Professional Documents
Culture Documents
DECEMBER, 2020
ETHIOPIA
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Contents
Executive Summary.......................................................................................................................................................5
CHAPTER I. INTRODUCTION........................................................................................................................................6
1.1 Background...........................................................................................................................................................6
1.2 Profile of the Promoter.........................................................................................................................................6
1.3 Purpose of the Document.....................................................................................................................................7
1.4 Project Justification...............................................................................................................................................7
1.4 Objective of the Project........................................................................................................................................8
1.6 The Socio - Economic Significance of the Project.................................................................................................8
1.7 Location and Premises Required..........................................................................................................................9
1.7.1 Location..........................................................................................................................................................9
1.7.2 Premises Required and Land Use................................................................................................................10
CHAPTER 2. MARKET STUDY, PLANT CAPACITY AND PRICING............................................................................11
2.1. General..............................................................................................................................................................11
2.2. Large and Medium Scale Manufacturing Industries and Distribution in Ethiopia.....................................12
2.3 Demand Analysis.............................................................................................................................................15
2.3.1 Construction Sector...................................................................................................................................15
2.3.2 Industrial Sector.........................................................................................................................................16
2.3.3 Agricultural Sector.....................................................................................................................................16
2.3.4 Construction of Project Camps & Temporary Business Areas...............................................................16
2.3.5 Micro and Small Scale Enterprise.............................................................................................................17
2.4 Supply Analysis.................................................................................................................................................17
2.5 Demand Forecast (Demand Projection)..........................................................................................................19
2.5.1. Demand Drives..........................................................................................................................................19
2.5.2 Present effective demand..........................................................................................................................24
2.6. Demand -supply gap and market share.............................................................................................................25
2.7 Marketing Strategy.............................................................................................................................................27
2.7.1 Market Development.................................................................................................................................27
2.7.2 Marketing Channels...................................................................................................................................27
2.8 Competitors.......................................................................................................................................................28
2.9 Pricing................................................................................................................................................................28
Chapter 3. TECHNICAL STUDY.......................................................................................................................................30
3.1. Land use and Building......................................................................................................................................30
3.2 Proposal for Preliminary Plant Layouts..........................................................................................................30
3.3 Production Processes flow chart and their description..........................................................................31
3.3.1 Production process flow Wire Rod and Deformed Bar...........................................................................31
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3.3.2. Production process flow chart for EGA sheet forming line............................................................32
3.3.3. Production process follow chart for profile making line................................................................32
3.4 Description of main product types...................................................................................................................32
3.4.1 Wire Rod.....................................................................................................................................................32
3.4.2 Deformed Steel Bars (R-bars)...................................................................................................................33
3.4.3 EGA sheets..................................................................................................................................................33
3.4.4 Profiles of different sizes...........................................................................................................................33
3.5. Annual Production at Full Capacity................................................................................................................33
3.6. Annual raw material requirement plan..........................................................................................................35
3.7. Plant machineries and equipment and General Specifications....................................................................36
3.8 Utilities requirement......................................................................................................................................37
3.8.1 Access road requirement.......................................................................................................................38
3.8.2 Electric power requirement..................................................................................................................38
3.8.3 Water.........................................................................................................................................................38
3.8.4 Fuel, oil, grease, and coolant.....................................................................................................................39
3.8.5 Telephone...................................................................................................................................................39
3.9 Office furniture and Equipment..........................................................................................................................39
3.10. Safety and Insurance......................................................................................................................................40
3.11. Vehicles Requirement....................................................................................................................................41
3.12 Project Implementation Schedule.................................................................................................................41
Chapter 4 ORGANIZATION AND MANAGEMENT.....................................................................................................42
4.1 Organizational Structure..................................................................................................................................42
4.2. Brief Functional Description...........................................................................................................................42
4.2.1 General Manager........................................................................................................................................42
4.2.2 MIS Service.................................................................................................................................................42
4.2.3 Administration and Finance Division.......................................................................................................43
4.2.4 Production and Technical Services Division......................................................................................43
4.2.5 Commercial Division...............................................................................................................................43
4.2.6 Administration and personnel Section...............................................................................................43
4.2.7 General Accounts and Costing Section................................................................................................43
4.2.8 Production Section..................................................................................................................................44
4.2.9 Maintenance and Technical Services Section....................................................................................44
4.2.10 Marketing and Sales Section...............................................................................................................44
4.2.11 Foreign and Local Procurement Section..........................................................................................44
4.3 Staffing Plan.......................................................................................................................................................45
CHAPTER 5. FINANCIAL ANALYSIS..........................................................................................................................48
5.1. Project Life.....................................................................................................................................................48
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5.2 Depreciation and Amortization......................................................................................................................48
5.3 Terminal Value (Salvage Value)......................................................................................................................48
5.4 Working Capital...............................................................................................................................................49
5.5 Discounting.....................................................................................................................................................49
5.6 Income Tax......................................................................................................................................................49
5.7 Result of Financial Analyses............................................................................................................................49
5.8 Investment Cost...........................................................................................................................................50
5.9 Cost of Production..........................................................................................................................................51
5.10. Financial Flow...............................................................................................................................................51
5.12 Cash Flow......................................................................................................................................................52
5.13. Discounted Cash Flow..................................................................................................................................52
5.14 Profitability....................................................................................................................................................52
5.15 Balance Sheet................................................................................................................................................53
5.16 Break -Even Analysis.....................................................................................................................................53
CHAPTER 6. SOCIO-ECONOMIC AND ENVIRONMENTAL ASPECTS......................................................................54
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Executive Summary
Project Name Iron & Steel Melting andProducts Manufacturing
Project Owner DSN SUNSHINE PLC
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CHAPTER I.INTRODUCTION
1.1 Background
Ethiopia is one of the East African countries with the diversified climatic conditions,
natural scenery and resource bases. Currently the country has a total population of about
100 million of which more than 40 million are found in Oromia regional state. Oromia is
one of the regional states of Ethiopia with very fertile land, very conducive weather
condition for both crop production and animal husbandry.
The government of the country has been excreting its maximum effort to expand
investment opportunities in the country by designing different policies and strategies that
will facilitate investment through attracting both domestic and foreign investors. Likewise,
the Oromia regional state government has been working day and night to make poverty
history by making its door open to investors both (domestic and foreign) to come and
invest in the region. Therefore, it is this many opportunities and cumulative experience
which makes the owner of the project promoter motivated to participate in her home
country Ethiopia in the manufacturing sector especially on plastic products.
