PROJECT PROPOSAL FOR ESTABLISHMENT OF

PAINTS FACTORY PLANT

PROJECT TO BE IMPLEMENTED IN BURAYU TOWN

OF OROMIA REGION

SUBMITTED TO OROMIA INVESTIMENT COMMISSION

PROMOTER: - SHALLAMA GURMESSA

Aug. 2021

ADDIS ABEBA, ETHIOPIA

 I. List of Table
1. Introduction-------------------------------------------------------------------------------------------- 3
2. Project Justification-----------------------------------------------------------------------------------
4
3. Promoter Experience--------------------------------------------------------------------------------- 4
4. Objective of the Project ------------------------------------------------------------------------------4
5. The economic Significance of the project ---------------------------------------------------------5
6. Supply of Quality of different types of paper recycling products----------------------------- 5
7. Value add-----------------------------------------------------------------------------------------------5
8. Source of the revenue---------------------------------------------------------------------------------5
9. Employment opportunity ----------------------------------------------------------------------------5
10. Save the Country foreign currency -----------------------------------------------------------------6
11. Benefit for the local Community--------------------------------------------------------------------6
12. Stimulate the local and National Economy--------------------------------------------------------
6
13. Technology Transfer----------------------------------------------------------------------------------6
14. Local and Premises required-------------------------------------------------------------------------6
15. Location------------------------------------------------------------------------------------------------ 6
16. Premises Required and land use plan --------------------------------------------------------------7
17. Flour Lay Out Plan -----------------------------------------------------------------------------------8
18. Market study -------------------------------------------------------------------------------------------
9
19. Past supply and Present demand --------------------------------------------------------------------9
20. Project demand----------------------------------------------------------------------------------------9
21. Production nature inputs, Products, Production Program Distribution channels and pricing
22. Production nature and description ----------------------------------------------------------------11
23. Inputs and utilities----------------------------------------------------------------------------------- 11
24. Raw Materials--------------------------------------------------------------------------------------- 11
25. Plant capacity and production program-----------------------------------------------------------12
26. Plant Capacity ---------------------------------------------------------------------------------------12
27. Production program----------------------------------------------------------------------------------12
28. Plant Capacity and Production Program ---------------------------------------------------------12
29. Distribution Channel and Pricing -----------------------------------------------------------------13
30. Product Distribution --------------------------------------------------------------------------------13
31. Technology and Engineering ----------------------------------------------------------------------15
32. Machinery and Equipment------------------------------------------------------------------------- 15
33. Technology ------------------------------------------------------------------------------------------16
34. Production technology process --------------------------------------------------------------------16
35. Man Power and organizational Management ---------------------------------------------------17
36. Man Power------------------------------------------------------------------------------------------- 17
37. Organizational structure---------------------------------------------------------------------------- 18
38. Source of Fund --------------------------------------------------------------------------------------28
39. Environmental Impact of the project -------------------------------------------------------------
32
EXECUTIVE SUMMERY

1. Project Name Paint Manufacturing Plant

2. Project Owner Shallama Gurmessa
3. Nationality Ethiopian
4. Project location Oromia region state, Burrayu town
5. Project Composition Processing different type of Paint production
6. Premises required
5,100 m2

7. Total Initial Eth. Birr 90,000,000 from this amount 30%

Investment Cost (27,000,000) financed by the owner equity and
70%( 63,000,000) financed bank loan.

8. Employment The total man power required for the plant will be
Opportunity 250 employs
 Permanent workers 185
 Skilled 85
 Un skilled 100
 Temporary 65
 Skilled 17
 Unskilled 48
9. Market share 80% of the production is for domestic
10.Benefits of the project Produce and supply of quality paint products uses
for the region /country source of revenue employment opportunity generate
the country foreigner exchange. Benefit for the local
community and stimulates the local country
11.Technology use To produce the paints product we use Mixers, high
speed , installation of machines and dispresss
machine processing

1.Introduction

Manufacturing small and medium enterprise make up the largest and most
important segment of the industrial sector in Ethiopia. In 200 for example
SME’s contributed I 68% of gross value of production and over 80% of
employment in manufacturing sector. As will be shown in below SME’s
especially the latter are among the most dynamic and innovative
enterprises in the country. In reviewing the investment and technology
policies of Ethiopia. Therefore, it is pertinent that is especial attention is
payed to the pattern of development and the strength and weaknesses of
SME’s in Ethiopia.

Besides, development of small and medium industries accelerates the fast

economic growth of Ethiopia and will help the nation lay it’s economic
foundation. On strong industrial base. However, there exist constraints on
the transition of industries to the heave one.

The government of Ethiopia has developed a conducive investment policy

packing and other sartorial reformism at federal and regional level. To
attract a huge privet investment including in MSE’s for the wellbeing of the
nation and citizen’s as a whole. Besides, it is also currently implementing
the five years growth and transformation plan gave a special focus for
manufacturing, small, medium and large industries.

In this regard, the oromia regional state government has been exerting its
maximum effort to expand investment. Opportunity in the region, so as to
 foster the economic development of the region and subduing the regions
being enemy that is the trap of poverty. There for the regional government
has been preparing a viable business environment to attract many
domestic and foreign investors. So that the dream of making poverty
history turns to bee true.

Therefore, the lucrative market potential and those viable investment

policies attracted the owners of this project. To engage in establishing
paint manufacturing plant in Burayu town Oromia region

1.1 Project Justification

The project objective is to setup paint factory processing plant in Burayu

town. The plant would process paint factory to use as raw material water
titanium ,resin, dyes, filler, calwolin , thinner, Acrylic product to the local
market.

Ethiopia has the great economic potential in Africa. The current double digit
and dynamic economic growth in all sectors support the idea to become a
great nation. As a component of the economic industry, agriculture and
tourism sectors are growing in the fastest rate. This cause an increase in the
hotel industries, therefore there is a need for paint materials which this
project provides the important supplies.

