PROJECT PROPOSAL

FOR ESTABLISHMENT OF MARBLE AND MARBLE

PRODUCT MANUFACTURING PLANT

PROJECT TO BE IMPLEMENTED IN HOLOTA TOWN,

O/S/Z/S/F, OROMIA REGION STATE

PROMOTER: - ZAWDE ASEMU

APR, 2022

FINFINE, ETHIOPI
TABLE OF CONTENT
TABLE OF CONTENT...............................................................................................................................1
EXECUTIVE SUMMARY.........................................................................................................................3
1. INTRODUCTION...............................................................................................................................4
1.1. Objective of the project.............................................................................................................5
1.2. The Economic Significance of the Project.............................................................................5
1.3. Location and Premises Required............................................................................................7
1.4. Location Map of the Area.........................................................................................................9
2. MARKET STUDY AND PLANT CAPACITY................................................................................10
2.1. Market Study............................................................................................................................10
2.1.1. Demand and Supply Analysis........................................................................................10
2.1.2. Market Prospects............................................................................................................11
2.1.3. Marketing Strategy and Promotion...............................................................................11
2.1.4. Target customers............................................................................................................11
2.2. Plant Capacity and Production Program..............................................................................12
2.3. Pricing.......................................................................................................................................12
3. PRODUCTION AND TECHNOLOGY..........................................................................................13
3.1. Product Nature and Description............................................................................................13
3.2. Raw materials and Input........................................................................................................13
3.3. Technology...............................................................................................................................13
3.4. Production Description...........................................................................................................13
3.4.1. Production Process.........................................................................................................13
3.5. Machinery and Equipments...................................................................................................16
3.6. Project Design and Engineering............................................................................................17
3.7. Building and Construction Works..........................................................................................17
3.8. Utilities......................................................................................................................................18
4. MANPOWER AND ORANIZATIONAL MANAGEMENT............................................................18
4.1. Manpower................................................................................................................................18
4.2. Organizational Structure and management.........................................................................19
4.3. Training Requirement.............................................................................................................21

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5. FINANCIAL REQUIRMENT and ANALYSIS...............................................................................22
5.1. Total Initial Investment Cost..................................................................................................22
5.1.1. Fixed Investment.............................................................................................................22
5.2. Annual Production Cost at Full Capacity.............................................................................25
5.3. Financial Analysis and Statements.......................................................................................27
5.3.1. Underlying Assumption...................................................................................................27
5.3.2. Sources of Fund..............................................................................................................29
5.3.3. Loan repayment Schedule.............................................................................................29
5.3.4. Depreciation Schedule...................................................................................................29
5.3.5. Revenue Projection.........................................................................................................30
5.3.6. Balance Sheet.....................................................................................................................30
5.3.7. Income Loss Statement..................................................................................................31
5.3.8. Cash Flow Statement.....................................................................................................32
5.3.9. Profitability........................................................................................................................32
5.3.10. Break-Even Analysis...................................................................................................33
5.3.11. Pay-Back Period..........................................................................................................33
6. FUTURE DEVELOPMENT............................................................................................................33
7. ENVIRONMENTAL IMPACT OF THE PROJECT......................................................................34
7.1. Socio-Economic Environment...............................................................................................34
7.2. Environmental Impact Assessment of the Project..............................................................34

2
 EXECUTIVE SUMMARY
1. Project name MARBLE AND MARBLE PRODUCT
MANUFACTURING PLANT

2. Project Owners Zawde Asemu

3. Nationality Ethiopian

4. Project Location HolotaTown, Oromia Special Zone Surrounding Finfine

5. Project Marble, terrazzo and other related products

Composition
6. Premises Required 10,000 M2

7. Total Initial Br 76,000,000 of which 30% equivalent to 22,800,000

Investment Capital
financed by the owners’ equity and the rest 70%
equivalent to 53,200,000 financed through bank loan

8. Employment 267 peoples

Opportunity
9. Benefits of the Produce and supply of quality marble and terrazzo,
factory For the
add value to the economy, Source of Revenue,
Region/ Country
Employment opportunity, Save Foreign currency,
Benefit for the Local Community, Stimulate the Local
Economy and technology transfer

