Project Profile on MANUFACTURING

of pulse AND oil

HEYAW MANUFACTURING P.L.C

0946127474

October 2022
Hamusit
 Table of Contents

1. Executive Summary............................................................................................1
2. Product Description and Application..............................................................1
3. Market Study, Plant Capacity and Production Program..............................1
3.1 Market Study...................................................................................................................1
3.1.1 Present Demand and Supply....................................................................................1
3.1.2 Projected Demand....................................................................................................3
3.1.3 Pricing and Distribution...........................................................................................3
3.2 Plant Capacity..................................................................................................................4
3.3 Production Program.........................................................................................................4
4. Raw Materials and Utilities..............................................................................4
4.1 Availability and Source of Raw Materials.......................................................................4
4.2 Annual Requirement and Cost of Raw Materials and Utilities.......................................4
5. Location and Site...............................................................................................5
6. Technology and Engineering............................................................................5
6.1 Production Process...........................................................................................................5
6.2 Machinery and Equipment...............................................................................................6
6.3 Civil Engineering Cost....................................................................................................6
7. Human Resource and Training Requirement................................................6
7.1 Human Resource..............................................................................................................6
7.2 Training Requirement......................................................................................................7
8. Financial Analysis.............................................................................................7
8.1 Underlying Assumption...................................................................................................7
8.2 Investment........................................................................................................................8
8.3 Production Costs..............................................................................................................9
8.4 Financial Evaluation......................................................................................................10
9. Economic and Social Benefits and Justification...........................................11
ANNEXES...............................................................................................................13
 1. Executive Summary

This project envisages production of 44 tons or1,333,456 liters of edible oil per annum. The total
investment requirement of the project including the working capital is estimated at about Birr
340 Million; of which nearly Birr 100 Million is the cost of the working capital and Birr 150
Million is for machinery and equipments. Based on the cash flow statement, the calculated
internal rate of return (IRR) and simple rate of return (SRR) of the project are 19.2 % and 16.7
%, respectively. The net present value (NPV) at 18 % discounting rate is about Birr 13,259. The
plant is expected to create employment opportunities for about 6 persons.

2. Product Description and Application

Edible oil is essential nutrient and industrial raw material that is extracted from oil seed crops.
Reference is, however, made here to its dietary use. Pressing the raw material (i.e. oil seeds) and
then extracting the oil with steam or water gives edible oil as end product. The high protein
residue (oil cake or oil seed cake) that remains after oil extraction is a valuable fodder for
livestock. Then the refined oil is used for cooking food. .

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

Edible oil is used in most food cooking. Even those kinds of food eaten without cooking, such as
salad, need edible oil particularly made for this purpose. Edible oils are rich in monounsaturated
or polyunsaturated fatty acids, and are more desirable than saturated animal fats such as butter.
Besides, butter is a substitute for oil only to a limited extent, as it is abstained from by devout
Coptic Christians during fasting days and seasons (which add up to more than half of the year).
Butter is also often triple or more of the price of oil, particularly in urban areas. For these and
other reasons, edible oils are preferred to animal fats, and demanded in food cooking by
households, hotels and restaurants.

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The annual consumption of industrially processed oil in the country can vary yearly depending
on the level of per capita consumption and population size. However, it shows an increasing
trend since both the population size and the per capita consumption (which is a positive function
of economic growth) have been increasing in the past. The annual supply of edible oil, which is
the sum of imports and local production, seem to confirm the same. Although these figures
indicate the trend of edible oil supply they do not show the actual supply of edible oil in the
country since large amount of edible oil is smuggled through different boarder towns( such as
Hart-shek, Moyale and others) of the country. Given this fact, Table 3.1 presents legally
registered imports and local production of edible oil in the country for the past decade.

