Sport Footwear

FEBILITY STUDY ON MANUFACTURING OF SPORT FOOTWEAR
FEASIBILITY STUDY ON MANUFACTURE OF SPORT FOOTWEAR
PROJECT INITIATOR: NIUBALUN SHOES

MANUFACTURING CO. LTD
PROJECT LOCATION : HUJIAN SHOE CITY INDUSTRIAL PARK

SHEGER CITY, OROMIA REGIONAL STATE
02/20/2024
Contents
DISCLAIMER.................................................................................................................................................4
EXECUTIVE SUMMARY............................................................................................................................5
1.INTRODUCTION........................................................................................................................................7
1.1 THE INVESTOR PROFILE ..............................................................................................................7
1.2 WAN WAY RELATED CLIANTS.................................................................................................. .7
1.3 CURRENT PROJECT PROFILE........................................................................................................8
1.4 LEGALITY AND LICENSE OF THE PROJECT............................................................................ 9
2.PURPOSE OF THE PROPOSA.................................................................................................................9
2.1 THE OBJECTIVE OF THE PROJECT ..............................................................................................9
2.2.1 SPECIFIC OBJECTIVES ............................................................................................................. 9
3.PROJECT TECHNICAL ANALYSIS...............................................................................................10
3.1 PROJECT LOCATION AND LAND REQUIREMENT...................................................................10
3.2 BRIEF DESCRIPTION OF PROJECT & PRODUCTS.......................................................................10
3.3 PRODUCTION PROCESS................................................................................................................11
3.4 PRODUCTION PROGRAMME AND INSATLLED CAPACITY...................................................11
3.5 RAW MATERIAL REQUIREMENT................................................................................................13
3..6 PROJECT MACHINERY REQUIREMENT....................................................................................13
3.6.1 PLANT, MACHINERY AND EQUIPMENT FOR THE PROPOSED PROJECT ......................13
3.6.2 FURNITURE, FIXTURES & VEHICLE REQUIREMENT.............................................................14
3.6.3 OFFICE EQUIPMENT REQUIREMENT.....................................................................................15
3.7 UTILITIES.........................................................................................................................................15
4.MARKET ANALYSIS...............................................................................................................................16
4.1 ANALYSIS OF THE BUSINESS ENVIRONMENT.........................................................................16
4.1.1 PEST ANAYSIS...............................................................................................................................16
4.2 TARGET MARKET............................................................................................................................19
4.3CRITICAL FACTORS TO PENETRATE MARKET IN ETHIOPA....................................................19
4.4 MARKET OPERATION COST .......................................................................................................20
4.5 PRICE AND PROFITABILITY OF PROJECT PRODUCTS ………………………………………...21
4.5.1 REVENEW GENERATION………………………………………………………………...............21
5. ORGANIZATION AND MANPOWER REQUIREMENT ………………………….………………...21
5.1 MANPOWER REQUIREMENT………………………………………………………………...……21
6. FINANCIAL ANALIYSIS…………………………………………………………………………… 22
6.1 FINANCIAL PLAN AND ANALYSIS………………………………………………......................... 23

6.1.1 LAND REQUIREMENT ……………………………………………………………………………
24
6.1.2 BUILDINGS ………………………………………………………………………………….
………….24
6.1.3 MACHINARY AND EQUIPMENTS…………………………………………………………………25
6.1.4 OTHER FIXED CAPITAL COST
………………………………………………………………….25
6.1.5 PROJECT WORKING CAPITAL 25

6.2 FINANCIAL SUMMARY 25
6.3 PROJECT FINANCING 26
6.4 PROJECT ECONOMICS 26
6.5 INCOME STATEMENT
PROFITABILITY 26
RATIOS 27
6.6 SOCIO — ECONOMIC BENEFITS OF THE PROJECT 27
6.7 ENVIRONMENTAL IMPACT OF THE PROJECT 27
Noise pollution mitigation plan ,.27
Dust pollution mitigation plan 28
Liquid waste mitigation plan 28
6.8 PROJECT IMPLEMENTATION SCHEDULE 29
7. CONCLUSION 30
ANNEX 31
Income Statement 33
Balance Sheet ……………………………………………………………………………………………………………………… 35
Cash flow Statement …………………………………………………………………………………………………………………...….
37
KEY ASSUMPTIONS ……………………………………………………………………………………………………………...…….…
39
DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and
information on the said matter. Although, the material included in this document is based on data
/ information gathered from various reliable sources; however, it is based upon certain
assumptions, which may differ from case to case. The information has been provided on as is
where is basis without any warranties or assertions as to the correctness or soundness thereof.
Although, due care and diligence has been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the actual
results may differ substantially from the presented information.
EXECUTIVE SUMMARY
Niubalun Shoes Manufacturing Co. Ltd is established in Addis Ababa city in according with
the commercial code of Ethiopia. The company was established by two Chinese (foreigners)
members who have different share amount. Niubalun Shoes Manufacturing Co. Ltd has
proposed 1,440 Sq.M of land at Oroma national regional state, Sheger City, Hujian Industrial
Park in lease agreement.
The main objective of this project is to fill the gap between demand and supply of high-quality
Sport Footwear products for local and international markets, to maximize the company profit,
create job opportunities for local and expatriate workers, tax generate to the government by
using modern and high technology machineries.
As per the park specif ication, machineries, and equipment, working capital, pre operating cost
and other fixed capital is estimated as 5,367,600. 498,000, 400,000, 1,168,193, and 3,926,016
respectively. The annual maximum production capacity of the envisaged plant is determined to be
1,270,000 pair of Sport Footwear within 100% theoretical capacity of production line based on
300 days working days per annum and 8 hours of one shift per day. The plant will start the
production at 75% in the first year,85% in the second year, 100% in the third to
tenth year.
Regarding the source of financing the company has planned the project source of the finance will
be from the owner's equity. The total project cost is estimated to be 11,360,000 Birr (USD
200,000).
The project planned to take any remedy for environmental pollution like dust, noise and waste.
the project will construct a huge water treatment plant and reuse the wastewater. the company
provides work opportunity for more than 500 permanent workers.
The assumption for the project has been driven based on the current market price approach and
the total revenue is calculated to 18,000,000 Birr in the first year. and becomes 24,000,000 Birr in
the third year.
The break-even analysis establishes a relation between operation costs and revenues. it indicates
the level at which costs and revenue are in equilibrium.to this end ,the breakeven point for
capacity utilization and Sales value estimated by using income statement projection are computed
as follow .break even sales value is achieved when revenue equals to operating cost.
Break even sale = (sales-operating cost) * 100 = 55% averagely

Sales revenue
The payback period is defined as the period required for recovering the original investment
outlay through the accumulated net cash flow earned by the project accordingly based on the
projected cash flow it is estimated that the project initial investment will be fully recovered
within a year which can be said fast period of recovery.
1. INTRODUCTION
1.1 THE INVESTOR PROFILE
This company is started on 2000 G.C, which headquarter located in the most experienced Sport
footwear manufacturing city in the world —Guangzhou, China. Wan way is a modern enterprise
integrating trade, design, development, production, and service, it is mainly for Sport Footwear
especially market target for 18 - 60 years old.
customers .and whole organization full assets valued at 52 million USD. now there is Four 100%
owned properties factory which located in China and Myanmar, the company's products are
majorly export to US, EU, SOUTH AFRICA, SOUTH AMERICA, MIDDLE EAST,
KOREA, JAPAN. with a good market trending in this industry, clients are more appreciating for
us service, price, quality, we are familiar with the developed country's fashion wearing style.
1.2 Niubalun Shoes Manufacturing Co. Ltd related clients
Europe has kept a good relationship with 3giant fashion distributers and retailers.
Next Sport Footwear (UK)
Zara (Spanish)
Group auchan (FRANCE)
Far East; The most popular fashion brand in far east area
Onitsuka Tiger (Japan)
US; American most popular fasting moving brand in fashion
H&M(America)
South America from the original latino brand

