1
6* Stacking unit Pcs 1
7 Auto unit Pcs 1
8 Socket forming machine Pcs 1
9 Socket forming dies Pcs 1
10 Scrap cutter Pcs 1
11 Crusher Pcs 1
12 Compressor pcs 1
13 Laboratory equipment set 1
Fitting making section
14 Automatic injection
15 Machine
16 Moulds
17 Water cooling unit balance
Total Cost(CIF Addis Ababa at Br 19 per USD exchange rate 41,862,672.80

.
7. Raw Materials and Inputs
7.1 Raw materials
The basic raw material for the project is PVC compound. PVC Compounds, in general, may be divided
into two groups i.e. Granulated Compound where mix is fused and extruded in pellets form and Dry Blend
where resultant compound is often in free flowing powder form. No auxiliary material/chemical is added to
the raw material during the production process. Use of raw material for production does not practically
result in wastage as any wastage is reprocess-able. No shortage of material was reported by the
manufacturers but price fluctuation is a common feature.
Table 2. Annual Raw Material Requirement and cost

No. Item Description UOM Annual Unit Total Price(Br.)
19
Quantity price(Br.)
1 PVC Compound Ton 8,500 17,000.00 144,500,000.00
7.2 Utilities
Electricity and water are utilities required for the plant. Electricity is required as motive power and to
supply lighting and sockets. Water is required for human consumption and general purposes. The cost of
the annual consumption of electricity, water and fuel oil is estimated as in the following table.
Table 3. Annual Consumption and cost of Utilities

Annual Unit
No. Item Description UOM Quantity price(Br.) Total Price(Br.)
1 Electricity Kwh 354,500 0.4736 167,891.20
2 Water M3 358,000 3.75 1,342,500.00
3 Fuel oil litre 2,500 18.78 46,950.00
Total Cost 1,557,341.20
8. OGANIZATION, MANAGEMENT AND MANPOWER
8.1 ORGANIZATION AND MANAGEMENT
The organizational structure should be in a way that the company able to achieve its
objectives as well as the satisfaction of standard requirement.
20
8.1.1 MAN POWER REQUREMENTS WITH QUALIFICATIONS

The total manpower required for the factory will be 346 persons. The manpower list and
the Corresponding labor cost are shown in in table below on the financial part.
SN Description No Qualification
1 General Manager 1 BA in Business Management
2 Production Manager 1 BSC in industrial Engineering
3 Shift supervisor 2 BSC in Production Technology
4 Secretary 1 Diploma In Secretarial Science
5 Public Relation Officer 1 Degree in Social Science
7 Personnel 1 BA in HRM
8 Planning Officer 1 BA in Economics/Statistics
9 General service 1 BA in management
10 Color Operator 3 Diploma in Chemistry/ Chemical Engineer
11 Hydraulic Technician 3 10+2 in general Mechanic
12 Machine Operators 15 10+2 in general Mechanic
13 Helper and laborers 35 10 completed
14 Marketing head 1 BA in Marketing management
15 Purchaser 1 Diploma in Pur. & Supplies management
16 IT officers 1 BSC in Computer Science
17 Administer 1 BA in Management
18 Sales person 5 Diploma in sales management
19 Finance head 1 BA in Accounting
20 Accountant 2 Diploma in Accounting
21 Electrician 1 10+2 in general electricity
22 Cashier 2 10+2 in bookkeeping
23 Store keeper 2 10+2 in logistic management
24 Cleaner 4 Unskilled
25 Office Boy 1 10 Completed
26 Driver 2 10 completed
27 Gardner 2 Unskilled
28 Guards/Security 6 Basics
Total 346
Benefit (20 % of Basic Salary)
Grand Total
8.1.2 Skilled and Unskilled, Permanent and Temporary Employee

Permanent 246 Casual 100 Total 346 employees Skilled 146 Sami Skilled 100
Unskilled 100 Total 346
21
8.2 ORGANIZATIONAL STRUCTURE
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
manager with the responsibility of supervising the overall activity of the plant.
Depending up on the nature of the center and the amount of work to be performs; there
exist auxiliary units under the general manager.
Employees under each unit will be supervised by the department head that is
accountable for the general manager. General Manager is appointed by board of
director.
Owner/s
General
Secretary
Manager
Manufacturing Admin. & Marketing &