TABLE 3.1
IMPORTS AND LOCAL PRODUCTION OF EDIBLE OIL
In Tons

Year E.C Import Local Total

Production Supply
1990 6,585 8,679 15,264
1991 42,932 6,579 49,511
1992 31,125 6,637 37,762
1993 37,797 8,329 46,126
1994 25,328 7,993 33,321
1995 135,540 8,027 143,567
1996 82,177 6,931 89,108
1997 91,685 4,882 96,567
1998 86,043 11,408 97,451
1999 111,640 7,718 119,358
Total 650,852 77,183 728,035
Average 65,085 7,718 72,804

As it is shown in the above table, in the past ten years more than 728 thousand tons of edible oil
was supplied; of which only 77 thousand tons (or little more than 10 % of the total supply) is
from the local sources. Assuming edible oil supply is equal to the demand for it in the long run,
on average, more than 73 thousand ton of edible oil was consumed annually for the past ten
years. This implies that the per capita consumption of edible oil in the country was nearly 1Kg or
1.06 liters per annum. The figure will be1.55 Kg or 1.64 liters, if we take the past five years
alone. It should be noted that this computation does not take into account the bulk of edible oil
illegal imports which would make the figure even higher.

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 3.1.2 Projected Demand

The future demand for edible oil in Ethiopia is conservatively forecasted based on the current per
capita consumption of edible oil and the population growth rate. The current per capita
consumption of edible oil in Ethiopia is estimated to be 2 Kg per annum while 3 % population
growth rate is assumed.

TABLE 3.2
DEMAND PROJECTION FOR EDIBLE OIL IN ETHIOPIA.

Year E.C Projected Demand

( In Tons)
2000 154000
2001 158620
2002 163379
2003 168280
2004 173328
2005 178528
2006 183884
2007 189401
2008 195083
2009 200935
2010 206963

As it is given in Table 3.2, the demand for edible oil is forecasted to reach 178,528 tons in 2005
E.C while it is expected to reach 206,963 tons in 2010 E.C. This clearly shows that there exist a
very large demand for edible oil in Ethiopia.

3.1.3 Pricing and Distribution

70% of our products will be exported to the international market.The current retail price of
locally pressed edible oil ranges from Birr 50 up to Birr 120 per liter. This project plans to sell its
cleaned pulse at factory gate price of Birr 60 at average per Kg for oil Birr 80 per liter. Besides,
it sells the by-product, oil cake, at Birr 400 per quintal.

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 3.2 Plant Capacity

The envisaged plant production capacity is estimated to be 183,567,345kg pulse seed cleaning
and 1,333,456 liters of edible oil per annum. The process also provides 100,222 quintals of oil
cake as a by product per annum. This is achieved by pressing 183,567,345 kg of pulse and oil
seeeds per annum 667,517.62 kg day as aresult 4,849 liter oil produced per day. The plant is
assumed to operate, in a single shift 275 working days in a year. This schedule is set by
deducting 52 Sundays, 13 public holidays, 15 days for annual maintenance and 10 days for
unexpected work interruptions.

3.3 Production Program

Since oil milling technology is simple and not new in the country, the envisaged plant is assumed
to utilize higher percentage of its full capacity beginning from the first year of its operation. The
only possible constraint that inhibits full capacity utilization in the first year of the plant
operation is assumed to be raw material procurement. Accordingly, 75 % capacity utilization is
assumed for the first year of the operation while starting from the second year 100 % capacity
utilization is assumed.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials

The diversified agro-climate conditions of the ANRS favor the cultivation of highly diversified
varieties of oil seeds. Oil seeds grow in large quantities in different parts of the region. These
include sesame, Niger seed, groundnut, flax/rape seed, sunflower, and castor beans.

4.2 Annual Requirement and Cost of Raw Materials and Utilities

The annual requirement of the main raw material (i.e. oil seeds) at 100 % capacity utilization
with the associated cost is given in Table 4.1.

