Investment Office ANRS

Project Profile on the Establishment of Solar

Cookers Making Plant

Development Studies Associates

(DSA)

October 2008
Addis Ababa
 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....................................................................................................5
7. Human Resource and Training Requirement................................................5
7.1 Human Resource..............................................................................................................5
7.2 Training Requirement......................................................................................................6
8. Financial Analysis.............................................................................................6
8.1 Underlying Assumption...................................................................................................6
8.2 Investment........................................................................................................................8
8.3 Production Costs..............................................................................................................8
8.4 Financial Evaluation........................................................................................................9
9. Economic and Social Benefit and Justification.............................................10
ANNEXES...............................................................................................................12
 1. Executive Summary
This project envisages production of 700 units of Solar Cookers per annum. The total investment
requirement of the project including the working capital is estimated at about Birr 774.5
thousand; of which nearly Birr 291.3 thousand is the cost of the working capital and Birr
153.2thousand is for machinery and equipments. Based on the cash flow statement, the
calculated internal rate of return (IRR) and simple rate of return (SRR) of the project are 32.4 %
and 27.1 %, respectively. The net present value (NPV) at 18 % discounting rate is about Birr
347.6 thousand. The plant is expected to create employment opportunities for about 12 persons.

2. Product Description and Application

Solar Cookers have been designed to utilize solar energy directly for the purpose of cooking.
Solar cookers are made form aluminum sheets and other metal products; such as copper and
steel. The cookers have a shape of “satellite-dish” that receives the sun’s heat and collects it. The
collected heat is transferred to a stove made from steel and installed behind the transparent
(satellite dish- shape device). The sun’s heat collected by the heat collector heats the stove, and
after a few minutes cooking takes place. The cooking is done outside the house wearing special
eye-glasses and a hat to protect the eyes of the cook from the sun’s radiation.

3. Market Study, Plant Capacity and Production Program

3.1 Market Study
3.1.1 Present Demand and Supply

The sun is the most powerful source of energy. Nowadays, solar energy has become increasingly
an attractive source of energy because of its free and inexhaustible supply, and its non-pollution
characters which are in stark contrast to fossil fuels, such as coal and petroleum, and firewood.
However, the most widely used fuels for cooking in Ethiopia are firewood and cooking gas, such
as kerosene. In big cities and some other areas, electricity is also used for cooking purpose.
Because of this, the demand for firewood and cooking gas is steadily increasing form time to
time. The soaring price of cooking gas and the continued tariff increase in electricity has forced
people to use more firewood, which in turn has led to serious deforestation that has already

1
passed a grave threat on the environment. This is also true in the ANRS, which is one of the
seriously affected areas in the country because of deforestation and environmental imbalance.

The introduction of the solar cooker in the Region will decrease reliance on petroleum products
(such as kerosene), fire wood and electricity for cooking. It will decrease the rate of deforestation
and the threat on the environment.

3.1.2 Projected Demand

Since solar cookers are not known in Ethiopia it is not possible to make sensible future demand
projection. However, as a substitute to any other cooking means and for its unique advantages
over them it is possible to create demand for solar cooker by introducing it to the public. In
connection to this, however, the minimum possible economically viable production capacity
should be chosen, and this chosen capacity should be very little fraction of the total demand for
cookers.

3.1.3 Pricing and Distribution

The factory gate price of the new product is set at Birr 1789 per unit. Though the price may not
seem competitive as compared to other low price cooking equipments, it is actually cheap since
it does not involve any running cost in using it.

3.2 Plant Capacity

The minimum economically viable production capacity for solar cooker making plant is 700
pieces per annum; and this is a very little fraction of the total demand for cookers both in
Ethiopia and ANRS. The plant is assumed to operate in a single shift basis for 275 working days
in a year; and this is set by deducting 52 Sundays, 13 public holidays, 15 days for annual
maintenance and 10 days for unexpected work interruptions.

