BUSINESS PLAN- MERM - A Lakegroup Company - AJE.pdf

A Lakegroup company

Middle East Ready Mix LLC

P.O Box: 52341, Dubai – UAE

T: +971 4 885 8421

+971 4 885 8800

F: +971 4 885 8678

www.lakeoilgroup.com

BUSINESS PLAN & Feasibility Study

BUSINESS PLAN & FEASIBILITY STUDY

Middle East Ready Mix LLC Confidential 2

CONTENTS Page

Introduction 03 01 Company 04 02 Market 07

03 Products 09

04 Customers 16 05 Competitors 17 06 Marketing and Sales Organisation 19

07 Management, Personnel and Organisation 23

08 Technology and Machinery 27

09 Financial Statements and Forecast 31

10 Mission Statement 32

11 Executive Summary 33 Appendix I Appendix II



INTRODUCTION.

The Company Lake Group – Middle East Ready Mix LLC (MERM) have established a Ready Mix

Concrete manufacturing facility (hereinafter Factory) in Jabel Ali, Dubai Investment Park II - United Arab

Emirates (UAE), that will produce a ready mix concrete mixes and special concrete to supply the local

market on the 22nd October 2014.

The products will be manufactured in a Ready Mix Concrete Plant to satisfy the highest quality level of

home standards desired by customers in the target market, the UAE.

The customers will be project development companies as well as general building contractors and

architects willing to apply the cutting edge ideas of the ready building system for residential housing.

Consequently, the marketing activities should be specific for these target groups. Currently, the market

for building materials in the UAE is growing at a high rate and existing suppliers are not able to cover

the demand. The market analysis showed that the next planned investments in the building industry of

the UAE will exceed former projects.

The Factory’s production portfolio will produce a special concrete mixes and unique environmentally

friendly mixes in the UAE market and will provide a competitive advantage over the existing ready mix

concrete plants. The distinguishing factor will be high quality environmentally friendly mixes, high

performance, ultra-high performance concrete, crack resistant/low shrinkage concrete, self-

consolidating concrete and number of others. We are specialist to modify the properties of concrete

through the use of innovative concrete admixture, combined with the proportions of the various

constituents depending on the type of jobsite requirements and application. Furthermore, the technical

design of the Factory will allow the extension of existing production by high standard concrete facility to

produce a special precast and decorative elements for industrial use (halls, stadiums or multi-cinemas).



01 Company

01.1 The Company

Middle East Ready Mix LLC (MERM) was established as a limited liability company with an aim to

produce highly durable and non-durable concrete which are used for piling, foundations and structures.

The production was started on 22nd October 2014. Nevertheless; the company was started on 2005 and

we as Lake Group took over. The company will be producing all of type of concrete. We are specialist to

modify the properties of concrete through the use of innovative concrete admixture, combined with the

proportions of the various constituents depending on the type of jobsite requirements and application.

We can design concrete that is more flowable, stronger, develops strength faster and also retains

workability longer.

We offer a special concrete portofolio, comprised of such products as high performance concrete, crack-

resistant/low shrinkage concrete, self-consolidating concrete, and number of others.

Middle East Ready Mix LLC (MERM) is a Lake Group company from Tanzania.

The company is using the latest German technology and it was established in association with KIT, BHS

and command Alkon.

As a part of our policy; we continuously work to improve the properties of concrete that make it a key

component of sustainable construction: durability, resistance to aggressive environment, light reflection,

and capacity to store energy among others.

We also constantly work to develop innovative solutions that advance the sustainable buildings that can

take advantage of the benefits of concrete in a wide range of applications.

In order to provide high Quality concrete to it valued customer’s MERM has set up two fully automatic

concrete batching plants, with attached ice plants, in Dubai investment park, Jebel Ali, United Arab

Emirates.



Placing the company in Jabel Ali - DIP will give the following advantages:

- LOCATION: It is strategically located close to Dubai and Abu Dhabi, with very good access to

all building sites locations in above mentioned emirates by road and direct access to the

planned new projects.

- INFRASTRUCTURE: unrivalled in the region in terms of facilities and efficiency. The location

has a full range of services, which are cheap to maintain.

- STABILITY: political and social stability is characterised by laws that are both pragmatic and

liberal

- COMFORT: possibility of labour accommodation close to the plant and at the same time with

full social-infrastructure for the worker (shops, cultural centres, leisure facilities etc.).

01.2 The Factory.

The factory as stated above is located in a very strategic area which is Dubai Investment Park with the

full facility under a plot number 597-133, Dubai Investment Park II – UAE and leased with built office

block, laboratory block, control block, maintenance shed, nine aggregates sheds, storage warehouse,

and guard house in addition to 2 fully automated concrete batching plant. – For fully detailed report; see

Appendix 1 (as per third party inspection).

The factory will produce the following type of concrete;

o Durable and non-durable concrete

o High-strength concrete.

o High-performance concrete.

o Ultra-high performance concrete.

o Micro-reinforced ultra-high performance concrete.

o Self-consolidating concrete.

o Shotcrete – Gunite concrete.

o Pervious concrete.

o Waterproof concrete.

o Crack resistant/low shrinkage concrete.

o Cellular and lightweight concrete.

o Geopolymer concrete.

o and; many more.



The production process includes the following stages starting from the raw materials to the construction

stage.



02 Market

According to the UAE Contractors' Association, the construction market in UAE the value of ongoing

construction projects in 2015 has been estimated at USD 727 billion.

Dubai won the right to host the World Expo 2020. The largest ever Expo site is set to be built in Jebel Ali

(DWC) area at a total cost of between USD 2B – 4B. The secondary infrastructure spend will be

upwards of USD 8B, and will include construction opportunities in the transport, hospitality, retail and

commercial sectors.

The building industry in the region has drawn on the best technology and expertise available, and is

now in a position to take on world-class projects with confidence. Particular the market for engineered

building is expanding as the UAE's economy enjoys continued growth. Engineered building is used as

industrial sheds, warehouses, showrooms, standalone outlets, hangars, farm buildings, supermarkets,

office buildings, towers, malls, cinemas, and special structures. A good number of offices in industrial

areas in Dubai have been constructed using ready mix concrete technologies.

Construction materials, equipment and machinery, manufactured in Europe, above all are popular

because of its high quality advanced technology. The industry itself is calling for practices and building

codes to be regulated. British and German standards are recognised and readily accepted in the

market, however American standards have been gaining ground.

Local market demand for building products is growing rapidly as both public and private sectors are

floating tenders for the construction of diversified commercial, residential and institutional buildings.

Major public sector projects in the UAE include airport developments, road building and the expansion

of utilities. Private sector development is visible in the development of new shopping malls, hotels,

apartment blocks and office towers.



The major multi-billion Dirham projects are planned in the emirate of Dubai for 2015 are;

Source: MEED

Resume:

The GCC region has witnessed a great boom in the construction sector with projects estimated at hundreds of billions of dollars, of which a significant part is being spent on the UAE's huge projects. Looking ahead to 2015 projects, the Ventures ME Report highlighted that figures across both the building construction and interiors markets are both set to increase further.

US$72bn worth of completed projects and US$103bn worth of awarded projects are forecasted over the next 12 months; the interiors market is also likely to grow by 9 percent. The Healthcare Sector is expected to grow by 91.12 percent from a value of US$3.72bn registered in 2014, to an estimated value of US$7.11bn for 2015. Qatar in particular will be the country with the majority of healthcare buildings completed worth a total value of US$2.43bn -followed by KSA with US$2.15bn and the UAE US$1.82bn. Despite the huge increase in the Healthcare Sector, the building construction market will still be led by the residential and commercial sectors that together will account for over half of the market share concentrated particularly in KSA, the UAE and Qatar. Interior Fit-out Market: Out of an overall estimated market value of US$7.35bn, the Residential Sector will account for 41.95 percent and US$3.09bn in value, followed by the Commercial Sector at 17.15 percent and US$1.26bn of value and the Hospitality Sector with 13.51 percent and US$99mn in value. When compared to 2014 figures, the Healthcare Sector will see the biggest growth with a huge 91.6 percent increase and reaching a value of US$569m. The Education Sector is expected to see the biggest drop in value by -13.72 percent from US$571m to US$492m.

