FEASIBILITY STUDY

ON
MRF MANUFACTUREING AND TREAD PRIVATE LIMITED COMPANY
(PLC)

Project Location: ADDIS ABABA CITY ADMINISTRATION

Specific Location: Addis Ababa TOWN
Promoter: MRF MANUFACTURING AND TREAD, PLC

PREPARED BY: ABRHAM ASTATIKE (0911384833)

MAY/2021

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TABELS OF CONTENTS
ANNEXTURE ........................................................................................................................................................IV
FIGURE ..................................................................................................................................................................IV
TABLES ..................................................................................................................................................................IV
ACRONYMS ........................................................................................................................................................... V
1. EXECUTIVE SUMMARY.................................................................................................................................. 1
2. INTRODUCTION................................................................................................................................................ 4
2.1 BACKGROUND ...............................................................................................................................................4
2.2 ETHIOPIA ELECTRICAL INSULATOR SOURCE ........................................................................................5
2.3 PROPERTIES OFPOLYMER INSULATING MATERIAL .............................................................................6
2.4 USES OF POLYMERS INSULATOR ...............................................................................................................7
2.5 PROJECT MISSION AND VISION ..................................................................................................................8
2.6 PROJECT PRODUCT AND SERVICE .............................................................................................................8
2.7 THE APPLICANT / THE PROJECT PROMOTER ..........................................................................................9
2.8 PROMOTER’S PROFILE ................................................................................................................................10
2.9 CAPITAL STRUCTURE OF THE PROJECT .................................................................................................10
2.10 PROJECT KEY SUCCESS ............................................................................................................................11
2.10.1 KEY SUCCESS FACTORS (KSF) ...................................................................................................... 11
2.10.1.1 MARKETING PROMOTION ....................................................................................................... 11
2.5.1.2 PRICING......................................................................................................................................... 12
2.10.1.3 PRODUCT PACKAGING ............................................................................................................ 12
2.10.1.4 AVAILABILITY .......................................................................................................................... 12
2.10.1.5 DELIVERY SYSTEM ..............................................................................................................................13
3. GENERAL DESCRIPTION 0F THE PROJECT ........................................................................................... 14
3.1 LOCATION OF PROJECT ..............................................................................................................................14
3.2 BACKGROUND OF THE COMPANY...........................................................................................................14
3.3 PROJECT LAND ACQUISITION & UTILIZATION.....................................................................................14
3.4 CLIMATICA CONDTION OF THE PROJECT AREA ..................................................................................15
3.5 WATER RESOURCES ....................................................................................................................................15
3.6V SOCIO-ECONOMIC ENVIRONMENT .......................................................................................................16
3.6.1 INFRASTRUCTURE AND SERVICES ................................................................................................ 16
4. MARKET STUDAY AND APPLICATION.................................................................................................... 17
4.1 GENERAL OVERIEW ....................................................................................................................................17
4.1.1 THE GLOBAL SCENARIO ................................................................................................................... 17
4.1.2 ETHIOPIA SSCENARIO ....................................................................................................................... 17
4.2 DEMAND ANALYSIS ....................................................................................................................................18
4.2.1 PAST SUPPLY AND PRESENT DEMAND......................................................................................... 18
4.2.2 THE PRESENT FORECAST DEMAND............................................................................................... 19

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 4.2.3 PROJECTED FUTURE DEMAND ...................................................................................................... 20
4.2.4 THE MARKET PROSPECT (DEMAND – SUPPLY GAP) ........................................................................20
4.5 MARKETING PLAN .......................................................................................................................................21
4.6 MARKETING STRATEGIES ..........................................................................................................................23
4.6.1 TARGET MARKETS ............................................................................................................................. 23
4.4.2 PROMOTIONAL STRATEGIES........................................................................................................... 23
4.7 COMPETITORS PROFILE & GAP ANALYSIS ............................................................................................23
4.8 PRICING AND DISTRIBUTION ....................................................................................................................24
4.8.1 SALES FORECAST ............................................................................................................................... 24
4.10.2 DISTRIBUTION .................................................................................................................................. 24
4.11 RISK MANAGEMENT EVALUATION .......................................................................................................25
5. THE PROJECT ................................................................................................................................................. 26
5.1 PROJECT DESCRIPTION ...............................................................................................................................26
5.2 PURPOSE OF THE PROJECT ........................................................................................................................27
5.3 PROJECT OBJECTIVES .................................................................................................................................27
3.3 OBJECTIVE OF THE COMPANY .................................................................................................................27
5.4 PROJECT DESIGN AND ENGINEERING ....................................................................................................28
5.4.1 PROJECT BUILDING AND CIVIL WORKS ....................................................................................... 28
5.4.1.1 LAND LEASE COST ANDLAND LAYOUT ................................................................................ 28
5.4.1.2 INTALLATION COST...............................................................................................................................29
5.4.1.3 BUILDING CIVIL WORKS AND RELATED COST ....................................................................... 30
5.4.1.4 PRODUCTION FACTORY BUILDING DETAILE ..................................................................... 31
5.4.1.5 SANITARY FIXTURE.................................................................................................................... 32
5.4.1.6 OFFICE AND CANTEEN............................................................................................................... 32
5.5 PROJECT TECHNOLOGY ENGINEERING AND PROCUREMENT .........................................................33
5.5.1 PLANT MACHINERY AND EQUIPMENT ......................................................................................... 33
5.5.3 OFFICE FURNITURE AND EQUIPMENT .......................................................................................... 34
5.5.4. VEHICLES REQUIREMENT ......................................................................................................................35
5.6 PRODUCTION AND PROCESSING ..............................................................................................................35
5.6.1 PRODUCT TYPE & SPECFICATION .................................................................................................. 35
5.7 PRODUCTION CAPACITY AND PROGRAM .............................................................................................42
5.7.1 PLANT AND PROJECT PRODUCTION CAPACITY....................................................................... 42
5.6.1.2 PRODUCTION PROGRAM .......................................................................................................... 42
5.7 RAW MATERIAL AND ACCESSORIES REQUIREMENT ........................................................................43
5.7.1 MAIN RAW MATERIALS .................................................................................................................... 43
5.7.2. PACKING MATERIAL REQUIREMENT ........................................................................................... 44
5.7.3. AVAILABILITY OF UTILITIES ......................................................................................................... 45
5.8 POLYMER INSULTOR PRODUCTION PROCESS .....................................................................................45
5.8.1 MANUFACTURING PROCESS INCLUDE THE FOLLOWING ACTIVITIES: ............................... 45
5.8.2 RAW MATERIAL USED FOR PROCESS MMANUFACTURING .................................................. 45
5.8.3 GENERAL PROCESSING FLOW CHART OF POLYMER INSULATOR MANUFACTURING .... 46
5.8.4 DETAILLE POLYMER INSULATOR MANUFACTURING PROCESS ........................................... 46

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 5.8.5 PRODUCT QUALIT AND STANDARD .............................................................................................. 53
5.9 SOURCE OF TECHNOLOGY ........................................................................................................................54
5.10 PROJECT OPERATING ACTIVITIES ..................................................................................................... 55
5.10.1 PRE- PRODUCTION EXPENSES....................................................................................................... 55
5.10.2 PROJECT OPERATION SETUP ......................................................................................................... 55
5.11 MAIN ACTORS ............................................................................................................................................56
6. ORGANIZATION, MANAGEMENT & MANPOWER ............................................................................... 57
6.1 ORGANIZATION AND MANAGEMENT .....................................................................................................57
6.2 ORGANIZATIONAL STRUCTURE...............................................................................................................57
6.3 MAN POWER AND RELATED COST REQUIREMENT .............................................................................60
6.3.1. PROJECT MAN POWER ..................................................................................................................... 60
6.3.2 MAN POWER FINANCE REQUIREMENT ...............................................................................................61
6.3.3 TRAINING COST .................................................................................................................................. 62
6.4 BENEFITS ........................................................................................................................................................62
7. FINANCIAL STUDY OF THE PROJECT ..................................................................................................... 63
7.1 INTRODUCTION ............................................................................................................................................63
7.2 OBJECTIVES ...................................................................................................................................................63
7.3 INVESTMENT OUTLAY ESTIMATION AND FUND ALLOCATION ......................................................64
7.3.1 TOTAL PROJECT INVESTMENT FOREIGN & LOCAL COST COMPONENT.............................. 64
7.3.2 TOTAL FINANCIAL REQUIREMENT EQUITY AND BANK LOAN BASE .................................. 65
7.3.3 SOURCES OF FINANCE (FUND ALLOCATION) ............................................................................. 65
7.4 FINANCIAL ANALYSIS AND SENSITIVITY ANALYSIS .........................................................................66
7.4.1 FINANCIAL ANALYSIS OF THE PROJECT ...................................................................................... 66
7.4.1.1 ESTIMATION TOTAL SALES ...................................................................................................... 66
7.4.2 PROJECT REVENUE PROJECTION ................................................................................................... 66
7.4.3 OPERATION AND ADMINISTRATIVE (DIRECT & INDIRECT) COST ........................................ 67
7.5 FINANCIAL ANALYSIS KEY ASSUMPTIONS ..........................................................................................67
7.6 PROJECT FINANCIAL RESLTS ....................................................................................................................67
7.6.1 PROFITABILITY - PROFIT / LOSS FORECAST................................................................................ 67
7.6.2 CASH FLOW FORECAST (LIQUIDITY) ............................................................................................ 67
7.6.3 BALANCE SHEET PROJECTION (CAPITAL GROWTH) ................................................................ 68
7.7 FINANCIAL EVALUATION (VIABILITY) ................................................................................................ 68
7.7.1 PROJECT WORTH (THE NPV & FIRR) .....................................................................................................68
7.7.1.1 THE NET PRESENT VALUE (NPV)............................................................................................. 68
7.7.1.2 THE FINANCIAL INTERNAL RATE OF RETURN (FIRR) ....................................................... 68
7.7.2 BENEFIT: COST’ RATIO (BCR) .......................................................................................................... 68
7.7.3 PAY BACK PERIOD ............................................................................................................................. 69
7.7.4 BREAK EVEN ANALYSIS ................................................................................................................... 69
7.7.5 S ENSITIVITY ANALYSIS .................................................................................................................. 69
7.7.6 PRINCIPAL LOAN REPAYMENT SCHEDULE ........................................................................................70
8. SOCIO-ECONOMIC IMPACT OF THE PROJECT .................................................................................... 71
8.1. POSITIVE IMPACT ON SOCIAL & ECONOMY ........................................................................................71
8.1.1 CREATION OF EMPLOYMENT OPPORTUNITY........................................................................ 71
8.1.2 LINKAGE EFFECT ............................................................................................................................... 71
9. CONCLUSION AND SUGGESTIONS ........................................................................................................... 72
10. ANNEXTURE .................................................................................................................................................. 73

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ANNEXTURE
Annex 1 PROJECTED INCOME STATEMENT (Birr) .......................................................................... 73
Annex 2 PROJECTED BALNCE SHEET (Birr) ..................................................................................... 74
Annex 3. PROJECTED CASH FLOW STATEMENT (Birr) .................................................................. 74
Annex 4 INTERNAL RATE OF RETUREN (Birr) ................................................................................. 75
Annex 5 Assumptions used in Financial Projections ................................................................................ 76
Annex 6: Project Loan Repayment schedule ............................................................................................ 77
Annex 7 : Project Deprecation Cost (Eth.Birr) ......................................................................................... 78

FIGURE
Figure 1 : Plant and Machineries for HT and LT Insulator Industry ........................................................ 46
Figure 2 : Rubber molding Machine ......................................................................................................... 47
Figure 3 : Organization Structure of the Project ....................................................................................... 58

TABLES

Table 1: Registered capital structure of the company ............................................................................... 11

Table 2: Marketing promotion strategy of the project .............................................................................. 11
Table 3: Import Electric Insulator Performance (Tones) .......................................................................... 18
Table 4: Present Project Demand of Electric Insulator (tones)................................................................ 19
Table 5: Project Future Demand of Electric Insulator (tones) ................................................................. 20
Table 6: Polymer Insulator Demined and supply gap (tones).................................................................. 21
Table 7: Company Projected Marketing Plan ........................................................................................... 22
Table 8: Land lay Out and Utilization ...................................................................................................... 29
Table 9: Infrastructure and cost related to installation.............................................................................. 30
Table 10: Building Construction works & Related Cost .......................................................................... 30
Table 11: Company Machinery type and Related cost ....................................................................... 33
Table 12: Auxiliary Equipment ................................................................................................................ 34
Table 13: The Estimated Cost of Office Furniture and Equipment .......................................................... 34
Table 14: The Company Vehicles and Motor ........................................................................................... 35
Table 15: Detailed product type and Specification ................................................................................... 37
Table 16: Projected Production Plan and Plant Capacity ......................................................................... 42
Table 17: Project Projected Production Plan ............................................................................................ 43
Table 18: Raw Material & Accessories Cost at Full Capacity ................................................................. 44
Table 19: Cost of Packing Material at Full Capacity ................................................................................ 44
Table 20: Summary of Utility Cost at Full Capacity ................................................................................ 45
Table 21: Pre-production cost of the project ....................................................................................... 55
Table 22: Project Implementation Schedule ............................................................................................. 55
Table 23: Minimum Qualification and Experience of Proposed Management ........................................ 59
Table 24: Man Power requirements .......................................................................................................... 61
Table 25: Company Training Cost ............................................................................................................ 62

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Table 26: Investment Outlay by existing & planned, Foreign & local Cost............................................ 64
Table 27: Total financial Requirement, project Investment cost & Sources of finance ........................... 65
Table 28: Total Projected Production Plan .................................................................................. 66
Table 29: Gross Revenue Assumption (seals) .......................................................................................... 66
Table 30: Projected Operation Expense Estimated Cost (direct and indirect).......................................... 67

Acronyms
ADLI Agricultural Development-Led Industrialization
ECX Ethiopian Commodity Exchange
ETB Ethiopian Birr
FDRE Federal Democratic Republic of Ethiopia
GDP Gross Domestic Product
GTP Growth and Transformation Plan
ha Hectare
KA(s) Kebele Administration(s)
KM Kilo Meter
m.a.s.l. Meters above sea level
mm Millimeter
MoARD Ministry of Agriculture and Rural Development
MoFED Ministry of Finance and Economic Development,
oC Degree Cellicious
PIF Policy and Investment Framework (of Ethiopian Agricultural
Sector)
PLC Private Limited Company (Pvt. Ltd. Co)
Qtl(s) Quintal(s)
USA United States of America
USD United States Dollars

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1. EXECUTIVE SUMMARY
The present investment feasibility study business plan is established with view to establish new MRF
manufacturing & Tread, Plc, to produce international and national standards for local and as well as
neighboring country market. This investment is initiated by newly established “MRF manufacturing &
Tread, Plc” investment with secured 3 ha land area at Addis Ababa City Administration and specific
location of Addis Ababa Town. The report consists of the market, technical, environmental, social, and
financial analyses components on the feasibility study of the envisaged plant.

MRF manufacturing & Tread, Plc is going to be established as is a electrical power transmission and
distribution polymer insulator producers company with 3,000 tons per annum at full capacity. The main
activities of the project will be manufacturing of varied range of Polymer Disc Insulator, post Insulator,
Composite insulator, Strain Insulator, Switch Nine, Insulator, Pin Insulator, Ton Composite Insulator
and Dead End type composite insulator and End fitting shape Insulator products for different sectors; i.e,
for mainly Ethiopia Electric Power Corporation(EEPCo), construction and real estate and other industry
sector such as basically for electrical sector electrical switches, connectors, power transmission, power
station and extension boards and for household and consumer use water drums.

Market demand analysis show the country’s requirement of polymer insulator products is met through
import. Recently, the demand for polymer insulator products is estimated at 11,396 million tons per
annum. The demand for the product is projected to reach 20,189 million tons and 39,345 million tons by
the years 2018 and 2025, respectively. The principal raw materials required are styrene and butadiene
which will have to be imported. This demand reveled the envisaged project is every important for import
substitution.

This summary highlights the key points of feasibility business plan MRF manufacturing & Tread, Plc
establishment for the production of exportable 3,000 tone electrical insulator per year mainly for
domestic and some export market, The plant processing capacity 5,000 tone per year, the overall the
project required 3,904 tones mainly Silicone elastomers, Thermoplastic rubber, Bisphenol or
cycloaliphatic epoxy resins, Ethylene-propylene diene monomer (EPDM), Fiberglass rod, Fibers &
Adhesives and alternatively Plastic, Aluminum or malleable iron, Defluculant (dispex) &
Quartz/silica sand , Felspar, Ball clay/Fire clay and Glazing materials etc… raw materials per year.

The allocation of investment cost is mainly on Site and building development accounts 7%, Machinery
and Auxiliary Equipment, Motor & vehicles and Furniture and Fixtures (fixed asset) 84% and the
working capital is 6% & Pre-production expenditure is 3% of total investment cost. The project
establishment area is 50,000 M2 of which the built up area covers 49,600M2 from the total of requested
investment land. The breakdown of total investment cost (Birr) is:

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 INVESTMENT COST(Birr)

Total Investment Capital 127,319,468

Initial Working Capital 7,666,394

Land Lease paymt

Pre-operating cost 4,138,027

Infrastructures and
InstallationsCost
Motor & vehicles 45,400,000 Building Cost

Furniture and Fixtures 1,392,319 Machinery & equipment Cost

9,194,420 Auxiliary Equipment

Auxiliary Equipment
Furniture and Fixtures
Machinery & equipment Cost 26,400,178
Motor & vehicles
Building Cost 24,795,485
Pre-operating cost
Infrastructures and… 2,707,645
Initial Working Capital

Land Lease paymt 5,625,000 Total Investment Capital

- 50,000,000 100,000,000 150,000,000

The total investment cost of the project to start the aimed MRF manufacturing & Tread, Plc electric
power transmission input manufacturing company is estimated at ETB Birr 127.319 million. These
results demonstrate that the project is viable and provides healthy returns to the promoters. The sources
of financing include: equity funds (own funds) of the project proponent share 38.198(30%) million birr
and the reaming 89.127(70%) million birr Ethiopia bank financing, by means of Ethiopia contractor
financing system.