Fallowing the nation’s economic growth the manufacturing sector is booming result in
bridging the market demand gap of such products in the country, The Government is highly
inviting the private sector to work on import substitution is highly motivating the private
sector to respond to the government invitation, there by contributing their share to the
development process.
One of the government strategies to improve the supply of steel and affiliated products is encouraging private
investments in the sector. Motivated by such encouragement and the prevailing business opportunity, Mr.
DSN SUNSHINE commissioned a consultant to conduct Techno Economic Feasibility Study for Establishing
aIron & Steel Melting and Products Manufacturingfactory with the motto of becoming one stop supplier of
quality Structural Metal & Steel Products to the major economic sectors of the country.
The promoter of the project Mr. DSN SUNSHINE is an Ethiopian born Norwegian (Foreigner) businessperson
who comes to the investment sector in response of the call made by Ethiopian government to all Ethiopian
and Ethiopian born to participate in the renaissance of their home. The promoter does have ample
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experience, accumulated diversified-skills in the area, and adopted working with many people. Thus, these
experiences primarily motivated the promoter to develop the inception of this project idea.
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1.4 Objective of the Project
The main objective of this factory is to manufacture, cost effective, market oriented, client
based and quality Structural Metal & Steel Products for local market.
In the production of Structural Metal & Steel Products the project will add value in the
metal industry.
2. Contribute to the Nation’s Development
By supplying customer oriented, high quality and cost effective Structural Metal & Steel
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 organization and individuals. Among the different forms of taxes,
business income taxes, VAT and payroll tax are collected from undertaking business
activities. Therefore, the project will serve as sources of revenue for both the region and
nation in whole.
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 in other
organization. Hence, this project will hire 850 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.
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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
This factory has positive externality in the district that will encourage the economic
movement of local economy. There will be economic relationship and transactions among
different actors.
8. Technology Transfer
By manufacturing Structural Metal & Steel Products (Iron & Steel Melting and Products
Manufacturing) will train and development the capacity of the technical staffs. By doing
this, the company will add value in technology transfer for the nation/region in this area.
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1.7.2 Premises Required and Land Use
Previously QUAN WANHUN PLCwill require30,000 m2 of land for the establishment of Iron &
Steel Melting and Products Manufacturingfactory. With the booming trend of the Ethiopian
manufacturing sector which demands this product currently meet through import motivated the
promoter to establish Iron & Steel Melting and Products Manufacturing factory.
The proposed set up of Iron & Steel Melting and Products Manufacturingplant land'
requirement includes space for the installation of plant and machinery, management office and
store for finished product and parking.
. No Descriptions area in M2
1 Production hall 15000
1.1 Workshop 10,000
1.2 Inspection room 5000
2 Warehouse 10,000
2.2 Raw materials and inputs 5000
2.3 Finished products 5000
3 Office and Showrooms 1000
3.1 Office 200
3.2 Show room 6000
3.3 Worker Canteens 200
4 Walk way and loading unloading 4000
Total 30,000
area
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CHAPTER 2. MARKET STUDY, PLANT CAPACITY AND PRICING
2.1. General
Upon successful implementation of the plan for accelerated and sustainable development
to end poverty (PASDEP) 2005/2006 -2009/2010, the Ethiopian Government has now
prepared a grand plan for the period 2011/2012- 2014/2015 for the growth and
transformation (GTP) of the economy. The GTP aims at doubling the GDP within the five
years. Towards that end, the double-digit GDP growth rate ware consecutively registered
over the previous ten years. The plan indicates that the government will continue to
undertake major development projects with the view to transform the national economy,
alleviate the acute shortage of homes, expand basic infrastructure, develop the industrial
base, and transform the nation to a middle-income country. As a result of this initiation, the
construction and the agricultural sectors to be followed by the industrial sector are
growing in leaps and bounds year after year.
Considering the current per capita consumption of Iron & Steel (metal) for example, it is
only 12 Kg/per head which is extremely very low, even when compared with other
developing countries. Now the Ethiopian government has indicated in the GTP, at least
develop to this per capita consumption by three folds within the five years (GTP P35).
One of the government strategies to improve the supply of steel and affiliated products is
encouraging private investments in the sector. Motivated by such encouragement and the
prevailing business opportunity, the promoter commissioned a consulting team to conduct
Techno Economic Feasibility Study of establishing a Manufacturing of Structural Metal &
Steel Products Nails, Bolt, Nut, Rivet and Fabricated Metal Products, manufacturing plant
with the motto of becoming one stop supplier of quality steel products to the major
economic sectors of the country.
Even though, Ethiopia is very rich in natural resources and man power, it is well
known that Ethiopia is one of the underdeveloped countries, where much is yet to be
done to utilize its natural resources and develop all economic sectors to change the
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current situation of the country. Infrastructural, Agricultural, and Industrial
development are the basic economic sectors that need great attention and
involvements of the Ethiopian Government and all other stakeholders to develop the
economy of the country.
To this end, the Ethiopian Government has currently set and approved a second five
year plan for growth and transformation of the economy with the ultimate goal of
pulling out the country from the current poverty level to the middle income economic
level within the coming 20 years. Therefore, considering the current situation of the
country, there are a lot of investment opportunities and conducive situation to
participate and contribute to the overall development of the economy.
2.2. Large and Medium Scale Manufacturing Industries and Distribution in Ethiopia.
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Major Industrial Group Regional States
NO
Addis Dire
Tigray Afar Amhara Oromiya Somalie Bensha. SNNP Gambella Harari Total %
Ababa Dawa
trailers
Manufacture of Furniture, Manufacturing N.E.C. 29 1 83 41 5 5 92 3 9 89 6 363 16.48
% 11.21 0.54 12.30 16.52 0.54 0.32 14.03 0.36 1.95 40.26 1.95 100.00
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Distribution of large and Medium Scale Manufacturing Industries
Major Industrialby Regional States and Major Industrial Group
Group
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The figures in the table indicates that, the total number of large and medium scale
manufacturing establishments of the country as a whole stood at 2,203 in 2001 Ethiopian
Fiscal year (E.F.Y) or (2008/2009 G.C). It has shown an increase of 273 establishments or
14.1 percent compared to the year before in absolute and relative terms, respectively. For
the country as a whole, establishments classified under manufacture of other non -metallic
mineral products industrial group constituted the largest share accounting for 27.6
percent of the total. The outputs by these industries among others include glass and glass
products, structural clay products, cement, article of concrete, lime and gypsum (plaster).
