Business Plan 2015-2017

Table of Contents1.1. Vision mission and values 31.2. Company history and key milestones 41.3 Production facilities 41.4 Technological prowess of the company 41.5 Key management and organization structure 5

Section 2. Business environment analysis 52.1 External assumptions 52.2 Internal assumptions 122.3 Legal and regulatory environment 142.4 Future outlook 15

Section 3. Industry Dynamics 153.1 Market size 173.2 Outlook on raw material and key inputs 173.3 Our market share, product portfolio and key competitors 183.4 Distribution and supply chain dynamics 193.5 Key proposed/upcoming developments in the market 203.6 Key Takeaways 20

Section 4. Strategic growth roadmap and action plans 21 4.1. Where are we today? (How did we fare against our previous budgeted estimates?) 214.2 What are our objectives and their respective action plans for the planning period? 214.3 Key projects and initiatives to be undertaken 22

Section 5. Financial Forecasts and Analysis 23

Section 1.

1.1. Vision, mission and valuesVision:

To be ‘Top Performer of First Choice’ in Galvanizing and Roofing Industries in Nigeria.

Mission: Our performance should be world class. Customers should prefer us. Competitors should admire us. Society and the Government should welcome us. Employees should feel proud in belonging to MIDGAL.

Values: To profitably help our customers succeed by providing them with low cost,

high quality metal building components backed by consistent and reliable service that enables them to be more efficient, flexible and responsive to their customers.

In order to truly make our customers more successful, we focus on: Customer Relationship:

Putting the needs of the customer first. We develop customer relationships based on trust, an orientation to problem-solving, and a desire to help our customers succeed.

Quality Processes:

The product is only as good as our people and the production processes. Hence, we are more efficient, flexible and effective in the manufacture and delivery of our products. We work as a team in resolving customer issues, improving the quality of our product and honouring our due date commitments.

Employee Satisfaction:

Respecting the knowledge, skills, and input of all employees, we enhance teamwork in the organization by listening to each other, communicating and providing feedback, and recognizing the efforts and successes of all employees. Overall, we are committed to encouraging professional staff development.

Supplier Relationships:

Our suppliers are our greatest allies with whom we work together while providing greater involvement for them in accomplishing our mission of being a low cost, high quality manufacturer. The focus of our relationship is to create win-win arrangements that ultimately enhance the satisfaction of our customer.

Work Environment:

Creating a safe, clean, and productive workplace, we provide our people with the tools, facilities, and training to produce quality work and to give sense of pride in their relationship with the organization.

Corporate Social Responsibility

We have a deep sense of social responsibility, thus, we are committed to the support of our local communities in various developmental activities.

1.2. Company history and key milestones1976 – Incorporation.

1979 – 18, 000T capacity (One GALVANISING Plant).

1983 – 8’ x 4’ Line installed (First in Nigeria) (Modification).

1983 – Coil to Coil continuous GALVANISING Line installed (First in West Africa).

1990 – Diversification to production of LP Gas Cylinders – Acquisition of Gas cylinder manufacturing plant.

1993 – Expansion and acquisition of one GALVANISING PLANT AT Aba. By this, Midgal capacity increased to 36,000MT (in various gauges).

– Export of our Cylinder products to ECOWAS Countries commenced.

1997 – Water heaters – Product Added.

1999 – Modernization of Abagal Line (Galvanising line brought from Aba).

2000 – Galvanising capacity increased to 36,000 tonnes p.a. by modernizing of 2nd

Coil to sheet line (Abagal). – New brand “ARISOCRAT” water heater – 50 litres capacity introduced and established in the market.

2003 – Third continuous galvanizing line (CGL3) was commissioned in August, 2003. This is the latest State of Art technology; very High Speed line 120M/minute, the highest ever in Nigeria.

– February, 2003 – Commenced ‘ARISTOCRAT’ – 30 litres water heater Production.

--September, 2003 – Manufacture of Head Pan started at the new cylinder factory location.

--October, 2003 – Developed ‘Stainless Steel’ inner tank water heater.

2004 – Coloured G. I. roofing sheet launched for the first time in Nigeria.

2005 – Commencement of the production of Long span galvanized and galvanised steel roofing sheets and colour coated roofing sheets took off.

2009 – Commissioning of Non – Ox Process Galvanising / ALUZINC LINE.

2009 – 2013 Addition of Roll Forming Lines – 5 Nos. + 1 Trimdeck Forming Line

1.3 Production facilitiesMIDGAL plant facilities and equipment’s are located in mainly two bays (Abagal-CGL3 bay & KY bay) whereas; some Auxiliary units are located by the side of bays.

