MANTO Industrial PLC

Manufacturing of Plastic product

Feasibility Study
Address:-Addis Ababa City Administration
Contact Person:-AtoAbrarMuradMuktar
Telephone No.:- 09-11-44-64-44
Email :-Manto [email protected]
Produced by Teshome Abebe
Banker and Business Advisor

June,2019
MANTO IndustrialPLC | Feasibility study for Plastic product Project 1
Contents
I. Executive summary……………………………………………………………… 2
II. Background Information ………………………….…………………………….. 3
2.1 Name and Address of the Company and the Project
III.
D. Demand and Supply Gap........................................................................................................29
5.3.3. Market and Marketing Arrangement..................................................................................29
5.3.4. Marketing Channel............................................................................................................30
7.1.Organizational Structure of Plastic Pipe Conduit and Fittings industry.................................37
7.2.Management and Manpower requirement..............................................................................38
8.1. Environmental Impact...............................................................................................................41
8.1.1Air Emissions......................................................................................................................41
8.1.2. Solid Wastes......................................................................................................................41
8.1.3. Noise (Sound pollution): No big sound or noise that disturbs the surrounding.................42
8.2. Occupational Health and Safety............................................................................................42
9.1 Positive Socio Economic Impact...........................................................................................44
9.2 Negative Socio Economic Impacts..................................................................................45
10.1. Key Risk Factors.....................................................................................................................45
10.2. Key Success Factors...............................................................................................................45
10.3. Key Drivers......................................................................................................................45
10.4. Problems and Constraints.......................................................................................................46
10.4.1Problem..............................................................................................................................46
10.4.2. Constraints.......................................................................................................................46

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 I. EXECUTIVE SUMMARY

The Manufacturing sector growth was higher than the growths of the other two sectors due to
the fact that the country is looking for the transformation of its economy from agriculture to
industry. Though, the manufacturing sector of Ethiopia constitutes a small section of the
economy, it has shown significant growth and diversification in recent years. The Ethiopian
government is working hard to expand the manufacturing sector with a view to make the
sector become commutative in the international market as well as required to play a
significant role in import substitution.

Plastic products manufacturing industries following the boom in construction sub-sector and
overall economic growth are escalating in number and have got an increasing demand for
their products. There are about 150 plastic factories in Ethiopia of which 33 of them are
engaged in the pipe production while others are producing various types of plastics. As the
need of plastic products is increasing, there is a huge gap which is currently filled through
import.
The major types of plastic pipes produced are polyvinylchloride (PVC) pipes, High-Density
Polyethylene (HDPE) pipes and PPR pipes. PVC pipe take the larger portion of the
production. Conduits are produced in a large quantity by most of pipe producing factories.
However, local production of fittings is very limited. The raw materials used for the
production of plastic pipe, hose, conduits and fittings are entirely imported from outside.

Considering the above facts and with the intention to take part in the development process,
therefor, our company,MANTOIndustrial PLC is managing to engage
intheManufacturing of Plastic product used as inputs for construction of buildings, vehicles
or other industrial product; plastic pipes or tubes and fittings used for irrigation and drinking
water supply as well as for sewerage system.The company has already received the required
legal documents like Investment permit, commercial registration certificate, TIN, as well as
supporting letter for investment incentives from pertinent Government Offices.
To achieve the plan, Birr 18,941,343 is required as an initial investment. All the
investment is expected to finance by MANTOIndustrial PLC.

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The project will take place in Addis Ababa City Administration, in one of industry Zone. It
is known that the area expected to be very conducive for production of plastic products and
distribution same. Hence, the promoter will employ smart marketing strategies that enable to
convert this potential in to real production that will in turn benefit the Nation as well as the
citizen’s income.

The opportunity for the envisaged project is as high as can be evidenced by the existing
visible market gap. It is expected that the unfulfilled demand for Plastic product keeps
continuing due to expansion of urban population, Government focus for irrigated agriculture
and boom construction sub sector coupled withincrease in car assembling companies from
time to time. Such progresses would obviously raise the need for plastic products.

In view of these facts, MANTO Industrial PLC is planned to establish Plastic products
factory aim to produce inputs for construction of buildings, vehicles or other industrial
product; plastic pipes or tubes and fittings used for irrigation and drinking water supply as
well as for sewerage system.

The company is located in Addis Ababa city Administration, in one of any kifleketema
where identified as industry Zone. The row material will be imported partially from Asian
countries and partially sourced locally. The company planned to use all raw materials from
domestic source.

The company expects to catch the interest of the all sectors, Manufacturing,Agriculture
including Government at a competitive price to meet their demand. At the first phase
AddisAbaba and surrounding areaswill be the targeted market, and then main regional
towns and neighboring countries are target in the second phase as well. The company plans
to build a strong market position in the country, due to the fact that the partners' have
accumulated experience as well as capacity in managing businesses specifically importing
various products from abroad.

The company plans to install a Manufacturing plant with a capacity of 48,000mts of

HDPE, 52,800mts of PPR pipes, 60,000units PVC pipe fittings, and 24000 sets of conduits
per annum

Total land area required is 5000square meter out of which 2500 Square meter is built-up
area. The company assumed to start full-fledged operation in the beginning of January
2020.

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AtoAbrarMurad will be assigned as a General Manager of the company, a professional with
rich technical experience in business management.He has completed formal education.
Andhe has a total of more than 10 years business experience. Taking this advantage, the
General Manger will drive the company towards effective operation through efficient
utilization of resources, and make it profitable venture. Moreover, he will be assisted by other
Department Managers mainly from the Production, Technical and quality control
Department, Marketing Department, HRM & Administration Department, Finance
Department and Customer Development department.

The income statement predicted for 10 project years shows a net profit of Birr4,641,502 in
the first year and Birr 6,473,409.00 in the tenth project year implying that the project is
financially profitable. The average annual net profit amounts to Birr 6,081,669.00

The cash flow projection made for 10 project years shows cumulative cash balance of Birr
4,385,202.00 in the first project year and increase to Birr 48,653,358.00at the tenth project
year implying that the project will not face liquidity constraint to finance its production cost
as well as timely payment of its debt obligation if there is any.

The pretax and after tax Internal rate of Return computed based on 10 years projects period
are 44% and 39%. This rate is by far above the cost of debt 12% implying that the project
could successfully cover its investment cost during its life span after paying its cost of debt.
Moreover, the sensitivity test worked out at 10% in costs and 10% decline in revenue showed
a good result of 36% and 31% IRR after tax, respectively. Hence, the project is relatively
sensitive to decline in revenue than increase in costs.

In addition to the above mentioned financial indicators, the factory has diverse economic
benefits as well. It creates Job opportunities for 56 permanent and up to50 temporarily
workers. Secondly, it generates tax revenue of Birr 3,023,488.00 on average per year in the
form of profit tax to the government treasury in the projected ten years.

To sum up, the market and financial appraisal of the project indicate that the project has
ample market prospect and financially viable, and economically feasible. Moreover, it has
commendable societal benefits.
Brief details of the feasibility study are discussed in the following pages.

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 II. BACKGROUND INFORMATION
2.1.Name and Address of the Company and the Project

The Company

Name of the Company : MANTOIndustrial PLC

Address : Addis Ababa City administration,
Addis Ababa Town,
Tell No. 09-11-44-64-44
Legal form of Organization : Private limited Company
Tax Payer Identification No(TIN):0058572047
VAT Registration Certificate No :
The Project

Project Name : MANTOIndustrial PLC

Address : Addis Ababa City administration,
Addis Ababa Town,
Status of the business : New
Investment Licensing Agency : Addis Ababa Government Investment Agency

License Number: አኢፈ 110336/11

Licensing Date: 19/7/2011

Commercial Registration Certificate Agency: Addis Ababa city Admin,Trade Bureau
License Number : NL/AA/2/0012612/2010
Licensing Date: 9/11/2010

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2.2. Brief History of the Enterprise/promoter

Promoter of the project, MANTO Industrial PLC, was established basically to engage in
various business and social Activities as per the Memorandum and Articles of association
like;
- Agriculture, Forestry, fishing
- Construction
- Manufacturing of plastic products, Electrical Material and General Machineries
- Transport, Storage and communication
- Financial Intermediation, Insurance, Real estate, and Business Service
- Community, social and Personal Services. The company is owned by two individuals who
came from different walk of life bust same business exposure.
Two of the shareholders, AtoAbrarMurad and AtoMuradTemam, are engaged in diversified
business. They have mainly run a business starting from their childhood through importing
various machineries. Both shareholdershave many years business experience and have
technical knowledge in plastic products and motor generator. Hence, the manager as well as
the other shareholder supports the project in identify/select appropriate machinery and
technology, proper installation, testing and other technical elements.

Moreover, the financial management and marketing tasks will receive strong support of
family members of the shareholders who are business students with good experience and
wide network.

Hence, the above resources and set up would tell the shareholders capacity to manage
efficient utilization of resources, explore potentials and accelerate progress of the project.

The name of the members and their respective capital contribution to the company is
shown below.

Table 2.1: Name of Shareholders and Number of Shares

Sr.N Name of Share Holder Number of Value of Total

Share Share Contribution
1 AtoAbrarMuradMuktar 1000 10,000 10,000,000

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 2 AtoMuradTemamMehamed 1000 10,000 10,000,000
Total 20,000,000.00

2.3. Scope and Objectives of the Project

As a business entity, the main objective of the project is to generate a reasonable profit to the
company through availing quality Plastic products to the society at reasonable price.