The project is financially viable with an internal rate of return (IRR) of 41% and 35% before and after
tax, at net present value (NPV) of Birr 372.422 an 265.024 million respectively, discounted at 10% ( all
above is at their full capacity after 4 years).

Some of social economic benefits

 The project will employ 21 workers for administrative & financing and for production & technical
staff 259 in permanent employment bases for more than 200 casual laborers every year totally 480
employers will employee in every year.
The envisage project will contribute to the national economy by,
 increasing the foreign exchange income of the country by directly or indirectly contributing
to the horticulture industry of the county
 Benefit from the tax of the MRF manufacturing & Tread company operations.
 Benefiting all the actors’ in the chain of polymer insulator industry from the country power
institution and others industry sectors who benefited from electric power supply in the chain will
benefit from this project.

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  The project is yet not started in the country, Ethiopia expend more than 85 million dollar per
year (EEPCo), report, 2017), the company will have an import substitution; by this the country is
benefited.
 Polymer Industry is an advantage for the polymer raw material mining industry by creating market
linkage.
 Polymer Industry is an advantage to crate sustainability development by participating electrical
power transmission and distribution country strategy.
Government Strategic Significance of the Project
 MRF manufacturing & Tread, Plc electrical polymer insulator Processing Plant industry
plays important role in economic development of the country by creating revenue tax from
occupancy.
 The Electrical polymer insulator Processing Plant is new and important in the country to reduce
the government import expenditure.
Some of opportunities and government strategies considered by the owner when planning to invest of
Electrical polymer insulator Processing Plant are,
 Strong effort is underway to improve Ethiopia’s image for the world power transmission and
distribution for the millennium development.
 The government commitment to use this MRF manufacturing & Tread company project for
the fight against poverty,
To full fill his desire after looking the gaps and opportunities the company share holders have
Proposed new investment on Agriculture Electrical polymer insulator Processing Plant
establishment over 30,000 square meter area and investment of Et. Birr 127.319 million birr for the
envisaged project.

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2. INTRODUCTION

2.1 BACKGROUND
The demand for electric power supply has been significantly increasing in the world. Especially
developing countries like Ethiopia are at the forefront of such high demand. The reason for such an
increase is that the fast growth of population and industrialization in most sectors. From the start of the
millennia to 2012 the demand for electricity increased by 45% in sub-Saharan countries and yet the
increase in demand is expected to continue with a rate of 4% a year for the next 20 years. Along this
power demand needs modern energy transmission and distribution electrical insulators rather than the
conventional ceramic/porcelain and glass insulators.
Electrical insulator is a very important component in the electric power systems such as sub-stations
and distribution & transmission lines. In the early days, insulators were made of ceramic and glass
materials. But in 1963, polymeric insulators were developed and its improvements in design and
manufacturing in the recent years have made them attractive to utilities. Polymer insulator is used
worldwide for mmorthan 30 years. During this period PI was developed and nowadays.

PI is consist of a fiberglass core rod covered by weathersheds of skirts of polymer such as silicone
rubber, polytetrafluoroethylene, EPDM (ethylene propylene diene monomer) and equipped with metal
end fittings. It is also called composite insulators, which means made of at least two insulating parts –
a core and housing equipped with end fittings. Polymeric insulators have many advantages over the
ceramic and glass insulators such as good performance in contaminated environment, light weight, easy
handling, maintenance free, and considerably low cost etc. Because of these properties it is gaining
popularity worldwide and replacing the conventional ceramic and glass insulators

Thus, polymer insulator industry makes significant contribution to the economic growth and
development of various key sectors mainly: Construction, Agriculture, Electronic Power transmission
and station, industry and Real estate etc...

Ethiopia`s requirement of Polymer insulator is met through import. Recently, the demand for polymer
insulator is estimated in 1997, the total imported porcelain insulators in Ethiopia were 78.2 tones and it
was tripled in 2006 being 252.4 tones. In 2020, the projected total imported polymer insulators demand

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was increased to 2,762 tones signifying the government's determination to satisfy the demand of the
population and industries via multiple projects in the country.

The demand for the product is projected to reach 3,038 tons and 7, 880 tons by the years 2021 and 2031,
respectively. The principal raw materials required are Composite (Silicon Rubber Insulators, polymer
composites), are fiberglass core rod covered by weathersheds of skirts of polymer such as silicone
rubber, polytetrafluoroethylene, EPDM (ethylene propylene diene monomer) and equipped with metal
end fittings. Some of the raw material purchased locally, others which will have to be imported (Silicon
Rubber Insulators, polymer composites).

With this we understand that an investment in polymer Industry for electrical transmission and
distribution system polymer product manufacturing should grow to aid in the achievement of the electric
power distribution growth and transformation plan that the country is implementing over the next years.

Based on this, the establishment and commissioning of MRF manufacturing & Tread, Plc will play a
huge role in meeting the demand of polymer insulator products in the country. Currently in Ethiopia yet
not started manufacturing unit for engineering polymers for different sectors, the company will be one of
the leading company in Ethiopia who are very keen to do their expansion in different sectors where
different grade of polymer insulator products for the electric power transmission and distribution which
is currently importing from various country.

The production will use new raw materials without compromising Ethiopian Electricity and Power
Corporation (EEPCo) standards and quality requirements by mixing the raw material in standard ratio.
Therefore, this project will benefit Ethiopia, not only in substituting import of polymer insulator
products that uses as inputs for different sectors, will also creating job opportunities, and will conserving
natural resources and protecting the environment.

2.2 ETHIOPIA ELECTRICAL INSULATOR SOURCE

Currently in Ethiopia yet not started manufacturing unit for engineering polymers for mainly electric
power transmission and distribution and for different sectors purpose and which is currently importing
from various countries.
The production of electric power polymer insulator is not an easy task. It demands a lot of worth money,
resources and manpower. Thus, it is crucial to develop a high voltage and long distance transmission and

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insulation materials for such power industries. This is because most of the electric power generated is
lost due to poor transmission and insulation. Many factors contribute to the loss of the generated energy
one of which being improper insulation.

Though many insulators are commercially imported available only porcelain insulator is the most
commonly used material for insulation in electric power transmission and distribution system in
Ethiopia. In 1997, the total imported porcelain insulators in Ethiopia were 78.2 tones and it was tripled
in 2006 being 252.4 tones. In 2020, the projected total imported polymer insulators demand was
increased to 2,762 tones signifying the government's determination to satisfy the demand of the
population and industries via multiple projects in the country.

Thus this envisaged project plan to solve this problems by manufacturing international standard polymer
insulator. For this purpose the company has plan utilized various materials such as porcelain/ceramic,
Composite (Silicon Rubber Insulators, polymer composites) different design and size in accordance
of Ethiopian Electricity and Power Corporation (EEPCo), specification. In addition to this the company
strategic plan is to produce polymer insulator in Ethiopia to satisfy the demand of the country as well as
import substitution,

2.3 PROPERTIES OFPOLYMER INSULATING MATERIAL

Polymer Electric Insulators Market Size By Material porcelain, polymer(Composite {Silicon Rubber
Glass, Others}), By Voltage (High, Medium, Low), By Application (Cables and transmission lines,
Switchgears, Transformers, Busbars, Others), By Product (Pin, Suspension, Shackle, Solid core Post,
Others), By End Use (Rural and urban electrification programs, Residential, Commercial & Industrial,
Utilities), By Rating (<11 kV, 11 kV, 22 kV, 33 kV, 72.5 kV, 145 kV, 220 kV, 400 kV, 800 kV, 1200
kV), By Installation (Distribution, Transmission, Substation, Railways, Others)
Composite Polymer Insulator:
It is mainly composed of Ceramic and epoxy fiberglass reinforced twine pipe, silicone-rubber ads sheds
increasing creepage distance and connecting flange. Epoxy fiberglass reinforced twine pipe, which is the
insulating inner part of composite hollow insulator, is processed by special winding machine using
epoxy resin impregnated fiberglass according to mechanical lay down design, and has excellent
mechanical strength and dielectric property. As the external insulation of Composite polymer insulator,
silicone rubber add sheds increasing creepage distance takes on necessary electric functions, such as
protecting and providing creepage distance. Connecting flange, which is made of aluminum through
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compression casting, adopts unique adhesive technology to deliver mechanical load and provide sealing
for supporting and connecting structures. Composite is suitable for 40.5KV-550KV power system. For
example, high voltage electric products like SF6 transformer, SF6 line breaker bushing, arrester, high
voltage bushing, subsection capacitor, cable terminal, etc.

2.4 USES OF POLYMERS INSULATOR

Polymers are used in a wide range of applications because of their properties. Polymers materials are
inherently heterogeneous and represent a defined combination of chemical and structural different
constituent materials, ensuring the required properties such as mechanical strength, stiffness, low
density, or other specific characteristics depending on their purpose.
One area of interest is maximizing the efficiency of the fuel cell by controlling the electrical
conductivity of the polymer insulator which is represented conductive plates in a fuel cell stack that act
as an anode for one cell and a cathode for the next cell.
The importance of polymers are widely from the fact that such materials can have exceptionally high
conductive for a given weight of material so as a result of this mixed with copper composites may take
place in industrial applications. The polymers still represents by far the biggest and most important class
of types of material. The combination of mechanical and thermal properties allows them to be employed
for highly specified end users and often for metal replacement applications.

It is important for increasing investments toward the modernization of aging grid infrastructure along
with rapid urbanization will drive the Ethiopia electric insulators market. Rising investments for the
expansion of electric networks along with investment targets supporting the complete value chain of
power transmission, generation, and distribution will further propel the industry dynamics.

Surging electricity demand for the steeply growing population along with investments to promote rural
electrification programs will boost the Ethiopia electric insulators market. Ongoing shift toward
generation of electricity from cost-competitive renewable energy sources will further complement the
industry landscape.

The primary advantage of polymer insulator is to prevent/minimize thermal energy losses for the
conservation of energy. However, polymer insulation helps in several ways as indicated below;
a) It provides more accurate control of process temperatures and protection of the product.

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 b) It prevents condensation on cold surfaces and the resulting corrosion.
c) It helps in saving of energy and reduction in Green House Gases (GHGs) in environment.
d) It minimizes the formation of condensate in steam pipeline and related problems.
e) It provides fire protection and absorbs vibration
f) It is very lightweight compared to porcelain and glass insulator.
g) As the composite insulator is flexible the chance of breakage becomes minimum.
h) Because of lighter in weight and smaller in size, this insulator has lower installation costs.
i) It has a higher tensile strength compared to a porcelain insulator.
j) Its performance is better, particularly in polluted areas.
k) Due to lighter weight polymer insulator imposes less load to the supporting structure
l) Less cleaning is required due to the hydrophobic nature of the insulator

2.5 PROJECT MISSION AND VISION

Our Vision: To be one of the pioneer companies in the field of manufacturing electrical insulators and
provide related services Eeast Africa.
Our Mission: Manufacture different electrical insulators and supply to national markets as well as
enhancing and developing our society.

Our Values:
Mutual respect, Credibility, reliability, and integrity.
Human resources are our dearest asset.
Loyalty for our Customers.
Innovation, creation, and continuous improvement.
Working in a safe friendly environment.
Quality is uncompromised

2.6 PROJECT PRODUCT AND SERVICE

 Main Product Type of Polymer and Priceline

Disc Insulator
Polymer Solid Post Insulator: used for substation requirements
Polymer Composite insulator
Strain Polymer Insulator
Hollow insulators : used for making of circuit breakers

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 Long rod single piece Priceline insulator
Polymer Pin Insulator: used in transmission up to 33KV system
Suspension insulators : used in transmission above 33KV
Dead End type composite polymer insulator
End fitting shape Polymer Insulator

 Future Product
Composite/silicone rubber/polymer hollow insulator
Composite/silicone rubber/polymer station post/support insulator
Composite/silicone rubber/polymer line post(horizontal/vertical) insulator
Composite/silicone rubber/polymer long rod/dead end/suspension/ tension insulator
Hybrid Insulator
Composite/Silicone Rubber/Polymer Railway Insulator
M.V Epoxy Resin Bushing
Composite Braced Post Insulator

2.7 THE APPLICANT / THE PROJECT PROMOTER

Name: “MRF manufacturing & Tread, Plc”
Address: Company Office City: Addis Ababa, Sub city: Cell phone No:
Nationality: Ethiopia
Legal form of ownership of the Private Limited Company(PLC): new
business
Owner: Wr. Rehima Husen Ali
The project
Name “MRF manufacturing & Tread, Plc”
Project Address Addis Ababa City Administration
Status of the Project New – to be established
Project Sector Category Electric power Industry
Type of Project
Project Objective The primary objective of the project is to engage in the development
of high technological electrical polymer Processing Plant to produce
high quality electrical power transmission polymer insulator, for local
and export market.
To successfully develop a polymer Industry plant technology and
deliver high quality products thus making a profitable business
venture
Project’s land holding;- Total area 30,000M2
Right of Occupancy of the project The promoter has acquired the land by lease from Addis Abba Lease
Land Policy

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Lease period 60 years
Lease amount or rent fee The land rent payment for the total is birr 3,375,000
Type of products Polymer Insulator(different type and & Size)
Project period 10 years (2021-2031)

2.8 PROMOTER’S PROFILE

“MRF manufacturing & Tread, Plc” Company is a electrical power transmission insulator producers
for country and some for export. Available in a two type of colors, designs and size, these polymer
insulators are designed keeping in mind the most up-to-date international standards.
“MRF Manufacturing and Tread, Plc” project will established as new by promoter namely
Wr.Rehima Husene Ali with a general objective of participating on electrical power transmission
polymer industry sector and with a particular objective of participating on developing polymer industry
plant using modern manufacturing technology and related with the objective of the Company with a paid
up capital of Birr 38,195,840.24.

After establishment of “MRF manufacturing & Tread, Plc”, the company was made decision to
involve in developing polymer industry using the latest processing technology. For its achievement, the
Company has selected to locate the project in Addis Ababa City Administration,
The owner’s was born in Ethiopian and currently have an Ethiopia citizenship. In view of their
education and work experiences in electric cable production, copper and Aluminum metal recycling,
they bring a wealth of experience for the new polymer insulator processing industry business
management. Wr. Rehima Husen Ali is the general manager of the project. In view of his education
and managing ability has had a very reputable 12 year experiences in the field of manufacturing,
agriculture and other business financial management.
The company is expected to introduce advanced technologies in polymer industry sectors. And thus, the
project will create better employment opportunities for the local communities and a good deal of
technological transfer to the country.

2.9 CAPITAL STRUCTURE OF THE PROJECT

The project Plc members minutes of the shareholders meeting document mean is reviled, two individual
was joined the beginning of company to approve the company Plc bill and contribute and buying shares

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 & the capital was start-up at birr 38,195,840.24. The detail of the company’s capital structure is
presented in the table as follows:-
Table 1: Registered capital structure of the company
Sr. Name of shareholder Total paid-up share Capital (Birr)
No. Cash Kind
1 MRF manufacturing & Tread Company 38,195,840.24. -
Capital Adequacy: The required equity capital contribution to the project is birr 38,195,840.24 (30%)
of the total project cost. The company’s registered capital is adequate. Hence, the company’s capitals
were fulfilling the required equity.

2.10 PROJECT KEY SUCCESS

2.10.1 KEY SUCCESS FACTORS (KSF)

2.10.1.1 MARKETING PROMOTION
a) Advertisement
The modern marketing tools include product advertisement, TV and print media advertising and
brochures. The project allocates 1% of the revenue for advertising and promotional purposes from the
2% of marketing expense. Apart from this advertisement, marketing tools, this study suggests to focus
more on other marketing magnets that include interactive marketing, interactive marketing may include
participation on the general exhibition and bazaar programe by displaying the products.
Overall marketing strategy may change with the change of target market. A market research study is
recommended to design the different dynamics of marketing before launching the product for sell.
Marketing expense has been included in the total project cost and it has been estimated around 1% the
seals. The company may decide to increase or decrease the amount of marketing expense depending
upon this choice of promotion activities and type of media used. Following table gives the breakup of
the marketing expense.
Table 2: Marketing promotion strategy of the project
From 1% of the Adverting expense
TV Advertisement 10%
SITE Advertisement 10%
Newspapers 5%
Point of Sales Marketing 8%

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The project core value proposition is that we will add value to our product by providing Different
polymer insulator products with extensive range of color and different sizes in comfortable and durable
fabric with easy mode of cash transactions at comparatively low prices.
b) Branding
We position ourselves as a brand, which gives quality products at fairly low prices with extensive range
of vibrant colors and continuous value addition to our products with innovative ideas in design in
printing

2.5.1.2 PRICING

The pricing strategy should be in line with the going rate market prices of local and export price. Since
this industry new has no to face a lot of competition from the market except government import, it is
suggested that the price ceiling should not be crossed whatever price strategy be adopted.

2.10.1.3 PRODUCT PACKAGING

Product nature is one of the main dynamics, which control the flow of target customers towards the
product. Packaging should be in line with the industrial norms. Packaging may also vary with the
EEPCo standards. Apart from proper handling and distribution of the products from the factory to
distribution centers, packing also serves the purpose of providing information about the product that
anybody can understand easily; i.e., packing can serve as a marketing instrument and hence should get
due emphasis. The major packing materials to be used are Carton, shock absorber and panel wood box.
The color and the design will create a positive perception for the new brand. The following information
should be added to the logo of the company.
A brief intro of the company with the address
Website address of the company
Brand Name /Trade Name
Net volume in System International /Metric system
Batch number or code number

2.10.1.4 AVAILABILITY

The polymer industry is a country driven products market whereby profitability comes from
combinations of high-value research, design, sales, marketing and financial services that allow the
designers and marketers to act as strategic brokers.

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In the first phase of the launch of the new polymer insulator products, availability will also play the key
role in attracting the customers. It is suggested that the entrepreneur decides the availability of the
product at any time local and export outlets or mass availability of the product (aggressive marketing).
Since, the perception of the product is also directly related with is availability so it is suggested that the
strategy for the availability of the product be designed according to EEPCo target market and other
industry sectors.

