ANRS INVESTMENT COMMISSIN

www.investamhara.gov.et

Project Profile on the Establishment of Plastic Gutters

down Pipes and Conduits Making Plant

Development Studies Associates

(DSA)

Revised 2016
Bahir Dar
 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........................................................................................2
3.1.3 Pricing and Distribution...............................................................................2
3.2 Plant Capacity......................................................................................................2
3.3 Production Program.............................................................................................2
4. Raw Materials and Utilities.......................................................................3
4.1 Availability and Source of Raw Materials...........................................................3
4.2 Annual Requirement and Cost of Raw Materials and Utilities............................3
5. Location and Site......................................................................................4
6. Technology and Engineering....................................................................4
6.1 Production Process...............................................................................................4
6.2 Machinery and Equipment...................................................................................4
6.3 Civil Engineering Cost.........................................................................................4
7. Human Resource and Training Requirement............................................5
7.1 Human Resource..................................................................................................5
7.2 Training Requirement..........................................................................................5
8. Financial Analysis.....................................................................................6
8.1 Underlying Assumption.......................................................................................6
8.2 Investment............................................................................................................7
8.3 Production Costs..................................................................................................7
8.4 Financial Evaluation............................................................................................8
9. Economic and Social Benefit and Justification.........................................9
ANNEXES....................................................................................................11
 1. Executive Summary
This project envisages the production of 180,000 tons of Plastic Gutters down Pipes and
Conduits per annum. The total investment requirement of the project including the working
capital is estimated at about Birr 6.62 million; of which Birr 1.026 million is for machinery and
equipments and Birr 2,038 million is the cost of the working capital. Based on the cash flow
statement, the calculated internal rate of return (IRR) and simple rate of return (SRR) of the
project are 33.8 % and 27.4 %, respectively. The net present value (NPV) at 18 % discounting
rate is about Birr 3.42 million. The plant is expected to create employment opportunities for
about 32 persons.

2. Product Description and Application

These are plastic products made of PVC resin and used for collecting rain water from building
roofs and transporting the water to desired destination. The products have become popular due to
lower costs, non –rusting characteristics and long useful life.

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

All types of buildings used for different purposes always use gutters, down pipes and conduits
for handling and clearing rain water which fails on roofs and around buildings. For many years,
gutters and down pipes made form galvanized iron sheet or metal sheet were being used for the
above purposes. Recently plastic gutters and down pipes have become popular and are widely
replacing metal gutters and down pipes. In connection to this, some ten thousand tons of the
items are estimated to be imported per annum in the recent past. This trend will continue in the
future. As the building industry is expanding in all part of the country, the demand for plastic
gutters and down pipes will also expand.

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Recently one factory has been established in Addis Ababa which produces some type’s plastic
gutters and down pipes. But the production is small compared to the national demand for these
products. The ANRS has its share of the building industry and it needs plastic gutters and down
pipes to this sector. Since the product takes much vehicle space during transportation,
transporting these products is expensive. Hence, it will be economical to establish a plant in the
region which will produce plastic gutters and down pipes. The manufacture of such items can be
undertaken even on small scale.

3.1.2 Projected Demand

Since there is no disaggregated import figure for the products it is not possible to have
reasonable demand projection. However, it is possible to be certain that a small plant that
produces few hundred tons of the items will face unlimited demand for its products as long as the
products are competitive in quality and price.

3.1.3 Pricing and Distribution

The average wholesale price of plastic gutters, down pipes and conduits is between Birr 16000
and Birr 22000 per ton. Based on this, the average price of the output of the envisaged plant is
set at Birr 16000 per ton. The plant uses the existing wholesale network of construction materials
for distribution purpose.

3.2 Plant Capacity

The annual production capacity of the plant is scheduled to be 180 tons of plastic gutters down
pipes and conduits. The production capacity is based on one shift a day and 275 working days a
year considering 52 Sundays, 13 national and public holidays, 15 annual maintenance days and
10 days for unexpected work interruptions.