1.2 Promoter Experience

The Companies are who participated in different business activity for a long
years’ experience in the field of trade in the Ethiopia. Under the
management the promoter many successful businesses have been in the
import export in Ethiopia. The promoter has been working in good conduct
and creates job opportunities to many unemployed people. Therefore, if the
participates in the paint manufacturing field he would be successful and add
value to the country economy
1.3 Objective of the Project

The main objective of the plant is to produce different paints and to sale with
responsible price for domestic market (in the future)

In, Addition Company would achieve all this by adopting: (i) an effective and
well defined growth strategies. (ii) Superb market positioning policy. (iii)
efficient marketing and distribution strategy. (iv)Great quality controlled
production. (v) The best customer, employee, distributor, supplier
motivational incentive programs in the industry.

To generate reasonable turnover with manufacturing and sale capacity of

over 7 million liters of paints annually. This will enable us to become
sustainable, create more jobs and expand our operations. We achieve this by
selling to diverse markets, ensuring customers’ loyalty and optimal use of
our facilities.

Customer satisfaction. We shall go extra mile to ensure that all our

customers are happy. We intend to do this by taking time to understand their
needs and assisting them to make better decision. Effective listening,
empathy and rapt attention to customers shall be our watchword.

1.4 The economic Significance of the project

The investigated project demand to contributed to economic development of

the nation in general and the region specific with following ways;

 The promoter has team with which has a vision and a deep
understanding of governments five-year growth and transformation plant
(GDP).
 The project takes quality control very seriously, there we have doubled
layer quality control system that clients trust and high standard of
 customer service with substantial reduction in cost due to transportation
and import tax savings.
 In order to facilitate the transfer of technology in a more organized and
permanent manner, this project will partner with local university in
Ethiopia in order to train professionals with the science of this project is
discussed below;

A. Supply of Quality of different types of paper recycling products

The project will provide expand paint manufacturing plant that will produce
quality and affordable product for the countries market. This will benefits the
users to get better product with better price and durability.

B. Value add

The establishment of this project will add a value to the manufacturing

industry sector in specific and in the economy in general.

C. Source of the revenue

As public policy of the nation the government collects different forms of

taxes from different business organizations and individuals. Among the
different forms of taxes, business income taxes VAT and prays roll taxes are
collected from undertaking business activities. Therefore the factory will
serve as source of revenue for both the region and country in general.

D. Employment opportunity

One of the problems that our country faced in unemployment. Therefore, the
current of the objective of the government is working on tackling the
problem of unemployment and fostering the development processing either
through creating self-employment or employment in other organization.
Hence this project will hire around 250 total employment opportunity from
the total job opportunity about 185 persons are employed permanent basis
(85 skilled and 100 unskilled) and 65 totally temporary from those 17
skilled and 48 unskilled persons on temporary employed basis.

E. Save the Country foreign currency

By minimizing the market gab for paint product demand and supply, the
project will help to reduce the nation’s foreign exchange cost to import these
materials. This will save the foreign exchange currency of the nation.

F. Benefit for the local Community

As a corporate responsibility the company will engage in different

development activities on the surrounding areas (Burayu Town). This will
better worse the community and contribute for development of the region.

G. Stimulate the local and National Economy

This project has positive externality in the zone that will encourage the
economic movement of local economy. Hence, there will be economic
relationship and transaction among different actors in the country.

H. Technology Transfer

By producing paints product, the project will train and develops the capacity
of the technical staffs. By doing this, the company will add value in
technology transfer for the nation.
 1.5 Location and Premises required

1.5.1 Location

The envisioned project is planned to be located in Burayu town (Which is

around 37 from the capital city of the country Addis Abeba), Oromia
regional state. The main justification behind the selection of this location are;
-

 Strategically located to the central and largest market of the nation

(Addis Abeba)
 Relatively advanced development in infrastructure (power, water,
telephone, internet, road and etc.).
 All road to the nearest market out lets.
 Accessibility of skilled labor force.
 Conducive investment policy and governance.
 Environmentally fit to manufacturing industry.
1.5.2 Premises Required

The total land holding of the project is 5,100 m2, the premises required
planned as follows in table one

Table 1. Premises required and land use plan

SN Description Land Requirement(m2)

1 Production hall(Installation machineries 1000
 and electrification)
2 Shops 1000
3 Inputs store 200
4 Core final product store 500
5 Parking 1000
6 Green area 600
7 Internal Road 600
8 Waste accumulation area 200
Total 5100

Flour Lay Out Plan

Production hall (Installation

machineries and electrification
3000m2 Core final product store 1500m2

Shops 2000m2 Green area=1000m2 Packing 1000m2

Internal Road= 300m2

Inputs store 200m2 West accumulation area 200m2

2. Market study and plant capacity
2.1 Market study

Among the final product 100% will be for local market but the future we will
be provide some present of the product for international market.

2.1.1 supply and demand Analysis

The market potential is great because the manufacturing industry is among

the fastest growing sectors of our economy. There is a lot of demand for
paint product this sector is in formal as there are many small scale firms
spread in major towns and trading centers in the country.

Besid, the demand for paint product plant is increasing with the growth in
investment in different sectors. Consumer demand in the country is growing
for this products. Increasing in purchasing power and changes in design tend
to increase the demand steel farther. In addition demand in Ethiopia
products are exports markets has gone up considerable in recent years. This
aspect is relevant for the flower manufacturing industry.

2.1.2 Market prospective

From the above market demand and supply analysis for paint product ,
there exist huge market gabion Ethiopian market. Hence, the envisioned

factory will be successful by interring in to this market. The envisioned

 project will supply 0% of its product for export (International market)
and 100% of its product to supply to Domestic market.

