XYZ Electro Mechanical

Engineering Plc.

Business Proposal Draft on

Transformer Manufacturing
Factory

Donedeal Business Consulting

Nov. 3rd, 2021
 1. Introduction

Transformer is a device that transfers electric energy from one

alternating-current circuit to one or more other circuits, either increasing
(stepping up) or reducing (stepping down) the voltage. Transformers are
employed for widely varying purposes; e.g., to reduce the voltage of
conventional power circuits to operate low-voltage devices, such as
doorbells and toy electric trains, and to raise the voltage from electric
generators so that electric power can be transmitted over long distances.

Transformers change voltage through electromagnetic induction; i.e., as

the magnetic lines of force (flux lines) build up and collapse with the
changes in current passing through the primary coil, current is induced in
another coil, called the secondary. The secondary voltage is calculated by
multiplying the primary voltage by the ratio of the number of turns in the
secondary coil to the number of turns in the primary coil, a quantity
called the turns ratio.

One of the main reasons that we use alternating AC voltages and currents
in our homes and workplace’s is that AC supplies can be easily generated
at a convenient voltage, transformed (hence the name transformer) into
much higher voltages and then distributed around the country using a
national grid of pylons and cables over very long distances.

The reason for transforming the voltage to a much higher level is that
higher distribution voltages implies lower currents for the same power
and therefore lower I2*R losses along the networked grid of cables.
These higher AC transmission voltages and currents can then be reduced
to a much lower, safer and usable voltage level where it can be used to
supply electrical equipment in our homes and workplaces, and all this is
possible thanks to the basic Voltage Transformer.

2. Executive Summary
This profile contemplates the establishment of a plant for the production
of transformers with a capacity of 3000 per year.

Home to 12 major rivers and the sources of the rivers Niger, Gambia and
Senegal, Guinea has some of the highest potential for hydropower in
West Africa, with a gross theoretical hydropower potential of at least
31,444 GWh/year.

The technically feasible potential is around 25,155 GWh/year, and the

economically feasible potential is estimated to be 20,124 GWh/year.
More than 7180 MW of capacity could be developed, which would
provide for the production of 20,000 GWh/year (see H&D World Atlas,
2017).

The further development of Guinea’s significant hydropower resources is

expected to play a major role in meeting growing electricity demand in
the country, amid forecasts of substantial economic and population
growth. The IMF forecasts a 5.8 per cent rise in GDP in 2018 and 5.9 per
cent in 2019, while the population is anticipated to increase to an
estimated 14.7 million in 2022, from 13.2 million in 2018. Hydro
development will also help meet the Government’s commitments to
reducing greenhouse gas emissions by increasing the share of renewable
energy in the generation mix and supporting long-standing plans for a
regional grid and increased power trading in West Africa.
Considering the fast expansion of construction, the market study on
Transformers shows that the demand is expected to reach around 38,700
terawatt-hours by 2050.
The total investment requirement is estimated at $1.7 million out of
which $220,203 is required for plant and machinery. The plant will create
employment opportunities for 77 persons.

3. Product Description and Application

The product that this business proposal is implying is Transformer. The
working principle of a transformer is very simple. Mutual induction
between two or more windings (also known as coils) allows for electrical
energy to be transferred between circuits. Say you have one winding (also
known as a coil) which is supplied by an alternating electrical source. The
alternating current through the winding produces a continually changing
and alternating flux that surrounds the winding.

If another winding is brought close to this winding, some portion of this

alternating flux will link with the second winding. As this flux is
continually changing in its amplitude and direction, there must be a
changing flux linkage in the second winding or coil.
According to Faraday’s law of electromagnetic induction, there will be an
EMF induced in the second winding. If the circuit of this secondary
winding is closed, then a current will flow through it. This is the basic
working principle of a transformer. Let us use electrical symbols to help
visualize this. The winding which receives electrical power from the
source is known as the ‘primary winding’. In the diagram below this is
the ‘First Coil’. The winding which gives the desired output voltage due
to mutual induction is commonly known as the ‘secondary winding’.

Figure 2.1 Winding of transformer

A transformer that increases voltage between the primary to secondary

windings is defined as a step-up transformer. Conversely, a transformer
that decreases voltage between the primary to secondary windings is
defined as a step-down transformer. Whether the transformer increases or
decreases the voltage level depends on the relative number of turns
between the primary and secondary side of the transformer.
If there are more turns on the primary coil than the secondary coil than
the voltage will decrease (step down). If there are less turns on the
primary coil than the secondary coil than the voltage will increase (step
up).
While the diagram of the transformer above is theoretically possible in an
ideal transformer – it is not very practical. This is because in the open air
only a very tiny portion of the flux produced from the first coil will link
with the second coil. So the current that flows through the closed circuit
connected to the secondary winding will be extremely small (and difficult
to measure).

The rate of change of flux linkage depends upon the amount of linked
flux with the second winding. So ideally almost all of the flux of primary
winding should link to the secondary winding. This is effectively and
efficiently done by using a core type transformer. This provides a low
reluctance path common to both of the windings.

Figure 2.2 Leakage flux of a transformer

The purpose of the transformer core is to provide a low reluctance path,

through which the maximum amount of flux produced by the primary
winding is passed through and linked with the secondary winding.
The current that initially passes through the transformer when it is
switched on is known as the transformer inrush current.
Main Parts of a transformer
The three main parts of a transformer:
 Primary Winding of Transformer: This the winding that produces
magnetic flux when it is connected to an electrical source.
 Magnetic Core of Transformer: The magnetic flux produced by the
primary winding, that will pass through this low reluctance path
linked with secondary winding and create a closed magnetic circuit.
 Secondary Winding of Transformer: The flux, produced by primary
winding, passes through the core, will link with the secondary
winding. This winding also wounds on the same core and gives the
desired output of the transformer.

