TET TEA FACTORY COMPANY LIMITED

F E A S I B I L I T Y S T U D Y.
Done By:
J.K.A. Koech / R. Koech,Weldon Korir.
P.O. Box 27, Kericho
20200.
Cell: 0722 668 755; 0722 407 200
e-mail: joelkoech@yahoo.com

Private and confidential

December 2010

TABLE OF CONTENTS.
EXECUTIVE SUMMARY......................................................................................................4
1.

Background......................................................................................................................5

2.

Sponsors of the Project....................................................................................................6

3.

Details of Tet Tea Factory directors...............................................................................6

4.

Advisory and Coordinating Team..................................................................................7

5.

Legislation........................................................................................................................9

6.

Management...................................................................................................................10
6.1 Human resource.....................................................................................................10
6.2 Management structure:...........................................................................................11
6.3 Responsibilities and Authorities of Key personnel................................................13

7.

Current production........................................................................................................13
7.1. Current availability of the product:.....................................................................13
7.2.

Tea producing areas:.............................................................................................13

7.3.

Production in Konoin ,Bomet county:.................................................................14

8.

Current Consumption...................................................................................................15

9.

Marketing Outlets and Future Trend..........................................................................15

9.1

General:...................................................................................................................15

9.2

Current Markets Outlets:........................................................................................15

10.

Potential Market Outlets...........................................................................................17

10.1.

Branded tea:........................................................................................................17

10.2.

Value added teas..................................................................................................17

10.3.

Emerging markets...............................................................................................17

11.

Pricing Structures......................................................................................................18

12.

Distribution:...............................................................................................................19

13.

Production..................................................................................................................19

13.1.

Product:...............................................................................................................19

13.2.

Location of the project:.......................................................................................19

14.
14.1.

Production Plan..........................................................................................................22

Source of Heat Energy for Drying....................................................................22

14.2.

Tea Processing....................................................................................................23

15.

Financial Evaluation.................................................................................................27

16.

Economic Evaluation.................................................................................................28

17.

Sensitivity Indicators ................................................................................................28

18.

Implementation Schedule..........................................................................................29

1. EXECUTIVE SUMMARY.
1. Tet tea Factory Company limited intends to invest in
the establishment of a tea Factory in Kimulot Division
of Bomet County.
2. Total estimated value of the investment is Kshs. 209,
444,000 (Two hundred and nine million four hundred
and forty four thousand shillings).
3. The project will be financed by Equity contribution
from shareholders, promoters and financier/strategic
partner as identified by the directors of Tet Tea
Factory Company limited.
4. The feasibility study reveals that the project will bring
in profits in the first year of operation and continues
to be profitable even after the sixth year of operation.
5. The project has good economic benefits to its
shareholders and the community around the location
of the project. This includes a direct employment of
75

people

and

sustainable

cooperate

tax

remittance.
6. The returns on both the Equity and the Investment
are quite good and sustained by a good flow of cash.

7. The project is technically feasible, economically viable

and
supported.

8.

financially sound and should be

Tet Tea Factory Company limited, in collaboration

with
the
strategic investor, has identified all the machinery,

equipments and
materials necessary for immediate
implementation of the project.

9.

The construction of the factory plant will commence

as soon as the Tea Board of Kenya issues a
manufacturing license to Tet Tea Factory

2. Background.
(a)The Tet Tea Factory Company Limited, a company limited by shares, was founded in
2009.Her directors, shareholders and promoters have been involved in tea farming,
fabrication, assembly and maintenance of tea Machinery in various tea factories in East
Africa for over thirty years. The directors of Tet Tea Factory Company limited would
like to invest in tea manufacturing facility, value adding of tea and in the marketing of
finished products in both local and international markets.
(b)The government encourages investment in tea sub-sector since Tea processing,
packaging and marketing was liberalized in 1992. This liberalization meant opening the
tea sector to various investments at various sections of the tea sector. However certain
regulatory procedures issued by the Tea Board of Kenya (TBK) as stipulated in the Tea
Act, must be met before and during operations in any investment on Tea. These
regulations covers various categories in Tea handling such as in Planting,
Manufacturing, Value addition, Marketing, Tea Estate management, Warehousing,
research Etc. While fulfilling the regulations required by the Tea Act, Tet Tea Factory
Company Limited would like to use this window of opportunity to invest in a tea
manufacturing factory.
(c)Tet Tea factory company limited directors, shareholders and sponsors has a rich
background on tea operations and would like to use their experience for further
development in tea operations by investing in a manufacturing factory. This project will
entail the building of a factory, acquisition and assembly of state of the art tea
manufacturing machines and facilitating the purchase of green leaf from the sponsors
and Suppliers of green leaf for conversion to black tea and specialty tea products.
5

(d)This project appraisal examine in details the viability and feasibility of Tet Tea Factory
companys vision setting up of a tea processing factory to be located in Konoin district
in the Bomet County in Rift valley province.