3.3 Production Program

The production program during the first year is schedule to be 85 % of the plant capacity.
Starting from the second year, 100 % of capacity utilization is assumed. The capacity build up is
established by considering the time required for training of operators, machine tuning and
adjustments during the first year.

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 4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials
The main raw material is PCV granules; besides, however, some stabilizers and fillers are also
required. All of these are to be imported.

4.2 Annual Requirement and Cost of Raw Materials and Utilities

Raw material for requirement for a full capacity single shift operation of the plant and the
corresponding cost estimates are given in Table 4.1.

TABLE 4.1
RAW MATERIALS REQUIREMENT

NO Material Qty. Cost'000 Birr

Ton Foreign Local Total
1 PVC Granules 180 3,117,690 3,117,690
2 Stabilizer 3.6 173,205 173,205
3 Fillers 4 173,205 173,205
Total 3,464,100

Annual electric consumption at 100% capacity utilization in a single shift operation of the
plant shall be 108MWH. Total cost of electricity is estimated at Birr 59,400 per annum. The
plant does not need water for the purpose of production but it is normally needed for general
cleaning. Yearly water consumption is estimated to be 200 m3, and its cost amounts Birr 530.
TABLE 4.2
UTILITIES REQUIREMENT

No. Utility Requirement Unit Price Cost

(Annual) (Birr)
1. Electricity 108 MWH Birr0.55 /KWH 59,400
2. Water 200 m3 Birr2.65 /m3 530
Total 59,930

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 5. Location and Site
For its convenience to distribute the product to different parts of the ANRS, Bahir-Dar is an
appropriate choice for the establishment plastic gutters down pipes and conduits producing plant
in the region.

6. Technology and Engineering

6.1 Production Process
After getting the granules, it is required to shape it to pipes. The main production process is
melting plastic granules, making it pass the melted plastic pass through molding machine and
forming the gutters and down pipes according to predetermined sizes. The principal machine
required is a plastic molding machine. And, this system of pipe making is known as pipe molding
system.
Alternatively, such items can be produced using compounding system.

6.2 Machinery and Equipment

TABLE 6.1
MACHINERY & EQUIPMENT

Item
1. PVC Pipe Plant Including Complete Machinery
2. High Speed Mixer
3. Water Piping Storage Tanks
4. Electrical Motors and Installations

The total cost of machinery/equipment is estimated at Birr 400 thousand, and all of which is
required in foreign currency.
Machinery Supplier’s Address:
Eagle Co
3-401, Building 24, Xinlijie Xiaoqu,
Jiaozhou City, Qingdao, China, Shandong
China-266300

6.3 Civil Engineering Cost

The building area required by the plant is estimated to be 500m2, and it costs Birr 1,000,000.
This would include cost of land preparation and associated civil works. The total land area of the

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plant, including the open space, is1000 m2 and its lease cost equals Birr 60,000. The cost of the
land lease is as per ANRS land lease rate for Bahir-Dar which is equal to Birr 60 per square
meter for industrial purpose. Of the total cost of the lease 5 % is paid in the beginning while the
rest will be paid in 40years.

7. Human Resource and Training Requirement

7.1 Human Resource

Details of the manpower requirement of the plant is shown in Table 7.1

TABLE 7.1
MANPOWER REQUIREMENT
Description No Monthly Annual
Salary (Birr) Salary (Birr)
A. Administration
1. Manager 1 7,698 92,376
2. Supervisor 1 3,849 46,188
3.Seretary 1 2,053 24,634
4.Slaesman 1 2,053 24,634
5. Cashier 1 1,540 18,475
6. Storekeeper 1 1,540 18,475
7. Driver 1 1,540 18,475
8.Guards 4 770 36,950
Sub-Total 8 280,207
B. Production
1. Skilled Workers 16 1539.6 295,603
2. Unskilled Workers 8 769.8 73,901
Total 649,711
Benefits (20%) 129,942

Total 32 779,653

The total annual wages and salary, including 20 % benefits, amount to Birr 779,653.

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 7.2 Training Requirement

One month on job training is required for the technical personnel. And this can be managed by
hiring one expert in the area from the technology suppliers.