3.3 Production Program

The production program follows gradual capacity utilization for the purpose of market
penetration. Accordingly, 75 % and 85 % capacity utilization are assumed for the first and the
second years of the operation, respectively. The third year onwards, 100 % capacity utilization is
assumed.

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 4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials

The required raw materials are GI.G. R sheets, wooden reapers, polyester films, glass panes,
hardware and other consumables.

4.2 Annual Requirement and Cost of Raw Materials and Utilities

The annual requirements of main raw materials at 100 % capacity utilization with their
associated costs are given in Table 4.1.

TABLE 4.1
ANNUAL RAW MATERIAL REQUIREMENT
(AT FULL CAPACITY)

Cost(In Birr)
No Raw Material Unit Qty.
F.C L.C Total
1 GI.G. R Sheets 67095 67095
2 Wooden Reapers 22365 22365
3 Polyester Films 111825 0 111825
4 Hardware 178920 0 178920
5 Glass Panes 44730 0 44730
6 Other  
Consumables 22365 22365
Total 335475 111,825 447,300

The total cost of the major raw materials and other consumables is roughly estimated to reach at
Birr 447.3 thousand per annum; of which Birr 335 thousand (75 %) is required in foreign
currency. The only utilities required by the plant are electricity and water. Electricity and water
requirements are about 99 MWH and 100 m3, respectively; and the total annual cost of utility at
full capacity is equal to Birr 139,852.

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 TABLE 4.2
UTILITIES REQUIREMENT

No. Utility Requirement Unit Price Cost

(Annual) (Birr)
1. Electricity 99,000 KWH Birr0.55 /KWH 54,450
2. Water 100 m3 Birr2.65 /m3 265
Total 54,715

5. Location and Site

For its convenience to introduce the product and to distribute it to different parts of the region,
Bahir-Dar is an appropriate choice for the Solar Cooker making plant in the region.

6. Technology and Engineering

6.1 Production Process

The process of solar cooker manufacturing is very simple. All the process can easily be
completed by a skilled sheet metal worker and a semi-skilled carpenter in a workshop. All the
operations can be done manually by using of simple machines. The production process involves
collection of raw materials, such as aluminum sheets prepared for the purpose, steel and copper
(wire). Then a typical active, and “satellite dish-shaped” plate with transparent aluminum sheets
facing the sum is made. A blackened metal plate is also prepared at the back of the plate. A stove
made of steel is connected with the blackened plate that transfers the sun’s heat from the heat
collector (the dish) to the stove.

6.2 Machinery and Equipment

The machinery and equipment required and the cost estimate is presented in Table 6.1.
TABLE 6.1
MACHINERY & EQUIPMENT
Item
1. Hand Lever Shearing Machine 150 mm Blade Length
2. Hand Operated Bending Folding Machine 20 G X 610 mm Length
3. Bench Drilling Machine 13 mm Capacity With 0.5 HP
4. DE Bench Grinder 150 mm Wheel Size With 0.5 HP
5. Hand Tools, Carpentry Tools and other Work Shop Equipments

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The total cost of machinery/equipment is estimated at Birr 153,360 all of which is in local
currency.

Machinery Supplier’s Address:

Machinery Suppliers located at Piassa, Addis Ababa.

6.3 Civil Engineering Cost

The building area required by the plant is estimated to be 50 m 2, and it costs Birr 255,600. This
would include cost of land preparation and associated civil works. The total land area of the
plant, including the open space, is 200 m 2 and its lease cost equals Birr 30,672. The cost of the
land lease is as per ANRS land lease rate for Bahi-Dar which is equal to Birr 153 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

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 Table 7.1
MANPOWER REQUIREMENT

Description No Monthly Salary Annual

(Birr) Salary (Birr)
A. Administration
1. Manager 1 5112 61344
2.Seretary/Cashier 1 2045 24538
3.Slaesman 1 2045 24538
4.Guards 2 767 9202
Sub-total 5 119621
B. Production
1. Skilled workers (Operators) 5 800 24538
2. Unskilled Workers 2 300 9202
(assistants)
Benefits (20%) 53983
12 207343

The total annual wages and salary, including 20 % benefits, amount to Birr 207,343

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 locally.