3. Sponsors of the Project.

a) The project is to be sponsored by:
i)

Tet Tea Factory Company Limited: This is a company limited by shares and
incorporated in Kenya under the company Act (Cap.486). It is run by a board of
Directors elected periodically. (See appendix 11 certificate of incorporation).

ii)

Small scale Tea farmers: These are the suppliers of the raw materials to the factory.
They have also been offered shareholding in Tet Tea Factory limited.

iii)

Financier/strategic partner: Tet Tea Factory Company Limited has invited a strategic
partner to fill the shortfall in the financing of the project. The engagement will be based
on agreed Equity contribution.

iv)

Other shareholders:
These are drawn from the general public who may not necessarily be suppliers of green
leaf. Their input will be based on purchase of shares.

b) Sponsors Equity: The entire investment will be financed by Equity contribution from the
sponsors as in (a) above. It is estimated that the total cost of the factory will be
Kshs.209, 444,000.

4. Details of Tet Tea Factory directors.

Mr. Metet Kipkoech Kenneth, 33, Chairman of the Board of Directors, Tet Tea Co.
Ltd.
Kenneth is a graduate of Maseno University in Bachelor of Science in Horticulture.
He worked with M/S Sulmac, a horticulture firm in Naivasha in Kenya before venturing
in to private agri-business.
He is result oriented personality, easily accessible and a team builder. He currently
manages family tea and real Estates.
He is also a chairman of small scale tea farmers supplying green leaf to Williamson Tea
Company in Kericho. He is the current lead trainer for Utz, Fair trade and Rain Forest
certification of small scale tea farmers. He will be a big asset to Tet Tea Factory Company
limited in harmonizing Tea quality procedures and welfare of the community with
international standards.
Mr. Didar S Hunjan, 67vice-Chairman of the Company
Didar is a Mechanical Engineer by profession. He has over 30 years of experience in tea
having worked with African Highlands Produce Company Ltd. (now James Finlay (K)
Ltd.) in their tea plantations and factories. He has been mainly involved in the research
and development of new inventions of tea machineries especially tea sorting machines.
He is all round trained on tea production and quality control. He is a co-founder of
Tealand group of companies. His wealth of experience in tea machinery will be of great
value to Tet Tea Factory.
Mrs. Bornice Soi, 56
She is a teacher by profession and a devoted tea farmer. She has a lot of interest in real
estate development and owns a well established real estate in the heart of Kericho town
and in local trading centers in Konoin District.
She has been a district representative in the Bomas Constitutional reform commission.
She sits in various community based committees and licensing Boards in the district. She
is the contributor of the parcel of land where the proposed Tet Tea Factory company
limited will be built on.
Mr. Kirpal S Hunjan, 66
Mr. K S Hunjan is a Mechanical Engineer with a lot of experience in structural design
and fabrication. His experience in structural works will be useful to Tet Tea Factory in
building designs and in the erection of structural works and subsequent maintenance.
7

Mr. Robert Cheruiyot Metet, 33

Robert is a graduate of University of Nairobi in Quantity Survey and Management. His
profession will be an asset to Tet Tea Factory limited in the management of resources
during the construction of the factory. His management skills will also be useful in the
design and placing of management systems and controls. Robert is one of the small scale
tea farmers who will supply Tet tea Factory with green leaf. He will take care of the
interests of small scale tea growers in the board.
Mr. Inderjit S Hunjan, 61
Inderjit is a British citizen and a Mechanical Engineer by profession. He has gained
substantial experience in tea machineries relating to the design, fabrication, quality
control and installation. His international exposure in tea and tea machinery technological
advancement will be very beneficial to Tet Tea Factory. He is also a founder member of
Tealand Group of companies.

5. Advisory and Coordinating Team.

Tet Tea Factory Company limited has contracted the following team of three individuals to
provide advisory services. They will also coordinate the project starting from the feasibility
study until six months after the commissioning of the project.
(a) Rehmi K. Koech: Is a certified public accountant, has a bachelor of commerce from
Nairobi University currently pursuing the final year in MBA in the same university. He has
worked in management position with National housing corperation, Industrial commerce
Development Corporation (ICDC), Kenya National Trading Corporation (KNTC) and now
works with Kenya Institute of public policy Research Authority (KIPPRA). He specializes in
Auditing. He has been a national chairman of Rotary club among many other public
engagements.
b) Weldon Korir: is a certified public accountant with many years of service with Unilever
limited. On retirement with Unilever, he has been engaged in private business which includes
tea farming and service provision to Multinational tea companies in Kericho. Weldon has a
rich background in management and control of accounts. Some of the major assignments has
been in sales collections marketing strategies, construction of unit accounts, setting and
managing Financial controls, Executive reporting, appraisal of new projects and their
implementations and evaluation.
(c) Joel K.A.Koech: A career manager of over 32 years working with Tea. On completion of
E.A.A.C.E (passed with 3p and 1s), Joel was employed as a management trainee with the
then Brooke Bond (K) Ltd (now Unilever Tea Kenya ltd.). He rose through the ranks to be
senior manager both in field and factory operations. A few of the areas he worked extensible
includes:

Estate Field operations.

Mombasa trading and saleroom operations.
Running development Projects in factories technical services.
Management of Factory production.
Retooling of various factories.
Management of company small scale farmers both in Rift valley and Central

provinces..
Rehabilitation of Small scale tea farms in Bahati, Nakuru.
9

 Managing Value adding projects for specialty markets.

