Successful funding package turned around in 48 hours; in-depth due-diligence for an industrial re-start project (i.e., projections and scenario-based forecasting).

1. Due Diligence Report
for
Sayeed Muhammed Brick Factory
Balad, Salah ad Din
Prepared by:
Edward J. McDonnell III, CFA
Salah ad Din PRT Satellite Balad
Date: 18th October 2008
Clarification.
These findings and the attached projections result from meeting
with the President and Chief Operating Officer of the Sayeed
Muhammed Brick Factory (the Company) as well as a principal
of the Al Baydaa Center for Economic Development at Joint
Base Balad with PRT representatives Sara Aziz and Neddy
McDonnell of 18th October 2008. This report is intended as a
supplement to the business plan previously prepared by the
company. Any points of disagreement between that report and
this reflect different methodologies; in these instances, one
ought to defer to the company’s business plan. We find this
company to be well managed and worthy of the $1.1 million
requested from the Task Force for Business and Stability in
Operations (TF-BSO). In fact, the theoretical pay-back time of
this grant would be three (3) years under the Company’s
prudent assumptions and seventeen (months) under the PRT
version. The Company appeals to TFBSO to facilitate the
transfer of heavy fuel oil (HFO) from the Bayji Oil Refinery.

2. SUMMARY OF FUNDINGS
Sayeed Muhammed Brick Factory in Balad (the Company) is the only operating brick factory
in Balad qada. There are two other manufacturers known to be operating in Southern Salah
ad Din (SaD). The Company started operations privately in 2003 with two brick-making
furnaces and quickly expanded to four. Al Qaeda / Iraq swept through the area in the
aftermath of the Golden Mosque bombings of 2006 and destroyed the facility, including the
records. Currently, two of the four furnaces are in operation. The $1.1 million requested will
restore operations within two months and expand operations to twelve furnaces and one
hundred fifty (150) employees within twelve-to-eighteen (12-18) months.
The value proposition is simple. This company is positioned to be the low-cost, high
quality producer of brick in Balad and Southern SaD. The following value drivers will sustain
the value proposition over time:
1. housing in Balad to double over next five years;
2. economy growing rapidly with improved security;
3. no transportation costs for raw materials;
4. no long-term storage or carrying costs;
5. only less than 10% of bricks in demand met by local production;
6. assured water supply;
7. reliance upon heavy fuel oil (HFO) to fire furnaces; and,
8. cost structure permitting considerable pricing power.
DESCRIPTION OF PROPOSED FUNDING
As detailed on the attached capital budget, the $1.1 million requested will initially restore the
plant’s four (4) furnace capacity. Within twelve-to-eighteen (12-18) months, the number of
furnaces will triple to twelve (12), each producing two hundred twenty-eight bricks per hour
during a twelve (12) hour work day. The requested amount will be sub-divided in the
following manner:
• 33% for construction and installation of HFO burners of twelve (12) furnaces;
• 26% for two (2) steam shovels and eight (8) other vehicles;
• 23% for brick-cutting machinery;
• 11% for three (3) electric generators and one (1) electric engine;
• 5% for various storage tanks and a small water system.
DESCRIPTION OF PROPOSED FACILITY
The current facility sits on six donums of land; or, roughly four (4) acres. At four thousand
square meters (4,000 m2
), the facility takes up a small portion of the land. The medium and
long-term goals of twelve (12) to twenty-four (24) furnaces can be managed easily on this
land amount. Water is also abundant with access to the Tigris as well as three (3) wells on
the property itself.
Secondary warehouse construction remains unnecessary since wet clay (from rain)
expedites brick-making; additionally, only tarpaulins are necessary to protect these supplies
and the finished goods inventory. Lastly, there are two usable access roads into the plant.
Since the skill requirements for making bricks are relatively low, management anticipates
few, if any, problems hiring, training and sustaining the productivity of qualified employees.
COMPANY MANAGEMENT
Senior management appears to be well-versed and experienced in its trade. The singular
focus on bricks with a preference toward expanding production as opposed to product mix
mitigates the problem of management reaching beyond its capability. Curricula vitae will be

