Uganda Grain Dealers LTD Business Plan

UGANDA GRAIN DEALERS LTD.
BUSINESS PLAN CORPORATE DOCUMENT

1.0 EXECUTIVE SUMMARY
1.1 Business Concept
Uganda Grain Dealers Ltd. is proposing a maize mill to service the Kawempe-Tula
peri-urban area within Kawempe Division in the northern outskirts of Kampala city.
Uganda Grain Dealers Ltd.willbuy maize and produce maize meal with bran as a by-
product. The proposed dry milled maize plant will have an operational output capacity
of 360 metric tonnes per annum (or 1 metric tonne per day).
1.2 Financial Features
Uganda Grain Dealers Ltd estimates processing 360 tons of maize annually to produce
7,200 bags of posho (of 50 kgs each). Peak sales season is December through March.
First year expenses are estimated at UGX 334.84 million with gross sales of UGX 372.96
million. Startup expenses are estimated UGX 54 million.
1.3 Industry Analysis & Marketing Plan
Posho, a fine flour made from ground corn, is an important part of the East African diet,
and somost rural farmers grow a considerable amount of maize to process into posho.
This results in ahigh demand for corn grinders. However, because of the high costs
associated with purchasinga grinder, the number of grinders is limited, especially in
most of the rural and peri-urban areas of Uganda. Within these areas, most of the corn
grinders are separated by distances ranging between 6 to 10 kms that renders them
barely adequate to service the corn-grinding needs of most of the local residents who
depend on posho for a large part of their staple diet. This creates a perfect opportunity
for a grindingbusiness if enough corn is grown and processed within these areas to turn
a profit. After an analysis of the Kawempe-Tula peri-urban area, including those that
would grind their corn in the area, it was decided that there was enough demand for
posho and corn grinding services in the area to turn a profit if a corn grinder were built.
1.4 Management
Uganda Grain Dealers Ltd. will benefit from an experienced entrepreneurial-based

management team. J. Kahafu Enterprises Limited, a local trading company engaged in
the trade of fast moving consumer goods holds the majority shares in Uganda Grain
Dealers Ltd., and is responsible for strategic corporate and financial planning. Ms.
Neema Grace and Mr. Honward Kabateraine, are long term residents of Kampala with
a firm knowledge of the local economy and experience in agricultural management and
project infrastructure development, will run the day-to-day operations. Mr. Cranmer
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UGANDA GRAIN DEALERS LTD. BUSINESS PLAN CORPORATE DOCUMENT
Tayebwa, a Kampala-based advocate and legal consultant, brings to the table years of
milling industry expertise and industry connections. Ownership interest is allocated at
45% to J. Kahafu Enterprises Limited, 10% to Ms. Neema Grace, 10% to Mr.
HonwardKabateraine, and 10% to Mr. Cranmer Tayebwa.
1.5 Partnerships
Uganda Grain Dealers Ltd. will strive to form mutually beneficial partnerships with
local farmers and grain traders. The farmers and grain traders will receive more
favourable prices for their crops while Uganda Grain Dealers Ltd. saves significantly
on transportation costs.
1.6 Financial Plan
The corn grinding project would require a loan of UGX 30 million. This business is
projected tohave a Return on Investment (ROI) of 17.48% the first year and 23.32% in
the second year. Similarrates continue into the future. Projections show that the
business should be turning greatprofits after one year and loan repayments are
projected to be met without much strain on thebusiness or owner.
1.7 Loan Information
Uganda Grain Dealers Ltd. is seeking UGX 30 million in short-term commercial loan
funding. Uganda Grain Dealers Ltd. will leverage this funding with UGX 40 million of
in-kind contributions in the form of capital, land, labor and expertise. It is proposed that
the loan of UGX 30 million will pay for the equipment, and part of the working capital
costs. The loan will be for a period of two years at 21 percent interest, with a grace
period of six (6) months in the first year and a monthly payment of UGX 2.5 million per
month during Month 7 – Month 12, and a further monthly payment of UGX 1.25 million
in the second year of the project with payments being made every first and third
Monday of each month. Loan funding will greatly reduce the financial start-up burdens
and provide for a much quicker path to profitability.
1.8 Economic Impact
With current high maize meal prices and frequent shortages, Uganda Grain Dealers Ltd. will
provide a cheaper product and assure year round availability. Local farmers and grain traders
will also save costs by delivering their crops to a local mill. Similarly, more local land owners
would be able to farm with a local mill that can buy their product. This will stimulate the local
economy and increase cash flow within the domestic agricultural economy.
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2.0 PROJECT PROFILE
The proposed project is for setting up a Maize Flour Mill. The Mill will be established
the Kawempe-Tula peri-urban area of Kawempe Division of Kampala city. The
document highlights marketing, management, business operations and financial aspects
required for the establishment of successful maize milling business venture. The unit
will be using modern automated machinery for all the processes, ensuring quality check
throughout the production process. After processing, the flour will be packed in
standard 50 kg-sized packages. The unit will produce premium quality flour to be sold
in the local market, competing with existing brands.
2.1 Project Brief
This document describes the investment opportunity for setting up a Maize Flour Mill.
The said plant will have total installed maize crushing capacity of 360 Tons per year.
2.2 Market Entry Timing
As such there is no specific time required for the entry time in this sector. As the need
for maize flour is increasing day by day due to the increase in population, investment
can be made any time during the year.
2.3 Opportunity Rationale
Agriculture sector contributes 23.1% of the total GDP for Uganda (2013). However, the
rapid rate of population growth in Uganda coupled with climate-change-induced
weather changes, have greatly burdened the agriculture sector as its productivity is not
able to meet the current food requirements. Lack of infrastructure and a fast-growing
population have also increased demand of food items, which havea direct impact on
public & private sector Flour Mills. Uganda is a medium-density populated country,
which creates a great demand for Maize Flour, whereby big investment opportunity
exists in this sector. Introduction of latest technology, hygienic processing and
professional staff will also contribute to the popularity and success of private sector
Flour mill. Investment in the private sector can, therefore, exploit this opportunity and
provide good products within easy access.
2.4 Business Legal Status
The legal structure of Uganda Grain Dealers Ltd. is that of a limited liability company,
the details of which are provided in Section 3.1.5.
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2.5 Project Capacity
The proposed project will have the total output capacity of 360,000 kgs of maize flour
per year; the maize flour plant will start milling at 100% of its installed milling output
capacity in the first year of business being a small-scale agro- industrial enterprise.
2.6 Working Time
As per the nature of business recommended timings would be 10 hrs per day, and 30
days per month. This will be executed in a single shift for smooth operations of
tasks/obligations.
2.7 Project Investment
The Total Initial Cost of the Project is worked out in Table 1 as follows:
Table 1: Project Cost Summary in UGX

S. No. Project Investment Component Share Project Short-term Total
Promoter Debt/Loan
(Equity) Financing
1. Existing Milling Plant Structure 14.29% 10,000,000 0 10,000,000
2. Plant Machinery and Equipment 51.43% 16,000,000 20,000,000 36,000,000
3. Prelim. & Pre-op. Expenses 5.71% 4,000,000 0 4,000,000
4. Working Capital 28.57% 10,000,000 10,000,000 20,000,000
5. TOTAL PROJECT FUNDING 100.00% 40,000,000 30,000,000 70,000,000
6. %age of Total Project Funding 57.14% 42.86% 100.00%
2.8 Project Location
The maize milling plant will be based in the Kawempe-Tula peri-urban industrial area
of Kawempe that is located in the northern outskirts of Kampala city. This area is
convenient because it can easily be accessed by farmers and grain traders alike with
maize grain-laden trucks – especially coming from the Masindi and Central Uganda
maize-production areas. The Kawempe-Tula area is also well-served with basic
infrastructure like good access roads, power connections, as well as water and sewerage
disposal lines.
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2.9 Key Success Factors
The commercial viability of the proposed Maize Flour Mill depends on the following
Factors:
 Utmost care should be taken while selecting maize. Only the best quality maize
should be used.
 Waste Production should be kept at minimum and production process need to be
monitored very carefully.
 Advance sale orders can ensure the success of the business.
 It is recommended to estimate the maize requirements for the year and this
should be contracted for in advance with the suppliers to secure the drastic
fluctuations in the prices of maize.
 Quality maintenance will play an important role as it is evident from the
behavior of the general consumers that they are more specific towards health
issues than ever before.
 Cost Accounting system should be strengthened so as to monitor the entire
process and determine the reasons for major variances in the process such as
Material, Labor and Factory Overhead Variances.
 Location of the project is of prime importance.
 Selection of technical / skilled staff would be very crucial decision to be made by
the management.
 Continuous efforts should be made for up-gradation of the technology.
2.10 SWOT Analysis
The SWOT Analysis that has inspired and driven Uganda Grain Dealers Ltd. to
consider investing in this maize flour milling project is summarized in Table 2 below:
Table 2: SWOT Analysis for the Maize Milling Project