Americanino
1.3 Current project profile
Name of the project: - Niubalun Shoes Manufacturing Co. Ltd
Address
Region —Oromia regional state
Zone-Sheger City
City-Hujian Shoe City Industrial Park
Project type — Sport Footwear Manufacturing
Contact person — Mr. Liang. Deping and Mr. Feng Dan
Mobile: -+251951888888
Shareholders arrangement
Table 1. Shareholders of the company
Name Nationality Passport No Share

Mr. Liang. Deping Chinese EJ4585404 60% percentage
Mr. Feng Dan Chinese EH8213189 40%
.._._
As the business going, the share may probably increase.
3.3 PRODUCTION PROCESS
Generally, the production process of Sport Footwear production is kind of not complicated. It
involves main steps such as yarn preparation, spinning, knitting, coloring, clipping, sawing,
quality control and packing.
Chart 1. Production process
3.4 PRODUCTION PROGRAMME AND INSATLLED CAPACITY
In order to provide time for market penetration, it would be advisable to start production at a
relatively medium output. The plant will, therefore, start production at 75% of full capacity
during the first year and then raise production capacity to 85% in the 2nd and then to 100%
During the 3rd year, respectively.
1.4 Legality and licenses of the project
Based on the commercial code of the country with the objective of engaging on production of
Sport Footwear, after its establishment the company has plan to lease acquire 1,440 Sq. M of
land at Hujian Shoe city Industrial Park
2. Propose of the project
2.2 The objective of the project
The general objective of this project is primarily producing best quality of Sport footwear by
using best technology machineries, for local and international markets as to earn profit to the
company, create job opportunity for local people and expatriates and tax income for the government.
2.2.1 SPECIFIC OBJECTIVES
 Generate profit for the investors.

 Supplying the product for local and interna.et
 Save foreign currency for the country in the form of importing substitution.
 To contribute to the country's gross domestic products
 Empowering employees by focusing and giving equal opportunity for women
employees.
 To generate revenue to the government
 To create forward linkage to the sport sector and other forward linkage to different
types of business companies
 To invest or promote the market situation of the country by producing quality Sport
Footwear
• To contribute by filling the demand and supply gap for these products in the
surrounding area.
Create job opportunity for Ethiopia workers.

Bring knowledge and technology transfer.
Fulfill its corporate social responsibility (CSR)
3. PROJECT TECHNICAL ANALYSIS

3.1 PROJECT LOCATION AND LAND REQUIREMENT
The project location is Oromia regional state, Sheger city, Hujian Shoe City Industrial Park
This factory plan to gets suitable land of 1,440 Sq.M on this area by fulfilling every process and
fee for the government. And this land is already fulfilling the need of the company for the
intended purpose.
3.2 BRIEF DESCRIPTION OF PROJECT & PRODUCTS
This particular project provides for setting up a Sport Footwear manufacturing unit on a
extremely large -scale that will supply to wholesalers and retailers for local and international
consumer market. The factory will start from the scratch to Sport Footwear products are
manufactured in different sizes and colors depending upon the demand. The most common type
of shoes is Sport Footwears (Sport Footwear for both sex and different age levels). While there
is also a reasonable demand of customed order destined to do and delivery accordingly, the
proposed unit will mainly cater to major types of Sport Footwears with an installed capacity of
producing around 1,270,000 pairs of Sport Footwear annually on 8 hours single shift basis with
total capital of 11,360,00 Birr (USD 200,000). Since, different sport Footwear are a product of
occasional use for all age groups and genders; hence, the target market is easy to define. The
proposed project would mainly cater to the wholesalers and retailers of Sport Footwear business.
Presently, Sport Footwear manufacturing units in Ethiopia are predominantly concentrated urban
areas and in the newly developed industrial zone. Therefore, the ideal location for proposed
manufacturing unit is the Hujian shoe City industrial park this park mainly due to easy
availability of raw material and skilled labor force.
The installed capacity is based on a combination of different types of machines related to above
stated production operations. According to the capacity of installed machines the proposed unit
can manufacture 105,833 pieces of different types of Sport Footwear per day in 8 hours single
shift basis. The details of overall installed, operational, and maximum capacity utilization of the
proposed unit is provided below:
Table 2. Production capacity with three

phases
Year Team Employees Team arrangement Capacity /month
25/Sport Footwear and

2024 50 500 312,000,312,000
25/other
2025 75 1000 40/Sport Footwear ,35/other 950,000,766,000
2026 90 1500 50/Sport Footwear 40/other 12,700,001,270,000
3.5 Raw Material Requirement
The Rubber molded/leather sole, lining and foam and polyster are the major raw materials that are
required for manufacturing of Sport Footwear. Additionally, elastic is also required in higher
quantity. Different chemicals, colorings also needed in a potential way. Furthermore, packing
material is also required. The details of raw material required for this project is listed below:
Table 3: list of raw material
Description Details
Rubber molded/leather sole Raw Material Cost: Birr. 61200 Per ton
Lining and Foam Raw material cost:Birr 50000 pre ton
Insole leather Raw Material Cost: Birr per package
Upper Leather 5000,10,000
Studs 3500,5500,6200 (50 kg )
Polyester 5000,15000,6000
Nylon Raw Material Cost: Birr per barrel 75,000
Elastic material Raw Material Cost: Birr. Per m=60,one role 40m
Total raw material cost for the first phase is 2,000,000 Birr
3.6 PROJECT MACHINERY REQUIREMENT
3.6.1 Plant, machinery and equipment for the proposed project are stated below.
Table 4: Machinery list
S No. Machine Quantity Unit Price (USD) Total Price (USD)
1 Clicker Machine 3 Set 4,500 13,500
2 Skiving Machine 3 Set 2,395 7,185
3 Sewing Machine 3 Set 1,245 3,735
4 Lasting Machine 3 Set 22,000 66,000

Other Tools &
5 5,000 5,000
Equipment’s Set
Total 35,140 95,420
3.6.2 Furniture, Fixtures & Vehicle Requirement
Table 5: Details of the furniture and fixture required for the project are given below .
Description Quantity Unit Price in birr Total Price in birr
Table for Director 4 4,800.00 19,200

Chair for Director 4 2,800.00 11,200
Table 5 1,400.00 7,000
Chair 50 50,000
1,000.00
File Cabinet 5 4,600.00
23,000
_ ,..
Sofa Set 3 127,000.00 381,00
,.
Miscellaneous Furniture 1 50,000.00 50,000

Air Conditioner (1.5 Ton
Split) 3 24,000.00 72,000
Lightening, Fans Etc. 200 20,000.00 4,000,000
Vehicle 3 1,500,000.00 4,500,000
Total
8,787,955
3.6.3 OFFICE EQUIPMENT REQUIREMENT
Table 6: Following office equipment will be required for the production.