8. Financial Analysis
8.1 Underlying Assumption
The financial analysis of Plastic Gutters down Pipes and Conduits producing plant is based on
the data provided in the preceding chapters 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%
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

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 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 2.6 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.
TABLE 8.1
TOTAL INITIAL INVESTMENT

Items L.C F.C Total

Land 3,000   3,000
Building And Civil Works 2,566,000   2,566,000
Office Equipment 128,300   128,300
Vehicles 641,500   641,500
Plant Machinery & Equipment 0 1,026,400 1,026,400
Total Fixed Investment Cost 3,338,800 1,026,400 4,365,200
Pre Production Capital
167,175 51,320 218,495
Expenditure*
Total Initial Investment 3,505,975 1,077,720 4,583,695
Working Capital at Full
526,066 1,511,608 2,037,673
Capacity
Total 4,032,041 2,589,328 6,621,368

*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 2.59 million or 39.1 % of the total
investment cost.

8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 4.935 million (See Table
8.2). Raw materials and utilities account for 66.7 %.
TABLE 8.2
PRODUCTION COST AT FULL CAPACITY

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 Raw Material Requirement Cost
1. Local Raw Materials 0
2. Foreign Raw Materials 3,464,100

Total Production Cost at full Capacity

Items Cost
1.      Raw materials 3,456,000
2.      Utilities 153,421
3.      Wages and Salaries 303,840
4.Spares and Maintenance 130,790
Factory Costs 4,044,051
5.      Depreciation 414,797
6.      Financial Costs 475,960
Total Production Cost 4,934,808

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 and increases on wards. 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 23.8 % of capacity utilization

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 two years.

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 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 would be 27.3 % 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 33.8 % and the net present value (NPV) at 18 % discount is Birr 3.42 million.
VI. Sensitivity Analysis
The sensitivity test result which undertaken by increasing the cost of production by 10 % still
indicates that the project would be viable.

9. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn 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 1.64 million
per year and Birr 16.42 million within the project life. Such result induces the project promoters
to reinvest the profit which, therefore, increases the investment magnitude in the region.

B. Tax Revenue

In the project life under consideration, the region will collect about Birr 5.9 million 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

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 C. Import Substitution and Foreign Exchange Saving

As there is no enough production of plastic gutters down pipes and conduits 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 2.8 million
will be saved as a result of the proposed project. This will create room for the saved hard
currency to be allocated on other vital and strategic sectors

D. Employment and Income Generation

The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide permanent employment to 32 professionals as well as support
stuffs. Consequently the project creates income of Birr 779,653 per year. This would be one of
the commendable accomplishments of the project.

E. Pro Environment Project

The proposed production process is environment friendly.

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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 0 2585589 3447452 3447452 3447452
Raw Materials in Stock- Total 0 0 1133705 1511607 1511607 1511607
Raw Material-Local 0 0 0 0 0 0
Raw Material-Foreign 0 0 1133705 1511607 1511607 1511607
Factory Supplies in Stock 0 0 4045.427 5393.886 5393.886 5393.886
Spare Parts in Stock and Maintenance 0 0 10726.11 14301.47 14301.47 14301.47
Work in Progress 0 0 101135.5 134847.3 134847.3 134847.3
Finished Products 0 0 202270.9 269694.5 269694.5 269694.5
2. Accounts Receivable 0 0 604642.9 806190.6 806190.6 806190.6
3. Cash in Hand 0 0 76371.86 101829.1 101829.1 101829.1
CURRENT ASSETS 0 0 2132898 2843864 2843864 2843864
4. Current Liabilities 0 0 604642.9 806190.6 806190.6 806190.6
Accounts Payable 0 0 604642.9 806190.6 806190.6 806190.6
TOTAL NET WORKING CAPITAL REQUIRMENTS 0 0 1528255 2037674 2037674 2037674
INCREASE IN NET WORKING CAPITAL 0 0 1528255 509418.4 0 0

