KEREN MOTORS LIMITED

INVESTMENT INFORMATION MEMORANDUM FOR THE

TURNAROUND PLAN AND EXPANSION PROGRAM FOR KEREN
MOTORS AND KAZUNGULA BRIDGE PROJECT

KEREN MOTORS LIMITED

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 Table of Contents

2 DISCLAIMER .............................................................................................2

3 ENQUIRIES ...............................................................................................3

1 DEFINITIONS ........................................................................................... 1

6 TURNAROUND PLAN/EXPANSION .................................................6-9

7 THE BUSINESS ........................................................................................ 10-11
8 THE FINANCING PROPOSAL ........................................................................ 11
11 REASONS TO INVEST IN THE PROJECT ........................................................ 13

7 KEREN MOTORS LTD INVESTMENT....................................................... 1

7 BACKGROUND ......................................................................................... 10-11

10 SHARERHOLDERS ........................................................................................ 12
14 INPUTS ........................................................................................................ 12
16 DIRECTORS ................................................................................................. 12

18.3 MARKETING ................................................................................................. 14

18.3 MARKET STRATEGY ...................................................................................... 14
19 COMPETITORS ............................................................................................. 14

12 THE TRANSPORT/MINING INDUSTRY ........................................... 14

17 FINANCIAL PERFORMANCE .............................................................. 16

17.1 HISTORICAL FINANCIAL PERFORMANCE .................................................... 16

18 FINANCIAL PROJECTIONS AND PERFORMANCE ........................ 16

18.1.PROJECTEDFINANCIALPERFORMANCE..........................................................16
20.1.SENSITIVITIES....................................................................................................................17
22. IMPLEMENTATION………………………………………………............18
23. UTILISATION…………………………………………………………........18
24. ECONOMIC BENEFITS………………………………………..................18
24. CONCLUSION………………………………………………………...........18

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1 DEFINITIONS

US$ United States Dollars/cents, the lawful currency of the United

States of America @KR11.9=$1

K Kwacha, the lawful currency of Zambia

ZAMTEL Zambia Telecommunication Company Ltd

PROJECT Turnaround Plan and Expansion Program for the Kazungula

Bridge

PTAZ Petroleum Transporters Association of Zambia

AFDB African fund Development Bank

GDP Gross Domestic Product

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2 DISCLAIMER
This Confidential Information Memorandum (the ‘Memorandum’) is being issued by
Keren Motors Ltd Finance Department on behalf of Keren Motors Ltd.

It is being delivered to interested lenders who may be interested in investing in financing

the expansion program for the Kazungula Bridge Project and the Turnaround Plan on
offer.

The sole purpose of this investment Memorandum is to assist the recipient in deciding
whether they wish to proceed with expressing an interest in investing in Keren Motors
Ltd. It is intended to form the basis of an investment decision with any other
information which a Financial might deem necessary for them to make an informed
decision.

The information in this Memorandum, which does not purport to be comprehensive,

has been provided by Keren Motors Ltd and has not been independently verified by
Keren Motors Ltd Finance Department, the stakeholders or their agent make no any
representation or warranty, express or implied, as to the accuracy or completeness of
this Memorandum or any other written or oral information transmitted or made
available to a prospective Financier. In particular, no representation or warranty is given
as to the achievement or reasonableness of any future projections, estimates or
statements about the future or Prospects of the project; the only representations and
warranties that will be made are those that may eventually be included in any in
financing Agreement between Keren Motors Ltd and the Financier.

This Memorandum is for the use of the persons to whom it is addressed only and the
information and opinions contained in it are strictly private and confidential. The
distribution of this Memorandum is subject to the terms of a confidentiality agreement.
All persons into whose possession this Memorandum comes must inform themselves
of the contents of that agreement and comply with its terms and in particular must not
use or disclose the information contained in this Memorandum or any other
information except as expressly permitted by the terms of the confidentiality agreement.
This Memorandum and all other information provided in connection with the proposed
investment in the company must be delivered to Keren Motors Limited on demand,
without keeping any copies or materials containing information derived from this
Memorandum or any other information provided.