Strengths Weaknesses
 Continuous availability of raw material,  Strict controls over labour efficiency
i.e. high quality maize grain. need to be observed to reduce the waste
 Fully automated plant, hence less labour production to a minimum level.
involved.  Expected loss at the initial stages of the
 Availability of low cost labour. operation as a result of sales return from
 Product affordable to all income groups. the distributors.
 Wide range of target market.  Inexperienced technical staff as
compared to the units currently in
operation.
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Opportunities Threats
 Changes in the current eating habits of  Already established businesses in same
the people. industry.
 A large number of people that are not  Fluctuation in the price of maize.
brand loyal can be targeted through  Quality of the flour is to be monitored
marketing campaign. very closely as people are more directed
 About 40% of the Maize Flour Market towards health and safety issues.
share comprises of un-branded flour this  Strong competition and high
share can be gained through heavy promotional activity by the competitors.
marketing campaign.
 Export opportunity.
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3.0 BUSINESS PROFILE
3.1 The Business
3.1.1 Goals and Objectives
Mission Statement– Uganda Grain Dealers Ltd. will produce maize flour (posho) in
the Kawempe-Tula area of northern Kampala’s suburbs in order to reduce the retail
price of maize flour in this northern suburb of Kampala district.
Vision Statement- Uganda Grain Dealers Ltd. will strive to stimulate and support long
term economic growth and increased cash flow in the northerly Kawempe area of
Kampala District.
0-3 month goals – This is the start-up period where the milling infrastructure will be
built. This includes building of facilities, ordering and installation of a maize mill,
installation of electricity hookups, procuring maize sources, and the training of staff on
operations and maintenance. Full operation will start during the 2015 first harvesting
season.
2 year goals– With positive cash flow Uganda Grain Dealers Ltd. will turn its focus on
growth through community involvement. Uganda Grain Dealers Ltd. will work with
non-farming local property owners to encourage commerce and thus gaining additional
maize sources.
3.1.2 Long Term Goals
Uganda Grain Dealers Ltd. would like to accomplish the following goals:
1. Capture wider profit margins of a value added corn product versus lower profit
margins of raw commodity maize. Regardless of whether or not the business is
organized under a cooperative format where producers have the ability to be
shareholders, or under a corporate structure (i.e. limited liability corporation),
the goal of the value added venture which utilizes maize as the primary input is
to provide alternative markets for producers of corn and greater market access
for producers.
2. Increase net income of investors and provide a long term return on investment
sufficiently larger than what is expected for alternative investments.
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3. Establish a strong customer base through emphasis on customer service and
relationship building. This will provide the opportunity to secure long term
demand for milled maize flour production.
4. Provide a reputable product that will successfully compete in the Ugandan
maize flour industry and satisfy customer needs and expectations.
Uganda Grain Dealers Ltd. will use the following objectives to accomplish the stated
goals:
1. The investing company will pool their collective strengths in a manner that will
achieve the optimal outcome and put aside individual interests that may conflict
with the greater good that is to be achieved collectively.
2. Provide a total maize flour product for the customer that incorporates a superior
level of service and quality. This can be achieved by constant sampling and
testing of the product from the production line, and constant contact with the
customers to assess their changing needs.
3. Hire individuals for key positions who have sufficient knowledge and
experience in the maize flour industry. These people will help to establish
relationships in the maize flour industry, and will further help to achieve the
goals of the venture and build with its customers a partnership to achieve their
complementary goals.
Uganda Grain Dealers Ltd. can use the following strengths to accomplish its vision and
goals.
1. The group of investors has strong financing capabilities and borrowing ability.
2. Many investors in the company have management skills from off-farm jobs both
in agri-business and non-agribusiness industries. These skills include personnel
management skills, project management skills, and some financial management
skills.
3. Uganda Grain Dealers Ltd. has a close partnership with an industry insider,
who can provide detailed and valuable information about the maize flour market
and customers.
3.1.3 Products and Service
Uganda Grain Dealers Ltd. will purchase maize and produce maize meal (posho).
Maize grain will be purchased from local and commercial farmers in any quantities. The
maize is typically received bagged in 50kg bags. Maize will be stored until processed.
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Once processed, the meal will be bagged in 50kg bags and transported for sale. The
grade of the meal is determined by the finished product’s fineness. Finer meal is
typically used for porridge with a runny consistency while coarse meal is used for a
firm and pasty type porridge. Finer meal (called Breakfast Posho) is generally more
expensive but ultimately preferred.
3.1.4 Type of Business
Uganda Grain Dealers Ltd. is a newly established company, registered in December

2012. Uganda Grain Dealers Ltd., is a corporation with four shareholders who all serve
as the board of directors. During operation the mill will require 4 to 8 labourers
respectively during the off and peak seasons to run at capacity. These workers will be
hired and trained prior to the completion of the facility. The facility will be located at
Kawempe-Tula of Kawempe Division in Kampala district. The mill is expected to be
fully operational for the 2015 harvesting season.
Sales will be divided roughly 50% / 50% between wholesale and retail.
3.1.5 Company Ownership & Legal Status
Uganda Grain Dealers Ltd. is a company incorporated at the Registrar of Companies

through the foresight and vision of its four founding directors. Uganda Grain Dealers
Ltd. was incorporated in the Republic of Uganda on 11th December 2012. Though
relatively new, the directors realize their Company's vast potential market and
opportunity for growth given implementation of the appropriate strategies, aided by
the necessary finances.
3.1.6 The Shareholders
Shareholder Shares held (UGShs) [%age]
1. J. Kahafu Enterprises Limited 2,250,000 45%
2. Ms. Neema Grace 500,000 10%
3. Mr. Cranmer Tayebwa 500,000 10%
4. Mr. Honward Kabateraine 500,000 10%
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3.2 The Industry
3.2.1 Competition
There are two categories of maize mills in Uganda: small scale mills that only serve
their immediate communities and large scale mills that sell their product throughout
Uganda.
The large scale milling companies are able to spend significantly on marketing and
enjoy customer brand recognition. They are located in areas of established
infrastructure and have strong relationships with maize producers, grain traders and
outlets.
Large scale milling companies do however struggle to serve remote locations due to
transportation costs. They also process such high volumes that quality is often
neglected. Smaller outlets are typically ignored and customer support is virtually non-
existent.
Competitive Advantage
As the only small scale maize mill within the Kawempe-Tula area, Uganda Grain
Dealers Ltd. willoffer the following advantages over competitors:
Location – Uganda Grain Dealers Ltd. will be able to facilitate frequent deliveries
assuring constant availability. Being local also saves transportation costs.
Product Quality – There is currently no quality control enforcement in Uganda. Larger

mills do occasionally produce poor quality meal due to negligence or simply as a result
of processing large volumes of product. Given the manageable size of the Uganda
Grain Dealers Ltd. mill, such quality control can be performed regularly as needed
without any difficulties.
Local Knowledge – Traditional maize marketing channels in Uganda consists of:

Producer → Grain Trader → Milling Agent → Retailer → Consumer. With Uganda
Grain Dealers Ltd’s close ties with local businesses, the company will be able to buy
maize without the use of grain traders as well as sell roughly 50% of the product
independent of retailers.
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3.2.2 By-Product Market
A maize mill produces bran as a by-product. Not fit for human consumption, maize
bran is a nutritious component of livestock feeds and is even used by some farmers as a
complete replacement for expensive livestock feeds. Maize bran currently sells for UGX
200, which is around 6-10% of the price of the same weight in posho. The demand for
this product is always high in Uganda as animal feeds are very expensive and there are
many livestock farmers. Within Kawempe area alone there are several small and
medium scale poultry farmers that currently drive to more distant poultry feed mills
within Kampala district in order to buy maize bran – which considerably adds to the
cost of their livestock farming enterprises.
3.2.3 Industry Dynamics
Sales Fluctuations
Seasonal Fluctuations - Throughout rural Uganda people plant small areas of maize
around their huts to supply most of their needs. After drying and cleaning the maize
they grind it into a meal by hand or with small diesel powered milling units called
hammer mills. This practice effectively removes these sustenance farmers from the
commercial maize meal demand. However, every year between December and May
there is again a sharp increase in demand for commercially milled maize as these
sustenance farmers once again start relying on commercial meal. This is due to the
following two reasons:
 Sustenance farmers do not have access to adequate storage facilities for their
maize. If there is a big surplus of maize during the rainy season most or all of it
might spoil because of rain and high humidity.
 Many sustenance farmers simply did not grow enough.
The demand for commercial meal once again drops in May every year when people
again start harvesting their own crops. During the peak months of December through
May most milling companies look at producing twice as much maize meal per month as
they would during the rest of the year.
Annual Fluctuations - The milling industry in Uganda has enjoyed a very stable
environment over the last few years. The main reasons for this stability are:
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 Uganda has one of the most stable and favourable natural climates in Eastern
Africa for growing maize. Droughts and occasional floods along some parts of
Uganda do however occur which can impact national maize production
negatively. On average however, Uganda has been producing more and more
maize every year for the last eight years.
 During times of less maize production, and even in times of shortages, maize
allocated for human consumption receives priority above other maize consuming
business sectors like stock feed production, breweries and of course exports.
Prices do increase but are simply reflected in higher maize meal (posho) pricing.
This leaves the milling operators largely unaffected by less availability of maize.
Population Growth and Migration
It can be accepted that over 80% of Ugandans now consume posho as their staple or
secondary diet. The nationwide market for maize meal sales can therefore be directly
connected with population figures and growth rates. The current estimated population
of Uganda is 35,918,915 and grows with 3.24% annually.
Although it is difficult to correlate this fact without the proper censuses, Uganda Grain
Dealers Ltd. is confident that the population of Kawempe Division area is constantly on
the increase. This is evident in the rapid expansion of housing areas, new businesses
and various hotels and restaurants. New businesses generate employment and a steady
flow of villagers from rural areas. In these towns however, people are no longer able to
farm their own crop and they solely rely on commercial posho.
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4.0 MARKET STUDY
Maize was introduced in Uganda in 1861 and has since become a major part of the
farming system, ranking third in importance among the main cereal crops (finger millet,
sorghum and maize) grown in the country (USAID, 2010). Much of the production of
maize aims to supply export markets in the region, mostly especially Kenya and
recently Southern Sudan, which are in chronic maize deficits. The maize sub-sector is
estimated to provide a livelihood for about 3 million Ugandan farm households, close
to 1,000 traders and over 20 exporters (UBoS, 2011). Therefore, maize is a growing
source of household income and foreign exchange through exports. Providing more
support to the maize industry is therefore a key part of Uganda’s strategy to strengthen
its positioning in regional and world markets.
4.1 Production
Uganda’s small-scale farmers have traditionally cultivated maize for food and for
income generation. It forms an important part of the farming system, particularly in
Eastern Uganda. Maize is widely grown in Uganda. The main production agro-
ecological zones are in the west, east, north and southeast Uganda (NRI/IITA, 2002)
with the Eastern region accounting for over 50 percent of annual production (USAID,
2010). The crop is cultivated on about 1.5 million hectares of land. In terms of area
planted, maize is the third most cultivated crop after banana and beans. In some regions
of the country, the crop has now become a staple food, replacing crops like sorghum,
millet, cassava and banana. Maize is presently considered a major source of income in
the districts of Kapchorwa, Mbale, Iganga, Masindi and Kasese (Figure 1), with about
75–95 percent of the household harvest being sold to earn money (NRI/IITA, 2002).
Whilst production is influenced by climate patterns, farmers’ planting intentions, in