Installation and Presentation of factorys good Manufacturing practice (GMP) for
external Audit.
Training assignments under Future Force Training Consultancy Company.
He has extensive training in various fields both locally and in U.K.
He will oversee and coordinate the implementation of the entire project of Tet Tea
factory company Limited.

6. Legislation.
1. Tea Act (Cap 343) and Tea (Licensing, Registration and Trade) Regulations,
2008.This act generates the several regulatory requirements in detail in the Tea sub sector of
the Kenyan economy.
The directors and shareholders of Tet Tea Factory Company Limited
10

are confident that they will satisfy all the requirements and demands of the Act and
be able to obtain the various licenses from the Tea board of Kenya for the intended
investment. A standard form C is attached as appendix 12.
2. National environmental management Authority (NEMA):
Tet Tea Factory directors have an elaborate policy on environment, attached as
appendix 13.
However, an independent impact assessment and certification by NEMA is part of the
requirement by the Tea Act. Tet Tea Factory Company limited has therefore engaged
the services of GREANEIA consultants for this purpose.
3. Other legislation:
These include licenses from the county government, Water companies, Kenya Power
and lighting. The process of acquiring these required documents is already on- going.
Water Resource Management Association of Lake Victoria Basin will process the
water abstraction permit once the mandatory conditions have been satisfied.
See appendix 14.
The Kenya Power and Lighting Company limited Western Kenya Region have
confirmed their willingness to connect electricity to the factory once the construction
starts. A copy of their response to our application is attached as appendix15.
4. Quality certification:
Tet Tea Factory Company intends to produce a world class product which is good
and safe to the consumer. The directors have already drawn a product Quality and
consumer safety policy, attached as appendix 16.
However, Tet Tea factory will commit all the necessary resources to obtain Quality
Certifications such as Kenya Bureau of standards, ISO, Rain forest Alliance, Fair
Trade, Utz etc. The process of acquisition of each relevant certification would
commence once production starts. One director of Tet Tea Factory limited is already
involved in Rain Forest Alliance, UTZ and Fair Trade in anticipation of Tet Tea
factory using his expertise as soon as Production starts.

7.

Management.
11

(a)Human Resource.
(i)Employment creation: The project is expected to create 75 direct employment
opportunities with a multiplier effect of over 20 to give over 1000 indirect
opportunities for inhabitants of the area. Konoin and the greater Kericho districts has
plenty of experienced and professional workforce in tea processing in want of
immediate employment and Tet Tea Factory would like to tap into this available
human resource.
(ii)Placing: This Investment in a factory demands that the positions of both
management and directorship will be occupied by persons of high integrity and
professionalism. Tet Tea Factory Company Limited are already aware of this
prerequisite and will therefore put up rigorous engagement procedures for recruiting
and placing of staff in both management and directorship. Additionally strict controls
procedures and modern professional management systems will be instituted to govern
this investment accountably and more so transparently.
(iii) Management Information system: Placed human resource would require a
comprehensive computerized management system as operational assistance.
The directors of Tet Tea Factory Company Limited are keen in putting in place
modern management information systems for use in running, monitoring, controlling
and evaluating every aspect of this investment instantly and periodically. This will
include the installation of security surveillance cover.
.

(i)

Management structure and Numbers:

Chairman
Chairman
General Manager (1)
Chairman

12

Human r
Factory

Personnel & Admin .

unit

Factory

manager 1

Manager 1

Accountant
(1)

Production

Factory

assistants(3)

Engineer (1)

Purchasing

Assistant

Assistant

Clerk (1)

(1)

(1)

G e n e r a l

Section

Personnel

Heads (10)

Transport

Technical

Data Entry

Store

Sales

Assistant (3)

Clerk (4)

Clerk (1)

Clerk (1)

F a c t o r y

W o r k f o r c e (43)

Unit Manager
Total factory employees = 73

(ii) Key Job Description:

(a)Board of Directors: This consist directors of the company and has a
chairman and a secretary. They formulate policies and oversee the overall
strategy of the investment. They are elected regularly as per the company
articles of association.
13

(b)General Manager: This is will be the chief executive of the company

and is responsible for the day to day running of the factory. He will be
reporting to the Board of Directors on the performance of the factory.
(c) Factory unit manager: He will be in charge of factory operations
that cover production and plant management. He will be assisted by a
factory engineer, two shift management assistants and a field extension
services assistant .He will be reporting to the General Manager.
(d) Personnel and administration Manager: He will be in charge of all
personnel

and

administration

matters

that

include

facilitation

of

employment, placing, training, governance matters, security, transport

fleet management and procurement. He will be reporting to General
Manager.
(e)Factory Accountant: He will be in-charge of all factory accounts
reporting, sales accounts, stores administration, and data entry.