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 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 5 6 7 8 9 10
Capacity Utilization (%) 0 0 100% 100% 100% 100% 100% 100%
1. Total Inventory 0 0 3447452 3447452 3447452 3447452 3447452 3447452
Raw Materials in Stock- Total 0 0 1511607 1511607 1511607 1511607 1511607 1511607
Raw Material-Local 0 0 0 0 0 0 0 0
Raw Material-Foreign 0 0 1511607 1511607 1511607 1511607 1511607 1511607
Factory Supplies in Stock 0 0 5393.886 5393.886 5393.886 5393.886 5393.886 5393.886
Spare Parts in Stock and Maintenance 0 0 14301.47 14301.47 14301.47 14301.47 14301.47 14301.47
Work in Progress 0 0 134847.3 134847.3 134847.3 134847.3 134847.3 134847.3
Finished Products 0 0 269694.5 269694.5 269694.5 269694.5 269694.5 269694.5
2. Accounts Receivable 0 0 806190.6 806190.6 806190.6 806190.6 806190.6 806190.6
3. Cash in Hand 0 0 101829.1 101829.1 101829.1 101829.1 101829.1 101829.1
CURRENT ASSETS 0 0 2843864 2843864 2843864 2843864 2843864 2843864
4. Current Liabilities 0 0 806190.6 806190.6 806190.6 806190.6 806190.6 806190.6
Accounts Payable 0 0 806190.6 806190.6 806190.6 806190.6 806190.6 806190.6
TOTAL NET WORKING CAPITAL REQUIRMENTS 0 0 2037674 2037674 2037674 2037674 2037674 2037674
INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0 0 0

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 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 2294196.45 4331870 6147203 7591628 7390080 7390080
1. Inflow Funds 2294196.45 4331870 604642.9 201547.6 0 0
Total Equity 917678.58 1732748 0 0 0 0
Total Long Term Loan 1376517.87 2599122 0 0 0 0
Total Short Term Finances 0 0 604642.9 201547.6 0 0
2. Inflow Operation 0 0 5542560 7390080 7390080 7390080
Sales Revenue 0 0 5542560 7390080 7390080 7390080
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2294196.45 2294196 6540308 6344983 6179228 6123569
4. Increase In Fixed Assets 2294196.45 2294196 0 0 0 0
Fixed Investments 2184949 2184949 0 0 0 0
Pre-production Expenditures 109247.45 109247.5 0 0 0 0
5. Increase in Current Assets 0 0 2132898 710966 0 0
6. Operating Costs 0 0 3382589 4494333 4494333 4494333
7. Corporate Tax Paid 0 0 0 0 624724.1 648578
8. Interest Paid 0 0 1024821 477076.8 397564 318051.2
9.Loan Repayments 0 0 0 662606.7 662606.7 662606.7
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 0 2037674 -393106 1246645 1210852 1266511
Cumulative Cash Balance 0 2037674 1644568 2891213 4102065 5368576

Annex 2: Cash Flow Statement (in Birr)

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 CONSTRUCTION PRODUCTION
  Year 1 Year 2 5 6 7 8 9 10
TOTAL CASH INFLOW 2294196.45 4331870 7390080 7390080 7390080 7390080 7390080 7390080
1. Inflow Funds 2294196.45 4331870 0 0 0 0 0 0
Total Equity 917678.58 1732748 0 0 0 0 0 0
Total Long Term Loan 1376517.87 2599122 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0 0 0
2. Inflow Operation 0 0 7390080 7390080 7390080 7390080 7390080 7390080
Sales Revenue 0 0 7390080 7390080 7390080 7390080 7390080 7390080
Interest on Securities 0 0 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2294196.45 2294196 6067910 6063851 6008192 5289926 5289926 5289926
4. Increase In Fixed Assets 2294196.45 2294196 0 0 0 0 0 0
Fixed Investments 2184949 2184949 0 0 0 0 0 0
Pre-production Expenditures 109247.45 109247.5 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0 0 0
6. Operating Costs 0 0 4494333 4494333 4494333 4494333 4494333 4494333
7. Corporate Tax Paid 0 0 672431.8 747885.3 771739.2 795593 795593 795593
8. Interest Paid 0 0 238538.4 159025.6 79512.8 0 0 0
9.Loan Repayments 0 0 662606.7 662606.7 662606.7 0 0 0
10.Dividends Paid 0 0 0 0 0 0 0 0
Surplus(Deficit) 0 2037674 1322170 1326229 1381888 2100154 2100154 2100154