8. Financial Analysis
8.1 Underlying Assumption

The financial analysis of Solar Cooker making plant is based on the data provided in the
preceding chapters and the following assumptions.

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 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
Finished Products 15 Days
Accounts Receivable 30 Days
Cash In Hand 30 Days
Accounts Payable 30 Days

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 8.2 Investment
The total investment cost of the project including working capital is estimated at Birr 772
thousand 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 1534
  1534
Building And Civil Works 255600
  255600
Office Equipment 51120
  51120
Vehicles 0
  0
Plant Machinery & Equipment 153360
0 153360
Total Fixed Investment Cost 461614
0 461614
Pre Production Capital 23081
Expenditure*   23081
Total Initial Investment 484694
0 484694
Working Capital at Full Capacity 144138
57,273 290528
Total 628,832 57,273 775,222
*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 146 thousand or 18.9 % of the total
investment cost.

8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 1009 thousand (See Table
8.2). Raw materials and utilities account for 58.2 %.

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 TABLE 8.2
PRODUCTION COST AT FULL CAPACITY

Raw Material Requirement Cost

1. Local Raw Materials 111825
2. Foreign Raw Materials 335475

Total Production Cost at full Capacity

Items
1.      Raw materials
447300
2.      Utilities
54750
3.      Wages and Salaries
323896
4.      Spares and Maintenance
13848
Factory Costs
839795
5.      Depreciation
37844
6.      Financial Costs
46514
  Total Production Cost 924,153

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 37.5 % of capacity utilization

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

IV. Simple Rate of Return

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

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

The SRR would be 27.1 % 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 32.4 % and the net present value (NPV) at 18 % discount is Birr 348 thousands.

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:

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 A. Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 181 thousand
per year and Birr 1.8 thousand 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 657 thousand from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region

C. 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 12 professionals as well as support
stuffs. Consequently the project creates income of Birr 325 thousands per year. This would be
one of the commendable accomplishments of the project.

D. Pro Environment Project

The proposed production process is environment friendly. As there is no Solar Cooker Making
plant in the country, the commencement of this project substitutes the use of other means of
cooking that are not environmentally 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% 85% 100% 100%

1. Total Inventory 0.00 0.00 298886 338737 398514 398514

Raw Materials in Stock- Total 0.00 0.00 118941 134800 158588 158588
Raw Material-Local 0.00 0.00 9149 10369 12199 12199
Raw Material-Foreign 0.00 0.00 109792 124431 146389 146389
Factory Supplies in Stock 0.00 0.00 788 893 1050 1050
Spare Parts in Stock and Maintenance 0.00 0.00 1133 1284 1511 1511
Work in Progress 0.00 0.00 19694 22320 26259 26259
Finished Products 0.00 0.00 39388 44640 52518 52518
2. Accounts Receivable 0.00 0.00 102472 116135 136630 136630
3. Cash in Hand 0.00 0.00 37950 43010 50600 50600
CURRENT ASSETS 0.00 0.00 320367 363083 427157 427157
4. Current Liabilities 0.00 0.00 102472 116135 136630 136630
Accounts Payable 0.00 0.00 102472 116135 136630 136630
TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 217895 246948 290527 290527
INCREASE IN NET WORKING CAPITAL 0.00 0.00 217895 29053 43579 0