8. Production:
i)

14

Tea producing areas:

The major Tea producing areas include former districts of Kericho, Nakuru, Nandi,
Kisii, Nyamira, Kiambu, Kirinyaga, Nyeri, Muranga, Meru, Tharaka, Nithi,
Nyambene, Mt Elgon, Bomet, Vihiga, Tranzoia and now Transmara.
ii)

Production in Konoin ,Bomet county:

The location of the proposed Tet Tea factory will be Konoin in Bomet County where
there are six other factories which manufacture tea from small scale growers. The
District has all agronomical and climatic factors which favors tea growing in all
seasons.
The sponsors of Tet Tea Factory are among those currently supplying green leaf to the
six factories in the zone. However, the existing factories cannot cope with the volume
of leaf available throughout the year and especially in peak seasons. The peak season
normally starts in April and continues into early January with a climax in November
/December.
This bottleneck in factory capacity has given room to informal transfer of leaf to other
manufacturing facilities far away from the farmers area of operation. Furthermore, the
informal green leaf transfer gives the farmer erratic and low income i.e. the farmer is
not adequately rewarded for both the Quality and the Quantity of leaf he produces.
This has impacted negatively on improvement of yields and on the desired expansion
programme by the growers. They believe that by supporting Tet Tea factory they will
get access to farm extension services that can translate to better yields and to improved
factory capacity that can encourage them to expand their area under tea.
In answer to the wishes of the sponsors (green leaf suppliers) Tet tea Factory Limited
will set up systems that will ensure the farmers are well rewarded for their efforts in
the supply of both quality and quantity of Greenleaf at all times.
The factory will also work with the farmers by providing extension and advisory
services.
Tet Tea Factory Company limited will also, on behalf of the farmers, connect with
other stakeholders e.g. Tea Research Foundation, Relevant government departments
and other Agencies to ensure the sponsors do not lack behind in relevant information
and latest technological advancement

15

9. Consumption.
(a)

Local consumption: The production of tea in 2010 stood at total of three hundred
and ninety eight and a half (398.5) million Kgs. Local consumption was a mere
18.7 million kilogram of tea. This works out to below 0.5 Kgs. of tea per each
head of forty million Kenyans Most of the tea drank locally are in loose packets
or tea bags. Specialty tea products are still majorly underdeveloped. Tet Tea
Factory Company Limited would like to explore windows of opportunity for

(b)

selling its product in the local market.

Exports: Kenya exported a total of four hundred and forty one ( 441) million
kilograms of tea in 2010.The major consumers of Kenyan tea are Egypt, UK,
Pakistan .Afghanistan and Sudan which in total consumed 73% of

last years

(2010) export volumes ( statistics released by the Tea board of Kenya).

These are mainly Kenyas traditional markets. However emerging markets like
China, UAE, Canada, U.S.A. and Poland are encouragingly beginning to make
their presence felt in the Kenyan Tea Trade. Tet Tea Factory Company limited has
factored in the Muslim world and other emerging international markets in their
marketing plans.

10. Market Outlets.

(1) General:
This investment will be basically market driven. Tet Tea Factory Company Limited
plans to engage with international marketing partners for maximum profitability.
Market plans, therefore, will incorporate all partners inputs.
(2) Current Markets Outlets:
(a) The Mombasa Tea Auction outlet.
Mombasa Auction: run by East Africa Tea Trade Association currently the biggest tea
outlet for East and Central Africa and Tet Tea Factory Company limited will acquire
membership of the Association to be able to operate in this Auction.
16

Tea is allocated to registered brokers contracted to each producer for purposes of

obtaining the highest price of tea for each of their clients. The broker doubles up as
security in the collection of proceeds from sales for the account of their clients. It
should be noted that this process is long and expensive but secure. Tet Tea Factory
Company limited while using this outlet, will explore other outlets that would
minimize the supply chain.
(b)Direct linkage outlet:
This outlet is referred to as Forward contracts or Direct Sales through Private Treaties
for both local and international markets
Most consumers and distributors are now moving into direct linkages with the

first

line producers. This will bring the benefit of maximization of product quality, pricing,
identity, and traceability. Moreover, most consumers of commodity products
worldwide have rising awareness on social responsibilities and would like to
participate directly in the social development of the communities producing products.
Tet Tea Factory Company Limited would develop and identify themselves with these
group of end users of tea.

(c)Factory gate sales outlet:

Direct Gate Sales to a multiplicity of buyers at the factory gate either for local
distribution or consumption or for repacking for resale is a recent market opening in
the country.
The consumption of tea in the country is still very low compared to rise in population
(a scanty half a kilogram of tea per person annually). There are various companies for
both branded and strait teas from multinational, local companies and upcoming small
tea packers engage in this sector of the market and yet the local demand for quality
tea is still low. The value addition such as flavored teas, ready to drink tea, etc. are
largely undeveloped and the country depends largely on imports for this category of
tea. Through consistent production of good quality product and innovative marketing,
17

the Tet Tea Factory Company Limited expects to enter into this high premium
flavored tea market.

11. Potential Market Outlets.

1 .Branded tea:
Tea sales to the foregoing markets are serviced almost exclusively with bulk exports
(unbranded) and therefore subjected to reworking elsewhere before it reaches the
end consumer. This unnecessary long supply chain erodes substantial income that
would have benefitted the producer.
The reworking and re -handling of tea before the end consumer not only
compromises quality but also make the tea lose its original identity.
Tet Tea Factory Company Limited would like to develop branded teas with consistent
quality for both local and international markets. This will be possible with partnership
where necessary with other marketing partners.
2. Value added teas:
18