The major units are: CGL3, Abagal line, 1 x 5 Roll forming lines, 1 x 3 ITA lines, 1 x 3 Barrel corrugators along with Electrical control rooms, weigh scales, chemical & testing laboratory, area repair shops (Mechanical & Electrical), 1 x 3 warehouses, stores etc.

The auxiliary units are: Hydrogen plant, Nitrogen plant, R.O. plant, Cooling towers & pump house, ETP, 2 diesel generators, 2 Gas generators.

Material handling inside the bays by overhead cranes & receiving Raw materials, interbays transfer, finished coils dispatch carried out by 3 no's of forklifts.

1.4 Technological prowess Midgal has always been the leader in Nigeria, to provide best roofing solutions in the Country

Installed NON – OX furnace line - CGL 3.

We can produce material width up to 1220 MM Sheets in colour, thereby giving better effective coverage width, resulting in less number of sheets per square meter.

We are the only company in Nigeria which can produce up to 0.45 MM thick GI.

Utility gas plant (Hydrogen and Nitrogen).

Materials temper can be regulated effectively from Hard, Semi hard to Soft grade as per requirement.

Excellent Zinc adherence.

Finished goods of roll forming line better than Barrel corrugation (most competitors have only barrel corrugation.

Offline dual embossing facilities - Diamond and Stucco

The above mentioned Technological prowess of the company helps the company to improve the quality of the product and maintain its market share

1.5 Key management and organization structure

Board of Directors:

Chief A. O. Abudu, OFR

Mr. Adebowale Abudu

Mr. Adetokunboh Abudu

Chief (DR) J C Dugad (Indian)

Mr. Rashmi Chandaria (British)

Mr. Rohit Chandaria (British)

Mr. M P Singh (Indian)

Mr. Pradyot Mukerji(Indian)

Auditors:

MGI Alabi Ekundare, (chartered Accountants)

2A, Montgomery road, Yaba, Lagos, Nigeria

Secretaries:

Hasec Nominees Limited

2A, Montgomery road, Yaba, P.O. Box 4542, Lagos, Nigeria

Shareholding Pattern:

Ordinary shares of Naira 1 each

Serial Number Name of the Shareholder Percentage holding Number of Shares

1 Clovis Metal Inc 58.85% 41,31,00,0

00

2 Olabopo Holding Limited 39.23% 27,54,00,0

00

3 Midgal Staff Share Trust 1.92% 1,35,00,0

00

Total 100.00% 70,20,00,0

00

Section 2.Business environment analysis

2.1 External assumptionsa. Economic Outlook

Total Area: 923,768m²Land Area: 910,768m²Water Area: 13,000m²Population: 170 million (Est)Population Growth: 2.5%GDP Growth: 6.5% (2014)Headline Inflation: 8.3% (2014 )Main Forex Earners: Petroleum & Petroleum Production-95%, Cocoa & Rubber

FDI Inflow: US $5.6 BillionPolitical Scenario: Stable

Political Context Outgoing President Goodluck Jonathan served as Nigeria's president between

6 May 2010 and 16 April 2011, when a new presidential election in Nigeria was conducted. Jonathan of the PDP was declared the winner on 19 April 2011, having won the election with a total of 22,495,187 of the 39,469,484 votes cast, to stand ahead of Muhammadu Buhari from the main opposition party, the Congress for Progressive Change (CPC), which won 12,214,853 of the total votes cast. The international media reported the elections as having run smoothly with relatively little violence or voter fraud, in contrast to previous elections.

However, in the recently concluded March 2015 election, Muhammadu Buhari defeated Goodluck Jonathan by roughly 2 million votes. Observers generally praised the election as being fair. Jonathan was generally praised for conceding defeat and limiting the risk of unrest.

The main thrust of incoming administration’s agenda led by President elect Muhammadu Buhari is to tackle corruption head on as a long history of economic mismanagement and corruption has continued to impact negatively on the prospects and fortunes of the country.

Economic Overview: Performance and Outlook

Gross Domestic Product was 6.21% in the opening quarter of 2014. At 6.54%, second quarter growth was 0.33% in absolute terms higher than

that of the first The third quarter, relative to the second quarter, saw a slight slowdown in

growth, of 0.32% in absolute terms to 6.23%.