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 TABLE 4.1
ANNUAL RAW MATERIAL REQUIREMENT
Cost(In Birr)
No Raw Material Unit Qty.
F.C L.C Total
1 Oil Seeds Tons 1460 45,000,000 45,000,000
2 Different pulses Tons 37 4,500,000 4,500,000
3 Packing Materials Pieces 500,000 500,000
Total 50,000,000 50,000,000

Electricity and water requirement is about 25 KWH and 100 m 3, respectively. The total annual
cost of utility at full capacity is Birr 1,565,467,809.
Table 4.2
UTILITIES REQUIREMENT

No. Utility Requirement Unit Price Cost

(Annual) (Birr)
1. Electricity 300,000KWH Birr 5 /KWH 1,500,000
2. Water 32000 m3 Birr4.65 /m3 148,800
Total 1,648,800

5. Location and Site

For its convenience to procure raw material, south gondor Hamusit and its surroundings produce
various oilseeds in large amounts and is therefore an appropriate choice for the establishment of
pulse and oil milling plant.

6. Technology and Engineering

6.1 Production Process

In view of the small scale production under consideration, the press (expeller press) method is
proposed to recover oil from oil seeds and other pulses. This method involves continuous
crushing/pressing of cleaned seeds and filtering of primarily pressed crude oil. The filtered oil is
packed manually. Here, refining is not anticipated.
Alternatively, there is other method of recovering oil from oilseeds; that is solvent extraction.
This method of edible oil extraction is large scale and capital intensive.

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 6.2 Machinery and Equipment

The lists of machinery and equipments required to establish a edible oil milling plant is given
below (Table 6.1).
TABLE 6.1
LIST OF MACHINERY AND EQUIPMENT

Name Quantity
1. Expeller…………………………………..50
2. Filter Press………………………………..100
3. Electric Motor…………………………….10
4. Weighing Scale…………………………...4
5. Oil Drums…………………………………5
6.seed cleaning machine……………………..32
7.Oil filter press……………………………..100
6. Miscellaneous ……………………..……36

The total cost of machinery and equipment is estimated at Birr 150,000,000; of which Birr
102,000,000 is in foreign currency.
Machinery Suppliers’ Address:
Top consultants & Engineering PVT LTD
C-327, Inland Floor, Shanti Shopping Center,
Mira Road, Ply. Station E, Mumbai,
Maharashatra, India

6.3 Civil Engineering Cost

The building area required by the plant is estimated to be 30,000,000 m 2; and it is made of bricks
and galvanized corrugated iron sheet and costs Birr 45,000,000. This would include cost of land
preparation and associated civil works. The total land area of the plant, including the open space,
is100,000 m2 and its lease cost is Birr 5,000,000. The cost of the land lease is as per ANRS land
lease rate for south gondor Hamusit district which to Birr 50 per sq m for industrial purpose. Of
the total cost of the lease, 5% is paid at the beginning while the rest will be paid in 40years.

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 7. Human Resource and Training Requirement

7.1 Human Resource

Details of the manpower requirement of the plant are shown in Table 7.1
TABLE 7.1
MANPOWER REQUIREMENT

Description No Monthly Salary Annual

(Birr) Salary (Birr)
1. Supervisor/ 10 5,000
Purchaser/Cashier 600,000
2. Operator/Mechanic 300 3,000 15,000,000
3. Labor 150 2,500 375,000
Benefits (20%) 15,975,000

460 15,975,000

The total annual wages and salary, including 20 % benefits, amount to Birr 19,170,000.

7.2 Training Requirement

Since edible oil milling and pulse cleaning technology is simple and well known in our country,
no training is required.

8. Financial Analysis
8.1 Underlying Assumption

The financial analysis of pulse and oil plant is based on the data provided in the preceding
sections and the following assumptions.

