Brief History of KMPF

Kaliti Metal Products Factory (KMPF) was established in 1968 with the objective of producing structural and furniture hollow sections, door and window frame profiles, EGA and ribbed sheets for roofing & wall cladding, pressed and plain sheet metal products and other job order metal products.

Location
The factory is located on the main road to Debrezeit, 20 Kms away from the center of Addis Ababa (capital). It occupies a total land area of 99,400 square meters.

Vision
To play leading role in Metal sector by manufacturing quality metal products, equipments & machineries and export abroad in addition to satisfying the local demand.

Mission
KMPF aspires to become the leading enterprise by providing its customers high quality metal products at a competitive price with the sense of responsibility to support the national economy.

Production and Marketing

The factory uses imported steel sheets in coils as its major input to produce standardized and job order metal products. The factory distributes its high quality and dependable products to the local market from the factory premises and through its branch sales centers located in Teklehaimanot area (Addis Ababa),Adama and Hawassa.

Address Addis Ababa Administrative Region Akaki-Kaliti Sub-city Kebele 09 City Addis Ababa Country Ethiopia Postcode 5751 Telephone 4340110/4340387/4340162 Fax 4341013 Sub City Kaliti Akakai Kebele 9 Business Type Public Contact OwnerRecommendPrintVisit

Kaliti Metal Products Factory in Ethiopia, produces structural and furniture hollow sections, door and window frame profiles, EGA and ribbed sheets for roofing & wall cladding, pressed and plain sheet metal products and other job order metal products.

The objective of the factory is to design & manufacture various cold formed profiles and sections, such as Hollow sections, Door & Window profiles, EGA & pressed sheets, welded structures, and other products as per customers design and to sell its products in domestic and foreign market directly or through agents and to render services like cutting, slitting and press work in Ethiopia.

Types of Products: Black Square, Rectangular and Circular Hollow Sections. Secco and LTZ Door & Window Profiles. Pressed Products. EGA sheets for roofing and wall cladding. Plain & Fine Corrugated sheets. Dixon shelves, formworks and industrial cable tray. Truss, Purlin , Door and Window. Water, fuel and garbage tanker. Mobile field cooker. Assembling/Erection of products on site Other Products as per customer's design.

Kaliti Metal Products Factory (KMPF) was established in 1968 by an Italian Investor Mr. Riso Sporando, as major share holder jointly with other share holders with an initial capital of birr 500,000.

In 1976, KMPF was nationalized by the Derg regime and became part of the National Metal Works Corporation (NMWC).

The factory was re-established as a public enterprise by the Council of Minister's Regulation No. 54/1992 effective from November 10, 1992 in accordance with the provisions of Public Enterprise Proclamation 25/1992.

Total working capital of the factory is more than birr 250 Million.

Telephone

Factory (Head Office): 00251-114-340162 Chief Executive Officer

00251-114-340110 PBX 00251-114-340387 Purchase & Property Administration

Executive Officer 00251-114-342410 Sales 00251-114-341013 FAX 00251-114-340355 Planning & Finance Executive Officer 00251-114-341058 Market research, Production & Sales

Executive Officer 00251-114-340509 Human Resource Management Executive Officer 00251-114-349749 System Improvement Executive Officer 00251-114-343943 Internal Audit Executive Officer 00251-114-340110 Information System & Communication

Executive Officer Branches: 00251-111-570785 T/Himanot 00251-462-206203 Hawassa 00251-221-126061 Adama

Address Addis Ababa Administrative Region Akaki-Kaliti Sub-city Kebele 09 City Addis Ababa Country Ethiopia Postcode 5751 Telephone 4340110/4340387/4340162 Fax 4341013 Sub City Kaliti Akakai Kebele 9 Business Type Public Contact OwnerRecommendPrintVisit

Kaliti Metal Products Factory in Ethiopia, produces structural and furniture hollow sections, door and window frame profiles, EGA and ribbed sheets for roofing & wall cladding, pressed and plain sheet metal products and other job order metal products.

The objective of the factory is to design & manufacture various cold formed profiles and sections, such as Hollow sections, Door & Window profiles, EGA & pressed sheets, welded structures, and other products as per customers design and to sell its products in domestic and foreign market directly or through agents and to render services like cutting, slitting and press work in Ethiopia.