In Addition to this, the promoter aims to bring about the following benefits to the surrounding
community:
 Substantially reduce cost of residents, peoples engaged in irrigated farms (suppliers)
through integrating the supply chain and assist them to enhance the individual and
national level productivity
 Creating employment opportunities to surrounding people
The promoters aspire to make a difference in the lives of the surrounding community through
increasing their productivity, increasing volume of their business and collaborating in social
activities.
Moreover, for the society in general, the project may contribute for Economic growth of the
country through availing the required product.

2.4. Project Rational and Incentives

As we all know, Ethiopia has a large population, relatively favorable climate for agricultural
practice that enabled the country to have a substantial potential for Agricultural development.
However, disintegration of the supply chain, inadequate supply of capital and technology has
contributed to the less development of the sub sector. So that, the existing performance (&
productivity) has remained very poor when compared with its potential.

PVC is a versatile material for piping and has replaced conventional pipes made from
conventional materials such as Galvanized Iron (GI), Cast Iron, Asbestos Cement and Concrete
Cement. Its compatibility with most fluids, lower cost of material handling and installation,
unique combination of properties and availability of highly reliable jointing system makes it an
excellent competitor in the piping world, resulting in a product that is a viable competitor to
pipes made from other materials in dimensions up to 20 inches. The most common use of PVC is
to make pipes. The pipes are most commonly used for the purposes of drainage and for
protecting or containing the cables in the buildings, agriculture etc.

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This has drawn due attention of the Government as stated in its GTPIIplan and recent interest to
increase the Agricultural production by Significant growth through irrigation. In the coming
budget year the Government has allocated huge budget for Agriculture mainly through the help
of irrigation that highly needs plastic products steps to be taken to achieve the aspired production
level.Similarly, Ethiopia has opted to raise housing development activity since the demand for
housing is increasing at increasing rate from time to time, this obviously needs plastic product. In
addition plastic product is also used as an input for other manufacturing and industrial sectors.

Considering such potential, therefore, it is believed that a big leap forward can be made by
encouraging potential investors to bring the capital and technology to the sector. Besides,
investing in the similar sector contributes to alleviation of poverty in the country by
increasing the income offarm producers, creating employment and transforming the existing
largely subsistent type of agricultural production to commercial level.

In effect, the above mentioned immense potential, existing huge market gap of plastic
products, favorable Government policy and availability of credit facilities encouraged
MANTO Industrial PLC to consider investing in the Plastic Business and commit for
realization of the project under consideration.

2.5. Product Description

Plastic product manufacturing, as of the constituent of manufacturing sub-sector, plays an

important role in any developmental phases for countries like Ethiopia. Plastic products are
prominent in every aspect of human life. They are available in huge numbers and varieties
across the world due to their cheapness and convenience to use. PVC is a low maintenance
material. It is used in the agriculture, chemical and construction industry. It is available in a
variety of colors and finishes. The photo-effect wood finish of unplasticised
polyvinylchloride is also used in window frames and window sills as a substitute for painted
wood.

The major types of plastic pipes produced are polyvinylchloride (PVC) pipes, high-density
polyethylene (HDPE) pipes and PPR pipes. PVC pipe take the larger portion of the
production. Conduits are produced in a large quantity by most of pipe producing factories.

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Plastic pipes: - are hollow tubes that are made from row materials like PVC, HDPE and PP
mixed with other plastic additives to attain the required features of the product and used for
conveyance of substances that can flow. Following are the characteristics of plastic pipe; they
are rust resistant. They have good elastic properties. Their adaptability to earth movements is
better.

Plastic hoses: - is a flexible hollow tube designed to carry fluids from one location to
another. It is the final output of plasticized PVC or special grade of polyethylene (LDPE and
especially LLDPE). It can be used in water or other liquid environments or to convey air or
other gases.

Plastic fittings: are products that are made from different plastic row materials together with
additives to determine its quality and required characteristics, and it used for the applications
like connecting pipes and changing the direction of fluids.

Plastic conduits: - are produced in similar manner from plastic raw materials and additives
for the applications like protecting and routing electric wire.

HDPE (high density polyethylene pipe): - is a type of plastic pipe made of a strong form of
polyethylene thermoplastic material.

PVC (polyvinyl chloride pipe): - is a type of plastic pipe made of PVC resin, a
thermoplastic material that is a polymer of vinyl chloride, mixed with polymer additives for
the required specific property of the pipe. PVC pipes can be plasticized (flexible) or remain
rigid (plasticized).

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 III. RAW MATERIALS AND INPUTS

3.1. Major materials and inputs used for plastic pipe, fitting, conduit and hoses

The major raw materials and input to be used for the production of plastic pipes, conduits,
fittings and hose are the following;

A. Plastic Pipe
- HDPE Pipe- High Density polyethylene (HDPE) resin
- PPR Pipe - Polypropylene (PP) resin
- PVC Pipe- Polyvinyl Chloride (PVC) resin in different form
B. Fitting:- Polypropylene (PP) resin or Polyethylene(PE) resin
- Gasket
-Washer
C. Conduit:- Low Density polyethylene (LDPE) resin
D. Hose:-Low Density polyethylene (LDPE) resin
E. Additive: Master Batch, Master batch, Caco3, Lubricant, PE wax, plasticizers, others

F. Utilities:-Electricity and Water

3.2. Source of Raw Materials

The materials and inputs required for manufacturing of plastic pipe, fitting, conduit and hose
can be made available by importing from abroad. They are available in the international
market through import from the main supplier countries which are revealed as source
countries. Moreover, the inputs/additive to be used for the same is sourced from foreign
country and locally.

In the last five years Ethiopia import the required plastic resin and additives from Saudi
Arabia, Thailand, Korea Rep, United Arab Emirates, India, and China.

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Table 3.1: Source of major raw materials and additives used in plastic factory

Description Source Country

Foreign Domestic
HDPE Resin/Granule 
PP Resin/Granule 
PVC Resin/Granule 
PE Resin 
LDPE Resin 
Master Batch 
Calcium Carbonate 
Lubricant (PE wax) 
Stabilizers 
Plasticizers 
Ring Gasket 
Washer 

Source:- survey

3.3. Demanders of Major Raw Materials and Domestic Production

The demanders of major raw materials required for the manufacturing of plastic product like
plastic pipes, conduits, fittings and hose are those other factory producing different type
plastic product in addition to the listed one. The major demanders of the raw materials are
those factory produce plastic trays and general purpose containers, plastic Corrosion-resistant
work surfaces, Parts that require flexibility, for which it serves very well, Very soft and
pliable parts such as Snap-on lids, Six pack rings, Food storage containers, Bottles, suitable
for re-use, Fuel tanks for vehicles, Laundry detergent bottles, Milk jugs, Corrosion protection
for steel pipelines and Etc. In General the major raw materials and even additives required for
the production the stated products are imported from abroad. However, MANTO Industrial
PLC will going to exert maximum effort to source much of the raw material required for the
production of plastic product using its Research and Development unit.

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3.4. Additives and utilities required in plastic factory

As per the information obtained from different plastic factories additives listed in the raw
material part is only used if the raw materials are imported in resin or powder form unless if
the raw materials are imported in the form of granules only master batch is added to make the
final products different color. This shows that if the raw materials are imported in resin form
additives like stabilizers calcium carbonate, plasticizers, PE wax and other are used to make
granules required for the manufacturing of the required final product. Therefore a lending
unit should first consider the type of raw materials imported before allocating the raw
material cost to avoid unnecessary cost especially regarding the cost of additives. Utilities
like water for cooling the machine and electricity as the source of power is crucial for the
factory.

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 IV. PRODUCTION PROCESS AND MACHINARY SELECTION

The commonly used Polymers for manufacturing Pipes, Conduits, Fittings and Hose are:
PVC, PE (HDPE and LDPE) and PPR. These all raw materials are thermoplastic matrix
composites and the forming process can be Extrusion, Injection Molding, Calendaring, Co-
Extrusion Film, Thermoforming, Blow Molding and etc. Choice of forming method is
depending on the type of product that is going to be produced. Pipes, Conduits and Hoses are
manufactured all over the world by plastic extrusion method while Fittings are manufactured
by injection molding process. These two thermoplastic forming methods; production process
and process flow chart are discussed in the sub heading below.

4.1. Production Process of Pipe, Conduit and Hose

The raw materials are mixed according to their recipe and fed into the hopper of the extruder
which goes into the heated cylinder of the extruder, where the granules melt and are
conveyed (pumped) to the die exist. Now the melt passes through the die and takes the shape
of the die i.e. circular shape and emerges from the exit of the die. It then passes through the
calibrator and is forced to take the shape of the inside of the calibrator which is round in
diameter by the inside air pressure. This melt solidifies and taken round shape in the
calibrator, which is cooled by passing chilled water through it continuously.

Now the solid pipe is taken out from the water and is drawn continuously from the die. The
speed is adjusted according to the thickness of the pipe required and extruder output. The
pipes is either cut into the required length or wound on the winder unit. The schematic
diagram for pipe manufacturing plant is given below Figure 1.