Figure 3.3 Installed Transformer

Uses and Application of Transformer

The most important uses and application of Transformer are:

 It can rise or lower the level of level of Voltage or Current
(when voltage increases, current decreases and vice versa because P
=V x I, and Power is same) in an AC Circuit.
 It can increase or decrease the value of capacitor, an inductor or
resistance in an AC circuit. It can thus act as an impedance
transferring device.
 It can be used to prevent DC from passing from one circuit to the
other.
 It can isolate two circuits electrically.

Transformer is the main reason to transmit and distribute power in AC

instead of DC, because Transformer not work on DC so there are too
difficulties to transmit power in DC. in the DC Transition and
distribution, the level of voltage Step up by Buck and Boost Converter
but it is too costly and not suitable economically.
The main application of Transformer is to Step up ( Increase) or Step
down (Decrease) the level of Voltage.
in other words, Increase or decries the level of Current, while Power must
be same.

Other Uses and application of Transformer:

 It steps up the level of voltage at generation side before transmission

and distribution.

 In distribution side, for commercial or domestic use of electricity,

transformer step down ( decries) the level of voltage for example
form 11kV to 220 V single phase and 440 V three phase. The Current
 Transformer and Potential Transformer also used power system and
in the industry.
 Also, it is used for impedance matching. So these were the simple
uses and application of transformer.

3.1 Product Types

It generally makes things clear to put that this report sights on product
range spans between 50 KVA to 2000 KVA right at the very top of this
section.

In Electrical, the Power domain deals with the power generation,

measurement, and distribution. However, it is a very large field where
transformers are an essential part to accommodate safe power conversion
and successful power delivery to the substation and to the end users.

The transformers which are used in the power domain can be both
outdoor and indoor but mostly outdoor. This report sights on product
range spans between 50 KVA to 2000 KVA.

(a) Power Transformer

Power Transformers are larger in size and used to transfer the energy to
the substation or the public electricity supply. This transformer acts as a
bridge between the power generator and the primary distribution grid.
Depending on the Power rating and specification, Power transformers can
further be classified into three categories: Small power transformer,
Medium Power transformers, and the Large power transformers. The
rating can be more than 30KVA to the 500-700KVA or in some cases
that can be equal to or more than 7000KVA for small rated power
transformer. The medium rated power transformer can be up to 50-100
MVA whereas large rated power transformers are capable to handle more
than 100MVA.

Figure 3.1.1 Power Transformer

Due to very high power generation, the construction of a power

transformer is also critical. The construction includes solid insulating
peripherals and well balanced cooling system. The most common power
transformers are filled with oils.

The main principle of the power transformer is to convert the Low

voltage high current to a high voltage low current. This is required to
minimize the power loss in the power distribution system.

Another important parameter for the Power transformer is the phase

availability. Typically Power transformers works in three phase system,
but in some cases, Single phase small power transformers are also used.
Three Phase Power transformers are the most costly and efficient than the
single phase power transformers.

(b) Distribution Transformer

This is the main product that this proposal is focusing on, due to
 Simplicity of required technology to manufacture this product
 Less initial investment requirement compared to other types of
product
 High demand and wide market available for it
 Easier access to its raw materials and supplied components
This is used in the last phase of the power distribution system.
Distribution transformers are step down transformer, which converts
High grid voltage to the end customer required voltage, 110V or 230V. It
can also be single phase or three phases.

Figure 3.1.3 Distribution Transformer

Distribution transformers can be smaller in shape as well as bigger,

depending on the conversion capacity or ratings.
Distribution transformers can be further categorized into based on the
type of insulation it uses. It can be a dry type or can be liquid-immersed.
It is made using laminated steel plates mostly constructed in C shape as a
core material.

Distribution transformer also has a different type of classification based

on the location it is used. The transformer can be mounted on a utility
pole, if so, it is called a pole mounted distribution transformers. It can be
placed inside of an underground chamber, mounted on a concrete pad
(pad mounted distribution transformer) or inside an enclosed steel box.

Generally, distribution transformers have a rating of less than 200kVA.

4. Project Objectives and benefits

The main objective of the project is aimed at to maximize the
return on invested capital in the form of profit for the promoter. However,
its implementation will benefit the employee, the society, the government
at different levels and ultimately the overall well-being of the country
including economic and social security wellbeing. In this respect the
project is aimed to promote the following objectives: -
 To maximize the return on invested capital through transformer
manufacturing firm
 To reduce the interruption of power in the country thereby raising its
contribution to the national economic development,
 To distribute transformers at competitive prices
 Keeping the society’s safety at high level for its wellbeing
 To provide gainful employment opportunity to a large segment of the
population of the project area and augment earning capacity at the
grassroots level,
 Increase government revenue through the different forms of taxes,
which in turn used to facilitate social and economic development.
In general, the project is believed to have significant social and
economic benefits that accrue to the society, the region and the country
beyond the financial returns to its owner.
5. Project location
The choice of the transformer manufacturing plant establishment
should consider the following major factors to select the appropriate site:
 Accessibility network to the main market centres;
 Existing power distribution networks, possibilities of future
expansions and upgrading along with the expansion of power
generation
 Availability of skilled/unskilled labour
 Near where similar plants are established for easy training and
experience sharing
 Availability of raw materials and required component manufacturing
firms in the area
Accordingly, XYZ company has set the location of the transformer
manufacturing factory to be in Conakry, which is the capital of Guinea
Conarky.