This Memorandum sets out the requirements for the potential financing in the
turnaround and expansion program programme of Keren Motors Ltd. Keren Motors
Ltd may at any time and without prior notice and without any liability to the recipient
or its advisers: amend any of those requirements; negotiate with the recipient or any
other person to any timetable and on any terms which Keren Motors Ltd may decide;
provide different information or access to information to different persons; terminate
negotiations with the recipient or any other person; accept or reject any offer made,
irrespective of whether or not it is the highest offer; and reject all offers made. The
distribution of this Memorandum is not to be taken as any form of commitment on the
part of Keren Motors Ltd to proceed with any transaction on any terms but negotiated
terms.

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3 ENQUIRIES
Requests for further information should be directed for the attention of Mr Masauso
Lungu and addressed to:

KEREN MOTORS LIMITED

PLOT 6920,MUNGWI ROAD
P.O BOX 31897
Lusaka, Zambia
Mobile: (260) 0977 704922
E-mail:Masat92003@yahoo.com

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4 KEREN MOTORS LTD– CORPOARTE INFORMATION

Nature of Business
The Main Business Line for Keren Motors Ltd is Contract Haulage, Bulk fuel
transportation, Residential and Commercial Construction as well as Mining to be
specific Concrete Production

Physical Address

The Physical Address is Plot Number 6920-Lusaka

Postal Address
The Postal is P.O Box 31897

Contact Person
Mr. Masauso Lungu-Finance Manager

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5 Technical Feasibility

Land and Building /Equipments/Machinery

Keren Motors Ltd has got the following;

 Keren Motors Ltd has got over 100 fuel tankers that include open tankers that
are currently running and with a capacity of 36000 litres each tanker,
 Keren Motors Ltd has over 30 utility vehicles which it is current using on the
day to day running of the business, the Kazungula Bridge Project has in excess
of 10 utility vehicles to support its concrete bridge project

Electricity
ZESCO Powered Electricity at its Head Office and at Kazungula Bridge Project,
together with the Stand-by Generators

Water
Keren Motors Ltd is using water from its own boreholes at both properties at Head
Office as well as, at its Kazungula Project; the company has a water tanker

Lawyers
Kalokoni and Company

Bankers
Zambia National Commercial Bank,
Cavmont Bank Ltd,
First National Bank Zambia Ltd
Stanbic Bank Zambia Ltd

Location
Mungwi Road Plot 6920, in between Barloworld Zambia Ltd and Parmalate Zambia
Ltd

Auditors

KJK Tembo and Associates, a firm of Chartered Accountants with over 30 years
experience in Audit, Tax and Consultancy

Regulatory Association

Engineering Institute of Zambia, Transporters Associations of Zambia (PTAZ) and

other regulatory authorities

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6 TURNAROUND PLAN AND EXPANSION PROGRAM OPPORTUNITY
Keren Motors Ltd is a leading haulage company that is involved among other things in
the transportation business, mining and recently construction business. Keren Motors
Limited has been in existence for the last 29 years, with its core business being haulage
mainly wet transportation of bulk fuel cargo for clients like PUMA Zambia Ltd,
KOBIL Zambia Ltd, TRAFIGURA, the business is also involved in the
transportation of dry cargo mainly on its open trucks to various customers such as the
LAKE KARIBA INN and many other players who are looking for the transportation
of dry cargo within Zambia and outside Zambia.

Keren Motors Ltd, however had diversified the business in response to the stiff
competition especially in the Wet Cargo business owing to the weaker legislation which
has seen foreign tankers coming to lift fuel for the respective players in the business,
leaving transporters like Keren Motors Ltd and others with no manageable business
volumes to be able to meet their operational costs, this then in 2008 to 2009 financial
year prompted Keren Motors Ltd through their strategic plan to diversify their business
into the residential and commercial construction sector with the hope that this business
line with contribute a positive return on margin, to this effect in 2011 Keren Motors
Ltd was offered the contract to construct the Mkushi Road at estimated construct value
of K104,000,000 by the Ministry of Local Government and Housing, this contract is at
45% complete and Keren Motors Ltd has received 55% of the total contract value.

Keren Motors Ltd has another contract in Kalambo District under Ministry of Local
Government and Housing to construct low cost houses estimated at K9, 000, 000,this
contract is at 15% complete and no income received on this contract.

Keren Motors Ltd also entered into a Joint Venture agreement with Dawiq
International, a UK based construction a contract under Road Development Agency
(RDA) in the ratio 50% to Keren Motors Ltd and 50% to Dawiq at the contract value
of K118, 000, 000, this contract is at 12% Complete and 11% of the contract value has
been received so far from this contract.