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Figure 1: Schematic diagram for pipe extrusion line

4.2. Pipes, Conduit and Hose Production Process Flow Chart

The main Pipe, Hose and Conduit manufacturing processes includes those shown in the
process flow diagram below:

Required Material Process/Operation

- natural resin and Raw Material

Preparation
- color concentrate
- Stabilizer

Pipe Extrusion

Pipe Sizing Operation

Cooling Operation

- Take-Off Operation

- Printing Ink Marking/Ink Printing

- Thinner (Solvent) Operation

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 - Wrapping material Cutting & Bundling
- Bundler Machine

Final Product

Chart 1: Pipe, Hose and Conduit Manufacturing Process Flow Diagram

4.3. Fitting Production Process

Fittings are made on the injection molding machines. Polymers mixtures in the form of
pellets are fed through the hopper. The material is then conveyed forwarded by a feeding
screw and forced into a split mold, filling its cavity through a feeding system with spur gate
and runners.

Reciprocating screw since it not only rotates but also moves forward and backward according
to the step of the molding cycle. It acts as a ram in the filling step and then retracts backward
in the molding step. Heating elements, placed over the barrel, soften and melt the polymer.
The mold is equipped with a cooling system providing controlled cooling and solidification
of the material.

Figure 2: Typical diagram for injection molding system

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4.4. List of machinery and equipment’s

Table 4.1: List of Machineries and Equipment’s

Sr.No Major Machineries and Equipment Purpose

A.for pipe, conduit and hose
1 Full pipe extrusion line which includes the following The pipe extrusion line may be one or
systems: two or more according to the size of pipe
that is going to produce
Extruder unit
Small Size Pips Extrusion Line 
Die head Medium Size Pips Extrusion Line
Calibration system
 Large Size Pips Extrusion Line
 Cooling unit

 Haul-Off unit

Cutting or Winding unit

B. for Fitting
2 Injection molding machine full set The injection To produce Fitting having various size
molding machine can be: and shape

Single Head Injection Molding Machine

 Double Head Injection Molding Machine

 Multi Head Injection Molding Machine

3 Mixer To mix raw materials as per the recipe
4 Air Compressors To supply compressed air for various
machinery applications
5 Stand by generator To supply power in case of power
interruption occurs
6 Chilling plant To provide cooling water to the system
7 Scrap Grinder and Recycling machine To recycle waste scrapes
8 · Die heads and mandrels for pipe, conduit and hose (as To give the required size and shape

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 per the required size)

· Various size of molds for fitting

9 Hot embossing or ink printing equipment (if any) To apply marks logos and any other
information
10 Overhead cranes To change molds and different
accessories of various equipment’s
11 Forklift For the purpose of transporting raw
material, finished products and other
equipment’s
12 Weighing scale For weighing the raw materials during
mixing
13 Testing equipment’s To measure the various technical
parameters; Dimension measuring
Tools, Pressure Testing Units,
Physical Property Tester

V. . MARKET STUDY

The market document has two elements i.e. the global and the local market. The global
market discusses about the market share of the producers and traders (importer-exporter).
Hence, it identifies the major competitive countries for plastic pipes companies’ and gives
valuable information for countries those need to join similar market.

5.1. Market Segmentation

Plastic pipe , conduit and fitting have been produced to satisfy the domestic needs of
construction & building, municipal sewerage, irrigation & portable water supply, and
electrical & telecommunication sector demand. The country has not yet exported to the
abroad. Domestically, the plastic pipe& conduit and fitting market can be segmented by their
end user:

Construction & building,

 Municipal sewerage

 Irrigation

 Portable water supply

Electrical and, Telecommunication sector.

5.2. World Market

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World plastic pipes market is driven by heavy infrastructure investments and construction
boom in the developing countries as well as new application areas for plastic pipes including
electrical and telecommunications conduits and wastewater and drainage pipe systems.

Even though, the global recession pulled down the growth in plastic pipes market owing to
significant downturn in construction and building, two of the most adversely affected
industries during the crisis; plastics are rapidly penetrating into the piping market and
replacing other materials such as steel and cast iron owing to their superior performance in
sectors such as utility water systems, cable protection, large diameter sewage pipe, and under-
floor heating.

Europe represents the largest market for plastic pipes. Within the global Plastic Pipe market,
Polyvinyl Chloride (PVC) pipes represents the largest segment however, it is gradually losing
share due to toxic & coercion nature. Introduction of high-quality, less toxic products such as
High Density Polyethylene pipes with features such as joint integrity, flexibility, trench
laying capability and sturdiness is adding to the growing market for Polyethylene (PE) pipes.
Currently, Polypropylene (PP) pipes are used primarily as replacement for PVC pipes in
building and sewer systems is another growing category with huge potential in the future.

A. World Export

The export for top ten exporters has been growing as seen in the table below. China and
Germany are the leading exporter of plastic pipe. The details of the world and the world top
ten exporters and their export amount for the last five years is displayed in the tables 5.1
below.

Table 5:1 World Plastic Pipe & conduit and fitting Export (Ton)

Exporters 2013 2014 2015 2016 2017

China 528,879 568,115 550,920 584,581 662,901
Germany 457,079 478,606 477,055 484,467 522,624
USA 384,841 364,718 356,640 313,300 314,468
Turkey 350,136 351,137 280,393 214,789 211,116
Poland 124,361 121,339 129,869 138,094 161,891
Spain 117,253 115,801 126,786 135,706 139,944
Netherlands 142,968 168,063 113,546 110,961 108,990

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Czech republic 86,879 91,856 91,242 94,495 104,583
UK 79,007 83,155 84,686 92,853 99,914
Mexico 67,683 68,146 66,390 64,698 93,948

Source: ITC

B.World Import

USA is a leading importer of plastic pipe from the top ten importers below.
World importers of Tubes, Pipe, Hose and Fittings in (tons)

Table 5.2: World Import of Tubes, Pipe, Hose and Fitting (ton)

Importers 2013 2014 2015 2016 2017

USA 267,067 283,574 284,031 280,929 360,864
France 239,467 235,498 246,434 249,461 270,933
Germany 193,437 202,292 209,578 209,764 231,489
Mexico 222,961 188,027 269,933 276,036 216,612
Mauritania 5,642 5,617 7,676 5,410 182,667
Canada 146,439 146,828 135,451 126,981 148,559
Belgium 87,172 85,485 82,358 93,430 109,621
UK 87,005 97,329 96,148 98,354 106,928
Russia 167,984 161,813 107,645 94,761 99,116
Poland 89,973 88,421 89,984 94,880 95,366

Source: ITC

5.3. Ethiopian Plastic Pipe and Conduit and Fitting Market

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The huge investment in the manufacturing sector is very critical in industrial transformation.
In the country, like Ethiopia, where the establishment of manufacturing industries is very low
and the resource is limited, the transformation challenge is gallant. However, the recent
economic growth seen in infrastructure development, the construction and building booming,
enhancing of electrification and communication service, irrigation and water supply is
believed to oblige the demand for the products. Construction and building, water supply,
town and rural electrification and the like have been increasing.

5.3.1. Demand and Supply of Plastic Pipe and Conduit and Fitting
A. Demand for Plastic Pipe and Conduit and Fitting

The demand for plastic pipe &conduit and fitting is derived from the demands in construction
and building, municipal sewerage, water supply, irrigation development, electrification and
telecommunication line distribution. The plastic pipe & conduit and fitting are the major
input in development of these sectors. In the last few years, the development of
construction& building, water supply, electrification & telephone line distribution to the
housing unit in the country have been increasing. According to the Ethiopian census report,
the housing units have increased from 10,766,729 in 1994 to 15,103,135 in 2007.

Table 5.3: Housing Unit and Infra- Structure Distribution Description

Description Distribution/Accessed housing units

1994 2007
Total Housing Unit 10,766,729 15,103,135
Construction & Building of houses 115,873 355,194
( with bricks , block & stone wall)
Tap water supply 2,575,549 6,867,234
Telephone line 115,955 582,755
Electrification 970,057 2,251,187

Source: Census Report of 1994 & 2007

B. Private Residential and cooperative house construction

The data obtained from urban development and construction minister indicates that in 2016
the number of house had taken construction permit from the minister were 16,406.from this

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house the construction completed were 16, 056. This data includes the constructed private
residential of all the regional government and Addis Ababa City.

Table 5.4: Number of private house constructed

Description Year
2015/16 2016/17 2017/18
Private Residential Houses 16,050.00 18,601.00 13,534.00

Source: Urban Development and Construction Minister

Private residential houses to be built in the entire country over future five years stipulated in
the second GTP plan anticipated to be 64,000 units per annum. Out of this figure, 14,000
units will be built by real estate developers, 16,000 and 34,000 units will be built by private
developers and cooperatives respectively. Hence, a total of 320,000 housing units will be
built as a residential construction by private sector within coming five years’ period (Clay
Brecks Commodity Study, 2017).

C. Low cost Housing Programmer of Government.

The low cost housing program has been started by government before a decade to provide a
house to peoples especially in selected city of the country. The program had planned to build
10/90, 20/80 and 40/60 condominiums in the city of Addis Ababa. The data obtained from
Addis

Ababa city housing program office indicates that in the past the number of house built in the
city was increasing year to year. The following Table illustrates that number of house
constructed in the past in Addis Ababa City.

Table 5.5: Low cost house completed and transferred

Year Number
2012 44,876
2013 39,249
2014 52,651
2015 41,421
2016 37,532

MANTO IndustrialPLC | Feasibility study for Plastic product Project 22

2017 1,292

Source: Addis Ababa House Construction Office.