It is should be noted that very small amount of tea are value added at the

country of

origin before exporting. This robs the farmer (primary producer) the premium price
that is associated with value addition. Tet Tea Factory Company Limited plans to add
value to part of its Tea products before releasing to the market. It is anticipated that
packeted teas, flavored teas and ready to drink Teas will with time be produced by Tet
Tea Factory limited.
3. Emerging markets
The United States, Canada and Australasia despite their big purchasing power are
not major tea consumer but tea is beginning to gain popularity. It should be noted
that there is a growing Diaspora population emigrants from tea drinking and
growing regions that could assist in the introduction of Tea drinking in these
countries. It is gratifying to note that our Tea Board of Kenya has also identified this
window of opportunity for marketing Kenyan Tea as in their TEA NEWS issue of
October / December 2010. High premium markets such as North Americas Japan
and Australasia are still lowly developed and yet there is a considerable influx of
immigrants from tea drinking countries to these areas. Tet Tea Factory Company
Limited would develop marketing channels for its range of product in these areas.
This would take the engagement of the population Diaspora to jump start the
marketing operations in those regions..
(b)The Middle East and the entire Muslim world is a very important market for
Kenyan Tea and its potential is yet to be optimized. The Far East- Japan, China, and
Russia have a big potential, which is yet to be explored by the tea producers in
Kenya.

19

12. Pricing Structures.

The current market price for processed tea is Ksh 280/= per kilogram in the local
market and Ksh 220/= for export and the sponsors will retain and even improve on these
price levels. The real value of this price levels is heavily dependent on the strength of
Kenya shilling against the US dollar. Tea is auctioned in Mombasa in US Dollar.
It should be noted that that prices of tea are normally set in reference to the prevailing
levels at the Tea auctions which varies every week. Tet Tea Factory Company Limited
will negotiate regularly with consumers for dynamic and progressive changes in price.
The negotiated price would be much improved from auction prices .This is possible on
selling direct to the consumer on a forward contract. The company will therefore avoid
the current long chain of middlemen as much as is practicable.

20

13. Distribution:
The black tea will be distributed through the following Outlets:
i) Retailers:
This will be to the supermarket chains both locally or internationally: This will gather
for the bulk of the value added Teas. The supermarket chains are currently spreading
their influences across the country and their direct collaboration with producers is
being developed. This is an area the Tet Tea Factory Company Limited would like to
maximize on.
ii) Directly sales to consumers
This is locally referred to as factory gate sales which will ensure speedy delivery to
individual consumers. Tet Tea factory company limited will establish a sale
distribution system locally..
21

(iii)

Mombasa Auction:
This would take substantial volume of loose teas from Tet Tea factory Company
Limited.

14. Location of the project and attendant utilities:

(i)Location:
The project will be located in Konoin district in Bomet County. The area
has good soil, adequate rainfall, and good supply of labor force that has
supported tea growing.
(ii)The site description:
(a) The land parcel for the factory site has been identified, surveyed and the
process of acquisition is complete. Application for transfer are attached as
appendix 17).
(b)The parcel of land is fronted by a permanent water spring that will be the
source of sufficient water to the facility.

22

(c)It is situated within two hundred meter distance from a developed market
centre supplied with water, 3-phase electric power supply.
(d)An all- weather trunk road passes at the edge of the factory site and has
been planned and committed by the government of Kenya for tarmacking soon.
The existing tarmac road is only 8 kilometers from the proposed factory site.
(e)The Kimulot Market next to the factory site is currently a divisional
administration centre and its security detail is only 50m from the proposed
factory gate.
iii) Source of raw materials
Specific quality of green tea leaves will be purchased from the small holder tea
farmers in the catchment area of the factory (not more than 10 Kilometers from the
factory).These are the sponsors and also shareholders of Tet Tea Factory Company
Limited. These growers have already applied to supply green leaf to Tet tea factory
as soon as it starts manufacture.
Tet tea factory has already opened a register for those applications. Their total area
under Tea is 980.3 acres which is well above the mandatory 512.5 acres.(250h.a).
However, a supply contract agreement will be entered into between each farmer
and Tet tea factory Company limited. There will also be an affirmed affidavit by the
farmer confirming commitment to support Tet Tea Factory Company Limited.
These will only be affected once Tea Board of Kenya grants a manufacturing
license to Tet Tea Factory Company limited.

23

(iv) Growers/applicants register:

Serial

Name

Acres

ID No.

Musa Kiplangat Rotich

100

1760232

Cherogony Investments

96

Bornice Chelangat Soi

80

3849531

Esther Chepkoech Soi

150

3846967

Julius C Ngeno

50

0737065

Joseph K Sang

50

3848249

No.

24

Title Deed Registration

numbers
Ker/Kim/152
Ker/Kim/1Ker/Kim/1281
Ker/Chept/1987
Ker//Kim/ 202,
Ker/Kim/203 & Ker/Kim/204
Ker/Kim/50, 38, 707
Ker/Kim/708, 1646
Ker/Kim321, Ker/Kim/1,
Ker/Kim/324
Ker/Kim/146
Ker/Kim/145
Ker/Kim/658