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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 0 5542560 7390080 7390080 7390080
1. Inflow Operation 0 0 5542560 7390080 7390080 7390080
Sales Revenue 0 0 5542560 7390080 7390080 7390080
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 2294196 2294196 4910844 5003752 4494333 5142911
3. Increase in Fixed Assets 2294196 2294196 0 0 0 0
Fixed Investments 2184949 2184949 0 0 0 0
Pre-production Expenditures 109247.5 109247.5 0 0 0 0
4. Increase in Net Working Capital 0 0 1528255 509418.4 0 0
5. Operating Costs 0 0 3382589 4494333 4494333 4494333
6. Corporate Tax Paid 0 0 0 0 0 648578
NET CASH FLOW -2294196 -2294196 631715.9 2386328 2895747 2247169
- -
CUMMULATIVE NET CASH FLOW -2294196 -4588393 3956677 1570349 1325398 3572567
Net Present Value (at 18%) -2294196 -1944234 453688.5 1452393 1493594 982258.2
- -
Cumulative Net present Value -2294196 -4238431 3784742 2332349 -838755 143502.9
Net Present Value (at 18%)            
Internal Rate of Return            

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

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 CONSTRUCTION PRODUCTION
Year 1 Year 2 5 6 7 8 9 10
TOTAL CASH INFLOW - - 7,390,080 7,390,080 7,390,080 7,390,080 7,390,080 7,390,080
1. Inflow Operation - - 7,390,080 7,390,080 7,390,080 7,390,080 7,390,080 7,390,080
Sales Revenue - - 7,390,080 7,390,080 7,390,080 7,390,080 7,390,080 7,390,080
Interest on Securities - - - - - - - -
2. Other Income - - - - - - - -
TOTAL CASH OUTFLOW 2,294,196 2,294,196 5,166,765 5,242,219 5,266,072 5,289,926 5,289,926 5,289,926
3. Increase in Fixed Assets 2,294,196 2,294,196 - - - - - -
Fixed Investments 2,184,949 2,184,949 - - - - - -
Pre-production Expenditures 109,247 109,247 - - - - - -
4. Increase in Net Working Capital - - - - - - - -
5. Operating Costs - - 4,494,333 4,494,333 4,494,333 4,494,333 4,494,333 4,494,333
6. Corporate Tax Paid - - 672,432 747,885 771,739 795,593 795,593 795,593
NET CASH FLOW (2,294,196) (2,294,196) 2,223,315 2,147,861 2,124,008 2,100,154 2,100,154 2,100,154
CUMMULATIVE NET CASH FLOW (2,294,196) (4,588,393) 5,795,881 7,943,743 10,067,750 12,167,904 14,268,058 16,368,211
Net Present Value (at 18%) (2,294,196) (1,944,234) 823,586 674,267 565,067 473,492 401,265 340,055
Cumulative Net present Value (2,294,196) (4,238,431) 967,089 1,641,356 2,206,423 2,679,916 3,081,180 3,421,235
Net Present Value (at 18%) 3,421,235.36
Internal Rate of Return 33.80%