In line with this the data taken from Addis Ababa house construction office indicates that in
this year 2018 the office has been planning to transfer 132,354 houses. From these 94,114
houses in 20/80 program and 38,240 houses in 40/60 housing program which the construction
was completed more than 80%.

In addition to this the urban development and construction minister will plan to build 50,000
houses and 15,000 houses annually at 20/80and 40/60 housing program respectively in the
Addis Ababa city for the coming next five years.

D. Federal Housing Corporations

The federal housing corporation is established to manage the house of the government
previously taken from different peoples during Derg regime. The data obtained from the
corporation indicates that for the next five years the corporation plans to construct 16,000
houses. The corporation plan to construct 3200 house annually in different areas of Addis
Ababa city. The constructed house includes Villa G+0 up to G+35 floor building. E.
Government Construction on infrastructure Ethiopia’s government allocated a huge amount
of birr for capital expenditure yearly to maintain the growth of the country. The government
had spent in billions of birr for construction of roads, railways, dams, Mega Projects and
governmental institution. According to NBE annual report of 2016/17 The construction
sector, the manufacturing sector, mining and energy sector were grow at an annual average
growth of 27.98, 17.5 and 9.54 percentage respectively in the past five years.

Ethiopia’s construction sub-sector has the major share which is 70% from all growth in the
economy register by the country (NBE, 2016/17). And it will outgrow that of neighbors in the
region over the next ten years, according to projections by BMI Research International. The
construction sector will grow at an annual average growth of 27.98 % and will be fueled by a
swell in infrastructure investments in the region. BMI said it expected the growth to be
pushed in future, by residential and non-residential sectors. Although the rate is expected to
be slower than that in the previous years because the government will be unable to maintain
spending in the infrastructural sector, it is expected that the growth will remain to be one of
the highest growing in the world over the ten year’s forecast.
MANTO IndustrialPLC | Feasibility study for Plastic product Project 23
The plastic pipe & conduit and fitting consumed by construction & building, Municipal
sewerage, water supply, irrigation development, electrification and telecommunication line
distribution for the last five years is shown in the table below.

Table 5.6: Plastic Pipe & Conduit and Fitting Consumption

Year Pipes & Conduit (kg) Fitting (kg)

2013 21,186,823 4,687,159
2014 23,729,241 5,390,232
2015 26,576,750 6,198,767
2016 29,765,960 7,128,582
2017 33,337,876 8,197,870

According to the above table the total consumption of plastic pipe& conduit and fitting shows
increasing trend. The consumption of the plastic pipe& conduit and fitting which is
distributed over the housing unit in a year, in other words, the housing unit per capita
consumption shows 29 % of annual increment for plastic pipe & conduit and 63 % of annual
increment for plastic fitting.

Table 5.7: Per capita consumption of Plastic pipe& conduit

Year Pipes & conduit (kg) Housing unit PCC

2013 21,186,823 14,719,176 0.46 kg
2014 23,729,241 15,103,135 0.31 kg
2015 26,576,750 15,501,858 1.13 kg
2016 29,765,960 15,911,107 1.04 kg
2017 33,337,876 16,331,160 1.30 kg
AAGR 29 %
Table 5.8: The per capita consumption of plastic fitting

Year Fitting (kg) Housing unit HUPCC

2013 4,687,159 14,719,176 0.06 kg
2014 5,390,232 15,103,135 0.10 kg
2015 6,198,767 15,501,857.76 0.01 kg
2016 7,128,582 15,911,106.81 0.28 kg
2017 8,197,870 16,331,160.03 0.42 kg
AAGR 63

5.3.1.1Demand Forecast for Plastic pipe & conduit and fitting

The demand for the next ten years is forecasted using the average annual per capita
consumption of plastic pipe & conduit and fitting that is 29 % and 63 % respectively. The
housing unit is also projected using the past years annual growth rate (2.64%).

MANTO IndustrialPLC | Feasibility study for Plastic product Project 24

Table 5.9: Forecasted Demands for Plastic Pipe & Conduit

Year Housing Unit Pipe PCC of HU Demand for pipe & Conduit (kg)
2019 16,762,302.65 1.38 23,050,924.65
2020 17,204,827.44 1.46 25,079,037.21
2021 17,659,034.89 1.55 27,285,591.22
2022 18,125,233.41 1.64 29,686,286.67
2023 18,603,739.57 1.74 32,298,204.92
2024 19,094,878.30 1.84 35,139,930.18
2025 19,598,983.08 1.95 38,231,681.80
2026 20,116,396.24 2.07 41,595,458.09
2027 20,647,469.10 2.19 45,255,192.88
2028 21,192,562.28 2.32 49,236,925.77
Table 5.10: Forecasted Demands for Plastic Fitting
Year Housing Unit fitting PCC of HU Demand for plastic fitting (kg)
2019 16,762,302.65 0.68 11,398,366
2020 17,204,827.44 1.12 19,269,407
2021 17,659,034.89 1.82 32,139,443
2022 18,125,233.41 2.96 53,650,691
2023 18,603,739.57 4.83 89,856,062
2024 19,094,878.30 7.88 150,467,641
2025 19,598,983.08 12.84 251,650,943
2026 20,116,396.24 20.93 421,036,173
2027 20,647,469.10 34.11 704,285,171
2028 21,192,562.28 55.61 1,178,518,388

Table 5.11: Total Forecasted Demands for Plastic products

Demand for plastic products
Year Pipes PCC(kg) fitting (kg) (Ton)
2019 23,050,924.65 11,398,366 34,449
2020 25,079,037.21 19,269,407 50,158
2021 27,285,591.22 32,139,443 59,125
2022 29,686,286.67 53,650,691 83,336
2023 32,298,204.92 89,856,062 122,154
2024 35,139,930.18 150,467,641 185,607
2025 38,231,681.80 251,650,943 289,682
2026 41,595,458.09 421,036,173 462,613
2027 45,255,192.88 704,285,171 749,540
2028 23,050,924.65 1,178,518,388 1,227,755

5.3.2. Supply of Plastic Pipe and Conduit and Fitting

MANTO IndustrialPLC | Feasibility study for Plastic product Project 25

The domestic supply of plastic pipe & conduit and fitting is the sum of total production by all
establishments in the country and the import.

A. Production

There are more than 33 factories producing plastic pipe and conduit and fitting producing
factories, however, most of the fitting are imported. There is low capacity utilization rate due
to the nature of raw material that requires huge working capital to purchase in bulk amount
and the order base market situation. See Table 5.12 and Table 5.13for more information.

Table 5.12: Plastic Pipe& conduit and Fitting Production Capacity (kg/hr)

Product Capacity
Designed Attainable Current %
Sr.N Company Type of Product capacity capacity productio capacity
o name product range(mm n capacity utilization
)
1 Oromiya Pipe UPVC Pipe 75-63 2730 2184 1,856.4 85
Factory
2 GIW UPVC pipe 20-400 1100 880 748 85
HDPE pipe 20-63 300 240 204 85
3 Amhara UPVC pipe 20-400 1100 NA NA NA
4 EXCEL 1 UPVC pipe 13-400 1040 1300 416 40
HDPE pipe 20-400 800 640 256 40
PPR Pipe 20-63 250 200 80 40
5 Birutesfa HDPE pipe 20-400 1300 1040 832 80
6 Ethio Plastic UPVC pipe 13-400 700 560 476 85
HDPE pipe 20-300 300 240 204 85
PPR Pipe 20-63 250 200 170 85
7 Ethio polymers UPVC pipe 13-250 700 560 112 20
8 Plastech PLC UPVC pipe 13-110 150 120 24 20

MANTO IndustrialPLC | Feasibility study for Plastic product Project 26

 HDPE pipe 13-110 150 120 24 20
9 Tana Plastic UPVC pipe 16-350 700 560 336 60
HDPE pipe 20-75 250 200 10 5
10 Dari Bus. UPVC pipe 16-350 500 400 80 20
Group
HDPE pipe 20-110 250 200 10 5
UPVC fitting 40-200 50 40 40 40
11 Taffo Plastic HDPE pipe 20-110 250 200 0 0
12 MA Termo.P. UPVC Pipe 16-110 40 32 12.8 40
13 Alemgenet UPVC profile 13-200 250 200 120 60
PPR pipe 20-63 200 160 64 40
PPR fitting 40-200 50 40 16 40
14 Black Pe Conduit 13-160 100 80 32 40
Diamond
15 Unique plastic UPVC pipe 16-60 150 120 48 40
UPVC fitting 40-200 50 40 16 40
16 AB plast UPVC pipe 16-200 250 200 80 40
PPR pipe 20-63 150 120 48 40
UPVC fitting 150 120 72 60
17 Tilahun G/mickeal UPVC pipe 16-160 600 480 288 60
18 Temesgen Chaka UPVC pipe 16-250 200 160 64 40
19 Nati plastic UPVC pipe 13-160 250 200 80 40
20 Natran UPVC pipe 13-200 600 480 307.2 64
HDPE pipe 20-75 200 160 88 55
PPR pipe 20-63 150 120 72 60
21 Yimerdin UPVC pipe 16-200 200 160 64 40
22 Bekrobe UPVC pipe 16-110 250 200 160 80
23 Yoki UPVC pipe 16-250 250 200 40 20
24 Afatco UPVC pipe 16-100 200 160 64 40
25 Erimias HDPE pipe 13-32 100 80 48 60
26 HAKAMAZ PPR pipe 16-200 250 200 80 40
27 Geo synthetics PVC, HDPE 9600 ton
industrial pipes and per year
conduits
28 Sky industries PVC, flexible 300 ton/yr
PLC pipes, hoses
and household
materials

MANTO IndustrialPLC | Feasibility study for Plastic product Project 27

29 Modern Pipe PVC pipes 10687
ton/yr
30 Family Modern PVC pipes 1500 ton/yr
31 Tigist and PVC pipes 250 ton/yr
shimelis
32 HF tafo PVC, 911 ton/yr
conduits,
hoses
33 Hansem Corrugated 20,000
HDPE pipe ton/yr

Source: survey

Table 5.13: Plastics, Pipe, Conduits, and Fitting production (Ton)

Description 2013 2014 2015 2016 2017

Plastic products 18,251 20,952 29,827 313,807 17,235

Source: CSA

B. Import

The growth in the sectors of construction and building, water supply, electrification and
expansion telephone lines has contributed a lot in an increment of imports throughout the
lastfive years. According to the data international commodity trade center the import of
pipe &conduit and fitting and conduit has reached 27,607 ton as of 2018.