Total Price
Description Quantity Unit Price in birr birr
Laptop 10 35,000 350,000
Computers with UPS 10 15,000 150,000
Computer Printer (s) 10 25,000 250,000

Infrared cameras 5 100,000 500,000
Telephones 3 4000 12,000
Fax Machines 1 27,000 27,000

Total Office Equipment 1,289,000
3.7 UTILITIES
Electricity Power
The envisaged plant has high power consumption to run the machinery. Hence the availability of
electric power supply needs to be secured to actualize the operation of the plant . The
Consumption of electric power for the factory is estimated to be 3000 kw.
Water
The envisaged plant requires water during production process and other general operation. Hence,
it is important to the plant to be located in the area where there is sufficient and continuous water
supply. The annual water consumption of the factory is estimated to be 40m3/sec
Table 7: Utility cost
Utility Requirement Installation cost Fee per year

Water 40m3/sec 1million(drilling) 10,000
Electricity or power 3000 5 million (transformer and 500,000
kw/year other accessories including
installing)
Total 615,000
4. MARKET ANALYSIS
4.1 ANALYSIS OF THE BUSINESS ENVIRONMENT
4.1.1 PEST ANAYSIS

External business environment affects the operation of any envisaged project. A prior review of
the situation would help to foresee factors that may the project and it also pave the way to prepare
ahead and avoid any surprises.
The major external factors that affect the operation of a business enterprise are political, socio-
economic/socio-cultural and technological development (PETS). Accordingly, our company
undergoes analysis of PEST factors and their impact as related to the activity of envisaged
project and briefly discussed below.
Political
The formally centralized system to federal and increasingly decentralized one Due to extensive
capacity building programs carried out , significant progress has been achieved in good
governance and public service delivery , insuring transparency of operation and the
efficiency and accountability of justice system were carried away specially in past year after
PM Abiy Ahmed is on power.
Even though Ethiopia is a large and very diverse country, the political environment is
characterized by very little crime and disorder. Since Ethiopia is one of less developed countries
with lowest levels of corruption, it can claim to offer one of the cleanest business climates
in the developing world.
Most publication that undergoes research regarding Ethiopian political environment

describe Ethiopia as "safe, peaceful, stable and with less corruption index."
Economic
Ethiopia is one of the fastest growing economies of the world .as the recent GTP II
performance report of the country, Ethiopia has been growing by an average annual
growth rate of 8%.
Since 1992, the government has successfully implemented a series of reform programs,
in order to transform the economy from command lead to a market economy, to speed
up the integration of the economy into the economy and encourage wide participation of
the private sector in developing the national economy. Such reforms include among
others:
Deregulation of domestic prices

Liberalization of foreign trade and abolition of all export taxes
Devaluation of exchange rate etc.
Currently the government is working to transform the economy from agricultural lead
economy to industrial (manufacturing) lead economy to achieve these objectives
various activities that would enhance the manufacturing sectors are underway.
Among these are the development of industrial zone in various part of Ethiopia,
Prioritization of loan, allocation of land and various incentive mechanism can be cited.
Socio-cultural /socio-economic
According to various estimate, the country's current population is more than 120
million. One of the features of Ethiopia's demographic characteristics is that a large
number of populations is young and join the national workforce each year. According to
documents of GTP-II, the ration of the population of working age to the total population
is about 54% and estimates are that each year additional 1.2 million people join the
national work force.
Provided that the additional workforce receives the support necessary to be productive, the
country's workforce can play a significant role for increased economic growth and development.
Technology
The advancement and spread of science and technology in the country will favorably influence
the service rendering and manufacturing capacity of the envisaged project. During the past ten
years and so the ICT sector of the Ethiopia has made significant progress. The mobile
technology capacity, electrification program and countries electricity coverage, wireless
network, fiber optics etc. has increased substantially which in turn increase/improve IST quantity
and quality throughout the country. Realizing the importance of ICT in the economic and social
development both GTPs (l& II) have given high priority to upgrade the existing ICT network to
accommodate the latest information) technologies and improve network quality and expand
services. Accordingly, in addition to the planned expansion of fixed line, mobile and internet
service coverage is planned to reach 20Gbs from the current 3Gbs.
The spread of information and technology and availability of Internet service, the ability to
conduct video conferences, the possibility of processing of and distribution of data using
computer hardware and software, telecommunications, and digital electronics will create an
opportunity for envisaged project to become more effective.
Conclusion of PEST analysis

It can be concluded from the above PEST analysis there is continuous improvement of
governance and public service delivery in the country. The macroeconomic performance in the
past years has been very positive and encouraging and the GTP-II indicates a very good
prospect, with a minimum of 10% GDP growth per annum. Although the incentive given
currently given seems to adequate the government is planning to give additional incentives for
the manufacturing sector, particularly for export oriented and import substitution projects.
More specifically, priorities will be given to the manufacturing sector in support or provision
in the areas of licensing, land and finance allocation, training and the like.
Beside the favorable demographic characteristics of the population, the expansion of

universities as well as TVETs in all parts of the country provides a good opportunity in
supply market of skilled and semi-skilled technical personnel. The improving social
and economic infrastructures, including the advancement of ICT in the country, would enable
enterprises to run their business smoothly which can be considered as a major opportunity to the
country.
4.2 TARGET MARKET
The project main target market is local market and international markets.
Table 8. local target market on local at three stages
Year domestic Target market

2024 90% A.A/Diredawa /mekele/bahirdar
2025 80% A.A/Diredawa/mekele/hawasa/bahirdar
2026 70% A.A/Diredawa/mekele/hawasa/bahirdar
Table 9. International target market on local at three stages
year Export Target market
2024 10% U.S/Korea

2025 20% Fareast /EU
2026 30% EU/Fareast /U.S
4.3 CRITICAL FACTORS TO PENETRATE MARKET IN ETHIOPIA
The commercial viability of the proposed Sport Footwear unit depends on the following critical
factors.
 Technical know-how and relevant experience of entrepreneur
 Availability of skilled labor having technical knowledge.
Ability to generate work orders through industrial networking, direct

marketing and negotiating long term contracts.
Selection of appropriate machinery, technology and human resources

would be required to run project successfully.
Stringent supervision of the production process at every level; utilization

of job costing and job card with technical specifications sheet.
Higher return on investment and a steady growth of business is closely

associated with regular training and capacity building of the entrepreneur
and employees.
No Costs Annual cost in Birr
1 Utility 6,510,000
2 Manpower 1,560,500
3 Maintenance and others 1,000,000

Total 9,070,500
The most important factor for the success of the project would be the quality
products and customer satisfaction in order to get a comparative
advantage.
Table 10. Operation Cost

4.4 MARKET OPERATION COST
4.5 PRICE AND PROFITABILITY OF PROJECT PRODUCTS
4.5.1 REVENUE GENERATION
Based on the capacity utilization of 75 % for Sport Footwear sales revenue

during the first year of operations is estimated as under.
Table 11: Revenue Generation — Year 1
No. unit Finished unit available Sales Price Sales

Description produced goods sales for sale (birr)/pieces revenue
Sport in pieces inventory
Footwear
1,270,000.00 1,269,000.00 100,000 1,000 100,000,000
Total 1,270,000.00 1,269,000.00 100,000 1,000 100,000,000
5.1 MANPOWER REQUIREMENT
The total manpower requirement for this project is 550 employees. Out of this the total
number of casual works (temporary) would be 50 while the total number of permanent
employees is expected to around 500.
All the required manpower will be recruited from and around project site and will be paid on
the basis of the prevailing labor market price. The annual budget of manpower is estimated to
be 19,038,000 birr.
Table 12; manpower requirement and their salary

Monthly
No. of Salary per
Description Employees person Total salary
General Director 1 25,000 25000
Deputy manager 1 20,000 20000
Finance Officer 1 20,000 20000
Finance assistant 3 12,000 36000
Accountants 5 6,000 30000
Lawyer 1 20,000 20000
Company consultant 1 30,000 30000
Production Manager 2 15,000 30000
Master Bach expertise 3 15,000 45000
Clicking workers 15 3000 45000
Skiving controller 2 10,000 20000
Swing worker 10 3,000 30000
Lasting Master 3 8,000 24000
Sol stitching experts 5 10,000 50000
Weaving workers 100 2000 200000
Heeling assistance 3 10,000 30000
Technical Supervisor 10 8,500 85000
Quality In Charge 10 8,000 8000
Machine Operator 20 6,000 120000
Rinsing machine workers 20 2,000 40000
Drying and ironing workers 10 1500 15000
Linking/Pressing/Packing Staff 40 3,000 12000
Seamstress
Seamstress 200 1,500
300000
Human resource manager 1 9,000 9000
Purchase Officer 3 15,000 45000
purchasers 5 3000 15000
Store Assistant 1 4,000 4000
Admin Officer 1 6,000 6000
Translator 1 15,000 15000
Office assistant 1 4,000 4000
ICT 4 8,000 32000
Sells 5 3000 15000
Security Guard 3 2,500 7500
Driver 5 3,000 15000
Janitor 5 800 4000
Total per month 500 1,586,500
Total per year 500 1,903,800
6. FINANCIAL ANALYSIS
6.1 FINANCIAL PLAN AND ANALYSIS
This investment Project is planned with 100% equity from the owner side. Therefore, its
financial plan is prepared accordingly.
6.1.1 LAND REQUIREMENT
The space requirement for the proposed manufacturing unit is estimated considering various.
facilities including management office, production hall, storage, open space, etc. The total area
required for this project is 1,440 m2.for this project the total fee to get this land is 3,926,016
Birr Per Anum for lease fee.
6.1.3 MACHINARY AND EQUIPMENTS