Manufacture of food products and beverages, and manufacturing of furniture, which
represented 25.5 and 16.5 percent of the total number of establishments, were in second
and third position, respectively. That means the share of the three industrial groups
combined was 69.6 percent of the total number of manufacturing industries, which
indicates that, the Ethiopian large and medium scale manufacturing Industry is
characterized by a high concentration of a limited range of manufacturing activities. One
can also clearly see from table 3.1, the share of number of Industries for manufacture of
basic iron and steel and manufacture of fabricated metal products except machinery and
equipment were 0.82 percent and 5.45 percent, respectively. That means the share of the
two industrial groups combined was only 6.27 percent, which is very small.
On the other hand, the figures in the same table reveal that the distribution of large and
medium scale manufacturing industries by regional states of the country is highly skewed.
Slightly more than 40 percent of the total large and medium scale manufacturing
industries, which were operating in the reference year, were located in Addis Ababa,
followed by Oromiya, S.N.N.P., Amhara and Tigray Regional states.
Generally, one can conclude that the number of establishments for medium and large
manufacturing industries in Ethiopia are very few compared with the area and population
size of the country.
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2.3 Demand Analysis
As briefly indicated in the chapter one of this study, the main products of the envisaged
project areStructural Metal & Steel Products like Wire Rods, Reinforced Bar, RHS, Iron
Sheet, Steel Tube, Steel Rod, Angle Iron, Corrugated Iron Sheet, LTZ, etcwith different size
and wall thickness;and this products are demanded by wide range of economic sectors,
their demand analysis is also approached sector by sector as follows;
The booming construction sector of the country is one of the potential consumers of the
products from the envisaged project. Government has planned to build as many as possible
condominium houses to alleviate the acute shortage of residential houses in the capital and
in many cities of the regional states. Real estate developers are also engaged in building a
great number of buildings for residential and commercial activities. Building of new and
upgrading existing service providing centers like airport terminals railway stations and bus
stations are being done and are planned to be continued extensively by government to
improve the level of service provision to the public. Construction of highways with hay
guards, fences and toll gets is already started and expected to be continued extensively.
Construction of hydro power stations and steam power stations to improve the electric
power supply emerging industrialization and the growing population of the country is
expected to continue at faster rate to satisfy the current and future demand. Obviously, all
the construction activities mentioned above can use directly a substantial amount of
products and services from the envisaged project
Deformed Steel Bars of different sizes and grades are very essential in making reinforced
concrete structures for extensively wide range of applications. Structural Steel Beams with
thicker walls can also used as columns or supports in construction of buildings. Tower
cranes are demanded highly to, shorten construction period of building construction and
securing safe & neat construction sites.
Using formworks and scaffolding made from steel also speed up the construction of a
building and improve the safety of the workers. It also minimizes or avoids the use of
Eucalyptus tree posts hence educing deforestation and subsequent environmental
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degradation due to the booming construction activities in the country.
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miscellaneous purposes and uses from steel products that can be easily transported,
assembled and disassembled after use (to evacuate from the land when it is needed for its
permanent purpose) and re-assembled in another location.
If good market development is done, such activities will definitely create good market for
the products and services of the envisaged project.
Most of these enterprises demand as an input, steel and steel products in various forms to
establish, do and expand their businesses creating considerable market for the products
and services of the project to be established.
2.4 Supply Analysis
The national demand for these products and services similar to products and services to be
produced and rendered by the envisaged project are being satisfied through two sources so far.
The first and the major parts are being satisfied through imports, while the second and the minor
portions are being satisfied by products from local manufacturers. Until preparation of this
feasibility study, there are only eight manufacturing firms all over the country, which are fully or
partially engaged in the manufacturing of products similar to that planned by the envisaged
project. They are:-
1. Zikuala Steel Rolling Mill with annual estimated capacity of 20,000 tons.
2. Ethiopian steel factory with annual estimated capacity of 10,000 tons.
3. Abyssinian Integrated Steel industry with annual estimated capacity of 5,000 tons.
4. Habesha Deformed steel bars manufacturing PLC with annual estimated capacity of
5,000 tons.
5. Yesu Deformed Steel bar marketing line (wing) with annual estimated capacity of 5,000
tons.
6. Walia Deformed steel bars manufacturing line (wing) with annual estimated capacity of
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5,000 tons.
7. Eastern Steel industry with annual estimated capacity of 30,000 tons.
8. Steel R.M.I with annual estimated capacity of 50,000 tons.
The above eight manufacturers are basically engaged in the manufacturing of deformed
steel bars from ingots and imported steel billets. None of them are engaged in the
fabrication of customized products of similar cross sections, construction equipment,
tower cranes, pre- fabricated houses from steel and other similar activities as planned by
the envisaged project, except Kaliti metal products factory which is attempting to fabricate
form works from steel, trusses and shelves.
The above import quantities do not include duty free imports for various government and
private investment projects.
One can easily understand from the above table that the total quantity of steel products
being imported to the country is considerably high which will even be more higher if those
quantities imported by government and private sectors with duty free privileges are
included. Therefore, the market opportunity for the products of envisaged project and the
role it is going to play in processing and supplying import substitute products is very high.
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2.5 Demand Forecast (Demand Projection)
There are various techniques for estimating future demand or demand projection for a
given products or services. Some of such techniques are regression method, consumption
level, end use method and trend projection method. However, all of them are used only for
estimation and the accuracy of the result obtained by each method depends on the
satisfaction of certain conditions under each cases. However, for the purpose of illustration
and indication of demand projection by assuming the total supply in the past six years as
the total apparent consumption in the same years, the trend projection technique is
applied. Based on the calculation using trend projection Technique, the forecasted demand
for steel products for the coming ten years is indicated in table.
Demand Projection
Deformed steel bars
Steel Products Aggregate Steel Products Aggregate Demand Forecast [Ton]
Year
Demand Forecast In [kg] Demand Forecast In [Ton] (80% of the Aggregate is
Assumed)
2013 545,756,437 545,826 436,605
2014 560,687,163 560,687 448,550
2015 575,617,889 575,618 460,494
2016 590,548,615 590,549 472,439
2017 605,479,341 605,479 484,383
2018 620,410,067 620,410 496,328
2019 635,340,793 635,341 508,273
2020 650,271,520 650,272 520,218
2021 665,202,246 665,202 532,162
2022 680,132,972 680,133 544,106
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are the major components of the sector. More over steel products are also used by micro
and small enterprises for fabrication of different products from steel.