Table 5.14:Import of tubes, pipes, hoses and fitting therefore of plastics(Ton)

Year Tubes, pipes, hoses, and fittings

2013 13,136
2014 18,447
2015 22,493
2016 19,317
2017 27,607

Source: ITC

MANTO IndustrialPLC | Feasibility study for Plastic product Project 28

Existing supply of plastic product in the country is the sum of both production and import;
Table 5.15: Total Existing Supply (ton)
Year Production Import Total Supply
2013 18,251 13,136 31,387
2014 20,952 18,447 39,399
2015 29,827 22,493 52,320
2016 313,807 19,317 333,124
2017 17,235 27,607 44,842
AAGR 21%
Source: CSA,ERCA& FBPIDI

C.Supply Projection
The future supply of plastic products is projected using the past growth trend. In the last five years the
supply of plastic products has grown by 21 % and the near future supply is projected using 13%
average annual growth rate which is different from the last recent five years. This is because total
volume of plastic products produced in 2016 is highly overstated (the growth rate was 1079% against
2014) the five year average growth rate.

Table 5.16: Supply Projection (ton)

Year Supply
2019 50,674
2020 57,258
2021 64,702
2022 73,113
2023 82,618
2024 93,358

D.Demand and Supply Gap

The demand supply gap analysis which is estimated using the per capita consumption of
plastic product and the total supply which is the sum of both production and import shows the
existence of growing unsatisfied demand. As there is 1% in the year 2019 and 211% in the
year 2024 gap between the demand and supply of plastic product in the country this sector
needs more supply of Plastic products.
Table 5.17: Demand –Supply Gap
Year Demand Supply Demand and Supply Gap
(Ton)
2019 50,052 187
50,158
MANTO IndustrialPLC | Feasibility study for Plastic product Project 29
 2020 59,125 57,258 1,867
2021 83,336 64,702 18,634
2022 122,154 73,113 49,041
2023 185,607 82,618 102,989
2024 289,882 93,358 196,524

The demand supply gap analysis of plastic pipes and conduit and fittings shows that there is
high and increasing demand for plastic products. Thus, the gap is increasing throughout the
forecasted years from 187 ton in the year 2019 to 196,524 ton in 2024.

As it is shown above in import section the country’s demand for plastic products is
equivalentlycovered by the import and same as the local produce, and the country’s
expenditure in the purchase of it has been increasing by the alarming rate. Thus from this the
substitution of import by local produce should be the prime of objective of the country.

5.3.3.Market and Marketing Arrangement

The company positioned itself in the market on the basis of low price high quality Plastic
products. The marketing mix will be combination of product, price, promotion and
distributions and other marketing activities needed to meet the marketing objectives are offers
different type of product.
And the sizeof product ranges from 16 to 400mm as per the need of the customer. MANTO
Industrial PLC uses state of the art machinery and technology for production and packing its
offer.

The marketing of product is held at the different places according to the agreement of the
producer and buyer as well as the agent/whole seller.

The company is planned to implement order base and sub-contract agreement with the
distributor, whole seller as well as any customer who is interested to engage in bulk purchase.
Then the company get sub-contract with other to supply parts of the required amount.

However, the lion share of the sale will be held at the get of the factory and when the factory
get contract or sub contract from some companies it may transport the products to the gate of
the buyer by its own transportation but transportation cost will be added on the selling price
of the product.

MANTO IndustrialPLC | Feasibility study for Plastic product Project 30

5.3.4.Marketing Channel
The plastic pipe, conduit and fitting market may pass different stages before reaching to the
consumers which is depend on the agreement of the producer and buyer. Accordingly, the
company follows the following distribution channel.

Order/ consumer

Factory/Producer Sub-contractor Consumer

Whole Seller/Agent

Consumer

Figure 3: Marketing channel Diagram

5.4. Competition Analysis

The most powerful and widely used tool for systematically diagnosing the principal
competitive pressure in a market and assessing the strength and importance of each is the
five- force model of competition.
Threats on new entry

There always prevail the treats of new entry in the industry as market possesses enough
growth potential. Anyone entering in the industry with superior technology and better quality
has high chance of success. So, threat of new entrants domestically is high as the market is
quite lucrative and plastic product demand-supply gap in the country is huge. But the
envisage company is entering the industry with superior technology and better quality has a
high chance to compute and succeed.
Threat of substitute products

MANTO IndustrialPLC | Feasibility study for Plastic product Project 31

There is a little threat from substitute products. However, one little exception can be
mentioned. The product can be substituted by metal product. However, the price of metal is
much higher than products produced using plastic and hence substitute products will never be
a treat.
Rivalry among Competing Firms
Rivalry among competing firms is moderate as they are operating in plastic industries that are
the companies substitute product. Hence the intra-industry rivalry is domestically low
because the demand is quite high than the supply.
Bargaining power of Buyer/consumer
As plastic product is the commodity which is currently demanded by many customers like
real-estate developers, Government (for housing project as well as irrigated agriculture),
contractors, and individuals. So, bargaining power of the buyer/customer is low. But they
have several options to choose. Relatively low price may attract the customer lesser the risk
of switching from the envisage company since the company is planning to produce plastic
products to all level customers, in different size and color.
Bargaining power of suppliers
Suppliers of this industry enjoy a bargaining power. As most of the raw material are of
imported as well as found scarce. However, the company has ability to afford the price and
the raw material producers are loyal to make supply uninterrupted since the owners of the
company easily get the raw material using their import experience and already created direct
relationship with suppliers.
5.11. Marketing Strategy
i. Product
The company planned to produce more than 4 types of plastic product from various raw
materials imported and sourced locally. Moreover, it is planned to increase the product type
after customer test and preference assessment. The company is planned to equip with modern
processing machinery capable of producing high quality plastic product.
The management of MANTO and its employees are committed to protect the environment
and operate with responsible manner to minimize and control the environmental impacts
concerning its operational activities, products and services.

ii.Place of Marketing
The company is strategically located in Addis Ababa city Administration. The company will
going to open distribution centers or market outlet in different major town of the

MANTO IndustrialPLC | Feasibility study for Plastic product Project 32

country.MANTO uses a simple distribution channel with its already established distribution
network found in Addis Ababa and regional towns from plants. Sales team uses firm’s
covered Van to distribute the product to the dealers. It uses different specific day for specific
point/region. The secondary distribution channel leads by dealers distribute the product by
their own resources. The company is also make strategic alliance with building materials
wholesaler or retailer shops.
iii. Promotional Work
In order to gain market share and operate at its maximum capacity, the promoter uses
aggressive various promotional activities mainly in the first year of operation. The company
expected to use electronic and various media networks to advertise the product.
Certification by quality authorities and attracting packing of Plastic products and
participation in national trade fairs and exhibitions which has resulted in increase in sales of
its products and higher market outreach & more revenue and income for the company is some
of the marketing strategy.
iv. Pricing strategy
As there is a large volume of import and number of factories in this product, the company
plans to manufacture quality product which attract all consumers of the product and charge
competitive price and hence it can compute and substitute imported products.

VI. TECHNICAL STUDY

This section describes technical information related to the industry under consideration. It
briefly discusses about selection of the project site, civil works, equipment’s, utilities and
implementation schedule. Details are discussed as follows:

6.1. Location and Site selection

The envisaged project, MANTO Industrial PLC is to be implemented in Addis Ababa city
Administration. The land requirement is around 5,000 Sq. meters in any area where all
utilities and facilities are properly available. The plot will easily allow the accommodation
of the recommended machines and also allow space for material and finished goods storage.
The detailed allocation of space and approximate construction cost estimations have been
provided in the following table:

MANTO IndustrialPLC | Feasibility study for Plastic product Project 33

 6.2. Project Design and engineering
The civil work of the project consistsfactory building, stores for raw materials and finished
goods, office, clinic and guest house.Fence work, site clearing and access road construction
are part of the civil work.

The overall cost of the building and other civil works is estimated at Br 8,000,000, the detail
being as follows:

Table 6:1Building and its cost

Total construction
Type of Building Size (sqmt) cost
Factory Building 1000 3,000,000
Store for Raw material 500 1,500,000
Store for finished product 500 1,500,000
Ofiice, 250 1,000,000
Guest house 100 250,000
Septic Tank 50 250,000
Generator house 10 50,000
Guard house 10 100,000
Fence Work and access road 250,000
Other room 80 100,000
GRAND TOTAL 8,000,000 8,000,000
Land for the proposed production facility will be availed by Addis Ababa city administration .