Sammy Chepkwony

50

12915456

Ker/Kim/249

Annah C Chepkwony

20

3848650

Ker/Kim/208

Stephen A Nyigei

30

3858035

Ker/Kim/339

10

Peter C Serem

30

0866058

Ker/Kim/1102,
Ker/Kim/1103

11

Paul Kipkirui Keter

30

7062158

Ker/Kim/263

12

Misiri Kiprono Ruto

15

8660291

Ker/Kim/114

13

Jeremiah Kipsang Langat

20

3876920

Ker/Kim/133, 137, 009

14

Christopher Langat

30

3848253

Ker/Kim/1005

15

Zephania Kirui

15

0473938

16

Jonah Rono

10

Ker/Kim/356

17

Samuel Soi

0866319

Ker/Kim/753

18

Jonathan Mutai

3861499

Ker/Kim/966

19

Sofia Koech

13

3951363

Ker/Kim/372

20

DAVID Kimutai Arap Soi

8109025

Ker/Kim/331

21

Elijah C Koskei

0322521

Ker/Kim/303

22

Peter Keinoi

0851101

Ker/Kim/859

23

Ezekiel Kipkoech Siele

0739162

Ker/Kim/627

24

James K Siele

16

3851587

Ker/Kim/ 466, 121

25

Charles Kipkurgat A Too

15

3876939

Ker/Kim/4

26

DAVID Kitur Maritim

18

3848540

Ker/Kim/76, 79

27

Simion Kitur

3850051

Ker/Kim/879

28

Pascalia Chepkemoi Sang

10

12922146

Ker/Kim/715

29

David Kiprotich Arap

Chpekulul

7482116

Ker/Kim/49

30

Kenneth Mutai

22374907

Ker/Kim/667

31

Richard Korir

9434308

Ker/Kim/ 1186

32

Rusi C Langat

11

1760103

Ker/Kim/73, 736, 23

33

Daniel Barchok

3849312

Ker/Kim/837

34

John Roberto Chepkwony

1773422

Ker/Kim/154

35

Samuel K Rono

2.5

1760372

Ker/Kim/1156, 972

36

Vincent Langat

20245964

Ker/Kim/239

25

37

Kipkoskei Arap Maritim

0322565

Ker/Kim/510

38

Joseph Yegon

0604147

Ker/Kim/24

39

Joseph Kibet Rotich

10.5

0868912

Ker/Kim/504

40

Daniel Kipchirchir Ngeno

12.32

3848835

Ker/Kim/122

41

Stanley Kiptonui

1761313

Ker/Kim/113

42

Joel Kimalel Cheruiyot

3848182

Ker/Kim/742

43

Benson Kirui

7374061

Ker/Kim/81

TOTAL

980.32

15. Energy requirement:

i)source of heat Energy for drying.
(a) Fuel wood: The factory will require reliable supply of wood fuel for its tea drying
process. Tea industry in Kenya relies predominantly on wood fuel from eucalyptus trees
planted strategically near factories. The ratio in acreage of tea to wood fuel is usually 4:1.
Or Every 100 Kgs. of made tea uses an average of 0.40cubic meter of firewood. The
suppliers of green leaf to Tet tea factory have already provided for this requirement in
their farms and some are ready for use once the factory starts operating. Tet Tea factory
will continue to encourage farmers especially those suppliers of tea to also raise
eucalyptus trees for sale to the factory by keeping a constant supply of seedlings in the
factory Nurseries for planting by the farmers This is currently the cheapest means of
drying tea.
(b). Other sources: However, Tet Tea Factory company limited will progressively
explore alternative

26

sources of heat energy, in line with innovation in the energy sec rtor,

that are convenient and cost effective. In particular, use of briquettes made from
agricultural wastes e.g. bagasse or tea waste will be evaluated.
Furnace oil, coal or electricity are not cost effective but a standby facility will be installed
for use in dare emergency only.
.
ii) Energy source for machinery and lighting needs: The prime mover for machines will
be electric energy sourced from Kenya Power and Lighting Company. However, there
will be a standby generator to gather for unexpected power interruptions.

16. Tea Processing.

(a) Harvesting and Plucking in the Farms:
The final quality of tea in a cup depends on the genetic composition of the leaf, the
agronomic practices, plucking standards and the handling of the plucked leaf. The
Plucking of tea is meticulously done to ensure that only the upper two leaves and a bud
are picked.
Tet Tea Factory Company limited will provide Extension services to the farmers; ensure
the farmer get access to information and technological advancement to ensure good
Agricultural practice is upheld at all times.
27

(b) Factory Production:

Receiving of green leaf:
Quality assurance of green leaf is done at the receiving bay in the factory by a process
called leaf count. The inspection of green leaf ensures that only the best quality of leaf
will be manufactured and poor quality leaf is rejected.
The green leaf is also weighed and recorded. Tet Tea Factory Company Limited will
invest in computerized digital scales linked to various terminals users.

(c) Withering stage:

The green leaf once in the factory is spread on to large troughs by the green leaf labor.
The large troughs are fitted with reversible low pressure fans to assist in removal of
moisture from the leaf. The target is to remain with a moisture content of 65-70%. This is
referred to as Physical wither. The leaf stays in withering troughs for a period of
between 12-16 hrs to allow for the necessary biochemical reaction in the leaf. This is
referred to as chemical withering. Tet Tea Factory Company limited plans to invest in
withering troughs complete with motorized fans. These troughs are available and ready
for installation by our strategic as soon as a manufacturing license is issued.
(a) Maceration:

Maceration process is the stage where semi permeable membrane in the leaf is ruptured
and distorted allowing the juice and the sap to be mixed in the presence of oxygen. This
commences the chemical changes necessary for black tea production through the process
of oxidation. The green leaf color changes to golden brown. There are many systems of
maceration of green leaf depending on the targeted end product. Tet Tea Factory limited
plans to initially invest in one line of modern CTC macerating machines. This will be
followed later with other types of machines. These CTC machines are readily available
ex stock from our strategic partner in Kericho.