2.1.3 Marketing strategy and promotion

The company will follow the following promotional method;

 Electronic media
 Advertising(media, flayer and newspaper)
 Papule relation
 Branding

The marketing strategy mainly focus on the satisfying the need, orders and
the requirement of the customers

2.1.4 Target Customers

The local market the requirement for the paint product can be categorized in
to four namely

 House
 For dowry
 For renovation
 For institutional buyer
 Public and private sector

The majority of customers in the domestic market belong to first and second
category. This customer require different colors of paints and quartz
products for their house and usually buy range of products.
2.2 Plant capacity and production program

Considering the gradual growth of demand and the tome required to develop
the required skill, the rate of capacity, utilization during the first, second and
third year of production will be 70%, 85% and 100% respectively. Full
capacity utilization will be reached during the third year of operation. The
plant will operate 290 days per year.

2.3 Pricing

It would be important to examine the possible level of price based on the

competitors action. In this connection, the existing average prices of similar
product in Addis Abeba were assessed for benefited of comparison.

3. Production and technology

3.1 Production

Among the final product 100% will be for domestic market. But for the future
we will provide for international market.

3.1.1 Products

Our campony produces more than 300tons of paints with high technology
and quality and provide with responsible price for domestic and
international market.

Paint products

 Plastic paints
 Water paints
 Anti-Rusts
 Alkide varnish
 Glue
  Black board paint
 Road mark paints
 Quartz

3.1.2 Production Amount per year

No Product type Production amount per year

in tone
1 Addtivis 2 tone/year
2 Pigment and Extenders 5000 tone/peryear
3 Binder 900 tone/ per year
4 Solvent 300 tone /per year
5 Quartz 300 tones
6 Different colour of paint 300tones
Total 12202 ton per year

Additional project

3.2 Product Nature and Description

The factor will produce different products based on the customer desire and
requisite in general the following products and designed by the plant to be
produced. The expandable plant will produce different paint products based
on the customer desire and order. Besides, it will will under take different
maintenance on demand base.

3.3 Raw materials and Inputs

The major raw materials required for the products of the paint product
include additives, pigments, binder, solvent etc. the required raw materials
will be imported on purchased in the local market. Different in puts and
supplies are necessarily to finalized those products

Manufacturing paints depend mainly on three physical processes which are

mixing, milling, and filtration, which will be described in some details, and
according that 3 industrial units used which are mixers, mills, filters, each of
them will discussed in some details.

Mixing operation

In paints manufacturing several ingredients used to formulate paint system,

each of them has properties differ from others which mean that there is no
homogeneity between all these several components, mixing process has a
vital role in achieving homogeneity to the mentioned components to get the
final paint system. All paints components are in solid or in liquid state so the
used mixing techniques, will be depends on; solid - liquid mixing, and liquid –
liquid mixing.

Liquid - liquid Mixing

Most of paints components are liquids for providing a final liquid state for
paint applying, three processes occur simultaneously to achieve
homogeneity which are; coalescence, dispersion, and suspension.
Coalescence and Dispersion; occur dependence on shear or velocity
gradient which resulted from mixing speed of liquids drops, which force
drops to deform, to daughter drops increasing due to high energies that
produced by dispersion, after deformation they disperse, collide with
each other, and then coalesce.

Suspension; occur depending on flow movement inside mixing vessel,

which come from speed of mixing, so high-speed mixers are used to
achieve coalesce drops suspension, [8].

Solid- liquid mixing

Solid content of paint system varies, and may reaching to 50% or more
from contents of paint formula, and usually added in the middle stages
of mixing after adding some liquidous components. This mentioned solid
content is a finite powder, dissolved in other liquidous components by
three processes which are; suspension, distribution, and drawing down
of solids by agitation.

Suspension; the condition where no particle remains on the bottom of

the vessel (or upper surface of the liquid) for longer than 1-2 sec. this
position achieved by existence of anti-settling agents and high rotating
speed.

Distribution; it means that there’s no particles in flocculated state

usually in bottom of mixing vessel, this achieves by using dispersing
agents which led for particles distribution in all directions inside vessel.

Drawing down of solids; it achieved by agitation, and represented in

mixing by a cone shape around agitator,.

Mixing Equipment

As obtained in figure mixing operation in paints industry requires a

jacketed vessel for water cooling or for steam heating, which is usually
vertical, and high-speed mixer consists of one or more impellers, which
consisted of a shaft contain one or more disk mixing blade, it driven by
electrical motor and its rotational speed organized using inverter.
 Figure (3.1): A mixing unit

Impeller can be classified to axial, radial, and helical, according to shape

of disk that attached to impeller shaft, usually helical used in mixing
pastes that has high density and viscosity, while axial and radial used in
mixing paints that has low density and viscosity, figure (3.2) show the
different types of impellers.

Vessel flow pattern

There are four flow patterns for vessels which obtained in figure (3.3),
but according to require to achieve con shape or vortex for solid-liquid
mixing, the first flow pattern will be used.
Milling operation
If the mixer power does not achieve the required fineness for the
mixture, the needing for milling appear to achieve the required fineness,
the problem which leads for using mills is that there’s a still colloid
particle not dispersed in the mixture although existence enough amount
of dispersing agent.
The point of view in this process is damaging these agglomerations of
particles and dispersing it in the mixture, and this can be done by
several processes, most common one in paint industry is collision the
agglomerated particles with small balls, these small balls manufactured
from several materials such as glass, steel, and ceramics. Ceramics and
glass for medium and light paints, and steel for dark paints, the amount
of balls put be according to the following equations;

Amount of balls=Capacity of tank * Density of ball * Percentage of

balls………equation (3.1)

Milling equipment
There are two types of mills used in paints industry; rotary mills, and
ball mills. Ball mills is more suitable and provide more safety than rotary
mills because milling processes done in open-air state which is non-
suitable wit paints that contain volatile solvents, these emissions are
harm for working team, but in case of ball mills it done under circular
cover which prevent solvent emissions.