6. Industry Analysis
Rising electricity consumption across the globe has significantly
accelerated the growth of power transformer market especially in
developing countries. The emerging markets in Latin America, Asia and
Africa have a major influence on the growth of transformers market and
currently dominating the demand for power transformers. The rapid
build-out in the Asian countries such as India, China and other emerging
countries has created a boom period for power transformers during the
first decade of 21st century. Further, the government initiative in
developing regions for modernizing the existing grids coupled with
installation of advanced and new power transformers is likely to drive the
power transformer market growth.

Goldstein Market Intelligence analyst forecast the global power

transformer market to grow at a CAGR of 5.7% during the period 2017-
2030. Further, the global power transformer market is predicted to reach
USD 34.6 billion by the end of forecast period.

The global electricity demand is expected to reach around 38,700

terawatt-hours by 2050, which is supported by the expansion of the
transmission and distribution network. This resulted in a significant
demand for the T&D equipment, such as a transformer. The global power
supply is undergoing a major transition, moving away from fossil fuels
and shifting toward renewable energy sources. Moreover, investments in
new renewable power capacity have outstripped the amount invested in
fossil-based generating capacity, with most of the installation of new
renewable energy capacity currently occurring in developing and
emerging countries. Renewable power accounted for 60% of net additions
to global power generating capacity in 2018. The strong growth in
renewable energy is a result of the increasing competitiveness of wind
and solar power. With the rapid integration of renewable energy sources
and distributed technologies onto the grid, utilities have to upgrade their
existing systems to address the challenges of maintaining power quality,
balancing supply and demand in real-time, and ensure adequate
distribution infrastructure capacity.
Key Market Trends

 Distribution Transformers to Dominate the Market

 Distribution transformers (DTs) or service transformers provide the

final voltage transformation in the electric power distribution system.
DTs are used to step down the voltage used in the distribution lines
(usually up to 36 kV) to the level used by the customer (usually 250
up to 435V).
 As a result, it is the most widely used in commercial buildings and by
industrial customers, as well as electric utilities, largely in areas
where electricity leaks are more costly.
 In Asia-Pacific, according to BP Statistics 2019, the total electricity
generated in 2018 was 12273.6 Terawatts, while the overall
consumption was less. This stems from a higher demand for
distribution transformer infrastructure to bridge the gap between
supply and demand.
 Increasing investments in the transmission and distribution networks
in countries, such as India and China, provide a tremendous
opportunity for the distribution transformer manufacturers to increase
their share in the market, during the forecast period.
 Countries in the Middle-East and African region, such as Oman and
Saudi Arabia, are also investing in the expansion and restructuring of
distribution power grids, which increases the growth prospects of the
distribution transformer market segment.
6.1 Demand Analysis

Access to electricity in West Africa is at 52 percent, with shortages of up

to 80 hours per month, and yet electricity there remains among the
costliest in the world, at $0.25 per kilowatt-hour, more than twice the
global average.

Domestic demand in West African countries is often too low to attract

investments in large projects that benefit from economies of scale.
Instead, these countries rely on small-scale, expensive oil-fired power
generation. Lack of planning has led to reliance on emergency rental
plants, which further inflates costs.

Improving electricity access and reliability in West Africa requires close

collaboration among neighbouring countries. The West Africa Power
Pool (WAPP) is a cooperation of 14 countries–Benin, Burkina Faso, Cote
d’Ivoire, the Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali,
Niger, Nigeria, Senegal, Sierra Leone, and Togo– with 27 national
electricity utilities, working towards an integrated regional power market.

Factors affecting demand of transformer include:

 Expansion of electricity infrastructure and development of new
electric power generation
 The increasing development in heavy industries and renewable
energy.
 Urbanisation
 High population growth in the country
 New technologies being introduced in the country seeking the
application of electricity
 Need to upgrade existing power distribution system due to failure
to meet the society’s electric demand

Providing greater power for the domestic market is crucial to the

country’s economic growth and political stability, given frequent
protests over power shortages. Access to electricity in the country is
very low: around 25 per cent in urban areas, and only 4 per cent in
rural areas (H&D World Atlas, 2017). This shows that there is a wide
range of electric expansion in Guinea.

In fact, to be specific, in Guinea, electricity is used as a source of

lighting by only three out of five people. Households rely exclusively
on wood for cooking, which exposes them to fine particles of smoke –
a health hazard – and to carbon monoxide (CO), besides sustaining
deforestation. It is indeed a great opportunity to manufacture
transformers and supply to these infrastructure expansion.
 6.2 MARKET OPPORTUNITIES

The global awareness and interest in clean and green energy and the
subsequent boost to the renewable energy market will be seen fueling
demand for pad-mounted transformers. An increasing inclination
towards improving the reliability and stability of existing grid
infrastructure provides another growth opportunity for this industry.
The large scale adoption of self-sustaining power networks to ensure a
stable and sustainable power supply network will further improve the
transformer market outlook in the coming years. Growing investment
toward expansion of electricity networks will create a positive and
accelerated effect on the overall transformer market dynamics.

Aging assets, and new power generation projects, involving the use of
renewable resources will be seen powering the global transformer
industry trends during the forecast period. Dynamic growth trends in
the global real estate sector and the impetus in industrialisation and
growing commercialisation across the world are also significant
growth opportunities for the transformer market value worldwide. An
upwards trend in infrastructural development powered by an ever-
increasing inflow of significant investments from the private as well
as the public sector will further boost the market during the forecast
period.