In 2015 Keren Motors Ltd was offered a contract to supply Aggregate concrete by
Daewo International Ltd under Daewo International Botswana at the estimated
contract value of $6,986,000 and this contract is at 18% complete and Keren Motors
Limited has so received 10% of the advance payment guarantee and $707,565 of the
invoiced amount, this whole amount has gotten back because it was either paid directly
to purchase new equipments or used for operational purposes through the purchase of
cement ,diesel and explosives which constitute the bulk of the working capital needs for
Kazungula Bridge Project.

Keren Motors Ltd need for diversifying its business model from the traditional
transport sector to the construction sector was to advantage of the growth in the
construction sector and seeing that the transport sector was slowing down, Keren
Motors Ltd diversified its core business with serious consequences which include
among others;

1. After entering the sector, it became apparent to Keren Motors Ltd that
the sector required players with ready cash which Keren Motors Ltd did
not have and financial institutions in Zambia are generally risk averse to
invest in the sector,

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2. The employer here being the Zambian Government overcommitted itself
and such Keren Motors Ltd found itself not being paid for invoices it
raised some 9 months ago,

3. The sector is labour intensive, both requiring skilled and unskilled labour
who are not willing to wait for their monthly due arising from poor cash
inflow from late payments from the employer, in the end Keren Motors
Ltd found has itself dealing with labour related issues due to this
mismatch in the fixed cost and expected inflow, to this end in January
2016, Keren Motors Ltd embarked on a redundancy exercise on its
Mkushi project due to lack of payments of invoices by the Ministry of
Local Government and Housing, to this effect the labour position in
Mkushi Project has been reduced to a parley 15% of its former self.

4. Keren Motors Ltd overestimated the impact of the construction sector to

the overall business of the company because it became apparent that the
huge operational cost of construction started affecting other lines of the
business such as the transport sector because Keren Motors started
subsidising this business line with the transport income with the hope
that when the invoice will be paid the sector will be reimbursed, in the
end the general problem of the business worsen as the construction sector
continued to affect the company negatively, this has prompted Keren
Motors Ltd to do a turnaround plan for the business mainly focusing on
the Kazungula Bridge Project and the Traditional sector which is the
transport sector.

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 6. (II) TURNAROUND PLAN-KAZUNGULA BRIDGE PROJECT

Keren Motors Ltd mid last year was offered a contract by Daewoo International Ltd
Botswana to supply aggregate concrete to the ongoing construction of the Kazungula
Bridge Project, estimated at the total project cost of $256,000,000 on completion done
in phases or parts as they call it.

The Kazungula Bridge Project is a joint venture bridge construction project between
the Zambia Government and the Botswana Government, the bridge construction is
being funded by the two Governments assisted by the Africa Development Bank
(AFDB) ,the aim of the project is to increase the smooth flow of traffic between the
two countries which in the end will enhance commence and ultimately increase their
Gross Domestic Product (GDP) hence the participation of the AFDB in the project.

The Bridge construction exercise is a 7 year project, with phase 1, Keren Motors Ltd
being offered a subcontract value of $6,986,000 by Daewoo International Botswana for
a period of 3 years and subject to renewal when Phase 2 of the project starts, Keren
Motors Ltd is expecting to increase its contract once capacity is enhanced.

Keren Motors Ltd strategic plan and turnaround plan therefore is to focus fully on this
contract by way of increasing capacity by acquisition of new equipments and
construction vehicles (please see quotation attached, )currently due to lack of capacity ,Keren
Motors Ltd production levels are at 15% ,the reason for low production capacity is due
to lack of equipments and working capital to enhance production levels and such it
affects the amount of invoices being raised which are currently sitting at around $70,000
to $100,000 ,even when raised these invoices are deducted by Daewoo International
because of advances availed to Keren Motors Ltd mainly to cover operational costs
such as salaries ,explosives and diesel.