6.3. Machinery and Equipment

Based on the number and type of UPVC pipes, and fittings to be produced by the proposed
setup, the following machinery will be required:
Table:6.2 Breakdown of machineries

Sr.N Items Number Estimated cost

o
A Pipe production line 2 2,000,000
1 Powder-auto loader

2 Twin screw extruder

3 Mold

4 Calibration tank

MANTO IndustrialPLC | Feasibility study for Plastic product Project 34

 5 Haul-off Machine
6 Automatic cutting machine

7 Stacker
B Oil-ink printer 1 150,000

C Compressor 2 200,000
D Chiller unit 1 200,000

E Generator 300KVA 1 500,000

Total Machinery & equipment 3,050,000
Shipment, insurance bank charge 305,000
Grand Total 3,355,000

6.4. Equipment and furniture

Regarding office equipment and furniture, the project offices are expected to furnish with
reasonable office equipment and furniture estimated to be Birr 350,000.

6.5. Vehicles

One NPR trucks acting as light carrier vehicle would also be needed for transporting raw
materials and distribution of finished products. Moreover, pick-up is also required for
administration purpose. For this purpose birr 2,100,000 has been assumed. The vehicle will
depreciate at a rate of 20% annually.

Table:6:3 Vehicles detail

Type Purpose Qty Unit cost Total Cost

1,000,00 1,000,00
Isuzu NPR covered Delivery 1 0 0
1,100,00 1,100,00
Toyota Pickup   1 0 0
Total       2,100,000

6.6 Raw Material

The principal raw material required for the production of pipes, fittings, conduits areHDPE
Resin/Granule, PP Resin/Granule, PVC Resin/Granule, PE Resin, LDPE Resin, Master
Batch, Calcium Carbonate, Lubricant (PE wax), Stabilizers, Plasticizers Ring and
GasketWasher.moreover, other additives are required for the production process.
MANTO IndustrialPLC | Feasibility study for Plastic product Project 35
The required plastic resin and additives from Saudi Arabia, Thailand, Korea Rep, United
Arab Emirates, India, and China.

6.7. Utilities

The major utilities required by the envisaged project are electric power, water, fuel and oil.
All are available locally. The total KWH demanded for implemented the processing machine
is 300KWH and annual electric power consumption at full capacity is assumed to be
189,000KWH.which will be supplied by Ethiopian Electric power Authority. 300KV
generator is planned to be purchased that will be on operation during electric power
breakdown.

The other important utility required by the project is water. The total annual cost of water for
consumption and sanitation purpose is assumed to be birr 2,796. Fuel is also the required
utilities and its cost is estimated to be birr 289,629 per annum.

6.8. Environmental Impact Assessment

The plastic products plants have very limited pollutant emitted from the production process,
and can be easily managed by the company. Thus, the envisaged project planned to manage
in this regard to make the project environment friendly.

6.9. Project implementation schedule

Implementation of the project involves activities of site clearing, construction works of

factory building, obtaining of finance, importation and installation of the processing plant,
staff recruitment and commissioning of the project It is planned to finalize the project in 12
months in expedite manner so as to efficiently realize the value for moneyon the investment.
Table 6:3 Work plan
      Months
No Activities  
1 2 3 4 5-6 7-8 9-12
1 Civil works
2 Secure of finance
3 Purchase of processing plant              
4 Installation of machinery              

MANTO IndustrialPLC | Feasibility study for Plastic product Project 36

 5 Manpower recruitment              

6 Purchase of furn. and equip              

7 Commissioning and start operation              

8 Supply to the market

VII. ORGANIZATIONAL STRUCTURE AND MANAGEMENT

7.1.Organizational Structure of Plastic Pipe Conduit and Fittings industry

The organization and management for plastic pipe, conduit and fittings factories is structured
to consist a General Manager, two core process, three support process, three services and 6
sections. The core process is production core process, business development and sales core
process. Support process are administration & finance support process, technical support
process, purchase and property administration support process, the service are audit service,
plan and management service and production and service quality management service and
sixteen different section.

The typical organizational structure for plastic pipe, conduit and fittings producing factory is
shown below.
MANTO IndustrialPLC | Feasibility study for Plastic product Project 37
General Manager
 Executive secretary

Adimin& Quality Purchas& Planning Production Business Technical

Audit finance control property &mgt core Dev’t and supportpr
Service supportPr service Admin service process sales core ocess
ocess process process
Service
Production Technical
Purchase Plan & process
Head Follow up head
HR & Finance Service
general process
servicepro Head
cess

Figure 4: Organizational structure of the Company

7.2.Management and Manpower requirement

For effective, efficient and smooth operation of a plastic pipe, conduit, fittings and hose
industry, best management system should be put in place with competent and qualified
management staff.

The availability of the required competent as well as qualified human resource is a very
important factor in industrial assembly or manufacturing plants. The management, technical
and other workers requirement of a typical assembly plant is shown in table below.
Manpower requirement.

Minimum Requirement
Sr. No of Salary
Job description Relevant
No. staff Qualification Scale
Experience
I General Manager Office
1.1 General Manager 1 BA in Mgt or Economics >or = 10 years 15,000

MANTO IndustrialPLC | Feasibility study for Plastic product Project 38

 Minimum Requirement
Sr. No of Salary
Job description Relevant
No. staff Qualification Scale
Experience
1.2 Executive Secretary 1 TVET (10+3) in secretarial science and >or = 2 years 4,500
office mgt
II Audit Service
2.1 Audit Service Head 1 BA in Accounting >or = 6 years 8,000
2.2 Senior auditor 1 BA in Accounting >or = 4 years 4,200
III Planning & Management Services
3.1 Planning & mgt services 1 BA in Mgt or Economics or Statistics >or = 6 years 6,500
head
3.2 I CT Expert 1 BA in Social Science >or = 2 years 3200
3.3 Planning follow up & 1 BA in Mgt or Economics or Statistics >or = 2 years 3200
Evaluate Expert
3.4 Secretary 1 TVET (10+3) in secretarial science and >or = 2 years 2500
office mgt
IV Quality Control Service
4.1 Quality Control Service 1 BA in Chemistry >or = 6 years 6500
Head
4.2 Quality Control Expert 1 BA in Chemistry >or = 2 years 3200
4.3 Laboratory Technician 1 Diploma in Laboratory Technician >or = 2 years 2900
V Administration and Finance Support Process
5.1 Admin’n and Finance 1 BA in Mgt or Accounting >or = 8 years 8000
Process owner
5.2 Secretary 1 TVET (10+3) in secretarial science and >or = 6years 2500
office mgt

No Minimum Requirement
Sr. Salary
Job description of Relevant
No. Qualification Scale
staff Experience
5.3 Human Resource & General 1 BA in Management >or = 8 years 6500
Service Process Head
5.4 Human Resource Officer 1 BA in Management >or = 2 years 3400
5.5 Personnel Clerk 1 Diploma in Mgt >or = 0 years 1500
5.6 General Service Clerk 1 Diploma in Mgt >or = 0 years 1500
5.7 Petty cash casher 1 TVET (10+3) in Accounting >or = 0 years 1500
5.8 Medical Officer 1 BA in Nursing >or = 2 years 3500
5.9 Clinical Nurse 1 Diploma in Nursing >or = 2 years 3400
5.10 Laboratory Technician 1 Diploma in Laboratory >or = 2 years 3400
5.11 Finance Process Head 1 BA in Accounting >or = 6 years 6500
5.12 Sr. Accountant 1 BA in Accounting >or = 4 years 4200
5.13 Sr. Cost & Budget Accountant 1 BA in Accounting >or = 4 years 4200
5.14 Casher 1 Diploma in Accounting >or = 0 years 2400
MANTO IndustrialPLC | Feasibility study for Plastic product Project 39
 Minimum Requirement
Sr. No of Salary
Job description Relevant
No. staff Qualification Scale
Experience
5.15 Security Guard 3 8th Grade >or= 2 years 600
VI Business Development and Sales Core Process
6.1 Business Dev’t& Sales Core 1 BA in Management or Economics or >or = 8 years 8000
Process Manager Marketing
6.2 Secretary 1 TVET (10+3) in secretarial science >or = 0 years 2500
and office mgt
6.3 Market Study Expert 1 BA in Marketing >or = 2 years 4500
6.4 Business Dev’t Expert 1 BA in Economics or Management >or = 2 years 4500
6.7 Sales Person 1 Diploma in Marketing >or = 2 years 2500
6.9 Production Store keeper 1 TVET (10+3) in Accounting >or = 2 years 2000
VII Purchase & Property Administration Support Process
7.3 Purchase Process Head 1 BA Management or Marketing >or = 6 years 6500
7.4 Purchase Officer 1 BA Management or Marketing >or = 2 years 3400
VIII Production Core Process
8.1 Production Core Process 1 BA in Chemical or Industrial Engineer >or = 8 years 8000
Manager
8.2 Production Plan & follow 1 BA in Chemical Engineer or Industrial >or = 6 years 6500
up Service Head Engineer
8.3 Production Plan 1 BA in Chemical Engineer or Industrial >or = 3 years 3400
Controller Engineer
8.4 Production Operator III 1 TVET (10+3) in General Mechanics >or = 3 years 2500
8.5 Production Operator II 1 TVET (10+3) in General Mechanics >or = 2 years 2000
8.6 Production Operator I 1 TVET (10+3) in General Mechanics >or = 0 years 1500
8.7 Production Clerk 1 TVET (10+3) in General Mechanics >or = 0 years 1500
8.8 Mold day and Support 1 TVET (10+3) in General Mechanics >or = 0 years 2000
Machine kipper
IX Technical Support Process
9.1 Technical Support 1 BA in Chemical or Mechanical >or = 8 years 6500
Process Manager Engineer
9.2 Technical Plan and 1 BA in Chemical or Mechanical >or = 2 years 3400
Follow up Worker Engineer
9.3 Tools Keeper 1 TVET (10+3) in General Mechanics >or = 0 years 1000
9.5 Technical Process Head 1 BA in Chemical or Industrial Engineer >or = 6 years 6500
9.7 Sr. Mechanic 1 BA in Chemical or Industrial Engineer >or = 4 years 4500
9.8 Sr. Electrician 1 BA in Electrical Engineer >or = 4 years 4500
9.9 Electrician 1 BA in Electrical Engineer >or = 2 years 3400
9.10 Mechanic 1 BA in Mechanical Engineer >or = 2 years 3400
9.11 Jr. Mechanic 1 BA in Mechanical Engineer >or = 0 years 3000
9.12 Jr. Machinist 1 BA in Mechanical Engineer >or = 0 years 3000
9.13 Welder and Plumper 1 TVET (10+3) in General Mechanics >or = 2 years 1500
9.14 Winder 1 TVET (10+3) in General Mechanics >or = 2 years 1500
9.15 Auto Mechanic 1 TVET (10+3) in General Mechanics >or = 2 years 1500
TOTAL 56 200,500