5.314.21

5.496.21 6.54 6.23 5.97

0.00

2.50

5.00

7.50

2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 E

NIGERIA GDP ANNUAL GROWTH RATEPERCENTAGE CHANGE IN GROSS DOMESTIC PRODUCT

SOURCE: NATIONAL BUREAU OF STATISTICS

The Nigerian economy is facing challenges which seem to occur just about every decade: a decline in crude oil prices. As the country is an oil exporter, the decline in crude oil prices is a downside to the economy in both the short and medium term.

In addition to declining crude prices, the Nigerian economy is faced with other headwinds; as a result of declining crude oil prices, the supply gap in the foreign exchange market is likely to increase as the demand for dollars outpaces supplies, putting pressure on the Nigerian Naira.

As in the past, the CBN is likely to intervene to achieve its mandate of price stability, but this will come at the cost of depleting reserves.

Again, while the risks to growth do pose challenges, the Federal Government via its Economic Management Implementation Team had anticipated, discussed, and formulated policies with the view of a negative price shock on crude oil prices, some of which had been rolled out by the Coordinating Minister of the Economy during their 2015 budget presentation;

Shoring up non-oil revenues by increasing the tax base

Cutting back on government expenditures.

The crude oil price shocks, the resulting declining government expenditure and its multiplier effects are likely to impact businesses as well.

Nevertheless, prioritization of infrastructure such as roads and power are likely to mean that while growth may slow, it is likely to be stable.

While growth is expected to peak at 6.5 percent in 2014, the economy is expected to grow by 5.5 percent in 2015, as the non-oil sector of the economy is expected to drive growth. Over the 2015 through 2017 period, growth is expected to average 5.7 percent.

Sectors contributing to Nigeria’s GDP:

The non-oil sector continued to drive growth in the Nigerian economy throughout 2014.

Within the non oil sector, the Services Sector remains the key driver with 53.20%, 58.13% and 55.59% of growth in quarters one, two and three respectively attributable to this sector.

The industrial sector followed with 31.39% of growth in quarter one, 28.66% in quarter two and 28.18% in quarter three.

The remaining was driven by agriculture, which peaked in Q3, driving 18.23% in growth

AGRICULTURE

Despite the unrest in the North Eastern part of the country, Agricultural output remained strong in 2014

Agriculture is comprised of the four sub-activities of Crop Production, Livestock, Forestry and Fishing. The largest activity in the Agriculture sector is Crop Production. It was also the main driver of growth of the agricultural sector, contributing 85.39%, 85.91% and 90.13% to growth in quarters one, two and three respectively.

The fastest growing of the sector activities however was fishing, which exhibited growth of 8.40% in the opening quarter of 2014, dipping 3.52% in absolute terms to 4.89% and increased to 6.72% growth in quarter three.

INDUSTRY

The industrial sector had a more erratic output than the other sectors, partially due to electricity output, and the need to import key manufacturing inputs.

The growth rate in 2014 largely reflects the irregular output in 2013, which became much more consistent in the following year.

Analysis of growth year on year shows ups and downs in industrial output during the year; from a rate of 4.84% in the opening quarter, and it increased to 8.97% growth in Q2, followed by a decline to 5.43% growth in the third quarter. Yet, average growth in quarters one to three in 2014 was 6.41% as against 0.87% in the same period of 2013.

The largest component of the Industry sector is Crude Petroleum and Natural gas. Other prominent components of the Industrial sector were Food, Beverages and Tobacco, Construction, Textiles, Apparel and Footwear.

SERVICES

The services sector continued to dominate GDP structure.

Trade was the greatest driver of year on year growth the services sector, telecommunications.

INFLATION

In 2014 Headline Inflation opened at 8.0%, and remained below or equal to this figure until June.

(SOURCE: NATIONAL BUREAU OF STATISTICS)

The Naira

Naira was devaluated from 158 to 168 per USD during November 2014. It was further devaluated to 198 during February 2015. The US Dollar increased to 199.05 Nigerian Naira in May 2015 from 198.85 in April of 2015. USD is now between Naira 197 – 200. The Nigerian Naira averaged 125.17 from 1960 until 2015, reaching an all time high of 204 in February of 2015 and a record low of 0.53 in September of 1980.