A. Construction and Finance

Construction Period 2 Years

Source Of Finance 40% Equity and 60% Loan
Tax Holidays 2 Years
Bank Interest Rate 12%

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 Discount For Cash Flow 18%
Value Of Land Based on Lease Rate of ANRS
Spare Parts, Repair & Maintenance 3% of the Fixed Investment

B. Depreciation

Building 5%
Machinery And Equipment 10%
Office Furniture 10%
Vehicles 20%
Pre-Production (Amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30 Days

Raw Material-Foreign 120 Days
Factory Supplies In Stock 30 Days
Spare Parts In Stock And Maintenance 30 Days
Work In Progress 10 Days
Finished Products 15 Days
Accounts Receivable 30 Days
Cash In Hand 30 Days
Accounts Payable 30 Days

8.2 Investment

The total investment cost of the project including working capital is estimated at Birr 100 million
as shown in Table 8.1 below. The owner shall contribute 40 % of the finance in the form of
equity while the remaining 60 % is to be financed by bank loan.

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 TABLE 8.1
TOTAL INITIAL INVESTMENT

Items L.C F.C Total

Land
5,000,000 5,000,000
Building And Civil Works
40,000,000 40,000,000
Office Equipment
2,000,000 3,000,000
Vehicles
2,000,000 2,000,000
Plant Machinery & Equipment
76,000,000 114,000,000 200,000,000
Total Fixed Investment Cost
125,000,00 114,000,000 240,,000,000
Pre Production Capital
Expenditure* 1,000,000 2,000,000
Total Initial Investment
126,000,000 114,000,000 218,000,000
Working Capital at Full Capacity
100,000,000 1000,000,000
Total 226,000,000 114,000,000 340,000,000
*Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee during
construction and expenses for company‘s establishment, project administration expenses, commission expenses,
preproduction marketing and interest expenses during construction.

The foreign component of the project accounts for Birr 114,000,000 thousand or 33.5 % of the
total investment cost.

8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 50 million (See Table
8.2). Raw materials and utilities account for 90.7 %.

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 TABLE 8.2
PRODUCTION COST AT FULL CAPACITY

Raw Material Requirement Cost

Local Raw Material 50,000,000
Foreign Raw Materials 0

Total Production Cost at full Capacity

Items Cost
1. Raw Materials 50,000,000
2. Utilities 1,700,000
3. Wages and Salaries 16,000,000
4. Spares and Maintenance 3,000,000
Factory Costs 25,700,000
5. Depreciation 1,000,320
6. Financial Costs
2,000,000
Total Production Cost 99,400,320

8.4 Financial Evaluation

I. Profitability
According to the projected income statement (See Annex 4) the project will generate profit
beginning from the first year of operation which increases onwards. The income statement and
other profitability indicators also show that the project is viable.

II. Breakeven Analysis

The breakeven point of the projects is given by the formula:

BEP = Fixed Cost

Sale –Variable Cost at full capacity.

The project will break even at 29.2 % of capacity utilization

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 III. Payback Period
Investment cost and income statement projection are used in estimating the project payback
period. The project will payback fully the initial investment less working capital in three years.

IV. Simple Rate of Return

The project’s simple rate of return (SRR) is given by the formula:

SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.

The SRR is 16.7 % at full capacity utilization.

V. Internal Rate of Return and Net Present Value

Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR) of the
project is 19.2 % and the net present value (NPV) at 18 % discount is Birr 13 thousand.

VI. Sensitivity Analysis

The sensitivity test result when undertaken by increasing the cost of production by 10 % still
indicates that the project will be viable.

9. Economic and Social Benefits and Justification

Based on the foregoing presentation and analysis, we can say that the proposed project possesses
wide range of benefits that complement the financial feasibility obtained earlier. In general, the
envisaged project promotes the socio-economic goals and objectives stated in the strategic plan
of the Amhara National Regional State. These benefits are listed as follows:

A. Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 54 thousand per
year and Birr 539 thousand within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.

11
 B. Tax Revenue

In the project life under consideration, the region will collect about Birr 203 thousand from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region

C. Import Substitution and Foreign Exchange Saving

As there is no enough Oil Milling Plant in the country, the commencement of this project
relieves a portion of the import burden. That is, based on the projected figure we learn that in the
project life an estimated amount of US Dollar 1.1 million will be saved as a result of the
proposed project. This will create room for the saved hard currency to be allocated to other vital
and strategic sectors

D. Employment and Income Generation

The proposed project is expected to create employment opportunity for several citizens of the
region. That is, it will provide permanent employment to 6 professionals as well as support staff.
Consequently the project creates income of Birr 46 thousand per year. This would be one of the
commendable accomplishments of the project.