MANTO IndustrialPLC | Feasibility study for Plastic product Project 40

 VIII. ENVIRONMENTAL CONSIDERATION AND SOCIO ECONOMIC
IMPACT

8.1.Environmental Impact

Environmental issues of concern arising from the manufacturing of plastic pipe, conduits,
fitting and hose products primarily include the following:

Air emissions
Solid waste
Noise

8.1.1Air Emissions

MANTO IndustrialPLC | Feasibility study for Plastic product Project 41

Air emissions may contain particulate matter and volatile organic compounds (VOC).

Particulate matter may be released during handling of dry additives and granulation of
polymers. In addition, heating of thermoplastics during compounding and forming may result
in formation and release of fine aerosols. Recommended pollution prevention and control
techniques for emission of particulate matter include:

- Optimize processing conditions for handling and mixing of dry additives,

temperature, and polymer granulation;
- Filter air exhaust from material handling and granulation areas using a cyclone and /
or bag house; Capture and control fugitive missions from production devices,
typically through a primary cyclone and secondary bag house or electrostatic
precipitator.

Volatile Organic Compounds (VOC), including low-molecular weight additives and

solvents, may be released during compounding and forming operations, especially when
heated. During shaping operations for nonreactive plastics, the base polymers are stable well
beyond the required processing temperatures with few exceptions. During shaping, however,
water vapor, low boiling point additives, and monomer trapped in the polymer may be
released, in particular at the hottest part in the processing line.

8.1.2.Solid Wastes
Significant quantities of solid wastes are not typically generated in plastics manufacturing.
The scrap materials resulting from shaping and finishing operations can be recycled.

8.1.3.Noise (Sound pollution): No big sound or noise that disturbs the surrounding.

8.2.Occupational Health and Safety

Occupational health and safety impacts during the construction of manufacturing plants for
metallic, plastic and rubber products are common to those of most industrial facilities.
Occupational health and safety issues associated with plastic products manufacturing
primarily include the following and the company will strictly follow the guideline for
effective prevention and control.

- Physical hazards
- Chemical hazards

MANTO IndustrialPLC | Feasibility study for Plastic product Project 42

 Physical Hazards

Many physical hazards in plastic Product such as Plastic Pipe, Conduit and fittings processing
are similar to those found in the metal manufacturing industries and will be managed in the
manner described in the General EHS Guidelines.

 Chemical Hazards

 Fire and Explosions

Fire in plastics manufacturing facilities may generate black acrid smoke and
poisonous gases including carbon monoxide. The fires may spread quickly and be
difficult to extinguish. Sources of ignition should be controlled by prohibiting
smoking and hot work in high risk areas. However, the company strictly implement as
per the General EHS Guidelines.

 Polymeric Dust: Granulators produce fine dust that is often combustible. If

suspended in air in high concentrations and ignited, an explosion may occur. High
concentration of polymeric dusts may be generated close to the granulator when
foamed rigid plastics are treated, and whenever coarse and fine granules are
mechanically separated by sieving. Fine powders may accumulate on vertical walls,
as well as on horizontal surfaces beyond the reach of conventional housekeeping.

Although some polymeric dust is always formed, this becomes a hazard only if the
materials are rigid (e.g. if its glass transition temperature is above room temperature).
The severity of the hazard is higher for foamed materials due to their lower resistance
to fragmentation.

 Measures to prevent and control this hazard include the following:

The health and safety measures which will be implemented in the proposed plastic
factories undertaking, with a view to ensure a safe and productive working
environment, are listed out as follows:-

 Use Personal Protective Equipment

To minimizethe workers exposure to dust and noise problems the recommended

management system is to use the appropriate hearing protectors’ equipment (ear plugs
or ear muffs). Every worker should use the personal protective equipment recommend
andfurnished by plastic industries.

MANTO IndustrialPLC | Feasibility study for Plastic product Project 43

  Dress recommendable Uniform

For the employees working in plastic pipe, conduits, fittings and hose factories, it is
recommended to wear uniform which is clean and fits properly.

 Use Eye Protection glass: Eye protection is necessary for many jobs in the plastic
factory.

IX. SOCIO-ECONOMIC IMPACT ASSESMENT

There will be significant economic and social benefits resulting from the expanded
production and sales of plastic pipe, conduits, fittings and hose products. The economic
developmentbenefits are often more immediate, important, and obvious to the societies:

9.1Positive Socio Economic Impact

 Employment Creation: The plastic production industry requires immense labor force and
technical staff, thus, provides job opportunity forcitizens, accordingly the company
planned to create employment for 87 permanent and 50 temporary peoples.
 GDP Contribution:

MANTO IndustrialPLC | Feasibility study for Plastic product Project 44

 The manufacturing of Plastic products contributes to the GDP of the country and
generates income for the workers employed in the factory. In this regard, the company
will contribute significant role to the GDP of the Nation.
 Technology and Knowhow Transfer

Modern plastic pipe, conduit and fitting industries would employ modern techniques of
operation for best quality of plastic production. Hence, it helps to transfer new
technologies and knowhow for domestic producers. The company planned to hire at least
4 expatriate for knowledge transfer.

 They generate revenue to the government in the form of taxes

MANTO generate revenue of birr 21,164,422 to the Government throughout ten years
project life. The company has a privilege of tax holiday for the first 3 years.

 Import Substitution
Foreign exchange allocated to import a lot of plastic product is by far large; plastic
product would provide an opportunity of supplementing the country’s demand thereby
substitute the import and thereby saves foreign exchange. In addition to their use in
domestic consumption, Plastic products they are assumed to play a significant role on the
country’s foreign exchange earnings.

9.2 Negative Socio Economic Impacts

 Reduction of income in Steel pipe manufacturing factories: The plastic pipe product
will directly replace Steel pipes manufacturing factories and reduces the income of the
employees as well as the promoters/owners/.

X. KEY RISK, SUCCESS, DRIVER FACTORS, PROBLEM AND

CONSTRAINTS

10.1.Key Risk Factors

MANTO IndustrialPLC | Feasibility study for Plastic product Project 45

These are factors that are outside the control of an operator of the industry, but are likely to
have significant impact on a business. The performance of the plastic pipe industry is affected
by the following key sensitivities.
 Raw materials cost and the dynamic change of global market situation and fluctuation
of foreign currency.
 change in technology (obsolescence)
 Change in quality preference of the consumers ( in terms of health hazard )

10.2.Key Success Factors

These are factors under the control of the operator and should be followed in order to be
successful.
 The existence of skilled manpower specially skilled with the plastic technology
 The existence of effective and strong management system
 Availability of latest and easily manageable technology
 quality product with relatively low production cost and fair selling price
 good public image
 Communication and promotion strength

X.3. Key Drivers

 Availability ofgood market for plastic pipe, conduit and fittings due to the growth in
industry, construction and building, communication and agricultural sectors.

 Peace and Stability of the Country:-It is the corner stone of any investment. Promoters
always assure the security of the country before investing capital. They need to get
security coverage for their investment.
 Stable macroeconomic policy

10.4.Problems and Constraints

10.4.1Problem
 Working Capital Shortage

The problem observed in plastic pipe, conduit and fittings manufacturing sector is
lack of sufficient finance. Working capital shortage is the common problem for
almost all factories.
 High cost for the imported raw materials.