                                                 

b. Market size Overall roofings market size of Nigeria in 2015 is estimated to be 300,000

MT.

c. Competitors The competitors of Midgal are as mentioned below along with their market share:

Midgal (17%), Aarti (17%), Wempco (21%), MINL (11%), RSP (10%), Primlaks (4.7%), ABM/PMP (2%), KamRoof (13%), Olak (1%), Imports (3.3%)

d. Technology

Non – Ox Galvanizing line Roll forming lines Off line Dual Embossing - Stucco and Diamond.

e. Industry demand

The building and construction industry is a leading driver of economic development in a country. This is basically due to the fact that almost all other sectors of the economy in one way or another depend solely on the products and services of the construction industry in order to carry out their operations.

Nigeria has the potential to be one of the biggest building and construction markets in the world.

While the world was struggling to emerge from the global economic collapse a few years ago, Nigeria’s construction industry grew fast and is likely to grow astronomically over the next decade, according to forecasts made in a June 2010 report by Global Construction Perspectives and Oxford Economics.

The report found that Nigeria’s population of 170 million is urbanising at one of the fastest rates in the world.

The following are pointers to the fact that the construction industry is receiving a major boost.

- Massive demands for buildings across all sectors of the economy.- Recent focus on infrastructural development by federal and state

governments.- The adoption of privatization and commercialization as

instruments of federal government policy.- The tightening of regulations relating to how business is done in

Nigeria. Nigeria’s surge in the construction sector comes despite some major

obstacles: - Corruption and government bureaucracy.- Poor existing infrastructure. - Shortage of skilled man power- Difficulties in the procurement of plants and equipment- Inadequate capital for execution of projects

- Lack of training and development institute that can help to sharpen the skills and ability of construction workers

Unfortunately its contribution to the Nigerian GDP and employment of labour is still very low compared to what is obtainable from other developed Nations.

But these will soon rise because of the recent focus of government to investments on infrastructural developments which are currently attracting foreign investors with the attendant benefit of increase in construction activities.

f. Products and services Galvanised Iron Roofing Sheets and Coils- Plain And Embossed Finish. Pre-Painted Galvanised Iron Roofing Sheets and Coils- Plain And Embossed

Finish. Pre-Painted Aluminium Sheets and Coils – Embossed Finish

- Sheets are available in:1. Standard colours and profiles (Corrugated, Trimdek, Metral,

Steptiles, Metcoppo) and surface finish (Plain, Diamond embossed and Stucco embossed)

2. Normal Span, Long Span and Wide Span Installation and Maintenance Potential to supply ALUZINC products

g. Pricing

Due to stiff competition, the Galvanised Iron Roofing Sheet market in Nigeria is very price sensitive. Therefore all manufacturers keep within the same price band, as dealers tend to patronise suppliers who offer lowest.

Also, there is a seasonal trend to pricing. Peak season for the market, when prices reach the highest, is experienced between December and June. Thereafter, a steady price decline is experienced between July and

November occasioned by reduced demand engendered by the rainy season.

However, we have a range of value added products which attract 11% higher prices than standards products as competition is less severe.

h. Suppliers and Distribution Our products are distributed throughout the country through direct and

indirect channels

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( ) DEALER NETWORK -(OVER 70 DIRECT DEALERS)

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* DEPOTS - (6 NOS)

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STATE CAPITALS

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Supply and distribution is carried out through the following channels:FACTORY

WHOLESALER

RETAILER(Wholesaler is responsible for transportation and other logistics)

For PPG.I products however, supplies are made directly to wholesaler, retailers and end users.

i. Availability of human resources – Trained and Skilled manpower is hard to source.

Retaining skilled people is also a challenge.

j. Logistics

There are ample transporters available in Nigeria both for domestic and export consignments. However, the cost of transportation is high.

Few of our competitors are now maintaining their fleet of trucks by which they deliver to their customers.

We get CRC from Midland Rolling Mills through Contract transporter. Tolling GI sent for colouring and PPGI receipt are both through contract transporter. From plant to depot, Goods are transferred through approved contract transporters.

All of our customers take delivery of material through their own transport arrangements.

k. Raw material availability and pricesOur major raw materials are Zinc Ingots and CR Coils. We maintain a steady supply chain of 25-45 days lead for Zinc Ingots supplies from Ms Pritt & Co Ltd and Metma, both in UK. Raw materials are readily available based on current LME prices.

CR Coils are solely sourced from our sister company, M/s Midland Rolling Mills Ltd, Abeokuta. Much stock is not often kept as we enjoy JIT inventory system, given the short distance of few hundred metres between both factories. This implies that we do not incur attributable holding cost.