DAEP - DWC: Al Maktoum International Airport Expansion Transport 31,668 Main Contract PQ

Nakheel Corporation - Deira Island Construction 8,908 Main Contract Bid Dubai Holding - Mall of The World Entertainment District Construction 5,800 Design DEWA - Hassyan Coal Fired IPP Phase 1 Power 3,540 Main Contract Bid Dubai RTA - Dubai Metro: Purple Line Transport 2,730 Study Dubai RTA - Dubai Metro: Blue Line Transport 2,500 Study Damac Properties - Akoya Oxygen Construction 1,850 Design Meraas Holdings - La Mer Construction 1,600 Design ICD - Palm Jumeirah: Royal Atlantis Resort & Residences, Phase 2 Construction 1,500 Main Contract PQ

Dubai RTA - Dubai Metro: Red Line Extension Transport 1,300 Design Nakheel Corporation - Villas At Nad Al Sheba Construction 1,200 Design Dubai Holding - Innovation Hub Construction 1,200 Study Meydan - Meydan City: Hadaeq Sheikh Mohammed Bin Rashid Scheme Construction 1,089 Main Contract Bid

Dubai Supreme Council of Energy / China Sonangol - Dubai Refinery Oil 1,000 Main Contract PQ

DWTC - Redevelopment of World Trade Centre - Phase II Construction 1,000 Main Contract PQ



03 Products.

Raw Materials Cement The main source of cement if from the UAE domestic market; could be from Al Fujeirah Cement Co., Al Binani Cement Co., ARKAN cement, Cemex…etc Cement from other manufacturers will also be provided if required by customer. Only deliveries having quantity certificate showing specific compliance will be accepted. The total capacity of cementitious materials is 3000 tons at a time on daily basis. Mineral Additives Silica fume, Ground Granulated Blast Furnace Slag (GGBS) and Purified Fly Ash (PFA) are also available to produce high performance concrete. All mineral additives will be stored in separate silos and dispatched into the mixer through automatic weighing systems. The quantity of the additives used in the concrete depends on the specification requirements. Coarse Aggregates Fully crushed and sound coarse aggregates (20mm and 10mm) from the approved sources are available in separate purpose built storage bays. Fine Aggregates Crushed rock sand (washed) from the approved sources as per the internal QA/QC procedure of MERM

and Dune sand from Al Ain/Al Dhaid will be used for the concrete production. Middle East Ready Mix

LLC (MERM) shall strictly conform to Dubai Municipality Administrative order No. 143-91 and

only sand which is certified as complying is permitted to be used in the ready mix concrete.

Water The main source of water is Dubai. For quality control purposes regular independent laboratory tests will be conducted on samples collected from the main water tank. In addition, water is chilled to control the temperature of Ready Mix Concrete. Whenever required flake ice will also be used to maintain the temperature of concrete below 32 o C. Admixture MERM uses admixture from different suppliers. For normal concrete, plasticizers, superplasticisers or combinations of these two will be used. In addition, special additives such as hydrophobic pore blockers, water proffers etc. will be used upon the request of the customer. All admixtures will be dispensed through automatic dispensing system. Water Treatment Recycling Plant is already available in line with Dubai Municipality requirements and regulations. Each location has an equipped mechanical workshop with foreman and skilled mechanics supervised by

workshop Managers and two Mechanical Engineers. These Engineers implements an effective program



to keep plants and equipment in a suitable working condition. Moreover; as well as the technical team in

line with Dubai Municipality Administrative order No. 192 for the year of 2013.

03.1 Durable and non-durable Concrete

Preventing water and chlorides from penetrating concrete and protecting steel reinforcement from

corrosion extends the useful life of concrete structures and lessens the demand for new cement in

construction and reduces maintenance and replacement costs.

Concrete is a fundamental building material and has many beneficial properties, including being

versatile, strong, and readily available. However, cement, the glue that holds the concrete mix together,

has a large carbon footprint. Cement production is energy intensive and the process releases CO2.

Using the GGBS with the cement and concrete mix is achieving the durability of the concrete.

GGBS Cement

03.2 High strength Concrete

Has a compressive strength greater than 40 MPa (5800 psi). In the UK, BS EN 206-1 defines High

strength concrete as concrete with a compressive strength class higher than C50/60. High-strength

concrete is made by lowering the water-cement (W/C) ratio to 0.35 or lower. Often silica fume is added

to prevent the formation of free calcium hydroxide crystals in the cement matrix, which might reduce the

strength at the cement-aggregate bond.

Low W/C ratios and the use of silica fume make concrete mixes significantly less workable, which is

particularly likely to be a problem in high-strength concrete applications where dense rebar cages are

likely to be used. To compensate for the reduced workability, superplasticizers are commonly added to

high-strength mixtures. Aggregate must be selected carefully for high-strength mixes, as weaker

http://en.wikipedia.org/wiki/Silica_fume

http://en.wikipedia.org/wiki/Superplasticizer



aggregates may not be strong enough to resist the loads imposed on the concrete and cause failure to

start in the aggregate rather than in the matrix or at a void, as normally occurs in regular concrete.

In some applications of high-strength concrete the design criterion is the elastic modulus rather than the

ultimate compressive strength

03.3 High Performance Concrete (Grey & Colored)

(HPC) is a relatively new term for concrete that conforms to a set of standards above those of the most

common applications, but not limited to strength. While all high-strength concrete is also high-

performance, not all high-performance concrete is high-strength. Some examples of such standards

currently used in relation to HPC are:

Ease of placement

Compaction without segregation

Early age strength

Long-term mechanical properties

Permeability

Density

Heat of hydration

Toughness

Volume stability

Long life in severe environments

Depending on its implementation, environmental

03.4 Ultra - High Performance Concrete (Grey & Colored)

Is a new type of concrete that is being developed by agencies concerned with infrastructure protection.

UHPC is characterized by being a steel fibre-reinforced cement composite material with compressive

strengths in excess of 150 MPa, up to and possibly exceeding 250 MPa.UHPC is also characterized by

its constituent material make-up: typically fine-grained sand, silica fume, small steel fibers, and special

blends of high-strength Portland cement. Note that there is no large aggregate. The current types in

production (Ductal, Taktl, etc.) differ from normal concrete in compression by their strain hardening,

followed by sudden brittle failure. Ongoing research into UHPC failure via tensile and shear failure is

being conducted by multiple government agencies and universities around the world.

http://en.wikipedia.org/wiki/Elastic_modulus

http://en.wikipedia.org/wiki/Segregation_in_concrete



03.5 Micro-reinforced ultra-high performance concrete

Is the next generation of UHPC. In addition to high compressive strength, durability and abrasion

resistance of UHPC, micro-reinforced UHPC is characterized by extreme ductility, energy absorption

and resistance to chemicals, water and temperature. The continuous, multi-layered, three dimensional

micro-steel mesh exceeds UHPC in durability, ductility and strength. The performance of the

discontinuous and scattered fibers in UHPC is relatively unpredictable. Micro-reinforced UHPC is used

in blast, ballistic and earthquake resistant construction, structural and architectural overlays, and

complex facades.

03.6 Self-consolidating concrete

The defects in concrete in Japan were found to be mainly due to high water-cement ratio to increase

workability. Poor compaction occurred mostly because of the need for speedy construction in the 1960s

and 1970s. Hajime Okamura envisioned the need for concrete which is highly workable and does not

rely on the mechanical force for compaction. During the 1980s, Okamura and his Ph.D. student

Kazamasa Ozawa at the University of Tokyo developed self-compacting concrete (SCC) which was

cohesive, but flowable and took the shape of the formwork without use of any mechanical compaction.

SCC is known as self-consolidating concrete in the United States.

