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UTILITIES 39-11 39-11 39-12 V. MANPOWER REQUIREMENT B. PRODUCTION COST C. III. ENGINEERING 39-12 39-12 39-13 VI.TABLE OF CONTENTS PAGE I. FINANCIAL ANALYSIS A. TECHNOLOGY B. MATERIALS B. MARKET STUDY B PLANT CAPACITY AND PRODUCTION PROGRAMME 39-3 39-3 39-4 39-4 39-11 IV. MATERIALS AND INPUT A. TRAINING REQUIREMENT 39-14 39-14 39-14 VII. II. MANPOWER AND TRAINING REQUIREMENT A. ECONOMIC BENEFITS 39-15 39-15 39-16 39-17 39-18 . TOTAL INITITAL INVESTMENT COST B. SUMMARY PRODUCT DESCRIPTION AND APPLICATION MARKET STUDY AND PLANT CAPACITY A. FINANCIAL EVALUATION D. TECHNOLOGY AND ENGINEERING A.
It has a high temperature resistance property. for partition and for lining various types of kilns and furnaces used in iron and steel plants.brick and sand . The present demand for the proposed product is estimated to be 309. discounted at 10. .430 pieces by the year 2010. The plant will create employment opportunities for 27 persons.000 pieces of bricks per annum. The one produced in Ethiopia is of hard and softer type having a size of ( 6x 12 x 25 ) centimeters. cement and fertilizer. It is usually red in colour because of the selected clay ingredient for which the bricks are made.298.5%. petrochemicals.07 million.lime bricks. SUMMARY This profile envisages the establishment of a plant for the production of 600. bricks can be of different types such as fire. The total investment requirement is estimated at Birr 4. The project is financially viable with an internal rate of return ( IRR) of 13% and a net present value ( NPV) of Birr 654 thousand. PRODUCT DESCRIPTION AND APPLICATION Brick is physically expressed as a rectangular prism of clay or soil which has been burnet in a kiln.39-3 I. The standard size of bricks indicated in some literatures is about ( 6x10x20) centimeters. The principal application of bricks is for construction in buildings. out of which Birr 2.366 pieces and it is projected to reach 1. II. Depending on the type of raw materials used for the manufacture. glass and ceramics and other chemical industries extensively.4 million is for plant and machinery.
1. . rather than for structural purposes. Although brick has high strength and high aesthetic value in building construction.39-4 III. Most residential and high rise buildings in Addis Ababa and major urban areas are built with hollow block as a walling material. when bricks are used in building structure. it is most of the time for facing (appearance) purposes at the front side. The low utilization of bricks for building residential houses could also be inferred from Table 3. MARKET STUDY AND PLANT CAPACITY A. MARKET STUDY Present Supply & Demand The demand for bricks is a derived demand of mainly building construction.1 on urban housing stock. in kitchen due to their high heat resistance and also in industrial and commercial construction. it is being gradually substituted with blockets because of high cost per unit of construction and high cement consumption in relation to blockets for the same unit area. Bricks are applied in construction of kilns for bakeries.
925 and those with bricks wall amounts to 222.1 that the total housing stock in the three areas identified equals to 123. However.482. This suggests that one out of 1000 houses are of a brick wall. the share of housing with bricks wall in the total housing stock has been estimated to be only 0.721 68242 4895 27169 27439 39439 1862 17030 1906 4877 34648 20697 239. . commercial and industrial constructions. the supply of bricks as reflected from the official statistics is not increasing over the past many years.190. BY CONSTRUCTION MATERIALS OF WALL (URBAN) Total Urban Region Housing Units Tigray Afar Amhara Oromiya Somali Bensishangul-Gumuz SNNR Gambella Harari Addis Ababa Dire Dawa Country Total 115421 20160 285203 406169 70088 8499 142212 6268 17455 134742 36382 1.18 per cent. The larger proportion of application of bricks is in high rise building. Population Housing Census If we assume Somali. the 1994. It can be seen from Table 3.291 543 399 3409 4775 1418 131 1029 267 834 23076 4514 40.1 HOUSING UNITS OF REGION.182 Others Source:.39-5 Table 3. Its application is also more in urban areas than in rural areas.CSA.589 534 24 229 1996 30 17 90 10 122 9163 70 12.395 Bricks Material of Wall Blockets Wood and Mud 46102 14842 254396 371986 38186 6489 124057 4085 11622 307855 11101 1. Harrari and Dire Dawa as potential users of bricks.