The demand for steel products also depends on the economic growth of the end users.
Therefore, the demands for steel products are derived demand, which depends directly on
the economic performance of its major end- users. On the other hand, the economic
performance of the end users is dependent on a number of inter related variables. Some of
the variables are essential in determining the magnitude and trend of demand for steel
product are-
Performance of the national economy
Performance of the construction sector
Demand for housing and housing construction activities.
Trends in infrastructure development
Tend in steel products manufacturing and
Rate of population growth and urbanization
A general assessment of current status and future prospect of the above factors are
presented here under, as they have decisive influence on the likely direction of the
demand for the product under consideration beside the estimate demand forecasted in
table 3.3
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Ethiopian economy is expected to continue in the future. As a result, demand for steel
products is also reasonably expected to increase as economic expansion continues.
b) Housing Construction
The building construction sub-sector, apparently one of major consumer of deformed steel
bars, is currently going through a boom period witnessing a substantially marked increase
in investment in complex and high rising buildings in major cities of the country like Addis
Ababa, Hawassa, Bahir Dar, Mekelle, Adama, etc. had it not for the shortage of electric
power supply from the national grid, the construction could have accelerated more than
that achieved now, leading to higher demand for steel products than registered in the
recent years.
One of the developments in housing construction in the cities and towns is the construction
of multi block condominium houses by the city/town administrations. With this respect,
considering Addis Ababa as an example, the city administration has constructed 954 blocks
of condominium apartment at 102 sites with 32,388 housing unit in 2006 only. Since the
condominium development is supposed to address the need of the low and medium income
parts of the community the largest share of the housing units are studios, one bed room
and two bed rooms accounting 18.45%, 34.70% and 36.17% of the total condominium
housing units respectively. The share of three bedrooms housing unit is only 5.34%.
However, the city administration's condominium construction is far from satisfying the
demands for condominium housed among the city residents. As per the city
administration's call, 453, 081 people have been registered for condominium house. This is
about 68% of the number of households in the city and indicates that the demand for
housing in the city is very high and the supply and demand gap is very huge. The
condominium housing units constructed by the city administration accommodates only
7.15% of the total number of people registered for condominium houses. Moreover, at
present in the urban areas of Ethiopia, the majorities of houses are below qualitative
standards and lack adequate space.
The extent of provision for water supply, electricity, and waste drainage is minimal. in
recognition of this problem, Ethiopian government guiding strategic frame work, i.e., (Plan
for accelerated and sustained development to end poverty (PASDEP) stipulated that with
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the objective of reducing slums in main cities of Ethiopia by 50% an integrated housing
development program that scales up Addis Ababa's initiative, based on lessons learned,
that integrates public and private sectors investment with micro & small scale enterprise
(MSE) development and provision of basic services were launched. Accordingly, the
ministry of work and urban development (MOWUD) had developed and integrated housing
development program. The plan envisaged for construction of 396,000 houses in 203
towns, located in seven regional states by the year 2010.
Furthermore, during PASDEP the plan envisaged the construction of a total of 170,713
classrooms, 12,249 health posts and 563 health stations. The governments and private
sectors projects in building residential houses, commercial buildings, public service offices,
education and health service sectors facilities create a substantial market for construction
inputs such as steel and steel products.
As an illustration, deformed steel bars are need for all reinforced concrete works for
foundation works, slabs and columns. EGA sheets are needed for roof covering in most
residential and commercial buildings, while used for roof and wall cladding in most of
industrial and workshop buildings. Other construction materials and equipment fabricated
from steel are also highly demanded in the course for realization of effective & efficient
construction activities.
Regarding building construction for factory, service and investment activities, during 1993
-2006 at national level (for example) is a total of 19,363 investment projects involving Birr
229.28 billion capitals were licensed by the Ethiopian Investment Agency and regional
investment offices. Of the total licensed projects, 17,310 (or 89.4 percent) were domestic,
1,955 (or 10.1 percent) were foreign, and 96 (or 0.5 percent) were public. In terms of
investment capital, Birr 140 Billion (or 61.1 percent) were domestic, Birr 63.5 billion (or
27.7 percent) were foreign and 25.67 billion birr (or 11.2 percent) was public. During the
period of analysis, the number and investment capital of approved projects has registered
an average annual growth rate of 25% and 32%, respectively. As a result of the various
incentives provided by the government, the high growth rate of investment activity
witnessed in Ethiopia during the past several years is expected to continue at an
accelerated rate in the approved second five years growth and transformation plan (GTP)
to transform and double the GDP within the coming five years..
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C) Trends in Infrastructure development
Road Construction, Electric power supply and development (from huge damps like the
Renaissance Dump, from geothermal, wind and solar energy), water and sanitation supply
activities and development, irrigation activities and development, and rail way
construction projects are given due attentions in the approved five years plan for growth
and transformation of the economy. During implementation of such diversified and huge
projects a considerable amount of steel profiles and products from steel profiles are
demanded.
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e) Population growth and urbanization
Based on the third national population and housing census conducted in 2007, the
population of Ethiopia was estimated to be around ninety million now.
The Census also revealed that about 83 percent of the population resides in the rural areas,
while 17 percent were urban dwellers. The country is among the high fertility rate of about
six children per woman. The central statistical authority of Ethiopia projected the country's
population to be over 100 million by the year 2020, while the World Bank projected the
country's population to be over 120 million by the year 2020. This implies that the
population w-ill double in a quarter of a century and may triple well before year 2050.
As indicated in the Approved Growth and Transformation Program {GTP} of Ethiopian
economy the current agricultural led economy will transform to industrial led economy.
The population growth indicated above and the economic directions approved by the
government will trigger faster urbanization in Ethiopia as in any developing countries. In
fact, according to the United Nations population projection, the proportion of urban
population in the country will be 26 percent by the year 2015 and 34 percent by the year
2025. {UN 1987}
Thus, from the above discussions, it can be concluded that there are many factors which
imply that there will be high demand for steel profile products and products from steel
profiles, like construction equipment’s, household and office furniture.