Dept. Finance Sales Dept.
Dept.
22
Mold Section Production & Qty
Control Section
Fig: Organizational Structure
Hence the following section deals with the duties and responsibilities of some
departments.
1. Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory to be
profitable.
 She/he will incorporate modern technological innovation that will facilitate the
service delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human
resources of the plant so as to achieve the short and long run objectives of the
organization.
2. The Manufacturing Department

Duties and responsibilities:-
It is the core department of the project that has two main section (Mold and Production
and quality control) and has the following responsibilities.
 Design and prepared prototype for This project based products on the plant
standard and customer preferences
 Use modern manufacture, processing and technologies that will enhance the
quality of This project based products.
 Produce quality product that will enable the center competent both in the
domestic and international market.
23
 Use appropriate technology to manage its products.

 Produce those products from a recycled this project materials
 Control on the quality of raw materials, inputs, quality of the product and also the
overall production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final products
3. Administration and Finance Department

 Will plan, organize direct and control the financial transaction of the plant by
using the entire necessary document.
 Will develop sound financial control system by developing modern financial
control systems.
 Will prepare the annual financial statements and prepare condensed reports for
the general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include:
effective handling of the different inventories of the machineries, equipments, raw
materials, finished products, and devise strategies of controlling against fraud
and damage.
 Manage and execute the company national and international procurement
procedure
 Administer and control the company logistic resource
 Effectively administer the company Procurement process domestically as well as
internationally.
 Manage the public relation of the company/factory with external
parties/stakeholders
 Provide and manage general supportive service to the plant.
4. Commercial Department
 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
24
 Provide cost estimates in preparation for securing ...

 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of
the company
25
9 FINANCIAL REQUIRMENT AND ANALYSIS
9.1 Total Initial Investment Cost
The total amount of initial investment capital money that is required to establish the
envisaged factory is estimated to be Br. 81, 510, 787.70.
Table Total Initial Investment Capital

SN Description Cost in birr
Land, Building &
1 22,898,875.00
Construction
2 Machines & Equipment’s 16,985,000.00
3 Vehicles 3,750,000.00
4 Office Equipment 503,350.00
Total Fixed Investment Cost 44,137,225.00
5 Pre service Expense 4,393,150.00
6 Initial Working capital 32,160,534.00
Total 80,490,909.00
Contingency ( 10%) 794,909.90
Total Initial Investment
81,510,787.70
Capital
26
9.1.1 Fixed Investment
A. Land, Building & Construction
SN Description Land Unit cost in Br. Total cost in Br.

Requirement(M2)
1 Workshop(Two Building) 3,000.00 2,500 15,500,000.00
2 Warehouse 2,000.00 2500.00 500,000.00
3 Office Building 500.00 2500.00 1,250,000.00
4 Waste Accumulation area 500.00 2000.00 1,000,000.00
5 Green area, Parking and Buffer Zone 1,200.00 500.00 600,000.00
7 Fence and others _ 1,000,000.00
8 Site Development 1, 500,000.00
9 Design and Supervision 300,000.00
10 Land lease Initial Fee 6.5br per M2 for 1,400,000.00
60 years
Total 10,000.00 22,898,875.00
B. Machinery And Equipment
The total cost of machineries and equipments listed in part 3.4 is estimated to be Br.
16,985,000.00
SN Description Oty Unit Price in Total Price in
Br Br.
1 Blow Molding Machine 12 500,000.00 6,000,000.00
2 Crusher 14" 2 150,000.00 400,000.00
3 Molds 8 75,000.00 600,000.00
4 Lathe Machine 8 Ft 5 1,000,000.00 5,000,000.00
5 Support structure (cutter, batteries, 3, 400,000.00
etc.)
6 Generator and other 1 1,985,000 1,985,000.00
Total 16,985,000.0
C. Vehicle
SN Description Qty Unit Price Total Price Remark