Mill Design
The used mills in paints industry is rotary mills and ball mills, and as
mentioned previously using ball mills is better than rotary mill.

: Rotary mill
It consists of number if rollers each of them rotates in opposite direction
from the other one, as obtained in figure (3.4), and with different speed,
between each two rollers there’s a clearance controlled to get the
required fineness
Ball Mill
This type of mills uses small balls that crashed with colloid particles, it
has two types classified according to its position the first one is
horizontal type and the other one is vertical type.
Horizontal ball mill; as obtained in figure (3.5), it consists of
cylindrical tube and inside its horizontal axis and disks fixed on it
rotate around its center each impeller contains holes for moving of
paint, this machine can use both of steel or glass or ceramics balls.

Figure (3.5): Horizontal ball mill

Vertical ball mill; it also called with basket mill this type has more efficiency than the
horizontal type, also it only uses ceramic balls which give his its efficiency, figure (3.6) show
the basket-ball mill.

Figure (3.6): Basket-ball mill

Filtration operation
A rest colloid particles and ability of glass balls to be broken in case
of using it, so the filtration operation needed, several techniques can
 be used in paints filtration but, screening filtration is more common
in paints industry.

Filtration equipment
As mentioned, the screen filter which obtained in figure (3.7), is the
most widely filter, simply it consists of sheet of cross-linked steel
with holes for purification of paint.

3.4 Technology

Technologies used in this engineering plant use mixers, high speed,

Installation of machines and equipment disperses with latest machineries for
a quality and branded products which are export standard in different stage
of manufacturing extreme care is required for this processes.

3.5 Project Design and Engineering

The proposed project comprises stock of different components to be

executed at different phases of the project life. These activities include;
design and Construction of various buildings (workshops), importing of
machineries, additive chemicals and other raw materials, imports of product
transporting medium vehicle.
3.5. Paints manufacturing Procedures

Firstly, surface active agents, usually thickeners added to give a gel stage
after that binders or oils added, in addition to adding pigment and fillers also
amount of solvent added, this procedure called premixing, after that a
sample sent to laboratory to get a report about its fineness, viscosity, and
density.

If the fineness not meet the required specifications, the mixture charged to
the milling unit, after that the other additives and the rest amount of solvent
added and mixed in a procedure called thinning, after this procedure another
sample sent to the laboratory to done some tests such as, viscosity, density,
and hiding power.

If test results meet the required specification, the quality lab. Give a
permission to start packaging, and before that the final mixture purified
using a bar screen, after that it packaged manually, semi-automatic, or
automatic according production volume, figure (4.1) show the flow sheet of
paints manufacturing.

Epoxy paints

Epoxy systems are considered from the best systems of paints specially and
of coatings generally, most of it using in protection purposes, it has several
systems, but the common system is the 2-component system, an example of
2K system components is obtained in table (4.1), and the hardener in table
(4.2). Table (3.1): epoxy-base components
 Component Phase Function
Vehicle (Solvent +Resin)
Epoxy resin with solid content Liquid Binder
100%
Epoxy resin with solid content Liquid Binder
75%
Hydrocarbon resin dissolved in Liquid Binder
xylene
Iso butanol Liquid Solvent
Xylene Liquid Solvent
Pigment
Titanium di-oxide Solid (powder) Pigment
Carbon black Solid (powder) Pigment
Additives
Nonyl phenol BYK Liquid Wetting agent
163 Liquid Dispersing agent
Silica flower Solid (Powder) Filler
Barium sulphate Solid (Powder) Filler
Crayvallac Liquid Thickener
Based silicones Liquid Anti-foaming agent

Table (4.2): epoxy-hardener components

Component Phase Function

Iso butanol Liquid Solvent
Xylene Liquid Solvent
Polyamide Liquid Hardener
Ankamide Liquid Accelerator

Manufacturing o epoxy 2k system procedures

At first the mixing unit must be cleaned well, with toluene or any
solvent, to remove the rest of the previous batch, after that we use
another small mixing unit for mixing the amount of hydrocarbon resin in
a same amount of xylene, we can use another solvent but for saving
time xylene is used, this procedure take usually 30 minutes. After that
the 2 epoxy resins added in the main mixing unit, in addition to xylene,
nonyl phenol, and iso-butanol, and start of mixing components for 30-45
minutes until the mixture temp. reach 50-60 ◦C, which is the suitable for
Crayvallac to start its work as thickener and anti-settling agent, when
reaching to the required mixing temperature, the other components of
epoxy base added; Crayvallac, fillers, TiO 2, and carbon black to get a
grey color.

This mixture mixed for 30 minutes for dissolving these added powders
after adding BYK 163, which is a dispersion agent. After that a sample
sent to quality control laboratory (QCL) to test its fineness, and with QCL
acceptation the defoamer added, and mixed, after that another sample
sent to QCL to test its, viscosity, density, and hiding power.

The hardener manufactured by injection all its components, which

obtained in table (4.2), in another tank and mixed for 15-20 minutes,
and sending a sample for QCL, and after acceptation the product
filtrated using a screen filter, packaged, and labeled.