Keren Motors Ltd estimates that they need the following equipments in order to
increase their capacity to close to 80% optimum production levels, these equipments
and vehicles being;

I. 4- Inveco Mixer Trucks $559,179.36

II. 4-Inveco Tipper Trucks $313,765.14
III. 2-Excavators $553,000.00
IV. 1-Weighbridge $26,343.00
V. 3-Cement Tankers $162,672.42
VI. Wheel Loader $104,100.00
VII. Conveyor Belt $97,288.00
VIII. Drill Rig $275,000.00

Total $1,991,788.51

In additional to equipment and vehicle financing, Keren Motors Ltd would like to access
working capital requirements in order to meet the following key monthly expense lines
for the Kazungula Bridge Project once the project is at 80% capacity these being;
I. Monthly Procurement of Cement $182,179.60
II. Aggregate Stones $86,023.00
III. Diesel Cost $14,311.11
IV. Salaries and Wages $46,444.44
V. Explosives $35,000.00
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VI. Electricity and Water $22,222.22
VII. Plant Insurance on purchased items $99,589.43

Total $485,769.58

The total request to implement the turnaround plan for Keren Motors Ltd is as
follows;
I. Capital Requirement for Turnaround $1,991,788.51
II. Working Capital $458,769.58

Total Request for Turnaround and expansion $2,450,558.09

Keren Motors Ltd medium term strategy in seeking financing is as follows,

 To Turnaround the whole company–The Company strategy in seeking

finance is to enable it concentrate on the $6,986,000 Kazungula Bridge project
which is a project that the company has with Daewoo International Ltd funded
by AFDB ,with its income coming in Dollars and not under the Central
Government who take long to pay on the invoices raised, it is believed that this
once this Kazungula Project is well funded, Keren Motors Ltd will be able to
raise invoices per month in excess of $400,000,this the company will believe will
help in redeeming the existing facilities the company has with Barclays Bank
Zambia sitting at $1,105,000 as on 1s2t May 2016,this figure is based on the
consent order signed between Keren Motors Ltd and Barclays Keren Motors
Ltd believes that once the turnaround plan is achieved the company will be able
to redeem the facility from this Kazungula Bridge Project because they is
assurance from the employer for a possible renewal if phase 1 is properly
executed, this execution is dependent largely on equipment and necessary
machinery being requested, it must be said that Keren Motors Ltd main
bankers,Zambia National Commercial Bank Ltd has already expressed interest
to fund the project,and it is from this position that Keren Motors Ltd would
like Barclays Bank Zambia Ltd to restructure the outstanding Balance on the
consent order to realign the current cashflows to the expected new tenure from
ZANACO once the turnaround plan is achieved in June

 To Reorganise and Expand the Business-over the last one year, it has
become apparent that the dependent on the government contracts has made
Keren Motors Ltd balance sheet worsen due to increasing arrears on its loan
book with various players due to the nature of the split banking going on at
Keren Motors Ltd, the reason for this is because Keren Motors Ltd had
concentrated investing its resources in Government contracts which have
yielded no return at all, so the current strategic plan is to move away from
government dominated contracts and concentrates on contracts that are not
government oriented such as Daewo International Ltd ,the second quarter
strategic plan is also to increase income in the transportation sector, to this
effect the current PUMA Zambia Ltd contract is being scaled up in order for
the company to increase its income from the current K350,000 to K400,000 to
about K700,000,this contract is already assigned to Zambia National
Commercial Bank Plc and we expect that by the end of may the income from
PUMA Zambia Ltd will increase,but again the problem we face here is that we
had invested so much in the construction sector and we now have no

9
 operational funds to repairs our vehicles since the income from PUMA Zambia
Ltd is coming directly to ZANACO, this in turn has affected the number of
vehicles available on the PUMA Contract, however our strategy is that we
reorganise this transport side to take advantage of the increasing need for fuel
in Zambia and the liberation of the sector that allows private companies to lift
fuel on behalf of the country and other players in the market,

 Increasing the Kobil Zambia Ltd Contract –Keren Motors Ltd strategy is to
increase the Kobil Zambia Ltd, this is hoped will increase the income coming
to Keren Motors Ltd, currently the Kobil Zambia Ltd contract is bringing an
average of K300,000 per month, this income which is going into Stanbic Bank
Zambia Ltd account, Keren Motors Ltd hope to increase this business volumes

7 The Business
Keren Motors Ltd is a haulage company that has been in existence for the last 29 years,
its main line of business has been mainly haulage business and the bulk fuel
transportation from one destination to the other, Keren Motors Ltd was promoted and
started by Mr. Berhane Kibrom who saw an opportunity for good capital growth by
10
 investing in the transport sector, he started with only 5 trucks and over the years the
company has grown to be one of the leading companies in the haulage and bulk fuel
transportation business in Zambia and is one of the big players in the continent, the
company over the last years has also seen an opportunity in the construction sector
which has been necessitate by the Patriotic Front Government deliberate policy to
create and increase capacity in the construction sector, this over the years has seen an
increase in foreign owned companies who have been the major players in the
construction sector.