2.10.1.5 DELIVERY SYSTEM

For all individual, commercial, industrial, government, and buyer customers, delivery will be by
specially designed car for the local market. Customers buyers can purchasers company products are
accustomed to making their purchase at company stores, but the company market 80% local and 20%
export one, once a product is posted on the website, and up-on order agreement we will offer fast
delivering system days or months within the continental market for target clients.

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3. GENERAL DESCRIPTION 0F THE PROJECT
3.1 LOCATION OF PROJECT AREA
The project is located Addis Ababa City Administrative. Addis Ababa is where the African Union
headquartered and where its predecessor the Organization of African Unity (OAU) was based. It also
hosts the headquarters of the United Nations Economic Commission for Africa (ECA), as well as
various other continental and international organizations. Addis Ababa City is therefore often referred
to as "the political capital of Africa" for its historical, diplomatic and political significance for the
continent. Its geographical coordination is in between 9°02′05″N 38°45′03″E, latitude and longitude
respectively, with 726 feet (2,355 m) meter above sleeve.

3.2 BACKGROUND OF THE COMPANY

MRF manufacturing & Tread, PLC project is a new undertaking for the shareholders intending to
manufacture varied range of best international quality polymer insulator products from commodity and
engineering polymer insulator raw material for different sectors like mainly for Ethiopia Electric
Corporation Agency, construction and real estate, and others industry in Ethiopia to meet the growing
demand from almost all sectors.

The founders have rich experience in the industry manufacturing area and enough knowledge of the
domestic and international market for both raw materials and end products they intend to manufacture.
They also have knowledge of the Ethiopian business environment and culture.
The production will use combination of virgin polymer insulator raw materials such as, Silicone
elastomers, Thermoplastic rubber, Bisphenol or cycloaliphatic epoxy resins, Ethylene-propylene diene
monomer (EPDM), Fiberglass rod, Fibers &Adhesives and alternatively Plastic, Aluminum or malleable
iron, Defluculant (dispex and other polymer additives parts as manufacturing input which has significant
cost and environmental implications. It reduces not only manufacturing input cost but also contributes
towards building eco-friendly business with huge environmental benefits.

3.3 PROJECT LAND ACQUISITION & UTILIZATION

The project acquired a total land size of 30,000M2 from the Addis Ababa City Administration lease
agreement. The company will secured the required land by made negation agreement with government

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 2
Investment Office at rent value of birr 33,375,000 for 60 years periodat the rate of Birr 18.75 per M ,
from year 2013 E.C to 2053 E.C, (2021 to 2061 G.C). The company was paid 10% of birr 3,375,000 the
total lease amount in the first year. This project cost is include the project initial investment, the rest
will paid in 28 years and the company will have a plan of 29,170 square meter built-Up area and the
rest will be for loading and unloading and future project expansion.

3.4 CLIMATICA CONDTION OF THE PROJECT AREA

The project area similar to Addis Ababa City which as has a subtropical highland climate with
precipitation varying considerably by the month. The city has a complex mix of alpine climate zones,
with temperature differences of up to 10 °C (18 °F), depending on elevation and prevailing wind
patterns. The high elevation moderates temperatures year-round, and the city's position near
the equator means that temperatures are very constant from month to month. As such the climate would
be maritime if its elevation was not taken into account, as no month is above 22 °C (72 °F) in mean
temperatures.
Mid-November to January is a season for occasional rain. The highland climate regions are
characterized by dry winters, and this is the dry season in Addis Ababa. During this season the daily
maximum temperatures are usually not more than 23 °C (73 °F), and the night-time minimum
temperatures can drop to freezing. The short rainy season is from February to May. During this period,
the difference between the daytime maximum temperatures and the night-time minimum temperatures is
not as great as during other times of the year, with minimum temperatures in the range of 10–15 °C (50–
59 °F). At this time of the year, the city experiences warm temperatures and a pleasant rainfall. The long
wet season is from June to mid-September; it is the major winter season of the country. This period
coincides with summer, but the temperatures are much lower than at other times of year because of the
frequent rain and hail and the abundance of cloud cover and fewer hours of sunshine. This time of the
year is characterised by dark, chilly and wet days and nights. The highest temperature on record was
30.6 °C (87.1 °F) 26 February 2019, while the lowest temperature on record was 0 °C (32 °F) recorded
on multiple occasions.

3.5 WATER RESOURCES

The project is used water for processing from the underground water. So water is not a big problem in
this area and the project will has its own water source and support for the surrounding dwellers by
developing ground water.

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3.6 SOCIO-ECONOMIC ENVIRONMENT

3.6.1 INFRASTRUCTURE AND SERVICES

Road:. There is a Ring Road near Addis Ababa City which is an important for the project to connect
with all other regions (Jimma, Bishoftu, Dessie, Gojjam and Ambo).

Air: The project is served by Bole International Airport, where a new terminal opened in 2003.
Railway: The also serve by new Addis Ababa-Djibouti Railway started operation in September 2016.
Financial Institutions: There is one Government Bank and the private bank is available in the
administrative center of the town.

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4. MARKET STUDAY AND APPLICATION
4.1 GENERAL OVERIEW
4.1.1 THE GLOBAL SCENARIO

World is experiencing a tremendous expansion of industrial and real estate sectors and accompanied by
a massive Increase in the need for electric power energy due to the essential role of the electric power in
the development and growth in all areas of life. This huge demand of the electrical power bodes market
demand for large investments in the field of electric power and its support services industry

Global demand for insulation is expected to rise 3.7 percent per year to 26.0 billion square meters of R1
value in 2020. Developing countries are expected to account for the majority of insulation demand
gains, with rising building construction activity and industrial output driving growth. Electric insulators
are essential components of transmission and distribution (T&D) lines.

They play a crucial role in preventing the flow of electric current down to the earth through supporting
points between the transmission line and tower. There are here types of electric insulators based on the
materials used for their production—ceramic, glass, and composite.

The global electric insulator market was growing at a CAGR of 6.23% during the period 2016-2020.
Global electrical insulation materials market is expected to witness a steady growth over the coming
year from 2017 to 2026 as the demand for electrical insulation materials is expected to be driven
primarily by the growth in demand from construction industry.

The global insulation market size was USD 44.46 billion in 2015 and is anticipated to grow at CAGR of
8.5% from 2016 to 2024. Growing consumer awareness regarding energy conservation is expected to
remain a key driving factor for global insulation market

4.1.2 ETHIOPIA SSCENARIO

Increasing investments toward the modernization of ageing grid infrastructure along with rapid
urbanization will drive the Ethiopia electric insulators market. Rising investments for the expansion of
electric networks along with investment targets supporting the complete value chain of power
transmission, generation, and distribution will further propel the industry dynamics.

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For instance, the Ethiopia Electric Corporation Agency (EEPCo) developed a 10-year mission plan in
2012 for the future developments of the domestic electrical equipment industry.

Surging electricity demand for the steeply growing population along with investments to promote rural
electrification programs will boost the Ethiopia electric insulators market. Ongoing shift toward
generation of electricity from cost-competitive renewable energy sources will further complement the
industry landscape.

In 2017, the Government of Ethiopia introduced the Green Energy Corridor Project, offering an
investment worth $ 85 million toward the development of a separate grid infrastructure for renewable
energy transmissions. Rising need to provide electricity to areas that lack grid infrastructure along with
the need for network expansion will stimulate the industry growth. Investments by regulators at national
& state levels to increase the availability of electricity will further fuel the business landscape. The
Government of Ethiopia is focusing on attaining ‘Power for All’ to accelerate capacity addition in the
country.

4.2 DEMAND ANALYSIS

4.2.1 Past Supply and Present Demand

There are a variety of electrical insulators that are demanded for power transmission, conduit tubing and
various machines. These include glass, ceramic, plastic, fibers and rubber made of other materials. The
demand for r porcelain/ceramic insulators in Ethiopia is mainly met through import. Import of porcelain/
ceramic in the past 10 years is provided in Table 3.
Table 3: Import Electric Insulator Performance (Tones)

Year Quantity
1997 78.2
1998 119.7
1999 344.1
2000 53.9
Average 148.975
2001 207.2
2002 126.8
2003 306.8
Average 213.6

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 Year Quantity
2004 52
2005 1,350.10
2006 252.4
Average 551.5

Source:- Compiled from Ethiopian Customs Authority

The data in Table 3 is reveals that consumption of porcelain insulators in the past years has been
generally increasing although there were some fluctuations from year to year, 6 to 5.

When the data set is analyzed by grouping in to three periods the average quantity imported during
1997-2000 was about 149 tones. In the three consecutive years, i.e., 2001-2003 the yearly average
quantity imported increased to 214 tones. Similarly the yearly average quantity imported during 2004-
2006 has sharply increased to 555 tones.
The average consumption of the recent two years (2005/2006) is assumed to fairly reflect the current
effective demand. Accordingly current effective demand is estimated at 801 tones.

4.2.2 THE PRESENT FORECAST DEMAND

Porcelain insulators are used mainly for transmitting electricity along transmission lines from the power
stations to end users, i.e., households, factories, service sector etc. This implies that the demand for
insulators grows parallel with the development and expansion of electricity in the country.

Ethiopia is considered to be among the few countries in the world endowed with huge potential for
hydropower development. In order to utilize this huge resource, the Ethiopian Electricity and Power
Corporation (EEPCo) has developed a generation and transmission plan up to the year 2025. The plan is
based on the nation’s targets for economic development in that period. In addition to the power
requirement of the modern sector, rural electrification is also given high priority in the plan. Considering
the above situation, demand for porcelain insulators is assumed to grow by 10% per annum. The
projected demand for porcelain insulators up to year 2020 is shown in Table 4.
Table 4: Present Project Demand of Electric Insulator (tones)
Year Quantity
2008 880
2009 968
2010 1,065

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 Year Quantity
2011 1,171
2012 1,288
2013 1,417
2014 1,559
2015 1,715
2016 1,886
2017 2,075
2018 2283
2019 2511
2020 2762
Source: Consultant Calculation

4.2.3 Projected Future Demand

Based on the Growth & Transformation Plan, the real GDP of Ethiopia (at a base case scenario) is
expected to grow at an average annual growth rate of 11.2% during 2011 through 2014/15. By taking the
growth rate of the GDP and some sectors like construction (20%) with huge leap into consideration, the
demand for Polymer Insulator is conservatively assumed to grow at a rate of 10%. Projected demand is
presented in the following Table 5.
Table 5: Project Future Demand of Electric Insulator (tones)
Year Quantity
2021 3038
2022 3,342
2023 3,676
2024 4,044
2025 4,448
2026 4,893
2027 5,382
2028 5,920
2029 6,512
2030 7,163
2031 7,880
Source: Consultant Estimate

4.2.4 THE MARKET PROSPECT (DEMAND – SUPPLY GAP)

The interaction of demand supply is summarized in table 6 below through projected demand–supply gap
of forecast and supplied are calculated as shown Present Supply base is the average forecast present

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demand average 3,038,000 tones is base for the future demand estimation. It will grow 10 % per year in
the forecasted period (above table 6).
So as table 6 is revealed that Demand–supply gap, Source: Consultant Analysis Results. The Demand–
Supply analysis shows that there is a wide range of supply that enables this upcoming project to sale its
produce without any problem. Based on based on the above assumption, for the sake of project
feasibility the future polymer insulator products demand is calculate for the next 10 years as shown in
the following table 6.
As a result the present demand-supply gap for the proposed product is estimated at 1,973,000 tones and
the demand-supply gap to reach at 5,118,000 tones of polymer insulator from the year 2021 to 2032
respectively.
Table 6: Polymer Insulator Demined and supply gap (tones)
Year Future Demand Present Supply Unsatisfied Demand
2021 3038 1,065 1,973
2022 3,342 1,171 2,171
2023 3,676 1,288 2,388
2024 4,044 1,417 2,627
2025 4,448 1,559 2,889
2026 4,893 1,715 3,178
2027 5,382 1,886 3,496
2028 5,920 2,075 3,845
2029 6,512 2283 4,229
2030 7,163 2511 4,652
2031 7,880 2762 5,118
Source: Consultant Analysis Results
Plants that can cover about 30% of the total demand can be envisaged in Addis Ababa City
Administration.

4.5 MARKETING PLAN

Considering the need for skill development and the time required for market penetration, the processing
plant will be planned to start operation at 70% of the capacity in the first year, and will grow to 80%
90% and 100% in the second, third and fourth years respectively. The plant will operate at full capacity
operation in the fourth year and then after. It is estimated that the product is about 80% to the local
market and 20% for export market.

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Our main products which are offered for mainly Ethiopia Electric corporation Agency, Construction and
real estate and other industries sectors
Main Product Type
Disc Insulator, Polymer Solid Post Insulator, Strain Polymer Insulator, Hollow
insulators, Long rod single piece Priceline insulator, Polymer Pin Insulator, Suspension
insulators, Dead End type composite polymer insulator and End fitting shape Polymer
Insulator and etc…
The factory operates 300 day per annum, 0ne shifts of 8 hours & has a production installed capacity of
Products as shown in the following table 7.
Table 7: Company Projected Marketing Plan

Product Type Product UoM Production Year

Sr.NO Proportio Y1 Y2 Y3 Y4-Y10
n Ratio
Project Utilization Capacity(%) 70% 80% 90% 100%
Company Projected Production Tones 2,100 2,400 2,700 3,000
1 Disc Insulator 10% tones 210 240 270 300
2 Solid Post Insulator 10% tones 210 240 270 300
3 Composite insulator 10% tones 210 240 270 300
4 Strain Insulator 10% tones 210 240 270 300
5 Hollow insulators 10% tones 210 240 270 300
6 Long rod single piece Priceline 10% tones 210 240 270 300
insulator
7 Pin Insulator 10% tones 210 240 270 300
8 Ton Composite polymer Insulator 10% tones 210 240 270 300
9 Dead End type composite insulator 10% tones 210 240 270 300
10 End fitting shape Insulator 10% tones 210 240 270 300
Total 100% 2,100 2,400 2,700 3,000
From the total company products Proportion Ratio constitutes each 10% of the total products.
After start-up funding is secured, we will expand the types of polymer insulator items available and the
customization options. Additional items to the company couture product line will include based on
research results. The company will add a new product line of high-quality electric polymer insulator. In
the future, the company intends to expand its line of business according to the market demand.

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4.6 MARKETING STRATEGIES

4.6.1 TARGET MARKETS

A number of prospective customer groups will comprise MRF Manufacturing and Tread,
PLC’s principal target markets. The type of marketing required to effectively connect
to the various groups will vary, and these differences will be noted.
Local Market: The Company plans to target potential clients of mainly Ethiopia Electric Corporation
Agency and construction and real estate and other industries sectors.
Export Market: The Company plans to the neighboring country target potential clients of mainly
Electric Energy organization and construction and real estate and other industries sectors

4.4.2 PROMOTIONAL STRATEGIES

As a general statement, the principal objective behind MRF Manufacturing and Tread, PLC’s
ongoing promotional activities will be to introduce and reinforce the product brand name to the
market. Some of the promotional activity / tactics to be employed are rather straightforward, including:
Large signage along major roadways (e.g. billboards).
Free sample giveaways in markets and other shopping places.
Radio and newspaper ads.
Offer a discount on buyers for those customers who agree to commit to longer-term, minimum
volume, supply contracts.
Pay competitive commissions to local buyers and brokers so that they remain motivated to sell
the company product lines.
Internet: In addition to the direct sales efforts Internet plans to establish a presence on the
internet by developing a website. Plans are underway to develop a professional an effective site
that will be interactive and from which sales will be generated worldwide.

4.7 COMPETITORS PROFILE & GAP ANALYSIS

In Ethiopia polymer insulator yet not started production only import type where MRF Manufacturing
and Tread, PLC are intended to enter in to engineering polymer insulator products for different sectors
mainly EEPCo and construction and real estate, and other industries consumer sectors. Thus there is no
any competitor in the country except the import one; the company will win regardless of the quality.

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4.8 PRICING AND DISTRIBUTION

4.8.1 SALES FORECAST

Company’s pricing objectives are twofold (cost and value-based). Prior to the company’s mission
statement, pricing must remain reasonable and, competitive. So the company will focus on maximizing
sales through volume pricing and continue to maximize return on sales (ROS). The company will use a
cost-value based pricing strategy. The costs of raw materials are discounted when company purchase in
bulk, because vendor tend to discount wholesale/volume purchases.
MRF Manufacturing and Tread, Plc project has a capacity of 3,000 tens full production capacity. The
aim of the project is to produce quality polymer insulator materials on the scope where it stands; i.e.
mainly EEPCo and construction and real estate, and other industries consumer sectors. Furthermore, the
selling price will be as much as fair from the existing market. The marketing strategy of the project
diligently works to make the company products available in big & small market as well as in export
market. Therefore POLYMERS expect to sale its products effectively since the market study results a
huge supply & demand gap.
However, the factory gate price of Birr 70,000 per tones for local and 75,000 per tones were assumed
for sales revenue projection and financial analysis. With regard to distribution, direct sale to EECA is
recommended since it is the major end user of the product.
4.10.2 DISTRIBUTION

The company intends to build a sales team that will be tasked with generating sales leads on
international and national basis. They will also be responsible for establishing connections with other
buyer outlets. A key factor in the success of company will be by its distribution. The company plans to
use the following channels of distribution channels:
Polymer Insulator specialty stores
Internet stores
Catalogs are another important method of marketing. Consumers have lesser time to shop, and for some,
catalog shopping offers a more convenient and pleasant alternative.

The distribution channel that has received the most attention recently is the Internet. Consumers like the
convenience of being able to shop from anywhere and at any time at hoping satellite location they wish.
Manufacturers with internet sites use them for marketing and awareness purposes. With further

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technological advances in hardware, software and data pipelines, shopping for fashions continues to gain
popularity.