excess of subsistence requirements, are largely influenced by price levels and overall
output tends to fluctuate accordingly. The country has a potential of producing up to
7.5 million metric tons utilizing the current area under maize by utilizing improved
varieties and crop management technology (AATF/NARO, 2010). However, this is
never achieved largely due to various production constraints including low soil fertility,
lack of improved maize varieties, erratic rainfall patterns and drought stress during
some seasons. Maize production is generally characterized by low yields, which result
in high unit costs and thus low returns. Regardless of the farm sizes, Uganda’s maize
yield levels are low and are generally between 1.0 and 1.8 metric tons/ hectare. Crop
failure due to drought can cause losses of up to 80 percent. The magnitude of the
problem is high in districts such as Kasese where losses can reach catastrophic levels.
Other drought-prone regions include eastern, northeastern and northern Uganda.
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Figure 1: Map of Uganda illustrating flow of maize
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Figure 2: Maize area and production trends in Uganda (1990-2012)
Production ('000 tonnes) Area Harvested ('000 Ha)
3000
2500
2000
1500
1000
500
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: FAOSTAT (2012).
Over the last two decades (1990-2012), both maize area and production in Uganda
increased dramatically (Figure 2). Harvested area increased from about 0.4 million
hectares in 1990 to 0.65 million hectare in 2001 reaching 1.094 million hectares in 2012
(FAOSTAT, 2013). Similarly, production more than doubled during the same period,
i.e., from 0.602 million tons in to 2.734 million tons in 2012. Clearly, most of the
production increase is the result of area expansion rather than yield improvement as
crop yield stagnated at around 1.5 t/ha in recent years (FAOSTAT, 2012).
4.2 Consumption
While maize has been grown for a long time in Uganda, nonetheless, unlike in
neighboring countries (Kenya, Tanzania, etc.), it does not form a major part of the
population’s traditional diet, but is grown primarily for income generation, rather than
for food security. However, the growing cost of traditional staple foods (such as
cooking bananas locally called Matooke) has had the impact of increasing maize
consumption, especially in urban areas. Kampala alone accounts for about 50percent of
formal trade in maize (USAID, 2010).
The domestic market for maize in Uganda is estimated at 350,000 - 400,000 metric tons
per annum1 (NRI/IITA, 2002). In 2007, domestic consumption remained at 400,000 MT
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out of a national availability of approximately 638,000 MT (USAID, 2008). Maize is
consumed in various forms – grilled or whole, as a cake [Posho, or Ugali], or as porridge
– especially in urban centers. Over 70 percent of the maize is consumed as food, and
about 10percent is used as animal feeds (maize bran). There is also increasing demand
for value-added products (maize flour, poultry feeds, etc) especially in urban centers
where maize is gaining importance both as a major food item and for income
generation.
4.3 Marketing and Trade
Uganda’s maize export market is mainly regional, comprising of markets within

Eastern and Southern Africa, the Democratic Republic of Congo and Southern Sudan.
Exports of maize to Kenya alone more than doubled from 2004 to 2008 (MAAIF, 2010).
Uganda’s export potential for maize is estimated between 200,000 and 250,000 MT per
year (USAID, 2010). Nonetheless, the country has only managed to formally export half
of this amount, reflecting a low level of penetration into the regional markets due to the
poor rural road network, and limited business exposure (USAID, 2010). Maize is sold
across borders through Mutukula for Tanzania, Busia for Kenya, and Gatuna for
Rwanda (Figure 1). The challenge for the cross-border trade, however, has been the
increasing informal (unofficial) cross-border trade with neighboring countries for
difficulty of controlling both quantity and quality of commodity flow. Of all the five
neighboring countries, Kenya dominates the informal export destinations followed by
DRC, Southern Sudan, Rwanda and Tanzania.
There has been a vibrant cross-border trade in maize with these regional markets.
According to USAID (2010), internal procurement and trade in maize along Uganda’s
eastern and southern borders with Kenya and Rwanda, respectively, remains brisk, as
high demand for maize in the neighboring countries increased the follow of maize from
production centers in Uganda. Trade in maize to these markets is entirely informal.
Consequently there are no accurate data on volume and values of exports to these
countries.
Official figures indicate that in 2008 alone, maize is estimated to have generated over
USD 18.5 million in export earnings from an estimated 66,671 tons (MAAIF, 2011). Table
2 presents maize production, import and export of Uganda (2004-2010). The data on
exports of maize reported mainly reflects the formal export. According to this data,
Uganda exported 8-12percent of its maize production between 2004 and 2010. However,
informal (unofficial) maize exports appear to far exceeding the formal (official) exports
through. According to Bank of Uganda (2011), the value of informal maize grain and
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flour exports to neighboring countries in 2009 and 2010 were estimated at USD 36.67
and 45.83 million, respectively. In contrast, the value of formal maize grain exports in
the same years were USD 29.07 and 38.21 million, respectively (MAAIF, 2010).
Table 3: Maize production, import and export of Uganda (2004-2010)

2004 2005 2006 2007 2008 2009 2010
Production (000 1,080.00 1,237.00 1,258.03 1,261.80 2,314.91 2,354.66 2,373.50
MT)
Imports (000 MT) 153.03 78.79 59.53 42.54 N/A N/A N/A
Formal Exports 89.32 90.36 118.49 107.08 66.67 94.44 166.25
(000 MT)
Formal exports as a 8.27% 7.31% 9.42% 8.48% 2.88% 4.01% 7.00%
% of production
N/A = data not available.
Source: FAOSTAT, 2011 and MAAIF (2011).
Data obtained from FAOSTAT (2012) indicates that formal imports of maize have been
declining since 2004. The same conclusion is also reported by USAID (2010). Imports of
maize have been high in seasons of low harvest (e.g., 2004) especially on account of
variations in rainfall patterns. By and large, however, Uganda has always been self-
sufficient in maize production and has not been dependent on imports.
4.4 Description of the Value Chain and Processing
Due to the importance of maize in Uganda, several studies of marketing, transaction