Keren Motors Ltd therefore, decided to enter into this sector whose main objective
was to source business and be an active player in the Market ,to this effect Keren Motors
Ltd has been offered construction jobs to Construct the Kazungula Bridg the cost of
$6,984,000 ,the project which is already in the process, Keren Motors Ltd has another
contract in Mkushi at a total value of K104,000,000,Keren Motors Ltd has also another
Contract Kalambo estimated at the contract value of K9,000,000 and Keren Motors
Ltd is also involved in a joint venture agreement with Dawiq estimated at a cost of
K118,000,000. Keren Motors Ltd therefore has fully entered this sector.

However, as started before this sector has seen a slow growth on returns due to huge
mismatch between the invoices raised and the income received, currently Keren Motors
Ltd is sitting with invoices it raised in October 2015 that have not been paid and this
has affected the business badly, going forward Keren Motors Ltd has decided to refocus
its business model into the Kazungula Bridge project which is a dollar dominated
contract and not under the Zambian Government and also decided to reorganise their
core competence which is the transport sector by increasing capacity on the PUMA
Zambia Ltd, and KOBIL Zambia Ltd Contracts ,in the last 2 months Keren Motors
Ltd through Petroleum Association of Zambia(PTAZ) has been talking to DALBIT
International, a Kenyan based petroleum company who have been offered a contract
by the Zambian Government to lift fuel for Zambia, Keren Motors Ltd through PTAZ
is expected to participate by lifting fuel from Mozambique, Zimbabwe to Zambia, this
contract will replace the TRAFIGURA Contract which was a dollar dominated
contract.

In addition Keren Motors Ltd has just signed a contract with Transmission Eltel
Limited for the hire of fuel tankers, this contract will be assigned to Barclays Bank
Zambia Ltd

Further Keren Motors Ltd has decided to engage Lafarge Cement Plc for the bulk
transportation of the quarry stones ,this before the contract was not renewed
contributed to 70% of the total income and when this contract was not renewed Keren
Motors Ltd decided to enter into the construction sector which has faired badly on its
books.

Therefore with this new strategy that moves away from the construction sector and
focus its energies on Kazungula Bridge project and the core competence of the
business, Keren Motors Ltd expects turnaround of its bad fortunes to good fortunes
starting in the third quarter of 2016.

8 The Financing and Investment Proposal

Given the Continued growth in the Mining Sector and Fuel Transport Sector, the
financial proposal is as follows;

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 Existing Facilities with Other Financial Institution-Keren Motors Ltd had
obtained an advance Payment Guarantee for its Mkushi Road Project with First
National Bank at 10% of the K104,000,000 Contract value and further
obtained a lease for its Mkushi Project, whose balance is sitting at K564,000
,however this facility is no deemed redeemed after a transfer of Daewo Paid ,
Keren Motors Ltd has an operational Account at Stanbic Bank Zambia Ltd
,there is no facility currently at Stanbic Bank Zambia Ltd, Keren Motors Ltd
obtained an advance payment guarantee with Cavmont Bank Plc for the
Kazungula Bridge project at 10% of the Contract value which is $6,986,000
and has a temporally overdraft facility sitting at around K823,000. Keren Motors
Ltd has a lease facility with Alios Finance Ltd for its tanker sitting at
$1,200,000,however this facility is marred with controversy because it became
apparent that Alios Finance Ltd did not follow the applicable law when
disbursing the facility hence some overcharges were noticed. Zambia National
Commercial Bank is sitting at around K39million as at 21st May 2016,with
expected increase of additional $2500,000 when the Kazungula project is funded
by ZANACO.

 Financing-Keren Motors Ltd is looking for $1,991,788.81 as capital

requirement for a period of 3 years and working capital of $485,769.58 for a
renewable period of 12 months, which its main banker is currently
considering, the financial proposal is that the existing facility at BBZ should be
plc should be consolidated be reviewed and a longer tenure structured to allow
Keren Motors Ltd to pay without difficult because the current monthly cost of
around $100,000 towards the facility is prohibitive given the current economic
environment and the current business model,Keren Motors Ltd believes that
once ,the turnaround is achieved ,the company will be in a position to meet a
monthly figure of around $50,000 per months coming specifically from the
Kazungula Bridge Project assisted by the transport ,this with full discount of the
Government contracts, this Keren Motors Ltd believes is an attainable position.