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2.6. Demand -supply gap and market share
According to the information obtained from Ethiopian Investment Commission, a total of
19 companies had permits in the production of steel profiles and other products partially
similar to the envisaged project. Out of this company, only eight companies are in the
operation phase currently. They are (as mentioned earlier)
a. Zukula steel Roll mill with annual estimated capacity of 20,000 tons.
b. Ethiopian steel factory with annual estimated capacity of 10,000 tons
c. Abysnia integrated steel industry with annual estimated capacity of 30,000 tons.
d. Habesha Deformed steel bars manufacturing PLC with annual estimated capacity of 5,000 tons
e. Yesu Deformed Steel Bars making line ( wing) with annual estimated capacity of 5,000 tons.
f. Walia Deformed steel bars manufacturing line (wing) with annual estimated capacity of
5,000 tons.
g. Eastern Steel industry with annual estimated capacity of 30,000 tons
h. Steel industry with annual estimated capacity of capacity of 50,000 tons
On the other hand, most of the remaining licensed companies are under pre
investment stages.
Due the problem mentioned earlier, all the above operating eight factories are producing
only around 78,000 tons per annum, which is only about 50% of their total production
capacity. Assuming that they improve their production performance by 10% every year
from where they stand now, the local production is calculated as depicted in 2nd column of
table below.
Projected Local Projected Supply Demand
Year Remark
Production [Ton] Demand [Ton] Gap [Ton]
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their maximum capacity
Existing Factories attained
2022 155,000 544,106 389,106
their maximum capacity
The demand supply gap indicates the possible production frontier that the envisaged
project can take over. It shows that there is a high-unsatisfied demand for the product in
the future which minimum average is about 350,000 tons per annum.
One should also keep in mind, as mentioned earlier, none of the above five companies
supply customized products along, with diversified and integrated Engineering services
and products so far as that of the envisaged project in this study. Supply of such customized
products and provision of special services by the envisaged project will expected to attract
more customers leading to a better market share. The market share of a company is also
influenced by a number of factors, including:-
Nevertheless, the number and capacity of new entrants may be larger than what this study
anticipated and due to the high demand for the product and service; new entrants may join
the sector.
Therefore, a moderate adjusted supply demand gap of around 60% of the demand supply
gap is proposed for the envisaged project. The estimated market share for the envisaged
project is shown in the following table bellow
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Year Adjusted Supply Supply Capacity of the Estimated Market Share
Demand Gap[ton] new project [Ton] [%]
2014 212,502 48,000 22.6
2015 214,006 64,000 29.9
2016 215,003 80,000 37.2
2017 215,258 80,000 37.2
2018 214,888 80,000 37.2
2019 214,304 80,000 37.3
2020 219,131 80,000 36.5
2021 226,297 80,000 35.4
2022 233,464 80,000 34.3
The prevailing practice of most of the manufacturers and suppliers in the country is sales
oriented only because it is mainly influenced by selling standard products or services
they readily have or get. But market development activity a manufacturer or a supplier is
expected to approach to different potential customers and try to learn their real demands
in addition to introducing the products are services they can readily provide. This
activity of approaching various customers or end users create a chance for the
manufacturer or supplier to customize some of their products and services' meet the
actual need of their potential customers keeping in mind current and future mutual
benefit of both parties. Therefore, it is highly recommended for the envisaged project, to
establish a mark, development section or division to be staffed and led by qualified
professionals for effective market development for products and services of the
envisaged project.
2.7.2 Marketing Channels
On top of effective market development, proper marketing channels are also very
important for the successful sales performance of the envisaged project. Designing of
29
market channels should also take into account each access of main potential customers in
the country.
In this regard, the company is expected to distribute its products through whole selling to
distributors in different regions. Besides the distributors, the company will open
representative office in selected and key market areas especially to introduce its
customized products and services to potential key customers.
2.8 Competitors
The main expected competitors to the products and services of the envisaged project are
mainly the imported products and the few local manufacturers mentioned earlier. As the
capacities of these local manufacturers are limited compared to the enormous demand of
the market, they are not considered as a threat to the products of the envisaged project.
They are not also engaged as such in supplying diversified products and rendering
engineering services as planned by the subject project.
On the other hand, it is also the Ethiopian Government policy to encourage local manufacturing
firms for overall advantages of the economy and job opportunity creations for citizens.
The local manufacturing are also expected to revise their management, system in order to reduce
their production cost and supply their products to the local market with competitive price,
compared to imported products.
It is the effectiveness and efficiency of the management system to be established, which will
provide competitive advantages to the envisaged project, to take and maintain considerable
portion from the prevailing large market demand for the products and services of the envisaged
project.
2.9 Pricing
At present, there are a few existing and up-coming steel industries, which means the envisaged
factory has to work within a competitive environment. In a competitive market, a straight cost and
pricing is not desirable as it is not sensitive to demand and competitors' price. Therefore,
30
competition based on going rate pricing is unavoidable as charging for a product more than the
going rate would not attract consumers and would eventually force the product out of the market.
Therefore, the envisaged project is recommended to adopt competition based pricing strategy.
The factory-gate price of deformed steel bar products has exhibited a rapid growth in the
past few years. Factory gate price of steel has increased from average of Birr 8 per kg
during April 2001 to average of Birr 25 per kg in February 2014 registering an average
growth rate of 16.35%.
However, the envisaged project, as a new entrant into the market, has to penetrate the
market by creating awareness first. Therefore, the objective of the pricing policy should be
to gain a foothold in the market, curve out a sizable market share and sustain a reasonable
profitability, which at the initial or be achieved through charging of lower prices that could
influence consumers. Therefore, the recommended factory-gate price for the envisaged
project's products is Birr 24.50 per kg of steel.
On the other hand, Pricing of the products of the project under consideration is based on
the Cost of raw material inputs, Cost of skilled and unskilled labor, Cost of indirect inputs,
and magnitude of different taxes and Profit margin of the company.
The company is expected to conduct thorough study of the price trend of the world steel
market and purchase in bulk the raw materials it may require during lower price season
of world steel price from selected vendors. Skilled and unskilled labor is also available in
comparatively cheap price in Ethiopia. There are also duty free privilege to import plant
machinery /capital items/and Billets (hot rolled Raw materials). Besides, newly
established manufacturing firms are exempted from profit taxes for five years from the
date of starting production.
All the above activities and privileges combined with effective and efficient management
will pave the way for the envisaged project to produce its products at relatively lower
production costs, supply to the local market at a market-penetrating price at initial stages
and continue to establish its market brand loyalty.
a)
31
Chapter 3.TECHNICAL STUDY
Receiving of raw materials inputs, storing of raw materials in the waiting area near the
production facilities, handling in-process materials, finished products and dispatching of
finished goods on customer trucks or owners trucks for transporting products to central
ware house for product distribution are also given due attention in designing the
preliminary plant layout. The plant layout is also designed in such a way to minimize
unnecessary movement of materials and operators in the production facilities.