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

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

1. Total Inventory 398514 398514 398514 398514 398514 398514

Raw Materials in Stock-Total 158588 158588 158588 158588 158588 158588
Raw Material-Local 12199 12199 12199 12199 12199 12199
Raw Material-Foreign 146389 146389 146389 146389 146389 146389
Factory Supplies in Stock 1050 1050 1050 1050 1050 1050
Spare Parts in Stock and Maintenance 1511 1511 1511 1511 1511 1511
Work in Progress 26259 26259 26259 26259 26259 26259
Finished Products 52518 52518 52518 52518 52518 52518
2. Accounts Receivable 136630 136630 136630 136630 136630 136630
3. Cash in Hand 50600 50600 50600 50600 50600 50600
CURRENT ASSETS 427157 427157 427157 427157 427157 427157
4. Current Liabilities 136630 136630 136630 136630 136630 136630
Accounts Payable 136630 136630 136630 136630 136630 136630
TOTAL NET WORKING CAPITAL REQUIRMENTS 290527 290527 290527 290527 290527 290527
INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 242347 532874 1041802 1078237 1272934 1252440
1. Inflow Funds 242347 532874 102472 13663 20494 0
Total Equity 96939 213150 0 0 0 0
Total Long Term Loan 145408 319724 0 0 0 0
Total Short Term Finances 0 0 102472 13663 20494 0
2. Inflow Operation 0 0 939330 1064574 1252440 1252440
Sales Revenue 0 0 939330 1064574 1252440 1252440
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 242347 242347 1134733 964049 1186811 1116225
4. Increase In Fixed Assets 242347 242347 0 0 0 0
Fixed Investments 230807 230807 0 0 0 0
Pre-production Expenditures 11540 11540 0 0 0 0
5. Increase in Current Assets 0 0 320367 42716 64073 0
6. Operating Costs 0 0 695919 787995 926110 926110
7. Corporate Tax Paid 0 0 0 0 72592 75383
8. Interest Paid 0 0 118446 55816 46513 37211
9.Loan Repayments 0 0 0 77522 77522 77522
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 0 290527 -92930 114188 86124 136215
Cumulative Cash Balance 0 290527 197596 311784 397908 534123

3
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 1252440 1252440 1252440 1252440 1252440 1252440
1. Inflow Funds 0 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0
2. Inflow Operation 1252440 1252440 1252440 1252440 1252440 1252440
Sales Revenue 1252440 1252440 1252440 1252440 1252440 1252440
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1109714 1104587 1098075 1014041 1014041 1014041
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0
6. Operating Costs 926110.2 926110.2 926110.2 926110.2 926110.2 926110.2
7. Corporate Tax Paid 78173.32 82348.95 85139.75 87930.54 87930.54 87930.54
8. Interest Paid 27907.97 18605.3 9302.664 0 0 0
9. Loan Repayments 77522.1 77522.1 77522.1 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 142726.4 147853.4 154365.3 238399.2 238399.2 238399.2
Cumulative Cash Balance 676849.1 824702.6 979067.8 1217467 1455866 1694266

4
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 939330 1064574 1252440 1252440
1. Inflow Operation 0 0 939330 1064574 1252440 1252440
Sales Revenue 0 0 939330 1064574 1252440 1252440
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 242347.1 242347.1 913813.8 817048 969689.2 1001493
3. Increase in Fixed Assets 242347.1 242347.1 0 0 0 0
Fixed Investments 230806.8 230806.8 0 0 0 0
Pre-production Expenditures 11540.34 11540.34 0 0 0 0
4. Increase in Net Working Capital 0 0 217895 29052.67 43579.01 0
5. Operating Costs 0 0 695918.8 787995.4 926110.2 926110.2
6. Corporate Tax Paid 0 0 0 0 0 75382.52
NET CASH FLOW -242347 -242347 25516.16 247526 282750.8 250947.3
CUMMULATIVE NET CASH FLOW -242347 -484694 -459178 -211652 71098.62 322045.9
Net Present Value (at 18%) -242347 -205379 18325.32 150651.9 145839.7 109691.4
Cumulative Net present Value -242347 -447726 -429401 -278749 -132909 -23217.8