6.3 Market Challenges

The biggest challenge that this industry faced came in the form of the
COVID-19 lockdowns – and the subsequent slowdown of economies
 worldwide. The closing of trade routes and temporary severance of
supply chains brought about a variety of challenges and cut through
the transformer market revenues. This created a delay in the execution
of many planned power projects and many others already underway
were stalled. Also, the pandemic cut into government revenues and
reduced the amount of disposable income available at individual and
government levels. All these factors have posed significant challenges
to the global transformer industry.

7. Market Analysis
7.1 Competitors Analysis

 Westrafo Ghana LTD: Westrafo designs power transformers with a

maximum voltage of 145 KV and power up to 40 MVA. It has
specialized in Medium and High Voltage Power Transformers.

7.2 Transformer Market Segment Overview

The transformer market research report takes a detailed look into the
various segments of the market and their impact on the transformer
market value during the forecast period. For this purpose the report
segments the global transformer market into segments based on
various parameters. The following are segment covered in detail in the
report.
 Transformer Market Segment By Core
 Closed
 Shell
 Berry

 Transformer Market Segment By Product

  Distribution Transformer
 Power Transformer
 Instrument Transformer

 Transformer Market Segment By Winding

 Two Winding
 Auto Transformer

 Transformer Market Segment By Installation

 Outdoor
 Indoor

 Transformer Market Segment By Insulation

 Gas
 Oil
 Solid
 Air
 Others

 Transformer Market Segment By Phase

 Three Phase
 Single Phase

 Transformer Market Segment By Mounting

 Pad
 Pole
 PC/PCB
 Others

 Transformer Market Segment By Application

 Residential & Commercial
 Utility
  Industrial

8. Technical Study
8.1 Production Capacity

The market study on Transformers that the demand is expected to

reach around 38,700 terawatt-hours by 2050. Considering this, the
plant will have an annual capacity of 3,000.

8.2 Materials and Inputs

A) Raw Materials: Though every raw material has been shown in the
financial section in detail, here under are the very common raw materials
that come into one’s mind while mentioning about manufacturing of
transformer.
 Laminated Steel
Electrical steel (lamination steel, silicon electrical steel, silicon steel,
relay steel, transformer steel) is an iron alloy tailored to produce
specific magnetic properties: small hysteresis area resulting in low
power loss per cycle, low core loss, and high permeability.
 Copper rod
Copper rods has many uses like drawing of wire, headed products,
woven-wire products, bent-wise products, copper alloy wire springs
etc. But, rods being described here in this report are used for wire
drawing. This wire is further used for electrical transmission. Copper
oxide is soft, electrically conductive, and breaks down easily. The
use of the right grade of copper is considered the best way to ensure
high short-circuit withstand capability in transformers, due to copper's
outstanding mechanical properties, such as yield strength and modulus
of elasticity.
 Coil Bobbins
Coil bobbins are used in the manufacture of inductive construction
parts like transformers, chokes, bobbins and antennas. Coil bobbins
are made of different synthetic materials. These are where the
electrical conductive wire is rolled over in constructing a transformer.
 Insulating Oil
Transformer oil or insulating oil is an oil that is stable at high
temperatures and has excellent electrical insulating properties. It is
used in oil-filled transformers, some types of high-voltage capacitors,
fluorescent lamp ballasts, and some types of high-voltage switches
and circuit breakers.

Process of Manufacturing
The manufacturing process of transformer covers the following
classes:-
 Coil Winding
 Core Assembly
 Core-Coil Assembly
 Tank-up
 Transformer Tank
 Painting & Finishing
Coil Winding

High Voltage Coils: H.V. Coils are the components of finished

transformers. They are made on automatic layer setting winding
machines. Coil Winding

 A solid cylindrical former of predetermined diameter and length is

being used as haze over which is made.
 Generally round insulated wire of either copper (Cu) or Aluminum
(Al) is used as basic raw material.
 The coils are made in number of layers.
 The starting and finishing leads of each coil are terminated on
either side of the coil.
 These leads are properly sleeved and locked at number of points.

Low Voltage Coils:

 L.V. Coils are also one of the components of transformer. The

procedure of making low voltage coil is generally same as
described earlier.
 The shape of the basic raw-material (Al or Cu) is rectangular.

Core Assembly

 The basic raw-material is COLD ROLLED GRAIN ORIENTED

(CRGO) Silicon Steel
 It is in the form of thin sheets & cut to size as per design.
 Generally three different shapes of core laminations are used in one
assembly.
 Notching is performed to increase the magnetic path.
 The laminations are put through annealing process.
  These laminations are assembled in such a manner that there is no
air gap between the joints of two consecutive sheets.
 The entire assembly is done on a frame commonly known as core
channel. These frames being used as a clamping support of the core
assembly.

Core Coil Assembly

 The components produced in the coil winding and core assembly

stages are then taken into core-coil assembly stage.
 The core assembly is vertically placed with the foot plate touching
the ground. The top yoke of the core is removed. The limbs of the
core are tightly wrapped with cotton tape and then varnished.
 Cylinder made out of insulating press board/ press pan paper is
wrapped on all the three limbs.
 Low Voltage Coil is placed on the insulated core limbs.
 Insulating block of specified thickness and number are placed both
at the top and bottom of the L.V.Coil.
 Cylinder made out of corrugated paper or plain cylinder with oil
ducts are provided over L.V.Coil.
 H.V. Coils are placed over the cylinder.
 Gap between each section of H.V. Coils including top & bottom
clearances is maintained with the help of oil ducts, as per the
design/drawings.
 The Top Yoke is refilled. Top core frame including core bolts and
tie rods are fixed in position.
 Primary and secondary windings are connected as per the
requirements. Phase barrier between H.V. phases are placed as per
requirement.
 Connections to the tapping switch (if required) are made.
  Finally, the component is placed in the oven.

