March 16, 2022

I. COMPANY PROFILE

Company / Applicant name A Cement Company

Company registration number CS201712345
Registration Date July 17, 2017
TIN 009-101-112-000
Project's location
Street National Highway
Barangay Brgy. Ilihan
Municipality / City Magsaysay
Province Lanao del Norte
Zip code 9221
IPA X IPA
Specific description of the
activity being registered New Producer of Cement (No clinkering facilities)
3. All Qualified Manufacturing Activities including
Agro-Processing

This covers the manufacture of industrial goods and

processing of agricultural and fishery products, including
Halal and Kosher food, into (a)
semi-finished/intermediate goods for use as inputs in the
production of other goods, or (b) finished products or
consumer goods for final consumption. xxx

All projects for the manufacture of industrial goods and

SIPP classification
processing of agricultural and fishery products must
utilize up-to-date and market-appropriate technology,
and must comply with the PNS, as applicable.

In addition, they must satisfy any of the following criteria

to be qualified for registration:
a) Will manufacture/process products, the
importation of which grew by an annual average of at
least 10% from 2017-2019, or the share of imports to
total apparent demand is at least 60%; or
b) xxx; or
Page 1 of 6
 c) Will manufacture/process products that will
utilize new technology and/or world-class design; or xxx

Cement projects that will qualify for registration with full

incentives must at least start from clinker production.
Projects with no clinkering facility may qualify for
registration provided entitlement to the ITH is limited
to two (2) years only, and at least 25% of the clinker
requirement is sourced from domestic manufacturers if
produced in sufficient quantity. xxx

Manufacture of other
PSIC2 sector code 23 non-metallic mineral
products
PSIC5 sector code 23940 Manufacture of Cement
Manufacturing or
Manufacturing
non-manufacturing

II. BACKGROUND

A. The A Cement Corporation (ACC) proposes to register and apply for incentives
for its new project that involves the construction of a Line 1 cement grinding
and packaging facility, and a wharf and port facility. The total project cost is
P7.5 billion and will be located on the National Highway, Barangay Ilihan,
Magsaysay, Lanao del Norte.

B. The ACC undertakes the construction of a Line 1 cement grinding and

packaging facility, and a wharf and port facility. The project will have an
overall capacity of 1.5 million MT of finished cement, or equivalent to 37.8
million cement bags, per year.

C. The project cost is P7.5 billion, 52% or P3.90 billion of which will be funded
through equity and the remaining 48% or 3.60 billion shall be financed
through a bank loan with a 6.5% interest rate. (See Table 2)

Table 2.
Project financing (in billion pesos)

Particulars Amount Percent

Equity 3.90 52%

Loan 3.60 48%

Total 7.50 100%

Page 2 of 6
D. Based on the company’s projections, the project is expected to generate at
least 130 jobs including the number of employees from the administrative
works in the first year and none for the succeeding years of its commercial
operations. (See Table 3)

Table 3.
Job generation

Classification Y1 Y2-Y5 Total

Direct labor 44 0 44

Indirect labor 64 0 64

Selling/admin 22 0 22

Total 130 0 130

Note: Year 1 (Y1) or 2022 is the start of commercial

operation.

E. For its capital equipment, the ACC will source 75% of its equipment locally
and 25% from abroad, amounting to P414 million and P391 million,
respectively. As of August 2021, equipment imported from Italy, Germany,
Denmark, and China are all installed and the firm has already paid the duties
for importation. For the equipment to be acquired in the country, all
equipment is already acquired and installed.

F. Cement manufacturing utilizes raw materials such as clinker, limestone,

pozzolana, gypsum, and fly ash. ACC will source all of its raw material in the
country, except for clinker which is 75% to be acquired from Indonesia and
Vietnam, while the remaining 25% will be sourced locally, from B Cement in
Pangasinan. (See Table 4).

Table 4.
The average projected cost of raw materials for the first
five years of operation (in billion pesos)

Particular Average % Distribution

Local 2.61 42%

Imported 3.57 58%

Total 6.18 100%

Page 3 of 6
 G. The company has started the construction of its cement plant and acquired
cement millings and other related equipment in 2018 but has not yet started
its commercial operations on the manufacture of cement. Hence, the project
may qualify as a new project.

Eligibility under the 2020 Investment Priorities Plan (IPP)

1. The proposed project of the ACC is qualified as a manufacturing activity (“All

Qualified Manufacturing Activities including Agro-Processing”) under the 2020 IPP,
which is the transitional Strategic Investment Priority Plan (SIPP). The firm will
produce Type 1 (Ordinary Portland Cement)1 and Type 1T (Ternary Blended
Cement)2 that is primarily used for the different infrastructure constructions in the
country.