Aluminum paint

It’s a protective paint used for metallic constructions it has a simple

formula which showed in table (4.3), manufactured by adding xylene,
propylene glycol mono ether, and aqualon which work as a thickener.
These components mixed for 20 minutes, after that aluminum pastels
which its composition showed in table (4.4), added and mixed with the
previous added components for 10 minutes, after that the silicon resin
and butyl titanate added and mixed very well with mixture. A sample
sent to QCL and tested, after that the mixture milled, filtrated, and
packaged.
 Table (4.3): Aluminum paint components
Component Phase Function
Vehicle (Resin + Solvent)
Silicone resin Liquid Binder
Xylene Liquid Solvent
Propylene glycol mono-ether Liquid Solvent
Pigment
Aluminum Solid (Paste) Metallic pigment
Additives
Aqualon Liquid Thickener
Butyl Titanate Liquid Anti-moisture agent

Table (4.4): Aluminum pastel contents

Substance name Percentage (%)
Aluminum 64-67
Hydrocarbons (C9-C12), n-alkanes, iso-alkanes, cylices, Aromatic 32-35
(2-25%)
Fatty acid (C16-C18) <1
Primer
Primer paints used for preparing surface to be painted, as it covers all
surface pores, leveling the surface to painted with a finish painting, its
formula showed in table (4.5), the first procedure is dissolving the hydro
carbon resin in white spirit, and this procedure take usually 2hours, during
this mixing we use another mixing unit for the other procedures.
The long alkyd resin, benton, and methanol added and mixed for 15-20
minutes, after that filler, and the pigment added and mixed for 20-30
minutes. A sample sent to QCL for testing fineness, and after that dryers,
anti-skinning agent, and dissolved hydrocarbon resin added, and mixed for
10-15 minutes. Another sample sent to QCL, to get a final report about its
meeting to the specific requirements, after that it milled, filtrated, and
packaged.
Table (4.5): Primer components
Component Phase Function
Vehicle (Resin + Solvent)
Long Alkyd resin (70%) Liquid Binder
White spirit Liquid Solvent
Hydrocarbon resin dissolved Liquid Binder
in white spirit
Pigment
Bayferox yellow Solid (Powder) Green pigment
Additives
Benton 34-non activated Liquid Thickener
Methanol Liquid Activation of Benton34
Calcium carbonate Solid (Powder) Filler
Methyl ethyl ketoxime Liquid liquid Anti-Skin Dryers
Zr, Co, Ca octoate

Lake
Lake is used after primer painting, it has a formula usually contain
alkyds as a binder, table (4.6) show components of semi-gloss lake. The
first procedure in its manufacturing is adding the long alkyd resin, white
spirit, soya lecisin, benton 34, methanol, and half amount of TX. After
adding this mixture mixed for 20 minutes to activate benton 34. After
that filler and titanium di-oxide added and mixed for 30 minutes.

A sample sent to QCL to get a report about its fineness, if the fineness
achieved meet the required specifications, dryers, toner, the rest
amount of TX, and anti-skinning agent added and mixed for 10-15
minutes. After that a sample sent to QCL to get a report about its
viscosity, density, and hiding power, also done some other tests to
ensure that it meet the required specification. After that it filtrated and
packaged.

Table (4.6): Semi-gloss lake components

Component Phase Function
Vehicle (Solvent +Resin)
Alkyd resin 60% Liquid Binder
White spirit Liquid Solvent
TX (Toluene-Xylene) Liquid Solvent
Pigment
Titanium di-oxide Solid (Powder) White pigment
Additives
Benton 34 Liquid Thickener
Methanol Liquid Activation of Benton 34
Soya lecisin Liquid Dispersing agent
Methyl ethyl ketoxime Liquid Anti-skinning agent
Zr, Co, Ca octoate Liquid Dryers
CaCO3 Solid (Powder) Liquid Filler
Toner Giving a shiny color

Poly urethane (2 components)

Approximately, it’s similar to epoxy in its using, and in its systems,
the most common system is 2K system, which for manufacturing it, a
two mixing units used, the first one used for manufacturing base and
the other one, used in manufacturing hardener.

In base manufacturing; which it components showed in table (4.7),

toluene de-isocyanate, xylene, crayvallac, and BYK 163 added and
mixed until the temperature of mixture reached to 55-60 ◦C, after
that talk, barium sulphate, and titanium de-oxide added and mixed
well for 20-30 minute, a sample sent to laboratory, to test its
fineness, and after that the rest of additives added which are; BYK
300, tinuvin 292, BYK 066, and cylan 187, and mixed for 10-15
minute, after that a sample sent to QCL for tests, after that it
filtrated, an packaged. In hardener, which its components showed in
table (4.8), it manufactured by adding all of it components, in a
vessel and mixing it for 10-15 minutes, after that it tested, filtrated
and packaged.

Table (4.7): Polyurethane-base components

Component Phase Function
Vehicle (Solvent +Resin)
toluene de-isocyanate Liquid Binder
Xylene Liquid Solvent
Pigment
Titanium di-oxide Solid (Powder) White pigment
Additives
Crayvallac Solid (Powder) Thickener
Tinuvin 292 Liquid Light stabilizer
Cylan 187 Liquid Adhesion promoter
Talk Solid (Powder) Filler
Barium sulphate BYK Solid (Powder) Filler
163 Liquid Anti-settling agent
BYK 300 Liquid Surface
BYK 066 Liquid Anti-foaming agent
 Table (4.8): Polyurethane-hardener components
Component Phase Function
Xylene Liquid Solvent
Polyamine Liquid Hardener
Varnish
It used for cover surface, but it has a distinguished property, which that
it’s not contains a pigment in its formula, which mean it’s a colorless
paint, simply it manufactured by adding the short alkyd resin, nitro
cellulose and the mentioned solvent in table(4.9), and mixing them for
10-15minute, after that adding zinc strate, and talk, and mixing them
for 10-15 minute. After that it filtrated, and packaged.

Table (4.9): varnish components

Component Phase Function
Vehicle (Solvent +Resin)
Short alkyd resin Liquid Binder
Nitro-cellulose Liquid Binder
Turpentine Liquid Solvent
Ethyl glycol Liquid Solvent
Butyl acetate Liquid Solvent
Additives
Zinc strate Solid (Powder) Defoamer
Talk Solid (Powder) Filler
Thinners
It’s a solvents composition, used for thinning paints products, with defined
percentages defined by the manufacturer, methanol is used as a filler, to decrease
cost of thinner, table (4.10) show types of paints and its thinner solvents. Table (4.10):
paints and its thinners
Type of paint Thinner solvents

Epoxy 1. Xylene;
2. Xylene + Methanol;

3. Xylene + Iso- Butanol.

Lake 1. White spirit;

 2. White spirit + xylene;

3. Xylene + Toluene.

Silk screen inks 1. Butyl glycol;

2. Ethyl glycol;

3. Butyl glycol + Ethyl glycol.

Thermal inks 1. Ethyl glycol;

2. Toluene + Methanol.

Polyurethane 1. Xylene;
2. Toluene.