Normal CR Coils from MRM (2 days stock) is available on 2 days lead time. Special order CRC from MRM (stock based on order) is available on 7 days lead time. Zinc and alloy imports (2 Months stock) – 2 – 3 Months lead time. CRC prices are regulated by MRM LTD in proportional to international CRC & HRC price . Zinc and Alloy as per LME price index.

L. Lenders and prevalent borrowing rates

The current lenders are as follows:

1. Diamond Bank PLC2. Guaranty Trust bank PLC3. Zenith Bank PLC4. First Bank of Nigeria 5. Union Bank of Nigeria PLC6. Access Bank PLC

Effective borrowing rates for USD is between 4.18% to 7% and for Naira loan is between 20% and 21%.

2.2 Internal assumptions

a. Unique Selling Proposition Highest Line speed. Produces widest (1200mm) and thickest (0.40mm) sheets. Operates a Non – Oxidation Furnace. Most sophisticated galvanizing technology in the industry Best quality finished products for the end user. Standard organization of Nigeria quality seal of approval

b. Customer Satisfaction-We strive to supply all range of goods competitively and on real time basis

c. Relationship Management:

With Employee

We respect the knowledge, skills, and input of all employees. We enhance teamwork in the organization by effective feedback

mechanism We recognize the efforts and successes of all employees. Overall, we are committed to encouraging professional staff

development.

With Supplier

Our suppliers are our greatest allies with whom we work together while providing greater involvement for them in accomplishing our mission of being a low cost, high quality manufacturer.

The focus of our relationship is to create win-win arrangements that ultimately enhance the satisfaction of our customer.

With Customer

Our interaction has developed around mutual trust, an orientation to problem-solving and a desire to help them succeed.

d. Brand Image Corporate brand image of MIDGAL has garnered familiarity in the

market for over 3 decades. Our product main brand is MIDGAL SIMBA. Along with a portfolio of product sub brands, viz

e. Existing bottlenecks in operations Unavailability of major spares in Nigeria Quality of locally procured spare always in question Spare and consumables imports lead time OEM supplier assistance not available for capital maintenance of

equipment. Lack of Quality trained manpower

f. Talent acquisition

Many of the employees working in Midgal have spent their entire professional career in the company.

However when it comes to skilled manpower the quantity of such professionals are very few in the country and they demand very high salary which usually exceeds Midgal criteria.

These people work for a few months / years at the salary which Midgal prescribes and then leave the company either to work in a higher paying company or to work as a free lancer.

g. Training Training and development department has been set up at Midgal, who

are in the process of designing a training program for the employees.

However a training calendar for each employee needs to be put in place right from an unskilled worker to the Business Head every year.

In house training of local staffs for equipment handling and process techniques, Safety at work place, firefighting and environment friendly operation techniques – training module is prepared by external Professional agencies . Local trained staffs are handling training independently.

h. Management information and IT systems To utilize SAP potential fully for timely and efficient MIS

To develop and train people on SAP module.

Reconciliation and input output balancing is done through SAP

2.3 Legal and regulatory environment

a. Import and export restrictions pertaining to raw materials and finished goodsFederal Government ensures that all importations are in line with the regulatory frame work and fiscal policy measures. The Nigeria Customs Service issue import tariffs and regulated by both the Federal Ministry of Finance and the Central Bank of Nigeria. These are subject to amendments via circulars based on the direction of the economy per time.

b. Govt. regulations and policies concerning our products

There is no regulation exclusively for our product. Our products portfolio is authorised and approved by Standard Organisation

of Nigeria. Close follow up and implementation with SON for materials standards and

specifications.

c. Legal loopholes in the system that affect our businessPeople try to find out ways to use loopholes in the system, which are used by them to import the material. Imported materials competing with our Company's products are brought illegally as if brought through normal channel by paying duty, it becomes unviable.

d. Environmental and social regulation/concerns Social:

With the new change in government, we expect a significant change in policies framework and directions which will aim towards sanitizing the economy. One of the cardinal policies of the new government is improved Power Generations and supplies. This will allow a multiplier effect because all the manufacturing operations are significantly contingent upon steady power supplies.

2.4 Future outlookGross Domestic Product

Analysis of previous historical trends of Nigerian economic growth show that the economy has been largely supported by non-oil growth, as a result of domestic oil supply shocks.

The Outlook for the economy in 2015 and beyond is even more complicated, in light of declines in crude oil prices.

While this on one hand creates risks to the economy, these declines in prices give the Nigerian government the opportunity for some potential savings as payments subsidies on PMS and other refined products may be diverted into more productive aspects of the economy as currently done with the Subsidy Reinvestment Program (SUREP).