Moreover. due to shortage of cement and transport cost over a long distance construction materials are expensive in the region. the two bricks factories are over 30 years old and are operating beyond their technical life.CSA. namely Ethiopia Bricks.39-6 Table 3.) 1990 1991 1992 1993 1994 1995 1996 1997 21680 21198 19970 19532 19292 15664 19876 19789 Source:. Ceramical Bricks and Addis Shekla. . Addis Shekla has suspended production following privatization while the remaining two are still operating. Transporting and selling bricks over longer distance is not an economical operation. Survey of the Manufacturing and Electricity Industries. In view of the relative stagnation of supply of bricks and costs related to transporting it over long distances the demand situation has been considered within the regional context and neighboring regions. The Somali Region is so large in terms of land mass that supplying bricks to different urban areas of the region from a single source will not be economical. there are small privately owned bricks factories but their production is small in quantity and poor in quality. In addition to the two public owned bricks factories. On the other hand.2 PRODUCTION OF BRICKS IN ETHIOPIA Year Quantity Produced (thousand pcs. A major share of bricks supply comes from three factories.
. the following consumption coefficient were developed in consultation with professional in the field (Table 3. Though the sectoral plans of the region indicate that the sectoral projects involve construction. In addition.3 CONSUMPTION COEFFICIENT BY BUILDING TYPE Wall Area m2 Building Type Floor Area M2 Ground plus zero Ground plus one Ground plus two Ground plus three Ground plus ten 150 300 450 600 900 81 162 243 324 486 135 270 405 540 872 9396 18792 28188 37564 50376 7830 15660 23490 31320 47096 17226 34452 51678 68904 10.Bricks requirement per m2 of floor area is 58 piece for internal walls.39-7 The regional government commit a huge budget to construction and some of it may require bricks as an input. there is no information on private commercial and industrial construction in the region. In view of poor housing condition in the Somali region and an effort to develop the region by the private and public sector. and 116 pieces for external walls. it does not show number of houses constructed with bricks or hollow blocks or other construction materials. it is assumed that the demand for construction materials including bricks will increase.3). Accordingly.472 External Internal Bricks requirement Extended Internal Total Note:. Estimation of current and future demand for bricks in this study is based on specifying consumption requirements by different types of buildings as well as anticipated construction work disaggregated into different types of buildings. Table 3.
is carried out under three scenarios. the present demand for bricks has been estimated at 309.5). Table 3. which is moderately optimistic assumes that 5% of buildings will be made of bricks. . which is optimistic. The second scenario.4). (Table 3.39-8 Taking the development in the region and the surrounding regions like Harari and Dire Dawa town into account. however. The first scenario. assumes that 10% of the buildings will use bricks as wall material. Accordingly. The third scenario assumes that only 3% of the buildings will use bricks. we can arrive at the current as well as future demand of bricks in the Somali Region (see Table 3.4 PROJECTED IMPLEMENTATION OF BUILDINGS IN THE REGION (NO.366 pieces.) Year Item Ground plus zero Ground plus one Ground plus two 2001 90 60 40 2002 100 70 50 40 30 2003 120 85 65 55 45 2004 150 100 80 70 60 2005 180 115 95 85 75 Total 640 430 330 280 230 Ground plus three 30 Ground plus four 20 When the consumption coefficient established earlier are applied on Table 3. The demand estimation. the following development trends were estimated.4.