Types of Products: Black Square, Rectangular and Circular Hollow Sections. Secco and LTZ Door & Window Profiles. Pressed Products. EGA sheets for roofing and wall cladding. Plain & Fine Corrugated sheets. Dixon shelves, formworks and industrial cable tray. Truss, Purlin , Door and Window. Water, fuel and garbage tanker. Mobile field cooker. Assembling/Erection of products on site Other Products as per customer's design.

Kaliti Metal Products Factory (KMPF) was established in 1968 by an Italian Investor Mr. Riso Sporando, as major share holder jointly with other share holders with an initial capital of birr 500,000.

In 1976, KMPF was nationalized by the Derg regime and became part of the National Metal Works Corporation (NMWC).

The factory was re-established as a public enterprise by the Council of Minister's Regulation No. 54/1992 effective from November 10, 1992 in accordance with the provisions of Public Enterprise Proclamation 25/1992.

Total working capital of the factory is more than birr 250 Million.

Telephone

Factory (Head Office): 00251-114-340162 Chief Executive Officer

00251-114-340110 PBX 00251-114-340387 Purchase & Property Administration

Executive Officer 00251-114-342410 Sales 00251-114-341013 FAX 00251-114-340355 Planning & Finance Executive Officer 00251-114-341058 Market research, Production & Sales

Executive Officer 00251-114-340509 Human Resource Management Executive Officer 00251-114-349749 System Improvement Executive Officer 00251-114-343943 Internal Audit Executive Officer 00251-114-340110 Information System & Communication

Executive Officer Branches: 00251-111-570785 T/Himanot 00251-462-206203 Hawassa 00251-221-126061 Adama

INVITATION TO BID
Bid No. 014/2000 Issued By Kaliti Metal Products Factory Bid Doc. Price Birr 50.00 Published Date June 1, 2008 Opening Date June 24, 2008 Remarks Bid Category Multiple Request Description KALITI METAL PRODUCTS FACTORY invites eligible and competitive bidders for the supply of: 1. Various Types of Bearings 2. Various Types of machine spare parts 3. hydraulic oil pumps

4. Couple of shearing Blade and others. All interested bidders may obtain bid document against non-refundable payment of Birr 50. From Commercial Department. Bids must be accompany by bid bond of 2% of the total offered value in CPO Cheque or Commercial Bank of Ethiopia guarantee letter issued in favour of the Factory. Tender closing date is June 24th, 2008 at 10:00 A.M. and opening is on same date and time in the presence of the bidders or their representatives. The Factory reserves the right to reject all or part of the bid. KALITI METAL PRODUCTS FACTORY TEL. 434 01 10 Or 434 03 87 FAX. 251 1 434 10 13

Steeling Ethiopias Metal Industry

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Sissay Tesfaye, 44, is the owner of Best Plastic Factory and Walia Steel Industry Plc, which he established 12 and four years ago, respectively. He is also president of the Ethiopian Association of Basic Metals and Engineering Industries (EABMEI). On August 28, 2010, he attended the meeting between Prime Minister Meles Zenawi and manufacturers. The government would do everything in its power to formulate policies that favor the local manufacturing sector, particularly the basic metal and engineering sector, Meles said during the meeting. The policy measures would include financial ones. A few days later, the Birrs devaluation by 20pc was announced. Asked if he thought Meles made the promise deliberately to prepare the industry for any possible shock over the devaluation news, Sissays immediate response was to laugh from the heart. We import a lot of capital goods, he then said. It will make investment difficult. Our working capital will also increase by 20pc. The steel industry is made up of basic metal manufacturing companies and the engineering sector. The basic metal industry produces two categories of products: long and flat. Long products include reinforcement bars and tubular sections and wires, while flat products comprise LTZ profiles and various sheets: such as steel (lamera), corrugated, and EGA. The engineering sector consists of manufacturers of doors and windows, tankers, vehicle bodies, truck trailers, spare parts, and machinery like concrete mixers and vibrators. Although iron ore is believed to exist in Ethiopia, it is not mined in the country. Bars and billets are produced from iron ore, coiled wire rods, from which nails are made, and coiled sheets are imported as raw materials. The only locally available raw material in the country is scrap metal, which the factories buy for between 2.80 Br and 3.20 Br a kilogram. It is smelted and converted into bars and billets. The bars are used to produce spare parts and simple machines like concrete mixers and vibrators.