costs and value chain analysis are available including USAID (2010), NRI/IITA (2002),
World Bank (2009) and PMA (2009). The description provided here is mainly based on
USAID (2010) which focused on market assessment of staple foods in Uganda, World
Bank (2009) and PMA (2009). According to these studies, the transactions involved in
the marketing of maize are complex but the main channels for the commodity flow
include (i) from farmer (farm gate) to agents/traders/village markets in rural areas; (ii)
from rural markets to secondary markets in regional towns such as Iganga, Bugiri and
Sironko; (iii) from urban markets to major buying centers outside the district and (iv)
the export market. Each one of these channels involves a number of key players. Figure
3 depicts the typical maize supply chain in Uganda.
Rural agents are the main buyers of all maize traded in the sub-counties (smaller
administrative units in the districts). Their main function is to buy and/or assemble
maize from the numerous scattered farmers, often located in inaccessible rural areas.
They find market for the maize (often the urban traders and processors) when they have
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accumulated sufficient quantities. The urban traders and processors arrange transport
to collect the maize either directly from the farmers whom they pay on a cash basis, or
from the collection points of the agents. Since the agents live in the rural areas, they are
a reliable linkage between the farmers and urban traders and processors/millers.
Urban traders are found in major urban centers in producing districts. Their main
activities include networking with rural agents, serving as a market outlet for farmers,
and collecting maize grain before selling it to the various clients, including institutions
and processors, located in the districts. Urban traders are also sources of bagging
materials (sacks) used by farmers as well as market information in their areas of
operation. Urban traders sell their maize mostly to millers.
Maize grown and traded undergoes some level of value addition – conversion of maize
grain into flour and a variety of other by-products, such as bran and germ. The
principle players in this value chain are the processors/millers, grouped into three
categories, namely: small-scale millers, medium-scale millers and large-scale millers.
Majority of the processors/millers fall under the small-scale category and they are
scattered in various rural trading centers in the districts, carrying out primarily
customized milling. Processing costs range from UgSh 50 to 100 per kg, depending on
the location.
The medium-scale processors are based in the main town centers – the district capitals
and offer both contract and trade-based milling services to institutions and urban
traders. The medium-scale millers first hull the maize to remove bran and then produce
“No.1” flour, which is not very nutritious. The medium-scale millers charge a price of
UgSh 70-100 per kg for milling. For every 100 kg of maize grain, about 70-73 kg of No.1
maize flour is produced. The millers sell the No. 1 flour at UgSh 1,000-1,400 to
wholesalers and retailers. The normal price of maize bran is UgSh 200 per kg to poultry
and animal farmers and manufacturers of feed meals. The medium-scale millers make a
profit of UgSh132-420 per kg or about 11-35 percent of the price of the flour.
Large-scale processors are only found in Kampala. They buy their maize from urban
traders and large-scale traders from the western, central and eastern regions. They sell
more than three quarters (75 percent) of their maize products to the World Food
Programme (WFP) for export and distribution to war displaced people in Northern
Uganda. The processors carry out activities such as cleaning, de-stoning, drying,
fumigating and milling into flour.
18
Transport costs are the major marketing cost and, therefore, are key in determining the
prices offered to farmers by rural traders. The relative share of transportation cost in
total marketing costs averages 84 percent in Uganda (World Bank, 2009). These costs are
quite high because a maize bag often goes through a number of markets before reaching
the final consumer in large cities and thus requires loading and unloading at each
intermediate stop. For sales, maize is brought from farm to primary markets mainly by
traders but sometimes by farmers themselves. The common mode of transportation on
this route is either bicycle or carts. In Uganda, a 10 MT truck is the mostly common
mode of transportation beginning already from the rural market, while some traders
use trucks with a capacity of between 24 and 32 metric tons (World Bank, 2009).
Average distances between market pairs are short and the average distance between
secondary and wholesale markets is about 80 km in Uganda (from Jinja to Kampala).
A number of large scale traders and exporters of maize have emerged over the years.
The main ones include: (i) the World Food Programme, (ii) the Uganda Grain Traders
(UGT), (iii) the Masindi Seed and Grain Growers Association (MSGGA), and (iv) the
Uganda National Farmers Federation (UNFFE).
The informal export market to Kenya is uncontrolled and involves the sale of low and
variable quality maize. This constrains the penetration of the formal Kenya market
represented by large millers. Furthermore, Uganda lacks an authoritative price
determination point, e.g., a central commodity exchange or futures market, national
maize quality standards, and a legal and regulatory framework covering grain
warehousing and handling operations (NRI/IITA, 2002). These deficiencies, together
with inadequate finance to enable the development of an efficient warehouse receipt
financing system, constrain the holding of stocks, essential for the exploitation of export
marketing opportunities in particular (NRI/IITA, 2002).
Most farmers sell most of their maize at low prices to traders who in turn sell to
exporters (PMA, 2009). Further, PMA analysis of the trend of maize farm prices
indicates that, on average, there has not been any significant increase in the deflated
national average farm price received by farmers during the period 1970-2005 (PMA,
2009). At the end of the chain are large scale traders/processors, large scale distributors
and exporters, and big millers. They rent or have big warehouses and modern cleaning
and drying equipment, own transport facilities such as pick-up, trucks, Lorries and
trailers. They engage in maize cleaning, consolidation and bulking and sell maize to
relief agencies, or export to regional markets.
19
Ugandan maize exporters appear to receive profitable prices for their exports in most of
the years (Figure 3). With the exception of 2008/09, the export price of maize exceeds
wholesale price in Kampala considerably in most of the years. In 2008/09, export prices
were slightly below the whole sale market prices. This does not necessarily mean the
exporters are selling at loss as maize exported was probably purchased earlier at lower
wholesale prices. It is to be noted that export prices reported here are the average unit
value of exports to all countries. In contrast, trade data from Kenya Ministry of
Agriculture indicate much lower average value of maize imports from Uganda.
Wholesale maize prices in Uganda, especially in Kampala, are well often above the
world market prices, except few very short periods when they were below the world
market prices (World Bank, 2011).
Figure 3: Wholesale prices and export unit value (USD per ton) of maize in Uganda
wholesale price export price
350
300
250
200
price
150
100
50
0
2005 2006 2007 2008 2009 2010 2011
Source: Whole sale price data from www.ratin.net. Export prices calculated from data from
MAAIF (2011).
20
Table 4: SWOT Analysis of Uganda’s Maize Supply Chain
 Production of two crops  Production is done by small scale
 Still producing organic maize farmers who are scattered
 Production of white maize  No high inputs (use of poor
 Ample land for expansion technologies)
 Proximity to a major market (Kenya)  Use of poor technology for production
 Formation of UGT  No large scale storage facilities and poor
infrastructure to move the products
 The supply chain is not integrated
 Limited value addition
 Poor quality of maize produced
 Timely delivery is constrained by poor
infrastructure and storage
 Growing demand for maize  Stiff competition
 Emergency of commercial farmers  Unstable world prices
 Large scale grain traders have formed a  Lack of quality standards and
company enforcement
 Goodwill and support by the  High unit costs
government  Lack of post-harvest facilities
 Near to the Kenyan and relief agency
markets i.e. incurs less transport costs
 Delivery to the Kenyan and relief
markets is timely
 Maize still remains the major relief food
used by relief agencies
21
Figure 4: A Typical Maize Marketing Chain
Commercial Farmers Subsistence Farmers Organized Farmer Groups

B
Rural Traders/Agents
Urban Traders
Large Scale Traders Uganda Grain Traders
Busia/Suam Cross Relief Agencies/WFP Formal Trade

Border Markets Regional Exports
Millers
Wholesalers Animal Feed

Market Vendors Blenders
Retailers Supermarkets Feed

Agents
Regional Refugees and Internally Consumers (Institutions, Population, Animal

Countries Displaced Persons Breeders)
Bold Lines – Maize Grain

Broken Lines – Maize Flour
Rectangle – Producers
Ovals – Traders
22
Shadowed – Final Consumers
The Millers: Millers can be categorized as small and medium scale millers and mainly
carry out contract based milling for institutions, traders and direct consumers. Some
millers also involve themselves in maize grain trading, especially at peak harvest
season. They mainly operate locally fabricated hammer mills that are often poorly
maintained, which results into poor quality flour and outturns. For the millers who
carry out trade based milling, they procure the maize grain either through rural agents
or directly from urban traders. Trade-based millers mainly sell the flour to general retail
traders, wholesalers and institutions. Milling operations are affected by electricity
fluctuations and high tariffs as well as availability of maize grain.
Maize Milling and Consumption

Two maize milling channels were observed during the study:
Contract-based maize milling: This is where a client is charge a specific fee for milling
his/her maize grain. It is the most dominant form of maize milling in Iganga,
Kapchorwa, Masindi, Mbale, Jinja and Busia districts. These contract based maize
millers normally use hammer mills that are not well maintained leading to low returns
and poor quality flour. Most of the millers in the market report operating at 30%-50% of
the installed capacity of their mills. The quantity of maize milled is mainly determined
by the availability of power and the demand for maize flour. On average, the contract
millers reported milling between 1,900kgs-10,000kgs a day depending on the capacity of
the mill. The competition amongst the contract-based millers is so stiff that their profits
are so low. The demand for flour among the different buyers differs significantly; the
traders and wholesalers prefer super grade 'hodari', institutions prefer second grade
'nylon', while direct consumers demand for third grade 'safi'. Besides, the demand for
animal feeds has been growing rapidly resulting into increased usage of bran.
Trade-based maize milling: is more common in urban centres. It has built-in costs of
purchasing of the maize grain, transporting, grain storage, milling, packaging, storage
of maize flour and marketing.
23
Table 5: SWOT Analysis of Maize Millers
 Existence of value-addition through  Inadequate working capital.
milling.  Poor quality maize flour.
 Primarily carry out contract-based  Have poor milling machines.
milling.  Limited knowledge on value-addition.
 They are widespread and located near  Inadequate storage facilities that
the farmers. undermine bulking and stocking.
 Unpredictable electricity supplies.
 Increasing demand for flour.  Unreliable and seasonality of maize
 Maize can be processed into various supplies affects capacity utilization.
products and by-products.  Stiff competition.
 High energy costs.
 Limited integration with other
participants.
24
5.0 MARKETING PLAN
5.1 Product Use and Benefit
Uganda Grain Dealers Ltd. Mill will be filling a need within the Kawempe Division of
Kampala district that has a high inherent and unmet consumptive demand for maize
flour and other milled maize grain products. Uganda Grain Dealers Ltd. will provide a
lower priced product as it will be locally produced. Uganda Grain Dealers Ltd. will
also ensure a high quality product with consistent availability.
5.2 Price Point
Posho Grade 1 currently retails at UgSh 1,400 per kg in Kampala. This price is on
average between UgSh 100 to 200 more than retail prices in other upcountry towns of
Uganda due to the added transportation costs. As a local Kawempe-based mill Uganda
Grain Dealers Ltd. will provide posho to this market without the transportation
surcharges allowing for a retail price of UgSh 1,200 per kg. Uganda Grain Dealers Ltd.
will also offer a wholesale price of UgSh116,000 per 50 kg bag allowing for a price
discount of about UgSh 50 per kg on the retail price. At this price point with a quality
product market acceptance is assured.
5.3 Sales Channels
Sales are divided roughly 50% / 50% between wholesale and retail. All retail sales and
wholesale sales will be mostly cash sales except for a few large accounts with outlets
who will receive net 30 days payment terms.
5.4 Marketing
Uganda Grain Dealers Ltd. will use both mass media advertising (especially the print
and electronic media) to promote its product and also through direct sales calls to
businesses and retails outlets. Maize flour is fast becoming an increasingly important
food item of consumption and product of importance and word of mouth advertising
will account for a large portion of the general public’s product awareness. By providing
a quality product at a cheaper price, Uganda Grain Dealers Ltd.is virtually removing
all barriers to product acceptance.
25
6.0 TECHNOLOGY & ENGINEERING
6.1 Technology
Production Process
A great advantage of machine milling over pounding is that the relatively hard and
tough peels and embryos are thoroughly broken up and incorporated in the meal,
together with the starch. The starch provides calories for energy but the peels and
embryos supply oil and protein, giving almost balanced human food, after cooking.
This whole meal does not keep well due to the oil in the embryos going rancid, so a
farmer has to go fairly frequently to the mill with his maize.
Machine mills can separate out the peels and embryos which are valuable concentrates
for stock-feeding (bran); the fairly pure starch then keeps for longer periods but it has
little nutritional value. In view of the deteriorating relation of food production to
population in Africa, it is desirable that maize mills should produce whole meal. Milled
maize is becoming popular and is being produced in increasing quantities. It can
replace the white maize meal preferred by the higher income groups.
The commonest forms of power mills are hammer mills and plate mills. They are single-
stage; a stator with an internal power-driven rotor which pulverizes the grains of maize,
the meal escaping through a fine steel or brass screen. The loss, as flour dust, is low,
under 1 per cent, a notable improvement on hand pounding.
Roller mills are manufactured mainly for the production of fine corn-flour. The peels
and embryos are discarded and used for stock feed.
Grinding maize is a two step process that requires two different machines. The first
machine, called a decorticator (huller), is to remove the shell of the corn. The second
machine is the grinder that grinds the previously shelled maize into fine flour for
making posho. Both of these machines require a mechanical drive, the most popular
being an electric motor. It is therefore necessary that each one the two pieces (i.e. the
huller and the grinder) have a separate electric motor to make the entire maize milling
process speedy and more efficient.
With much of equity capital already invested in the existing mill plant infrastructure
and other vital pieces of maize-milling equipment displayed in Table 6below, Uganda
26
Grain Dealers Ltd. needs to access additional finance to acquire the two additional
motors need for the purpose of running both the huller and maize grinder.
6.2 Engineering
Machinery & Equipment
The production machinery and equipment required by the plant is shown in Table 6.
The total cost of machinery and equipment is estimated at UGX 36 million, out of which
UGX 20 million will be in form of short-term debt financing.
Table 6: Machinery and Equipment Requirement