Most of the machinery for this project will be imported from abroad. Since the project has a
plan to use the latest technology and the latest machinery in order to compete in the market. The
items will be readied with estimated cost of 5,720,000 birr.
6.1.4 OTHER FIXED CAPITAL COST

This project is large -scale project and therefore there are a lot of costs associated with this
project (buildings, office furniture, office equipment, pre-operation costs) and we assumed these
cost as fixed capital cost. The total fixed capital cost for the project is estimated76, 441,400 birr.
6.1.5 PROJECT WORKING CAPITAL

This investment project is going to be managed by a management team in headquartered in
Addis Ababa. The working capital mainly covers, salary expense, utility expense and some
minor operation expense the total working capital for the one year is estimated cost of
6.2 FINANCIAL SUMMARY

Table 13: Financial Summary
Capital Cost Description Total Cost (Birr)

1 Land 3,926,016
3 Machinery and Equipment 5,367,600
Other Fixed Capital 1,168,193
4
Pre-operating Cost 400,000
5 working capital 498,191
Total 11,360,000
6.3 Ratio
In financial analysis, financial ratios and efficiency ratios are used as an index or yardstick for
evaluating the financial position of a firm. It is also an indicator for the strength and weakness of
the firm or a project. Using the year-end balance sheet figures and other relevant data, the most
important ratios such as return on sales which is computed by dividing net income by revenue,
return on assets (operating income divided by assets), return on equity (net profit divided by
equity) and return on total investment (net profit plus interest divided by total investment) has
been carried out over the period of the project life and all the results are found to be satisfactory.
Consideration of the estimated costs and revenues presented in the preceding paragraphs and the
underlying assumptions for their estimation became the inputs to the income statement of this
medium-scale manufacturing investment project. The results are given in the annex part. The
results of the income statement show that the investment is exceptionally promising.
6.6 SOCIO — ECONOMIC BENEFITS OF THE PROJECT
Crete job opportunity for Ethiopian workers

Bring knowledge and technology transfer.
Generate tax and revenue for the country.
6.7 ENVIRONMENTAL IMPACT OF THE PROJECT
The project will not have significant environmental impact on its immediate surroundings. It will
not use any hazardous chemicals during its operation. However appropriate safety measures will
be taken for possible insignificant environmental emission like (noise, dust and possibly liquid
wastes) as per the recommendation of detail EIA for the project.
Noise pollution mitigation plan
One of the mitigation plans for noise pollution that we are planning to undertake includes. a noise
tolerant building such as a multi-story carpark building is used to protect residential.
Dust pollution mitigation plan

Dust control measures apply to any construction site where there is the potential for air and water
pollution from dust traveling across the landscape or through the air. this project will have
construction. so to prevent this dust pollution the project has a plan to use showering. during
production dusts from raw materials will occur. there for we are planning to install dust absorber
machine in any roof corners and find a good technology of machineries to minimize dusting. '
Liquid waste mitigation plan

The project has large liquid discharge. However, we plan to use septic tank to collect our liquid
waste and treat it with different modern technology water treatment plants as per the law
ordered.
The project has a plan to reuse the recycled water as main source of water. The project will open
a modern laboratory to follow of waste water.
6.8 PROJECT IMPLEMENTATION SCHEDULE

Table 14: - Schedule
Activities Feb Mar Apr May Jun Ju Au Sep oct Nov Dec
Project
development and
feasibility study
Land
accusation
Constriction
Procurement of
machinery and
equipment
Machinery and
equipment
erection
/installation
Preparation of raw
material (order,
purchase,
import)
Project
Commissioning
7. CONCLUSION
Niubalun Shoes Manufacturing Co. Ltd feasibility study, on the establishment of Sport Footwear
project has gone through all aspects of the project components,
market, technical, financial, organizational structure, socio economic condition environmental

impact and other vitality issues. Consequently, the study is coming up with the following.
conclusions: -
Considering the market condition, even though there are no too much factories that produce Sport
Footwears the demand is more than the existing supply (which is imported from abroad) for the
whole sellers in Ethiopia .in other words, the demand supply gap analysis confirmed the existence of
unsatisfied demand which is filled with import or some production in the country. Therefore, if the
project sticks to its plan and supply quality product with reasonable price, it will be easy to gain an
appropriate market share in Ethiopia and international market.
Technical viability of the project has also been assessed. Niubalun Shoes Manufacturing Co. Ltd
has plan to get a land from Hujain Industrial Park through lease and other necessary investment
costs are identified and included in this feasibility analysis. About the objective and workflow of
the project the company will hire more than 500 workers. Furthermore, training will be given to
technical employees when it is needed to assure smooth workflows functionality of the project.
Besides the above facts, financial viability, socio-economic benefit, and environmental impact of the
project have been assessed carefully. As per the projection made in this study; on the financial
profitability this project is feasible.
`1 ,
Therefore, the proposed project possesses wide range of economic and social benefits such as in
creasing the level of investment, tax revenue and employment creation. Generally, the project is
technically feasible, financially, and commercially viable as well as socially and economically
acceptable hence the project is worth implementing.
FINANCIAL ANALYSIS AND INDICATORS

FINANCIAL ANALYSIS
Financial feasibility analysis provides a basis for a decision as to whether to proceed or not with the
establishment of the project. The basic assumption for the financial analysis of the project is
presented in key assumption part of this study. The financial study of project is conducted by taking
into account the current change price, technology and system of production.
Investment cost and sources of finance
As shown in table below the expected fund required to run the project need about 11,360,000 Birr
(USD 200,000). The cost covers initial investment cost, working capital requirement and pre-
operating expenses. Out of the total estimated initial costs, machineries, and equipment, working
capital, pre operating cost and other fixed capital is estimated as 5,367,600. 498,000, 400,000,
1,168,193 and 3,926,016 respectively.
SN Description Cost in Birr % Share
i. Fixed Investment
1 Land Lease, Building & Construction 90,140,985
2 Machines & Equipment 103,720,000
3 Office Equipment & Furniture 4,613,400

4 Vehicles 7,500,000
Sub Total Fixed Investment 205,974,385 64.5%
ii. Pre Operating Expenses
1 Project Commissioning 2,000,000
2 Project Feasibility Study 200,000
3 Project Management 500,000
5 Staff Capacity Building 250,000
6 Promotion and Advertisement 200,000
Sub Total Pre-Operating Expenses 3,150,000 1%

iii. First Year Direct Material & Utilities Cost
1 Direct Material & Utilities 75,000,000
Sub Total Pre-Operating Expenses 75,000,000 23.5%
iv. Initial Working Capital
1 First Phase Working Capital 35,211,900

Sub Total Working capital 35,211,900 11%
Grand Total 319,336,285
Sources of Finance
The sources of finance for the project fully covered by the owners’ the owner equity collected
from founders of the company is approximately Birr 319,336,285
SN Description % Share Amount (in Birr)
1 Owner’s Equity 30 95,800,885.5