2. This reduces the negative effect of construction on the environment.221 1.777 1. The demand for bricks is also influenced by growth rate of the urban population. The cost comparison of the two material is provided in Table 3.598 22.220 Scenario 2 (5%) Scenario 3 (3%) 515.641 2.938 660.388 17. An important determinant of demand for bricks in Ethiopia. .343.640.469 1.39-9 Table 3.1 reveals. hallow block. is amply available and very much cheaper than bricks.5 CURRENT AND FUTURE DEMAND OF BRICKS Year 2001 Base year (105%) 2002 2003 2004 2005 10.197 13.e.389 806.764.687 26.031.254.610 309.218 2.6.343 676. Studies made on effect of economic growth on the construction industry indicated that construction activity increases faster than growth in the economy as a whole by 20%.775 1.312.320. including manufactured bricks. however. will replace traditionally used natural building materials.686.867. in Ethiopia housing construction is mainly based on naturally available materials such as wood and mud. With progress in development.207. is the price and availability of substitute product.366 Note: the base case refer to scenarios where all buildings are made of bricks plus 5% wastage allowance. which is estimated to be 4% per annum.369 396.033 Scenario 1 (10%) 1.225.060 882.030 529. modern building materials.127. i. Demand projection As the data in Table 3. The most notable substitute to bricks.
Apart from the price factor. Table 3.5 (b) Birr/piecs 2.6 shows that for the same square area the cost of using bricks as a construction materials is more than three fold to that of using hollow blocks.75 c+(axb) Birr /m2 25.00 21.298. In view of this.366 396. thereby raising the cost.221 529.7 DEMAND PROJECTION OF BRICKS Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Projected Demand in Pieces 309.641 806.75 c = axb Birr /m2 82. The workmanship required during brick laying is also of higher standard.580 1. Table 3.75 0.50 Table 3. the demand for bricks is not growing as fast as the growth of the construction industry.6 COST COMPARISON OF HALLOW BLOCK AND BRICKS Hallow Block Item (a) Piece /m2 External Partition 12. hollow blocks has an added advantage because it requires less cement and sand which are complementary materials during wall construction. an annual growth rate of 10% has been applied.00 1.39-10 Table 3.180.636 975. for the part of the construction period within the coming five years.075. Hence.083 1.5 12.391 1.00 43.218 676. despite its obvious attractive physical attribute.033 886.430 .90 (a) Piece/m2 116 58 Bricks (b) Birr/price 0.7 shows demand projection based on this rate of growth.
as the firing system in the drying kiln requires continuous operation. All types of customers. PLANT CAPACITY AND PRODUCTION PROGRAMME 1. This raw material must possess special properties and composition or constituents such as hydrous silicates of aluminum together with some colour imparting materials like hematite and limonite. MATERIALS The raw materials used for the production of ordinary type of bricks is clay. 2. The plant will start production at 80%. Pricing and Distribution The current ex-factory price of bricks in Dire-Dawa is Birr 2. small or big. Production Programme The proposed plant is planned to function for about 240 days a year in a single shift of 8 hours a day production system. This price is proposed for the envisaged project.39-11 3. Such raw material can be availed in the out skirts of Jigjiga. 90%. IV. make their purchases directly from the factories using their own means to transport the bricks to site. and 3. three shift production might be carried out until firing cycle is completed. Clay is the only raw materials for the above stated type of bricks. respectively. 100% capacity in years 1. The annual requirement of clay is estimated at about 1800 tonnes.2. MATERIALS AND INPUTS A.00 per piece. Plant Capacity The envisaged plant will have a production capacity of 600.000 pieces or 1500 tonnes of bricks per annum. However. the cost of which is about Birr 50. B. . which are mainly used for structural purposes in building construction.000.