Tank-Up
The core-coil assembly and tank supplied by the fabrication department
are taken into tank-up stage. The procedure is:
The core-coil assembly is taken out of the oven and the "Megger test" is
carried out.

 Only if the megger value is as per the specification, the assembly

may be taken for tank-up.
 The tanks, supplied by fabrication department. are brought to tank-
up department duly painted.
 Fittings like drain valves, HV& LV Bushings, conservator, oil
level indicator and explosion vent are fitted in the tanks.
 The Core-coil assembly is then placed into the tank and properly
locked up.
 Pure filtered transformer oil is filled in the tank to immerse the
assembly only.
 Connections of primary and secondary to the terminal bushings are
made. Operating handle for ratio switch is fitted, wherever
required.

Paint Process
Painting: The entire procedure of painting is done under two stages:

Cleaning of tanks

 The cleaning of tank is done normally by chipping/grinding.

 The outside surface of the tank is short blasted to achieve a very
fine and smooth finish
Painting of tanks

 After cleaning the tanks, a coat of hot oil resistance paint is applied
on the internal surface of the tank.
 The outside surface is painted with a coat of Red Oxide primer and
subsequently with one coat of enamel paint as per customer's
requirement.

Finishing

 Fittings and accessories as per customer's specification and

drawing are checked.
 Air Pressure test is subjected to avoid any leakage and seepage on
all transformer.
 Transformers are filled with oil up to the minimum level marking,
wherever necessary.
 Loose accessories like, earthing terminals, bimetallic connectors;
dial type thermometers are also checked for proper fittings.

B) Utilities
C) Machinery and Equipment

Production Machinery for Transformers

 wire winding machines

This machine is used to wind coils for motors, transformers, solenoids

and other types of industrial electronic equipment.
These electromagnetic coil winding machine offers variety of
machinery options.
  Foil winding machines.
 Vertical and horizontal winding machines.
 MITRE cutting lines.
 Automated stacking solutions.
 Bushing winding machines.

D) Land, Building and Civil works

9. Environmental Assessment
Pollution Control

The government of Guinea accords utmost importance to control

environmental pollution. Eentrepreneurs should have an environmental
friendly attitude and adopt pollution control measures by process
modification and technology substitution. The following steps are
suggested which may help to control pollution in electronics industry
wherever applicable:

i) In electronic industry fumes and gases are released during hand

soldering / wave soldering/Dip soldering, which are harmful to people as
well as environment and the end products. Alternate technologies may be
used to phase out the existing polluting technologies. Numerous new
fluxes have been developed containing 2-10% solids as opposed to the
traditional 15-35% solids.

ii) Electronic industry uses CFC, Carbon Tetrachloride and Methyl

Chloroform for cleaning of printed circuit boards after assembly to
remove flux residues left after soldering, and various kinds of foams for
packaging. Many alternative solvents could replace CFC-113 and Methyl
Chloroform in electronics cleaning. Other Chlorinated solvents such as
Trichloroethylene, Perchloroethylene and Methylene Chloride have been
used as effective cleaners in electronics industry for many years. Other
organic solvents such as Ketones and Alcohols are effective in removing
both solder fluxes and many polar contaminants. Energy Conservation
With the growing energy needs and shortage coupled with rising energy
cost, a greater thrust in energy efficiency in industrial sector has been
given by the Govt. of India since 1980s.

The Energy Conservation Act, 2001 has been enacted on 18th August
2001, which provides for efficient use of energy, its conservation and
capacity building of Bureau of Energy Efficiency created under the Act.
The following steps may help for conservation of electrical energy:

i) Adoption of energy conserving technologies, production aids and

testing facilities.

ii) Efficient management of process/ manufacturing machineries and

systems, QC and testing equipment for yielding maximum Energy
Conservation.

iii) Optimum use of electrical energy for heating during soldering

process can be obtained by using efficient temperature controlled
soldering and desoldering stations.

iv) Periodical maintenance of motors, compressors etc.

v) Use of power factor correction capacitors. Proper selection and layout

of lighting system; timely switching on-off of the lights; use of compact
fluorescent lamps wherever possible etc.

