Investment Project for Establishment of Two Plants for Nano-Cement

We plan to build two building materials plants: for cement and bricks, using modern technology as well as nano-technology. The payback period is 84 months.

Profitability Index: 1.31; IRR: 15.09%. The project will be developed in cooperation with a Chinese company.

"North Palette" Ltd. (Glazov, Udmurt Republic, central Russia) presents to your consideration a project for building a brick plant with a capacity of 50 million bricks per year and a cement plant with a capacity of 750 tons per day.

In 2007, "North Palette" entered into an agreement with Chinese state-owned company BeiJing Jingchenghong Bo International Trade Co., Ltd for the construction of brick and cement plants using new "dry" technology on a turnkey basis.

The cement plant will produce nano-cement with fundamentally new quality characteristics. One of the leading research institutes on materials in Russia will provide technological support for this production.

The simultaneous construction of these two modern plants for production of basic building materials will form a single industrial and science cluster in Yar village in the Republic of Udmurtia. This will allow conducting R&D work on the newest building materials technology. In addition, the concentration of manufacturing capacity will create savings on communications, construction and installation works.

Target markets for brick sales: Republic of Udmurtia, Kirov Region, Nizhni Novgorod Region, Moscow Region, North-West Federal District.

Target markets for cement sales: Republic of Udmurtia and adjacent regions. There is no modern cement production in the neighboring regions of the Volga Federal District.

Needed investment amount is 2.061 billion RUB, including 743 million RUB to pay for contracts with China, 1.0 billion RUB in infrastructure and logistics, 100 million RUB on additional machinery and equipment, 95 million RUB for working capital.

Sales for the planning period of 120 months are forecast at 12.709 billion RUB and the net profit at 2.529 billion RUB, resulting in a profitability of sales of 19.9%.

The payback period of the investment project is 84 months. The net present value (NPV) of the project at a discount rate of 10% for 120 months is 522 million RUB and the internal rate of return (IRR) is 15.09%. The profitability index (PI) is 1.31 and the average rate of return on investment is 23.82%.

The project has a strong social dimension: creation of new jobs, reducing the cost of housing, high-quality product production while meeting stringent legal requirements for environmental protection.
To implement the project the following activities have been completed: land plot for construction has been prepared; lease documents and preliminary contracts with suppliers of gas, electricity and raw materials have been signed; a license to develop a clay quarry with an area of 27 hectares has been obtained.

This project was approved at an investment forum of the Udmurt Republic and included in the State Register of investment projects of Udmurtia, Reg. № 154 from 30.06.2009. The project has the support of the President of the Udmurt Republic and the executive authorities.

"North Palette" is looking for potential investor not only as lenders but also as equity partners in the project aiming for long-term cooperation.

If you are interested investors, please contact us on Merar for more information.