5
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 1252440 1252440 1252440 1252440 1252440 1252440
1. Inflow Operation 1252440 1252440 1252440 1252440 1252440 1252440
Sales Revenue 1252440 1252440 1252440 1252440 1252440 1252440
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1004284 1008459 1011250 1014041 1014041 1014041
3. Increase in Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
4. Increase in Net Working Capital 0 0 0 0 0 0
5. Operating Costs 926110.2 926110.2 926110.21 926110.2 926110.2 926110.2
6. Corporate Tax Paid 78173.32 82348.95 85139.747 87930.54 87930.54 87930.54
NET CASH FLOW 248156.5 243980.8 241190.04 238399.2 238399.2 238399.2
CUMMULATIVE NET CASH FLOW 570202.4 814183.2 1055373.3 1293773 1532172 1770571
Net Present Value (at 18%) 91924.98 76591.69 64165.747 53748.56 45549.63 38601.38
Cumulative Net present Value 68707.25 145298.9 209464.69 263213.3 308762.9 347364.3
Net Present Value (at 18%) 347,364.3

Internal Rate of Return 32.4%

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 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
  1 2 3 4 5
Capacity Utilization (%) 75% 85% 100% 100% 100%

1. Total Income 939330 1064574 1252440 1252440 1252440

Sales Revenue 939330 1064574 1252440 1252440 1252440
Other Income 0 0 0 0 0
2. Less Variable Cost 593405.3 672526 791207.1 791207.09 791207.1
VARIABLE MARGIN 345924.7 392048 461232.9 461232.91 461232.9
(In % of Total Income) 36.83 36.83 36.83 36.83 36.83
3. Less Fixed Costs 140357.6 153313.5 172747.3 172747.26 172747.3
OPERATIONAL MARGIN 205567.1 238734.5 288485.6 288485.65 288485.6
(In % of Total Income) 21.88 22.43 23.03 23.03 23.03
4. Less Cost of Finance 118446.4 55815.91 46513.27 37210.606 27907.97
5. GROSS PROFIT 87120.65 182918.6 241972.4 251275.04 260577.7
6. Income (Corporate) Tax 0 0 72591.73 75382.523 78173.32
7. NET PROFIT 87120.65 182918.6 169380.7 175892.52 182404.4
RATIOS (%)  
Gross Profit/Sales 9.27% 17.18% 19.32% 20.06% 20.81%
Net Profit After Tax/Sales 9.27% 17.18% 13.52% 14.04% 14.56%
Return on Investment 29.26% 32.63% 27.85% 27.49% 27.13%
Return on Equity 28.10% 58.99% 54.62% 56.72% 58.82%

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

1. Total Income 1252440 1252440 1252440 1252440 1252440

Sales Revenue 1252440 1252440 1252440 1252440 1252440
Other Income 0 0 0 0 0
2. Less Variable Cost 791207.1 791207.1 791207.1 791207.09 791207.1
VARIABLE MARGIN 461232.9 461232.9 461232.9 461232.91 461232.9
(In % of Total Income) 36.83 36.83 36.83 36.83 36.83
3. Less Fixed Costs 168131.1 168131.1 168131.1 168131.12 168131.1
OPERATIONAL MARGIN 293101.8 293101.8 293101.8 293101.79 293101.8
(In % of Total Income) 23.4 23.4 23.4 23.4 23.4
4. Less Cost of Finance 18605.3 9302.664 0 0 0
5. GROSS PROFIT 274496.5 283799.1 293101.8 293101.79 293101.8
6. Income (Corporate) Tax 82348.95 85139.75 87930.54 87930.541 87930.54
7. NET PROFIT 192147.5 198659.4 205171.2 205171.24 205171.2
RATIOS (%)  
Gross Profit/Sales 21.92% 22.66% 23.40% 23.40% 23.40%
Net Profit After Tax/Sales 15.34% 15.86% 16.38% 16.38% 16.38%
Return on Investment 27.19% 26.83% 26.47% 26.47% 26.47%
Return on Equity 61.97% 64.07% 66.17% 66.17% 66.17%

Annex 5: Projected Balance Sheet (in Birr)