10.Government Regulation
 Business registration and investment
Business registration laws and procedures have thus far proven to be the
most serious legal obstacle to investing in Guinea. The documentary
framework is fragmented, consisting of a 1962 law which recognizes six
types of enterprises, informal instructions published over the years by
administrative agencies, the October 1984 Investment Code, and a May
1985 commercial enterprise law. The latter statute recognizes four types
of companies: o "societe en commandite simple" (roughly a U.S. limited
partnership), o "societe en nom collectif" (roughly a U.S. general
partnership", o "societe a responsabilite limitee" (roughly a U.S. close
corporation), and o "societe anonyme" (roughly a U.S. public
corporation). This statute is loosely based on French law governing
SARLs (March, 1.925) and SAs (July, 1867), and many of its provisions
are found in legislation of other francophone countries in Africa.
However, it is still unclear whether the law applies to all companies doing
business in Guinea, or only to companies working in the commercial
sector. Conversely, although all companies must seek inscription in the
Register of Commerce maintained by the Ministry of Commerce, officials
and businessmen are unclear as to whether approval of non-trading
companies must be sought from the Ministry of Commerce, or if this
procedure would apply only to companies engaged in import-export and
trading activities. A major gap in business formation law is the lack of
statutes governing associations such as cooperatives and mutual
organizations. There is an existing network of traders', transporters' and
even some farmers' associations in major towns throughout the country,
but their legal status needs to be re-established and their purposes can be
redefined to take advantage of new opportunities which can be pursued in
the liberalized environment. New associations are being formed in an ad
hoc manner, such as the Mutuelle de Promotion des Commercants whose
members have united to operate more effectively in the wholesale import
sector, and may use the pooled resources to guarantee loans. In any case,
a legal framework for all such entities and their activities is an essential
requirement for private sector development in Guinea. - 23 - Accounts of
successful and unsuccessful experiences with the registration and
approval process testified to the administrative problems caused by the
imperfect state of these business registration regulations. Under the
present system, separate sets of registration and licensing procedures are
applied to different categories of businesses, depending on their size, the
nature and location of their prospective activities, and whether or not they
are "investing" and seeking investment incentives under the Investment
Code. Although no one set was consistently described or experienced by
companies interviewed, as of December, 1985 the procedures for a setting
up a "general regime" company (as opposed to one seeking Investment
Code benefits) were complex and typically included: o formation of the
company and payment of a registration tax; o filing of request for
approval with the Small-and-Medium Enterprises Promotion Office of the
Ministry of Industry (or a similar office in the Ministry of Rural
Development if the company planned to operate outside of Conakry); o
review and approval by the Ministries of Planning, Health, Labor, Justice
and Finance, as well as the sectoral oversight ("tutelle") ministry; o
approval by the Ministry of Commerce (perhaps only for traders); o
inscription in the Registry of Commerce and registration with the
Ministries of Labor and Finance; announcement of establishment in the
Journal Officiel ( the official gazette). Companies seeking investment
code benefits must in theory address themselves only to the National
Investment Commission under the Ministry of Planning, which forwards
the file to the other regulatory institutions (through their representatives
on the Commission) for review. However, the extent of its jurisdiction,
particularly vis-a-vis the Small-and-Medium Enterprises Promotion
Office, was still unclear. Foreign investors have sometimes waited
months or failed altogether to obtain the approvals and licenses necessary
for the formation and registration of companies. Guinean officials point
out how little has been accomplished thus far by many of the companies
which have been fully approved, but all officials agreed that these
procedures will be pared down and centralized as soon as possible. Some
of these improvements - 24 might be made through the adoption of a new
investment code which has been in preparation for the past several
months. Officials consistently suggested that the National Investment
Commission should and/or would be maintained and strengthened as the
lead or even the sole agency for all investment approvals, and that
companies not seeking specific investment incentives would simply be
required to register with (rather than seek approval from) appropriate
authorities. Despite the bottlenecks, some foreign investors have little
trouble in establishing new had ventures, particularly those who have
expanded the activities of existing companies (which typically entered
Guinea as government contractors), or have been visibly supported and/or
directly assisted by aid institutions and foreign embassies (for example,
an EEC-sponsored fishing operation and a similar U.S. embassy-
supported project). Guinean nationals have had comparatively less
difficulty with the registration process, and Guinean project sponsors
rightly consider an already-established company to be an important asset
in attracting foreign partners. The October 1984 investment code was a
significant step towards the introduction of investment incentives in
Guinea, but it has been applied successfully in only a handful of cases
thus far. It is criticized as being procedurally too burdensome and
complex: the National Investment Commission has not yet established a
technical staff fully capable of conducting the detailed analyses (review
of feasibility studies, cost-benefit analyses, etc.) contemplated by the
Code. A major substantive criticism made of the Code is that the
eligibility criteria for the three preferential regimes relate strictly to the
size of the investment and to the number of jobs to be created, rather than
provide a framework for directing investment to critical sectors which
need to be developed in Guinea. The draft of a new code which has been
circulating since mid-1985 and is under final review would target these
priority sectors much more specifically. It would also reduce the amount
of discretion afforded to reviewing officials, building as much
automaticity as possible into the actual calculation of incentives for which
an applicant is eligible.

 Labour regulations
Labor regulations have generally not been an inhibiting factor to
investors. Wage levels and fringe benefits in the public sector are
extremely low, and officials have if anything seemed anxious to keep
private sector salaries in line with this scale. Government interference in
private sector personnel management has typically been limited to an ad
hoc - 25 review of salary scales, and then chiefly in the case of visible
investments with foreign participation. The mixed companies (state-
foreign joint ventures), on the other hand, have been subject to much
closer control and have been required to hire from the civil service and to
provide generous benefits to employees. Although civil service salary
increases have in at least one instance been legally imposed on private
employers (in January 1985), this is unlikely to be repeated, even if and
when civil service scales undergo the major adjustment which has been
talked about. As is discussed in Chapter III, the market for professionals
and skilled labor is likely to be very competitive, which will naturally
push salaries to steadily higher levels. A new Labor Code and several
new collective conventions in specific business sectors have been
prepared and are currently under consideration. These statutes should be
consistent with the ongoing liberalization effort. Statutes adopted in the
fall of 1984 dissolved all prior labor syndicates (trade unions) and
established conditions for organizing new ones. Legislation promulgated
in May 1985 established a new social security system and made the
National Social Security Fund an autonomous, financially independent
organization. It is unlikely that this legislation would have any
constraining influence on private investment. Visas and residence permits
for foreigners can be difficult and time-consuming to obtain, and
expatriate employment contracts must be presented to the Ministry of
Labor for approval. Immigration regulations in particular have been
unevenly administered: recent investors have pointed to the uncertainty of
their status and that of their employees as a major concern. Nevertheless,
manifestly foreign nationals with documented citizenship are routinely
employed in both white-collar and blue-collar positions, and this has not
been cited as an issue which has been taken up by the authorities.

