Konoz Complex for Steel Shaping & Production

Konoz complex factory established in 2019 located at Safola the main industrial area in Khartoum the capital of Sudan. The factory is established on a total area of 64,000 square meters at No.52, Block No.5.

The main products of the factory are Steel Bars, Tubes, Screws and Nails. The market for these products is growing and the gap between supply and demand is wide despite the fact that there are 48 producing facilities in Sudan.

Konoz factory requires for its operation fixed assets amounts to US$79,679,492, and working capital of US$109,375,270 (US$99,350,730 direct cost of production and US$9,210,940 fixed cost of production plus US$813,600 general and administrative costs) i.e. total capital of US$188,241,162.

15% of this capital is to be funded by the owners of the business i.e. US$28,236,174, and 85% i.e. US$160,004,988 to be funded by a loan.

The business is expected to generate revenue of US$152,905,500 in the first year of operation leading to gross profit of US$53,554,770 i.e. gross profit margin of 35% and net profit of US$31,299,953 i.e. Net profit margin of 20% as shown on the proforma income statement below.

This performance generates a return on assets (ROA) of 42% and return on invested capital (ROI) of 17%.

Profits are projected to grow by 25% over a 5 years plan. This projection generates stream of cash flows of US$112,490,666, US$131,924,977, US$169,124,864, US$227,654,877, US$309,306,776 respectively over the five year plan.

The feasibility of the business is measured by the NPV, IRR, and discounted payback period. The discount rate used is 20% to compensate for the risk of the future cash flows. The result of the study is a positive NPV of US$274,232,946, an internal rate of return (IRR) of 73% and a payback period of approximately two years.

A sensitivity analysis of the NPV was conducted using higher discount factors of 25%, 30% and at 35% to accommodate for unforeseen risk in the future and the result is still positive NPV and IRR of 73% (i.e. NPV = 0).

The business will breakeven at a sales mix of US$181,251,000, a sales quantity mix of 119,000 units (tons). The contribution at breakeven point amounts to US$66,764,000.

The Board of Directors of Konoz complex consists of 8 members. The board is led by a Chairman and a Deputy Chairman. The general manager is also a member of the board.

The general manager oversees the overall administration functions of the three plants of the complex. The GM is assisted by a deputy general manager. Konoz Complex constitutes of three plants, The Bar production plant, the Tube plant and the Screw and Nail plant. For each of the three plants a plant manager is assigned and report directly to the Deputy General Manager.