4.11 Risk management evaluation

Avoiding, reducing, and transferring risk is important to the success of the business and the basis of our
risk management plan. The company will not be assuming any risk directly. There are several laws that
apply to the company, for which I already comply or plan to comply with when employees are hired.
These include the following.
Online security laws: all customer information is fully protected by our secure shopping cart for
purchases.
Labor relations laws, compensation and equal opportunity employment laws: we will follow all
laws when hiring contract and full-time employees.
Consumer protection and environmental safety laws: company offers no products that will in any
way harm consumers or create a harmful environment.
The company is dedicated to the protection of its intellectual property. When company creates our own
proprietary designs, we will register the artwork with the Patent and Trademark Office to protect the
designs from unauthorized use. Our logo will also trade marked for protection.

Insurance is necessary to protect the business from unforeseen events that could cost the business
money. The following insurances will be purchased upon receipt of funding:
commercial general liability insurance to protect the business against lawsuits due to tort
allegations and unforeseen property damage;
auto insurance to cover any accidents while conducting business; and
Life insurance to cover any expenses incurred by the business in the event of the death of the
owner.
The CEO currently provides her own personal medical insurance, but as the business grows and
additional employees and equipment are added, it will be necessary to add:
worker’s compensation insurance;
group health insurance;
renters insurance; and
Product liability insurance.
The company accepts bank and credit cards through our secure online shopping cart that automatically
verifies all card information.

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5. THE PROJECT
5.1 PROJECT DESCRIPTION
Polymer Insulators are used for supplying electricity. The lines of high voltage transmission systems are
usually composed of Polymer Disc Insulator, Polymer Solid Post Insulator, Strain Polymer Insulator,
Hollow insulators, Long rod single piece Priceline insulator, Polymer Pin Insulator, Suspension
insulators, Dead End type composite polymer insulator and End fitting shape Polymer Insulator and
etc…, which are suspended from tall lattice work towers of steel by strings of polymer insulators. There
are the super high tension and high tension insulators used for transmitting electricity along a
transmission line from the power station to the substation. There are the high, middle, and low-tension
insulators used for transmitting electricity from a substation to the consumer through Ethiopian
Electricity Power Corporation (EEPCo.)

In planning to establish a porcelain insulator plant, it would be advisable to begin manufacturing of low-
tension and high tension insulators which are easy to manufacture. Then by gradually acquiring the
manufacturing technology, manufacturing should shift towards more complicated shape or high tension
insulators.
The company plans to strengthen partnerships with foreign and local buyers by hiring an independent
placement specialist, thereby creating and developing brand awareness. Company intends to market its
line as an alternative to existing upscale polymer insulator lines and differentiate itself by marketing
strategies, exclusiveness and high brand awareness.
Company is creates unique brand products to everyone that loves what they choose to their purpose. The
key message linked with the company product with no porosity high-quality. The company’s
promotional plan is diverse and includes a range of marketing communications. The company is
managed by Mr. Rehima Husen Ali.
The company has also planned to hire other qualified technical staffs since polymer insulator
manufacturing activities need experience and qualification of the management. Polymer Engineers,
Machine Operators and product Inspectors are the most recommended to work on the system to improve
processing of company production quality through applying modernized polymerindustr management &
packing practice integrated with product quality and brand research thus the company must recruit the
necessary man power. Finance Manager, HR-manager, Marketing, Production Manager and Production
& Technical unit head & staff.

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MRF manufacturing & Tread, PLC will invest ETB 127.319 million to startup the factory. The
source of finance and investment capital will be 30% from the investors’ equity and 70% from bank
loan.
The vision of the investor is to sale all the produced polymer insulator products to the local market
(80%) & export market (20%) and satisfy the local demand as well as become import substitution.

Hence, this project calls for establishment of exceedingly model polymer industry at Addis Ababa City
Administration.

5.2 PURPOSE OF THE PROJECT

The project envisages of the establishment of polymer industry for the production of high quality polymer
insulator products by applying good polymer industrial management and marketing to sell to export and
local market.
The overall goal of the project is to contribute towards the economic development of Ethiopia through
using the existing investment opportunities in the Country and taking advantage of the expressed policy
incentives that emphasize on greater commercialization of industry and enhancing private sector
development.
Company major goal is to start as a higher fashion firm and expand to be a national brand during year
ten. In order to accomplish this, sales must significantly increase between years to year. The
management team hopes to start distributing throughout the world target market, as well as local market.
Another venture goal of company is to be profitable by year ten. With current sales forecasts, company
will be making money by the end of year two, and to further develop a successful Internet site, while
maintaining strong relationships with buyers.

5.3 PROJECT OBJECTIVES

3.3 OBJECTIVE OF THE COMPANY

The objective of MRF Manufacturing and Tread, PLC is to manufactured Polymer Disc Insulator,
Polymer Solid Post Insulator, strain Polymer Insulator, Hollow insulators, Long rod single piece
Priceline insulator, Polymer Pin Insulator, Suspension insulators, Dead End type composite polymer
insulator and End fitting shape Polymer Insulator and etc… that can be used by as an input mainly to the

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Ethiopia Electric Power Corporation, construction and real estate, and others industry, and other Service
sector and household consumer polymer insulator products.

MRF manufacturing & Tread, PLC aims at running an eco-friendly polymer insulator manufacturing
plant and contributing its share towards conserving natural resources of our planet by fostering
innovation and sustainability. The company plans to make use of new advanced technology Micro-
processor base fully Automatic machinery for the production to achieve best quality and efficient use of
resources.

It will also create employment opportunities for more than 280 skilled and unskilled workers when it
reach its full capacity and 200 during construction totally 480 and hence play its role in reducing
unemployment in the country.
Through this investment will ensure optimal economic returns as well as socially and environmentally
acceptable processing system that will attain full production level within four years starting from the
2022. The specific objects are:

 To establish ourselves as a premier polymer insulator company, targeting professionals – working

professionals in both academic, entertainment and design industries
 To sell more than 2,100 tones in annual sales by year one and then grow by 5% growth rate,
providing high quality company products reach 3,000 tons per year.
 To reach a break-even point by the end of year tow
 As a business firm one of objective of the Company is to earn higher income from the demand
supply gap exists in the sector at large and while for the futures earn higher income at the export
markets.

5.4 PROJECT DESIGN AND ENGINEERING

5.4.1 PROJECT BUILDING AND CIVIL WORKS
5.4.1.1 LAND LEASE COST ANDLAND LAYOUT

In order to estimate the land lease cost of the project profiles it is assumed that all new manufacturing
projects will be located in Investment zones. Therefore, for MRF manufacturing & Tread, PLC a land
lease rate of ETB 18.75 per M2 which is equivalent to the average floor price of plots located in
industrial zone is adopted.

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According to the Federal Legislation on the Lease Holding of Urban Land (Proclamation No. 721/2004)
in principle, urban land permit by lease is on auction or negotiation basis, however, the time and
condition of applying the proclamation shall be determined by the concerned regional or city
government depending on the level of development.
On the other hand, some of the investment incentives arranged by the Addis Ababa City Administration
on lease payment for industrial projects are granting longer grace period and extending the lease
payment period. The criterions are creation of job opportunity, foreign exchange saving, investment
capital and land utilization tendency etc.

For the purpose of polymer Industry project profile, the average i.e. five years grace period, 28 years
payment completion period and 10% down payment is used. The land lease period for industry is known
as 60 years.

Accordingly, the total land lease cost at a rate of ETB 18.75 per M2 for the requested 30,000 m2 land is
estimated at ETB 33,375,000 of which 10% or ETB 3,375,000 will be paid in advance. The remaining
ETB 30, 375,000 will be paid in equal installments within 28 years i.e. ETB 1, 084, 82 annually started
after five years.
Table 8: Land lay Out and Utilization
No. DESCRIPTION Length( M) Height(M) Total %
m2 Share
1 Factory Shade 83 150 12450 45%
2 Raw material Scrap damping(2) 70 30 2100 13%
3 Garage & Maintenance hangar 80 50 4000 8%
4 Parking & Circulation 50 50 2500 7%
5 Loading & Unloading 60 20 120 4%
6 Generator House Pump House Reservoir and others 60 20 1200 6%
7 Warehouse 50 20 1000 5%
8 Office Area 40 30 1200 2%
9 Staff Camp & Recreation Area 50 30 1500 3%
10 Security(4) 15 10 600 1%
11 Recreation & Free Space among buildings 50 50 2500 5%
TOTAL PLOT REQUIRED 29170 100%

5.4.1.2 INTALLATION COST

For the purpose Site electric installations program it is necessary to the pre-plant site work activities
should be done accordingly the Ethiopia Electric Power Utility Addis Ababa City Administration

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electric service requirement estimation cost and some of site work perform, such activities are site power
and Generator Supply & installation. So as the proposed project area Infrastructures and installations
with related costs birr 2,707,645 is required, which is given the following table.
Table 9: Infrastructure and cost related to installation
Infrastructures and costs related to installations Total
Rate Cost
Description Unit Qt
Birr Birr
Electrification
Material cost As.req 2,299,960
Labour Cost As.req 136,707
overhead cost As.req 103,810
Other charge As.req 167,167
Total As.req 2,707,645

5.4.1.3 BUILDING CIVIL WORKS AND RELATED COST

The total project land of 30,000 M2 is secured by the company and for the proposed set up of polymer
insulator plant; a built-up area of 49,170 square meters is required. This requirement is study by Asrat
Consulting Architects Engineer, PLC for the plant Factory Shade, Raw material Scrap damping(tow),
Garage & Maintenance hangar, Parking & Circulation, Loading & Unloading, Generator House Pump House
Reservoir and others, Warehouse, Office Area, Staff Camp & Recreation Area ,Security(four) and
Recreation & Free Space among buildings is estimated cost to be birr 24,795,484.94. The details
breakdown and others details are shown at the supporting plan and bill of quantities. The grand
summary of the project building and construction cost is given below table 10.
Table 10: Building Construction works & Related Cost

S.No. Description Estimated Amount (EtH.Birr)

A. Substructure
1 Excavation and earth work 2,438,683.99
2 Concrete Work 2,413,469.41
3 Masonry work 1,290,254.50
Sub-total 6,142,407.90
B. Superstructure
1 Concrete Work 5,118,683.35
2 Roofing 2,114,985.00
3 Carpentry and joinery 786,917.50
4 Metal work 5,215,250.00
Sub-total 13,235,835.85
C. Finishing
1 Glazing 475,000.00

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S.No. Description Estimated Amount (EtH.Birr)
2 Painting 600,472.50
3 Site Work 482,275.00
4 Electrical installation 625,300.00
Sub-total 2,183,047.50
D. VAT 15% 3,234,193.69
TOTAL ESTIMATED COST (A+B+C+D) 24,795,484.94

5.4.1.4 PRODUCTION FACTORY BUILDING DETAILE

Foundation: Sound and firm foundation to bear load of machineries should be provided.
Floor: Concrete slab is more suitable for floor or other suitable material which is finished smooth,
impervious, non-slip and non- toxic that is resistant to wear and corrosion can be used. The floor
material used should be easy to clean and laid to an even surface that is free from cracks, crevices and
open joints. Adequate slop is necessary to drain waste waters to external sewers.
Wall: Face of Interior wall surfaces should be smooth, crevice-free, impact-resistant, impervious, light-
colored, nontoxic material to a height of not less than 5m from the floor. External wall should be
weatherproof and impermeable to water. Above 2m the wall should have a smooth, crevice-free,
impervious, washable, light-colored surface.
Wall-to-wall and wall to floor junctions in bottling areas shall be covered. The minimum radius of the
covering shall be 25 mm and 40 mm respectively.
Roof: The roof should be weatherproof and at least 3m above any overhead equipment and in no case
less than 3m from the floor. Where no ceilings are fitted, roofs should be faced with a smooth
impervious material that is light in colour and capable of being easily cleaned without damage, and shall
be so designed, constructed and finished as to be dustproof and to minimize condensation, mould
development, flaking paint and the lodgment of dirt.
Ceiling: At place where the packing materials or unprotected product are handled provision of ceiling is
mandatory. Ceilings shall be constructed at a height of 3m.
Door and window: Door should be of adequate width and tight-fitting. Doors and door frames have to
sheath with, or made from, corrosion-resistant material that has high impact resistance and should be
smooth, seamless, impervious, light-colored, readily cleanable surface.
Window sills should be constructed at least at a height of 1m from floor level and a sloped at least an
angle of 45º. Windows and other openings should be so constructed as to avoid accumulation of dirt.
Openings need to be fitted with screens that are easily removable for cleaning and should be kept in good repair.

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5.4.1.5 SANITARY FIXTURE
At the entrance of preparation and processing areas of the factory or at other convenient place within
easy reach of the employee provision of an adequate number of hand wash basin is requires
Raw material store: This building is a storage area for raw materials for polymer insulator production,
finished products and packing material and labels for the packing and packaging of the product. The
room should be reserved for the purpose and is separated from production area and other storage areas.
Finished product store: The final product, company, store in this building unit in such a way that under
conditions that will prevent contamination, water spoilage and deterioration. The room should be
avoidable of direct sunlight and the temperature should be kept to below 25º. Store for cleaning
disinfecting materials: Cleaning and disinfecting materials and equipment have to be stored in a room
separate from the processing area and should at no time come into contact with containers, raw materials
or the product.
Shower, Toilet and changing room: Adequate change rooms, shower baths, wash hand basins, and
water closets (separate for each sex) should be provided. These facilities have to be separated from and
do not open direct onto, processing areas. The toilets should be so designed and constructed as to ensure
hygienic removal of waste water. Water closet should be provided at an acceptable distance from the
processing areas and completely separate from change rooms. Auxiliary Units and blocks needed to
facilitate the whole process and give services to the workers include:

5.4.1.6 OFFICE AND CANTEEN

When food is consumed on the premises by employees during rest periods, a room or rooms that have
adequate dining facilities should provide. The change rooms cannot be used for the preparation of food
or as living quarters.
In addition to the above mentioned, the premises ground should be graded to ensure proper drainage
and also be maintained in a clean and hygienic state and be effectively fenced. Road ways and areas the
factory and that are within its boundaries or in its immediate vicinity, should have hard, paved surfaces
suitable for wheeled traffic. Applied technology and construction method are the determining factors
among others for durability and functionality of buildings. To elongate life span of the project, design
as well as construction methods have to be carefully planned and implemented. Additionally, the
configuration of any biodiesel plant should reflect the state of the art at the time it is built or modified.
Although there are alternative materials and construction methods as mentioned earlier, the main as

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 well as auxiliary units of polymer industry plant and biodiesel needs to full fill the following minimum
material and construction requirements.

5.5 PROJECT TECHNOLOGY ENGINEERING AND PROCUREMENT

5.5.1 PLANT MACHINERY AND EQUIPMENT

The project will have different types of polymer processing machineries required for cutting, sewing and
finishing processes. After evaluation of the submitted pro forma invoices, the following machinery are
selected by the company. The aggregate cost of machinery and equipment estimated cost is Birr
26,400,178.41(at table 11). The detail is presented in the following subsequent tables. The details of the
machinery & equipment are as following.
Table 11: Company Machinery type and Related cost

Sr. No. Description Qty. Cost(Birr)

LC FC Total
1 Slip preparation
Ball mill 2 (3) 2,486,547.75 2,486,547.75
High Speed Blunge and Medium speed Set
Storage Tank with Agitator 1
2 Filter Press –Cake Preparation and De-airing
Extrusion / Puging Division
Filter Press and Cake Transfer System 1 3,211,953.90 3,211,953.90
Plate Type Rotary Feeder Set
Vacuum Extruder / De-airing Pug Mill 3
3 Plant Environmental Control & Extruded Pug Set 4,169,498.97 4,169,498.97
Conditioning System
4 Shaping & finishing section 6 2,344,488.74 2,344,488.74
5 Chamber Drying & Tunnel Dryer System 3 24,790.03 24,790.03
6 Glaze Preparation & Glazing section 1 5,276,468.67 5,276,468.67
7 Insulator firing & its handling system 10 3,500,600.00 3,500,600.00
Kiln
7 Insulator Finishing Division LS 2,425,173.70 2,425,173.70
8 Insulator Assembly Division LS 329,950.48 329,950.48
9 Insulators washing, drying & shrink wrapping Set 818,427.40 818,427.40
system most useful system for Pre-packing stage
Sub-Total 24,587,899.64 24,587,899.64
Insurance, Customs Duty, Inland Transport, Bank Charge, Etc. - 1,812,278.77 0 1,812,278.77
Grand Total 1,812,278.77 24,587,899.64 26,400,178.41

Note: When calculating total cost, the following additional costs were included: Cost of freight (2.25%), Insurance (0.75%),
Bank charge (3%), and Local Costs (Port Handling, Loading, Unloading, Clearing and Forwarding, Local Transport etc) of
9.25 %) FOB price were considered and included in birr equivalent. The following exchange rates were used to convert the
costs to Birr: USD = 41.1665,

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 5.5.2 AUXILIARY EQUIPMENT

The project will require additional equipment which is necessary to factory the purpose of production
and processing. The total cost of the auxiliary equipment is Birr 9,194,420.45. The cost breakdown is
provided in Table 12 below.
Table 12: Auxiliary Equipment
Sr. Total Unit Price USD Total Price
No. Type Qty in USD
Auxiliary Equipment
Shuttle kiln having two ears control system,
1 oil storage tank and two extra ears(No.) 3 37,200 111,600
Misc. Tools, dies, trolleys, weighing
2 platform etc. 1 8,880 8,880
3 Testing equipments Set 19,200 19,200
Engineering workshop lathe bench, drilling
4 machine, Arc welding other misc. tools etc… 1 64,290 64,290
Sub-total in USD 178,156.80 203,970.00
Other Costs (9.25% of FOB Price) 19,377.15
Total Cost in USD 223,347.15
Total Cost In Birr(1USD=41.1665Birr) 9,194,420.45

5.5.3 OFFICE FURNITURE AND EQUIPMENT

The company Office furniture and equipment such as computer, printer & Fax machines will be
acquired for the project. The cost for furniture and equipment is estimated considering the size of
manpower required for actual production and management. The furniture and equipment will be procured
locally and the estimated total cost is Birr 1,392,319. See on Table 13 below for the breakdown.
Table 13: The Estimated Cost of Office Furniture and Equipment
Description Unit Quantity Unit Price in
Birr
Furniture
EXCUTIVE TABLE PCS 1 13,479
HIGH BACK CHAIR PCS 1 5,479
MEDIUM BACK CHAIR PCS 5 2,261
STANDARD TABLE PCS 5 4,696
FILLING CABINET PCS 2 5,131
SINGLE PEDESTAL TABLE 140X80X75 WITH PCS 3 2,367
THREE FIXED DRAWER
REVOLVING CHAIR: IMPORTED HIGH PCS 700 1,478
QUALITY REVOLVING CHAIR WITHOUT ARM
REST IN FABRIC
Bundling table PCS 2 16,493
Final Inspection Table(5 ' X 3 ') PCS 28 2,199

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 Description Unit Quantity Unit Price in
Birr
Trimming Table (Wire Meshed) PCS 28 550
Folding table 10 meter PCS 4 16,493
SUB-TOTAL
Equipment
Dell Optiplex 7010 PCS 5 12,499
INTEX 1050VA UPS-IT-1050V PCS 5 2,088
Hp LaserJet P2055d-printer PCS 3 3,290
Canon 2420 digital photo Copy machine PCS 1 23,478
Scanner G2710 HP PCS 2 2,200
SUB-TOTAL 110,683
TOTAL COST 1,392,319

5.5.4. VEHICLES REQUIREMENT

The vehicle types required include Toyota Hilux Pickup double cabin, ISUZU FSR, Service Bus,
Forklift and Trolley with an estimated total cost of Birr 19,582,985. The detail is given below Table 14.