1 Truck 1 1, 750,000 1000,000,00 Duty free
2 Service Bus 2 500,000 1,000,000.00
2 Pick Up 3 500,000 1,500,000.00 Duty free
Total 3, 750,000.00
D. Office Equipments
SN Description Qty Unit cost in Total cost in
27
Br. Br.
1 Managerial chair with tables 5 5000 25,000
2 Secretarial chairs with table 1 1650 1,650
3 Office Chairs with tables 12 1350 16,200
4 Computer with printer 10 15,000 60,000
5 Shelf 20 3500 7,000
7 Telephone machine set 15 1500 4,500
8 Filing Cabinets 2 2000 4,000
9 Assembly chair and table 55,000
10 Decoration(Carpet & Curtain) 30,000
Other 300,000
Total 503,350.00
9.1.2 Initial Working Capital
The initial working capital is estimated to be Br. 2,160,534.
9.1.3 Pre -Service Expense
SN Description Cost in br.

1 Project proposal 11,500
2 Environmental impact Assessment 100,000
3 Staff Capacity Building 50,000
4 Licensing fee and others 2000
Other commissioning 4,000,000.00
Total 4,393,150.00
9.2 Annual Production Cost at Full Capacity
i. Raw Materials and Inputs
SN Description Unit Qty Unit cost in Total cost in birr

measure birr
1 Virgin suspension Ton 250.00 28,000.00 7,000,000.00
grade(PP, HDPE and
other )
2 This project for Recycle Ton 75.00 6,900.00 517,500.00
28
3 Other Additives Ton 105.00 33,000.00 3,465,000.00

Total 10,982,500.00
ii. Salary Expense
SN Description No Qualification Monthly Annual

Salary in Salary in Br.
Br.
1 General Manager 1 BA in Business Management 6,000.00 72,000.00
2 Production Manager 1 BSC in industrial Engineering 4,000.00 48,000.00
3 Shift supervisor 2 BSC in Production Technology 3,000.00 72,000.00
4 Secretary 1 Diploma In Secretarial Science 1,200.00 14,400.00
5 Public Relation Officer 1 Degree in Social Science 1,800.00 21,600.00
7 Personnel 1 BA in HRM 1,800.00 21,600.00
8 Planning Officer 1 BA in Economics/Statistics 1,900.00 22,800.00
9 General service 1 BA in management 1,600.00 19,200.00
10 Color Operator 3 Diploma in Chemistry/ Chemical 1,350.00 48,600.00
Engineer
11 Hydraulic Technician 3 10+2 in general Mechanic 1,300.00 46,800.00
12 Machine Operators 15 10+2 in general Mechanic 1,370.00 246,600.00
13 Helper and laborers 35 10 completed 750.00 315,000.00
14 Marketing head 1 BA in Marketing management 3,000.00 36,000.00
15 Purchaser 1 Diploma in Pur. & Supplies 1,150.00 13,800.00
management
16 IT officers 1 BSC in Computer Science 1,800.00 21,600.00
17 Administer 1 BA in Management 1,750.00 21,000.00
18 Sales person 5 Diploma in sales management 1,100.00 66,000.00
19 Finance head 1 BA in Accounting 3,000.00 36,000.00
20 Accountant 2 Diploma in Accounting 1,150.00 27,600.00
21 Electrician 1 10+2 in general electricity 1,050.00 12,600.00
29
22 Cashier 2 10+2 in bookkeeping 950.00 22,800.00

23 Store keeper 2 10+2 in logistic management 980.00 23,520.00
24 Cleaner 4 Unskilled 450.00 21,600.00
25 Office Boy 1 10 Completed 650.00 7,800.00
26 Driver 2 10 completed 870.00 20,880.00
27 Gardner 2 Unskilled 400.00 9,600.00
28 Guards/Security 6 Basics 500.00 36,000.00
Total 97 44,870.00 1,325,400.00
Benefit (20 % of Basic 265,080.00
Salary)
Grand Total 1,590,480.00
iii. Other Operating Expenses
SN Description Annual Cost in Br. Assumption Used
1 Property Insurance 68,372.25 1% of fixed Investment cost