SCC is characterized by the following:

extreme fluidity as measured by flow, typically between 650–750 mm on a flow table, rather

than slump (height)

no need for vibrators to compact the concrete

easier placement

no bleeding, or aggregate segregation

increased liquid head pressure, which can be detrimental to safety and workmanship

SCC can save up to 50% in labor costs due to 80% faster pouring and reduced wear and tear on

formwork. In 2005, self-consolidating concretes accounted for 10–15% of concrete sales in some

European countries. In the precast concrete industry in the U.S., SCC represents over 75% of concrete

production. 38 departments of transportation in the US accept the use of SCC for road and bridge

projects. This emerging technology is made possible by the use of polycarboxylates plasticizer instead

of older naphthalene-based polymers, and viscosity modifiers to address aggregate segregation.

03.7 Shotcrete – Gunite concrete.

http://en.wikipedia.org/wiki/Vibrator_(mechanical)

http://en.wikipedia.org/wiki/Segregation_in_concrete

http://en.wikipedia.org/wiki/Wear_and_tear

http://en.wikipedia.org/wiki/Formwork

http://en.wikipedia.org/wiki/Transportation_in_the_United_States

http://en.wikipedia.org/wiki/Plasticizer



(Also known by the trade name Gunite) uses compressed air to shoot concrete onto (or into) a frame or

structure. The greatest advantage of the process is that shotcrete can be applied overhead or on

vertical surfaces without forming. It is often used for concrete repairs or placement on bridges, dams,

pools, and on other applications where forming is costly or material handling and installation is difficult.

Shotcrete is frequently used against vertical soil or rock surfaces, as it eliminates the need for formwork.

It is sometimes used for rock support, especially in tunneling. Shotcrete is also used for applications

where seepage is an issue to limit the amount of water entering a construction site due to a high water

table or other subterranean sources. This type of concrete is often used as a quick fix for weathering for

loose soil types in construction zones.

There are two application methods for shotcrete.

dry-mix – the dry mixture of cement and aggregates is filled into the machine and conveyed with

compressed air through the hoses. The water needed for the hydration is added at the nozzle.

wet-mix – the mixes are prepared with all necessary water for hydration. The mixes are pumped

through the hoses. At the nozzle compressed air is added for spraying.

For both methods additives such as accelerators and fiber reinforcement may be used.

03.8 Previous concrete.

Used in permeable paving, contains a network of holes or voids, to allow air or water to move through

the concrete. This allows water to drain naturally through it, and can both remove the normal surface-

water drainage infrastructure, and allow replenishment of groundwater when conventional concrete

does not. It is formed by leaving out some or all of the fine aggregate (fines). The remaining large

aggregate then is bound by a relatively small amount of Portland cement. When set, typically between

15% and 25% of the concrete volume is voids, allowing water to drain at around 5 gal/ft²/ min (70

L/m²/min) through the concrete.

03.9 Waterproof concrete.

British Standards set out to ensure that reinforced concrete structures provide the degree of protection,

internal environment and functionality required by owners or developers.

The term 'Waterproof' therefore conjures up a whole range of ideas. If the structure in question is to

retain water, say a water storage tank, then the designer may simply work to the design requirements of

the water retaining code, BS 8007, which sets out to limit crack width. This may be achieved by utilizing

http://en.wikipedia.org/wiki/Formwork

http://en.wikipedia.org/wiki/Tunnel

http://en.wikipedia.org/wiki/Compressed_air

http://en.wikipedia.org/wiki/Accelerant

http://en.wikipedia.org/wiki/Permeable_paving

http://en.wikipedia.org/wiki/Groundwater

http://en.wikipedia.org/wiki/Construction_aggregate

http://en.wikipedia.org/wiki/Portland_cement



a good quality, ordinary concrete, close attention to joint details and providing extra crack control

reinforcement; dampness being acceptable.

If on the other hand the structure is habitable or designed to house sensitive electronic equipment or

valuable archives, then simply designing to the water retaining code is not sufficient. This is especially

so given that ordinary good quality concrete provides little resistance to the passage of water vapour.

There are several degrees of waterproofing to be considered, all loosely defined under 4 categories in

BS 8102.

03.10 Crack resistant/low shrinkage concrete.

While often overlooked, the shrinkage potential of a concrete mixture is perhaps the most important

consideration for concrete used to construct industrial floors on ground. All concrete, even shrinkage-

compensating concrete, shrinks. Because of a loss in volume, concrete shrinkage can lead to cracking

when base friction or other restraint occurs. Shrinkage also causes curling/warping which can lead to a

variety of slab issues including decreased load-carrying capacity (structural cracking) and joint stability

problems such as spalling. Shrinkage-induced cracking and curling/warping can also contribute to

decreased vehicle ride (a potential health and safety issue) and floor covering failures (buckling caused

by reverse warping). In short, shrinkage is a factor in most concrete slab-on-ground performance issues.

To increase the performance of concrete floors, shrinkage must be better understood and addressed.

Therefore; a different type of special chemicals will be used in order to prevent this phoneme.

03.11 Cellular and lightweight concrete

Aerated concrete produced by the addition of an air-entraining agent to the concrete (or a lightweight

aggregate such as expanded clay aggregate or cork granules and vermiculite) is sometimes called

cellular concrete, lightweight aerated concrete, variable density concrete, foamed concrete and

lightweight or ultra-lightweight concrete,[14][15] not to be confused with aerated autoclaved concrete,

which is manufactured off-site using an entirely different method.

03.12 Geopolymer concrete

Geopolymer cement is an alternative to ordinary Portland cement and is used to produce Geopolymer

concrete by adding regular aggregates to a geopolymer cement slurry. It is made from inorganic

aluminosilicate (Al-Si) polymer compounds that can utilise 100% recycled industrial waste (e.g. fly ash,

slag) as the manufacturing inputs resulting in up to 80% lower carbon dioxide emissions. Greater

http://en.wikipedia.org/wiki/Expanded_clay_aggregate

http://en.wikipedia.org/wiki/Cork_material

http://en.wikipedia.org/wiki/Vermiculite

http://en.wikipedia.org/wiki/Types_of_concrete#cite_note-14

http://en.wikipedia.org/wiki/Types_of_concrete#cite_note-14

http://en.wikipedia.org/wiki/Aerated_autoclaved_concrete

http://en.wikipedia.org/wiki/Geopolymer_cement

http://en.wikipedia.org/wiki/Fly_ash

http://en.wikipedia.org/wiki/Slag



chemical and thermal resistance, and better mechanical properties, are said to be achieved for

geopolymer concrete at both atmospheric and extreme conditions.



04 Customers

Currently the main customers and prospective clients for future business are the developer companies

(especially where their own or hired architects are involved in the decision making process for material

used in construction), consultants and constructing companies.

The main product in production – durable and non-durable concrete is very specific and would be sold

only to general contractors as an additional part of any contract with them. General contractors primarily

engaged in construction (including new work additions, alterations, remodelling, and repair) of

residential buildings other than single-family house estates. This includes hotels, motels, apartments,

and apartment houses or skyscrapers.

Several architects working in UAE are looking for new performance possibilities other than those

already available. Currently only normal concrete mixes are available on the market. Also for the

facades only glass or natural stone façades are used for the cladding. Acid treated pre-coloured wall

panels are not known in UAE and the concept was enthusiastically received by the architects

interviewed and was generally very popular among potential clients. Architectural concrete demand

great care and precision when casting to create a finished high quality product that has classic, stone-

etched appearance. With the successfully technology offered by the Company, which can convince the

architects and finally the clients.

The ordinary ready mix concrete is a structural product for building industry. General and special trade

contractors primarily engaged in the construction of heavy projects not elsewhere classified. This

includes industry halls, canals, drainage systems, athletic and recreation facilities, land preparation, rock

removal, waste, water and sewage treatment plants, trenching construction and bridges, viaducts,

elevated highways, and highways, pedestrian and railway tunnels. Especially if the Company is going to

realize whole housing projects then the production of ordinary concrete mixes as a supplement to the

main production is necessary. Therefore the Factory is providing these products also.



05 Competitors

The market in general is price-driven and local contractors are used to using the standard products

available, which must be worked on further to achieve a high quality finish.

However; Middle East Ready Mix LLC offers unique products, which are at this moment almost

completely unavailable on the market and which have a high quality finish that, does not need an

additional touch up.