Table 14: The Company Vehicles and Motor

Description Quantity UNIT PRICE IN BIRR Total PRICE in Birr

ISUZU NPR 2 3,000,000 6,000,000
DAEWOO BUS 1 2,900,000 2,900,000
TRUCK 3 5,700,000 17,100,000
TOYOTA HILUX 4WD PICK UP 2 2,700,000 5,400,000
EXCAVATOR 1 13,000,000 13,000,000
FORK LIFT 2 500,000 1,000,000
TOTAL 45,400,000

5.6 PRODUCTION AND PROCESSING

5.6.1 PRODUCT TYPE & SPECFICATION

 Main Product Type of Polymer and Priceline
Disc Insulator
Solid Post Insulator: used for substation requirements
Polymer Composite insulator
Strain Polymer Insulator
Hollow insulators : used for making of circuit breakers
Long rod single piece Priceline insulator
Polymer Pin Insulator: used in transmission up to 33KV system
Suspension insulators : used in transmission above 33KV
Dead End type composite insulator

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 End fitting shape Insulator
Strain Insulator
Shackle Insulator

MRF manufacturing & Tread, PLC is will be one of the top Energy Solutions companies in Middle
East and Africa operating in diversified electric insulator segments; polymer insulator & accessories,
electrical products, transformers, electrical engineering & construction industry. We are proud of what
we have achieved so far The Company has the capacity and the will to lead. We will continue to work &
fight for those things that make the in Africa a better place. We remain dedicated to penetrate new
markets with a vision of providing the best products and services to our clients and shareholders and
create a good working environment for our employees. That’s Performance with purpose. That’s what
every business owner should strive for. We will have also achieved ISO9001:2008 for Quality
Management System, ISO 14001:2004 for Environmental Management System and OHSAS
18001:2007 for Occupational Health and Safety and ISO/IEC 17025:2005 for High voltage testing lab.
In addition to these international standards the company polymer Insulator can be Rubber, silicone,
Silver, Fiber glass and Composite and the type of color can be grey and brown and the size and the
capacity of Power loading is in accordance to the Ethiopia Electric power Regulation. The detailed
information of products type, size and each specification is given below table- 15.

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 5.6.2 PRODUCT SPECIFICATION
Table 15: Detailed product type and Specification

Sr.No Product Type Product Picture Description

1  DISC  Suspension insulators (disc porcelain) are the most widely used
INSULATORS models for transmission and distribution lines.
 In strings they can be used for any voltage depending on the number
of units mounted in series.
 It is possible to connect strings in parallel in sets of two or more to
provide adequate mechanical strength for large spans or heavy
conductors.
 Life expectancy of these insulators are extremely high
 CAP AND PIN  Creepage distance mm/kv correspond to highest system voltage in kv
INSULATORS ( phase to phase)
 Normal Disc &  In areas with no significant pollution a creepage distance not lower
Open Profile types than 16 mm/kv may be considered
 Anti Fog Type  Normal Disc & Open Profile types manufacture Normal Profile type
up to 120 KN, electro-mechanical strength and up to 320 mm leakage
path. Open profile type is up to 120 KN electro-mechanical strength
and 350 mm leakage path
 Silicon 33kV Polymer Disc Insulator, 33000 Volt
 Anti Fog type: Anti-fog type to 210 KN electro-mechanical strength
insulators and up to 555 mm leakage path for networks up to 500 KV.
2  SOLID CORE  Solid core line post insulators up to 33kv can be used for
LINE POST construction of overhead lines at a cheaper cost but having the
INSULATOR reliability of a line using suspension long rod insulator.

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3  PIN INSULATOR  Pin insulators of one piece construction are widely used in low cost
distribution lines. Pin Polymer full ranges of pin insulators for
application in sub-transmission and distribution lines up to system
voltage 33 Kv.
 These insulators are available with creepage distance to meet different
requirements of pollution up to 45mm/Kv
 Grey 33kV Polymer Pin Insulator, Creepage Distance: 630 mm

3  LOW VOLTAGE  Low voltage distribution transformer bushings with leakage path
DISTRIBUTION up to 100 mm which support the low voltage side of the
TRANSFORMER transformer to carry the output cables up to 3150A
BUSHING

4  MEDIUM
VOLTAGE
DISTRIBUTION
TRANSFORMER
BUSHING
 Epoxy Resin
Bushing

5  POST  Post insulators are used in medium voltage 12, 25 KV with leakage
INSULATOR path 440mm up to 1047 mm, with mechanical strength up to 4 KN
 Composite Line and also for 66 KV with leakage path 2450mm.
Insulator  It can be used for indoor and outdoor applications

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  LONG ROD  Long rod insulators are applied on medium and high over head
INSULATOR distribution and transmission lines for suspension or tension of
conductor to tower bodies.
 Long rod insulators are made with ceramic materials and it can be
manufactured with other voltage levels and higher leakage path as per
customer’s request.

 STAY  Three types of stay insulators are generally used for electric
INSULATOR transmission:
• 1.1 KV stay
• 15 KV stay
• 36 KV stay

 LOW VOLTAGE  These insulators are fitted on low voltage over head lines (1.1KV) for
PIN INSULATOR fixing of conductor to poles and in the distribution system of the town
with leakage path 150 mm up to 280 mm and with bending load 8KN
to 18 KN

6  SPI SILICONE  The core rod is a boron free, corrosion resistant ECR glass fiber
LONG ROD reinforced plastic rod (FRP rod). Due to the extremely high hydrolysis
INSULATORS and acid resistance of the FRP rod the risk of so called brittle fracture
 Core & End is completely eliminated for 45 SPI insulators.
Fittings  The end fittings, made of high grade hot-dip galvanized forged steel
not ductile cast iron to ensure the durability for very long time in
different climatic condition. A complete range of end fittings and is
available up to 340 kN of SML. The 45SPI is 100% exchangeable and
compatible with existing insulators and line hardware of all types.

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7  Configuration of  Dimensions in mm
End Fitting  SML (Specified Mechanical Load) : The SML is a load specified
by the manufacture that has to be verified during a mechanical test.
It forms the basis for selection of an insulator RTL (Routine Test
Load):
The RTL is rating equal to 50% of the SML

7  Accessories  Arc protection devices such as arcing horns and corona rings for
reduction of electrical field stress Customer-specific solutions as well
as other connection and cable clamps
 Corona is carefully designed based on numerous electrical simulations
regarding electrical field distribution. For system voltages above 170
kV corona rings are included in 45SPI

8  BALL &
SOCKET LONG
ROD
INSULATOR

 Ball & socket long rod polymer insulator for suspension and tension applications is up to 765 KV

9  SOCKET/SOCK  Socket/ socket long rod polymer insulator for suspension and tension
ET LONG ROD applications are available up to 765 KV .Just a few selected insulator
INSULATOR are listed below , Shorter or longer lengths and mechanical load are
available on request

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10  INSULATOR  Insulator fitting set up to 36 Kv
STRING  It is the string which contain some of the following parts to make a
FITTING complete insulator string mainly for disc and long rod insulators
 Extension link for 3u bolt tension clamp
 Extension link for 4u bolt tension clamp

11  Transformer  Low Voltage Ceramic Transformer Bushing, Capacitive Transformer

Bushing Porcelain Bushing, Composite Wall-type GIS Lead-out Bushing, RIP Railway
Insulator Type Traction Transformer Bushing, OIP Porcelain Transformer Bushing,
Short-Tail Ceramic Gas Switchgear Bushing
 126kv Transformer

12  Hollow Composite  Composite Hollow Insulator is suitable for 40.5KV-550KV power

Insulator system
 Rated voltage: 72.5—1100KV
 mainly composed of epoxy fiberglass reinforced twine pipe, silicone-
rubber

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5.7 PRODUCTION CAPACITY AND PROGRAM

5.7.1 PLANT AND PROJECT PRODUCTION CAPACITY

The capacity of a polymer insulator production is primarily determined by the machines capacity, size of
space available and the level of manpower skill. According to the product type, machine requirement
may change and daily average production in each type may vary. Depending on the simplicity of the
product type and improvement in operators’ productivity, production capacity can be increased.

However, for the purpose of technical and financial analysis, the envisaged model factory is assumed to
produce different types polymer insulator each type consists 10% of total products, the factory will have
a production capacity of 3,000 tones of polymer insulator per annum.

However, the project capacity is started at 70% of the plant capacity at first year. Assuming 300 net
working days (after deducting holidays and maintenance time) and a single shift operation of 8 hours,
the factory will have a capacity of producing at 100% production capacity at year four.
Moreover, since production capacity company factory is highly dependent on operator’s performance,
the average attainable Ethiopian machine operator’s performance is taken into consideration to
determine the overall capacity of the envisaged plant. Table -16 below shows the summary of the
production at full capacity (year four).

Table 16: Projected Production Plan and Plant Capacity

Product Specification UoM Project years

Y1 Y2 Y3 Y4-y10
Plant Installed Capacity Tone/year 5000 5000 5000 5000
Plant Capacity Per day (1shifit) Pcs 8,500 8,500 8,500 8,500
Project Utilization Efficiency (%) % 70 80 90 100
Project Annual Production Capacity tones 2,100 2,400 2,700 3,000

5.6.1.2 PRODUCTION PROGRAM

It is assumed that the production capacity utilization rate in the first year will be 70% and will increase
by 10% annually and reach the maximum of 100% in the four year of operation (the capacity utilization
will be 100% for the rest of the project’s life). The initial capacity utilization rate is set to 70% based on
the current average capacity utilization of similar factories. However, at later operational years, due to

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modern training and effective management and experience in the industry, the average productivity and
hence capacity utilization of the factory is expected to increase by 10% annually.

Table 17: Project Projected Production Plan

Product Specification Product UoM
Sr.NO Proportion Ratio Y1 Y2 Y3 Y4
Project Utilization Capacity (%) 70% 80% 90% 100%
Project Annual Production Tones 2,100 2,400 2,700 3,000
1 Disc Insulator 10% tones 210 240 270 300
2 Post Insulator 10% tones 210 240 270 300
3 Composite insulator 10% tones 210 240 270 300
4 Strain Insulator 10% tones 210 240 270 300
5 Switch Nine, Insulator 10% tones 210 240 270 300
6 Stretch Insulator 10% tones 210 240 270 300
7 Pin Insulator 10% tones 210 240 270 300
8 Ton Composite Insulator(CD) 10% tones 210 240 270 300
9 Dead End type composite insulator 10% tones 210 240 270 300
10 End fitting shape Insulator 10% tones 210 240 270 300
Total 100% 2,100 2,400 2,700 3,000

5.7 RAW MATERIAL AND ACCESSORIES REQUIREMENT

5.7.1 Main Raw Materials

The raw and auxiliary materials for the production of polymer insulators are mainly Silicone elastomers,
Thermoplastic rubber, Bisphenol or cycloaliphatic epoxy resins, Ethylene-propylene diene monomer
(EPDM), Fiberglass rod, Fibers &Adhesives and alternatively Plastic, Aluminum or malleable iron,
Defluculant (dispex) & etc… required per year. The raw materials estimation 30% of weight loss was plus
on the required amount, some of the raw materials are locally available and the majority were imported from
different foreign country. The annual raw material consumption at full capacity will be 3,904 tons per year.

As part of the project incentive, raw materials will be imported free of any duty and tax which is
important for the competitiveness of the company. Table 18 below shows the raw material and
accessories cost at full capacity for each product mix. At full capacity, the total cost of raw material and
auxiliary materials is estimated to be Birr 126,464,344 per annum.

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Table 18: Raw Material & Accessories Cost at Full Capacity
No. Description Qty. Unit cost Total Cost(Birr)
(Tones) ('000 Birr)
LC FC Total
A Main Raw Material
1 Silicone elastomers 930 14,635 - 13,611,000 13,611,000.00
2 Thermoplastic rubber 731 2,599 - 1,900,000 1,900,000.00
3 Bisphenol or cycloaliphatic epoxy resins 564 3,085 - 1,740,000 1,740,000.00
4 Ethylene-propylene diene monomer (EPDM) 800 920 - 736,000 736,000.00
5 Fiberglass rod 700 13,400 - 9,380,000 9,380,000.00
6 Fibers 80 945,000 - 75,600,000 75,600,000.00
7 Adhesives 2 6,255 - 12,510 12,510.00
Sub-Total - 102,979,510 102,979,510.00
B Alternative Raw Material
8 Plastic Quartz/silica sand , Feldspar & Ball 70 4,571 - 320,000 320,000.00
clay/Fire clay
9 Aluminum or malleable iron 25 448,000 11,200,000 - 11,200,000.00
10 Defluculant (dispex) 2 529,500 1,059,000 - 1,059,000.00
Sub-Total 3,904.00 12,259,000 320,000 12,579,000.00
Sub-Total(A+B) 12,259,000 103,299,510 115,558,510
Cost of Freight (3%FOB) 3,466,755
Sub -total 119,025,265
Other Local Costs (6.25% of FOB Price) 7,439,079
Grand Total Cost 126,464,344
Market share % 11% 89%

5.7.2. Packing Material Requirement

Apart from proper handling and distribution of the products from the factory to distribution centers,
packing also serves the purpose of providing information about the product that anybody can understand
easily; i.e., packing can serve as a marketing instrument and hence should get due emphasis. The cost of
packing materials at full capacity is estimated to be Birr 7,326,660 per annum.
Table 19: Cost of Packing Material at Full Capacity
Total Packing Material Total Cost
Packing Material Type Requirement-in Pcs Unit Price (Birr) (Birr)
Cartoon and Wood Panel 93,333 20 1,866,660
Plastic sheet Roll 2,100,000 1.5 3,150,000
Plaster Roll 2,100,000 0.55 1,155,000
Shook Absorber 23,100,000 0.05 1,155,000
Total Cost 7,326,660

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5.7.3. Availability of Utilities

Electricity, water and fuel are the three basic utilities required by the porcelain insulators plant. Annual
electric energy required is 950,000kWh. The annual expenditure on electricity is, therefore, Birr
3
807,500.00. Annual water consumption is estimated at 10,000m , which costs Birr 126,000 and annual
kerosene and fuel oil cost is estimated at Birr 1.8 million.

Table 20: Summary of Utility Cost at Full Capacity

Sr. Annual Requirement @ Total Cost

No. Utility Items 100% Capacity Unit Price (Birr) (Birr)
1 Electric power(Kwh) 950,000 0.85 807,500.00
2 Water(M3) 20,000.00 6.3 126,000.00
3 Fuel (litters 72,642.86 25.6 1,859,657.22
Oils & Lubricants (15%
4 of fuel cost) 278,949
Total 3,072,105.80

Fuel, Oil and Lubricants are also required for operation of the vehicles and the backup power supply
generator. Annually, the factory is estimated to consume 72,643 liters of oil at full capacity. At a cost of
Birr 25.60 per litter, the total cost for fuel, oil and lubricants is estimated to be Birr 1.859 million per
annum. While, the total annual utilities expense is Birr 3.072 million.

5.8 POLYMER INSULTOR PRODUCTION PROCESS

5.8.1 Manufacturing Process include the following activities:

Design
Production
Quality Inspection
Dispatch

5.8.2 Raw material used for Process Mmanufacturing

Main Raw materials: Silicone elastomers, Thermoplastic rubber, Bisphenol or cycloaliphatic

epoxy resins, Ethylene-propylene diene monomer (EPDM), Fiberglass rod, Fibers &Adhesives
and;
Alternatively Raw Materials: Plastic, Aluminum or malleable iron, Defluculant (dispex) &
Quartz/silica sand, Felspar, Ball clay/Fire clay and Glazing materialsetc…

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5.8.3 General Processing Flow Chart of Polymer Insulator Manufacturing

5.8.4 Detaille Polymer Insulator Manufacturing Process

Figure 1 : Plant and Machineries for HT and LT Insulator Industry

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Figure 2 : Rubber molding Machine

Processing step
(A) Slip preparation :
1. Ball Mill Charging System (Capacity Material Handling System from Raw Materials Batch
Weighing & transferring to Ball Mill. Box Feeder with load cell based digital weighing system.
Ball Mill Charging system with Auto PLC based Batch Weighing System.

2. Ball Mill (Capacity: 2’ X 2’ to 10’ X 15’ (100 liter to 36,000 liter capacity) for glaze body/slip
preparation with Auto Timer Controlled System along with revolution counter with the option of
A.C. Variable Drive System.)

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 3. High Speed Blunge (Capacity: 100 Kg – 5 tons/batch capacity Special design Blades High
performance Drive unit).