2 Audit & legal fee 18,000.00 1500per month
3 Uniforms 13,300.00 70*190br
4 Advertisement & Promotion 400,000.00 % of Sales
5 Telephone, fax and postal 10,800.00 900 per month
6 Cleaning goods supplies 12,000.00 1000 per month
7 Maintenance & Repair 136,744.50 2% of Fixed Investment Cost
8 Stationery and other office supplies 8,400.00 700 per month
9 Electricity 50,250.00 0.45*150,000W per year
10 Water 40,000.00 2*2000 m3 per year
11 Fuel 330,000.00 16500 lit*20 per year
12 Oil and lubricant 33,000.00 10% of fuel cost
13 Miscellaneous Expense 60,000.00 5000 br month
Total 1,180,866.75
30
9.3 Financial Analysis and Statements
9.3.1 Underlying Assumption

The financial analysis of the envisioned factory is based on the data provided in the
preceding sections and the following assumptions.
A. Construction and Finance
Construction period 1.5 years

Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 10 %
Utilities and operation expense increase 5% per annum after 3rdyr
Wages and Salary increase Increase 5% Per annum after 3 rd yr
B. Depreciation
Method Straight Line

Building 5%
Machinery and equipment 10%
Office Equipments 10%
Vehicles 20%
9.3.2 Source of Fund

SN Description % Amount(in birr)
share
1 Owners Share 30 24,453,236.3
2 Bank Loan 70 57,057,551.00
Total 100 81,510,787.70
31
9.3.3 Loan Repayment Schedule

No Years Installment Interest Principal
0 - -
81,510,787.70
1 8,151,078. 6,928,416. 73,359,708.
77 95 93
2 8,151,078. 6,235,575. 65,208,630.
77 26 16
3 8,151,078. 5,542,733. 57,057,551.
77 56 39
4 8,151,078. 4,849,891. 48,906,472.
77 87 62
5 8,151,078. 4,157,050. 40,755,393.
77 17 85
6 8,151,078. 3,464,208. 32,604,315.
77 48 08
7 8,151,078. 2,771,366. 24,453,236.
77 78 31
8 8,151,078. 2,078,525. 16,302,157.
77 09 54
9 8,151,078. 1,385,683. 8,151,078.
77 39 77
10 8,151,078. 692,841. (0.
77 70 00)
9.3.4 Depreciation Schedule

No Description Total Fixed Cost Depreciation Rate Total Cost
1.0 Building and Civil Work 0.1 2,289,887.5
0 22,898,875.00 0 0
2.0 Machinery and Equipment 0.2 4,246,250.0
0 16,985,000.00 5 0
3.0 Office Furniture and 0.1 1,698,500.0
0 fixture 16,985,000.00 0 0
4.0 Vehicle 0.0 849,250.0
0 16,985,000.00 5 0
Annual Depreciation 9,083,887.5
0
9.3.5 Revenue Projection

Based on the assumption of plant capacity, production program and pricing as indicated in part
2 of this paper, the revenue of the project at full capacity1 projected in the table below;
32
Description Year 1 Year 2 Year 3-10

Water Cans 1.5 liter 1,155,000.00 1,680,000.00 2,100,000.00
Water Cans 2.5 liter 1,650,000.00 2,400,000.00 3,000,000.00
Oil Cans 1 liters 412,500.00 600,000.00 750,000.00
Oil Cans 2 liters 770,000.00 1,120,000.00 1,400,000.00
Oil Cans 3 liters 2,475,000.00 3,600,000.00 4,500,000.00
Oil Cans 5 liters 3,795,000.00 5,520,000.00 6,900,000.00
Total 10,851,500.00 15,784,000.00 19,730,000.00
9.3.6 Balance Sheet (beginning)

Asset
Current Asset Value in Br.
Cash 1,002,241
Initial inventory of raw materials and
inputs 2,160,534
Total Current Asset 3,162,775.00
Fixed Asset
Land, Building and Construction 2,898,875.00
Machineries and Equipments 2,985,000.00
Office Equipment 203,350
Vehicles 750,000
Total fixed Asset 6,837,225
Total Asset 10,000,000.00
Liability
Account payable 7,000,000.00
Owners Equity
Capital 3,000,000.00
Total Liability & Owners’ Equity
10,000,000.00
9.3.7 Income/Loss Statement