Sr. No. Description Qty. (No.)
1 Decorticator (Huller) 1
2 Screen separator 1
3 Spiral separator 1
4 Grader (sorter) 1
5 Hydrator 1
6 Grain polisher 1
7 Screw conveyor 3
8 Intake hopper 1
9 Weigher 2
10 Grinder with in-mount sieve 1
11 Collecting Hopper 1
6.3 Quality Control
In order to ensure proper quality, Uganda Grain Dealers Ltd. will take proper
precautions including: making sure not to grind un-dried corn flour; sifting all corn to
remove all rubbish before processing; cleaning the premises every day; and ensuring
that workers are clean, wash hands regularly, and wear aprons; and packing flour in
clean material. The manager will supervise and inspect quality daily and address any
issues that arise.
27
7.0 DESCRIPTION OF PRODUCT AND BUSINESS OPERATIONS
7.1 Product Manufacture/Service Provision
Maize milling is the process where dried maize kernels are refined to posho. The maize
milling process is a mechanical process and consists of cleaning, grinding and sieving
operations. After each sieving operations, product of a particular quality is drawn and
the residue is recycled for further grinding or milling.
Equipment / Facilities: The production of maize meal requires a maize mill. The mill is
constructed of various parts each responsible for performing functions such as sorting,
cleaning, conveying, conditioning, grinding, crushing, purifying, and bagging. The mill
will be housed in a building that contains all of its operations. Roughly 150m2 is
required for the milling equipment with another 50m2 for surrounding working space.
A building with an additional 50m2 is required as temporary storage for the daily
finished maize meal product prior to being delivered.
Raw Materials: The principal raw material required by the envisaged plant is maize. In
view of high nutritional value, it is desirable that maize mills should produce whole
meal flour. Water is also required for use in the wet-milling process. Maize is purchased
a various quantities bagged in 50kg bags. Uganda Grain Dealers Ltd. will give all local
farmers first priority before purchasing from commercial growers. Water will be
pumped in Kampala water supply system. The pre-processed maize will be stored in a
building at the site with adequate floor dimensions and capable of containing up to 150
tons of maize. A water tank is also required to maintain 200L of water per day for the
mill’s operations.
The major auxiliary materials required by the plant are 50 kg polypropylene bags and
sewing thread which are locally available. The detailed list and cost of raw material and
auxiliary materials is depicted in the Table 7 below. The total monthly cost of raw
material and auxiliary materials is estimated at UGX 18.76 million.
Table 7: Monthly Raw and Auxiliary Materials and their Costs

Sr. No. Raw & Auxiliary Unit of Quantity Unit Cost Total Cost
material Measure Required (UGX) (UGX)
1 Maize Tonnes 30 600 18,000,000
2 PP bag (50 kgs) Pieces 600 1,000 600,000
3 Sewing thread Reel 2.5 64,000 160,000
Total 18,760,000
28
Utilities: The major utilities required by the plant are electricity, water and lubricants.
The estimated annual cost of utilities at 100% capacity utilization rate and the
corresponding costs are given in Table 8. The total cost of utilities is estimated at UgSh
1 million per month.
Table 8: Monthly Utilities Requirements and Estimated Costs

Sr. No. Description Unit of Quantity Unit Cost Total Cost
Measure Required (UGX) (UGX)
1 Electricity kWH 594 450 267,300
2 Water m3 215.18 3,089 664,700
3 Lubricants Kg. 4 17,000 68,000
Total 1,000,000
Quality Control: In order to ensure proper quality, Uganda Grain Dealers Ltd. will
take proper precautions including: making sure not to grind un-dried corn flour; sifting
all corn to remove all rubbish before processing; cleaning the premises every day; and
ensuring that workers are clean, wash hands regularly, and wear aprons; and packing
flour in clean material. The manager will supervise and inspect quality daily and
address any issues that arise.
7.2 Operational Plan
7.2.1 Current Status
Uganda Grain Dealers Ltd. is a newly established company, registered in December

2012 to meet the inherent maize demand within the Kawempe Division area of
Kampala District. In order to produce quality posho by the 2015 harvesting season,
Uganda Grain Dealers Ltd. will erect a facility for a maize mill with surrounding
infrastructure during the 2 months following funding. Uganda Grain Dealers Ltd. has
completed detailed financial, operational and business startup planning.
Post funding, Uganda Grain Dealers Ltd. is ready to proceed with the following start-
up activities:
 Ordering 2 maize mill motors and additional equipment
 Securing contracts for raw material procurement
 Installation of electricity and mill plant
 Milling operations
29
7.2.2 Startup Costs
There are several startup costs that are due to infrastructure development. These costs
are one-time expenditures totaling UGX 54,000,000 and include:
 UGX 20,000,000 – The maize mill (acquisition of two additional motors)
 UGX 10,000,000 – The maize mill (purchase of additional assorted maize mill
equipment)
 UGX 6,000,000 – Additional buildings development to house the mill and
processed maize meal
 UGX 4,000,000 - Storage buildings for pre-processed maize
 UGX 4,000,000 –Preliminary and pre-operating expenses
 UGX 10,000,000 –Working capital
(All costs include labour, transportation, and fees where appropriate).
7.2.3 Workforce
Post start-up, during normal operation the mill will require 2 to 6 labourers respectively
during the off and peak seasons to run at capacity. Operations management will consist
of overseeing milling operations, labour, maintenance, quality control and product
delivery. Financial management will consist of sales, marketing and administration.
Workers will be trained on location and will be responsible for running the mill.
7.2.4 Business Capacity
The mill will have a throughput capacity of 100 kgs of maize flour per hour. The down
time on a mill is about 15% with 10% idle time. A ten hour milling period will result in
roughly 1.0 ton of maize flour per day.
7.3 Critical Risk Factors
7.3.1 Market Risks
There are a few areas of risk within the corn grinding industry. First and foremost is
drought. Drought causes significant decreases in demand for corn grinding because
there is little to grind. Conversely, in times of plentiful rain harvest yields are higher but
demand for grinding may fluctuate due to favorable matooke (an alternative food)
prices in the area. In both cases on can help mitigate the losses by gathering grain at
times of plenty and selling it at times of scarcity.
30
7.3.2 Operational Risks
Fuel can become expensive, especially in times of political instability in Kenya because
most oil is imported through the eastern border. Although the cost to mill the corn will
increase as fuel prices increase, it is believed that most, if not all, of the cost can be
passed on to the customers in a higher price because the transportation costs to take the
corn elsewhere will rise with the fuel costs as well.
An additional risk is that the machines will break down and create expenses and/or
downtime. This will be addressed by ensuring the maintenance procedures are
followed correctly and timely. In addition to proper maintenance, the company should
have the most common failure spare parts on hand (many spares are included with the
engine, but as parts are used they will be replaced before failure so downtime is cut
down).
31
8.0 ORGANIZATION AND MANAGEMENT
Organization: Uganda Grain Dealers Ltd, is a corporation with four shareholders who
all serve as the board of directors. Ownership interest is allocated at 45% to J. Kahafu
Enterprises Limited, 10% to Ms. Neema Grace, 10% to Mr. Honward Kabateraine, and
10% to Mr. Cranmer Tayebwa.
Management: The board of directors / shareholders will jointly plan long term strategy
and day to day operations will be run by the maize mill plant Supervisor. Operations
management will consist of overseeing milling operations, labour, maintenance, quality
control and product delivery. Financial management will consist of sales, marketing
and administration.
Technical Expertise: a Miller with technical expertise in the milling process will be
appointed.
Human Resources: Human resource requirements for a maize mill are minimal.
Laborers will upload and download the bags of maize and maize meal, monitor the mill
during operation, clean the mill and surrounding areas and seal the bags of processed
maize meal. Typical wages for local labour is around UgSh. 10,000 per day.
Manpower Requirement:The total manpower requirement of the plant is 9 persons.