Traffic paints 1. Toluene;

2. Toluene + Methanol.

3.6 Building and Construction Works

A very simple building may suffice for an initial startup the main
consideration being the security of the equipment and secure connections to
electrical supply. The building will have to be designed along factory
production lines allowing for smooth transitioning of the raw materials in to
completed products and optimized for maximum efficiencies.

3.7 Utilities

A number of utility would be put in place in order to ensure smooth

functioning of the factory. These utilities include;

 Water supply
 Supplementary Electricity supply
 Telephone line
 Paved road transportation
  Drainage Facility

Table 3.1 Raw Materials requirement

RN Description Unit of Annual Unit price Total Price

measure Quantity
1 Additive tone 356 46,000 Br/t 16,376,000
2 Pigment tone 3,500 31.05Br/kg 1,068,675
3 Binder tone 4,500 29Br/kg 130,500
4 Solvent tone 2000 80.00Br/kg 800,000
18,825,265.
0

a. Distribution Channel and Pricing

i. Product Distribution

The final product will be directly supplied to wholesaler eliminating role of

the middleman. Distribution network of the product is illustrated below;

Figure 3.1 Product distribution Net-work

Manufacturing

Wholesale

Retailer

End User
 4 Man Power and organizational Management
Man Power

At the top of organizational structure, there will be general manager with the
responsibility of supervising the overall activity of the plant. Depending up
on the nature of the center and the amount of work to be performs, there will
be auxiliary units under the general manager. Employees under each unit
will be supervised by the unit head that is accountable for the general
manager.

The company will use efficient trained staff in the area of marketing to be
competitive in the market. The opportunity of being serviced b well skilled
professionals well enable the company to evaluated the internal weakness
and strength of the company as well as of the to assess the global
opportunity and risk in the world market so the company can cope up with
the dynamics of the market situation. The company hire 250 employ of
whom 132 persons (35 skilled and 100 unskilled) on permanent basis and 65
temporary employer from those 17 skilled and 48 unskilled on temporary
basis)

The detail human power requirement monthly and yearly salary is indicated
in part 6 the financial part.

4.Organizational structure and management

The organizational structure of the project is design by including all the

necessary personnel under the right division. At the top of the organizational
structure, there will be a general manager with responsibility of supervising
the over all activity of the plant. Employs under each unit will supervised by
the department head that is accountable for general manager. General
manager accountable to the owner of the plant as indicated in figure below.
Fig 5.1 Organizational structure

General Manager

Secretary

Production Marketing Department Administration Department

Department

Training Requirement

The manufacturing employs of the plant expected to take basic paint

technology manufacturing skill training for 20 days. In addition to training
could be given to the mechanic and to the supervisor will also take skill
training from one of TVET colleges or similar undertaking factories in Addis
Ababa.

1. General manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of
the plant.
 She/he will devise policies and strategies that will enable the factory to
be profitable.
 She/he incorporate modern technology innovation that will facilitate
the service delivery of the project center and increase customer’s
satisfaction.
  She/he will plan , organize ,direct and control the human and non
human resource of the plant so as to achieve the short and long run
objective of the organization.
2. The production Department
Duties and responsibilities

It is the core department of the project center and has the following
responsibilities;

 Design and prepared prototype for wood based products based on the
plant standard and customer preferences.
 Produce different kind of paint and paint product based on the plant
standard and customer preference.
 Use modern manufacture, processing and technologies that will
enhance the quality of those products.
 Produce quality paint product that will enable the center competent
both in the domestic and international market.
 Use appropriate technology that will enhance the quality of the
products.
 Control on the quality of raw materials, inputs quality, of the product
and also the overall production process.
 Produces products in least cost so that the profitability of the center is
guaranteed
 Moreover control over the quality of the final paint products.
3. Administration and Finance Department
Duties and responsibilities
 Will plan, organize direct and control the financial transaction of the plant
by using necessary document.
 Will develop sound financial control system by developing modern
financial control systems.
 Will prepare the annual financial system and prepare condensed reports
for the general manager , owner and other concerned government body.
 Will control the human and nom human resources of the plant, which
include; effective handling of the different inventories of the machineries,
equipment’s, raw materials , finished products, and devices strategies of
controlling against fraud and damage.
 Manage and execute the company national and international procurement
procedure.
 Administer and control the company logistic resource.
 Effectively administer the company procurement process domestically as
well as internationally.
 Manage the public relation of the company/factory with external
parties/stakeholders.
 Provide and manage general supportive service to the plant.
4. Marketing and sales Department
Duties and responsibilities
 Will handle the overall marking activities of the organization which
include planning, organizing, directing and controlling.
 Provide cost estimate in preparation for securing.
 Gather information on new product design profile.
 Approval of new products profile and brand plan analyzes market
research.
 Plan and execute sales
 Will develop effective customer handling strategies.
 Will design and implement effective advertisement and promotion
schemes.
 Will develop the marketing strategies for future project center’s
development
 Conduct both foreign and domestic market research for expanding the
sales of the company.
 5. Financial requirements and analysis
5.1 Total initial investment cost

The total amount of the money that is required to established the envisaged
plant is estimated to Birr 90,000,000