 Tax and accounting regulations

The Guinean tax code and accounting regulations are outmoded; they
reflect the long domination of the business sector by public enterprises.
Draft legislation is under preparation and review in both areas, and by all
accounts will be promulgated during the 1986 calendar year. Most
provisions of the 1966 tax code applied to both public and private
enterprises, although a number of special taxes and exemptions were
applied to parastatals, depending on their activity. The basic corporate
income tax rate is 33 percent, - 26 to which are added miscellaneous
minor taxes on salaries, sales, dividends, and other items. The national
accounting plan, adopted in 1961, has been revised several times since
then, particularly to facilitate accounting among interconnected
parastatals (for example, through the innovation of special liaison
accounts). Inadequate features of the old system mentioned by secondary
sources include the fact that it makes no distinction between operating
and non-operating accounts and between inventory and long-term assets.
New regulations are likely to resemble closely the general accounting
plan used in many francophone African countries (the OCAM plan). In
addition, an Order of Chartered Accountants was established in February,
1985 under the supervision of the Ministry of Finance. This institution
provides a framework for the regulation of the accounting profession. The
statute is somewhat unrealistic, since it requires that all individuals or
corporations doing business in Guinea (including small merchants)
provide the Ministry annual accounts audited by a chartered accountant
(of which there were none as of December, 1985).

 Land law
Real property presently constitutes a major legal problem area. Although
there appears to be no question as to the right to hold title to buildings
(for foreigners as well as Guineans), private ownership of land was
abolished under the Tour regime and has not yet been officially restored.
A new system would probably use three reference points: the traditional
land tenure system, the 1932 law which provided registered title to
particular parcels, and the right of occupation and use recognized under
the Tour regime. It is likely that many old title deeds still exist,
particularly since the government did not physically expropriate
landholders. In any case, for a modern land tenure system to be fully
operational, particularly in Conakry, new cadastral surveys would have to
be taken and a working registry system established. This is a difficult
area, and temporary, ad hoc solutions are expected to be applied to meet
particular needs for some time to come. Land ownership has already been
granted to one or two new companies with foreign participation. Special
leaseholds on choice urban and suburban plots have also been granted
recently by ministries such as the Ministry of Industry. Also, some
interviewees spoke of attempts to develop ad hoc mechanisms for the use
of land as collateral for loans.

11. Financial Analysis

 Fixed Capital

The total fixed capital is estimated to be $220,203. The decomposition of

this figure is as follows:

(i) Land and Building

Unit
Area(m2 Total Price
S/n Description Price to
) ($)
build($)
1 Factory building 1000 50 50,000
2 Office building and cafeteria 500 150 75,000
3 Staff residence 1000 12 12,000
4 Store for raw material 400 25 10,000
packaging and store for output
5 400 25 10,000
product
6 sales shop 200 140 28,000
7 Generator and pump house 50 50 2,500
8 Guard house 50 80 4,000
9 parking area 100 25 2,500
10 garden area 100 25 2,500
Total 4,500 - 196,500

 Land Development cost which includes land levelling and clearing

costs is considered to be 1$ per square meter which is to be $4,500
totally.

(ii) Machinery and Equipment

S/n Description HW/KW Quantity Total Cost ($)

A) Production Unit
1 Guillotine Shear 1KW 1 520
Machine complete
with motors and
accessories
2 Sheet Bending 5KW 1 845
Press 150 Ton cap.
Heavy Duty
complete with
motor

3 Welding 10KW 1 325

Transformers 300
Amps
4 Welding Equipment 12KW 1 260
Generator type
400 Amps
5 Tube bending 1KW 1 200
Machine gear type
bending size ½“ to
2’ X 16 SWG
6 Flexible shaft 1KW 2 140
grinder 8” wheel
diameter
7 Gas Cutting Set 1 105
8 Power Hacksaw 1KW 1 65

8 Drilling Machine 1KW 1 104

Pillar Type
Cap.1½”
9 Radial Drill Machine 3KW 1 390
Bench Type ½“ cap
10 Drilling Machine ½“K 2 200
Bench type W
½“Cap.
11 Portable Drill Heavy ½“ 2 104
Duty ½“ Cap
12 Spray Painting 1KW 1 240
Equipment
Complete with
Compressor, Spray
Gun etc. Heavy
Duty
12 HT Automatic Coil 1 cap 5 2600
Winding
Machine 14 Swz to
30 Swz.
Complete with
accessories
15 L.T. Coil Winding 1/2 3 1300
Machines,
Heavy suitable for
coil size up to
25’complete with
counter
16 Paper Cutting 1 1 105
Machine
17 Electric Baking 10KW 1 585
Oven temp. range
 up to 105C. Size
96”X72”x72”
18 Vacuum 2KW 1 670
Impregnation Plant
with
Tank size 45’X56”
19 Oil Filtering 1 420
equipment 250
GPH
Total
8,888
B) Test Unit
1 H.V. Testing 10KW 1 800
Transformers with
Penal 66 KV/230V.
10 KVA
2 Double frequency 1 620
Generator
3 Variable 5KW 1 520
Transformer, 30
Amps 3
phase 50 HZ
4 Turn Ratio Test Kit 1 195
5 Oil Test Kit 1 130