The billets are used to make reinforcement bars. The highly automated industry is capital intensive. Mame Steel Mill Plc, which offered Fortune a rare visit to the interior of its manufacturing plant, boasts the latest Italian machinery on the market, according to Betru Woldehana, deputy general manager. It produces circular, square, and rectangular tubes (hollow sections) as well as LTZ profiles. Full automation results in only a few people being needed to operate the machinery. The mill employs 67 people of which very few are involved in operating the machines. The factory became operational in December 2009, and started trial production in March 2010. In 2010/11 it plans to produce 24,000tn, 40pc of its installed capacity. If I produce 24,000tn, I will need 279 million Br to buy raw materials, Betru said, making a quick calculation in his notebook. My problem is working capital. The same is true of other factories in the industry. The state owned Kaliti Metal Products Factory has a working capital requirement of 200 million Br, most of which it needs in hard currency for the importation of raw materials, on which the factory relies completely. In the short-term, there fore, the devaluation of the Birr will affect everyone in the industry; both traders and manufacturers. In 2008 local basic metal and engineering companies serve only 15pc of the market while the rest is imported, according to Getahun Tadesse, head of the Metal Products Development Centre (MPDC) of the Ministry of Trade and Industry (MoTI). In monetary terms, the share of the local industry was only 4.5 billion Br, a small sum in comparison with the 28 billion Br of imports. The local industry operated at only 40pc of its capacity, according to Getahun, while an even smaller figure was quoted by those in the industry. The plastic industry has almost eliminated imported basic plastic products from the market with the assistance of a 35pc duty levied them. The metal industry is far from that. The market is dominated by imported products while most of the local factories operate under their capacity. Most of the metal factories, including ours, are running at only 20pc to 30pc of their capacities, said Sissay. It seems as if only Kaliti Metal Products is operating at full capacity and even made 140pc of its targeted profit for 2009/10, according to Mathewos Assale, general manager, who declined to give the exact figure. However, he feels the government has not done enough to encourage and protect the local industry. Ethiopias engineering sector is still in its infancy. It could produce 85pc of the materials needed for the construction of sugar and cement factories; for everything except precision and complex electronic equipment, according to Getahun. Many products in the metal and engineering industry could be produced locally, he said. Yet, it has not happened. In addition, the industry has been unable to utilize its full capacity when demand booms. Over the last five years, huge government projects like the construction of houses, colleges, schools, and roads have resulted in a huge demand in the market.

It was a sudden boom, said Solomon Mulugeta, general manager of EABMEI. The industry was not ready for it. The basic metal and engineering industry is both capital intensive and knowledge based and has to grow naturally, according to Solomon. It is difficult to build capacity all of a sudden, he said. Working capital, spare parts, access to foreign currency, and human resources are among the biggest problems the industry faces. Engineering is supported by little research and development, which results in it not being cost-effective, according to Solomon. Other problems are the small tariff gap between imported raw materials and finished goods and the lack of quality monitoring on imported products. Even so, the combined problems have not hampered the growth of the industry. EABMEI boasts 28 members. There are about 10 other factories that are not members and several more that are currently under formation. Several companies that produce furniture, doors and windows, and automobile bodies have not been included in the association yet. Globally, scrap metal is a major source of raw material; between 50pc and 60pc, according to Solomon. Locally, it supplies about 40pc of the demand, but the billets that are made from it are only used to manufacture reinforcement bars. Local factories largely depend on imported raw materials from Turkey, Ukraine, Kazakstan, China, and India. The same countries also supply the bulk of finished goods in the market. Scrap metal covers up to 95pc of the steel needed for the production of reinforcement bars, according to Sissay. Tubular sections depend on 80pc to 90pc of imported raw materials while flat products are produced entirely from imported sheets. Existing local capacity can meet 50pc to 60pc of the demand for reinforcement bars and 100pc of the demand for tubular sections and flat products, said Sissay. Imports make their way into the country in various ways. Some local traders order the products specifically to their needs directly from China and Turkey. International trading companies such as Steelforce, a Belgian company, and Coutinho & Ferrostaal GmbH, a German company, supply factories with raw materials and the market with finished materials through local agents. These trading companies source their materials from various countries, such as China, Ukraine, and Turkey. The involvement of the trading companies is important because the selling factories do not want to be involved in the potential financial issues of a country, such as Ethiopia, with unreliable dollar reserves, according to Tewodros Mengistu, an agent for Steelforce in Ethiopia. Arcelor Mittal only sells to Ethiopia through us and other trade agents, he said. The trading company pays the factory, in a way financing the local buyers whose payment through letters of credit (LC) takes longer than factories are willing to wait. An order of 400tn may be big for a local company, but it is nothing for the manufacturer, Tewodros said. Usually the traders make huge purchases at discounted prices and deliver only the quantity their clients have ordered. There are several big local traders, such as Hadid