Competition from international companies in ordinary ready mix is available and companies with a

physical presence in the market and a strong-based local active sponsor are often seen as preferred

contractors. The plant which should be settled up will not be as labour intensive as other existing

manufactures. This will cut out the possibilities of human error in our production line and reduce the cost

of production.

Also because of our use of newest technology and machinery the competitors will have to modernise

their own production to keep pace with the Factory leaving it the position as one of the leading producer

of high modern ready mix concrete in UAE.

The most important competitors on this area are:

1. Dubai Ready Mix LLC - offers: different ranges of normal concrete for different projects in the Dubai

region.

2. Al Falah Ready Mix LLC - offers: different ranges of normal & durable concrete for different projects in

the Dubai and Abu Dhabi regions.

3. Unibeton Ready Mix LLC - offers: different ranges of normal, high strength & durable concrete for

different projects in the Dubai and Abu Dhabi regions.

4. Emirates Beton Ready Mix LLC - offers: different ranges of normal & durable concrete for different

projects in the Dubai region particularly for Al Shafaar group as it is a sister company.

5. Q.Mix Ready Mix LLC - offers: different ranges of normal concrete for different projects in the Dubai

and Sharjah regions.



Note;

No one of the above mentioned producers are providing the high quality

colored concrete, or Ultra-high performance concrete and none produce high

quality acid treated façades or photo concrete architectural designs.



06 Marketing and Sales Organisation.

06.1 Marketing Strategy.

The company's marketing strategy will be to promote sales of our highest quality new products and

attain a solid position as a major supplier of standard products.

Focusing on this product-component relationship will facilitate the company's ability to pursue the

vertical integration of the business and pass on the value-added savings to our customers. The

company's overall strategy is based on a continuous improvement process of setting objectives,

measuring results, and providing feedback to facilitate further growth and progress.

The company plans to rapidly develop marketing alliances with architects, building industry leaders and

pursue new sales of its products for residential and commercial builders. The market strategy is to

capitalize on the alliances by securing city, state, and government contracts.

It is planned to organise events and seminars in order to acquaint potential clients with the new

techniques and technologies that we alone will be making newly available on the market. At these

meetings we will have the opportunity to convince potential clients (architects, QC-Eng. and contractors)

of the unequalled quality of our brand new products.

The Factory should adopt a corporate strategy that is dedicated to improving the performance of

activities on the critical path of its customers' projects. The company does this by building on its core

strengths, innovative equipment, design engineering expertise, and project and site management, within

an environment of safety excellence.

From the customers' point of view, this strategy translates into these benefits:

● Reduction of set-up time for classic kinds of building construction.

● Increased site safety.

● Project cost reduction.

● Quality construction and a new kind of technology used.



● Review of structural plans.

The overall marketing plan should based on the following fundamentals:

● Segmentation of the planned market(s).

● Distribution channels to reach market segments: developer, architects associates

and building contractor federations.

● Share of the market expected to be captured over a fixed period of time.

Just as important is to be committed to an extensive promotional campaign. This is done aggressively

and on a broad scale. To accomplish initial sales goals, the company has to implement an effective

promotional campaign to accomplish two primary objectives:

● Attract a quality work force that has a desire to be successful.

● Attract customers who will constantly look for the products.

In addition will be advertisements in the yellow pages, trade press, and on billboards throughout the

state. The objective of brochures is to portray the company’s goals and products as an attractive

functionality. It is also to show customers how to use the latest in technology as it relates to construction

and building services. An extra budget should be planned for an ongoing, state-wide advertising

campaign.

As an extra incentive for customers (and potential customers) to remember the name, could be planned

to distribute coffee mugs, T-shirts, pens, and other advertising specialties with the company logo. This

will be an ongoing programme for the company, when appropriate and where it is identified as

beneficial.

06.2 Distributions channels and sales organisation.

Because different kinds of products are offered for marketing then different approaches are necessary

for advertising the products.



The high quality colored ready mix concrete and Ultra-high performance, which are completely

new product in UAE, must be aggressively marketed as there is nobody producing this product. Orders

for this product will usually come from general construction companies. To get onto these orders it is

necessary to be well-informed concerning building activities in the area both current and projected. To

sell successfully extra arguments are needed in order to make this part of the plants construction more

attractive to the buyer, for example:

● because of new transit mixers and machinery having a perfect work surface on

the production, the concrete productivity will be of a very high-quality smooth

finish;

● the other side of the walls panels should be plastered by very thin layer of

gypsum instead standard cement plastering;

● no additional insulation is needed (in case of insulated lightweight concrete);

● full filling the newest rules regarding coldness saving;

● physical building properties, which cannot be offered by conventional concrete.

● the customer can be given advice during the selecting phase of their project – for

example it may be offered financial advantages to the customer by suggesting

the use of thinner slabs if and where possible thus reducing costs depending

upon structural calculations;

The marketing of these products should begin in the first phase of any new building project. Good

contacts are needed to architects, building owners and other project investors or clients representatively

which is already existing in our case.

The sales staff will be professionally acquainted with this technology and able to show the client the

advantages of this product and its high quality and optical value. Contact with the customer should be

very well balanced.

Very good connections with the different types of client are needed for this, preferably someone with a

more mature knowledge of the market in the area would be suitable. Because of the rarity of this

particular product in the UAE, marketing should not be a problem.



Self-evidently samples of this product should be well presented on the plant area in eye-catching

displays.

The company must plan the selling of ordinary ready mix concrete (blinding, screed C30 and C40

grades concrete etc.) through a direct sales force using, relationship selling, and subcontractors to

reach our markets. These channels are most appropriate because time to market is reduced as is

capital requirements, and it gives fast access to established distribution channels.

Because this particular product is universally available in UAE and not so profitable it should be

marketed as an extra to our main product and so extra marketing would not be cost effective. In the

plant a high quality professionally prepared exhibition with large scale samples used in various

situations will be on show.



07 Management, Personnel and Organisation.

One of the decisive success factors of the entrepreneurial initiative is the potential of the management

team and labour. The subject of management is in many cases more important than the whole

entrepreneurial initiative.

The new undertaking will be successful only if all the necessary managerial qualities and conviction in

the product are apparent. This should emphasize the management’s ability to effectively implement the

business plan and deal with unanticipated changes.

The company's management philosophy will be based on responsibility and mutual respect. The

maintenance of an environment and structure that encourages productivity and respect for customers

and fellow employees has to be a must.

The company employees and management are committed to:

produce responsibly, conscientiously and believe that a well made product is not only good for

the company but also for themselves;

providing a safe work environment to protect themselves, the employees of customers and

subcontractors, and the public.

supplying safe products with the highest quality for customers.

continuously improving the company's safety programme to reduce the risk of accidents and

occupational illness in a changing work environment.

encouraging employees to participate in accident prevention programmes, and take personal

responsibility for their, and their co-workers', health and safety.

employing properly trained personnel, equipment, and procedures necessary to enable

regulatory compliance, and contribute to the high safety standards for our industry.

monitoring workplaces, enforcing safe work practices, and communicating the company's safety

performance to employees and other stakeholders.

making safety a value-added service that the company provides to its customers.

taking part in training programmes both home and abroad to keep up-to-date with the newest

techniques and technology. This will especially concern foremen positions



The management of the Factory will be highly experienced and qualified.

All of them should have a long experience and should be highly qualified in their respective fields of

responsibility.

General Manager Job description:

Complete responsibility for sales totals and results;

Represents the company with major customers, the financial community, administrative bodies

and the public;

Manage key personnel of any large investment, where the company has a controlling stake;

Coordinate all legal, accounting and finance, administrative procedures applicable to current

investments of the company in respective markets;

Directing and coordinating financial programs to provide funding for new or continuing

operations to maximise returns on investments and to increase productivity.