Details of manpower requirement and estimated annual labour cost including fringe
benefit are shown in Table 9. The total annual cost of labour (including Employee
Benefits) is estimated at UGX 4,080,000 (Year 1) and increasing at 5% per annum.
Table 9: Manpower Requirement and Estimated Annual Labour Cost

Sr. No. Description No. of Salary (UGX)
Persons
Monthly Annual
1 Plant Supervisor 1 800,000 9,600,000
2 Plant Operators 2 800,000 9,600,000
3 Accountant 1 600,000 7,200,000
4 Clerk/Store Keeper 1 400,000 4,800,000
5 Cleaning Workers 2 400,000 4,800,000
6 Guards 2 400,000 4,800,000
Sub-Total 9 3,400,000 40,800,000
Employee Benefits (20% of Basic Salary) _ 680,000 8,160,000
TOTAL _ 4,080,000 48,960,000
32
The duties of unskilled labourers will be as follows:
 Loading & unloading of raw materials and finished products.
 Feeding the machines with raw materials.
The duties of skilled labourers:

 Operating the machinery.
 Maintenance of machinery.
33
9.0 FINANCIAL ANALYSIS
9.1 Overview
In comparison to other business models a maize mill financial model is relatively

straight forward. Maize is purchased, and maize meal is sold. Uganda Grain Dealers
Ltd. will be able to sell 50% of its product at retail and the remainder at wholesale.
The total project cost for establishing and operating the maize milling plant is UgSh 70
million. A total of UgSh 40 million is in-kind contribution in the form of existing parts
of the maize milling plant and housing structure at Kawempe-Tula and preliminary and
pre-operating expenses by Uganda Grain Dealers Ltd. The requested UgSh 30 million
short-term loanfunding will mostly be allocated towards the acquisition of two (2) mill
motors and working capital costs that will provide the much-needed inventory capital
as well as operational cash flow.
Startup costs total UgSh 54 million. Capital going towards inventory is UgSh 40 million
while operating expenses for the first year are estimated at UgSh 325.680 million or
UgSh 27.14 million per month. Gross sales are estimated at UgSh 377.280 million for the
first year with an annual growth rate of 5%.
As the entire industry is mostly a cash industry, Uganda Grain Dealers Ltd. will pay all
accounts in cash never carrying any debt. Uganda Grain Dealers Ltd. also expects all
sales except for a few large accounts to be cash. These accounts will be net 30 days.
The financial model has been formatted to align with the annual agricultural season
with the start of the year in March and ending in February of the following year.
Uganda Grain Dealers Ltd. is further anticipating being able to sell virtually all
inventory prior to new acquisitions in the new year.
9.2 Production Cost
The annual production cost at full operation capacity is estimated at UgShs 335.82
million (see Annexures 1.1 and 1.2). The material and utility cost accounts for 70.61 per
cent, while repair and maintenance take 0.36 per cent of the production cost in Year 1
and 71.51 per cent and 0.36 per cent respectively for Year 2. Table 10 below provides
the details.
34
Table 10: Annual Production Cost at Full Capacity (In UGX)
Item/Year Year 1 Year 2
Cost % Cost %
Raw materials 225,120,000 67.04 236,376,000 67.89
Salaries & wages 48,960,000 14.58 51,408,000 14.77
Utilities 12,000,000 3.57 12,600,000 3.62
Repairs & Maintenance 1,200,000 0.36 1,260,000 0.36
Postage & Stationery 600,000 0.18 630,000 0.18
Telephone Charges 1,200,000 0.36 1,260,000 0.36
Advertisement & Publicity 1,800,000 0.54 1,890,000 0.54
Transport Charges 31,200,000 9.29 32,760,000 9.41
Other Miscellaneous Exps 2,400,000 0.71 2,520,000 0.72
Consumable Stores 1,200,000 0.36 1,260,000 0.36
Cost of Finance 5,644,000 1.68 1,708,000 0.49
Depreciation 4,500,000 1.34 4,500,000 1.29
Total Production Cost 335,824,000 100.00 348,172,000 100.00
9.3 Financial Evaluation
9.3.1 Profitability
According to the projected income statement, the project will start generating profit in
the first year of operation. Important ratios such as profit to total sales, net profit to
equity (Return on equity) and net profit plus interest on total investment (return on
total investment) show an increasing trend during the life-time of the project.
The income statements and the other indicators of profitability show that the project is
viable (Refer to Annexures 3.1 and 3.2).
9.3.2 Break-even Analysis
The maize milling project’s commercial break-even level (profitability break-even) in

Project Year 2 is calculated below:
35
Table 11: Break-Even Analysis in Project Year 2 (In UGX)
Items Variable Cost Fixed Cost Total Cost
Raw materials 236,376,000 0 236,376,000
Salaries & wages 38,556,000 12,852,000 51,408,000
Utilities 9,450,000 3,150,000 12,600,000
Repairs & Maintenance 840,000 420,000 1,260,000
Advertisement & Publicity 1,260,000 630,000 1,890,000
Transport Charges 21,840,000 10,920,000 32,760,000
Postage & Stationery 472,500 157,500 630,000
Telephone Charges 945,000 315,000 1,260,000
Other Miscellaneous Exp 1,890,000 630,000 2,520,000
Consumable Stores 840,000 420,000 1,260,000
Depreciation 0 4,500,000 4,500,000
Financial Expenses 0 1,708,000 1,708,000
TOTAL 312,469,500 35,702,500 348,172,000
Sales Value of Production = UGX396,144,000
Break-even Sales = 35,702,500 35,702,500 35,702,500

1 – 312,469,500 1 – 0.79 0.21
396,144,000
Break-even Sales = UGX 169,027,973
Capacity utilization required to Break-even = UGX 169,027,973 x 100 = 42.67%

UGX 396,144,000
Margin of Safety = 100% – 40.24% = 57.33%
9.4 Projected Income Statement, Balance Sheet, and Statement of Cash

Flows
Please see Annexures 1.1 – 4.2 on pages 40 – 47 for all financial projections.
9.5 Economic Benefits
The project can create employment for 9 persons. In addition to supply of the domestic
needs, the project will generate a total UgSh 20.528 million in terms of aggregate tax for
Year 1 and Year 2.
36
10.0 LOAN INFORMATION
10.1 Financial Needs
As noted in the capital requirements section the immediate total capital required for the
project amounts to UGX 54 million. Included in this is the equipment necessary for
milling maize (grinder, huller, and engine), the building construction that will house
the machinery, and other necessary start-up costs.
Uganda Grain Dealers Ltd. has already acquired and installed the basic maize mill
equipment at its Kawempe-Tula site like: the huller, grinder, intake hopper and
collecting hopper and weigher, but needs an additional loan of UgSh 20 million to
finance the purchase and installation of addition mill equipment including 2 mill
motors to run both the grinder and the huller, plus the screen and spiral separators,
grader, a hydrator that is used in the wet-milling process, grain polisher and a screw
conveyor. All the listed require mill equipment will be sourced from reputable maize
mill equipment suppliers in Kampala like Agro Sokoni, Magric (U) Ltd., etc. that not
only offer a one year warranty but can also guarantee supply of standard-priced spare
parts and after-sales servicing.
Additional costs for the equipment include transportation from the mill equipment
seller’s sales outlets in Kampala and installation costs. The cost of transportation is
estimated at UgSh 100,000. Installation costs are set at UgSh 500,000 for labour.
The remaining UgSh 10 million will be used to supplement additional working capital
costs that would include the purchase and transportation of raw materials to the maize
mill, and making initial payment for utilities and consumable stores, plus financing the
start-up maize mill plant overheads and sales and marketing expenses. These costs
mainly consist of small but necessary items toget the business up and running.
10.2 Loan Logistics
Because the requisite loan of the project is being solicited from a commercial bank, the
following is a breakdown of the logistics.
Loan Period: While it may be possible for the loan to be repaid within a year of
business, it could cause significant undue burden on both the business and the owner.
Therefore, it is proposed that the loan be repaid within a two year period with monthly
payments of UgSh 2.5 million in months 7 – 12 of Year 1 to decrease payment size. A
Grace Period for six months and covering the very first months of the project is also
37
proposed to allow the maize milling project to establish its operational capacity and
make an entry into the maize flour market before it can develop the competitive
capacity to repay its commercial debts. The repayment of the loan is structured in such
a format that the business could have recovered half of its commercial loan by the end
of Year 1 (i.e. UgSh 15 million) leaving with less pressure and ample room to pay
monthly loan principal repayments of UgSh 1.25 million in Year 2 that also total to
another UgSh 15 million by the year’s end. Loan repayments will be made once every
month. Please refer to Annexures 2.1 and 2.2 on Projected Cash flow Tables for Year 1
and Year 2, and Annexures 3.1 and 3.2 on Projected Income Statements for Year 1 and
Year 2 for details.
Interest Rate: While a 21 percent interest rate may seem high by US standards, a few
items must be taken into consideration, mainly being able to pay for the loan servicing
and keeping ahead of the relatively high inflation in Uganda. According to the
www.indexmundi.com Uganda Economy Profile 2014, Uganda had an estimated 14
percent inflation in 2012. Therefore, at 20 percent the loan will stay ahead of inflation
and is a reasonable rate relative to other financial institutions in the area.
Collateral: The loan will not contain traditional collateral as far as deeds to land or
buildings, but the equipment will be held as collateral until the final payment is made at
which time Uganda Grain Dealers Ltd. will own the entire business and equipment.
38
11.0 FINANCIAL STATEMENTS
BASIS AND PRESUMPTIONS: -
1. It is presumed that the unit will run on a single shift of 10 hours per day and 360
working days per annum.
2. The following extraction rates are presumed :
a) Posho Grade 1:72%

b) Posho Grade 2:16%
c) Bran: 12%
Extraction rates are only suggested. Thee miller can change according to demand,
maize quality & climatic conditions.
3. Labour wages have been taken as per market rates.