3. attached to the business plan issued by the company. Please refer to the organagram
included within the business plan.
MISSION and STRATEGY REVIEW
MISSION STATEMENT
To re-open and expand production of high, quality bricks for residential and commercial
construction in southern Salah ad Din in order to relieve over-crowding in both sectors.
GOALS and OBJECTIVES
First, to produce a higher quality, lower-cost brick than those currently freighted in from
other parts of Iraq or imported from neighbouring countries.
Second, to expand to twelve furnaces in twelve-to-eighteen (12-18) months.
Third, expand from one (1) twelve (12) hour daily shift to two (2) eight (8) hour daily
shifts when security improves over time.
Fourth, to use the pricing power available to the Company for funding the expansion to
twenty-four (24) furnaces within three years.
STRATEGY and SWOT ANALYSIS
The strategy parallels the value proposition: focus on one or two brick products to carve
out a profitable niche supported by cost efficiencies. With key raw materials on-site, the
Company collapses the value chain – both of inputs going in and products shipping out –
by cutting out most transportation costs. Long-term relationships with local sand
companies and third-party distribution representatives link the value chain together to
create one hundred fifty (150) permanent jobs within eighteen (18) months and up to
hundred (600) direct hires after five (5) years. The strategy also focuses on realizing
cost efficiencies by accessing by using less expensive HFO to fire the furnaces.
STRENGTHS:
• reduced supply / distribution chain;
• reputation of honesty and quality
product delivered consistently;
• experience and expertise remaining
focused over time;
• able to expand 6x over five (5) years;
• clear title to land confirmed; and,
• long-term relationships in place to
sustain low cost structure.
WEAKNESSES:
• only 5-14% share of capacity currently
operating in Southern SaD
• neglect of the business since 2006
destruction by AQI;
• possible under-estimations with
equipment prices on capital budget;
• small land parcel as possible
constraint to future growth; and,
• narrow, cyclical product mix.
OPPORTUNITIES:
• only 30-40% of demand for bricks in
Southern SaD met by area producers;
• housing and commercial construction
expected to double over five (5) years;
• better quality niche product with lower
costs structure; and,
• security improved in two (2) years.
THREATS:
• emergence of other competitors;
• product substitutes;
• security deteriorating recently;
• dependent upon fluctuating black-
market fuel prices; and,
• rapid expansion overwhelming strong
but lean management team.
MITIGANTS TO WEAKNESSES AND THREATS
Though the Company’s two furnaces are the only active kilns in the qada, competition
has yet to emerge despite frequent market rumors. The most likely product substitutes
are cinder-block or re-used bricks from demolished buildings, neither of which are
viewed favorably in the market. Management was off-focus for a while due to the
abduction and captivity of the President, Mr Salim, for five (5) months; he has recovered

4. and is aggressively seeking assistance in re-asserting his stature. Lastly the low cost
structure, together with twenty-to-thirty (20-30) years of pent up housing demand, should
protect the Company from cycles in the market; higher cost, often lower quality, imports
– from other Iraqi regions or countries – will suffer first.

5. INDUSTRY and MARKET ANALYSIS
INDUSTRY OVERVIEW
There is a large factory in Samarra with twenty-four (24) furnaces. The demand in
Samarra is absorbing these bricks. Local security in Samarra precludes transportation of
a significant portion of the product out of that qada. There is also a twelve (12) furnace
facility in Dujayl that meets a small percentage of the demand in that smaller, less
prosperous population center. The Company is the only plant operating in Balad.
MARKET REVIEW
Metro-Balad is experiencing a boom in residential and commercial construction as
security remains stable. An average of ten-to-fifteen (10-15) people live in typical house,
original designed for five-to-seven (5-7) occupants. Housing stock is set to grow 17%
per year for the next five years. Furthermore, existing homes will be expanded with the
addition of second floors.
Specifically, management believes that housing units in the qada will expand by two
hundred fifty (250) each quarter for the first (1st) year and then shoot up to ten-to-fifteen
thousand (10-15,000) within three (3) years and fifty-to-seventy-five thousand (50-
75,000) in five years. Commercial construction is expected to grow at a double-digit rate
for at least the medium term with the building of hospitals, hotels and restaurants to
accommodate not only the higher disposable income of area residents but the tourism
opportunities inherent in pilgrims travelling to a local shrine.
95% or more of the bricks used in building Balad’s prosperity originate from outside of
SaD. In Balad, the Company has free access to superior clay inputs, with lower levels of
salt (which weakens the brick) than in the products from Tuz, Kut, Diyala, Dujayl and
elsewhere. The Company’s cost structure averages twelve cents (12¢) versus market
price of twenty-three cents (23¢) per brick.
BUSINESS CLIMATE
The area is friendly to the Company due to the overwhelming demand for bricks; the
quality of product turned out by the plant for five (5) years; and, the reputation of integrity
enjoyed by, and respect accorded to, the owner’s family. Relationships with area tribes
are positive while security is assured by four (4) guards and the proximity of two (2)
relatively honest Iraqi police stations.
Additionally, the Company is taking steps to avoid the run-off of clay into the Tigris; it is
installing smoke filters to eliminate sooty particulates from the smoke emanating from the
furnaces. Lastly, the Company plans to show a hiring preference toward Sons of Iraq
(SoIs) rolling off the payroll. Nevertheless, management has made itself clear that it will
conduct background checks on SoIs and hire only those with good reputations.
CORPORATE DOCUMENTS
The Company has clear title to the six (6) donums – or four (4) acres – owned by the
President and the Chief Executive Officer. This ownership has been certificated by the
Ministry of Finance. Though AQI destroyed all corporate records, the Company has
written the Mayor of Balad for re-licensing, for which it has received Mr Amer’s support in
writing. Copies of other documents are either attached to the Company’s business plan
or are available upon request.

6. Comparative Projections
Please note attached capital budget; please refer to the expense section of these projections as the operating budget
Assumptions Company PRT
Time to 12 Oven Capacity 10 months 18 months
Price per Brick 16¢ 22¢ trending down to 18¢
Days Worked Per Month 26 26
Hours per Shift 12 12
Laborers 137 137
Staff 13 13
Hourly Bricks per Oven 228 228
Amount of Clay per Brick 2 kg 2 kg
Cost of Diesel per Liter 75¢ 75¢
Cost of HFO per Liter 33¢ 3¢ (free from Bayji Oil Refinery)
Liters Consumed Daily Unknown 960

7. Company Parameters for First Year

8. Company Parameters for Out Years

9. PRT Assumptions for First Year

10. PRT Assumptions for Out Years