A Business Proposal On Cement Distributi

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 21

BUSINESS PROPOSAL FOR CEMENT

PRODUCTS DISTRIBUTION

PROJECT TO BE IMPLEMENTED IN ADDIS ABABA CITY

PROMOTER: - MINE ROCK TRADING P.L.C

FEB, 2021
ADDIS ABABA, ETHIOPIA
EXECUTIVE SUMMARY
1. Project name Cement product distribution

2. Project Owners MINE ROCK TRADING P.L.C

3. Nationality Ethiopian

4. Project Location Addis Ababa

5. Project Composition
3.cement product
4. Low Heat Cement
5. Sulfates Resisting Cement
6. Blast Furnace Slag Cement
7. High Alumina Cement
8. Gypsum Products

1. Total Initial Br 4,000,000


Investment Capital
2. Employment The total manpower required for the plant will be 50 employe
Opportunity

3. Benefits of the supply of quality cement Products, add value to the economy,
factory For The Source of Revenue, Employment opportunity, Save Foreign currency,
Region/ Country Benefit for the Local Community, Stimulate the Local Economy and
technology transfer

4. Experience The Owner experienced has a different business experience and has
grown to successful to different business activates

2
INTRODUCTION:

This proposal is for establishment of cement distribution company .In fact, the high demand for cement

in Ethiopia for both private, industrial and government infrastructural development needs entails that

there has always been a continual need for cement distributors all over the country at all times. As a

matter of fact, the problem of inadequate housing for the teeming population of approximately 180

million Ethiopians is getting even more complicated as the years go by. The housing deficit at the

moment is put at about 17 million units.

In short, this shows that the market is large enough to accommodate more new comers. MINE ROCK

TRADING P.L.C is going to be a wholesale distributor in this market. Its marketing strategy entails

that it does not stock the commodity for more than two days.

The owners of this envisaged plant have a good business experiences and need to extend
this asset to this business . Therefore, the owner is very determined to establish the business
and considers getting the required support from regional government by considering the
existing facts and the multi benefits of this project.

Cement is a basic material for building and civil engineering construction. In Europe the use of
cement and concrete (a mixture of cement, aggregates, sand and water) in large civic works
can be traced back to antiquity. Portland cement, the most widely used cement in concrete
construction, was patented in 1824. Output from the cement industry is directly related to the
state of the construction business in general and therefore tracks the overall economic
situation closely.
EXECUTIVE SUMMARY

This project is to establish a cement distribution outfit/business in Addis Ababa city, Ethiopia for

MINE ROCK TRADING P.L.C. The purpose of this business proposal is to raise additional 4,000,000

birr for the establishment of the Cement Distribution outlet. The major product to be marketed is the of

3
cement. This business proposal which incorporates both the Business Plan and feasibility studies will

show the expected financials and operations over the next three years. 

The following reports and recommendations relate to the business plan and feasibility study to establish

a cement distribution depot. This project will need a start-up capital of 4,000,000, which is required to

finance both current and non-current assets. . MINE ROCK TRADING P.L.C has a 4,000,000 birr

capital to augment with the 1,000,000 to be share holder .

MINE ROCK TRADING P.L.C vision is to become a household name in the distribution of cement in

Addis Ababa , areas. This project is envisaged to be situated in Addis Ababa, in order to provide easily

accessible cement to the multiple cement users situated in the location. The financial projections show

that the project will be financially stable as it progresses.

By the end of the first year the expected net profit/ earnings from sales before tax is 11,276,000 birr

while net profit/earning after tax is 9,020,800 birr , giving a 100.2% returns on investment (ROI) and

225.5% return on Equity (ROE). It is also expected to grow by 20% in subsequent years. This is shown

by the expected earnings for the second year which gives 14,423,500 birr profit before tax and

11,538,800 birr profit after tax generating 128% ROI and 228.5% ROE respectively. 

The competitive edge of the business is in its ability to penetrate into the market freely, and the use of

marketing strategies that will promote rapid turnover. It has in mind to establish a tipper haulage at

head office at Addis Ababa and open two other depots in oromia region within the next three years.

This project is highly recommendable, because judging from the above profitable measures; it shows

that the project offers good investment benefits which is found technically feasible, financially viable

and economically desirable

NAME OF BUSINESS:

The name of the company is MINE ROCK TRADING P.L.C

4
NATURE OF BUSINESS:

MINE ROCK TRADING P.L.C was established on the 6th of May 2022. The primary object clause of

the company is cement distribution “to carry on business of trading, marketing, sales and distribution of

general goods, such as cement and blocks, tipper haulage, commission agents, manufacturers’

representatives, general suppliers and general contractors.” The company intends to commence

business in cement distributorship in one location in Addis Ababa for the next three years, thereafter it

will establish additional two warehousing locations within Addis Ababa for expansion purposes.

SITE LOCATION:

The project is intended to be situated in Addis Ababa road area of Addis Ababa state of Ethiopia. It will

lease a large store/warehouse where the operations will take place.