Outlook for the Fourth Quarter of 2014 growth is projected to be 5.97 percent, and is to be supported by non-oil growth which is expected at 7.01 percent, while oil-growth is expected to be lower at -4.1 percent.

In 2015, the economy is expected to grow by 5.54 percent, again supported by growth outside the oil sector.

This is also to be sustained by structural reforms by the Federal Ministry of Finance with initiatives such as the creation of the Nigerian Mortgage Refinance Company to support the Building and Construction Sector; Policies to support the Agricultural Transformational Agenda, such as the a N50 billion Farm Mechanization Support Fund set up by the Central Bank to establish 1,200 agricultural equipment hiring enterprises.

All these and more are policies aimed to counter the cyclical effects. Non-public investment decisions, which were put on hold during the first quarter of the year as a result of the then upcoming elections, are likely to be firmed up by the second quarter, will provide further support for growth.

And a reprioritization of capital expenditure by the Federal Ministry of Finance is likely to provide support for growth to reach 5.78 percent in 2016 and 5.80 in 2017.

5.314.21

5.496.23

5.54 5.78 5.80

0.00

2.50

5.00

7.50

2011 2012 2013 2014E 2015E 2016E 2017E

REAL GDP GROWTH YEAR ON YEAR

SOURCE: NATIONAL BUREAU OF STATISTICS

Inflation

The source of the upward pressure on inflation came from the devaluation of the Naira, which occurred in November 2014 and February 2015.

The impact of the depreciation has been felt in the first half of 2015.

Prices are likely to stabilize by the end of the year as a result of administrative measures by the CBN, in addition to ample food supplies when the harvest kicks in early in the second half of the year.

10.8312.22

8.50 8.05 8.78 8.10 7.52

0.002.004.006.008.00

10.0012.0014.00

2011 2012 2013 2014E 2015E 2016E 2017E

INFLATION

SOURCE: NATIONAL BUREAU OF STATISTICS

Trade

While exports are expected to be positive in the near term, the impact of declining crude oil prices is likely to result in a decline in the value of oil exports, over the forecasted period.

The recent depreciation of the Nigerian Naira is expected to result in cheaper prices of non-oil exports, resulting in a boost. Finally, the recent depreciation is expected to weigh on imports as while imports may grow, they are likely to grow at a slower rate compared to historical values.

Section 3. Industry Dynamics3.1 Market size

2015 2016 2017 CAGR

(MT) EST (MT) EST (MT) EST %

PLAIN G.I NIGERIA 245,000 255,600 266,000 4

PP G.I NIGERIA 55,000 59,400 64,000 8

TOTAL NIGERIA 300,000 315,000 330,000

NAME OF PRODUCT

MARKET SIZE FORECAST

PLACE

3.2 Outlook on raw material and key inputsa. Current raw material sourcing strategy and current pricing

CRC from MRM- 2 days processing stock based on consumption and lead timeZinc and Alloy imported- 2 months stock based on consumption and lead time

b. Availability of raw material in the future and pricing forecasts, along with necessary reasons/assumptions for the sameThere is no availability issue as on date. Raw Material is readily available from Midland Rolling Mills Limited. Pricing is discussed and negotiated between the two downstream companies. Pricing is reflective of pricing trends in the GI market.Zinc and Alloy pricing is based as per LME price index, there is no availability issues and same in expected in future.

c. Availability of skilled/semi-skilled labour in the market and prevalent cost incidenceMidgal is a well-respected Employer and no significant issues are seen with sourcing semi-skilled Labour. Challenges will continue to exist for some years with sourcing Technical/Engineering professional labour but Midgal intends to mitigate via University attachment and Graduate Training programmes.

It is likely that the cost of labour will continue to increase at between 8-10% per annum through the BPP cycle. This is incorporated in the Budget. A significant increase in LTD spend has been budgeted in line with Group LTD programme and planned activities.