Knowledge, Skills and Experience:

Graduate in industry or MBA knowledge;

10+ years of experience in senior management roles within an international building company,

ideally ready mix and concrete, including P&L responsibility;

Emerging markets experience;

Excellent ability to define problems, collect data, establish facts, draw valid conclusions and

lead the team in solving problems;

Strong communications skills, multi-lingual;

Adaptable and culturally sensitive;

Clear cost and results orientated;

Production Manager job description:

Manages and directs the production, based on profit and return of capital;

Plans, develops and implements organisation policies and goals;

Dispenses advice, guidance, direction and authorisation to carry out major plans and

procedures, consistent with established policies and board approval;



Establishes and maintains an effective system of communications throughout the organisation;

Primary responsibility in machinery, production and quality of products

Knowledge, Skills and Experience:

Graduate in industry or engineering knowledge;

7+ years professional level relevant experience within production of pre-cast concrete elements;

perfect knowledge of concrete technology, shuttering and prefabricated machinery and

equipment;

excellent communication and organisational skills, proven leadership/management capabilities;

o excellent time management skills, problem-solving attitude, creative thinking, goal and

result-

Training programmes.

The target of the following points is to establish a loyal, hardworking and adaptable work force.

1. New employees must show basic trade qualification or proof of minimum three to five years

experience in the industry.

2. New employees must agree to adapt to the practices in use in other plant.

3. The first group of employees should be schooled in such a way that as further staff is taken on

they can be used as training staff.

4. For exceptional workers with language ability operational training will be arrange with machine

producers abroad.

5. Bonus incentives for safety record, production levels and quality production is to be foreseen.

6. Pay scale linked to participation in company organised courses (trade and language).

Social activities

The target of the following points is to achieve a good team spirit and readiness to help in order to carry

out the day’s duties enthusiastically.

1. Canteen – will provide national food.

2. Establishing team sports (football, basketball etc.).



3. Cultural events, especially within national holidays.

The staff and workers of the Factory have to be proud to work in the most technologically

advanced plant in the area and identify with it.



08. Technology and Machinery

08.1 Technology and Machinery for Ready Mix Concrete Batching Plant.

The company is using the latest German technology fully computerized in the batching plant (BHS

Sonthofen, Germany). The horizontal concrete plants are the best and most used solution for production

of the ready mix concrete in the area. With ejector outputs of up to 120m³ hardened concrete per hour,

the correct performance class is available for every requirement/batching plant.



08.2 Technology and Machinery for Chilled Water Plant. “Already ordered”

The technology of the chilled water plant is from KTI, Germany. Our latest containerized chillers are

specially designed for cooling the mixing water for batching plants from 45 °C down to less than 1 °C.

Using evaporative condensers and a 4-stage cooling system these new containerized chillers are

superior to any common water chiller available in the world. The capacity is 340m3 per hour.

08.3 Technology and Machinery for Ice Plant. “Already ordered”

The technology of the Ice Plant also is from KTI, Germany with a capacity of 84 tons per day.

Flake ice has the highest surface area per ton of ice, providing a greater cooling efficiency than

any other ice.

Short melting time by the use of flake ice compared to any other ice

Shortest mixing times of the batching plant compared to any other ice as flake ice melts rapidly.

Higher lifespan of the batching plant equipment and cost savings due to the short mixing times

The latent heat, the principal source of the cooling energy is 100 % or even higher as the flake



ice is sub-cooled (-7 °C).

Due to the dryness, the cooling input of flake ice can be accurately calculated and its effects on

the mixtures temperature are quickly apparent.

Flake ice is free flowing, its flakes remain crisp and do not stick together nor do they form

blocks.

Easy to be stored and levelled inside a refrigerated ice storage with a fully automatic ice rake

system

Easy to transport via screw conveyors or blowing system to any location required

No losses due to hot gas defrosting of the freezing surface. Flake ice is sheared from the

freezing surface by the ice removal tools.



08.4 Technology and Machinery for Concrete Pumps.

The technology is from Germany and China; 4 numbers with a length of 42 meters, 37 meters and 36

meters. In addition to a static pumps with 2 numbers.

08.4 Technology and Machinery for Transit mixer.

The technology comes from HOWO - China with fully branded new 2015 transit mixer with a capacity of

12m3 per truck with 40 numbers.

A fully equipped laboratory to check and confirm the Quality Control procedure in line with the

international and domestic markets standards.



09 Financial Statements and Forecast

Financial projections are based on prices and sales volume as gathered on the Dubai market during

2014/2015 and upon access to planned projects as described during interviews with local architects,

engineers, QC engineers, contractors, pre-cast and ready mix concrete companies (Safemix Ready Mix,

Think International and Union Cement Products LLC). The prices and conditions (see Appendix II for

Projected Balance Sheet, Projected Income statement and Schedule to projected balance sheet).

Financial notes and assumptions

Revenues will be derived from sales of ready mix concrete. The Factory plans to bid and receive contracts for commercial concrete projects at all levels throughout the state. Management also expects to achieve a small percentage of revenues resulting from quality productivity.

Annual Growth

The Company expects to increase annual growth, on the basis that the company will be stepping up its sales efforts, as well as initiating new partnerships and alliances that will foster growth and extensions of our existing markets. These strategies are designed to build momentum and critical mass within the company and its overall sales results.

Cost of Goods

The Company expects that its products will bear a reasonably high mark-up, because of the new high quality technology which will be available for the first time in this market.



10 Mission Statement

The company's mission is to be successful by effectively looking to achieve the targets of high quality,

advanced techniques, and customer service. It is important that the company continues to provide

superb customer service and fast delivery. At the same time, the company's further success will depend

on securing new customers in the served market niches, and maintaining a very good reputation with

clients.

The mission of the Company is to become THE LEADING PRODUCER by providing the best

quality ready mix environmentally friendly concrete and colored ultra-high performance concrete

in the UAE market.

To become the leading provider of the above in the area means always having the best and most

efficient facilities, product quality, and professional staff that are able to provide solutions to any client’s

problem. To achieve this, the company is investing in many fields that will result in competitive

advantages for its customers, for example:

Review of structural drawings. The company eliminates possible structural problems and

delays.

Pre-job conferencing upon request. The company thoroughly understands the construction

business and the science of formwork. Recommendations are made, and customers are alerted

when things can be done better. A partnership is based on trust and includes planning and

teamwork.

Delivery. Material choice and placement is of cardinal concern to the company and efficiency on

the job.

Forming, reinforcing, and after-marketing products. One of the things the company does for its

customers is to help streamline the ordering process.

This makes certain target achievement.



11 Executive Summary

The Company has been established as a Limited Liability Company and a Lake Group Company with

an active share holder Mr. Ally Eidha Awadh.

Mr. Ally Eidha Awadh is topping the list of 10 young African millionaires to watch 2014 Forbes list;

http://www.forbes.com/sites/mfonobongnsehe/2014/07/08/10-young-african-millionaires-to-watch-2014/

Lake Group turnover for the year 2014 stands at USD 465.34 million (Net Profit: USD 34.34 Million) and

USD 824.25 Million in 2014 (Provisional) and expected to cross USD 1 Billion in 2015.

The Factory will produce a ready mix concrete specialising in a technology which is at the moment not

available in the area and supported by the production of classic concrete offering a complete package to

any construction company.

The plant has been established in Jabel Ali (DIP) where not only can the plant and offices be built but

also the workers housed. DIP is unrivalled in the region in terms of facilities and efficiency. The location

has a full range of services, which are cheap to maintain and at the same time has a complete social-

infrastructure for the worker.

The machinery has been supplied by well-known manufacturer (mostly from Germany & China) with

years of proven experience in this area of technology. The batching plant is already existing with the

high quality machinery with the computer controlled planetary mixer technology along with the 4

concrete pumps and 40 transit mixer.

All servicing and training will be carried out by each of the producers as well as by the support of Think

International FZE.” A well-known consultancy firm company specialist in all types of concrete”

The target market is all of the potential new projects planned in the UAE with special attention to those

planned for Dubai.

http://www.forbes.com/sites/mfonobongnsehe/2014/07/08/10-young-african-millionaires-to-watch-2014/



According to the accompanying financial tables it is self-evident that the planned project will be an

extremely profitable investment even in the event of the projected plant does not reaching its planned

100% output. That is because of the new technologies being introduced onto the market by the

company. This would enable the initial investment to be repaid in a very short time.