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 CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 242347.1 775221 964813.98 1083873 1196227 1294597
1. Total Current Assets 0 290526.7 517963.84 674867.5 825064.6 961279.2
Inventory on Materials and Supplies 0 0 120861.97 136976.9 161149.3 161149.3
Work in Progress 0 0 19694.236 22320.14 26258.99 26258.99
Finished Products in Stock 0 0 39388.497 44640.28 52518 52518
Accounts Receivable 0 0 102472.37 116135.3 136629.8 136629.8
Cash in Hand 0 0 37950.338 43010.37 50600.44 50600.44
Cash Surplus, Finance Available 0 290526.7 197596.46 311784.4 397908.1 534122.7
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 242347.1 484694.3 446850.14 409006 371161.9 333317.7
Fixed Investment 0 230806.8 461613.6 461613.6 461613.6 461613.6
Construction in Progress 230806.8 230806.8 0 0 0 0
Pre-Production Expenditure 11540.34 23080.68 23080.68 23080.68 23080.68 23080.68
Less Accumulated Depreciation 0 0 37844.136 75688.27 113532.4 151376.5
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 242347.1 775221 964813.98 1083873 1196227 1294597
5. Total Current Liabilities 0 0 102472.37 116135.3 136629.8 136629.8
Accounts Payable 0 0 102472.37 116135.3 136629.8 136629.8
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 145408.3 465132.6 465132.6 387610.5 310088.4 232566.3
Loan A 145408.3 465132.6 465132.6 387610.5 310088.4 232566.3
Loan B 0 0 0 0 0 0
7. Total Equity Capital 96938.86 310088.4 310088.4 310088.4 310088.4 310088.4
Ordinary Capital 96938.86 310088.4 310088.4 310088.4 310088.4 310088.4
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 87120.65 270039.2 439419.9
9.Net Profit After Tax 0 0 87120.647 182918.6 169380.7 175892.5
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 87120.647 182918.6 169380.7 175892.5

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 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 1399479.216 1514105 1635241.9 1840413 2045584 2250756
1. Total Current Assets 1104005.616 1251859 1406224.3 1644624 1883023 2121422
Inventory on Materials and Supplies 161149.2822 161149.3 161149.28 161149.3 161149.3 161149.3
Work in Progress 26258.98932 26258.99 26258.989 26258.99 26258.99 26258.99
Finished Products in Stock 52518.0042 52518 52518.004 52518 52518 52518
Accounts Receivable 136629.8298 136629.8 136629.83 136629.8 136629.8 136629.8
Cash in Hand 50600.44188 50600.44 50600.442 50600.44 50600.44 50600.44
Cash Surplus, Finance Available 676849.0946 824702.6 979067.83 1217467 1455866 1694266
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 295473.6 262245.6 229017.6 195789.6 162561.6 129333.6
Fixed Investment 461613.6 461613.6 461613.6 461613.6 461613.6 461613.6
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 23080.68 23080.68 23080.68 23080.68 23080.68 23080.68
Less Accumulated Depreciation 189220.68 222448.7 255676.68 288904.7 322132.7 355360.7
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 1399479.216 1514105 1635241.9 1840413 2045584 2250756
5. Total Current Liabilities 136629.8298 136629.8 136629.83 136629.8 136629.8 136629.8
Accounts Payable 136629.8298 136629.8 136629.83 136629.8 136629.8 136629.8
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 155044.1995 77522.1 0 0 0 0
Loan A 155044.1995 77522.1 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 310088.399 310088.4 310088.4 310088.4 310088.4 310088.4
Ordinary Capital 310088.399 310088.4 310088.4 310088.4 310088.4 310088.4
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0

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8. Reserves, Retained Profits Brought Forward 615312.4234 797716.8 989864.34 1188524 1393695 1598866
9. Net Profit After Tax 182404.3903 192147.5 198659.4 205171.2 205171.2 205171.2
Dividends Payable 0 0 0 0 0 0
Retained Profits 182404.3903 192147.5 198659.4 205171.2 205171.2 205171.2

11