2 Bank Loan 70 223,535,399.5
Total 100 319,336,285
Projected Financial Statement
Projection is made based on assumption and facts; a complete set of financial projection are
providing in this section. These projections include profit/loss statement, statement of cash flow and
balance sheet. The projections are prepared on annual basis.
According to projected annual revenue from sales of Jeans trouser and other apparel, the envisage
project will generate Birr 373,464,000 during its first year of operation and raises to Birr
410,810,400 at the second year, Birr 496,204,380 at the third years of operation. The cost of sales is
also projected to grow from Birr 178,043,000 during the first year to Birr 252,045,648 during the
tenth year.
Finally, the project will generate a net profit of birr 125,673,571 during its first year of operation and
raises to Birr 145,932,421 at the second year, Birr 194,678,243 at the third years of operation
respectively.
Year -1 Year -2 Year -3 Year -4 Year -5 Year -6 Year -7 Year -8 Year -9 Year -10
Total Sales Revenue
373,464,000 410,810,400 496,204,380 496,204,380 521,014,599 521,014,599 547,065,329 547,065,329 574,418,595 574,418,595
Total Production Cost
178,043,000 191,381,000 221,878,850 221,878,850 230,739,643 232,972,793 242,276,625 242,276,625 252,045,648 252,045,648
EBIT
125,673,571 145,932,421 194,678,243 194,577,046 205,573,571 206,663,081 221,507,109 221,414,199 236,994,301 233,765,314
Interest Expense
- - - - - - - - - -
EBT
125,673,571 145,932,421 194,678,243 194,577,046 205,573,571 206,663,081 221,507,109 221,414,199 236,994,301 233,765,314
Income Tax (30%)
- - - 58,373,114 61,672,071 61,998,924 66,452,133 66,424,260 71,098,290 70,129,594
Net Profit
125,673,571 145,932,421 194,678,243 136,203,932 143,901,500 144,664,157 155,054,977 154,989,940 165,896,011 163,635,720
Financial Indicators
IRR and NPV and Sensitivity Analysis
a. IRR and NPV
Financial return analysis indicates that the project will generate an acceptable internal rate of return.
The internal rate of return (IRR) after tax for the project is 45 %. The net present value (NPV) at a
discount rate of 10.5 % is nearly Birr 637,139,443
b. Sensitivity Analysis
Sensitivity analysis on selected cost components has been further conducted to test the strength and
viability of the project. In view of this, extreme conditions like cost escalation on production cost
and decrease of sales price due to various factors have been therefore examined. The result of
Sensitivity analysis shows the project is viable both with an increase of 10% in cost of production
with IRR of 40 % and 10% decline of price with IRR of 29%.
Key Variable Discounted Rate IRR in % NPV in ETB

If Cost of production increase by 10% 10.5% 40% $530,829,981.52
If selling Price Decline by 10% 10.5% 29% $296,484,839.18
The results of the project feasibility study conducted indicate the envisage company has strong
potential to be a successful enterprise. The Textile and garment is projected to grow at rapid rate in
the coming year in markets. The products will be supplied to high demanding domestic and abroad
market and save and generate foreign currency to the country and improve the lives of local
community through employment creation. Further, the company has a plan to help the surrounding
community by implementing necessary corporate social responsibility.
1. Profitability Ratio
a. Gross Profit Margin

A company’s first production year gross profit margin is 52.33 it implies that how much of total
income of a company has left over after it covers all direct Cost.
Gross Profit Margin = Gross Profit x 100 = 195,421,000x 100 =52.33%
T Total Revenue 373,464,000
This higher gross profit margin indicates that the envisage company have more money left over to
cover operating expenses, taxes, depreciation, and other business costs. It may also result in higher
ending profits for owners and shareholders.
b. Operating Profit Margin
A company’s first production year Operating profit, or earnings before interest and taxes (EBIT) is
33.65 it implies that the gross profit and deducts operating expenses. The operating
profit margin shows the percentage of revenue that remains once operating expenses are deducted
from net revenue.
Operating Profit Margin =Operating Profit x 100 = 125,673,571 x100= 33.65%

T Total Revenue 373,464,000
c. The net profit margin
A company’s first production year net profit margin is equal to 33.65% it shows how much net
income or profit is generated as a percentage of revenue. Net profit margin is the ratio of net profits
to revenues for a company or business segment. The net profit margin illustrates how much of each
Birr in revenue collected by a company translates into profit.
The net profit margin = Net Income x100 = 125,673,571 x100 = 33.65%
Total Revenue 373,464,000
 Net profit margin is thus 0.3365 or 33.65 % ($125,673,571/$373,464,000) x 100. A 33.65

percent profit margin indicates the company earns 33.65 cents in profit for every 1 birr it collects.
2. Return Ratio
According to the projected income statement, the project will expect to start generating its return
from invested equity and investment through generating income or profit. Important ratios such as
profit to total asset (Return on investment), net profit to equity (Return on equity) show an
encouraging ratio trend during the lifetime of the project.
a. Return on Equity
Return on Equity = Net Income x100 = 125,673,571 x100= 39.35 %

Total Equity 319,336,285
 Return on Equity is thus .3935 or 39.35 % ($125,673,571/$319,336,285) x 100. A 39.35 percent return of
equity indicates the company earns 2.54 birr from every 1 birr equity investment.
b. Return on Investment / Asset
Return on Investment = Net Income x100 = 125,673,571 x100 =28.24 %

Total Asset 445,009,856
 Return on Investment is thus .28 or 28.24 % ($125,673,571/$445,009,856) x 100. A 28.24 percent return of
asset indicates the company earns 3.54 birr from every 1 birr of total asset investment.
c. Solvency Ratio
Solvency ratios is the technique help to measures the capability of firms to honor their long-term
debt obligations and the long-term health of a business that could suggest the potential
for bankruptcy in the future.
d. Debt-to-Assets Ratio
The debt-to-assets ratio measures how much of the firm's asset base is financed using debt.
Debt-to-Assets Ratio= Total Long Term Debt = 0 = 0%

 Since a firm is invest 100 % shareholder equity there is no debt to refund
3. Equity Ratio
This ratio tells us how effectively a company funds its assets with shareholder equity, as opposed to
debt. The higher the ratio, the less debt is needed to fund asset acquisition.
Equity Ratio= Total equity = 445,009,856 = 100%

 Since a firm is invest 100 % shareholder equity therefore equity ratio is 100%
d. Interest-Coverage Ratio
This ratio measures a company's ability to meet its long-term debt obligations.
 Since a firm is invest 100 % from shareholder equity there is no there is no interest coverage ratio
4. Liquidity Ratio
It is a measure of firm’s ability to satisfy the clams of short term creditors by using all current assets.
The income statement and the other indicators of risk show that the project is viable and can repay
all its short term debt properly.
a. Current Ratio
Current Asset = 96,688,430= 2.56

Current Liability 37,702,071
 If a current ratio is less 1 is generally considered a troubling number. But in this case a current ratio of
2.56 indicates the project highly feasible to meet its short term debt obligations.
5. Payback Period
The investment cost and income statement projection are used to project the pay-back period. The
project's initial investment will be fully recovered at the 1.94 Years or 1 rear and 11 Months of
operation.
Initial Investment = 319,336,285 = 1.94 Years or 1 rear and 11 Months

Average Cash inflow per period 164,991,220.70
FACT SHEETS, ASSUMPTIONS and ANNEXES