4. Different varieties of maize may be blended for producing desired end product.
5. The rate of interest has been taken at 21% on an average for the short-term
commercial loan.
6. Monthly interest payments are calculated on a reducing balance basis.
7. The loan has a Grace Period of six (6) months with repayments commencing in
Month 7 of Year 1.
8. The rates quoted in respect of Machinery/equipment raw materials are those
prevailing at the time of preparation of the Business Plan report and are likely to
vary from place to place and supplier to supplier and necessary changes are to be
made as and when required.
9. Annual operating costs are presumed to increase at a rate of 5% per annum.
10. Annual sales prices for the products are also presumed to grow at a rate of 5%
per annum.
39
Annexure 1.1: Monthly Production Cost Estimates for Year 1 (In UGX)
ACCOUNT HEAD
MONTH 1 2 3 4 5 6 7 8 9 10 11 12 TOTAL
Operating Costs (UGX)
Raw materials 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 225,120,000
Salaries & wages 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 4,080,000 48,960,000
Utilities 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 12,000,000
Repairs & Maintenance 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,200,000
Postage & Stationery 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 600,000
Telephone Charges 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,200,000
Advertisement & Publicity 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 150,000 1,800,000
Transport Charges 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 2,600,000 31,200,000
Other Miscellaneous Exp 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 2,400,000
Consumable Stores 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 1,200,000
Cost of Sales 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 27,140,000 325,680,000
Financial Costs (US$)

Interest on Short Term Loan 525,000 525,000 525,000 525,000 525,000 525,000 525,000 481,000 438,000 394,000 350,000 306,000 5,644,000
Depreciation 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 4,500,000
Total Financial Costs 900,000 900,000 900,000 900,000 900,000 900,000 900,000 856,000 813,000 769,000 725,000 681,000 10,144,000
Total Production Costs 28,040,000 28,040,000 28,040,000 28,040,000 28,040,000 28,040,000 28,040,000 27,996,000 27,953,000 27,909,000 27,865,000 27,821,000 335,824,000
40
Annexure 1.2: Monthly Production Cost Estimates for Year 2 (In UGX)
ACCOUNT HEAD
MONTH 13 14 15 16 17 18 19 20 21 22 23 24 TOTAL
Operating Costs (UGX)
Raw materials 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 236,376,000
Salaries & wages 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 4,284,000 51,408,000
Utilities 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 1,050,000 12,600,000
Repairs & Maintenance 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 1,260,000
Postage & Stationery 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 630,000
Telephone Charges 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 1,260,000
Advertisement & Publicity 157,500 157,500 157,500 157,500 157,500 157,500 157,500 157,500 157,500 157,500 157,500 157,500 1,890,000
Transport Charges 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 2,730,000 32,760,000
Other Miscellaneous Exp 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 210,000 2,520,000
Consumable Stores 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 1,260,000
Cost of Sales 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 28,497,000 341,964,000
Financial Costs (US$)

Interest on Short Term Loan 263,000 241,000 219,000 197,000 175,000 153,000 131,000 109,000 88,000 66,000 44,000 22,000 1,708,000
Depreciation 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 375,000 4,500,000
Total Financial Costs 638,000 616,000 594,000 572,000 550,000 528,000 506,000 484,000 463,000 441,000 419,000 397,000 6,208,000
Total Production Costs 29,135,000 29,113,000 29,091,000 29,069,000 29,047,000 29,025,000 29,003,000 28,981,000 28,960,000 28,938,000 28,916,000 28,894,000 348,172,000
41
Annexure 2.1: Projected Cash flow Table for Year 1 (In UGX)
Period
Month 0 1 2 3 4 5 6 7 8 9 10 11 12
Costs (US Dollars)
A. Cash inflow 54,000,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000
1. Financial resources
total 54,000,000
2. Sales revenue total _ 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000
B. Cash outflow -54,000,000 -37,368,097 -37,368,097 -37,368,097 -37,368,097 -37,368,097 -37,368,097 -39,868,097 -39,824,097 -39,781,098 -39,737,098 -39,693,098 -48,935,898
1. Total assets schedule
including replacements -54,000,000 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764 -9,569,764
2. Operating Costs (Cost of
Sales) _ -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000 -27,140,000
3. Debt Service
a) Interest _ -525,000 -525,000 -525,000 -525,000 -525,000 -525,000 -525,000 -481,000 -438,000 -394,000 -350,000 -306,000
b) Repayments _ 0 0 0 0 0 0 -2,500,000 -2,500,000 -2,500,000 -2,500,000 -2,500,000 -2,500,000
4. Corporate tax _ 0 0 0 0 0 0 0 0 0 0 0 -9,286,800
5. Dividends 4% on equity _ -133,333 -133,333 -133,333 -133,333 -133,333 -133,333 -133,333 -133,333 -133,334 -133,334 -133,334 -133,334
C. Surplus / deficit 0 -5,928,097 -5,928,097 -5,928,097 -5,928,097 -5,928,097 -5,928,097 -8,428,097 -8,384,097 -8,341,098 -8,297,098 -8,253,098 -17,495,898
D. Cumulative cash
balance 0 -5,928,097 -11,856,194 -17,784,291 -23,712,388 -29,640,484 -35,568,581 -43,996,678 -52,380,775 -60,721,873 -69,018,971 -77,272,069 -94,767,967
42
Annexure 2.2: Projected Cash flow Table for Year 2 (In UGX)
Period
Month 13 14 15 16 17 18 19 20 21 22 23 24 Total
Costs (US Dollars)
A. Cash inflow 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 396,144,000
1. Financial resources
total
2. Sales revenue total 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 396,144,000
B. Cash outflow -30,607,168 -30,585,168 -30,563,168 -30,541,168 -30,519,168 -30,497,168 -30,475,168 -30,453,168 -30,432,169 -30,410,169 -30,388,169 -41,607,769 -377,079,617
1. Total assets schedule
including replacements -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -463,835 -5,566,017
2. Operating Costs (Cost of
Sales) -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -28,497,000 -341,964,000
3. Debt Service
a) Interest -263,000 -241,000 -219,000 -197,000 -175,000 -153,000 -131,000 -109,000 -88,000 -66,000 -44,000 -22,000 -1,708,000
b) Repayments -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -1,250,000 -15,000,000
4. Corporate tax 0 0 0 0 0 0 0 0 0 0 0 -11,241,600 -11,241,600
5. Dividends 4% on equity -133,333 -133,333 -133,333 -133,333 -133,333 -133,333 -133,333 -133,333 -133,334 -133,334 -133,334 -133,334 -1,600,000
C. Surplus / deficit 2,404,832 2,426,832 2,448,832 2,470,832 2,492,832 2,514,832 2,536,832 2,558,832 2,579,831 2,601,831 2,623,831 -8,595,769 19,064,383
D. Cumulative cash
balance 2,404,832 4,831,665 7,280,497 9,751,329 12,244,161 14,758,994 17,295,826 19,854,658 22,434,490 25,036,321 27,660,152 19,064,383
43
Annexure 3.1: Projected Income Statement for Year 1 (In UGX)
Month 1 2 3 4 5 6 7 8 9 10 11 12 Total
Sales 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 31,440,000 377,280,000
Raw Materials 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 18,760,000 225,120,000
GROSS PROFIT 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 12,680,000 152,160,000
Less: Operating Costs

(excl. Raw Materials) 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 8,380,000 100,560,000
OPERATING PROFIT 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 4,300,000 51,600,000
Less: Accrued interest on

Medium-Term Loan (@ 21%
p.a.) 525,000 525,000 525,000 525,000 525,000 525,000 525,000 481,000 438,000 394,000 350,000 306,000 5,644,000
Less: Annual Repayments 0 0 0 0 0 0 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 15,000,000
NET PROFIT BEFORE TAX 3,775,000 3,775,000 3,775,000 3,775,000 3,775,000 3,775,000 1,275,000 1,319,000 1,362,000 1,406,000 1,450,000 1,494,000 30,956,000
Corporation Tax 30% 0 0 0 0 0 0 0 0 0 0 0 9,286,800 9,286,800
NET PROFIT 3,775,000 3,775,000 3,775,000 3,775,000 3,775,000 3,775,000 1,275,000 1,319,000 1,362,000 1,406,000 1,450,000 -7,792,800 21,669,200
Accumulated Net Profit (Loss) 3,775,000 7,550,000 11,325,000 15,100,000 18,875,000 22,650,000 23,925,000 25,244,000 26,606,000 28,012,000 29,462,000 21,669,200
Net Profit Margin 0.120 0.120 0.085 0.085 0.085 0.085 0.041 0.042 0.043 0.045 0.046 -0.248
Gross Profit Margin 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403
Rate of Return on Investment 5.39% 5.39% 5.39% 5.39% 5.39% 5.39% 1.82% 1.88% 1.95% 2.01% 2.07% -11.13%
Operating Profit Margin 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137
44
Annexure 3.2: Projected Income Statement for Year 2 (In UGX)
Month 1 2 3 4 5 6 7 8 9 10 11 12 Total
Sales 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 33,012,000 396,144,000
Raw Materials 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 19,698,000 236,376,000
GROSS PROFIT 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 13,314,000 159,768,000
Less: Operating Costs

(excl. Raw Materials) 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 8,799,000 105,588,000
OPERATING PROFIT 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 4,515,000 54,180,000
Less: Accrued interest on