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 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
  1 2 3 4 5
Capacity Utilization (%) 75% 100% 100% 100% 100%
1. Total Income 5542560 7390080 7390080 7390080 7390080
Sales Revenue 5542560 7390080 7390080 7390080 7390080
Other Income 0 0 0 0 0
2. Less Variable Cost 3101337 4135116 4135116 4135116 4135116
VARIABLE MARGIN 2441223 3254964 3254964 3254964 3254964
(In % of Total Income) 113.0323 113.0323 113.0323 113.0323 113.0323
3. Less Fixed Costs 697020.5 774985.9 774985.9 774985.9 774985.9
OPERATIONAL MARGIN 1744202 2479978 2479978 2479978 2479978
(In % of Total Income) 80.75202 86.11496 86.11496 86.11496 86.11496
4. Less Cost of Finance 1024821 477076.8 397564 318051.2 238538.4
5. GROSS PROFIT 719380.7 2002901 2082414 2161926 2241439
6. Income (Corporate) Tax 0 0 624724.1 648578 672431.8
7. NET PROFIT 719,380.7 2002901 1457690 1513349 1569007
RATIOS (%)  
Gross Profit/Sales 12.98% 27.10% 28.18% 29.25% 30.33%
Net Profit After Tax/Sales 12.98% 27.10% 19.72% 20.48% 21.23%
Return on Investment 28.52% 37.43% 28.00% 27.64% 27.28%
Return on Equity 27.14% 75.57% 55.00% 57.10% 59.20%

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Annex 4: NET INCOME STATEMENT ( in Birr)

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 PRODUCTION
  6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%
1. Total Income 7390080 7390080 7390080 7390080 7390080
Sales Revenue 7390080 7390080 7390080 7390080 7390080
Other Income 0 0 0 0 0
2. Less Variable Cost 4135116 4135116 4135116 4135116 4135116
VARIABLE MARGIN 3254964 3254964 3254964 3254964 3254964
(In % of Total Income) 113.0323 113.0323 113.0323 113.0323 113.0323
3. Less Fixed Costs 602986.9 602986.9 602986.9 602986.9 602986.9
OPERATIONAL MARGIN 2651977 2651977 2651977 2651977 2651977
(In % of Total Income) 92.09374 92.09374 92.09374 92.09374 92.09374
4. Less Cost of Finance 159025.6 79512.8 0 0 0
5. GROSS PROFIT 2492951 2572464 2651977 2651977 2651977
6. Income (Corporate) Tax 747885.3 771739.2 795593 795593 795593
7. NET PROFIT 1745066 1800725 1856384 1856384 1856384
RATIOS (%)  
Gross Profit/Sales 33.73% 34.81% 35.89% 35.89% 35.89%
Net Profit After Tax/Sales 23.61% 24.37% 25.12% 25.12% 25.12%
Return on Investment 28.74% 28.38% 28.02% 28.02% 28.02%
Return on Equity 65.84% 67.94% 70.04% 70.04% 70.04%

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 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4

TOTAL ASSETS 5,886,908 17,002,487 20,399,931 24,356,297 26,396,480 11,137,757

1. Total Current Assets - 5,228,670 9,692,978 14,716,208 17,823,254 8,212,440

Inventory on Materials and Supplies - - 2,946,992 3,929,323 3,929,323 1,531,303

Work in Progress - - 259,514 346,018 346,018 134,847

Finished Products in Stock - - 519,027 692,036 692,036 269,695

Accounts Receivable - - 1,551,514 2,068,685 2,068,685 806,191

Cash in Hand - - 195,970 261,294 261,294 101,829

Cash Surplus, Finance Available - 5,228,670 4,219,962 7,418,852 10,525,898 5,368,576

Securities - - - - - -

2. Total Fixed Assets, Net of Depreciation 5,886,908 11,773,816 10,706,953 9,640,090 8,573,227 2,925,317

Fixed Investment - 5,606,579 11,213,158 11,213,158 11,213,158 4,369,898

Construction in Progress 5,606,579 5,606,579 - - - -

Pre-Production Expenditure 280,329 560,658 560,658 560,658 560,658 218,495

Less Accumulated Depreciation - - 1,066,863 2,133,726 3,200,590 1,663,076

3. Accumulated Losses Brought Forward - - - - - -
4. Loss in Current Year - - - - - -
TOTAL LIABILITIES

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 5,886,908 17,002,487 20,399,931 24,356,297 26,396,480 11,137,757