FACT SHEETS & ASSUMPTIONS
Fact Sheets
Working Days per Month 25 days
Working Days 300 per year
Number of Shifts >Year-1 2 per day
Working Hours 8hr.per Shift
Working Months 12 per year
Working Hours per Year Year 2,400
Year-1 75%
Jeans Trousers Year-2 85%
>Year-3 100%
Capacity Utilization of Plants
Year-1 75%
Others Apparel Year-2 85%
>Year-3 100%
@ Year-1 1,040 Jeans Trousers per Shift
Jeans Trousers @ Year-2 1,144 Jeans Trousers per Shift
Production Capacity
@ Year->3 1,316 Jeans Trousers per Shift
per
@ Year-1 1,040 Others Apparel per Shift
Shift
Others Apparel @ Year-2 1,144 Others Apparel per Shift
@ Year-3 1,316 Others Apparel per Shift
@ Year-1 936,000 Jeans Trousers per Year
Jeans Trousers @ Year-2 1,029,600 Jeans Trousers per Year
Production Capacity
@ Year->3 1,184,400 Jeans Trousers per Year
per
@ Year-1 936,000 Others Apparel per Year
Year
Others Apparel @ Year-2 1,029,600 Others Apparel per Year
@ Year-3 1,184,400 Others Apparel per Year
Expected Selling Price per unit Jeans Trousers @ Year-3 300 Ethiopian Birr
In ETB Others Apparel @ Year->3 300 Ethiopian Birr
Details of Direct Costs and Expenses @ First Year
S.n Descriptions Unit Quantities Required Cost
Direct Labor & Materials
1 Direct Labor Number 1,351 42,588,000
2 Direct Raw Material and accessories kg 75,000,000
Direct Utilities and supplies
3 Water M3 300,000
4 Electricity Kw 1,500,000
5 Fuels Lt. 250,000
6 Oil & Lubricant kg 25,000
Indirect Operating Expenses

No Description Assumption Used Remark
1. Consumable Goods & Materials
1 Cleaning Goods Supplies 120,000 Birr per Year Cost of Cleaning goods supplies expected to increase by 5% every year
2 Uniforms and Overcoats 150,000 Birr Per Year Cost of Uniforms expected to increase by 5% every year
3 Stationery Material & Office Supplies 50,000 Birr Per Year Cost of Stationery & Office supplies expected to increase by 5% every year
4 Direct Machinery Consumed Fuels A 250,000 Birr/Year Cost of fuels expected to increase by 5% every year
5 Oil and Lubricant 10% of fuel cost Oil and Lubricant expected to increase by 5% every year
6 Office Vehicle Running Fuels 165,000 Birr/Year Cost of fuels expected to increase by 5% every year
7 Office Vehicle Running Oil and Lubricant 10% of fuel cost Oil and Lubricant expected to increase by 5% every year
2.Contracted out Service & Supplies
1 Contracted Professional Services fee 0.5 % Total Revenue
2 Marketing & Advertisement Expenses 0.5 % Total Revenue Cost of Advertisement and marketing promotion expected to increase by 5% every 5 year
3 Insurance
Health & Life Insurance 2% of Total Salary Cost of Health & Life insurance increase by 5% every 5 years
Property Insurance 0.5% of fixed Investment Cost of Property insurance increase by 5% every 5 years
Liability Insurance 1% Cost of Vehicles Cost of Liability insurance increase by 5% every 5 years
4 Electricity Charges 3,000 kw per year Required @ Full Capacity Cost of Electricity expected to increase by 5% every 5 years
5 Telephone, Fax and Postal 50,000 per month Cost of Telephone expected to increase by 5% every 5 years
6 Water Charges 4,200 m3 per year or 40m3/sec Required @ Cost of Water expected to increase by 5% every 5 years
Full Capacity.
3.Maintenance and Repairs
1  Maintenance and repair of Machinery & Equipment operation will start after the second
years of project commencement
Maintenance & Repair of Machinery &
1% of Fixed Cost Machinery & Equipment  Cost of Maintenance and repair of Machinery & Equipment expected to increase by 5%
Equipment
every 2 years
2 Maintenance & Repair of Vehicles 1% of vehicles Cost Cost of Maintenance and repair of vehicles expected to increase by 5% every 2 year
3 Maintenance of Building 0.5% of Fixed Cost Building  Maintenance of building operation will start after five years of project commencement
4. Salary and Benefits

1 Annual Overhead Salary Expense 4,182,000 Br. @ Year-1 Annual Salary expected to increase by 5% every 5 years
2 Employee Training and benefits 20% of Salary Expenses Annual Salary expected to increase by 5% every 5 years
3 Per Diem 2% of Salary Expenses Annual Salary expected to increase by 5% every 5 years
4 Traveling Allowance 4% of Salary Expenses Annual Salary expected to increase by 5% every 5 years
Indirect Operating Expenses

No Types of Items Total of
Year -1 Year -2 Year -3 Year -4 Year -5 Year -6 Year -7 Year -8 Year -9 Year -10
10 Years
1 Consumable Goods & Materials
1 Cleaning goods supplies 120,000 126,000 132,300 138,915 145,861 153,154 160,812 168,852 177,295 186,159
2 Uniforms and Overcoats 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 232,699
3 Stationery Material & Other office supplies 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566
4 Office Vehicle Running Fuels 250,000 262,500 275,625 289,406 303,877 319,070 335,024 351,775 369,364 387,832
5 Office Vehicle Running Oil and Lubricant 25,000 26,250 27,563 28,941 30,388 31,907 33,502 35,178 36,936 38,783
6 Overhead Electricity charges 300,000 315,000 330,750 347,288 364,652 315,000 315,000 315,000 315,000 315,000
7 Telephone, fax and postal 50,000 50,000 50,000 50,000 50,000 52,500 52,500 52,500 52,500 52,500
8 Overhead Water Supply Charges 100,000 100,000 100,000 100,000 100,000 105,000 105,000 105,000 105,000 105,000
Consumable Goods & Materials Sub Total 1,045,000 1,089,750 1,136,738 1,186,075 1,237,879 1,231,887 1,269,857 1,309,725 1,351,586 1,395,539
2 Contracted out Service
1 Contracted Professional Services fee 26,676,000 29,343,600 35,443,170 35,443,170 37,215,329 37,215,329 39,076,095 39,076,095 41,029,900 41,029,900
2 Audit & Legal Fees 15,000 15,000 15,000 15,000 15,000 15,750 15,750 15,750 15,750 15,750
3 Marketing & Advertisement Expenses & Sells
26,676,000 29,343,600 35,443,170 35,443,170 37,215,329 37,215,329 39,076,095 39,076,095 41,029,900 41,029,900
Commission
4 Insurance fees 11,309,119 11,309,119 11,309,119 11,309,119 11,309,119 11,874,575 11,874,575 11,874,575 11,874,575 11,874,575
Contracted out Service Sub Total 64,676,119 70,011,319 82,210,459 82,210,459 85,754,777 86,320,983 90,042,515 90,042,515 93,950,125 93,950,125
3 Maintenance and Repairs
1 Maintenance & Repair of Vehicles 75,000 75,000 78,750 78,750 82,688 82,688 86,822 82,688 91,163 91,163
2 Maintenance & Repair of M/c & Equipment - 1,037,200 1,089,060 1,143,513 1,143,513 1,200,689
1,037,200 1,089,060 1,200,689 1,260,723
3 Maintenance and Repair of Building - - - - 3,125,000 - - - - 3,125,000
Maintenance and Repairs Sub Total 75,000 1,112,200 1,115,950 1,167,810 4,296,748 1,226,201 1,230,335 1,283,377 1,291,852 4,476,886
5 Training & Benefits, Traveling & Per Diem
1 Training & Benefit Expense 9,354,000 9,354,000 9,354,000 9,354,000 9,354,000 9,821,700 9,821,700 9,821,700 9,821,700 9,821,700
2 Per Diem 83,640 83,640 83,640 83,640 83,640 87,822 87,822 87,822 87,822 87,822
3 Traveling Allowance 167,280 167,280 167,280 167,280 167,280 173,971 173,971 173,971 173,971 173,971
Training & Benefits, Traveling & Per Diem Sub Total 9,604,920 9,604,920 9,604,920 9,604,920 9,604,920 10,083,493 10,083,493 10,083,493 10,083,493 10,083,493
Grand Total of Indirect Operating
75,401,039 81,818,189 94,068,067 94,169,264 100,894,324 98,862,564 102,626,200102,719,110 106,677,056 109,906,043
Expenses
FINANCIAL ANALYSIS AND STATEMENTS UNDERLYING ASSUMPTION
The financial analysis of the envisioned factory is based on the data provided in the preceding sections and the
following assumptions.
Construction and Finance
 Construction Period 3 Years
 Source of Finance 100 % Equity
 Tax Holidays 3 years
 Income Tax Rate 30%
 Average Inflation Rate 18%
 Discounted Rate 10.5 %
Depreciation
 Method of Depreciation Straight Line
 Building & Construction 5%
 Machinery and Equipment 10%
 Office Equipment and Furniture 10%
 Vehicles 20%
A. Summary of Total Initial Fixed Investment and Working Capital
SN Description Cost in Birr % Share