Revenue Year 1 Year 2 Year 3-10
Sales Revenue 10,851,500.00 15,784,000.00 19,730,000.00
Purchase of Raw Material 6,040,375.00 8,786,000.00 10,982,500.00
Gross profit 4,811,125.00 6,998,000.00 8,747,500.00
Expenses
33
Salary Expense 874,764.00 1,272,384.00 1,590,480.00

Other Operating Expenses 649,476.71 944,693.40 1,180,866.75
Pre-operating Expense 47,000.00 - -
Deprecation Building 144,943.75 144,943.75 144,943.75
Deprecation Machineries 298,500.00 298,500.00 298,500.00
Deprecation Vehicles 150,000.00 150,000.00 150,000.00
Deprecation office Equip 20,335.00 20,335.00 20,335.00
Interest Expense 700,000.00 630,000.00 560,000.00
Lease payment 43,875.00 43,875.00 43,875.00
Total Expense 2,928,894.46 3,504,731.15 3,989,000.50
Profit Before Tax 1,882,230.54 3,493,268.85 4,758,499.50
Tax(30% ) - - 1,427,549.85
Net Profit 11,882,230.54 33,493,268.85 33,330,949.65
9.3.8 Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3-10
Equity Capital 3,000,000.00
Loan principal 7,000,000.00
Net sale - 10,851,500.00 15,784,000.00 19,730,000.00
Total cash in flow 10,000,000.00 10,851,500.00 15,784,000.00 19,730,000.00
Cash payment
Purchase of raw - 6,040,375.00 8,786,000.00 10,982,500.00
materials
Salary expense - 874,764.00 1,272,384.00 1,590,480.00
Pre operating expense 93,150.00 - - -
Investment 6,837,225.00 - - -
Other Operating cost - 649,476.71 944,693.40 1,180,866.75
loan repayment - 1,400,000.00 1,330,000.00 1,260,000.00
Lease payment 238,875.00 43,875.00 43,875.00 43,875.00
Tax payment - - - 1,427,549.85
Total payment 7,169,250.00 9,008,490.71 12,376,952.40 16,485,271.60
Cash surplus / Deficit 2,830,750.00 1,843,009.29 3,407,047.60 3,244,728.40
Cumulative Cash flow 11,843,009.29 15,250,056.89 18,494,785.29
9.3.9 Profitability
According to the projected income statement, the project will start generating profit in
the 1st year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the lifetime of the project.
34
The income statement and the other indicators of profitability show that the project is
viable.
9.3.10 Pay-Back Period

The investment cost and income statement projection are used to project the pay-back
period. The project's initial investment will be fully recovered at the 4.2 years of
operation.
10 Land Use Plan and Activity Plan

A. Land Use Plan
The factor planned to acquire a total of 10,000 m 2 areas of land. This land planned to
use as follow indicated in table below.
Table 3. Land use plan in m2
Number of
OBJECT Base area Total Area
floors
1. Offices and goods delivery building 90*40 1 1,500
2. Raw material store 100*30 1 3,000

3.Production hall 80*40 2 3,500
4. General purpose 50*20 1 1000
5. Others(parking lots, internal roads and 20*25 1000
paths, cafeteria, guest club etc )
Total built-up area 1,000
6. Expansion purpose 1,000
Total area 10,000
B. Activities Plan
TABLE PROJECT IMPLENTION SCHEDULE
35
No Description Total Implantation schedule (month)

mont
h
1 Project proposal approval and investment 2.0 1 2 3 4 5 6-2 Y
2 Tender, contract negotiation and purchase 1.0

order
3 Delivery of machine and equipment 3.0
4 Civil construction works and plant foundation 2.0

5 Plant erection and training 1.0
6 Testing and commissioning 0.5
7 Production start Up 0.5
36
11 ENVIRONMENTAL IMPACT ASSESMENT AND