 Security Offered-Keren Motors Ltd is offering the existing security with BBZ
,further it our proposal that since there was an undertaking that once the
$400000 or so from ZANACO was paid the Lusaka security which is also the
subject of the consent should be released ,Keren Motors Ltd wishes to reaffirm
that this undertaking should be reactivated to allow Keren Motors Ltd to pay
this amount to free this property while at the same time redeeming the
restructured amount with BBZ.

 BBZ Consent Order- Keren Motors Ltd is proposing that the current consent
order monthly payment of around $100,000 should be reviewed and reduced to
around $40,000 to $50,000 ,this is in line with the expected income from
Kazungula Bridge Project and seeing that Keren Motors Ltd is accessing close
to $2,500,000 from ZANANCO to increase capacity for the Kazungula Bridge
which will also help to repay the BBZ amount.

 BBZ Consent Order-Keren Motors Ltd is also proposing that Plot 9345 in
the consent should be deemed freed as per the bank undertaking if the
equivalent amount of the ZANANCO expected inflow then is paid to BBZ ,this
is to allow the property to be freed in line with that undertaking of 2014 March.

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  BBZ Consent Order-Keren Motors Ltd is proposing that the repayment of
the restructured monthly amount should be in line with the expected inflow
from the expected expansion plan for the Kazungula Bridge Project

 BBZ Consent Order-Keren Motors Ltd entered into this consent order on the
strength of the government contracts that have not contributed anything and
this have prompted Keren Motors Ltd to discount them and request for a
review of the consent order on the basis of the Kazungula Bridge project only
and transport sector

9 Valuation of the Business

The Business Valuation is based on market value calculation using discounted gilt edge
securities and new and existing acquired contracts, the valuation is sitting at around
$30,000,000, this valuation is aside the asset and properties valuation which is currently
being done by five star properties.

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10 Shareholders

Name Age
Kibrom Berhane 90

Jane Makumba 10

*Note all the existing Shareholders are Zambians

11 Reasons Why invest in Keren Motors Ltd

The key advantages of investing in Keren Motors Ltd are:
 Keren Motors is run and promoted by well experienced professionals in
thee bulk fuel transportation and mining sector, the Managing Director of
14
 Keren Motors Ltd has been in the bulk fuel transportation business for over
30 years and is a well renowned businessman in this sector,
 Keren Motors Ltd is offering grade A contracts for the restructured amount
which is dollar dominated contract with Daewoo International Ltd valued
at $6,986,000
 Keren Motors Ltd is prepared to do the assignments of receivables to the
BBZ on Eltel Contract and Delta Energy Ltd International, provide
personal guarantees of the directors and any other preferred form of
security preferred by the financier,
 In addition to the Daewoo International contract, Keren Motors Ltd has
existing contracts with PUMA Zambia Ltd, KOBIL Zambia Ltd and just
recently signed a hire of tanker business with Transmission Eltel Zambia
Ltd and is finalising an agreement for hire of tankers with ORXY Energies
Zambia Ltd,
 Keren Motors Ltd has experience borrowing under debt and as such is
aware of the expectation of the financiers, in addition Keren Motors Ltd in
line to position itself and to be in line with corporate governance issues has
just recently recruited new management team, the company has just
employed a new Finance Manager and is in the process of setting a new
board of directors to oversee the operations of the business,
 This is a good opportunity for a financial institution to enter into the sector
with good prospects of growth,
 Keren Motors Ltd is in the process of putting together a board of directors
at the company in order to allow for the process of succession plan and
good corporate governance, to date names likes the former Bank of Zambia
Governor, Dr Michael Gondwe is being considered to be the board
chairperson, this strategy is to benefit from Dr. Gondwe vast experience
both at the Bank of Zambia and PTA Bank.

Keren Motors Ltd is an excellent opportunity for a group of investors:

(i) Investors who are simply seeking an opportunity for good capital growth; and
(ii) An investor who have an appetite for commodity financing and need to grow
indigenous companies with the bottom of the pyramid approach,

12 Transport and Mining Industry

Macroeconomics and Transport
Construction is a critical sector of the Zambian Economy.
One third of the country’s labour force works in it which typically provides about 20
percent of GDP. The sector is characterized by a traditional system which has a low
15
 productivity and a small but highly important real estate sector. The two sectors share
common constraints which is CREDIT.