Table Total initial investment capital

No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 25,200,000
1.2 Machines and Equipments 19,800,000
1.3 Vehicles and Motors 2,700,000
1.4 Office Furniture and Equipment 1,800,000
Total Fixed Investment Cost 49,500,000
2 Operating Expense
2.1 Raw Materials Purchase and Products 18,000,000
2.2 Salary Expense 9,000,000
2.3 Other Operating Expense 2,700,000
2.4 Pre-operating Expense 1,800,000
Total Operating Expense 31,500,000
Contingency (Lump sum) 10% 9,000,000
Total Investment Cost 90,000,000

Fixed investment

A . Building and construction

Table Construction and civil work cost

The total cost of required construction and civil work, is estimated to Birr
25,200,000

R Description Land Unit cost in Total cost in

N requirement birr birr
Production hall(Installation 2000 2800 5,600,000
of machineries and
electrification
Shops 300 30000 4,900,000
Input stores 1000 5000 500,0000
Core final product store 1000 5000 500,0000
Office 300 5000 210,0000
Cafeteria 200 6100 122,0000
Generator house 50 3000 15,0000
Guard house 50 3000 15,0000
Parking 100 2000 20,0000
Green area 600 1000 60,0000
Internal Road 300 3000 900,0000
 Waste accumulation area 100 1000 10,0000
Total 5000 91000 22,200,000

A. Machineries and Equipment’s

The total cost of required machineries and equipment’s, is estimated to be
Birr 19,800,000

Table Machineries and Equipment’s Cost

R Description Quantity Unity Total Cost

N cost
1 List of Machines for paint
Production
Machines and equipment 12 500,000 10,000,000
Furniture and fitting 4 275,000 1,475,000
Lab Instrument 6 1,000,00 8,000,000
0
Total 19,800,00
0

A. Vehicles

Table vehicles cost

The total cost of required vehicles, is estimated to be 2,700,000

N Type of purpose Qty Unity price Total Cost

o Vehicle
1 Pickup Material 1 660,000 660,000
transportation
2 Dum truck Material 2 80,000 600,000
transportation
3 Tandem axel For unloading raw 1 1,530,000 1,530,000
truck with materials
 mounted
crane
4 Bus(43-57P) Employee srvice 4 500,000 2,000,000
Total 2,700,000

Initial Working capital

The initial working capital is estimated to be birr 31,500,000

A. Pre-service Expense

Table Pre-service expenses

RN Description Total cost in Birr

1 Project proposal 15,000
2 Environmental Impact assessment 30,000
3 Staff capacity Building 100,000
4 Licensing free and others 2,000
5 Others facilitation 100,300
Total 1,800,000

B. Raw materials and Inputs

The total cost of inputs and raw materials required for the production of paint
product include Additive, pigment, binder, solvent etc . The required
materials will be imported or purchased in the local market. Different input
and supplies are necessary to finalize those products.

Which is estimated to be birr 18,000,000

Input Supply;- agreement is not needed , materials are widely available.
The company is also planned to established mutually beneficially relationship
with very few reliable suppliers with other similar companies and also based
on their reputation and financial viability to ensure real time delivery of
critical new materials.

All materials are available from multiple sources throughout the market. The
company will buy two months of stock for materials. Raw materials will be
transported and stored on the premises. Finished products will be stored on
the premises. The customers pick up the finished product on a weekly basis
as stipulated in the contract.

The company has capacity to store and handle raw materials and finished
materials on the premises

Table The required raw materials cost

R Description Unity of Annual Unity price Total price

N Measure Quantity
1 Addiive tone 92 46,000Br/t 4,278000
2 Pigment tone 3,500 31.05Br/kg 108,680
3 Binder tone 4,743 25Br/kg 231,075
4 Solvent tone 293 80Br/kg 207,520
18,000,00
0

C. Salary Expense
Table The Required salary Expense

RN Position No Qualification Monthly Annual

Salary Salary in
in Birr Birr
1 General manager 1 MBA 5,000 100,000
2 Operational Manager 1 BSC in industrial 3,000 60,000
 engineering
3 Senior/Junior 4 BSC in engineering 2,0000 96,0000
engineers
4 Technical inspector 4 Dip in. Indus. 1,800 86,400
Technology
5 Electrician 3 Diploma in electricity 1,800 64,800
6 Designer 2 BSC in drafting 2,500 60,000
7 Skilled workers 15 10th/12th completed 1,200 216,000
8 Daily workers 131 unskilled 1033 1,623,876
9 Head administration 1 BA in Acco/Mgt 2,800 33,600
and Finance dept
10 Sales 2 Diploma in sales mgt 2,000 48,000
11 Accountant 2 BA in accounting 2,000 48,000
12 Cashier 1 10+2 in 2,000 24,000
Bookkeeping
13 Personnel 2 BA in HRM 2,000 48,000
14 Head, commercial 1 BA in marketing mgt 2,800 33,600
Dept
15 Secretary 1 Dip in secretarial 1000 12,000
science
16 Cleaner 3 Unskilled 1,000 36,000
17 Store keeper 2 Diploma in logistic 1,600 38,400
mgt
18 Purchaser 2 Diploma in supp and 1,600 50,400
put mgt
19 Guard/security 5 Basic 1,500 90,000
20 Driver 4 10th completed and 1,500 72,000
certification
21 Operator 4 10th completed and 2,500 120,000
certification
22 Ass.Driver 2 Basic 1,200 100,800
23 Gardner 4 Unskilled 800 38,400
Total 19 100,63 9,000,00
7 3 0

D. Other operating expenses

Table Other operating cost

RN Description Annual Assumption Used

 Cost
1 Property insurance 100,000 1% of fixed investment
cost
2 Workers incentive 200,526 20% of salary
3 Audit and legal fee 240,000 2000 per month
4 Workers uniform 28,800 160*180 br
5 Telephone , fax and postal 12,000 1000 per month
6 Cleaning goods supply 16,800 1400 per month
7 Repair and maintenance 225,000 2% of the fixed cost
8 Advertisement 10,000 10% of the sales
9 Stationary and office supply 9,600 800 Per month
10 Electric city 155,000 1,527,232KWH
*0.5778Kw/year
11 Water 8,000 2br *4,000m3 per
month
12 Oil and lubricant 70,000 10% oil and lubricant
13 Spare parts 100,000 1%of fixed investment
cost
14 Miscellaneous expense 60,000 5000 per month