E. Pro Environment Project

The proposed production process is environment friendly.

F. Diversification and InterSectoral linkage.

The proposed project helps to diversify ANRS’ and Ethiopian economy. It contributes to
industrialization of the region as well as the county’s economy.

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ANNEXES

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 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0 0 75% 100% 100% 100%

1. Total Inventory 0.00 0.00 224122.61 298830.14 298830.14 298830.14

Raw Materials in Stock- Total 0.00 0.00 79281.82 105709.09 105709.09 105709.09

Raw Material-Local 0.00 0.00 79281.82 105709.09 105709.09 105709.09

Raw Material-Foreign 0.00 0.00 0.00 0.00 0.00 0.00

Factory Supplies in Stock 0.00 0.00 855.99 1141.32 1141.32 1141.32

Spare Parts in Stock and Maintenance 0.00 0.00 503.92 671.89 671.89 671.89

Work in Progress 0.00 0.00 21399.69 28532.92 28532.92 28532.92

Finished Products 0.00 0.00 42799.38 57065.84 57065.84 57065.84

2. Accounts Receivable 0.00 0.00 93712.09 124949.45 124949.45 124949.45

3. Cash in Hand 0.00 0.00 4376.86 5835.82 5835.82 5835.82

CURRENT ASSETS 0.00 0.00 242929.74 323906.33 323906.33 323906.33

4. Current Liabilities 0.00 0.00 93712.09 124949.45 124949.45 124949.45

Accounts Payable 0.00 0.00 93712.09 124949.45 124949.45 124949.45

TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 149217.65 198956.87 198956.87 198956.87

INCREASE IN NET WORKING CAPITAL 0.00 0.00 149217.65 49739.22 0.00 0.00

1
 Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
PRODUCTION
5 6 7 8 9 10

Capacity Utilization (%) 100% 100% 100% 100% 100% 100%

1. Total Inventory 298830.14 298830.14 298830.14 298830.14 298830.14 298830.14

Raw Materials in Stock-Total 105709.09 105709.09 105709.09 105709.09 105709.09 105709.09