One can see from all of the projects planned that there will be a stable market for ready mix concrete

and especially the new high quality products that the plant will offer even beyond.

Lake Group is happy to enter into UAE market by acquiring “Middle East Ready Mix LLC” (MERM) and

wishes to grow exponentially.



All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, without the prior

permission in writing of Middle East Ready Mix LLC OR Think International FZE,

UAE.

Appendix I

APE

Assets Appraisal for Middle East Ready Mix

P.O Box......., Dubai, UAE

Job Ref No. PM/004/10/2014

Assets Appraisal Report19 October 2014

Customer: M/s Middle East Ready Mix P.O Box:..........., Dubai United Arab Emirates

Private & Confidential

Chesterton International LLC

Mena Head Office: Branch O

Office# 1802, 18th Floor

Boulevard Plaza Tower 1

Downtown Dubai

P.O Box: 283361

Dubai, UAE

Middle East Ready Mix L.L.C 19 October

port

Middle East Ready Mix L.L.C Dubai

United Arab Emirates

Chesterton International LLC

Mena Head Office: Branch Office:

Office# 106, 1

Boulevard Plaza Tower 1 Al Rasis Tower

Downtown Dubai Al Barsha 1

Box: 283361 P.O Box: 283361

Dubai, UAE Dubai, UAE

19 October 2014

Page 1 of 10

ffice:

1st Floor

Tower

83361

APE

Assets Appraisal for Middle East Ready Mix L.L.C 19 October 2014


Job Ref No. PM/004/10/2014 Page 2 of 10

Contents

1.0 Introduction 03

2.0 Company Details 04

3.0 Asset Details 04 - 05

4.0 Insurance Policy 06

5.0 Plant & Machinery Appraisal 06

6.0 Appraisal Value 07

Disclaimer 08

General Principles 09

Photographs 09 & 10

APE




Plant & Machinery (Concrete Batching Plants) Appraisal Chesterton Reference: PM/004/10/2014 Customer: M/s Middle East Ready Mix L.L.C

1. INTRODUCTION

This report is prepared for M/s Middle East Ready Mix L.L.C.

The purpose of this report is to determine the market value of the assets owned by M/s Middle East

Ready Mix L.L.C, in order to secure credit facilities / financing from Banks / Financial Institutes.

We refer to your (“The Customer’s”) instructions dated 12 October 2014 to carry out the appraisal of their

concrete batching plants and related accessories, in accordance to our agreed Terms and Conditions.

The assets were inspected by Mr. Bilal Ahmed (Valuer / Surveyor – Plant and Machinery) on 15 October

2014 and report undertaken by Mr. Khizar Hayat (Valuations Manager – Plant and Machinery),

supervised by Mr. Simon Gray (Managing Director). We write to advise you as to our opinion of the

Market Value of the assets to be used for the purpose of securing credit facilities / financing from banks /

financial institutes.

We confirm that to the best of our knowledge, M/s Chesterton International LLC has not had any previous

involvement with the subject assets or the Customer, which could give rise to a conflict of interest.

Our report and appraisal is subject to the Appraisal Conditions and Assumptions that are also included in

the Disclaimer section.

For the purposes of this report and appraisal, the date of valuation is 15 October 2014.

In accordance with your instructions, we provide appraisal within this report as follows;

• Market Value using Comparable Method of Valuation

We have provided further details in the General Principles section of this report, which outlines the

definition of the appraisals, mentioned above.

APE




2. COMPANY DETAILS

2.1. Company Overview

Description

M/s Middle East Ready Mix LLC is a Dubai based company and is in the business of producing ready mix concrete. According to the information provided by the company’s representative M/s Middle East Ready Mix LLC is preparing / overhauling their plants to re-initiate their production activities in the near future. The production activities were halted in the year of 2008 mainly because of market conditions prevailing at that time. The list of the assets owned by M/s Middle East Ready Mix L.L.C, considered for the purpose of this valuation assignment is given below under the heading “Assets Details”. Location

The subject assets were inspected in the Dubai Investment Park (DIP) – 2 Area of Dubai - UAE.

3. ASSETS DETAILS

Concrete Batching Plant – 01

S.No Description Qty CapacityCountry of

Manufacture

Year of

Manufacture

Year of

Install Market Value in AED

Mixer Including:

i) Concrete Discharge System

ii) Support Structure

iii) Charging System

iv) Cement Weigher

v) Electro-Mechanical Micro Silica Weigher

vi) Water System

vii) Admixture Addition System

viii) Electro-Mechanical Weigher

ix) Control Room (Wires and Panel)

x) Protocol Printer etc

Make: BHS Sonthofen GMBH

Model: N/a

Fabrication No: 4038067 - 004D

1 SetProd. Cap: 120 Cm/Hr

(3 Cm/Batch)Germany 2004 2004

Electro-Mechanical Belt Conveyor Including:

i) Weigh-out equipment / load cells

ii) Cable box including cable, leading

to weigher electronics

iii) Suspensions for load cells and belt conveyor

iv) Guides and Stabilizers

Set

Max. load:7500 kg

Length: 11 m

Belt Speed: 1.26 m/s

Belt Width:1000 mm

Drive Power: 30 kW

malaysia 2004 2004

2Aggregate Storage Bins (In-line Bins)

Made of: Mild Steel

Set of

Four (4)45 Cubic Meter Each malaysia 2004 2004 90,000.00

3 Feeding Conveyor ( From Aggregate Bins to Mixer) 1Length: 35 M

Motor Power: 15 Kwmalaysia 2004 2004 50,000.00

4

Silos ( Cement Storage)

Made of: Mild Steel

Equipped with: Silo Filters, Pressure Valves,

Level Indicator and Air Injection System

5 100 Ton UAE 2004 2004 330,000.00

5

Silos ( Micro-Silica Storage)



Made of: Mild Steel

1 40 Ton UAE 2004 2004 30,000.00

6 Screw Conveyors 5

Length: 5 m

Dia: 273 mm

Motor Power: 15 Kw

malaysia 2004 2004 45,000.00

7 Screw Conveyor 1

Length: 5 m

Dia: 110 mm

Motor Power: 12 Kw

malaysia 2004 2004 9,000.00

8 Air Compressor 1Max. Pressure: 11 Bar

Vol: 500 LitItlay 2005 2005 2,000.00

1,656,000.00 TOTAL

1

Batching Plant

1,100,000.00

APE




Concrete Batching Plant – 02

S.No Description Qty CapacityCountry of

Manufacture

Year of

Manufacture

Year of


Mixer Including:

i) Concrete Discharge System

ii) Support Structure

iii) Charging System

iv) Cement Weigher

v) Electro-Mechanical Micro Silica Weigher

vi) Water System

vii) Admixture Addition System

viii) Electro-Mechanical Weigher

ix) Control Room (Wires and Panel)

x) Protocol Printer etc

Make: BHS Sonthofen GMBH

Model: N/a

Fabrication No: N/a

1 SetProd. Cap: 120 Cm/Hr

(3 Cm/Batch)Germany 2004 2004

Electro-Mechanical Belt Conveyor Including:

i) Weigh-out equipment / load cells

ii) Cable box including cable, leading

to weigher electronics

iii) Suspensions for load cells and belt conveyor

iv) Guides and Stabilizers

Set

Max. load:7500 kg

Length: 11 m

Belt Speed: 1.26 m/s

Belt Width:1000 mm

Drive Power: 30 kW

malaysia 2004 2004

2Aggregate Storage Bins (In-line Bins)

Made of: Mild Steel

Set of

Four (4)45 Cubic Meter Each malaysia 2004 2004 90,000.00

3 Feeding Conveyor ( From Aggregate Bins to Mixer) 1Length: 35 M

Motor Power: 15 Kwmalaysia 2004 2004 50,000.00

4

Silos ( Cement Storage)

Made of: Mild Steel



5 100 Ton UAE 2004 2004 330,000.00

5

Silos ( Micro-Silica Storage)