MANTO IndustrialPLC | Feasibility study for Plastic product Project 46

  The bulky packing nature of the raw material at supplier which forced buyers to buy
from brokers for a small quantity for high price.
 Absence of technical supporting institutions to improve quality of production.
 Huge capital requirement to established the industry

10.4.2.Constraints
 Absence of inputs & spare parts in domestic market and the global price escalation
due to the devaluation and shortage of foreign currency,in recent year the price of
inputs and spare parts is consistently increasing. This increases the operational costs
of the business and hence, it is hindering investments in the sub sector in general.
 Lack of raw material in the local market.
 Power interruption

XI. OPPORTUNITY AND THREATS OF THE PRODUCT

The following opportunities and threats have been viewed in line with the commodity study
under consideration at national and industry level.
 Opportunities

 At National Level
 Favorable and supportive government policies
 Stable political climate & security
 High /potential/ domestic market demand
 Governments need for import substitution and currency saving
 Good credit facilities & insurance service

MANTO IndustrialPLC | Feasibility study for Plastic product Project 47

  At Industry Level

 Availability of enough market

 The expansion of building & construction, agriculture and industries
 Infrastructure facilities
 Tax holiday

 Threats

 At National Level
 Shortage of foreign exchange for the import of raw materials and other inputs
 Political instability of oil producing country
 The import of other similar products that may shift the consumer preference

 At Industry Level
 Import of high quality pipes at low price.
 Increasing trend in the price of raw material
 Quality management problems at industrial level.

MANTO IndustrialPLC | Feasibility study for Plastic product Project 48

Mitigation measure for Threat
•Promote cooperative action, improve Plastic product infrastructure, and improve linkage
among the key actors, reliable, up-to-date and consistent market information system.
•Strong institutional set-up to technical and skilled human resource.
•The required infrastructure has to be constructed, electric power supply, road and
establishment of well-equipped collection center.
•Effective and well developed plastic product market
•Avail the required foreign currency for imported raw material and working on to source raw
material locally.
•Establish quality control enforcement, set standard for raw material and plastic product
standard.

XII. FINANCIAL STUDY

MANTO IndustrialPLC | Feasibility study for Plastic product Project 49
 12.1 Investment Outlay

Table 12:1 Estimated Planned investment

Source of Finance
Existing Planned Total
Ser.
Description Investment Investment Investment
No. Own Bank Loan
Cost(Birr) Cost(Birr) Cost(Birr)
Cont’n

100,000
1 Land Acquisition Cost 100,000 -
100,000
Building and 8,000,000
2 - 8,000,000 8,000,000
Construction
3,100,000
3 Processing Plant - 3,100,000
3,100,000
1,100,000
5 Vehicle - 1,100,000
1,100,000
6 Generator - 500,000 500,000 500,000
7
Office Equipment &
- 350,000
350,000
Furniture 350,000
500,000
8 Electric Installation - 500,000
500,000
  Sub-total 100,000 14,658,508 14,758,508 14,758,508
9 Pre-production Cost 100,000 - 100,000 100,000
10 Pre-production Interest - 0 0 0
  Sub-total 100,000 0 100,000 100,000
11 Working Capital - 4,082,840 4,082,840
  Sub-total - 4,082,840 4,082,840
Grand Total 200,000 18,741,343 18,941,343 18,941,343
Percentage of D/E ratio 100%

Total investment cost of the project amounts Birr 18,941,343.It is assumed that the company
will going to financeall the investment cost of Birr 18,941,343(100%) from own source.

12.2 Production, Revenue and operating Cost

Table 12:2 Production and Revenue
S Product Types Units of Yield Total Unit Selling Total
MANTO IndustrialPLC | Feasibility study for Plastic product Project 50
 Revenue
Per
r. Production Per
Price Annum
N Measurement Parameter Annum at Full
(In Birr) at Full
o. Capacity
Capacity
(In Birr)
1 HDPE Mts 100% 48,000 120 5,760,000
2 PPR Pipes Mts 100% 52,000 160 8,448,000
3 Conduits sets 100% 24,000 500 12,000,000
4 PVC Fittings units 100% 60,000 50 3,000,000

Total         29,208,000

Table 12:3 Production and Revenue at different Capacity

Capacity Product Type Total Revenue Per Annum
Yea
Utilization PVC at Different Capacity
r HDPE PPR Pipes Conduits
Capacity Rate Fittings (In Birr)

1 70% 4,032,000 5,913,600 8,400,000 2,100,000 20,445,600

2 80% 4,608,000 6,758,400 9,600,000 2,400,000 23,366,400
3-10 90% 5,184,000 7,603,200 10,800,000 2,700,000 26,287,200
12.3 Projected Financial Results

12.3.1. Projection of Income statement

Table 12:4 profit and loss statements

Particulars Year 1 Year 2 Year 3 Year 4 Year 5
Sales 20,445,600 23,366,400 26,287,200 26,287,200 26,287,200
Cost and Expenses
Operating Costs 13,693,385 14,782,203 16,300,130 16,506,292 16,722,761
Gross Profit 6,752,215 8,584,197 9,987,970 9,980,908 9,564,439
Less:Depreciation 1,270,713 1,270,713 1,270,713 1,270,713 1,270,713
Profit Before I &Tax 5,481,502 7,313,484 8,716,356 8,510,195 8,293,726
Less: Interest - - - - -
Profit before tax 5,481,502 7,313,484 8,716,356 8,510,195 8,293,726
Less: profit Tax(35%) 2,978,568 2,902,804
Net Profit 5,481,502 7,313,484 8,716,356 5,531,627 5,390,922

12.3.2 Cash flow forecast

Table12:5Cash flow
Particulars Project Year
MANTO IndustrialPLC | Feasibility study for Plastic product Project 51
 0 1 2 3 4
Cash Inflows          
Owner's Equity        
18,941,313
Loan -        
Net Profit   5,481,502 7,313,484 8,716,356 5,531,627
Depreciation   1,270,713 1,270,713 1,270,713 1,270,713
Total Cash Inflows 18,941,313 6,752,215 8,584,197 9,987,069 6,802,340
Cash out Flows          
Total Fixed Assets 14,658,418        
Pre-operating Interest &
200,200        
Cost
Working Capital 4,082,840        
Increase in Working
  - 332,404 473,248 36,823
Capital
Loan Repayment - - - - -
Replacement    
Withdrawal (20%) - 1,096,300 1,462,697 1,743,271 1,106,325
Total Cash Outflows 18,941,313 1,096,300 1,795,101 2,216,519 1,143,148
Net Cash Flow - 5,655,915 6,789,096 7,770,551 5,659,192
Cumulative Cash
- 5,655,915 12,445,011 20,215,562 25,874,754
Balance
Retained Earning - 4,385,302 5,850,787 6,973,085 4,425,302
Cumulative Retained
- 4,385,302 17,209,074 21,634,376
Earning 10,235,989

12.3.3. Balance sheet forecast

Table 12:6. Projected Balance sheet

Particulars Project Years

MANTO IndustrialPLC | Feasibility study for Plastic product Project 52

 0 1 2 3 4
A. ASSETS          
Current Assets          
Cash - 5,655,915 12,445,011 20,215,562 25,874,754
Inventory 4,082,840 4,082,840 4,415,244 4,888,491 4,925,314
Total C. Assets
4,082,840 9,738,755 16,860,255 25,104,053 30,800,068
Fixed Assets          
Building and Construction 8,000,000 6,863,750 6,502,500 6,141,250 5,780,000
Plastic Processing Plant 3,705,750 22,715,748 20,191,776 17,667,804 15,143,832
Vehicle 2,100,000 7,464,000 5,598,000 3,732,000 1,866,000
Generator 500,000 1,200,000 900,000 600,000 300,000
Office Equipment &
Furniture 350,000 291,240 258,880 226,520 194,160
Electric Installation 500,000 26,378 23,447 20,516 17,585
Total Fixed Assets 14,658,508 38,561,116 33,474,603 28,388,090 23,301,577
Intangible Asset          
Land Acquisition Cost 100,000 90,000 80,000 70,000 60,000
Pre-production Cost 100,000 90,000 80,000 70,000 60,000
Pre-Production Interest - - - - -
Total Intangible Assets 200,000 180,000 160,000 140,000 120,000
TOTAL ASSETS 18,941,347 23,326,529 29,177,337 36,150,422 40,575,723
B. LIABILITY          
DBE Loan - - - - -
Total Liability - - - - -
C. CAPITAL          
Equity contribution 18,941,347 18,941,347 18,941,347 18,941,347 18,941,347
Retained earning - 4,385,202 10,235,989 17,209,074 21,634,374
Total Capital 18,941,347 23,326,545 29,177,332 36,150,417 40,575,719
TOTAL LIABILITY &
CAPITAL 18,941,347 23,326,545 29,177,332 36,150,417 40,575,719

12.4 Viability and other Measures of Project Worth

12.4.1 Financial IRR Before and after Taxation

The pre-and after tax financial internal rate of return computed based on the ten year
projection period are 44% and 39%.This is above acceptable level or by far above the cost of

MANTO IndustrialPLC | Feasibility study for Plastic product Project 53

debt 12%. In addition, the sensitivity test worked out at 10% increase in costs and 10%
decline in revenue shows a good result of36% and 31% IRR after tax respectively.

12.4.2 Net Present Value(NPV)

NPV = Present value of Gross profit- Present Value of Gross cost

= 20,445,600- 13,693,385

= 6,752,215

The Net Present Value is greater than zero. Therefore, this milk processing project is
accepted and viable. So, its implementation will provide good benefit to the investors.

12.4.3 Benefit/cost Ratio

BCR= Present Value of Gross Profit

Present Value of Gross cost

= 20,445,600

13,693,385

= 1.49

The ratio is greater than one. This means that the project owner will recover the investment, it
is profitable.

MANTO IndustrialPLC | Feasibility study for Plastic product Project 54

 Annexes

MANTO IndustrialPLC | Feasibility study for Plastic product Project 55