4. Medium Speed Blunger (Capacity: 100 Kg. – 5-tons / batch capacity Special design Blades High
performance Drive unit)
5. Storage Tank with Agitator(Capacity: 1 Ton – 20 tons/batch Special design Blades High
performance Drive unit)

(B) Filter Press –Cake Preparation and De-airing Extrusion / Puging Division::
1. Filter Press and Cake Transfer System(Cake Transport & Conveying System, comprises loading &
ageing Mobile trolley, with flexi type Polymer cover design cake Transport system)

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2. Plate Type Rotary Feeder ( with Scrapper Arm & Rotary Feeder Plate System, Capacity 500 Kg /
hr to 5 tons / hr With SS 304/316 replaceable type liners)

3. Vacuum Extruder / De-airing Pug Mill (Capacity: 500 Kg to 5 tons /Hr, with vacuum efficiency
95% (720 mm of Hg) Auger ø 50 mm to 750 mm, with world class updated technology. Pug Transport
& Cutting System, with Roller / Flat Belt Conveyor & Pneumatic Cutting Machine)

Extruded Pug Handling System, with Loading, Transport & Unloading device, with Storage &
Aging arrangement.
Hydraulic Manipulator & Hydraulic Mobile Trolley for Pug handling.
Vacuum Pump Canopy, for Isolation of Pump noise, as per Noise Pollution & environmental
requirement.

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(C) Plant Environmental Control & Extruded Pug Conditioning System:
Blank conditioner, with electrical heating system & 100% humidity environments, with its
transport & handling system.
Air Conditioning System, for Pug storage & aging area, shaping area, cutting & grinding area
and bushing assembly area.
Isolated Clean Room Chamber, with Universe / all seasons climatic control system, which
controls, air conditioning, its relative humidity & temp as per designed & desired parameters &
its location weather on Plant enviro system comprises Spray Type Air Washer OR CEL-DECK
type Humidifier, with Heating OR Adiabatic Cooling arrangement, Filtration by Panel Static
Filters.

(D) Shaping & finishing section:

Extruded Blank Turning and Shaping Machine: CNC Based Turing and Boring machine from ø 250mm
to ø 750mm and Blank Height from 1500mm to 4000mm

Shaping Machine, with CNC control & Hydraulic Operator’s Lift.

Hydraulic Pug Lifting Table, with remote control drive.
Green Insulator Handling System comprises Jip crane, with Telescopic Hydraulic Clamps,
Hydraulic Manipulator.
Scrape Collection & Handling System, comprises Shaping Machine, Collective Chute, Divergent
Hopper and Belt Conveyor System. To transport max. 80-90% scraps from shaping area & for
avoiding any contamination of scrape & increasing the value addition by using the same in
blended slip.
Scrape Continuous Type Blunging & Transfer System, comprises 100% contamination proof
Scrape Transport & Box Feeding System, High Speed Blunger, Buffer Storage Tank, Auto Sp.
Gravity control system, Continuous type scrape slip pumping system, Automatic online metallic
sensors & metal detection system.

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(E) Chamber Drying & Tunnel Dryer System:
Chamber Dryers for Insulators, with the hot air circulation & Moisturized air exhaust
arrangement. Modular type chamber, with structural supports, insulated Colour coated / GI
Cladded wall heating arrangement by gas burner or using WHR heat, Air tight Doors for
entrance & exit purpose. The drying cycle will be designed on PID Controller, with efficient
Drying.
Tunnel Dryers are designed, to dry the insulator on continuous batch; using high hot air
circulation system will be energy efficient working with programmable control.

(F) Glaze Preparation & Glazing section:

Glaze Ball Mill, Glazing Booth, Glaze Spraying System
Glaze Stirrer
Glaze dipping tank with Glaze Oscillation System

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(G) Insulator firing & its handling system: there are two types of Shuttle Kiln and Tunnel Kiln
Insulators are fired after glazing
High speed diesel or Propane gas is used for firing
Minimum temp. is 50°C and Maximum temp is 1235°C
Firing continues for 24 hrs
Shrinkage : 11 to 14%

(H) Insulator Finishing Division:

Solid Core Insulator Cutting Machine: Manual and CNC Based with Double end type high sped
diamond cutter & fully auto control, Noise proof, Safety Enclosure water leak proof Hydraulic
Isolation system, Capacity: ø -100 mm to 350 mm, length Min. 500 x 3000 mm Max.
Hollow Insulator Cutting Cum Grinding Machine, with fully Hydraulic & ONC control system.
Insulator Chamfering & Finishing devices & Portable Pneumatic operated Grinding Machine.
Insulator handling horizontal Scissor Lift / Hy. Manipulator /Jib Crane.
(I) Insulator Assembly Division:
Insulator Sanding Table, with Hydraulic Manipulator.
Granual spraying nozzles & its spray guns.
Solid core Insulator Bushing, Fitting & Assembly Jigs & Fixture, with very accurate vertical
alignment & Parralison parameters.
Hollow Core bushing, fitting Assembly, with Centering Jigs assembly.
Hollow Core CI bushing, grinding machine, with accurate both ends Parrallison, with using
vertical head grinding attachments.
Hollow core grinding cum lapping machine to maintain accurate clearance between bushing &
core surface by diamond impregnated grinding wheel.
(J) Insulators washing, drying & shrink wrapping system most useful system for Pre-packing
stage.

(K) Inspection and Quality Checking-Equipments:

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 Insulator’s Mechanical –Load Testing-Cantilever Bend Testing Machine, Horizontal Tensile
Testing Machine
Load Capacity: 1KN to 500KN.
Insulator Dia: 150 mm to 550mm.
Insulator Length: 1000mm to 10,000mm.
Insulator type: Porcelain & Composite

5.8.5 PRODUCT QUALIT AND STANDARD

Method of Product Tests

Based on the purpose of testing, the tests to be performed on polymer insulators are classified in four
categories as follows:
1. Design Tests - Design tests are performed to verify the suitability of the manufacturer's design,
materials, manufacturing process and technology. When an insulator is submitted to the design
tests, the results shall be considered valid for all insulators of the same design that are
represented by the tested one. The design tests are performed once. Design tests shall include the
following tests:
Material Tests
a) Water Penetration Test ii) Tracking and Erosion Test
b) Aging or Accelerated Weathering Test iv) Dry Penetration Test
c) v) Water Diffusion Test vi) Power Arc Test
d) vii) Flammability Test
Mechanical Tests
a) Tension Strength Tests
b) Torsion Strength Test
c) Working Cantilever Load
d) Thermal Mechanical Test
2. Type Tests - Type tests verify the main characteristics of the insulators, which depend mainly on
its shape and size. They shall be repeated when the design, type, or size of the insulators
changes. Three production line insulators of the relevant type shall meet the requirements. The
following tests are recommended for this type of testing:
a) Low-Frequency Dry Flashover Test

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 b) Low-Frequency Wet Flashover Test
c) Critical Impulse Flashover Test
d) Radio Influence Test
3 Sample Tests -Sample tests verify other characteristics of the insulator, including those which
depend on the quality of the manufacture and on the material used. They are performed on
insulators taken at random from a lot offered for acceptance. Sample shall include the following tests:
a) Galvanizing Test
b) Tension Strength Test
c) Dye Penetration Test
d) Retest Procedure
e) Verification of Dimensions, Markings, and Metal Fittings
4 Routine Tests - Routine tests are conducted to detect and discard insulators with manufacturing
defects. They are made on every insulator produced. They include tensile load (50% of S.M.L.)
and visual examination tests.
*Note: Other parameters such as Insulator Strength Rating, Loading Considerations – Ice and
Wind, Electrical Parameters, Low Frequency Ling Duration (60Hz) Selection, Switching Surge
Selection, Contamination Performance and others

5.9 SOURCE OF TECHNOLOGY

a) HAJUNG
 Korea Heavy Industries Construction
 Changwon – shi, Keyongnam
o Tel 0551-278-6114
o Fax 0551-278-5551
b) OMEGA FURNACE Industries
 14, Saritwri Compound
 S.M Road, Jalahalli West,
 Bangalore – 56 0015, India

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 5.10 PROJECT OPERATING ACTIVITIES

5.10.1 PRE- PRODUCTION EXPENSES

It is estimated that an additional amount of 4,138,027 Birr will be required in cash for pre-
production investment expense before starting production and generate revenue. The pre-
Production costs are include plan and design, feasibility study, machinery installation expense
(0.2% machinery cost), premium insurance cost (0.5% fixed asset), Safety Wear& Uniforms
(one year perform), Legal documentation, security deposits, stamp duty and other legal
expenses (0.1% 0f revenue). The described assumption and estimated pre-production
operational cost estimate of the envisaged project is given below table 21.
Table 21: Pre-production cost of the project
PRE – OPERATING EXPENSE
TYPE OF EXPENSES ASSUMPTIONS COST
Feasibility Studies and Engineering 50,000
Installation Cost 2% Machinery and Equipments 2,310,301
Premium Insurance cost 0.50% Fixed Asset 577,575
Safety Wear& Uniforms One year Performa 45,000
Legal documentation, security deposits, 1% 1,155,150
stamp duty and other legal expenses(1% of
revenue)
Total in Birr 4,138,027

5.10.2 PROJECT OPERATION SETUP

Over a projected time frame of 12-months (end of 2021-2022), a 3-phase of processing plan schedule
will be required to fully plan out, construct, and launch this venture. Generally the project
implementation phase of period is below table-22 and the less cost distribution is during phase I, the
amount of required expenditure becomes highest in phase II. These three phases are described below table 27.
Table 22: Project Implementation Schedule
2020-2021
Sr. No. Type of Activities Aug Sept Oct Nov Dec Jan Mar Apr May Jun Jul

Site Engineering (months 1 to 3)

Loan Processing
Phase I
Identify best plant site from several candidates
Develop full engineering specs for the plant
Infrastructure Acquisition (months 4 to 6)
Arrange for building construction / renovation
Phase II
Order all production equipment
Recruit senior production personnel
Phase Construction & Plant Set-up (months 7 to 12

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 2020-2021
Sr. No. Type of Activities Aug Sept Oct Nov Dec Jan Mar Apr May Jun Jul

III Construction / renovation of the plant

Production equipment received and assembled.
Delivery equipment received
Marketing materials prepared and promotion
begins
Commencement of Operation

5.11 MAIN ACTORS

Ethiopia Electric Power Corporation(EEPCo)
Ministry of water and energy
Ethiopian Investment Agency
Ministry of mines
Standard and quality control Authority
Ministry of Trade
Ministry of Industry
Regional investment and Trade and Industry Bureau
Custom Authority

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6. ORGANIZATION, MANAGEMENT & MANPOWER

6.1 ORGANIZATION AND MANAGEMENT

MRF Manufacturing and Tread, Plc’s typical organizational structure is composed of the General
Manager at the top with other production mangers, Administration, finance & marketing that are
accountable to the general manager.
Nature, scale and size of business are the normal factors which determine forms of internal organization.
The polymer insulator production firms of similar size as the envisaged project currently operating in
Ethiopia have line type of organizational structure, where each department is a complete self-contained
unit. Based on this experience, the organization structure is devised to incorporate owners at the top
followed by general manager and other line departments. The owner/PLC will have the power to control
the overall activities of the proposed factory and decide on the highest level attention requiring issues
that impede the normal operation or that affect the future performance of the project. The General
Manager, there will be separate departments which are responsible for their respective units. The
organizational set up of the project at hand should be designed to have a functional structure which
establishes effective management system and enhances upward, downward, horizontal and lateral
communications and tasks in the line of order. The typical organizational structure for company is
shown below

6.2 ORGANIZATIONAL STRUCTURE

A well-structured organizational management system is one of the success factors of an enterprise. The
decision-making process, coordination between different units and the communication process are
determined by the nature of the adopted organizational structure which affects the overall efficiency and
performance of the enterprise.

The enterprise is expected to have the following organizational structure which is functional and
production based. At the top, there will be a General Manager followed by five department managers for
Administrative and Finance, Production and Technical, Marketing and Supplies; and Planning and MIS
departments. Under each department there will be divisions to effectively and efficiently operate the
activities of the factory. The detail of the Organizational structure (Organogram) is given as follows:

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Figure 3 : Organization Structure of the Project

Management
Deferent sectors of the economy demand different skill level of management and workforce skill. In
order to work in managerial occupations in the company, a collage education is necessary and some
positions even require an advanced degree. Many workers in administrative and managerial occupations
shall be those having degrees in business and possess a combination of technical and business degrees
The organizational set up of MRF Manufacturing and Tread, Plc’s project shall be managed by the
first general manager of Wr. Rehima Husen Ali at the top together with the second production and
technical department manager (to be assigned), and Administration, finance and marketing department
manager that are accountable to the general manager. The project should be designed to have a

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functional structure which establishes effective management system and enhances upward, downward,
horizontal and lateral communications and tasks in the line of order.
Table 23: Minimum Qualification and Experience of Proposed Management
Minimum Qualification & Experience
No.
Sr. No. Management Position
Required Minimum Qualification Experience
BA degree in
Minimum of 8 years of
1 General Manager 1 management, Economics
relevant experience
& related field
BA degree in
Minimum of 5 years of
2 Administrative & Finance Dep’t 1 management or any
relevant experience
related field
BSC degree in electrical Minimum of 8 years of
3 Production &Technical Dep’t 1
engineering relevant experience
BA degree in
Minimum of 5 years of
4 Planning & MIS Dep't 1 Economics, Management
relevant experience
& related field
Minimum of 6 years of
5 Marketing & supplies Dep’t 1 BA degree in marketing
relevant experience

General Manager
The company’s General Manager Wr. Rehima Husen Ali has held 12 years of relevant experience in
the other business and these will enabled him to fit to the position & to run the company under
consideration. Moreover, the company has a plan to hire other qualified technical staff since polymer
insulator production activities need experience and qualification of the management.
Thus the company shall recruit based on the recommended experience gained from the different
positions on the same line of business of the general manager can run the project at its best performance
with the support of the project that would be recruited an agronomist farm manager & other technical &
qualified personnel
Production Department Manager
Production manager will serve as the company's Production Manager. He/she holds a B.Sc.in production
engineering, economics and has held the position of Production polymer insulator quality control
specialist at the industry. Of particular significance, he/she will assume oversight responsibilities during
the initial plant setup stage, ensuring that the various section components are assembled and tested
properly. Once operational, he/she will manage all production staff training, and will establish quality
control policies and procedures.

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Financial Department Manager
The Financial officer will direct the organization’s financial goals, objectives, and budgets. She/he will
oversee the investment of funds and manage associated risks, supervise cash management activities, and
execute capital-raising strategies to support a firm’s expansion.
Marketing Department Manager
B.Sc. in Business Administration from the known University and has been active in the Arts and Science
field. He/she is very familiar with the media and promotional venues
Serving as the lead marketing and promotion strategist for the firm, he will develop and implement the
appropriate advertising campaigns essential to establish and then build the polymer insulator brand.
His/her job will also include recruitment and training of all marketing and sales personnel, as well as
ensuring that sales targets are being met.
Distribution and delivery unit is directed under marketing department, He/she will manage the firm's
trucking fleet operations, including the recruitment and training of all delivery personnel. Once
operational, his job will be to ensure that delivery routes are properly planned and executed, and that
product is distributed on time and cost-effectively.
Administration Manager
He/she will serve as the company's Administration Manager, primarily managing the
day-to-day affairs of the firm's Luanda office, including reception, secretarial, payroll,
human resources, and other administrative tasks. He/She has got many years of
experience in the administration and public relations field.
STAFF CONSIDERATIONS
“MRF Manufacturing and Tread, Plc” will require a substantial workforce to adequately carry out the
range of activities envisioned. Some of the highlights for these staff members are highlighted below
table 25.

6.3 MAN POWER AND RELATED COST REQUIREMENT

6.3.1. PROJECT MAN POWER

Polymer Industry is labor intensive where use of quality labor is the most determining success factor.
Availability of training is also crucial to improve productivity, speed and management. In Ethiopia,
though there is abundant labor, quality is a big problem. There is scarcity of designer, pattern maker and
marketing professionals with higher education.

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The manpower requirement of the enterprise is estimated employment for about 21 administrative &
Financial and production and technical staff 259 totally 280 skilled & semi-skilled and 200 casual
lobour, overall total 480, and employers will be employee. Of the total manpower, foreign expatriates
with special technical skills are expected to employee for one two years; they will be replaced by
domestic employees. See table below for the detail manpower requirement: The total manpower
requirement planned for the project is given below the table 24.

Table 24: Man Power requirements

Sr. Job Title No. of Monthly Salary Annual

No. Persons (Birr) Salary (Birr)
A. Administration & Financial
1 General Manager 2 10,000 240,000
2 Executive Secretary 2 3,000 72,000
3 Finance and Administration Head 1 7,000 84,000
4 Accountant 2 6000 144,000
5 Store Man 2 4000 96,000
6 Clerk 2 2500 60,000
7 General Service 10 2500 300,000
Sub-Total 21 996,000
B. Production
8 Engineer (Production & Technique) 3 20,000 720,000
9 Supervisor 3 10000 360,000
10 Quality Control Staff 3 8000 288,000
11 Laboratory Staff 5 7500 450,000
12 Casters 20 2500 600,000
13 Skilled Workers 10 2500 300,000
14 Assistant Skilled Workers 15 2500 450,000
15 Casual Labour 200 1500 3,600,000
Sub Total 259 6,768,000
Worker's Benefit (25%) 1,941,000
Grand Total 8,709,000

6.3.2 MAN POWER FINANCE REQUIREMENT

As Labour is a highly valued asset in polymer industry, the enterprise is assumed to pay competitive
salary and benefit packages. The total salary cost of Birr 8,709,000 in the first year of operation, the
enterprise is expected to fully cover the required salary and wage while it will growth at 5% growth rate.
Moreover, the enterprise is assumed to pay about 25% of the basic salary as a benefit package.

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 6.3.3 TRAINING COST
Training will be conducted in collaboration with the Ethiopian Ethiopia Electric Power Corporation
(EEPCo) and other sectorial associations. A training center is expected to be set in the company area,
equipped with the necessary materials and facilities including the required human resource. At the initial
stage, there will be intensive training programs and majority of the cost (up to 85%) will be covered by
the government. However, starting from the second year (till the tenth year), the training cost will
decrease as training is expected to be given only to new and some existing employees. For the detail see
table 25 below.