Trading Plc and Yohannes Abadi, who import reinforcement bars, tubular sections, and steel and corrugated sheets. Hadids general manager was not available to talk to Fortune. Yohannes Abadi has a policy of not talking to journalists, according to his brother who manages the company that is his namesake. Yet, the local manufacturers have a lot to complain about with regard to the quality and tariffs of imported products. Importers deliberately order substandard material (shorter and thinner products), according to manufacturers. A six-meter tubular section could be shorter by a few centimeters or a sheet could be thinner by a fraction of a millimeter. The advantage to the trader is that he orders the products in tons but sells it in pieces, so that a ton of shorter rods and thinner sheets will have more pieces. Most buyers are not professionals and rely on the information provided to them by the supplier, according to the manufactures. A decrease of up to six per cent in the thickness of reinforcement bars is acceptable, said Tewodros. We have observed differences of up to 11pc but you cannot blame the traders. The Quality and Standards Authority of Ethiopia (QSAE) should be regulating quality. We have no standards in Ethiopia, except for corrugated iron sheets, said Mathewos. Mame Steel Mills products are up to 15 Br more expensive apiece than Turkish products in the market, according to Betru. His only consolation comes from the fact that he is confident that his products are of a better quality than the imported ones and that there is enough room in the market for both local and imported products. I believe that enough support has not been given to the metal industry, said Mathewos. Some of it has to do with implementation. If a local bidder in a government tender adds value by 20pc, the tender issuing body must add 15pc to the price offered by a foreign bidder to give the local company an advantage, according to financial regulations. However, implementing bodies fail to abide by the directive and evaluate all bidders by the same standard, according to Mathewos, who stops short of identifying the culprits. Government owned companies are also encumbered with the requirement that they issue tenders for all purchases. As a result, situations arise in which commodity prices vary so much between the issuing of tenders and the placing of orders that the tender has to be reissued, according to Tewodros. Things would be easier if he could simply contact a trusted supplier and place orders, according to Mathewos. However, Kaliti has been producing so far beyond its capacity for nearly 15 years that it has been elected as a role model for other state enterprises. In spite of the problems it faces, the industry can benefit greatly from the governments latest five-year plan, the much publicized Development and Transformation Plan. The services sector will benefit less than agriculture and related sectors as well as industry, according to the plan.

Agriculture, which grew by six per cent in 2009/10, according to the government, will grow by eight per cent, according to the base case scenario, or by 14.9pc in the high case scenario. These two scenarios will either bring agricultures share of the national gross domestic product (GDP) down to 35.8pc, from 41pc in 2009/10, or keep it at the same level. The metal industry registered growth of 10.2pc in 2009/10. The government targets a growth of at least 20.1pc and 21.4pc at best, according to the five-year plan. The industrys share in GDP could either be 19pc or 16.9pc: the best case scenario shows the effect of the higher growth of agriculture. Among industries, the basic metal and engineering industry stands to benefit the most, according to Meles. Over the next five years, per capita metal consumption could grow between 12 kilograms and 34.72 kilograms, according to the government. The government, the biggest buyer of metal products, could create a bonanza in the industry, with or without incentives, although the biggest beneficiary could end up being the traders. Some of the factories are undertaking expansion projects. Kaliti has initiated a 138 million Br project which will equip it with additional machinery over the nest two years. In 2010/11, it plans to spend 50 million Br on machinery that have already been ordered and are currently being manufactured in Italy and China, according to Mathewos. More raw materials could be manufactured locally over the next five years, according to Sissay. However, the tariff intervention will completely hinder competition, according to Getahun. The government does not see tariffs as only a source of revenues but also as a policy measure to assist the local industry, both Meles and Sufian Ahmed, minister of Finance and Economic Development (MoFED), told the manufacturers, according to Solomon. EABMEI is currently working on its own five-year strategic plan based on the governments fiveyear plan while the MPDC is also looking for ways in which to help the industry. The foreign currency issue is one of resources allocation and the governments priority is the textile and leather industries, according to Getahun. Yet, while some of the major problems will persist, the future is not bleak. Even though we have not utilized our existing capacity, we are importing additional equipment because we look forward to a growing market, said Sissay. If we look at the devaluation positively, the local industry will eventually benefit from it. If the government accorded more tariff protection, existing factories could increase their capacities and local and international investors could open new factories, according to Mathewos. EABMEI is preparing to make that kind of proposal to the government. [Fortune]
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