(b) Fermentation Stage:

The fermentation is the most distinguishing quality factor in black tea processing. It is at
this stage that most important properties of tea qualities of tea are produced. The leaf is
kept here for about 90-120 minutes under strict temperature controls between 18-26 0 C.
At the end of this duration, the fermented leaf attains a bright copper brown color. The
28

Process demands machinery that allow free flow and abundant oxygen to reach every
particle of macerated leaf in the allowed fermenting time. There are several types of
fermenting equipment but the most preferred for consistent quality is Continues
Fermenting System. Tet Tea Company plans to install a modern Continuous Fermenting
System commonly referred to as Intelligent Continuous Fermenting System.

(c) Drying process:

This is the stage where heat energy is used to dry Tea with a moisture content of 65%
reduced to below 3%.Drying stops fermentation, preserves tea quality and reduces its
mass among many other chemical changes. Drying process takes an average of 20
minutes.
Heat energy is derived from burning firewood in the Boiler furnace in the boiler house.
Heat energy boils water in the boiler drum and water boils to generate steam which is
channeled through steam pipes and fittings into the drier radiators. The dryer fans draw air
from the atmosphere through the radiators where the air is heated and blown through the
perforated bed of the dryer and into contact with fermented leaf. The steam in the radiator
looses heat energy and turns back to condensate. The condensate returns back to the
Boiler drum and the circle begins again.
There are several system of drying available in the market but Tet Tea Factory Limited
have picked one for installation from the market leader in drying machinery fabrication.
This has been picked for efficiency and the Quality of the product it produces.
Tet Tea Factory limited has also identified an efficient Boiler for importation and
installation. Firewood will be sourced from among the farmers living close to the factory
location and Tet Tea factory limited has plans to supplement or diversify use of firewood
in drying into other alternative source of energy like briquettes made from farm waste.

(g) Sorting stage

Tea sorting is a function of fiber/stalk and black tea separation and separation of particle
sizes into grades. The first stage of sorting is the removal of caseharden chunks of tea
from the bulk of Tea from the Dryer discharge then followed immediately by separation
of stalk/Fiber from black Tea by a Pre-sorter. This involves conveying EX-dryer Tea and
passing below electro statically charged rotating rollers.
29

Separated black tea, referred to as primary grades, is conveyed into a fibro screen with
layers of different sieves with various holes sizes. The fibro screen separates granular
sizes into grades as below and their percentages:
Broken Pekoes (BP 1)

10 %

Pekoe Fannings (PF1)

60 %

Pekoe Dust (PD)

20 %

Dust 1 (D)

5%

Primary grades are all conveyed to the storage bins.

The fibrous teas are conveyed to a sorter that separates size particles into secondary
grades. These are:
Fannings (F 1)

2%

Dust (D)

2%

Broken Mixed Fiber (BMF)

1%

All sorting machines are readily available in Kericho for immediate purchase and
installation by Tet Tea Factory Company Limited.

(d) Storage and Packing:

The biggest percentage of tea will be packed in large consignment for sale and Export .It
is therefore necessary to store made tea in large quantities before packing.
Properly designed bins will be installed in Tet TEA factory for storing particularly the
primary grades which constitute over 95% of the total production.
Secondary grades of tea are normally floor bulked before packing for the market.

Not:. Each stage of manufacture has well set quality parameters,

controls and records kept for the purpose of quality assurance and
traceability of the product. Tet Tea factory plans to invest in modern
quality assurance equipment relevant to each stage of manufacture.

30

17. Profitability and Financial Evaluation

a)

Analysis of profit and loss forecast:

A six year forecast has been tabulated and shows that progressive profits are
realized from the project from the first year of operation.
Details of the projection are tabulated in appendix 8 attached.

b)

Cash flow Analysis: Proceeds from sales are realized within three months of each
production and this will well sustain the cash requirement for the project. The
cash requirement will only be a challenge in the first three months of operations
and this will be provided for in the initial working capital. (see appendix 10).

31

c)

A Balance sheet See Appendix 9.

d)

Others: Appendices 1 to 16 contain all other necessary portraits of the

proposed project.

e)

Working capital: It is anticipated that once the factory is commissioned cash

remittance from tea sales will take three months to be realized. A working capital
of kshs.87 million has been set aside for operations during that period.

18. Economic Evaluation

i)

The proposed unit will create direct permanent employment for at least 75

ii)

individual and over 30 casuals. This has multiplying effects

Tet Tea Factory Company Limited has policy of identifying and partnering with
the local community in the development of facilities such as health, education

iii)

environment etc. that would improve the welfare of the community.