32
3.3 Production Processes flow chart and their description
33
3.3.2. Production process flow chart for EGA sheet forming line
Step 1: Select appropriate type of galvanized and pre-coated coil or galvanized coil
with desired thickness to form the EGA sheet.
Step 2: Load the selected type of coil on to the uncoiler of the EGA profile forming
machine
Step 3: With the help of serious of various types of rollers, the forming machine
forms the fed coil into EGA profile (corrugated with different predefined
shapes).
Step 4: The formed EGA sheet is cut to the desired length with, the help of integrated
cutter on the end of the EGA former.
Step 5: The cut to size EGA sheet is piled on a piler and ready for packing, storing
and dispatching on customer trucks.
Step 1: Slitting HRC still coil to the desired width for a C-Profile to be formed
Step 2: Load the Slatted coil of the desired width on the uncoiled of the C-forming
machine to feed to the C-former
Step 3: With the help of properly selected and arranged rollers the C-formers
gradually forms the fed flat band of slatted coil into a straight
Step 4: The integrated cutter at the end of the C-forming machine cuts the C-profile
to the desired lengths, and the final product is ready to be transported to
storage area or next process or for dispatching on customer trucks.
34
steel bars.
35
production facilities and inputs are maintained as assumed in the design phase.
The rated or practical production capacity is the attainable, capacity under actual
operating conditions considering all practical deviations of all parameters and inputs from
those assumptions in the design phase.
The production capacity for each of the production units in this study are rated capacities
given on an hourly basis, and 20 effective operation hours (the plant is assumed to be
operated for 24 hours) [on average, 4 hour is assumed daily for Rolling
adjusting(changing) and minor maintenances] per day are considered for preparation of
the subsequent production plan. Hourly production capacities are preferred in this study
because it is the most commonly accustomed practice for processing facilities. One can
also easily calculate the daily, weekly, monthly, quarterly or yearly capacity simply by
multiplying the hourly capacity by the number of effective operation hours in the desired
period as the base for capacity determination.
The capacity of deformed steel bars manufacturing units under this study also depends on
the speed of operation and sizes of the product.
Considering production of deformed bar with thinner diameter for example, it will take
longer time to reduce to such a diameter by passing many times through reducing rollers.
Even though a longer deformed bar (hence more number of products) can be made from a
single ingot (or billet) than when rolling deformed bars with larger diameter, the tonnage
of the finished product is very small compared to that of larger diameter produced in a
given production period. Therefore, only average values are assumed to estimate the
hourly capacity of the production facilities in this study.
It is also worth noting that the average or rated capacity of major production units of the
deformed steel rolling mill plant are given in suppliers technical specifications along with
their price quotation and annexed to this technical study.
Annual calculated average production capacity were calculated and presented in table
below. The actual attainable capacity can be higher than this average values if the
production machines are engaged in manufacturing of products with thicker diameters,
operated by well-experienced operators. The frequency of switching between different
36
sizes of products will also affect the capacity, the lesser the frequency the higher the
capacity due saving in roller die changing time. The reverse of these situations, on the
other hand, leads to reduced capacity performance than the calculated average. However,
for the purpose of this feasibility study, the calculated average production capacities
mentioned in table below are reasonably assumed to be attainable and considered as a
rated production capacity.
From the calculated average annual production capacity, the annual production plan for
every year of the estimated project life which is 10 years, starting from the end of its
commissioning is given in table below. In the first year after commissioning, only 70% of
the calculated average capacity is assumed to be achieved due to running in problems and
operators training.
Annual Calculated Average
S.No. Product type
Production at full Capacity
1 Wire Rod 8,000 tons /year
2 Reinforced Steel Bars 12,000 tons /year
3 EGA and Corrugated IronSheet 5,000 tons/year
RHS, Iron Sheet, Steel Tube, Steel Rod, Angle
4 8,000 tons /year
Iron, steel Tube, Steel Rod, Angle Iron,
d) Pre - coated sheet in coils with Z22- Z27 and thickness 0.2mmto O.4mm (for EGA
sheet making only)
Based on the annual production plan given in table assuming 20% wire rods and
37
deformed bars are to be made from grade 60 imported Billets and assuming 5% wastage
for steel scraps and 1% wastage for other imported materials, the average annual raw
material requirement given in table below.
Annual raw material requirement plan in tons
Type of raw material Production Year
Year 1(ton) Year 2(ton) Year 3(ton)
1 Steel craps 7200 9600 12000
2 Billets 1500 2000 2500
3 Galvanized or pre-coated coils 3000 4000 5000
4 Raw Materials for Engineering
1800 2400 3000
Products
1 Medium Size Hydraulic Capable of pressing steel scraps into bales of 2Sets
Baling Press 5O-60kg Complete with all accessories (like oil
pumps, heat Exchangers, and feeding hopers
etc)
2 Electrical Careless With capacity of 2000kg per heat and 13Sets
High Frequency approximate Transformer Power of 1250KW or(16units
Induction Furnace (for (for each set) , approximate Output Voltage: )
Steel Scraps Melting) 660V, 380V-2 With complete Electrical Control
Systems and other auxiliaries
3 Re-Heating Furnace With inner clear width of 1.5 meter, with 1set
burners using heavy fuel oil(HFO2tons/hr.
Including One complete set), and heating
capacity of at least of hydraulic pusher for
billet feeding, heat recycling system, discharge
side pusher (or roller conveyor)
38
4 Re-Bar (Steel) Rolling Capable of rolling Ingot (Billet) size with 1set
Mill (With minimum maximum size of100xl00x1200mm. Series or
Capacity of 50,OOO parallel type Rolling Mill with only one main
TPA( 10TPH) drive Electrical motor and one gear Box
driving several rollers in series stands With
complete Electrical systems and all accessories
(like Cooling, exhaust systems) Including also
discharge conveyors (running out roller
conveyors), 36 meters long cooling bed cold
sheer machine, roller rethreading lathe
machine, and all necessary work shop machine
and hand tools for maintenance and Smooth
operation of a steel rolling mill.
5 Cold Forming Machine Capable of forming and cutting to size coated 1 set
For EGA Sheet Making cold rolled coils of thickness ranging from
for roof and walls 0.2mm to 1.0mm to produce EGA sheet of
cladding various profiles
Estimated cost for access road building, the project consumptions of electric power, water,
fuel, oil, grease and telephone are included under this topic.