Raw Material-Local 105709.09 105709.09 105709.09 105709.09 105709.09 105709.09

Raw Material-Foreign 0.00 0.00 0.00 0.00 0.00 0.00

Factory Supplies in Stock 1141.32 1141.32 1141.32 1141.32 1141.32 1141.32

Spare Parts in Stock and Maintenance 671.89 671.89 671.89 671.89 671.89 671.89

Work in Progress 28532.92 28532.92 28532.92 28532.92 28532.92 28532.92

Finished Products 57065.84 57065.84 57065.84 57065.84 57065.84 57065.84

2. Accounts Receivable 124949.45 124949.45 124949.45 124949.45 124949.45 124949.45

3. Cash in Hand 5835.82 5835.82 5835.82 5835.82 5835.82 5835.82

CURRENT ASSETS 323906.33 323906.33 323906.33 323906.33 323906.33 323906.33

4. Current Liabilities 124949.45 124949.45 124949.45 124949.45 124949.45 124949.45

Accounts Payable 124949.45 124949.45 124949.45 124949.45 124949.45 124949.45

TOTAL NET WORKING CAPITAL REQUIRMENTS 198956.87 198956.87 198956.87 198956.87 198956.87 198956.87

INCREASE IN NET WORKING CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00

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 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 107782.50 306739.37 952739.59 1176607.36 1145370.00 1145370.00
1. Inflow Funds 107782.50 306739.37 93712.09 31237.36 0.00 0.00
Total Equity 43113.00 122695.75 0.00 0.00 0.00 0.00
Total Long Term Loan 64669.50 184043.62 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 93712.09 31237.36 0.00 0.00
2. Inflow Operation 0.00 0.00 859027.50 1145370.00 1145370.00 1145370.00
Sales Revenue 0.00 0.00 859027.50 1145370.00 1145370.00 1145370.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 107782.50 107782.50 1081962.33 1187426.91 1121814.00 1118332.02
4. Increase In Fixed Assets 107782.50 107782.50 0.00 0.00 0.00 0.00
Fixed Investments 102650.00 102650.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 5132.50 5132.50 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 242929.74 80976.58 0.00 0.00
6. Operating Costs 0.00 0.00 776913.30 1035152.57 1035152.57 1035152.57
7. Corporate Tax Paid 0.00 0.00 0.00 0.00 20337.94 21830.21
8. Interest Paid 0.00 0.00 62119.29 29845.57 24871.31 19897.05
9. Loan Repayments 0.00 0.00 0.00 41452.19 41452.19 41452.19
10. Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 0.00 198956.87 -129222.74 -10819.55 23556.00 27037.98
Cumulative Cash Balance 0.00 198956.87 69734.13 58914.58 82470.57 109508.55

3
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00
1. Inflow Funds 0.00 0.00 0.00 0.00 0.00 0.00
Total Equity 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loan 0.00 0.00 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 0.00 0.00 0.00 0.00
2. Inflow Operation 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00
Sales Revenue 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 1114850.04 1111983.95 1108501.97 1063567.80 1063567.80 1063567.80
4. Increase In Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
Fixed Investments 0.00 0.00 0.00 0.00 0.00 0.00
Pre-production
Expenditures 0.00 0.00 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 0.00 0.00 0.00 0.00
6. Operating Costs 1035152.57 1035152.57 1035152.57 1035152.57 1035152.57 1035152.57
7. Corporate Tax Paid 23322.49 25430.67 26922.95 28415.23 28415.23 28415.23
8. Interest Paid 14922.79 9948.52 4974.26 0.00 0.00 0.00
9. Loan Repayments 41452.19 41452.19 41452.19 0.00 0.00 0.00
10. Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 30519.96 33386.05 36868.03 81802.20 81802.20 81802.20
Cumulative Cash Balance 140028.51 173414.56 210282.59 292084.79 373886.99 455689.19

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0.00 0.00 859027.50 1145370.00 1145370.00 1145370.00

1. Inflow Operation 0.00 0.00 859027.50 1145370.00 1145370.00 1145370.00

Sales Revenue 0.00 0.00 859027.50 1145370.00 1145370.00 1145370.00

Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00

2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 107782.50 107782.50 926130.96 1084891.79 1035152.57 1056982.78

3. Increase in Fixed Assets 107782.50 107782.50 0.00 0.00 0.00 0.00

Fixed Investments 102650.00 102650.00 0.00 0.00 0.00 0.00

Pre-production Expenditures 5132.50 5132.50 0.00 0.00 0.00 0.00

4. Increase in Net Working Capital 0.00 0.00 149217.65 49739.22 0.00 0.00

5. Operating Costs 0.00 0.00 776913.30 1035152.57 1035152.57 1035152.57

6. Corporate Tax Paid 0.00 0.00 0.00 0.00 0.00 21830.21

NET CASH FLOW -107782.50 -107782.50 -67103.46 60478.21 110217.43 88387.22

CUMMULATIVE NET CASH FLOW -107782.50 -215565.00 -282668.46 -222190.24 -111972.81 -23585.60

Net Present Value (at 18%) -107782.50 -91341.10 -48192.66 36808.91 56848.92 38634.87

Cumulative Net present Value -107782.50 -199123.60 -247316.26 -210507.35 -153658.43 -115023.56

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00

1. Inflow Operation 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00

Sales Revenue 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00

Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00

2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 1058475.06 1060583.24 1062075.52 1063567.80 1063567.80 1063567.80