OFFICE ADDRESS:

Addis Ababa , Ethiopia

OBJECTIVE:

The objective of this business as indicated in this business proposal (business plan and feasibility study)

include:

1.  To make cement available to the members of the public at a very affordable price.

2.  To close the gap in cement product supply chain that always cause product scarcity. This will

make cement available to the public at all times.

3.  To focus the activities towards specific services delivery that will achieve the above objectives,

and thereby to become a leader in this market.

4.  To generate customer satisfaction so that at least 80% of our customer base is repeat business.

5.  To generate sufficient cash flow to finance the activities of the company, and the future growth

and development of the company.

5
6.  To provide key resources needed by the company and its owners.

7.  To expand the business at a rate that is both challenging and manageable, and competitively

enviable.

8.  To maintain a Constant growth in sales in 12 months.

VISION:

To become a household name in cement distribution in Addis Ababa and other region . Achieve sales

and services and profit growth goal of 20%, in the next three years.

MISSION STATEMENT:

MINE ROCK TRADING P.L.C mission is to become the recognized leader in its targeted local

market in cement distribution, and to give customer optimum satisfaction, through its innovative,

quality, and timely service delivery.

PURPOSE OF THE BUSINESS PROPOSAL:

The aim of this plan is to set up MINE ROCK TRADING P.L.C using only 1,000,000 from the

shareholder . The plan is to liquidate the loan with the interest within the first three years. It is hoped

that by this time. MINE ROCK TRADING P.L.C would have been able to generate enough fund to

stand by itself at this capacity of operation. Further expansion and diversification will be the subject of

a Growth Model Plan.

COMPANY PROFILE:

MINE ROCK TRADING P.L.C was established on the 5th of 2022. The primary object clause of the

company is cement distribution “to carry on business of trading, marketing, sales and distribution of

general goods, such as cement and blocks, commission agents, manufacturers’ representatives, general

suppliers and general contractors.” The company is located at, Ethiopia. MINE ROCK TRADING

P.L.C is a 100% Ethiopian owned company engaged in providing high end user services with latest and

innovative business support solutions that add value to any new or existing businesses.

6
PRODUCTS AND SERVICES:

Explained below is a description of the products offered by MINE ROCK TRADING P.L.C

Wholesale Distribution of Cement:

The primary revenue source for the business will come from the wholesale of Dangote cement and

others Ethiopia cement factory to the general public. The owner intends to carry out multiple strategic

marketing activities that will promote the distribution business which will generate high turnover for

the business. He intends to source inventories/stock from closest Dangote cement and others factory to

the location of the business. Four employees (which include one Supervisor, one security man, one

sales attendant, one driver) will be involved in the business operations and to assist customers with

their needs.

Dangote Cement is a fully integrated cement company and has projects and operations in Ethiopia. Its

operations include,manufacturing/ importation, packaging and distribution of cements.

CUSTOMER NEEDS:

The market characteristics shows that there is steady demand for the commodity. Our survey also

reveal that over 60% of the buyers ask for Dangote brand of cement and others . The fact that there is

housing deficit and people are eager to have roof over their heads promotes the demand for cement.

The location of this business is going to be in Addis Ababa and later in others region where there are a

lot of building construction going on at all times. MINE ROCK TRADING P.L.C will sale to both

retailers and direct consumers who could buy not less than 100 bags at a time.

PRICING:

One known fact about cement business is that it has a stable retail price which apply generally to all

marketers. It is not foreseeable that a single wholesaler will be able to manipulate the price of the

7
commodity. In such a price taker market, marketers make other marketing efforts to promote sales

instead of price cut.

MINE ROCK TRADING P.L.C will take the following measure to promote sales:

 Good publicity fliers, posters, and sign- posts

  Regular visits to customers, construction sites etc.

 Retailers friendship – good public relations with retailers, this will make him form a clique of

retailers that he can always count on.

   PROMOTIONS PLAN:

The long-range goal is to gain enough visibility to leverage upon so that MINE ROCK TRADING

P.L.C will be able to expand with additional two warehouses in other parts of Addis Ababa within its

three years of existence. 

The unique marketing approach / analysis using word of mouth, free gifts, loyalty cards, special offers

will be applied. A special awareness contact marketing will be carried out by a dedicated staff within

the first two months of the start-up of the business.

BASIC ASSUMPTIONS:

1. This investment business plan and feasibility study, is anchored on the following critical

assumptions:

The present macro-economic indicators, (economy-wide trends), government economic policies and the

conditions peculiar to cement trading business in Ethiopia provide reasonable assurance that the

assumptions are realistic and will hold. Therefore one is assured that some of the necessary conditions

for the unhindered operations of Company can be guaranteed.

8
MANAGEMENT TEAM:

1. This will be made up of the Managing Director and the following;

2. Supervisor = 1 person

3.  Sales Girl = 1 people

4. Driver = 1 person 

5. Security = 1 person

6,temporary 46

MILESTONE:

Activities are scheduled as follows:

 Start-up capital to be ready by March, 2022

 Every preparations to be concluded by 26th May , 2022

 The business to start off 1st june 2022

 Acquisition and disposal of five truck load of cement each week.