Table 25: Company Training Cost

Project Years
Description
Year-1 Year-2 Year-3 Year-4 Year-5
Training on Designing, pattern making, Cutting, Sewing, Quality Control, Machine Application etc
No. of Trainee 799 320 320 320 320
Average Training Cost/Head in Birr 5,000 5,250 5,513 5,788 6,078
Total Training Cost 3,995,000 1,677,900 1,761,795 1,849,885 1,942,379
Government Support (%age) 85% 75% 50% 25% 0%
Government Support (Birr) 3,395,750 1,258,425 880,898 462,471 0
Training Cost to the Company in Birr 599,250 419,475 880,898 1,387,414 1,942,379

6.4 BENEFITS
To cover employee’s benefits of leave, bonus, dressing, health, and pensions an additional budget of 20%
of the salary included in the budget.
LEAVE
Employees will be entitled to annual and sick leaves. The duration and condition of leave will be worked
out by the Department of Administration and finance.
HEALTH AND LIFE INSURANCE
Employees will be entitled to health and life insurance as per the terms and condition of the plant manual.
BONUS
Employees will be entitled to annual bonus equivalent to their monthly salary based on overall performance
and achievement of the Plant. Criteria, type, and amount of a bonus should be prepared separately by
Administration and finance department.
DRESSING
Technical workers will be provided with uniforms to wear at workplace in the plant premises

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7. FINANCIAL STUDY OF THE PROJECT
7.1 INTRODUCTION
The demand for polymer insulator is increasing rapidly in national markets and a big gap exist local
market demand. There is need to take advantage of this situation by encouraging its production which is
a highly viable venture as brought out below for “MRF Manufacturing and Tread, Plc” putting hands
in company industry in the country. Polymer insulator manufacturing movement yet not started in
Ethiopia except the government import from different country; the company production would give fast
returns to them and will contribute in the wealth of nation.

With the imbalance between supply and demand in the national polymer insulator requirement product
market coupled with a high technological industry for company sell, there is much interest among
private operators to invest in for Polymer industry in Ethiopia. The Polymer Industry plant establishment
for electrical insulator product processing is a necessary investment to produce a high standard quality
product, which is sold in the local (80%) and export (20%) at affordable prices. This chapter will assess
the financial feasibility of investing in company manufacturing and marketing, using the “MRF
Manufacturing and Tread, Plc” establishment as feasibility studies. Detailed information regarding
economics of the project is provided as follows:

7.2 OBJECTIVES
The purpose of this section is to find what should have been the profitability of the project if major
investments and operation costs were paid by them. The results of the analysis may therefore be a useful
guide for project implementation and weather it is feasible or not the analysis will:
i. Estimate the expected after-tax cash flows from the investment over a time frame of ten
years. The time frame of ten years was chosen because it was difficult to predict what the
polymer insulator products market, a thin market, will look like in the long run.
ii. Compute the net present value and the internal rate of return.
iii. Propose a hypothetical model of polymer Insulator Industry is sales pricing related to
related supplier factory price base analysis.
iv. Carry out sensitivity analysis to identify the impact of change of key parameters on profitability.

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7.3 INVESTMENT OUTLAY ESTIMATION AND FUND ALLOCATION

7.3.1 TOTAL PROJECT INVESTMENT FOREIGN & LOCAL COST COMPONENT

MRF Manufacturing and Tread, Plc's the total initial investment cost including land lease, fixed
asset, Pre-Production cost and working capital is estimated at ET. Birr 127,319,468. The fixed
investment component is estimated at about Birr 115,515,047 (90.73%) the working capital portion is Birr
67,666,394 (6.02%) and Pre- Production cost of Birr 46,324,869 (36.4%). From the total investment cost
birr 80,994,599 (63.6%) is foreign currency required and the remaining of birr 34,520,448 (9.27%) is for
local purchasing cost. The following table briefly summarizes the total investment cost of the project.
Broad break-up of the above cost under various heads is presented, table 26 below.
Table 26: Investment Outlay by existing & planned, Foreign & local Cost

Existing Planned Total Investm Foreign Local

Asset Percntg share of
Sr. no Description Investment cost Exi + Plan Component Component
value/Inv cost (Birr) the total Inv (%)
(birr) (Birr) (Birr)
(Birr)
I. F/Asset Investment
1 Land Contract downpaymt 0 5625000 5,625,000 - 5,625,000

2 Land dvelopment of Infrastructures and costs related to installations 0 2,707,645 2,707,645 - 2,707,645

3 Bluliding & Construction 0 24,795,485 24,795,485 - 24,795,485

4 Machinery & Axulaly Equipmwent Cost 0 35,594,599 35,594,599 35,594,599 0

5 Vehicles and Moter 0 45,400,000 45,400,000 45,400,000 0

7 Furniture and Fuxture 0 1,392,319 1,392,319 0 1,392,319

I Sub-total F/Asset 0 115,515,047 115,515,047 90.73% 80,994,599 34,520,448

II. W/ Capital Requirement
1 Direct Labor cost at Yr 1 0 1,819,784 1,819,784 - 1819784

2 Indirect Labor Cot Yr 2 0 5,846,610 5,846,610 - 5846610

II Sub-total W/capital (II) 7,666,394 7,666,394 6.02% - 7,666,394

III. Pre- Prodn cost - 4,138,027 4,138,027 3.25% - 4,138,027

IV. Pre-Prodn Interest - 0 0 0.00% - -

Total ( I+II+III ) 0 127,319,468 127,319,468 100% 80,994,599 46,324,869

Percent Share of Foreign& Local (%) - 100% - 63.6% 36.4%

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7.3.2 TOTAL FINANCIAL REQUIREMENT EQUITY AND BANK LOAN BASE

Table 27: Total financial Requirement, project Investment cost & Sources of finance

Source of Finance (Fund Allocation)

Owner's Equity contruib & utilization (bir
Sr. ExistingInv/Asset
No
Description
Value(birr)
Planned Investment Cost (Birr)
DBE Loan (birr) Existing Asset Owner's Eqty Total Eqty
Value cash contr ExiAsset& cash
Yr 0 Yr 1 Yr 2 Yr 0 Yr 0 Yr 0 Yr 0
I. Fixed Asset Investment

1 Land Lease Rent downpaymt 0 5,625,000 5,625,000 - 3937500 0 1,687,500 1,687,500

2 Land Infrastructures and related to installations costs - 2,707,645 1,895,351 0 1895351.185 0 812,293 812,293

3 Buliding & Construction Work Cost - 24,795,485 17,356,839 0 17356839.46 0 7,438,645 7,438,645

4 Machinery & Axulaly Equipmwent Cost - 35,594,599 24,916,219 0 24916219.2 0 10,678,380 10,678,380

5 Vehicles and Moter - 45,400,000 - 45,400,000 31780000 0 13,620,000 13,620,000

6 Furniture and Fuxture - 1,392,319 0 1392319 974623.3 0 417,696 417,696

Sub-total F/Asset (I) 0 115,515,047 44,168,410 46,792,319 80,860,533 0 34,654,514 34,654,514

II W/Capital Requirement II.

1 Direct working coss - 1,819,784 909,892 909,892 1,273,849 0 545,935 545,935

2 Indir working cost - 5,846,610 2923305 2,923,305 4,092,627 0 1,753,983 1,753,983

Sub-total Wcapital (II) - 7,666,394 3,833,197 3,833,197 5,366,476 0 2,299,918 2,299,918

III. Pre-production Cost - 4,138,027 2,069,013 2,069,013.33 2,896,619 0 1,241,408 1,241,408

Sub-total I+II+III - 127,319,468.08 50,070,620 52,694,529 89,123,628 0 38,195,840 38,195,840

Total I+II+III 127,319,468.08 50,070,620.21 52,694,529.37 89,123,627.65 - 38,195,840.42 38,195,840.42

Debt : Equity Ratio (% ) on initial Year Investment - 100% - - 70% - 30%

7.3.3 SOURCES OF FINANCE (FUND ALLOCATION)

The financing is of the project investment requirement of Birr 126,263,164.33 is planned to be sourced
from two parties: equity and debt to be obtained from Ethiopia bank on long term basis to be repaid
within ten years of the project life with 2 years of grace periods payable from the proceeds of direct
sales revenue within the project life. The bank loan is interest bearing one with an interest rate of 11%
repayable annual or six month within ten years of the project life assuming that the project will continue
its business as a going concern of business entity.
The total owner’s equity contribution of Birr 38,195,840.42 (30%) earmarked for covering of fixed
assets, building & construction and the pre-operative expenses and working capital, whereas, the
89,123,627.03 (70%) will be financed through bank borrowing. By taking long term bank loan the
company intended to finance the procurement of new polymer insulator processing machinery &
equipment, vehicles, office furniture & equipment and working capital

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The promoter of the project has planned to finance the project through a long-term loan from the
Development Bank of Ethiopia; and, partially from own contribution. The debt equity ratio is assumed
to be 70:30 based on the agreement between the bank and owner. For the detailed information is given
above table 27.
7.4 FINANCIAL ANALYSIS AND SENSITIVITY ANALYSIS
7.4.1 FINANCIAL ANALYSIS OF THE PROJECT
7.4.1.1 ESTIMATION TOTAL SALES
The financial projections are made for a period of ten years. Total sales revenues of the project are
determined based on various criteria that consists types of products sold, total quantities of products
sold, and selling prices of the products. As per the detail machinery specifications provided by the
selected supplier Performa, the subject plant is envisaged to have 3, 000 tons per year at full capacity.
The envisaged project is planned to produce, start at capacity utilization rate of 70% in the initial year
and with 10% increment per annum the project is expected to reach maximum attainable capacity of
100% in the fourth year. For the detailed information is given above table 28.
Table 28: Total Projected Production Plan
Revenue Summary Unit Y1 Y2 Y3 Y4

Local Market
Sales Volume tone 1,680 1,920 2,160 2,400
Finished Goods sold tones 420 480 540 600
Total tones 2,100 2,400 2,700 3,000

7.4.2 PROJECT REVENUE PROJECTION

The planned Expected Revenue: Based on local market the revenue earned from product of company
sales for ten year project life. The following table briefly summarizes the projected revenue of the
project. The detailed calculation is given below table 29.
Table 29: Gross Revenue Assumption (seals)

Revenue Summary Unit Y1 Y2 Y3 Y4

Local Market
Total Local Sales Birr 117,600,000 141,120,000 166,698,000 194,481,000
Export Market
Total Export Sales birr 31,500,000 37,800,000 44,651,250 52,093,125
Total Sales (Export and Local ) 149,100,000 178,920,000 211,349,250 246,574,125
Gross sales Income (Birr) Birr/Year 149,100,000 178,920,000 211,349,250 246,574,125

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7.4.3 OPERATION AND ADMINISTRATIVE (DIRECT & INDIRECT) COST
The total operating cost is estimated at Birr 170,499,004 at full production capacity ten years five
and will increase through project life. Operating costs are recorded on a year basis. It is divided into
direct and indirect costs. Summary of operating costs is presented on below table 30.

Table 30: Projected Operation Expense Estimated Cost (direct and indirect)
Production cost Unit Y1 Y2 Y3 Y4-Y10
Direct Birr/y 95,804,177 109,490,488 123,176,799 136,863,110
Indirect Birr/y 20,964,836 25,508,729 27,891,265 29,235,855
Sub-total Birr/y 116,769,013 134,999,217 151,068,064 166,098,966
WC in (3Month only)
Direct 3Month 1,819,784 2,079,753 2,339,722 2,599,691
Indirect 3Month 5,846,610 6,982,583 7,578,217 7,914,365
Sub-total Birr/Y 7,666,394 9,062,336 9,917,939 10,514,056
Total

7.5 FINANCIAL ANALYSIS KEY ASSUMPTIONS

The project cost estimates for the proposed “MRF Manufacturing and Tread, Plc’s have been
formulated on the basis of discussions with project manager. The projections cover the cost of
infrastructures, building and civil works construction, machinery and equipment purchase, office
furniture and fixtures, pre-operating expense and working capital for the startup of the project.
Assumptions regarding machinery have been provided Performa base, however, specific assumptions
relating to individual cost components are given as under. It is given in the annexe-5.

7.6 PROJECT FINANCIAL RESLTS

7.6.1 PROFITABILITY - PROFIT / LOSS FORECAST

The projection shows positive net profits of Birr 7,146,386 at the begging project year & grows to birr
88,371,001 in the 10th projection period. Further, adequate surplus cash is available with the unit for
promoter withdrawal. For the detailed information is given in the Annexure-1.

7.6.2 CASH FLOW FORECAST (LIQUIDITY)

The project shall add values and generate positive cash flow throughout the ten consecutive years and it
is also expected bring higher cash inflows in future periods of the business. During these periods, it
generates an average net profit of Birr 46.193 million throughout the project life. The business is
projected to register a net cash flow of Birr 7.146 million in the first year that will grow to a cumulative

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 net cash flow of Birr 88.371 million in the tenth year. This shows its ability to meet its obligations on
time, effectively and efficiently. All in all, the project is liquid throughout its life.

7.6.3 BALANCE SHEET PROJECTION (CAPITAL GROWTH)

Assets of the envisaged project are naturally the total initial investment at the beginning year. Whereas,
the liabilities constitute Birr 89.123 million of long term loan at end of the first year that makes up 50%
of total assets or capital invested for the project, and no balance of liabilities shall appear at the end of
the ninth year.
Throughout the business life, the project creates additional values as it is financially strong and can
settle its obligations through the added value. Through the operational life it builds up its own capital
which is expected to rise to Birr 505.141 million at end of 10th year.

7.7 FINANCIAL EVALUATION (VIABILITY)

7.7.1 PROJECT WORTH (THE NPV & FIRR)

7.7.1.1 THE NET PRESENT VALUE (NPV)

Net Present Value (NPV) before Tax at 11 % interest rate; Birr 372,422 million
Net Present Value (NPV) after Tax at 11 % interest rate; Birr 265,024 million
The net present value is the difference between the sum of discounted future cash flow, year 1 to 10 and
the amount of the initial investment at year zero. The NPV’s computed at the prevailing 11% interest
rate results positive large cash amount indicating that the project is viable.

7.7.1.2 THE FINANCIAL INTERNAL RATE OF RETURN (FIRR)

A commercial profitability analysis indicates that the plant will generate a reasonable rate of return. The
internal rate of return (IRR) for the project after and before tax is expected to be 41% and 35%, respectively.
The Financial Internal Rate of Return both after and before income tax is higher than the economic rate of
return of about 11%. This indicates that the project is financially viable one.

7.7.2 BENEFIT: COST’ RATIO (BCR)

The present value of benefits to the present value of costs; has been calculated by dividing discounted
benefits (or revenue) by discounted costs of the project. Again, a discount rate of 11% has been used. That is:

B/C Ratio=PVB/PVC= 246,574,125 / 187,760,265 = 1.31

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Given the BCR > 1; therefore, the project is considered economically sound

7.7.3 PAY BACK PERIOD

The computation of the payback period is given at Annexure-4. The pay- back period would be much
less in case calculated on the basis of profit before tax. Therefore, the investment cost and income
statement projection are used to project the pay-back period before tax at 4 years +3 months and works
out to 7 years + 6 month on the basis of profit after tax. The project’s initial investment will be fully
recovered within 8 years.

7.7.4 BREAK EVEN ANALYSIS

To determine BEP Annual Sales, multiply annual sales found in the income statement by the annual
fixed costs and divide by annual sales less annual variable costs.

BEP (Sales) = Annual Sales x Annual Fixed Costs/ Annual Sales - Annual Variable Costs

The break even analysis shows that for the first year, the break even monthly sale is 7,230,198 and for the
second year break even point is 6,860,643 for the final year, the monthly break even point falls to
6,860,643.

The break even ratio, the ratio of break even sales to planned production, for the entire period is between
0.35 and 0.14. The break even ratio of the project is not only low but it also steadily declines through out
the operation period. This low break even ratio means low risk to the investment; the business has great
level of security against unforeseen operational difficulties.

7.7.5 S ENSITIVITY ANALYSIS

The project's sensitivity to adverse circumstance is viewed & analyzed from two different scenarios:
by decreasing its sales revenue by 10 % and increasing its operating cost by 10%.
A) Sensitivity test Scenario I: – Increase in operating cost by 10 %
When operating cost increases by 10%, the result indicates that FIRR after tax decreases from 37% to
29%. It can be concluded that, the project can cover its costs, make profit for stakeholders & will
remain viable even if unforeseen costs would occur that should be incurred more than estimated.
B) Sensitivity test Scenario II: – Decrease in Revenue by 10 %

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 When revenue decreases by 10%, the result indicates that FIRR after tax decreases from 33% to 25 %.
It can be concluded that, the project will remain viable even if an adverse marketing problem would
occur that forces to reduce the selling price & hence reduce the revenue. It also shows that the project
is more sensitive in both case and affected by decline in sales revenue when compared with the
increase in operating costs and indicates caution to be taken in selling the products.

7.7.6 PRINCIPAL LOAN REPAYMENT SCHEDULE

The principal loan shall be repaid every year, starting on, 2022 & ending on, 2032, whereby repayment
will be made in 10 annual instalments.
The loan repayment period is simply defined as the period (i.e. the number of years) required paying the
principal and interest of the original investment cost throughout the project life. The business result
obtained reveals that the investment is financially viable and has a healthy cash flow forecast. The
outcome of the financial analysis reveals that in the table of the given Annex-6.
Interest Payment: 11% p.a. on the outstanding loan balance is to be paid every 31 on December in
every production year. Pre- production interest shall be paid by the promoter on the due date.
Commitment Charge Payment: Calculated @ 5% and other charge @ 2% per annum on the balance in
commitment

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8. SOCIO-ECONOMIC IMPACT OF THE PROJECT

8.1. POSITIVE IMPACT ON SOCIAL & ECONOMY

The establishment of the polymer industry plant has many socio-economic benefits which include,
among others:-

8.1.1 CREATION OF EMPLOYMENT OPPORTUNITY

The project is expected to create new employment for about 21 administrative & Financial and
production and technical staff 259 totally 280 skilled & semi-skilled and 200 casual lobour, overall total
480, and employers will be employee in the initial project year and more of these & large number of
man days in the subsequent investment years & projected operational years .polymer insulator
production is one of the labor intensive company activities, it provides employment opportunity for the
citizens; especially during project installing and operation (during the peak operational month) and
processing at project site, it provides employment opportunity for many rural households.