Made of: Mild Steel

1 40 Ton UAE 2004 2004 30,000.00

6 Screw Conveyors 5

Length: 5 m

Dia: 273 mm

Motor Power: 15 Kw

malaysia 2004 2004 45,000.00

7 Screw Conveyor 1

Length: 5 m

Dia: 110 mm

Motor Power: 12 Kw

malaysia 2004 2004 9,000.00

8 Air Compressor 1Max. Pressure: 11 Bar

Vol: 500 LitItlay 2005 2005 2,000.00

1,656,000.00 TOTAL

1

Batching Plant

1,100,000.00

Accessories: S.No Description Qty Capacity

Country of

Manufacture

Year of

Manufacture

Year of


1 Diesel Tank 1 10,000 Gallons UAE 2004 2004 25,000.00

2Water Tank (Horizontal)- Non Insulated

Made of: Mild Steel1 30,000 Gallons UAE 2004 2004 35,000.00

3

Containerized Ice Water Plant (CIWP)

Make: KTI

Type: CIWP.Eco 400

1

Prod. Cap: 400 m³/Day

Ice Water Outlet Temp: 1 °C

Water Flow: 16.66 m³/Hr

Germany 2014Yet to Be

Installed 600,000.00

4

Containerized Flake Ice Plant (FLIP)

Make: KTI

Type: FLIP.5-102

1

Prod. Cap: 102 Ton/Day

No. of Ice Makers: 2

Power Consumption: 376 Kw


Installed 1,397,500.00

5

Mobile Ice Storage (MIS)

Make: KTI

Type: MIS.4-75

1 Holding Cap: 75 Ton Germany 2014Yet to Be

Installed 520,000.00

6

Screw Conveyors

Make: KTI

Type: RFS 323 X 12000

2

Dia: 323 mm

Length: 12000 mm

Motor Power: 11 Kw

Delivery Rate: 40 Ton/Hr


Installed 78,000.00

7

Ice Weigher

(Galvanized Hopper with Pneumatic

Operated Gates)

Make: KTI

Type: IW500

2 Weighing Cap: 500 Kg Germany 2014Yet to Be

Installed 32,500.00

8

Wheel Loader

Make: Caterpillar

Model: 938 G

Chassis No: C800938GTPHN02878

1 Gross Power: 134 Kw USA 2008 300,000.00

9 Weigh Bridge 1 Capacity: 120 Ton N/a N/a N/a 70,000.00

3,058,000.00 Total

APE




4. EXAMINATION

The assets were inspected with regard to their existence, maintenance level and operating condition. According to our observations the plants were in good condition and required maintenance / overhauling was in progress. Further, the containerized ice water plant, flake ice plant, mobile ice storage, screw conveyors (KTI) and ice weighing system could not be inspected physically as these machines / assets were recently purchased by the customer and are yet to arrive to the site of their operation. The valuation of these assets is conducted on desk-top basis i.e. the valuation of these assets is based on the information provided by the customer.

5. INSURANCE POLICY

We are not provided with any insurance document hence we are unable to comment on the type and extent of the insurance coverage.

6. PLANT & MACHINERY APPRAISAL

Methodology

The assets were inspected with regard to their existence, level of maintenance and assessments of the values of the equipment’s were carried out on the basis of their present condition. The market value for the machines is obtained on the basis of buying / selling prices of the machines of similar types and capacities. Since there is an established secondary market for used / second hand assets related to concrete industry, In case of used heavy machinery we have adopted the comparable method of valuation by conducting a research on prevalent prices rather than Depreciated Replacement Cost (DRC) approach. CONCLUSION: This report is compiled based on the information received and gathered to the best of our belief, knowledge and understanding. The information revealed in this report is strictly confidential and issued for the consideration of owners, their bankers and or their financial consultants. We trust that this appraisal report fulfils the requirement of your instruction and is issued without prejudice and liabilities.

APE




7. APPRAISAL VALUE

Market Value of Assets

Our opinion of the Market Value of the assets in their current condition “as at 15 October 2014” is approximately: -

AED 6,370,000/-

(Six Million Three Hundred and Seventy Thousand UAE Dirhams Only)

Summary of Valuation

S.No Description Market Value in AED

1 Concrete Batching Plant - 1 1,656,000.00

2 Concrete Batching Plant - 2 1,656,000.00

3 Accessories 3,058,000.00

6,370,000.00 Total

Yours faithfully

Mr. Simon Gray Managing Director - MENA For Chesterton International LLC

APE




Disclaimer

This asset appraisal and report is subject to the following conditions:

i. The assessor’s responsibility in connection with this assessment report is limited to the client to whom it is addressed and to that client only. The assessor disclaims all responsibility and will accept no liability to any other party.

ii. The assessment contained herein is given on the basis that the asset is not subject to any unusual or

especially onerous restrictions, encumbrances or outgoings; that the assets and its value is unaffected by any matters which would be revealed by a local search and replies to usual enquiries, or by any statutory notice; and neither the assets, nor its conditions, nor its uses, nor its intended uses are, or will be, unlawful; and that the inspection of those parts which have not been inspected would neither reveal material defects nor cause the assessor to alter the calculation materially.

iii. The figures provided within this report for the subject asset and any allocation of values between parts of the assets applies only in the terms of and for the purpose of this report. The values assessed should not be used in conjunction with any other assessment, as they may prove incorrect if so used.

iv. Where the values are provided, they reflect the full contract value and no account is taken of any liability to

taxation on sale or of costs involved in effecting sale.

v. Any sketch, plan or map in this report is included to assist the reader while visualizing the asset or its

operations; we assume no responsibility in connection with such matters.

vi. The assessor is not required to give testimony or to appear in court by reason of this assessment report, with

reference to the asset in question, unless arrangement has been made thereof.

vii. Neither the whole nor any part of this assessment and report or any reference to it may be included in any

published document, circular or statement nor published in any way without our prior written approval of the form and context in which it may appear.

viii. Unless stated otherwise information on which this assessment has been based has been supplied to

Chesterton International LLC by the Client and/or the client’s approved contractor, this information is believed to be reliable but we accept no responsibility if this should prove not to be so. In case of information that has been obtained by our search of the records and examination of documents or by inquiry from the Government or other appropriate departments, it has been so mentioned

ix. The report is provided for the stated purpose and for the sole use of yourselves. It is confidential to yourselves

and your client for the purpose to which it relates but may be disclosed to other professional advisors assisting yourselves in respect of that purpose only. The assessors accept responsibility to you alone that the report has been prepared with the skill, care and diligence reasonably to be expected of a competent assessor, but accepts no responsibility whatsoever to any person other than the client. Any other person relies upon the report at his own risk. Neither the whole nor any part of this report or any references to it may be included in any published document, circular or statement nor published or reproduced in any way without our written approval of the form and the context in which it may appear.

x. All due care and precaution has been exercised in preparation of this report. However, the value quoted may

vary periodically due to various unforeseen factors. It is beyond the scope of our services to ensure the consistency in values due to changing scenarios.

xi. In undertaking and executing this assignment, an extreme care and precaution has been exercised. This report is based on the information supplied by sponsors of the project and the list of inventory prepared by our engineer. The values may greatly reduce and differ or vary periodically due to various unforeseen factors beyond our control such as fluctuations in the currencies, replacement values, inflation, local policies and tariffs, poor maintenance, etc.

xii. We have not been provided with any previous record of mortgage etc of any equipment valued therefore we cannot comment on this issue. It should be noted that this valuation is not applicable under liquidation scenario of the business. It is beyond the scope of our services to ensure the consistency in values due to changing scenarios.

APE




General Principles

Market Value This assessment is undertaken in compliance with IVSC International Valuation Application 2 (IVA 2) of the international valuation standards. The valuation of the subject asset is undertaken on the “Market Value” basis of valuation which is defined as:- “The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties have each acted knowledgeably, prudently and without compulsion”.