The amount of credit available is very limited in relation to demand, even though
nominal credit cost are high, the commercial bank loan interest rate ceiling, set by Bank
of Zambia, is now 15.5% in Kwacha.

13 Goals and Objectives after Expansion Plans

 With this additional capacity the company intends to increase its transportation
business as well as increase capacity on its Kazungula Bridge Project in the third
quarter of 2016.
 It is expected that once the expansion program is achieved Keren Motors Ltd
will begin to redeeming the restructured facility at BBZ by the end of June to
July 2016

14 Mining and Transport Materials Inputs

The Main Construction Inputs are;
 Mining Materials–The Main mining Inputs is Cement, explosives, diesel which can
be found locally.
 Other Main Inputs-The other critical materials are bought within Zambia to
promote Zambian businesses.

14.1.1 Electricity
The Company uses much electricity in the mining process, the average monthly electricity
bill is sitting at K100,000 and is projecting that this bill will increase once capacity has been
increased on the Kazungula Bridge project, In addition the company has a standby
generator at its premises in case of electricity shut down.

14.1.2 Labour
The labour used in the transport sector and the mining area is sourced locally; currently
Keren Motors Ltd has in excess of over 150 workers on all its sites including Kazungula
Project.

15 KEREN MOTORS LIMITED SENIOR MANAGEMENT

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15.1 Managing Director-Mr. Berhane Kibrom

Mr. Kibrom is the Managing Director of the Company; he has over 30 years in the
bulk haulage transport and general business management.

Mr. Kibrom has been instrumental in business development as well as project

overseeing; Mr. Kibrom was instrumental in sourcing of the Kazungula Bridge
Project, and recently he has just signed a new contract with Transmission Eltel Ltd
Contract.

His relationship with the business peers and partners has been excellent; because
of his business experience and expertise, Keren Motors Ltd is being considered for
equity partnership with Nitrogen Chemicals of Zambia (NCZ).

Mr. Kibrom is an Eritrean who is a naturalised Zambian and married to a Zambian

woman, he is over is 57 years old and in good health, he holds a degree in
mechanical engineering from Eritrea.

15.2 Operations Manager.-Joseph Ngosa

Mr. Joseph Ngosa is the Operations Manager of the Company, he coordinates all
the operations of the company, including all the operations of all contracts for the
company, Mr. Ngosa is the in the Management level of the Chartered Institute of
Management Accountants(CIMA) and has over 10 years experience the transport
business and general trading business.

Mr Joseph Ngosa is responsible from overseeing the construction sector and works
hand in hand with the Kazungula project team to ensure that there is smooth
operations of the operations with Head office, his responsible for ensuring that the
team in Kazungula is working according to the contract with Daewoo International
Ltd.

He is a Zambian Citizen with a mature age of 39 years, in good health with no

criminal record.

15.3 Finance Manager-Mr. Masauso Lungu

Mr. Masauso Lungu is the Finance Manager of the company, he has over 10 years
post qualifying experience, his experience includes being the Finance Manager of
Zambia Pork Products Ltd and he was also the Head of Credit for Madison
Premier Finance Ltd, a Non-banking financial institution.

At Keren Motors Ltd he is involved in the day to day operations of the company
finance, including setting credit limits with suppliers and customers as well as
engaging with financial institutions.
.
Mr. Lungu is a Management Chartered Accountant (CIMA), a Zambian Citizen
with a mature age of 39 years, in good health with no criminal record.

15.4 Project Manager,Kazungula Bridge-Mr. James Zulu

Mr. James Zulu is the Project Manager for the Kazungula Bridge Project, this being
the Daewoo Project with a contract value of $6,986,055 to construct the Kazungula
Bridge Project, Mr Zulu is responsible for the General overseeing of the Project,

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 his responsible for the meeting the targeted output of concrete given by Daewoo
International Ltd and his staff with minimal supervision from head office.

Mr. Zulu holds a bachelors degree in Mechanical Engineering from the University
of Zambia and before joining Keren Motors Ltd, Mr Zulu worked for the Konkola
Copper Mine as supervisor in the quarry section and project Manager for quarry at
Lafarge Cement Plc.