8.1.2 LINKAGE EFFECT

There is a high interdependence of foreword & backward activities of the project. This project has
forward and backward linkage effects, as it has forward linkage with the industry sector for the electric
insulator consumer clients. This creates mutual benefits in the sectors;
 Technology and knowhow transfer: The polymer insulator manufacturing plant processing
practice can transfer new technology and know-how, especially in the project area for investment
on this industry type business besides its vital role in the growing of the economy.
 Generate revenue to the Government: The project when it starts operation & begin production
will generate substantial revenue to the promoter & in turn to the government in the form of
taxes.

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9. CONCLUSION AND SUGGESTIONS
It is Conclusion that
“MRF Manufacturig and Tread, Plc” has applied for a loan of Birr 127,319,468.08 to finance its new
Polymer Industry plant project to be established in Addis Ababa City administration.

The Promoter’s business objective is to engage in the production of polymer insulator products for
export and local market. The project operation will start by developing land, establish polymer insulator
manufacturing plant and produce company products. Moreover, company products produced & shall be
sold at export and local market for the consumers. In order to establish the project and achieve its
objective; the promoter has approached Ethiopia bank for partial finance which is in excess of its equity.
A loan of Birr 89,123,627.65 is proposed to be financed by the bank to be used for partial covering of
the fixed asset investment cost & the working capital requirement after assessing the viability of the
project.
The total investment cost out of which Birr 115,515,047 is on fixed Asset, Birr 7,666,394, on working
capital, Birr 4,138,027 is on pre-production costs. The project’s success & risk factors are identified &
the risk mitigating factors are proposed. As shown in the fund allocation table 33, out of the total
financial requirement (investment cost) of Birr 127.319,468.08, Birr 38,198,840.42(30%) is the owner’s
equity contribution and Birr 89,123,627.65 (70%) is planned to be financed by bank of Ethiopia term
loan.
The projected financial statements & analysis indicates that the project will run in losses during the
period before electrical power insulator input begins to give production up to the one year project years
when land development, Site Engineering, Infrastructure Acquisition and Construction & Plant Set-up to
be undertaken. The project will be profitable during the project second year.
Therefore based on the financial analysis made, the envisage project will be profitable and viable.

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10. ANNEXTURE
Annex 1 PROJECTED INCOME STATEMENT (Birr)
Sr. Project Years
Description
No 1 2 3 4 5 6 7 8 9 10

1 Gross Revenue 149,100,000 178,920,000 211,349,250 246,574,125 258,902,831 271,847,973 285,440,371 299,712,390 314,698,010 330,432,910

2 Less: Production costs (Dir+Indir)Costs 116,769,013 134,999,217 151,068,064 166,098,966 164,081,422 163,004,051 163,915,020 164,871,536 165,875,879 166,930,439

3 Gross profit 32,330,987 43,920,783 60,281,186 80,475,159 94,821,409 108,843,921 121,525,352 134,840,854 148,822,131 163,502,471

Less administrative Cost(Dir + Indr) 7,666,394 9,062,336 9,917,939 10,514,056 10,009,671 9,740,328 9,829,131 9,922,374 10,020,279 10,123,079

Less: Deprication Expense 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243

4 Operation Profit 13,517,350 23,711,204 39,216,004 58,813,860 73,664,495 87,956,351 100,548,978 113,771,237 127,654,609 142,232,149

5 Profit Before Interest & Tax 13,517,350 23,711,204 39,216,004 58,813,860 73,664,495 87,956,351 100,548,978 113,771,237 127,654,609 142,232,149

Less: Prodn Interest Exp 5,833,064 9,370,474 8,823,239 7,842,879 6,862,519 5,882,159 4,901,800 3,921,440 2,941,080 1,960,720

6 Profit before tax (PBT) 7,684,286 14,340,730 30,392,765 50,970,981 66,801,976 82,074,192 95,647,179 109,849,798 124,713,529 140,271,430

Othe Charge(2% ) 153,685.71 286,814.60 607,855.30 1,019,419.62 1,336,039.52 1,641,483.83 1,912,943.58 2,196,995.95 2,494,270.59 2,805,428.59

Community Development(5% ) 384,214.28 717,036.51 1,519,638.24 2,548,549.06 3,340,098.81 4,103,709.58 4,782,358.95 5,492,489.88 6,235,676.47 7,013,571.48

7 Less: Profit Tax (30% of PBT) 0 0 9,117,829.44 15,291,294.36 20,040,592.85 24,622,257.47 28,694,153.68 32,954,939.30 37,414,058.81 42,081,429

8 Net Profit / Loss 7,146,386 13,336,879 19,147,442 32,111,718 42,085,245 51,706,741 60,257,723 69,205,373 78,569,523 88,371,001

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 Annex 2 PROJECTED BALNCE SHEET (Birr)
Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Assets
Cyrrent Asset
Cumul Cash balance 7,666,394 7,336,852 10,209,023 15,816,094 31,152,310 55,144,695 87,275,188 126,243,598 172,301,665 225,707,195 286,723,650
Inventory - 9,341,521 10,799,937 12,085,445 13,287,917 13,126,514 13,040,324 13,113,202 13,189,723 13,270,070 13,354,435
Accounts receivable - 7,455,000 8,946,000 10,567,463 12,328,706 12,945,142 13,592,399 14,272,019 14,985,620 15,734,900 16,521,646
Total Current Assets 7,666,394 24,133,373 29,954,961 38,469,002 56,768,933 81,216,350 113,907,911 153,628,818 200,477,007 254,712,166 316,599,731

Gross property, plant & equipment 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074 119,653,074
Less: Accumulated depreciation expense - -11,147,243 -11,147,243 -11,147,243 -11,147,243 -11,147,243 -11,147,243 -11,147,243 -11,147,243 -11,147,243 -11,147,243

Net property/equipment 119,653,074 108,505,831 108,505,831 108,505,831 108,505,831 108,505,831 108,505,831 108,505,831 108,505,831 108,505,831 108,505,831

Total assets 127,319,468 132,639,204 138,460,792 146,974,833 165,274,765 189,722,181 222,413,742 262,134,650 308,982,838 363,217,997 425,105,562

Liabilities Initial balance Year 1 Year 2 Year 3 Year 4 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5
Accounts payable - 3,503,070 4,049,977 4,532,042 4,982,969 4,922,443 4,890,122 4,917,451 4,946,146 4,976,276 5,007,913
Notes payable/short-term debt - 0 0 0 0 0 0 0 0 0 0
Total current liabilities - 3,503,070 4,049,977 4,532,042 4,982,969 4,922,443 4,890,122 4,917,451 4,946,146 4,976,276 5,007,913

Long-term debt from 89,123,628 83,793,908 77,877,918 71,311,170 64,022,080 55,931,189 46,950,301 36,981,515 25,916,162 13,633,621 -
Shareholders equity 38,195,840 45,342,226 58,679,105 77,826,547 109,938,265 152,023,510 203,730,251 263,987,974 333,193,346 411,762,870 500,133,870
Total long-term debt and shareholders equity 127,319,468 129,136,134 136,557,023 149,137,717 173,960,345 207,954,699 250,680,552 300,969,488 359,109,508 425,396,490 500,133,870

Total liabilities 127,319,468 132,639,204 140,607,000 153,669,759 178,943,314 212,877,142 255,570,673 305,886,939 364,055,654 430,372,767 505,141,783

Annex 3. PROJECTED CASH FLOW STATEMENT (Birr)

Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Net income 7,146,386 13,336,879 19,147,442 32,111,718 42,085,245 51,706,741 60,257,723 69,205,373 78,569,523 88,371,001
Plus depreciation 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243 11,147,243
Less increase in inventory - (9,341,521) (10,799,937) (12,085,445) (13,287,917) (13,126,514) (13,040,324) (13,113,202) (13,189,723) (13,270,070) (13,354,435)
Less increase in accounts receivable - (7,455,000) (8,946,000) (10,567,463) (12,328,706) (12,945,142) (13,592,399) (14,272,019) (14,985,620) (15,734,900) (16,521,646)
Plus increase in accounts payable - 3,503,070 4,049,977 4,532,042 4,982,969 4,922,443 4,890,122 4,917,451 4,946,146 4,976,276 5,007,913
Cash flow from operations(Inflow Cash) - 5,000,178 8,788,161 12,173,819 22,625,306 32,083,275 41,111,382 48,937,196 57,123,419 65,688,072 74,650,076

Less investment (119,653,074) - - - - - - - - - -

Cash flow from operations and invests (119,653,074) 5,000,178 8,788,161 12,173,819 22,625,306 32,083,275 41,111,382 48,937,196 57,123,419 65,688,072 74,650,076
Plus net new equity capital raised 38,195,840 - - - - - - - - - -
Less dividends paid - - - - - - - - - - -
Plus net new long-term debt 89,123,628 (5,329,720) (5,915,989) (6,566,748) (7,289,090) (8,090,890) (8,980,888) (9,968,786) (11,065,353) (12,282,541) (13,633,621)
Plus net new bank borrowings - - - - - - - - - - -

Cash flow from ops, invests, and fin(Outflow) 7,666,394 (329,542) 2,872,172 5,607,071 15,336,216 23,992,385 32,130,494 38,968,410 46,058,066 53,405,530 61,016,455
Beginning cash balance - 7,666,394 7,336,852 10,209,023 15,816,094 31,152,310 55,144,695 87,275,188 126,243,598 172,301,665 225,707,195
Ending cash balance 7,666,394 7,336,852 10,209,023 15,816,094 31,152,310 55,144,695 87,275,188 126,243,598 172,301,665 225,707,195 286,723,650

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 Annex 4 INTERNAL RATE OF RETUREN (Birr)

Benefits Costs
Income tax 30% Net Benefit Before Net Benefit After
Fixed asset Initial Investment Replacement Operat/Prodn of PBT Tax Tax
Project Years Gross Revenue W/Cap Recovery
recovery
Total Benefits
Cost Cost costs
Total costs

1 2 3 4=1+2+3 5 6 7 8 = 5+6+7 9 10 = 4-8 11= 4-8-9

0 0 0 0 0 127,319,468 0 0 127,319,468 0 -127,319,468 -127,319,468

1 149,100,000 0 0 149,100,000 0 0 124,435,407 124,435,407 0 24,664,593 24,664,593

2 178,920,000 0 0 178,920,000 0 0 144,061,553 144,061,553 0 34,858,447 34,858,447

3 211,349,250 0 0 211,349,250 0 0 160,986,003 160,986,003 9117829.436 50,363,247 41,245,417

4 246,574,125 0 0 246,574,125 0 0 176,613,022 176,613,022 15291294.36 69,961,103 54,669,809

5 258,902,831 0 0 258,902,831 0 0 174,091,093 174,091,093 20040592.85 84,811,738 64,771,145

6 271,847,973 0 0 271,847,973 0 0 172,744,379 172,744,379 24622257.47 99,103,594 74,481,336

7 285,440,371 0 0 285,440,371 0 0 173,744,150 173,744,150 28694153.68 111,696,221 83,002,067

8 299,712,390 0 0 299,712,390 0 0 174,793,910 174,793,910 32954939.3 124,918,480 91,963,541

9 314,698,010 0 0 314,698,010 0 0 175,896,158 175,896,158 37414058.81 138,801,852 101,387,793

10 330,432,910 10,123,079 11,147,243 351,703,232 0 0 177,053,518 177,053,518 42081428.89 174,649,714 132,568,285

Total F.A-Y10 41% 35%

FIRR Before Tax = 41%
FIRR After Tax = 35%

NPV beforeTax (Birr) 372,422,854

NPV after Tax (Birr) 265,024,527

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Annex 5 Assumptions used in Financial Projections
ECONOMIC ASSUMPTIONS
Operating Expenses for the project and there basis are taken as follows
Description Basis Basis
CONSTRUCTION AND FINANCE
Construction period 1 years 1year
Bank interest 1% 11% (DBE)
Discounted cash flow 11% 11%
Source of finance 30% equity and 70% loan
Utilities price growth 5%
Material price growth rate 5%
Wage Growth Rate 5%
Tax rate 30%
EXPENSE
Salaries Expenses As per salary estimations
Staff Benefits 15% of Payroll
Insurance 1% of equipment Cost
Oil & Lubricants 15% of the fuel cost/annum
OPERATING AND REVENUE ASSUMPTION
No. of working days in one year 300
No. of working hours in one day 8
No. of working shift in one day one
Product, seals mix & price
Polymer insulator local Selling price per tone 70,000 birr
Polymer insulator export Selling price per tone 75,000birr
Capacity Installed 3,000 tones per/year
Revenue price growth rate 5%
Capacity utilization in first year 70%
Sales price growth rates 5%
Production capacity utilization growth rate 10%
Maximum Capacity utilization 100%( at 4th year)
For Community development Community 5% & other charge 2%
Utilities price growth
Water and electric city price growth rate % 5%
Loan period 10 years
CASH FLOW ASSUMPTIONS
Inventory (% of COGS) 8%
Minimum cash balance (% of sales) 2%
Accounts receivable (% of sales) 5%
Accounts payable (% of COGS) 3%
WORKING CAPITAL ESTIMATIONS
Raw material 3 Months

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Auxiliary Raw Materials Local 3 Month
Stock of Finished Goods 3 Month
Goods in Process 3 Month
Administrative and Marketing Expenses 3 Months
Operating Cost(indicate at working capital Assumption)

Annex 6: Project Loan Repayment schedule

Interest
Principal Payment at Outstanding
Year Disbursement Repayment 11% Balance
30-septmeber 89,123,628
30/1/2020 47,065,029 445,618 47,065,029
30/1/2021 38,121,099 5,387,446 85,186,128
85,186,128 5,833,064
30/1/2023 8,912,363 9,370,474 80,211,265
30/1/2024 8,912,363 8,823,239 71,298,902
30/1/2025 8,912,363 7,842,879 62,386,539
30/1/2026 8,912,363 6,862,519 53,474,177
30/1/2027 8,912,363 5,882,159 44,561,814
30/1/2028 8,912,363 4,901,800 35,649,451
30/1/2029 8,912,363 3,921,440 26,737,088
30/1/2030 8,912,363 2,941,080 17,824,726
30/1/2031 8,912,363 1,960,720 8,912,363
30/1/2032 8,912,363 980,360 -
- -
Total 89,123,628 53,486,670 142,610,297

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Annex 7 : Project Deprecation Cost (Eth.Birr)
Project Years
Description
0 1 2 3 4 5 6 7 8 9 10
original cost 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645 2,707,645
Deperciation Rate 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Infrastructures costs Deperciation amt 135,382 135,382 135,382 135,382 135,382 135,382 135,382 135,382 135,382 135,382 135,382
Acc Dep 135,382 270,764 406,147 541,529 676,911 812,293 947,676 1,083,058 1,218,440 1,353,822 1,489,205
Book Valu 2,572,262 2,436,880 2,301,498 2,166,116 2,030,733 1,895,351 1,759,969 1,624,587 1,489,205 1,353,822 1,218,440
original cost 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485 24,795,485
Deperciation Rate 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Civil works & Buildings Deperciation amt 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774 1,239,774
Acc Dep 1,239,774 2,479,548 3,719,323 4,959,097 6,198,871 7,438,645 8,678,420 9,918,194 11,157,968 12,397,742 13,637,517
Book Valu 23,555,711 22,315,936 21,076,162 19,836,388 18,596,614 17,356,839 16,117,065 14,877,291 13,637,517 12,397,742 11,157,968
original cost 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599 35,594,599
Deperciation Rate 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Machinery & equipment. Deperciation amt 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460 3,559,460
Acc Dep 3,559,460 7,118,920 10,678,380 14,237,840 17,797,299 21,356,759 24,916,219 28,475,679 32,035,139 35,594,599 39,154,059
Book Valu 32,035,139 28,475,679 24,916,219 21,356,759 17,797,299 14,237,840 10,678,380 7,118,920 3,559,460 - (3,559,460)
original cost 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000 45,400,000
Deperciation Rate 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Vechicle and Motor Deperciation amt 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000 4,540,000
Acc Dep 4,540,000 9,080,000 13,620,000 18,160,000 22,700,000 27,240,000 31,780,000 36,320,000 40,860,000 45,400,000 49,940,000
Book Valu 40,860,000 36,320,000 31,780,000 27,240,000 22,700,000 18,160,000 13,620,000 9,080,000 4,540,000 - (4,540,000)
original cost 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319 1,392,319
Deperciation Rate 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%
Furniture & Fixture Deperciation amt 278,464 278,464 278,464 278,464 278,464 278,464 278,464 278,464 278,464 278,464 278,464
Acc Dep 278,464 556,928 835,391 1,113,855 1,392,319 1,670,783 1,949,247 2,227,710 2,506,174 2,784,638 3,063,102
Book Valu 1,113,855 835,391 556,928 278,464 - (278,464) (556,928) (835,391) (1,113,855) (1,392,319) (1,670,783)
original cost 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027 4,138,027
Deperciation Rate 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Pre-production costs Deperciation amt 413,803 413,803 413,803 413,803 413,803 413,803 413,803 413,803 413,803 413,803 413,803
Acc Dep 413,803 827,605 1,241,408 1,655,211 2,069,013 2,482,816 2,896,619 3,310,421 3,724,224 4,138,027 4,551,829
Book Valu 3,724,224 3,310,421 2,896,619 2,482,816 2,069,013 1,655,211 1,241,408 827,605 413,803 - (413,803)
original cost 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264 9,722,264
Deperciation Rate 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
Deperciation amt 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37 972,226.37
Pre-production Interst costs
Acc Dep 972,226 1,944,453 2,916,679 3,888,905 4,861,132 5,833,358 6,805,585 7,777,811 8,750,037 9,722,264 10,694,490
Book Valu 8,750,037 7,777,811 6,805,585 5,833,358 4,861,132 3,888,905 2,916,679 1,944,453 972,226 - (972,226)

Annual Deperci. & Amortization 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19 11,139,109.19

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