j. Fixed Investment
1 Land Lease , Building & Construction 90,140,985
2 Machines & Equipment 103,720,000
3 Office Equipment & Furniture 4,613,400
4 Vehicles 7,500,000
Sub Total Fixed Investment 205,974,385 64.5%

ii. Pre Operating Expenses
1 Project Commissioning 2,000,000
2 Project Feasibility Study 200,000
3 Project Management 500,000
5 Staff Capacity Building 250,000
6 Promotion and Advertisement 200,000
Sub Total Pre Operating Expenses 3,150,000 1%

v. First Year Direct Material & Utilities Operational Cost
1 Direct Material & Utilities 75,000,000

Sub Total First Phase Operational Cost 75,000,000 23.5%
vi. Initial Working Capital
1 First Phase Working Capital 35,211,900
Sub Total Working capital 35,211,900 11%

Grand Total 319,336,285
B. Source of Fund
SN Description % Share Amount (in Birr)
1 Owner’s Equity 100 319,336,285

2 Bank Loan 0 0
Total 100 319,336,285
C. Depreciation Schedule
Original Value in Depreciation Depreciation

SN Description Birr Rate in % Per Year
1 Building & Construction 90,140,985 5 4,507,049.25
2 Machines & Equipment 103,720,000 10 10,372,000

3 Vehicles 7,500,000 20 1,500,000
4 Office Equipment & Furniture 4,613,400 10 461,340
Total 205,974,385 16,840,389.25
1. INCOME/LOSS STATEME
Year -1 Year -2 Year -3 Year -4 Year -5 Year -6 Year -7 Year -8 Year -9 Year -
rom Jeans Trousers
186,732,000 205,405,200 248,102,190 248,102,190 260,507,300 260,507,300 273,532,665 273,532,665 287,209,298 287,209
rom Grinder discs
186,732,000 205,405,200 248,102,190 248,102,190 260,507,300 260,507,300 273,532,665 273,532,665 287,209,298 287,209
Total Revenue
373,464,000 410,810,400 496,204,380 496,204,380 521,014,599 521,014,599 547,065,329 547,065,329 574,418,595 574,418
42,588,000 42,588,000 42,588,000 42,588,000 42,588,000 44,717,400 44,717,400 44,717,400 44,717,400 44,717
erial and Accessories
133,380,000 146,718,000 177,215,850 177,215,850 186,076,643 186,076,643 195,380,475 195,380,475 205,149,498 205,149
& Utilities
2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,178,750 2,178,750 2,178,750 2,178,750 2,178,7
st
178,043,000 191,381,000 221,878,850 221,878,850 230,739,643 232,972,793 242,276,625 242,276,625 252,045,648 252,045
Gross Profit
195,421,000 219,429,400 274,325,530 274,325,530 290,274,956 288,041,806 304,788,704 304,788,704 322,372,947 322,372
dvertisement Expenses & Sells
26,676,000 29,343,600 35,443,170 35,443,170 37,215,329 37,215,329 39,076,095 39,076,095 41,029,900 41,029,
pense
on of Land & Building

4,507,050 4,507,050 4,507,050 4,507,050 4,507,050 4,507,050 4,507,050 4,507,050 4,507,050 4,507,0
on of Machineries 10,372,00
10,372,000 10,372,000 10,372,000 10,372,000 10,372,000 10,372,000 10,372,000 10,372,000 10,372
0
on of Vehicles
1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 - - - - -
on of Office Equipment & Furniture
461,340 461,340 461,340 461,340 461,340 461,340 461,340 461,340 461,340 461,34
erhead Salary Expense 4,182,000 4,182,000 4,182,000 4,182,000 4,182,000 4,391,100 4,391,100 4,391,100 4,391,100 4,391,1
ndirect Operating Expenses
48,725,039 52,474,589 58,624,897 58,726,094 63,678,995 61,647,235 63,550,105 63,643,015 65,647,156 68,876,1
otal Production Expense
69,747,429 73,496,979 79,647,287 79,748,484 84,701,385 81,378,725 83,281,595 83,374,505 85,378,646 88,607
Profit Before Tax
125,673,571 145,932,421 194,678,243 194,577,046 205,573,571 206,663,081 221,507,109 221,414,199 236,994,301 233,765
Income Tax (30%)
- - - 58,373,114 61,672,071 61,998,924 66,452,133 66,424,260 71,098,290 70,129
Net Profit
125,673,571 145,932,421 194,678,243 136,203,932 143,901,500 144,664,157 155,054,977 154,989,940 165,896,011 163,635
2. WOKING CAPITAL DETERMINATION
Coverage Inv’t Year -1 Year -2 Year -3 Year -4 Year -5 Year -6 Year -7 Year -8 Year -9
i. CURRENET ASSET
9,668,843 10,319,221 11,828,478 9,704,467 9,985,178 10,089,274 10,423,630 10,438,242 10,788,45

vable 14,503,265 15,478,831 17,742,716 14,556,701 14,977,768 15,133,912 15,635,445 15,657,363 16,182,67
Raw material & Accessories 10,877,448 11,609,124 13,307,037 10,917,526 11,233,326 11,350,434 11,726,584 11,743,022 12,137,00
Finished Products 18,129,081 19,348,539 22,178,396 18,195,876 18,722,210 18,917,390 19,544,306 19,571,704 20,228,34
Spar parts 43,509,794 46,436,494 53,228,149 43,670,103 44,933,303 45,401,735 46,906,335 46,972,089 48,548,03
ory 72,516,323 77,394,157 88,713,582 72,783,505 74,888,838 75,669,558 78,177,225 78,286,815 80,913,39
set 96,688,430 103,192,209 118,284,776 97,044,673 99,851,784 100,892,744 104,236,301 104,382,420 107,884,5
ii. CURRENET LIABILITY

le (30%) 37,702,071 43,779,726 58,403,473 40,861,180 43,170,450 43,399,247 46,516,493 46,496,982 49,768,8
ability 37,702,071 43,779,726 58,403,473 40,861,180 43,170,450 43,399,247 46,516,493 46,496,982 49,768,8
iii. WORKING CAPITAL

apital 58,986,359 59,412,483 59,881,303 56,183,493 56,681,334 57,493,497 57,719,808 57,885,438 58,115,7
3. Cash Flow Statement

Preparation
Year -1 Year -2 Year -3 Year -4 Year -5 Year -6 Year -7 Year -8 Year -9
Cash in Flow
319,336,285 - - - - - - - - -
- - - - - - - - - -
om Sells
- 373,464,000 410,810,400 496,204,380 496,204,380 521,014,599 521,014,599 547,065,329 547,065,329 574,418,59
epreciation 16,840,390 33,680,780 50,521,170 67,361,560 84,201,950 99,542,340 114,882,730 130,223,120 145,563,510
-
ow
319,336,285 390,304,390 444,491,180 546,725,550 563,565,940 605,216,549 620,556,939 661,948,059 677,288,449 719,982,10
Cash out Flow