39
3.8.1 Access road requirement
The project site is not known yet. Therefore, it is not possible to estimate the access road
cost.
3.8.2 Electric power requirement
The electric power required when all the production line operates at their rated capacity
is estimated and given in the following table.
Estimated power requirement of main production machinery auxiliary equipment
S.N. Machine/Equipment description Estimated Power
requirement
1 Medium Size Hydraulic Baling Press 9KW
As the fuel cost is escalating from time to time, the option of installing diesel generator for
standby power generation is not considered, as the price of products made by power from
the expensive fuel will not be competitive in the market.
3.8.3 Water
Water is required for cooling of the induction furnace systems, the reheating furnace
system, the deformed bar rolling system and for sanitation purposes in the project site. As
40
water for machine cooling is circulated, only make up water for lose in the process are
required, once the system is completely full. Hence about 200 cubic meter of water is
estimated to be consumed every month for machine cooling water make-up, car washing,
worker washing and all sanitary purpose in the envisaged project. Taking the average flat
rate of 6.37Birr per cubic meter, the annual water consumption is calculated to be Birr
15,288.
Fuel is basically required for reheating furnace (kerosene or 'buta' gas) and for fork lift
(Diesel fuel) which is required for unloading and moving of raw materials for the
envisaged project, as the option of using power from own diesel generator is already
omitted due to its high cost.
Oil, grease and coolant are required for plant machinery lubrications and cooling besides
the requirement for lubrication of the forklift. The total annual costs for such inputs are
assumed to be birr 4,000,000.00.
3.8.5 Telephone
Telephone line plays crucial role in conducting project implementation, operation and
marketing. As it is obviously known, telephone line is required for communication, fax,
internet browsing and e-mailing
List of the minimum requirement of office furniture and equipments for the project is
given in table below
41
1.7 Copier, Fax, printer & scanner machine i.e. 4 in one 1 unit 6,000
2 Administration and Finance Division Head Office
2.1 Table with drawers 1unit 3,000.00
2.2 Swivel chair 1 unit 2,000.00
2.3 Coffee table 1 units 500
2.4 Guest Chairs 2 unit 600.00 x 2
2.5 Computer with printer 1 set 10,000.00
2.6 Shelf 1 unit 5,000.00
3 Production and Technical Division Head Office
3.1 Table with drawers 1 unit 3,000.00
3.2 Swivel chair 1 unit 2,000.00
3.3 Coffee table 2 units 500
3.4 Guest Chairs 1 unit 600.00 x 2
3.5 Computer with printer 1 set 10,000.00
3.6 Shelf 1 unit 5,000.00
4 Commercial Division Head
4.1 Table with drawers 1 unit 3,000.00
4.2 Swivel chair 1 unit 2,000.00
4.3 Coffee table I 2 units 500
4.4 Guest Chairs 1 unit 600.00 x 2
4.5 Computer with printer 1 set 10,000.00
4.6 Shelf 1 unit 5,000.00
Total 65,100.00
Though ultimate effort is made and intensive care is taken to avoid any injury and
accidents on workers, plant machinery and equipment, it is mandatory to buy insurance
coverage for all company production facilities and personnel’s.
42
43
3.11. Vehicles Requirement
List of the minimum requirement of office Vehicles for the project is given in table below
S.No Type of quantit Unit price Total price
y
1 V 8 or similar standard car for general 1 2000,000 2000,000 duty free
manager
2 4WD Double cup for departmental heads 3 800,000 2,400,000 duty free
3 Truck 3 2000,000 6000,000 duty free
4 Employees Service 2 1000,000 2000,000 duty free
Total 12,400,000
3.12 Project Implementation Schedule
Year Of Implementation
S/N Activity Description 2019 2020 2021
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
1 Completion of visibility study
2 Project change
11 Trial production
44
45
Chapter 4ORGANIZATION AND MANAGEMENT
General Manager
MIS Service
46
4.2.3 Administration and Finance Division
The Administration and Finance Division is responsible for planning, organizing,
coordinating controlling of the tasks of recruiting, training and development, performance
appraisals, keer records of the work force and other activities of the human resource
management on one part, and is also responsible for the planning, organizing,
coordinating and controlling of the financial and property movements and record keeping
of the same for the company on the other hand.
4.2.4 Production and Technical Services Division
Production and Technical Services Division is responsible for planning, organizing,
coordinating and controlling of the production process and plant machineries, equipment
and vehicles maintenance services.
The Production and Technical Services Division is also responsible for preparation of
technical specification for any technical items to be purchased and renders any other
technical services whenever required by any work unit of the company.
47
Property record keeping and materials management and stores keeping activities are also
the responsibility of General accounts and costing section in this specific organizational
structuring approach.
4.2.8 Production Section
The Production Section is responsible for daily planning and execution of production
activities in accordance with plan of its respective division. The production section is
responsible for daily coordination of manpower and plant machinery for effective and
efficient operation & production performance of the company.
4.2.9 Maintenance and Technical Services Section
The Maintenance and Technical Service Section is responsible for preparation and
implementation of preventive and window maintenance plan in line with the annual
maintenance plan of its respective division. Regular inspections, preventive and break
down maintenance activities are expected to be carried out rigorously by the qualified
technical crews under this section.
Technical services which may be requested by other work divisions like commercial
division is also to be take care by the technical professionals in the maintenance and
technical services section.
4.2.10 Marketing and Sales Section
The Marketing and Sales Section is responsible for planning and execution of all marketing
and sales activities in line with plan of its corresponding division. Intensive market
research and development, efficient and effective sales and customer service activities are
few of the many activities to be handled by the marketing and sales section for overall
marketing and sales performance of the company.
4.2.11 Foreign and Local Procurement Section
Planning and execution of procurements of raw material inputs, spare parts, consumables
and technical services from foreign and local markets are some of the responsibilities
vested on the foreign and local procurement section.
The section is also responsible for gathering and processing relevant information to make
proper vendor selection for efficient and effective purchase of inputs or services. Relevant
48
record keeping and retrieving whenever required is also expected from the staff members
in the section.