2,700,000

4.4 BANK LOAN

Principal Interest Total Annual Remaining

Year
Payment (10%) Payment Balance
0 0 0 0 90,000,000
1 9,000,000 9,000,000 18,000,000 81,000,000
2 185,000,000 8,100,000 193,100,000 -104,000,000
3 185,000,000 -10,400,000 174,600,000 -289,000,000
4 185,000,000 -28,900,000 156,100,000 -474,000,000
5 185,000,000 -47,400,000 137,600,000 -659,000,000
6 185,000,000 -65,900,000 119,100,000 -844,000,000
7 185,000,000 -84,400,000 100,600,000 -1,029,000,000
 8 185,000,000 -102,900,000 82,100,000 -1,214,000,000
9 185,000,000 -121,400,000 63,600,000 -1,399,000,000
10 185,000,000 -139,900,000 45,100,000 0

4.3 Underlying Assumption

The financial analysis of the envisioned plant is based on the data provided
in the preceding sections and the following assumption; -

A. Construction and Finance

 Construction period 26 months

 Source of finance 30% of equity (from owner ) and
70% loan from Bank
 Operating costs, raw materials wages
and salary increase by 3% after three
years
 Sales priced increased by 3% after 3
years

 Working days 12 month, 312 days per year

B. Depreciation

Building 5%

Machinery 10%

Vehicles 20%

Office furniture 10%

C. Working Capital

Accounts receivable 30 days

Raw material local 30 days

Working progress 5 days

Finished products 30 days

Cash in hands 5 days

Accounts payable 30 Ays

4.5 Source of Fund

It is expected that from the total project cost 30% of the project cost is
covered by the owner equity and 70% of the project cost is covered by the
bank loan.

RN Description % share Amount (in

Birr)

1 Owners Equity 30 27,000,000

2 Bank Loan 70 63,000,000

Total 100 90,000,000

Depreciation schedule

The total depreciation of the fixed asset is estimated to birr

S Original Value Depreciation Depreciation Per
Description
N In Birr rate in % year
Construction and
1 518,000,000 5 25,900,000
Civil Work
Machines &
2 407,000,000 15 61,050,000
Equipment’s
3 Vehicles 55,500,000 20 11,100,000
4 Office Equipment 37,000,000 15 5,550,000
Total 1,017,500,000 103,600,000

Balance Sheet Table Balance Sheet

Asset
Current Asset
Cash 13,500,000
Inventory of raw materials and inputs 18,000,000
Total Current Asset 31,500,000
Fixed Asset
Land, Building and Construction 25,200,000
Machineries and Equipment’s 19,800,000
Office Equipment 1,800,000
Vehicles 2,700,000
Total fixed Asset 49,500,000
Total Asset
Liability
Account payable 63,000,000
Owners Equity 27,000,000
Capital
Total Liability & Owners’ Equity 90,000,000

4.8 Profitability

Based on the projected profit and loss statement, the project start operation
in the loss and it will generate a profit starting from second years Birr
5,363,500 the annual net profit after tax will grow on third years of operation
when it start at full capacity Birr7,639,420 during the life of the project.

Import ratio such as profit to total sales, net profit to equity (return on
equity) and net profit plus interest on the total investment (return on total
investment) show an increasing trend during the life time of the project.

The income statement and the others indicators of the profitability show that
the project is viabl.

4.9 Break-even Analysis

The break- even point of the project including cost of finance when it starts
to operates at full capacity(year 3 ) is estimated by using income statement
projection.

BE=Fixed cost/sales- variable cost= 64%

4.10 Ratios

In financial analysis financial ratios and efficiency ratios are used as an index
or yardstick for evaluating the financial operation of a firm. It is also an
indicators for the strength and weakness of the firm or the project. Using the
year –end balance sheet figures and other relevant data, the most important
ratios such as return on sales which is computed by dividing net income by
revenue, return on assets (Operating income divided by assts), return on
equity(net profit divided by equity) return on total investment (net profit plus
interest divided by total investment) has been carried out over the period of
the project life and all the result are found to be satisfactory.

4.11 pay- back period

The payback period also called pay off period is defined as the period
required recovering the original investment outlay through the accumulated
net cash flows earned by the project . Accordingly, based on the project cash
flow it is estimated that the project initial investment will be fully recovered
with 4 years.

4.12 Internal rate of rerun

The internal rate of return (IRR) is the annualized effective compounded

return rate that can be earned on the investment capital i’e the yield on the
investment. Put an other way, the internal rate of return for an investment is
the discount rate that makes the net present value of the investment’s
income stream total to zero.

It is an indicator of the efficiency or quality of an investment. A project is a

good investment proposition if it is IRR is a greater than the rate of return
that could be earned by alternate investments or putting the money in the
bank account. Accordingly, the IRR of this project is computed viable
indicating the viability of the project.

4.13 Net Present Value

Net Present value (NPV) is defined as the total present (Discounted) Value of
a time series of cash flows. NPR aggregates cash flows that occur during
different present value. It is a standard method for the using the time value
of money to appraise long-term projects. NPV is an indicator of how much
value an investment or project added to the capital invested. In principal
aproject is accepted if the NPV is non-negative. Accordingly, the net present
value of the project is found to be is acceptable

4 .ENVIRONMENTAL IMPACT OF THE PROJECT

Environmental aspects are fundamental for the sustainability assessment of
the current and novel designs of this project. In this regard the plant will
under take a separate and detailed environmental impact assessment. To
assess the impact and design mitigation measure if any adverse impacts are
there so as to make the project benefited more society and nation