Fixed Asset 205,974,385 - - - - - - - - -
Capital
35,211,900 - - - - - - - - -
Expense
3,150,000 - - - - - - - - -
42,588,000 42,588,000 42,588,000 42,588,000 42,588,000 44,717,400 44,717,400 44,717,400 44,717,40

terial and Accessories
75,000,000 133,380,000 146,718,000 177,215,850 177,215,850 186,076,643 186,076,643 195,380,475 195,380,475 205,149,49
& Utilities
2,075,000 2,075,000 2,075,000 2,075,000 2,075,000 2,178,750 2,178,750 2,178,750 2,178,750
ry Expense
4,182,000 4,182,000 4,182,000 4,182,000 4,182,000 4,391,100 4,391,100 4,391,100 4,391,100
Operating Expenses
48,725,039 52,474,589 58,624,897 58,726,094 63,678,995 61,647,235 63,550,105 63,643,015 65,647,156
le
37,702,071 43,779,726 58,403,473 40,861,180 43,170,450 43,399,247 46,516,493 46,496,982 49,768,803
ment
- - - 122,170,820 128,659,663 128,986,516 136,789,104 136,761,231 144,952,11
Total payment
319,336,285 268,652,110 291,817,315 343,089,220 447,818,944 470,430,751 471,396,891 493,523,427 493,568,953 516,804,817
h surplus / Deficit
121,652,280 152,673,865 203,636,330 115,746,996 134,785,798 149,160,048 168,424,632 183,719,496 203,177,28
mulative Cash flow 0
121,652,280 274,326,145 477,962,475 593,709,471 728,495,269 877,655,317 1,046,079,949 1,229,799,445 1,432,976,73
PROJECTED BALANCE SHEET

4. Projected Balance Sheet
Year -1 Year -2 Year -3 Year -4 Year -5 Year -6 Year -7 Year -8 Year -9 Y
ASSET
i. CURRENT ASSET
9,668,843 10,319,221 11,828,478 9,704,467 9,985,178 10,089,274 10,423,630 10,438,242 10,788,453 11,
t Receivable 14,503,265 15,478,831 17,742,716 14,556,701 14,977,768 15,133,912 15,635,445 15,657,363 16,182,679 16,
ry 72,516,323 77,394,157 88,713,582 72,783,505 74,888,838 75,669,558 78,177,225 78,286,815 80,913,396 84

tal of Current Asset 96,688,430 103,192,209 118,284,776 97,044,673 99,851,784 100,892,744 104,236,301 104,382,420 107,884,528 113
ii. FIXED ASSET
uilding and Construction 90,140,985 85,633,935 81,126,885 76,619,835 72,112,785 67,605,735 63,098,685 58,591,635 54,084,585 49,
eries and Equipment 103,720,000 93,348,000 82,976,000 72,604,000 62,232,000 51,860,000 41,488,000 31,116,000 20,744,000
s 7,500,000 6,000,000 4,500,000 3,000,000 1,500,000 10 10 10 10
urniture & Equipment 4,613,400 4,152,060 3,690,720 3,229,380 2,768,040 2,306,700 1,845,360 1,384,020 922,680
ulated Depreciation 16,840,390 33,680,780 50,521,170 67,361,560 84,201,950 99,542,340 114,882,730 130,223,120 145,563,510 160
erating Cost 3,150,000 2,835,000 2,520,000 2,205,000 1,890,000 1,575,000 1,260,000 945,000 630,000
Operational Input Investment 122,356,651 136,426,722 170,394,977 133,475,769 138,681,226 140,217,913 147,580,176 147,684,020 155,402,983 159
tal of Fixed Asset 348,321,426 362,076,497 395,729,752 358,495,544 363,386,001 363,107,698 370,154,961 369,943,805 377,347,768 369
Total of Asset 445,009,856 465,268,706 514,014,528 455,540,217 463,237,785 464,000,442 474,391,262 474,326,225 485,232,296 482
LIABILITY & CAPITAL
i. LIABILITES
NET LIABILITY
d Payable 37,702,071 43,779,726 58,403,473 40,861,180 43,170,450 43,399,247 46,516,493 46,496,982 49,768,803 49,
tal of Current Liability 37,702,071 43,779,726 58,403,473 40,861,180 43,170,450 43,399,247 46,516,493 46,496,982 49,768,803 49
f Liability 37,702,071 43,779,726 58,403,473 40,861,180 43,170,450 43,399,247 46,516,493 46,496,982 49,768,803 49,
ii. CAPITAL
r’s Equity 319,336,285 319,336,285 319,336,285 319,336,285 319,336,285 319,336,285 319,336,285 319,336,285 319,336,285 319
d Earing 87,971,500 102,152,695 136,274,770 95,342,752 100,731,050 101,264,910 108,538,484 108,492,958 116,127,208 114
apital 407,307,785 421,488,980 455,611,055 414,679,037 420,067,335 420,601,195 427,874,769 427,829,243 435,463,493 433
Liability & Capital Total 445,009,856 465,268,706 514,014,528 455,540,217 463,237,785 464,000,442 474,391,262 474,326,225 485,232,296 482

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FEBILITY STUDY ON MANUFACTURING OF SPORT FOOTWEAR

FEASIBILITY STUDY ON MANUFACTURE OF SPORT FOOTWEAR

PROJECT INITIATOR: NIUBALUN SHOES

PROJECT LOCATION : HUJIAN SHOE CITY INDUSTRIAL PARK

6.1 FINANCIAL PLAN AND ANALYSIS………………………………………………......................... 23

6.1.5 PROJECT WORKING CAPITAL 25

Break even sale = (sales-operating cost) * 100 = 55% averagely

1.1 THE INVESTOR PROFILE

1.2 Niubalun Shoes Manufacturing Co. Ltd related clients

US; American most popular fasting moving brand in fashion

South America from the original latino brand

Table 1. Shareholders of the company

Name Nationality Passport No Share

3.3 PRODUCTION PROCESS

3.4 PRODUCTION PROGRAMME AND INSATLLED CAPACITY

During the 3rd year, respectively.

1.4 Legality and licenses of the project

2. Propose of the project

2.2 The objective of the project

2.2.1 SPECIFIC OBJECTIVES

 Generate profit for the investors.

Create job opportunity for Ethiopia workers.

3. PROJECT TECHNICAL ANALYSIS

3.2 BRIEF DESCRIPTION OF PROJECT & PRODUCTS

Table 2. Production capacity with three

Year Team Employees Team arrangement Capacity /month

25/Sport Footwear and

2025 75 1000 40/Sport Footwear ,35/other 950,000,766,000

2026 90 1500 50/Sport Footwear 40/other 12,700,001,270,000

3.5 Raw Material Requirement

Table 3: list of raw material

Nylon Raw Material Cost: Birr per barrel 75,000

3.6 PROJECT MACHINERY REQUIREMENT

Table 4: Machinery list

S No. Machine Quantity Unit Price (USD) Total Price (USD)

1 Clicker Machine 3 Set 4,500 13,500

2 Skiving Machine 3 Set 2,395 7,185

3 Sewing Machine 3 Set 1,245 3,735

4 Lasting Machine 3 Set 22,000 66,000

3.6.2 Furniture, Fixtures & Vehicle Requirement

Description Quantity Unit Price in birr Total Price in birr

Table for Director 4 4,800.00 19,200

Miscellaneous Furniture 1 50,000.00 50,000

Lightening, Fans Etc. 200 20,000.00 4,000,000

Vehicle 3 1,500,000.00 4,500,000

3.6.3 OFFICE EQUIPMENT REQUIREMENT

Table 6: Following office equipment will be required for the production.

Computers with UPS 10 15,000 150,000

Computer Printer (s) 10 25,000 250,000

Telephones 3 4000 12,000

Fax Machines 1 27,000 27,000

Table 7: Utility cost

Utility Requirement Installation cost Fee per year

4.1.1 PEST ANAYSIS

Most publication that undergoes research regarding Ethiopian political environment

Deregulation of domestic prices

Conclusion of PEST analysis

Beside the favorable demographic characteristics of the population, the expansion of

4.2 TARGET MARKET