3. Increase in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00

Fixed Investments 0.00 0.00 0.00 0.00 0.00 0.00

Pre-production Expenditures 0.00 0.00 0.00 0.00 0.00 0.00

4. Increase in Net Working Capital 0.00 0.00 0.00 0.00 0.00 0.00

5. Operating Costs 1035152.57 1035152.57 1035152.57 1035152.57 1035152.57 1035152.57

6. Corporate Tax Paid 23322.49 25430.67 26922.95 28415.23 28415.23 28415.23

NET CASH FLOW 86894.94 84786.76 83294.48 81802.20 81802.20 81802.20

CUMMULATIVE NET CASH FLOW 63309.34 148096.10 231390.58 313192.78 394994.98 476797.18

Net Present Value (at 18%) 32188.63 26616.69 22159.51 18442.80 15629.49 13245.33

Cumulative Net present Value -82834.94 -56218.25 -34058.74 -15615.94 13.56 13258.89

Net Present Value (at 18%) 13,258.89

Internal Rate of Return 19.2%

6
 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 75% 100% 100% 100% 100%

1. Total Income 859027.50 1145370.00 1145370.00 1145370.00 1145370.00

Sales Revenue 859027.50 1145370.00 1145370.00 1145370.00 1145370.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 760893.80 1014525.07 1014525.07 1014525.07 1014525.07
VARIABLE MARGIN 98133.70 130844.93 130844.93 130844.93 130844.93
(In % of Total Income) 11.42 11.42 11.42 11.42 11.42
3. Less Fixed Costs 33572.50 38180.50 38180.50 38180.50 38180.50
OPERATIONAL MARGIN 64561.20 92664.43 92664.43 92664.43 92664.43
(In % of Total Income) 7.52 8.09 8.09 8.09 8.09
4. Less Cost of Finance 62119.29 29845.57 24871.31 19897.05 14922.79
5. GROSS PROFIT 2441.91 62818.86 67793.12 72767.38 77741.64
6. Income (Corporate) Tax 0.00 0.00 20337.94 21830.21 23322.49
7. NET PROFIT 2441.91 62818.86 47455.18 50937.17 54419.15
RATIOS (%)
Gross Profit/Sales 0.28% 5.48% 5.92% 6.35% 6.79%
Net Profit After Tax/Sales 0.28% 5.48% 4.14% 4.45% 4.75%
Return on Investment 17.70% 22.35% 17.45% 17.09% 16.73%
Return on Equity 1.47% 37.89% 28.62% 30.72% 32.82%

7
 Annex 4: NET INCOME STATEMENT (in Birr):Continued
PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00

Sales Revenue 1145370.00 1145370.00 1145370.00 1145370.00 1145370.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 1014525.07 1014525.07 1014525.07 1014525.07 1014525.07
VARIABLE MARGIN 130844.93 130844.93 130844.93 130844.93 130844.93
(In % of Total Income) 11.42 11.42 11.42 11.42 11.42
3. Less Fixed Costs 36127.50 36127.50 36127.50 36127.50 36127.50
OPERATIONAL MARGIN 94717.43 94717.43 94717.43 94717.43 94717.43
(In % of Total Income) 8.27 8.27 8.27 8.27 8.27
4. Less Cost of Finance 9948.52 4974.26 0.00 0.00 0.00
5. GROSS PROFIT 84768.91 89743.17 94717.43 94717.43 94717.43
6. Income (Corporate) Tax 25430.67 26922.95 28415.23 28415.23 28415.23
7. NET PROFIT 59338.23 62820.22 66302.20 66302.20 66302.20
RATIOS (%)
Gross Profit/Sales 7.40% 7.84% 8.27% 8.27% 8.27%
Net Profit After Tax/Sales 5.18% 5.48% 5.79% 5.79% 5.79%
Return on Investment 16.71% 16.35% 15.99% 15.99% 15.99%
Return on Equity 35.79% 37.89% 39.99% 39.99% 39.99%