MANAGAMENT OF THE PROJECT
PVC pipes manufacturing process is environmentally safe because it neither produces any smoke, dust or
other pollutants nor it discharges any unwanted chemicals into the water used in the production process. The
water used once is reusable after cooling in the chiller.PE is recyclable, both post industrial waste and post-
consumer waste is recycled. A process to recover this projects pipes from construction and demolition waste
is being used in the developed countries, which removes practically all this projects pipes from the waste and
produces granulated materials suitable for new pipe feedstock.PE is thermothis project materials and as such
is readily recycled. Being thermothis projects any waste generated in the manufacturing process is recycled.
A. Environmental Impact Assessment Of The Project
Environmental aspects are fundamental for the sustainability assessment of the current
and novel designs of this project related plant. In this regard the factory will undertake a
separate and detail Environmental impact Assessment.
B The Environmental Impact of Vinyl Chloride
Virtually no (< 1 ppm) monomer is emitted from the finished product, but monomers can
be released in minute quantities through such activities as burning the polymer.
Monomer emission is always below what are classified as “harmful” levels. Generally
speaking, all manufacturing processes generate emissions. Studies have sampled vinyl
chloride levels in the air near this project factories. They demonstrated that levels were
lower than the worker health protection standards set by the health authorities. If
minimal monomer emissions are present in the atmosphere near production sites, the
vinyl chloride monomer tends to remain in the air for two days because it breaks down
very quickly. Its impact on stratospheric and greenhouse impact is thus negligible. The
potential impact of this monomer on tropospheric ozone has not yet been assessed.
In this regard the factory will undertake a separate and detail Environmental impact
Assessment.
37
38

Plastic Abdu Ali (Repaired) Final of Final

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Plastic Abdu Ali (Repaired) Final of Final

Uploaded by

Copyright:

Available Formats

Project Proposal for PVC Pipe and Irrigation Conduits manufacturing Factory

PROJECT TO BE IMPLEMENTED IN BURAYU TOWN , OROMIA

PROMOTER- Ali Mohammed Kiyar

9.1.2 Initial Working Capital............................................................................................................28

6. Premises Required 10,000m2

8. Employment Permanent 246 Casual 100 Total 346 employees

1.1. Project Justification

investments in various related activities as well.

1.2. Objective of the Project

1.3. The Economic Significance of the Project

2. Contribute to the Nation’s Development

5. Save/Generate the Country Foreign Exchange

6. Benefit For The Local Community

As a corporate responsibility the company will engage in different development

8. Stimulate The Local Economy

2.1. Project Description

makes its popular this project for wide variety of products.

3. LOCATION OF THE PROJECT AREA

Figure A. LOCATION MAP OF THE AREA

4.1 Present Demand and Supply

authorities) and construction sector.

estimated at 7628 ton per annum of the years 2007 – 2012.

4.2 Projected Demand

(7628 ton) as a base year of projection.

12,614.3 tons when the project becomes operational in 2016.

4.3 Pricing and Distribution

through the existing outlets and direct delivery to major distributors .

Table Pricing of the Factory

Product Price of the

5. PLANT CAPACITY AND PRODUCTION PROGRAM

5.1 Plant Capacity

shifts of 24 hours a day for 300 working days a year.

5.2 Production program

specific skills and knowhow.

Table Production programme

Vaseline Cans 20 gram 330,000.00 480,000.00 600,000.00

6.1 Technology and Engineering

damage due to unsuitability for which it needs cooling down.

Calibration and hauling off:

cutter cuts the pipe at pre-determined lengths.

6.3.1.2. Source of Technology

Plant is of Indian origin, with following address:

is given as a turnkey, at a CIF Addis Ababa cost of Br. 41.86 million.

Total Cost(CIF Addis Ababa at Br 19 per USD exchange rate 41,862,672.80

7. Raw Materials and Inputs

7.1 Raw materials

manufacturers but price fluctuation is a common feature.

Table 2. Annual Raw Material Requirement and cost

Table 3. Annual Consumption and cost of Utilities

8. OGANIZATION, MANAGEMENT AND MANPOWER

8.1 ORGANIZATION AND MANAGEMENT

8.1.1 MAN POWER REQUREMENTS WITH QUALIFICATIONS

8.1.2 Skilled and Unskilled, Permanent and Temporary Employee

8.2 ORGANIZATIONAL STRUCTURE

Manufacturing Admin. & Marketing &

Fig: Organizational Structure

2. The Manufacturing Department

 Use appropriate technology to manage its products.

3. Administration and Finance Department

 Provide cost estimates in preparation for securing ...

9 FINANCIAL REQUIRMENT AND ANALYSIS

9.1 Total Initial Investment Cost

Table Total Initial Investment Capital