3.3 Our market share, product portfolio and key competitors

Our Market Share and Key Competitors

Midgal42,500

17%

Aarti46,350

19%

Wempco50,000

20%

MINL20,800

9%

RSP19,500

8%

Primlaks15,840

7%

ABM/PMP8,010

3%

KamRoof39,000

16%

Olak3,000

1%

Others0

0%

2015MARKET SIZE G.I - 245,000mt

COMPANYWISE SHARE

Our Product Portfolio for the Year 2015

Midgal8,50016%

Aarti4,500

8%

Wempco14,000

25%MINL

13,50025%

RSP4,500

8%

Primlaks0

0%

ABM/PMP0

0%

KamRoof0

0%

Olak0

0%

Others10,000

18%

2015MARKET SIZE PPG.I - 55,000mt

COMPANYWISE SHARE

BUDGET % of TOTAL

27,115 55.8%

3,368 6.9%

2,102 4.3%

766 1.6%

2,356 4.8%

2,785 5.7%

3,621 7.4%

120 0.2%

80 0.2%

1,305 2.7%

2,069 4.3%

48,601 TOTAL (MT)

2,912 6.0%NON PRIME

0.15 X 755- COATED COILS

0.23/0.25 X 1000- COATED COILS

GI Sheets-34G * 1000-exports

GI -EMBOSSED COILS-.15MM

PPGI Sheets-0.15MM -Embossed

GI Sheets-34G *.20X 1000-Domestic

PPGI Sheets-0.15MM -Plain

GI Sheets-36G-.15MM -ITA

GI -EMBOSSED Sheets-.15MM

GI Sheets-36G-.15MM

GI Sheets-35/34G

PRODUCT MIX

3.4 Distribution and supply chain dynamics

a. Logistics We maintain three strategically located Depots in the North and East for

closeness to far fling markets.

Sufficient finished goods stocks are maintained at these depots to satisfy mostly retail and end use.

b. Raw material suppliers and lead timeNormal CRC from MRM – 2 days lead timeSpecial order CRC from MRM – 7 days timeZinc and Alloy – imported

4 months lead time

c. Distribution network All sales transactions are done ex Works, Abeokuta, and ex Depot as the

case may be.

d. Customer delivery systems All customers collect material on Ex-Works basis.

3.5 Key proposed/upcoming developments in the market The construction industry is expected to receive a major boost. The

following are pointers to this fact:- Massive demands for buildings across all sectors of the economy.- Recent focus on infrastructural development by federal and state

governments.- The adoption of privatization and commercialization as

instruments of federal government policy.- The tightening of regulations relating to how business is done in

Nigeria.

3.6 Key Takeaways

Increase of number of domestic competitors and imports forcing drop in prices and impacting bottom lines.

Need to look at more products and alternate channels to increase sales

Regulatory/policy change that will positively affect our business

o Strict enforcement of duty regimes payable on imported material, both raw material and finished goods.

Section4. Strategic growth roadmap and action plans

4.1. Where are we today? (How did we fare against our previous budgeted estimates?)

4.2. What are our objectives and their respective action plans for the planning period?

58,780

50,030

48,601

60,000

54,140

40,000

50,000

60,000

70,000

12013 (B) 2013 (A) 2014 (B) 2014 (A) 2015 (B)

SALES (MT)

8.6%Gr YoY

(16.6)%Gr YoY

TO FOCUS ON AND ACHIEVE GROWTH IN HIGH VALUE PRODUCTS AND SOLUTIONS

Increase Revenue Sustain Profitability

Develop Workforce Skills through effective training

Improve upon PerformanceManagement

To increase Workforce Quality and Productivity

Increase reach of Distribution

Increase Customer Satisfaction

Cut down on Wasteages

Increase Market Share

Increase PP G.I Sales Volume

Increase Coil Sales Volume

Increase Widespan Sales Volume

Improve Working Capital Management

PEO

PLE

AND

CAPA

BILI

TIES

FIN

ANCE

CUST

OM

ERS

Strategies to grow and enhance the Market share in PP G.I Roofing:

Objective: “To achieve sales target of 9,200 MT of PP GI in 2015.”

The table shows region-wise analysis of the growth we plan to achieve in 2015.

2013 ACTUALS

2014 ACTUALS

2015 BUDGET

East 1640 921 1,200 279 30

North 2435 2,492 3,300 808 32

M-Belt 335 640 850 210 33

South 2245 1,990 3,700 1,710 86

Export 67 150 83 125TOTAL 6,655 6,109 9,200 3,091 51YoY Growth -8.21% 50.61%

REGION YoY Growth in MT

YoY Growth %

VOLUMES IN MT

The various strategies which we shall adopt to achieve the growth, along with the action plan, is as follows:-

Strategy Action Plan Timeline

Market Development

Seek out roll forming units in the South and North hitherto dependent on Aluminum and imported PP G.I Coils in order to supply them with narrow width coils Full utilization of our roll forming machines at our Kano Depot to bring the finished product closer to the market