The newly established counties will benefit from this investment as a way of

iv)

wealth creation to the county not withstanding revenue from taxes

Tet Tea Factory Company Limited plans to attract and encourage other service
providers e.g. banks, communication companies, etc. to bring their services

v)

close to the factory vicinity

Tet tea Factory Company limited intends to use her influence for the
development of infrastructure while remitting proceeds from cess and other

vi)

taxes for the good of the country and the local community.
Tet Tea factory limited would like to develop a win win opportunities in the
community it is operating in.

32

19. Sensitivity Indicators and their mitigation.

The sensitivity analysis has been performed to assess the viability of Tet Tea Factory Co.
Ltd. under unforeseeable changes and the current assumptions. The sensibility of issues
below can be as low as 5% change and calls for stringent controls to be set in place.

(i)

Decrease in tea prices realizable in the market: This comes as a result

of drop in quality or worldwide market forces of demand and supply. As
mentioned earlier Tet Tea factory will set up systems that would guarantee
quality at all times. TTFCL also intends to put up forward market
intelligence and contracts that would guarantee a premium sale price
return over her own original estimates and the prevailing Mombasa
Auction price level.

(ii)

Increase in the cost of production: stringent management and system

controls with alarm indicators will be set up in all areas of operations.

(iii)

Decrease in factory green leaf throughput: This is a volume based

indicator and any downward trend in the supply of green leaf will
negatively impact on use of assets and hence unfavorable condition on
dilution of fixed costs. Tet Tea Factory Company limited will ensure
consistent supply of raw materials and high level of efficiency in
machinery maintenance and human resource management. It should also
be that value addition is part of Tet factorys strategy and this is expected
to bring in sales premium even with low factory throughput.

(iv)
33

Fluctuations in Exchange rates: Apart from local sales, all teas are sold in
foreign currencies and predominantly in U.S.Dollar. A strong Kenya shillings

will Impact negatively on Export sales whereas a weak shilling will bring
more cash volumes into the business.
The above has sensitivity as at 5% change but adverse effect will be more profound at
10% negative change. The Directors of Tet Tea factory company limited fully
understand these challenges and have program in place to success fully face up to
these challenges.

Details of Tet Tea Factory directors.

Mr. Metet Kipkoech Kenneth, 31, Chairman of the Board of Directors, Tet Tea Co. Ltd.
He is the anchor management lead operations coordinator of the nucleus tea farm of 80
acres to subscribe its tea green leaf production to the proposed Tet Tea Factory Complex.
Kenneth is a graduate of Maseno University and did B.Sc. in Horticulture. Thereafter, he
worked with M/S Sulmac, a horticulture firm in Naivasha in Kenya before venturing in to
private agri-business
Mr. Didar S Hunjan, 65, Vice-Chairman of the Company
Didar is a Mechanical Engineer by profession. He has over 30 years of experience in tea
having worked with African Highlands Produce Company Ltd. (now James Finlay (K)
Ltd.) in their tea plantations and factories. He has been mainly involved in the research
and development of new varieties of tea machineries. He is all round trained on tea
production and quality control
Mrs. Bornice Soi, 54

34

She is an astute educationist and a devoted farmer. She is also an established and
respected business lady based in Kericho with substantial interests in real estate and
agriculture
Mr. Kirpal S Hunjan, 64
Mr. K S Hunjan is a Mechanical Engineer and has been involved majorly in the design
and fabrication of tea and coffee machinery but more widely on tea
Mr. Robert Cheruiyot Metet, 31
Robert is a Quantity Surveyor/Management by profession and will be an asset in the key
elements of the design and contract management of the project
Mr. Inderjit S Hunjan, 59
Inderjit is a British citizen and a Mechanical Engineer by profession. He has gained
substantial experience in tea machineries relating to the design, fabrication, quality
control and installation.

TO
The managing Director ,
Tea Board of Kenya,
Tea Board House,
Naivasha Road-off Ngong Road,
P.O.Box 20064-00200,
NAIROBI -KENYA.
12th March 2011.
Dear Madam,
REF:

Application for tea manufacturing license for Tet tea

factory.
35

Refer is made to your TBK/TSD/CONF2 dated 10 th September 2009 on

the above application for a license.
Enclosed, please find:(a)Report on Environmental Impact Assessment as done by
Greanei consultants.
(b)Copies of letters of commitment by the growers supporting the
project.
(c) Letter of commitment by Tealand Engineering (2001) limited to
assist in the Funding of the project together with other share
holders.
(d)A Tea Board of Kenya application Form C duly completed.
(e)A complete feasibility Study on the viability of the project.

We look forward to your earliest and favorable response.

Thank you.
Yours sincerely.
Chairman, Tet Tea Factory Company Limited.
Kenneth K. Metet

15.2. Standard Black Tea Processing Flow Chart:

M.C. is moisture content.
PF is Pekoe Fannings.
PD is Pekoe Dust.

36

GREEN LEAF RECEPTION

85% Good Quality
15% Acceptable
Leaf
1`

SORTATION
Fibre Extraction
True Grades

PACKING
Packing Wts
PF1/PD in
Paper sacks

37

WITHERING & COLLECTING

68 70% M.C

DRYING
2.5 3.5 % M. C
Temperature

QA AND DESPATCH

M.C

Density Checks

Documentation

CUTTING
V Profile
Roller Changing

FERMENTATION
Time
Temperature

SAMPLING AND SALE

Sampling Procedures
Warehousing