8
 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 107782.50 414521.87 510675.87 563279.90 569282.90 578767.88
1. Total Current Assets 0.00 198956.87 312663.87 382820.90 406376.90 433414.88
Inventory on Materials and Supplies 0.00 0.00 80641.72 107522.30 107522.30 107522.30
Work in Progress 0.00 0.00 21399.69 28532.92 28532.92 28532.92
Finished Products in Stock 0.00 0.00 42799.38 57065.84 57065.84 57065.84
Accounts Receivable 0.00 0.00 93712.09 124949.45 124949.45 124949.45
Cash in Hand 0.00 0.00 4376.86 5835.82 5835.82 5835.82
Cash Surplus, Finance Available 0.00 198956.87 69734.13 58914.58 82470.57 109508.55
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 107782.50 215565.00 198012.00 180459.00 162906.00 145353.00
Fixed Investment 0.00 102650.00 205300.00 205300.00 205300.00 205300.00
Construction in Progress 102650.00 102650.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 5132.50 10265.00 10265.00 10265.00 10265.00 10265.00
Less Accumulated Depreciation 0.00 0.00 17553.00 35106.00 52659.00 70212.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 107782.50 414521.87 510675.87 563279.90 569282.90 578767.88
5. Total Current Liabilities 0.00 0.00 93712.09 124949.45 124949.45 124949.45
Accounts Payable 0.00 0.00 93712.09 124949.45 124949.45 124949.45
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 64669.50 248713.12 248713.12 207260.94 165808.75 124356.56
Loan A 64669.50 248713.12 248713.12 207260.94 165808.75 124356.56
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 43113.00 165808.75 165808.75 165808.75 165808.75 165808.75
Ordinary Capital 43113.00 165808.75 165808.75 165808.75 165808.75 165808.75
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward 0.00 0.00 0.00 2441.91 65260.76 112715.95
9. Net Profit After Tax 0.00 0.00 2441.91 62818.86 47455.18 50937.17
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 0.00 0.00 2441.91 62818.86 47455.18 50937.17

9
 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 591734.84 609620.89 630988.92 697291.12 763593.32 829895.52
1. Total Current Assets 463934.84 497320.89 534188.92 615991.12 697793.32 779595.52
Inventory on Materials and Supplies 107522.30 107522.30 107522.30 107522.30 107522.30 107522.30
Work in Progress 28532.92 28532.92 28532.92 28532.92 28532.92 28532.92
Finished Products in Stock 57065.84 57065.84 57065.84 57065.84 57065.84 57065.84
Accounts Receivable 124949.45 124949.45 124949.45 124949.45 124949.45 124949.45
Cash in Hand 5835.82 5835.82 5835.82 5835.82 5835.82 5835.82
Cash Surplus, Finance Available 140028.51 173414.56 210282.59 292084.79 373886.99 455689.19
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 127800.00 112300.00 96800.00 81300.00 65800.00 50300.00
Fixed Investment 205300.00 205300.00 205300.00 205300.00 205300.00 205300.00
Construction in Progress 0.00 0.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 10265.00 10265.00 10265.00 10265.00 10265.00 10265.00
Less Accumulated Depreciation 87765.00 103265.00 118765.00 134265.00 149765.00 165265.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 591734.84 609620.89 630988.92 697291.12 763593.32 829895.52
5. Total Current Liabilities 124949.45 124949.45 124949.45 124949.45 124949.45 124949.45
Accounts Payable 124949.45 124949.45 124949.45 124949.45 124949.45 124949.45
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 82904.37 41452.19 0.00 0.00 0.00 0.00
Loan A 82904.37 41452.19 0.00 0.00 0.00 0.00
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 165808.75 165808.75 165808.75 165808.75 165808.75 165808.75
Ordinary Capital 165808.75 165808.75 165808.75 165808.75 165808.75 165808.75
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward 163653.11 218072.26 277410.50 340230.71 406532.92 472835.12
9. Net Profit After Tax 54419.15 59338.23 62820.22 66302.20 66302.20 66302.20
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 54419.15 59338.23 62820.22 66302.20 66302.20 66302.20

10