Medium-Term Loan (@ 21%
p.a.) 263,000 241,000 219,000 197,000 175,000 153,000 131,000 109,000 88,000 66,000 44,000 22,000 1,708,000
Less: Annual Repayments 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 1,250,000 15,000,000
NET PROFIT BEFORE TAX 3,002,000 3,024,000 3,046,000 3,068,000 3,090,000 3,112,000 3,134,000 3,156,000 3,177,000 3,199,000 3,221,000 3,243,000 37,472,000
Corporation Tax 30% 0 0 0 0 0 0 0 0 0 0 0 11,241,600 11,241,600
NET PROFIT 3,002,000 3,024,000 3,046,000 3,068,000 3,090,000 3,112,000 3,134,000 3,156,000 3,177,000 3,199,000 3,221,000 -7,998,600 26,230,400
Accumulated Net Profit (Loss) 3,002,000 6,026,000 9,072,000 12,140,000 15,230,000 18,342,000 21,476,000 24,632,000 27,809,000 31,008,000 34,229,000 26,230,400
Net Profit Margin 0.091 0.092 0.092 0.093 0.094 0.094 0.095 0.096 0.096 0.097 0.098 -0.242
Gross Profit Margin 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403 0.403
Rate of Return on Investment 4.29% 4.32% 4.35% 4.38% 4.41% 4.45% 4.48% 4.51% 4.54% 4.57% 4.60% -11.43%
Operating Profit Margin 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137 0.137
45
Annexure 4.1: Projected Balance Sheet for Year 1 (In UGX)
CAPITAL EMPLOYED: MNTH.0 MNTH.1 MNTH.2 MNTH.3 MNTH.4 MNTH.5 MNTH.6 MNTH.7 MNTH.8 MNTH.9 MNTH.10 MNTH.11 MNTH.12
Share Capital 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Retained Earnings 3,775,000 7,550,000 11,325,000 15,100,000 18,875,000 22,650,000 23,925,000 25,244,000 26,606,000 28,012,000 29,462,000 21,669,200
Shareholder's Equity/Deficit 8,775,000 12,550,000 16,325,000 20,100,000 23,875,000 27,650,000 28,925,000 30,244,000 31,606,000 33,012,000 34,462,000 26,669,200
Long-Term Liabilities 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 27,500,000 25,000,000 22,500,000 20,000,000 17,500,000 15,000,000
38,775,000 42,550,000 46,325,000 50,100,000 53,875,000 57,650,000 56,425,000 55,244,000 54,106,000 53,012,000 51,962,000 41,669,200
EMPLOYMENT OF CAPITAL:
Plant Buildings 10,000,000 9,958,333 9,916,667 9,875,000 9,833,333 9,791,667 9,750,000 9,708,333 9,666,667 9,625,000 9,583,333 9,541,667 9,500,000
Production Plant Equip. &
Machinery 40,000,000 39,666,667 39,333,333 39,000,000 38,666,667 38,333,333 38,000,000 37,666,667 37,333,333 37,000,000 36,666,667 36,333,333 36,000,000
Testing Equipment 0 0 0 0 0 0 0 0 0 0 0 0 0
Miscellaneous Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0 0
Vehicles 0 0 0 0 0 0 0 0 0 0 0 0 0
LONG-TERM ASSETS: 50,000,000 49,625,000 49,250,000 48,875,000 48,500,000 48,125,000 47,750,000 47,375,000 47,000,000 46,625,000 46,250,000 45,875,000 45,500,000
CURRENT ASSETS: -8,645,000 -4,495,000 -345,000 3,805,000 7,955,000 12,105,000 11,255,000 10,405,000 9,599,000 8,836,000 8,117,000 -1,844,800
Accounts Receivable 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667 2,261,667
Stock (Inventory) 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000 6,981,000
Bank Balance and Cash 327,097 327,097 327,097 327,097 327,097 327,097 327,097 327,097 327,097 327,097 327,097 327,097
Other Current Assets -18,214,764 -14,064,764 -9,914,764 -5,764,764 -1,614,764 2,535,236 1,685,236 835,236 29,236 -733,764 -1,452,764 -11,414,564
CURRENT LIABILITIES: 2,205,000 2,205,000 2,205,000 2,205,000 2,205,000 2,205,000 2,205,000 2,161,000 2,118,000 2,074,000 2,030,000 1,986,000
Accounts Payable 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000 1,680,000
Current Portion of Long-term
Liabilities 525,000 525,000 525,000 525,000 525,000 525,000 525,000 481,000 438,000 394,000 350,000 306,000
NET CURRENT ASSETS: -10,850,000 -6,700,000 -2,550,000 1,600,000 5,750,000 9,900,000 9,050,000 8,244,000 7,481,000 6,762,000 6,087,000 -3,830,800
TOTAL CAPITAL 38,775,000 42,550,000 46,325,000 50,100,000 53,875,000 57,650,000 56,425,000 55,244,000 54,106,000 53,012,000 51,962,000 41,669,200
46
Annexure 4.2: Projected Balance Sheet for Year 2 (In UGX)
CAPITAL EMPLOYED: MNTH.13 MNTH.14 MNTH.15 MNTH.16 MNTH.17 MNTH.18 MNTH.19 MNTH.20 MNTH.21 MNTH.22 MNTH.23 MNTH.24
Share Capital 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Retained Earnings 24,671,200 27,695,200 30,741,200 33,809,200 36,899,200 40,011,200 43,145,200 46,301,200 49,478,200 52,677,200 55,898,200 47,899,600
Shareholder's Equity/Deficit 29,671,200 32,695,200 35,741,200 38,809,200 41,899,200 45,011,200 48,145,200 51,301,200 54,478,200 57,677,200 60,898,200 52,899,600
Long-Term Liabilities 13,750,000 12,500,000 11,250,000 10,000,000 8,750,000 7,500,000 6,250,000 5,000,000 3,750,000 2,500,000 1,250,000 0
43,421,200 45,195,200 46,991,200 48,809,200 50,649,200 52,511,200 54,395,200 56,301,200 58,228,200 60,177,200 62,148,200 52,899,600
EMPLOYMENT OF CAPITAL:
Plant Buildings 9,458,333 9,416,667 9,375,000 9,333,333 9,291,667 9,250,000 9,208,333 9,166,667 9,125,000 9,083,333 9,041,667 9,000,000
Production Plant Equip. &
Machinery 35,666,667 35,333,333 35,000,000 34,666,667 34,333,333 34,000,000 33,666,667 33,333,333 33,000,000 32,666,667 32,333,333 32,000,000
Testing Equipment 0 0 0 0 0 0 0 0 0 0 0 0
Miscellaneous Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0
Vehicles 0 0 0 0 0 0 0 0 0 0 0 0
LONG-TERM ASSETS: 45,125,000 44,750,000 44,375,000 44,000,000 43,625,000 43,250,000 42,875,000 42,500,000 42,125,000 41,750,000 41,375,000 41,000,000
CURRENT ASSETS: 699,450 2,826,450 4,975,450 7,146,450 9,339,450 11,554,450 13,791,450 16,050,450 18,331,450 20,633,450 22,957,450 14,061,850
Accounts Receivable 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750 2,374,750
Stock (Inventory) 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050 7,330,050
Bank Balance and Cash 328,799 328,799 328,799 328,799 328,799 328,799 328,799 328,799 328,799 328,799 328,799 328,799
Other Current Assets -9,334,149 -7,207,149 -5,058,149 -2,887,149 -694,149 1,520,851 3,757,851 6,016,851 8,297,851 10,599,851 12,923,851 4,028,251
CURRENT LIABILITIES: 2,403,250 2,381,250 2,359,250 2,337,250 2,315,250 2,293,250 2,271,250 2,249,250 2,228,250 2,206,250 2,184,250 2,162,250
Accounts Payable 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250 2,140,250
Current Portion of Long-term
Liabilities 263,000 241,000 219,000 197,000 175,000 153,000 131,000 109,000 88,000 66,000 44,000 22,000
NET CURRENT ASSETS: -1,703,800 445,200 2,616,200 4,809,200 7,024,200 9,261,200 11,520,200 13,801,200 16,103,200 18,427,200 20,773,200 11,899,600
TOTAL CAPITAL 43,421,200 45,195,200 46,991,200 48,809,200 50,649,200 52,511,200 54,395,200 56,301,200 58,228,200 60,177,200 62,148,200 52,899,600
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Uganda Grain Dealers LTD Business Plan

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Uganda Grain Dealers LTD Business Plan

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UGANDA GRAIN DEALERS LTD.

BUSINESS PLAN CORPORATE DOCUMENT

1.1 Business Concept

1.2 Financial Features

1.3 Industry Analysis & Marketing Plan

Uganda Grain Dealers Ltd. will benefit from an experienced entrepreneurial-based

1.6 Financial Plan

1.7 Loan Information

1.8 Economic Impact

2.1 Project Brief

2.2 Market Entry Timing

2.3 Opportunity Rationale

2.4 Business Legal Status

2.6 Working Time

2.7 Project Investment

Table 1: Project Cost Summary in UGX

2.8 Project Location

2.10 SWOT Analysis

Table 2: SWOT Analysis for the Maize Milling Project

3.1 The Business

3.1.1 Goals and Objectives

3.1.2 Long Term Goals

3.1.3 Products and Service

3.1.4 Type of Business

Uganda Grain Dealers Ltd. is a newly established company, registered in December

3.1.5 Company Ownership & Legal Status

Uganda Grain Dealers Ltd. is a company incorporated at the Registrar of Companies

3.1.6 The Shareholders

Shareholder Shares held (UGShs) [%age]

1. J. Kahafu Enterprises Limited 2,250,000 45%

2. Ms. Neema Grace 500,000 10%

3. Mr. Cranmer Tayebwa 500,000 10%

4. Mr. Honward Kabateraine 500,000 10%

Product Quality – There is currently no quality control enforcement in Uganda. Larger

Local Knowledge – Traditional maize marketing channels in Uganda consists of:

3.2.3 Industry Dynamics

 Many sustenance farmers simply did not grow enough.

Population Growth and Migration

Whilst production is influenced by climate patterns, farmers’ planting intentions, in

Production ('000 tonnes) Area Harvested ('000 Ha)

4.3 Marketing and Trade

Uganda’s maize export market is mainly regional, comprising of markets within

Table 3: Maize production, import and export of Uganda (2004-2010)

4.4 Description of the Value Chain and Processing

Due to the importance of maize in Uganda, several studies of marketing, transaction

Commercial Farmers Subsistence Farmers Organized Farmer Groups

Large Scale Traders Uganda Grain Traders

Busia/Suam Cross Relief Agencies/WFP Formal Trade

Wholesalers Animal Feed

Retailers Supermarkets Feed

Regional Refugees and Internally Consumers (Institutions, Population, Animal

Bold Lines – Maize Grain

Maize Milling and Consumption

5.1 Product Use and Benefit

5.2 Price Point

5.3 Sales Channels

Machinery & Equipment

Table 6: Machinery and Equipment Requirement

6.3 Quality Control

7.1 Product Manufacture/Service Provision

Table 7: Monthly Raw and Auxiliary Materials and their Costs

Table 8: Monthly Utilities Requirements and Estimated Costs