6 Kelvin Bridge 1 195

7 Wheat Stone 1 325
Bridge
8 Control Personnel 1 200
with standard
Voltmeter, Watt
Meter,
Ammeters, Current,
Transformers,
P.T. frequency
Meter etc.
8 Tong Tester 1 80

9 AVO Meters 1 120

10 Meggar 500 V. 2 110
1000 Volts
11 Variac Single Phase 3 170
5 Amps
Total 3,465

(iii) Other Fixed Assets

S/n Description Total Price ($)

1 Office furniture and 4,000
Equipment,
 Work Benches, Rocks etc.
Hand Tools jigs, dies Fixtures
2 650
etc.
3 Oil Storage Tank 700
Installation and Electrification
4 1500
charges
Total
6,850

 Working Capital

(i) Staff & Labor (Per Month)

S/ Monthly Annual
Description of Job No.
n salary($) Salary(Br)
1 General Manager 1 5000 60,000
2 Secretary 2 130 1,560
Production & Technical
3 Head 2 400 9,600

4 Commercial Head 1 250 3,000

Finance & Administration
5 Head 2
4000 96,000

6 Personnel 3 200 7,200

7 Accountant 2 200 2,400
8 Accounts Clerk 2 140 280
9 cashier 2 140 3,360
10 Sales person 2 145 3480
11 Purchaser 2 140 3,360
12 Store Keeper 3 130 4,680
13 Quality Controller 1 300 3,600
14 Shift Leader 3 120 4,320
15 Operator 10 130 15,600
16 Assistant Operation 10 110 13,200
17 Labor 10 50 6,000
18 Mechanic 3 95 1,140
19 Electrician 5 100 6,000
20 Driver 4 95 4,560
21 Guard 3 50 1,800
22 cleaner 3 50 1,800
2 gardener 1
600
3 50

Total 77 12,025 253,540

 (ii) Raw Material (Monthly):

Description with Qty. Unit Month Yearly

S/ Specification Price( ly Total($)
n $) Total(
$)
1 M.S.B.P. Sheet (8 to 6MT 32 192 2,304
16 SWG)
2 CRGO Lamination 15MT 1,040 15,60 187,200
(Transformer grade) 0
3 DPC Aluminum Strip 2MT 1,500 3000 40,000
4 Super Enameled DPC 3MT 4,420 13,26 159,120
winding wire 0
5 Transformer Oil 15,500 0.52 8,060 96,720
ltr
6 M.S. Channels 3.4 MT 300 1,020 12,240
75X4mm to
100X50mm
7 M.S. Flat (25X6mm to 2 MT 300 600 7,200
75X12mm) MS Angles
(35X35 to
75x75x7mm)
8 Insulating Materials 2 MT 300 600 7,200
vise; Graft paper, PP
paper, Press Board,
Bam elite Sheet, PVC
Cotton Tape etc.
9 Hardware Materials, 1MT 390 390 4,680
M.S. Nuts, Bolts, G.I.
Pipe, Valve etc.
10 HV/LV bushings (Set of 100 11 1,100 13,200
9 pcs) sets
11 Paint/Varnish/Thinner 300 ltr 1.5 450 5,400
etc.
12 Copper/Brass Fittings 500 0.52 260 3,120
with Nuts bolts sets
13 Radiator/Radiator 200 pcs 1,014 12,168
tubes
Total 45,54 550,552
6

(iii) Utilities (Monthly)

The monthly electric power consumption is estimated to be 200 KWh per

month whereas, the water consumption is assumed to 1.5 cubic meters
per month.
Sl. Utility Monthly Rate/unit Value in Annual
No. Consumption dollar($) Value in
dollar($)
1 Electricity 200KWh 0.14 28 336
2 Water 2 cubic meter 0.12 0.24 2.88
Total 28.24 338.88

(iv) Other Contingent Expenses (Monthly)

Sl. Particulars Monthly Monetary Annual Total

No. Value($)
1 Rent 250 3,000
2 Postage & Stationery 15 180
3 Advertisement 50 600
4 Repair & Maintenance 25 300
5 Telephone 15 180
6 Transportation 15 180
charges
7 Sales expenses 20 240
8 Insurance 30 360
Total 420 5,040

 TOTAL RECURRING EXPENDITURE (Monthly):

Particular Monthly Value Annual Value

Salary and Wages 253,540 3,042,480
Raw Material 45,546 546,552
Utilityy 338.88 4,066.56
Other contingent 420 5,040
expenses
Total 298,844.88 3,598,138.56

 Total capital investment

S/N Particular Monetary Value($)

1 Fixed Investment 220,203
2 Working capital 896,534.64
investment(3 Months)
Total 1,116,737.64

 Cost of Production (Per Annum):

Sl. Particulars Monetary Value in dollar($)

No.
1 Total Recurring Cost per year 3,598,138.56
2 Depreciation on Machinery & 400
Equipment at 10%
3 Depreciation on Office Furniture at 2,471
20%
 Total 3,601,010

 TURN OVER (PER ANNUM):

Item/Product Qty Price/unit Total sales

Distribution 3,000 1,350 4,050,000
Transformer
Power 36 2,000 64,000
Transformer
Total 4,114,000

 PROFIT PER ANNUM (Before Taxes):

Profit = Annual Sales - Cost of Production

= 4,050,000-3,601,010

= 448,990
 NET PROFIT RATIO:

NPR= (Profit / Turn over) * 100%

= (448,990/4,290,000) * 100%

=10.47
 RATE OF RETURN:

RR= (Net profit/ Total Investment) * 100%

= (448,990/1,116,737.64) * 100%
= 40.21%