5. Total Current Liabilities - - 1,551,514 2,068,685 2,068,685 806,191

Accounts Payable - - 1,551,514 2,068,685 2,068,685 806,191

Bank Overdraft - - - - - -

6. Total Long-term Debt 3,532,145 10,201,492 10,201,492 8,501,243 6,800,995 1,987,820

Loan A 3,532,145 10,201,492 10,201,492 8,501,243 6,800,995 1,987,820

Loan B - - - - - -

7. Total Equity Capital 2,354,763 6,800,995 6,800,995 6,800,995 6,800,995 2,650,427

Ordinary Capital 2,354,763 6,800,995 6,800,995 6,800,995 6,800,995 2,650,427

Preference Capital - - - - - -
Subsidies - - - - - -
8. Reserves, Retained Profits Brought
Forward - - - 1,845,931 6,985,375 4,179,971

9.Net Profit After Tax - - 1,845,931 5,139,444 3,740,431 1,513,349

Dividends Payable - - - - - -

Retained Profits - - 1,845,931 5,139,444 3,740,431 1,513,349

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 Annex 5: Projected Balance Sheet (in Birr)

CONSTRUCTION PRODUCTION
Year 1 Year 2 5 6 7 8 9 10
TOTAL ASSETS 5,886,908 17,002,487 12,044,158 13,126,617 14,264,735 16,121,118 17,977,502 19,833,886
1. Total Current Assets - 5,228,670 9,534,610 10,860,839 12,242,727 14,342,880 16,443,034 18,543,188
Inventory on Materials and Supplies - - 1,531,303 1,531,303 1,531,303 1,531,303 1,531,303 1,531,303
Work in Progress - - 134,847 134,847 134,847 134,847 134,847 134,847
Finished Products in Stock - - 269,695 269,695 269,695 269,695 269,695 269,695
Accounts Receivable - - 806,191 806,191 806,191 806,191 806,191 806,191
Cash in Hand - - 101,829 101,829 101,829 101,829 101,829 101,829
Cash Surplus, Finance Available - 5,228,670 6,690,746 8,016,975 9,398,863 11,499,016 13,599,170 15,699,324
Securities - - - - - - - -
2. Total Fixed Assets, Net of Depreciation 5,886,908 11,773,816 2,509,548 2,265,778 2,022,008 1,778,238 1,534,468 1,290,698
Fixed Investment - 5,606,579 4,369,898 4,369,898 4,369,898 4,369,898 4,369,898 4,369,898
Construction in Progress 5,606,579 5,606,579 - - - - - -
Pre-Production Expenditure 280,329 560,658 218,495 218,495 218,495 218,495 218,495 218,495
Less Accumulated Depreciation - - 2,078,845 2,322,615 2,566,385 2,810,155 3,053,925 3,297,695
3. Accumulated Losses Brought Forward - - - - - - - -
4. Loss in Current Year - - - - - - - -
TOTAL LIABILITIES 5,886,908 17,002,487 12,044,158 13,126,617 14,264,735 16,121,118 17,977,502 19,833,886
5. Total Current Liabilities - - 806,191 806,191 806,191 806,191 806,191 806,191
Accounts Payable - - 806,191 806,191 806,191 806,191 806,191 806,191
Bank Overdraft - - - - - - - -
6. Total Long-term Debt 3,532,145 10,201,492 1,325,213 662,607 - - - -
Loan A 3,532,145 10,201,492 1,325,213 662,607 - - - -
Loan B - - - - - - - -
7. Total Equity Capital 2,354,763 6,800,995 2,650,427 2,650,427 2,650,427 2,650,427 2,650,427 2,650,427
Ordinary Capital 2,354,763 6,800,995 2,650,427 2,650,427 2,650,427 2,650,427 2,650,427 2,650,427

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Preference Capital - - - - - - - -
Subsidies - - - - - - - -
8. Reserves, Retained Profits Brought - - 5,693,320 7,262,327 9,007,393 10,808,118 12,664,501 14,520,885
Forward
9.Net Profit After Tax - - 1,569,007 1,745,066 1,800,725 1,856,384 1,856,384 1,856,384
Dividends Payable - - - - - - - -

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