On Going

Full utilization of our roll forming machines at our Kano Depot to bring the finished product closer to the market Q3, 2015

Market Intelligence

Tracking of Competitor activities and keeping close watch on their pricing to ensure our price is in line with the market On Going

Stock Sufficiency

Stock out situations to be avoided. Efficient planning and inventory management. On Going

Renewed Focus on Business Partners

Regular meet with Carpenters and Roll Formers Operators As per plan

4.3 Key projects and initiatives to be undertakenCGL 3 up gradation and conversion into Alu - Zinc Line – Planned after installation of new CGL and Colour Coating Line

New CGL cum CCL Line – was planned in 2014. BOI soft loan was also sanctioned. But due to policy change by Federal Govt, could not be disbursed, so it is temporarily postponed.

HUMAN RESOURCES

MIDLAND GALVANISING PRODUCTS LIMITED, ABEOKUTASTAFF STRENGHT AS AT MAY, 2015

DEPARTMENTEXPATRIAT

EMANAGER

SSENIOR

SJUNIOR

SSNR. TR.

JNR. TR.

W/ASST.

TOTAL

MANAGING DIRECTOR 1 0 0 0 0 0 0 1EXECUTIVE DIRECTOR 1 0 0 0 0 0 0 1GENERAL MANAGER (C&P) 1 0 0 0 0 0 0 1A. PRODUCTION                GENERAL MANAGER (WORKS) 1 0 0 0 0 0 0 1GALVANISING 1 0 5 5 0 2 9 22CORRUGATING, H/KEEPING & I.T.A 0 0 1 3 0 0 34 38EXIT LINE, ENTRY LINE & LOGO 0 0 0 5 0 2 7 14CRANE/FORKLIFT 0 0 0 4 0 0 5 9W/BRIDGE 0 0 0 1 0 0 0 1PROD. CLERK/P.P.C & Q.C 0 0 2 0 0 1 3 6FINISHED GOODS/W/HOUSE 1 0 1 3 0 0 3 8                 B. MAINTENANCE                

MECHANICAL 0 0 1 6 1 2 1 11ELECTRICAL 1 0 2 7 1 0 2 13GAS STATION 0 0 0 1 0 0 1 2UTILITY 0 0 0 5 0 0 0 5                 C. STORES                RAW MATERIALS/STORES 0 0 0 3 0 0 1 4                 D. ADMINISTRATION                GENERAL 0 1 1 2 0 0 3 7SECURITY 0 0 0 2 0 0 1 3DRIVERS 0 0 0 9 0 0 0 9                 E. PURCHASE 0 1 0 2 0 0 0 3                 F. ACCOUNTS 0 1 3 0 4 0 0 8                 G. MARKETING/SALES/EXPORTS 1 1 4 0 2 0 0 8                 H. COMPUTER/S.A.P 0 0 1 1 0 0 2 4                 TOTAL MIDGAL 8 4 21 59 8 7 72 179                 I. LONGSPAN 1 0 1 0 1 0 2 5                 J. METAL CAN 1 0 1 5 2 3 17 29                 GRAND TOTAL 10 4 23 64 11 10 91 213

There are no major vacancies in the Plant. Major issue is of making casual labour work under contract arrangements which will bring more discipline in overall plant operations.

Section 5: Financial Forecasts and Analysis

5.1 Financial Performance Snapshot     

As per attached template

5.2 Income Statement As per attached template

5.3 Balance Sheet

As per attached template

5.4 Cash FlowAs per attached template

5.5 Ratios As per attached template

5.6 Capex Expansion

MIDGAL DEPARTMENTAL

ORGANOGRAM/SPAN OF CONTROL

FACTORIES LINES

General Manager Mr. R.K. Singh

Stores&

Local Purchas

e

Electrical Vikas Taya

MechanicalVikas

Taya

Warehouse Kanike Prasad

Elect Engr.

3

Technician8

Production Sujit Kumar

Mech Engr.

1

Elect Engr.

1

IT 1

Junior Personn

el4

EDP/MIS

Oyeyinka Foluso

Prod Engr.

8 Technici

an7

Crane Operator

1

Factory Operativ

es7

LONGSPAN DIVISION

ORGANISATION AND SPAN OF CONTROL

Technical Manager Long span Roofing

Mr. Mahesh Kumar Patil

Prod Engr.

3

Sales Supervis

or2

Security Supervis

or1

Driver Regular

1

AccountsAccounts

clerk2

Factory Operator

1

Driver on

Contract 11