2. The period of availment of tax incentives under Section 296 (B) of the CREATE Act,
the ACC, a domestic market enterprise, may entitled to 4 to 6 years income tax
holiday (ITH) and 5 years enhanced deductions.

3. Since the proposed project has no clinkering facility, it may qualify for registration
provided entitlement to the ITH is limited to two (2) years only.

III. PROJECT DETAILS

Project timetable and cost (in PhP)

Activity Year Particulars Amount
Licenses, permit, registration Pre-operating 59,638,842.75
2018 expenses
Project site preparation and 2018-2021 Land 33,691,701.75
development Land 164,032,759.50
improvements
Building 4,401,284,824.50
Leasehold 0.00
improvements
Other expenses 232,938,181.50
Acquisition and installation Machineries 1,460,099,055.75
of machinery & equipment and equipment
2018-2021 Others 756,237,630.00
Testing and commissioning 2022-2022 70,764,023.25
Start of commercial November 321,312,981.00
operation 2022 Working capital
Total project cost 7,500,000,000.00

1
Most commonly used cement product in the Philippines for all standard construction solutions.
2
Used for general construction (residential, commercial and industrial) and high-performance concrete.
Page 4 of 6
Project financing

Source Amount Percentage

Equity 3,928,125,000.00 52% Interest rate 6.5%

Payment
Bank loan 3,571,875,000.00 48% period 7 years

Total 7,500,000,000.00

Projected production and sales schedule

Year Production Sales volume Average selling Projected sales value

volume (in 40kg bag) price per bag (in P)
(in MT) (in P)
1 1,512,000,000 37,800,000 172.25 6,511,050,000.00
2 1,512,000,000 37,800,000 175.01 6,615,226,800.00
3 1,512,000,000 37,800,000 177.81 6,721,070,460.00
4 1,512,000,000 37,800,000 180.65 6,828,607,500.00
5 1,512,000,000 37,800,000 183.54 6,937,865,220.00

List and Breakdown of Cost of Raw Materials (Y1-Y5)

Source Y1 Y2 Y3 Y4 Y5
a. Local Raw Materials
Davao/
Limestone Bohol 242,888,868 208,328,932 254,560,124 260,621,554 269,243,348
Pozzolana Davao 116,085,960 177,959,777 181,874,892 185,876,140 237,456,768
Clinker Pangasinan 960,213,184 958,579,852 956,382,749 978,653,651 961,587,944
Fly Ash Davao 31,237,407 31,924,630 32,626,972 33,344,765 27,262,680
Gypsum Leyte 100,230,122 102,480,725 104,787,060 107,150,661 139,456,693
Paper Bags Manila 404,982,789 413,892,410 422,998,043 435,186,027 441,814,688
Sub Total 1,855,638,330 1,893,166,326 1,953,229,841 2,000,832,798 2,076,822,121

b. Imported Raw Materials

Indonesia/
Clinker Vietnam 2,644,117,975 2,644,924,515 2,639,144,422 2,739,257,341 2,729,382,417
Sub Total 2,644,117,975 2,644,924,515 2,639,144,422 2,739,257,341 2,729,382,417
Total Raw
Materials 4,499,756,305 4,538,090,841 4,592,374,262 4,740,090,139 4,806,204,538
c. Direct
Labor Cost 7,812,750 8,125,260 8,450,270 8,788,281 9,139,813
d. Total
Overhead
Cost 823,223,114 850,012,821 881,694,611 901,680,221 917,406,887
e. Total
Production
Cost 5,330,792,169 5,396,228,922 5,482,519,143 5,650,558,640 5,732,751,237
Page 5 of 6
Jobs Generation

Number of Personnel
Classification
Y1 Y2 Y3 Y4 Y5
Direct Labor 44 44 44 44 44
Indirect Labor 64 64 64 64 64
Selling/Admin 22 22 22 22 22
Total 130 130 130 130 130

Cost of Machinery/Equipment (Brand new)

Imported Component
Total Cost (Php) Local Component
(Php)
Machinery/Equipment 1,460,099,055.75 674,842,898.40 785,256,157.35

Also attached herewith are the following:

● Annex “A” - Projected Balance Sheet
● Annex “B” - Projected Income Statement
● Annex “C” - Projected Statement of Cash Flows
● Annex “D”- Projected Cost of Goods Sold
● Annex “E” - Payroll
● Annex “F” - Operating Expenses
● Annex “G” - Machinery and Equipment
● Annex “H” - Forex savings on Displacement of Cement Imports by Locally Produced
Cement

Page 6 of 6