Mr. Zulu is assisted by other Engineers and technicians who are managing their
respective departments; these include Mr Yussief Tressigate, Engineer, with a
degree from Eritrea, Mr Kelvin Milanzi, and Quarry Manager, qualified with a
certificate in Mechanical fitting

Mr. Zulu is a Zambian and above over 45 years in good health and no history of
criminal record.

15.5 Human Resource Manager–Clavel Chola Mwewa

Mr. Clavel Chola Mwewa is the Human Resource Manager of the company, he is
involved in the day to day management of staff for the company, Mr. Mwewa has
over 11 years experience in human resource management, and he is a holder of a
diploma in human resource management from Cambridge College in the United
Kingdom.

He is over 36 years old and a Zambian, with a clean bill of health and no criminal
record.

16 FINANCIAL PERFORMANCE

The Company Audited Financial Statements for the Last 3 Years are
Attached to the Private Placement Paper. (Please Kindly see the attached
Financials)

16.1.1 Marketing Strategy

The Main Marketing Strategy for Keren Motors Ltd is the quality and efficient provision
of services to its customers and timely delivery of bulk fuel to the customers designated
station, Keren Motors Ltd has invested heavily in quality management and has also
invested in cost cutting measures.
17 Competitors
Keren Motors Ltd has several competitors in the transport sector due to the number of
players in the industry due to the liberation of the sectors, however Keren Motors Ltd
benefit from being the oldest indigenous company in Zambia with over 30 years
experience in the fuel transportation business, it is recognised in Zambia and regionally
,while in the mining sector, Keren Motors Ltd competes in a different sector such as
the quarry sector were it is among the top 10 players, this is evidenced by the Lafarge
cement contract and the Kazungula Bridge Project, therefore Keren Motors Ltd has
developed a privileged market were it is operating its business.

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18 Situational Analysis

18.1 Sensitivities
The key sensitivity in this Model is the ratio of prices and quality service delivery. An
indication of this sensitivity is given below:
Students Month 1 Month 2 Month 3
Service fees Varies Varies Varies*

 *Fees structure as per contracts attached

18.1.1 Other sensitivities

Other factors that May have a material effect on the Investment:

Upside

 Good Policies by the Current Government Supporting Growth in the economy,

especially in Agriculture, mining and construction were Keren Motors Ltd is actively
involved ,

 The expected bumper harvest will have a positive effect on the transportation
business for open trucks because they will be more need for transporting maize and
its products in the farming population which support the business,

 The Company has well educated and experienced management team with vast
experience in all the sectors were Keren Motors Ltd is involved ,it is expected that
this strong management team will be with the company for the period under debt,

 The current availability of Raw Materials and the availability of Main Suppliers of
these Raw Materials have Made it possible Companies to do the project within the
stipulated time,

Downside

 Lack of funds to fully operationalise the Kazungula Bridge Project,

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  Still competition from various companies offering the same services,

 Lack of enthusiasm from financial Institution to fully support indigenous

companies with experience and technical knowledge with equipments to match
their foreign competitors as such the Zambian Business are left to be non-
competitive in the market,

 Continued high borrowing and operational costs continue to harm the business,

 Rigidity in the financial institution sector as regards the realistic position of most
Zambian companies hence allowing these companies to fail even when there is
room for a turnaround

19 Activity Schedule

19.1 Activity 19.2 Period

Turnaround and June 2016
Expansion Plan

As far as we are concerned, the above implementation schedule is achievable provided

there are no foreseeable problems.

20 Utilisation of Funds

The Major Utilisation of Funds is for the purchase of equipments and vehicles for the
Kazungulu Bridge Project as well working capital requirements needed to enhance
operational capacity in order to increase its operational capacity to current 15% to the
project 80% when fully operational.
Keren Motors Ltd believes that once this turnaround,the current consent order will be
redeemed because the business will create capacity to increase its invoices that will help to
redeem the BBZ facility.

21 Economic and Social Benefits

The Company has staff Compliment of about 150 including Management and support
staff, it is expected once the expansion program is achieved, and additional staff will be
recruited.

22 Conclusion
The Project Potential, Economic and Development Impacts are several. They include
employment creation, provision of good road network system between the Zambian
Government and the Botswana Government, it is hoped that once this Bridge is fully
completed the both countries will improve trade which will ultimately increase their Gross
Domestic Product and Keren Motors Ltd is proud to be associated with such a great
historical construction project between two Governments.

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