 Opening of two other branches within or after three years.

 Sales promotion activities at construction sites.

SWOT ANALYSIS:

The proposed

is going to be located in Addis Ababa, and others regional state state where there are a lot of

competitors. A SWOT analysis carried out on the project reveals the following:

STRENGTHS

The project is situated at the commercial city, giving it the opportunity of having substantial demands.

Shop situated in Addis Ababa.

9
 Sited within construction areas

 Product is in high demand 

 Product does not expire easily

The company will capitalize on its strengths to advance.

WEAKNESSES

1.  MINE ROCK TRADING P.L.C is a new comer in the business.

2.  The source of product supply is Dangote factory and others factory

3.  The choice of selling only Dangote cement for now. 

OPPORTUNITIES

The external environmental analysis reveals certain new opportunities for profit and growth of the

business. Some examples of such opportunities include:

  The market trends favours Dangote Cement brand

  Households, social organizations favours relocation to Addis Ababa areas of Addis Ababa

  Market trend reveals an all-year-round demand 

THREATS

Changes in the external environment also may present threats to the business. Some examples of such

threats include:

 The presence of other variety of product in the market

 Environment and Health regulations agency threats

 Tendency of existence/emergence of price war 

 Lack of market entry barriers.

MARKET ANALYSIS:
10
We identify cement distribution business as non-gender sensitive. What we have found out is that every

human needs house to live in. We have identified that every one from the age of twenty upwards wants

to own a personal house. 

There are five key factors that drive the demand for cement in Addis Ababa:

1. Every family needs a roof over her head.

2. Every grown up person; ages 20 and above need to be in his/her house.

3. Governments (Local, State, and Federal) embark on infrastructural development efforts

4. regularly

5. Estate investors continue to build more houses.

6. Urban growth has continued to grow and develop all round.

7. Social organizations like Churches, Mosques build regularly.

Our target market is therefore segmented into seven subgroups:

Segment Expected Demand:

  Constructions firms 20%

 Block moulding firms 25%

 Government agencies 15%

 Households 8%

 Estate owners and managers 15%

 Retailers 7%

 Social organizations 10%

11
MARKET PLAN

Since cement business is a standard price market , that is to say, a price taker, MINE ROCK TRADING

P.L.C will adopt various service delivery strategies to attract and sustain customer loyalty.

These will be in the form of:

1. Use of the business van to deliver goods to customers

2. Making bulk delivery direct to customers sites

3. Making flexible purchase plan for customers’

MARKETING OBJECTIVES:

Marketing objectives are to:

 Attract buyers

 Increase turnover

 Create customer 

 Create customer satisfaction.

MARKETING STRATEGIES:

MINE ROCK TRADING P.L.C will apply a lot of marketing strategies which will aim at increased

turnover. These will include:1. Good public relations2. Advertising methods – distribution of fliers, use

of banners etc.3. Sales incentives like free delivery service, advisory services etc.

FINANCIAL ANALYSIS:

In order to carry out this project, plans on how to raise the venture capital are stated below.

12
Table: Source of Funds:

REQUIRED START-UP CAPITAL

Requires start-up capital is 4,000,000. 1,000.000 of this is the loan fund being sought.

Table: Total Start-up Capital Expenses:

13
FIXED CAPITAL INVESTMENTS/EXPENSES:

Table: Fixed Capital Investment

14
OPERATING EXPENSES:

15
FINANCIAL PROJECTIONS

MARKET DEMAND ASSUMPTIONS: In this proposal.

16
Estimate: 5 Trucks must be sold per week

Growth rate is 20% in year 2 and 3

17
BREAK EVEN ANALYSIS:

Break even analysis based on sale of number of trucks per week for 52 weeks of the year. The

monetary values are in Naira.

MINE ROCK TRADING P.L.C chooses this, it must not sell less than 2 trucks per week to break-even.

18
Break even analysis based on sale of number of trucks per month for 12 months of the year. The

monetary values are in Naira.

From these break even analysis:

1. The company must not sell less than 5 trucks in a month

2. As a distributive trade all start-up expenses are considered as fixed

3. The company intends to expand within 3 years with additional 2 branches

4. The Business Plan is bench marking 5 trucks per week for 52 weeks of the year, this will enable

proper utilization of borrowed fund and make it achieve its objectives

5. Because most of the fixed costs are due towards the year end, the company can increase its

turnover and earnings above 5 trucks a week for 52 weeks in the year without incurring further costs.

BUSINESS RATIOS:

19
All the business ratios generated in this business proposal are shown in this table

Economically, this business will not only create wealth and benefits to its promoters, the project will

fetch its entrepreneur’s good financial resources for business expansion.

CONCLUSION

20
Based on the projections of MINE ROCK TRADING P.L.C above, the project has a very good chance

to be financially successful. More importantly is the positive economic impact it will have in the lives

of the people of Addis Ababa and its environs. The management is free to make their expansion

decisions after three years of operations.

21

You might also like