electric power for machine drive and water for general purpose.0 V. The cost of pumping is included in electric power charge. In the proposed plant the process starts from grinding operation in order to reduce the investment cost. The annual consumption of these utilities is shown in Table 4. .125 300.2 13. grinding and mixing. The quarried raw material is subsequently crushed and wetted several times before it is passed or feed to the press vacuum chamber where air is extracted in order to obtain a compact mix. (Kwh) Water (m3) Total Qty 95 28.2 13.1_ ANNUAL CONSUMPTION OF UTILITIES Item No. drying of semifinished brick.8 -199. Then.8 199. a well prepared clay mix is extruded through a mold to get the required shape and dimensions. ---* Well -water will be used.000 F ---Cost ‘000 Birr L 185.) Electric Power.39-12 B. TECHNOLOGY 1. classifying and packing of the finished product. burning. UTILITIES Major utilities for bricks production are fuel oil for drying and burning of the product. Process Description The most common practice of bricks production involves several unit operations such as material excavation and transportation. brick shaping. The wet semi finished brick is conveyed to the batch drying chamber. 1 2 *3 Description Fuel Oil (Tonnes.1.0 T 185. Table 4. TECHNOLOGY AND ENGINEERING A.
0 250.O. Drying kiln F.0 200.175. Conveyors 6.430.175.0 250.C 340. Burning of the batch in the kiln is accomplished by a flame traveling in circle on top of the bricks. BASAVA BHAVAN. Cutter (Semi-automatic) 7.0 460.80 131. High Grounds Fax 91-802263606 B.175. Source of Technology The machinery and equipment required can be obtained from the following company. Machinery and Equipment The machinery and equipments required are listed in Table 5.0 350.0 200.6 2. Front end dumper 2. Box Feeder 3. The plant is environment friendly. 1 1 1 1 2 1 1 Cost ‘OOO Birr F. Table 5.1 REQUIRED MACHINERY AND EQUIPMENTS Items 1.40 Total 340. the selected bricks are made available for market.175 million is in foreign currency while the remaining 0.0 200.0 375.4 million. Roller crusher 4. the dried batch is conveyed to the kiln for the final process. Of the total.0 123. the total cost of the machinery and equipment is estimated at about Birr 2. Birr 2. Finally.0 255. the products are stored in a storage place where preliminary sorting is made.0 2. 2.0 2.0 200.39-13 where drying is carried out by blowing in warm air and expelling of humid air with intensive fanning.0 350.1.C L.0 460. Vacuum press with mixer 5.0 375.0 123.4 . ENGINEERING 1. Movers (India) Private Ltd. Then.255 million is in local currency.B C&F Various charges Total Qty. Upon completion of the baking of bricks.80 131.6 2.
Land lease cost at the rate of Birr 1 per m2 and for 95 years is estimated to be Birr 332.200 6.000. of which 750 square meter is alotted for building and production spaces. VI. 3.270. MANPOWER REQUIREMENT The list of manpower required and the corresponding labour costs are shown in Table 6. Machine Operators 4.550 39-15 . Mechanic cum Electrician 5.200 4. The total construction cost at a unit cost of Birr 1250 per m2 is estimated to be Birr 937.000 36. total land and construction cost amounts to Birr 1. MANPOWER AND TRAINING REQUIREMENT A.640 41.000 8.840 34.800 9. Land. Production Staff 1. Thus.710 173.500. Proposed Location Jigigja town is the best location for the bricks making plant as there is a rapid urban development activity which is an advantage interms of market outlet for the product.00 97.000 12.500.1 MANPOWER REQUIREMENT Salary in Birr Monthly Annually Description A.040 1400 750 600 500 200 16. Building and Civil Works The over all land required is about 3500 square meters.000 24.39-14 2. Supervisors 3. Unskilled Workers Sub-Total (B) Total (A+B) Benefits 25% Grand Total Required Number 1 1 1 1 4 8 1 1 5 2 10 19 27 1500 350 350 500 180 18. Production Head 2. Administrative staff 1 Manager 2 Secretary 3 Accounting clerk 4 Store man 5 Guards Sub – Total B.000 4. Table_6.1 below.800 138.