49
5.4 Accountant 8 2,000.00
5.5 Store Keepers 4 1,500.00
Sub total 17 37,000.00
6 Production And Technical Service Division
6.1 Division Head 1 10,000.00
6.2 Mechanical Engineer 6 5,000.00
6.3 Electrical Engineer 6 5,000.00
6.4 Technical Clerk 6 1,500.00
Sub total 19.00 79,000.00
7 Production Section
7.1 Section Head 1 5,000.00
7.2 Production Clerks 6 1,200.00
7.3 scrap Press Machine Operators 12 2000
7.4 Scrap Press Machine Operator Assistants 22 1,500.00
7.5 Scrap Melting Furnace Operators 26 2,500.00
7.6 Ingot Casting Helpers 25 1,500.00
7.7 Reheating Furnace Operators 8 2,500.00
7.8 Reheating Furnace Operator Helpers 25 1,500.00
7.9 Rolling Mill Operator 20 3,000.00
7.1 Rolling Mill Operator Helpers 80 1,500.00
7.11 Finished Product Binding & Loading Works 60 1,500.00
7.12 EGA Sheet Forming Machine Operators 4 2,000.00
7.13 EGA Sheet Forming Machine Operator Helpers 16 1,000.00
7.14 C-Section Forming Machine Operators 4 2,000.00
7.15 C-Section Forming Machine Helpers 40 1,000.00
7.16 General Workshop Chief Mechanical Engineers 5 8,000.00
7.17 General Workshop Chief Electrical Engineer 2 8,000.00
Sub total 356.00 627,200.00
7.18 General Workshop Mechanical Designers 5 5,000.00
7.19 General Workshop Electrical Engineers 4 5,000.00
7.2 General Workshop Mechanics 15 2,500.00
7.21 General Workshop Electricians 7 2,500.00
7.23 General Workshop Welders 15 2,000.00
7.24 General Workshop Helpers 25 11,500.00
7.25 Over Head Crane Operators 8 1,500.00
7.26 Production Workshop Cleaners 12 1,000.00
Sub total 91 441,500.00
8 Maintenance and Technical Service Section
8.1 Section Head 1 5,000.00
8.3 Mechanical Maintenance Forman 3 3,000.00
8.4 Electrical Maintenance Forman 3 3,000.00
50
8.5 Mechanic 10 2,000.00
8.6 Electrician 10 2,000.00
8.7 Welders 10 2,000.00
Sub total 37 83,000.00
9 Commercial Division
9.1 Division Head 1 5,000.00
9.2 Senior Secretary 2 1,500.00
9.3 Customer Handling & Promotion Officer 3 2,000.00
Sub total 6 14,000.00
10 Marketing and Sales Section
10.1 Section Head 1 3,000.00
10.2 Market Research and Development Expert 1 2,000.00
10.3 Sales Officer 6 1,500.00
Sub total 8 14,000.00
11 Foreign and Local Procurement Section
11.1 Section Head 1 3,000.00
11.2 Transit and Foreign Purchaser 2 2,000.00
11.3 Purchaser 4 1,500.00
Sub total 7 13,000.00
Grand Total 627 1,472,700
From 627 permanent employees 357 are skilled and 270 are unskilled and 223
employees casually which are 8 of them are skilled and the remaining 215 are unskilled.
The data regarding casual workers are not included in this section, because it is included
in the running costs.
51
CHAPTER 5.FINANCIAL ANALYSIS
52
5.4 Working Capital
The working capital requirement of the project during operation is calculated on the
basis of the minimum days of coverage needed for the different elements of the
working capital. Hence, the minimum days are specified in table 5.1 as follows:-
Sr. No. Item Minimum Days of Coverage
1 Raw Materials 120 days
2 Work in progress 30 day
5.5 Discounting
The total investment and equity capital of the project are discounted at 10 per cent over
the life of the project.
The financial implication of the project and its viability is evaluated and tested based on
the investment plan detailed out in various parts of this report and the above
assumptions. Accordingly, the financial analysis results are as discussed below.
53
5.8 Investment Cost
The total investment cost of the project is estimated at Birr 282,601,474 (See Table 5.2).
From the total investment cost the highest share (Birr 224,924,186.00 or 79.6 %) is
accounted for fixed investment cost and (Birr 57,677,288.00 or 21.4 %) is accounted for
Initial Working capital.
54
5.9 Cost of Production
The total cost of production at 100% capacity utilization will estimated at Birr
1,415,182,340.00.
Source of capital
Total investment capital
Year Equity capital [30%] long-term loan [70%] [Birr]
One 84,780,442.20 197,821,031.80 282,601,474
Total 84,780,442.20 197,821,031.80 282,601,474
55
5.12 Cash Flow
The projected cash flow of the envisaged project shows that the project would generate
positive net cash flows throughout the operation years. Cumulative cash flow generated by
the project towards the end of the operation will amount to Birr 4,312,686,332.12
5.14 Profitability
Based on the projected profit and loss statement shown in Annex V, the project will
generate a profit throughout its operation life. Annual net profit after tax increases from
Birr 332.9 million at the beginning of the project to Birr 698.4 million at the end year of
56
project life. Net profit as percentage of sales revenue lies between 23% to 29%, which is
reasonably high. Net profit to equity and net profit to total investment or return on
investment (ROI) are also very attractive.
Brake Even Sales Value = Fixed Cost + Financial Cost= Birr 130.9 million Variable Margin ratio
(%)
Brake Even Capacity utilization = Brake even Sales Value X 100 = 5.42% Sales Revenue
57
CHAPTER 6. SOCIO-ECONOMIC AND ENVIRONMENTALASPECTS
The implementation and operation of the project creates at least 627 permanent and 223
temporary employment opportunities for the members of the nation. It will also play great
role in making available various steel products at a competitive prices for micro and small
scale enterprises, thereby creating and sustaining additional job opportunities for a
portion of the nation indirectly.
The processing of steel products locally will also increase the overall value adding
capacity of the country and pave a way for technology transfer.
The implementation of the project and supplying of locally processed steel products will
also have great contribution in the country's effort for import substitution (saving hard
currencies) and overall economic growth of the nation.
As the process involved in the production of ingots, various sizes of plain and deformed
steel bars, EGA sheet, sections and Engineering products involves mainly steel, cutting and
forming into different profiles and shapes combined with high frequency electric welding
technique and no any involvement of hazardous chemicals as such or by products, the
project is environmentally friendly. The scraps and defective products evolved from the
process are of considerably high value and recycled without causing any damage to the
environment. The smoke from the melting furnaces will refine by appropriate equipment
before ejected to the environment. Hence, the impact of the project on the surrounding
environment is very low.
58