PHOTOGRAPHS

ASSETS

Mixer – Concrete Batching Plant - 01 Aggregate Storage Bins– Plant - 01

Cement Silos – Concrete Batching Plant - 01 Control Room

APE




PHOTOGRAPHS

ASSETS

Mixer – Concrete Batching Plant - 02 Aggregate Storage Bins– Plant - 02

Cement Silos – Concrete Batching Plant - 02 Compressors

Wheel Loader Weigh Bridge

Appendix II

Middle East Ready Mix Concrete LLC In Dirhams

Projected Statement of Financial Position

31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18

Non-Current assets

Good will 1,038,800 1,038,800 1,038,800 1,038,800

Plant and Machinery 6,552,000 7,309,000 8,216,000 8,923,000

Buildings - Control room, Lab, Security room &

Storage

21,897,000 20,364,000 18,731,000 16,998,000

Furniture & Fixtures 124,640 165,580 204,020 239,960

29,612,440 28,877,380 28,189,820 27,199,760

Current assets

Accounts receivable 15,145,151 26,321,227 28,201,315 30,081,403

Other receivables 225,000 250,000 300,000 350,000

Cash and bank balances 2,125,271 5,526,327 1,493,526 974,649

17,495,422 32,097,555 29,994,841 31,406,052

Total 47,107,862 60,974,935 58,184,661 58,605,812

Shareholders funds

Share Capital 300,000 300,000 300,000 300,000

Loans from Shareholders / Associate companies

31,195,000 31,195,000 18,350,000 6,422,500

Reserves and surplus 1,833,160 11,691,210 22,377,933 34,135,246

33,328,160 43,186,210 41,027,933 40,857,746

Non-Current liabilities

Term Loan 4,281,667 2,446,667 611,667 -

4,281,667 2,446,667 611,667 -

Current Liabilities

Accounts Payable 9,048,035 14,742,058 15,795,062 16,848,066

Other payables 450,000 600,000 750,000 900,000

9,498,035 15,342,058 16,545,062 17,748,066

47,107,862 60,974,935 58,184,661 58,605,812

Middle East Ready Mix Concrete LLC

Projected Income Statement

Dec-15 Dec-16 Dec-17 Dec-18

Production (Qty in M3) 290,000 504,000 540,000 576,000

145,000 42,000 45,000 48,000

Sales (In Dhs) 61,422,000 106,747,200 114,372,000 121,996,800

Cost of Production

Material cost

- Cement 22,610,952 39,296,275 42,103,152 44,910,029

- D.Sand 810,400 1,408,420 1,509,021 1,609,623

- W.Sand crushed 5,451,263 9,473,919 10,150,627 10,827,336

- 10 mm Cr. Agg. 3,434,549 5,969,009 6,395,366 6,821,724

- 20 mm Cr. Agg. 6,189,171 10,756,353 11,524,664 12,292,975

- Superplasticizer 2,785,327 4,840,706 5,186,471 5,532,235

Water 605,133 1,051,679 1,126,799 1,201,919

Factory overheads including labour - - - -

- Electricity 707,500 1,217,880 1,326,510 1,438,998

- Depreciation 3,161,000 3,426,000 3,726,000 4,026,000

- Repairs and maintenance 208,500 260,712 271,544 282,706

- Rent, rates and taxes 480,000 504,000 529,200 555,660

- Labour cost (Direct) 5,052,085 6,721,726 7,057,813 7,410,703

- Insurance - Buildings and Plant & machiney 12,737 12,737 12,737 12,737

- Others 149,000 173,808 181,030 188,471

51,657,617 85,113,223 91,100,934 97,111,115

Gross Margins 9,764,383 21,633,977 23,271,066 24,885,685

Administrative overheads

- Staff cost 2,144,237 2,768,845 2,907,287 3,052,652

- Postage and Telephone charges 84,600 115,920 125,685 136,137

- Electricity and water charges 81,000 85,680 87,394 89,141

- Office maintenenece 83,000 94,500 99,225 104,186

- Rent, rates and taxes 93,360 95,227 97,132 99,074

- Travelling expenses 139,500 178,920 191,835 205,594

- Security guard expenses 192,000 201,600 211,680 222,264

- Consultancy charges 263,500 331,380 353,903 377,849

- Subscriptions 55,000 63,000 66,150 69,458

- Audit fees 24,000 25,200 26,460 27,783

- Insurance 6,000 6,000 6,000 6,000

- Depreciation 32,810 42,810 42,810 57,810

- Miscellaneous expenses 85,000 115,920 125,685 136,137

- Printing and stationery 84,500 115,920 125,685 136,137

3,368,507 4,240,922 4,466,930 4,720,221

Selling and distribution expenses

- Staff cost 350,992 784,945 824,192 865,402

- Fuel expenses & mileage 3,117,500 5,526,360 6,039,522 6,571,000

- Insurance - Trucks and pumps 340,573 371,534 371,534 371,534

3,809,065 6,682,839 7,235,249 7,807,936

Finance cost - - - -

- Interest charges on USD 1.50 Million loan 428,931 467,925 467,925 155,975

- Bank charges - LC, Guarantee and misc 324,720 384,240 414,240 444,240

753,651 852,165 882,165 600,215

Net Profit after depreciation and interest 1,833,160 9,858,050 10,686,723 11,757,313

Profit before depreciation and interest 5,780,621 14,179,025 15,337,698 16,441,338

Bank obligations

Term loan installment - - - -

Bank charges 324,720 384,240 414,240 444,240

324,720 384,240 414,240 444,240

Schedule to Projected Financial statements In Dirhams

31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18

I . Plant and Machinery

- Opening Gross Block (based on val.report) 4,220,000 7,280,000 8,930,000 10,930,000

- Additions made during the year 3,060,000 1,650,000 2,000,000 2,000,000

Total gross block 7,280,000 8,930,000 10,930,000 12,930,000

- Depreciation @ 10% on SLM 728,000 893,000 1,093,000 1,293,000

- Accumulated depreciation 728,000 1,621,000 2,714,000 4,007,000

- Net block 6,552,000 7,309,000 8,216,000 8,923,000

Details of additions made

- One Containerised Ice water plant, One Flake Ice

plant, Mobile Ice Storage, Ice distribution to

batching plant and Ice Weigher

2,750,000 1,350,000

- Water Treatment plant 160,000 -

- Renovation cost - -

- Various items 150,000 300,000 2,000,000 2,000,000

II. Buildings

- Opening Gross Block (based on valuation report) 24,330,000 24,330,000 25,330,000 26,330,000

- Additions made during the year - 1,000,000 1,000,000 1,000,000

Total gross block 24,330,000 25,330,000 26,330,000 27,330,000

- Depreciation @ 10% on SLM 2,433,000 2,533,000 2,633,000 2,733,000

- Accumulated depreciation 2,433,000 4,966,000 7,599,000 10,332,000

- Net block 21,897,000 20,364,000 18,731,000 16,998,000

IV. Furniture and Fixtures

- Opening Gross Block 56,200 131,200 181,200 231,200

- Additions made during the year 75,000 50,000 50,000 50,000

Total gross block 131,200 181,200 231,200 281,200

- Depreciation @ 5% on SLM 6,560 9,060 11,560 14,060

- Accumulated depreciation 6,560 15,620 27,180 41,240

- Net block 124,640 165,580 204,020 239,960

V. Computers and software

- Opening Gross Block 15,000 105,000 135,000 185,000

- Additions made during the year 90,000 30,000 50,000 50,000

Total gross block 105,000 135,000 185,000 235,000

- Depreciation @ 25% on SLM 26,250 33,750 46,250 58,750

- Accumulated depreciation 26,250 60,000 106,250 165,000

- Net block 78,750 75,000 78,750 70,000

VI. Accounts receivable

- Credit Period (In days) 90 90 90 90

- Sales (In Dhs) 61,422,000 106,747,200 114,372,000 121,996,800

- Accounts receivable 15,145,151 26,321,227 28,201,315 30,081,403

VII. Accounts Payable

- Credit Period (In days) 80 75 75 75

- Purchases excluding water (In Dhs) 41,281,662 71,744,681 76,869,301 81,993,921

- Accounts Payable 9,048,035 14,742,058 15,795,062 16,848,066

VIII. Other Payables 450,000 600,000 750,000 900,000

Documents

BUSINESS PLAN- MERM - A Lakegroup Company - AJE.pdf