07 million. For details see Table 7. cost is required. Thus. TOTAL INITIAL INVESTMENT COST The total initial investment cost of the project including working capital is estimated at about Birr 4.B. TRAINING REQUIREMENT Couple of weeks orientation for production and technical personnel will be conducted during the plant erection and commissioning period by the machinery supplier. FINANCIAL ANALYSIS The financial analysis of the Bricks project is based on the data presented in the previous chapters and the following assumptions:- Construction period Source of finance 2 years 70% equity 30% loan Tax holidays Bank interest Discounted cashflow Land value Repair and maintenance Accounts receivable Raw material local Work in progress Finished products Cash in hand Accounts payable 3 years 10.5 % 10. out of which about 53% will be required in foreign currency.1 . no training VII.5% based on estimated lease rate of the region 5%plant and machinery 30 days 60 days 5 days 30 days 5 days 30 days A.
50 2.1 INITIAL INVESTMENT COST (‘000 BIRR) No.50 937.430. The material and utility cost accounts for 16. .040.900.50 1.81 7 Working Capital Total 2. commissioning expenses.4 million (see Table 7.51 B.00 289.90 50.173. etc.81 4. --* Pre-production expenditure include interest during construction (Birr 189. PRODUCTION COST The annual production cost at full operation capacity of the plant is estimated at Birr 1. Cost Items Foreign Currency Local Currency 332. licensing and formation of the company including legal fees.80 1.074.8 per cent while repair and maintenance take 13.173.866.173.50 2.50 332.40 50.00 256.50 Total 1 2 3 4 5 6 Land Building and Civil Work Plant Machinery and Equipment Office Furniture and Equipment Vehicle Pre-production Expenditure* Total Investment Cost 2.5 per cent of the production cost.70 33.20 33.39-16 Table 7.000) and cost of registration.80 4.00 289.2).50 937.
Profitability According to the projected income statement.55 298. net profit to equity (Return on equity) and net profit plus interest on total investment (return on total investment) will show an increasing trend during the life-time of the project. .390.00 C.40 597.00 15 50 97.39-17 Table 7.40 557.90 1. FINANCIAL EVALUATION 1. the project will start generating profit in the eleventh year of operation.00 34.40 27.90 3 40 78. The income statement and the other indicators of profitability show that the project is viable.2 159.71 41.40 583. Important ratios such as profit to total sales.60 298.60 1.2 ANNUAL PRODUCTION COST (‘000 BIRR) Year Items Raw Material and Inputs Labour direct Utilities Energy and power Spare parts Maintenance and repair Factory overheads Administration Overheads Total operating costs Depreciation Cost of Finance Total Production Cost 110.04 560.00 34.00 179.04 560.80 41.10 124.40 607.20 41.10 138.10 7 50 97.04 508.60 298.80 199.402.20 4 45 88.312.445.80 199.55 298.90 1.10 1.04 456.9 138.20 31.71 41.
the calculated IRR of the project is 13% and the net present value at 10. The project’s initial investment will be fully recovered within 9 years. the Regional Government can collect employment. Break-even Analysis The break-even point of the project is estimated by using income statement projection. Moreover. BE = Fixed Cost Sales .Back Period The investment cost and income statement projection are used to project the pay-back period.90 thousand. ECONOMIC BENEFITS The project can create employment for 27 persons. 4.39-18 2.46 thousand interms of tax revenue. Internal Rate of Return and Net Present Value Based on the cashflow statement.Variable Cost = 60% 3. The establishment of such factory will have a foreign exchange saving effect to the country by substituting the current imports. . Pay. the project will generate Birr 198. In addition to supply of the domestic needs. D.5% discount rate is Birr 653. income tax and sales tax revenue.
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