3
1. INTRODUCTION

Marble is a metamorphic rock composed of recrystallized carbonate minerals, most

commonly calcite or dolomite. Marble is typically not foliated, although there are
exceptions. In geology, the term marble refers to metamorphosed limestone, but its use
in stone masonry more broadly encompasses unmetamorphosed limestone.
Manufacturing Small and Medium Enterprises (SMEs) make up the largest and the most
important segment of the industrial sector in Ethiopia. In 2000, for example, SMEs
contributed to 268 per cent of gross value of production and over 80 per cent of
employment in the manufacturing sector. As will be shown below, SMEs, especially the
latter, are among the most dynamic and innovative enterprises in the country. In
reviewing the investment and technology policies of Ethiopia, therefore, it is pertinent
that special attention is paid to the pattern of development and the strengths and
weaknesses of SMEs in Ethiopia.

Besides, development of small and medium industries accelerates the fast economic
growth of Ethiopia and will help the nation lay its economy foundation on strong
industrial base. However, there exist constraints on the transition of these industries to
the heavy one.

The government of Ethiopia has developed a conducive investment policy packages

and other sectoral reforms at federal and regional level to attract a huge private
investment including in MSEs for the wellbeing of the nation and its citizens as a whole.
Besides, it is also currently implementing the five years growth and transformation plan
gave a special focus for manufacturing, small, medium and large industries.

In this regard, the Oromia regional state government has been exerting its maximum
effort to expand investment opportunities in the region, so as to foster the economic
development of the region and subduing the region’s big enemy that is the trap of
poverty. Therefore, the regional government has been preparing a viable business
environment to attract many domestic and foreign investors so that the dream of making
poverty history turns to be true.

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Therefore, the lucrative market potential and those viable investment policies attracted
the owners of this project to engaged glass plant in Holota town, Special Zone in
Oromia region.

The owners of this envisaged plant have a good business experiences and need to
extend this assets to this plant. Therefore, the owner is very determined to establish the
plant and considers getting the required support from regional government by
considering the existing facts and the multi benefits of this project.

1.1. Objective of the project

The main objective of the plant is to manufacture marble and terrazo to sale with
reasonable price for domestic and international market (in the future).

1.2. The Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the nation
in general and the region in specific with following ways:

A. Supply of Quality marble related Products

The project under discussion will establish this plant that will produce quality and
affordable marble and terrazzo products for the country market. This will benefits the
users to get better product with better price and durability.

B. Value Add

The establishment of this factory will add a value to the manufacturing sector in specific
and in the economy in general.

C. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, VAT and payroll taxes are collected from undertaking business

5
activities. Therefore, the factory will serve as sources of revenue for both the region and
nation in general.

D. Employment Opportunity

One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self employment or
employment in other organization. Hence, this factory will hire around 267 persons.

E. Save the Country’s Foreign Exchange

By minimizing the market gab for marble as well terrazzo products demand and supply,
the factory will help to reduce the nation’s foreign exchange cost to import these
materials. This will save the foreign exchange resource of the nation.

F. Benefit for The Local Community

As a corporate responsibility the company will engage in different development activities

on the surrounding areas (Holota district). This will better worse the community and
contribute for the development of the region.

G. Stimulate the Local and National Economy

This factory has positive externality in the zone that will encourage the economic
movement of local economy. Hence, there will be economic relationship and
transactions among different actors.

H. Technology Transfer

By producing glass products, the project will train and develops the capacity of the
technical staffs. By doing this, the company will add value in technology transfer for the
nation.

6
 1.3. Location and Premises Required

i. Location

The envisioned project is planned to be located in Holota town (which is around 38Km
from the capital), Oromia special Zone Surrounding Finfine, Oromia Regional State. The
main justifications behind the selection of this location are:

 Strategically located to the central and largest market of the nation (Addis Ababa)

 Relatively advanced development in infrastructure (Power, Water, Telephone

internet, road etc.

 All road to the nearest market outlets

 Accessibility of skilled labor force

 Conducive investment policy and governance

 Environmentally fit to manufacturing industry.

ii. Premises Required

The total land holding of the project is 10,000 M 2, the premises required planned as
follows in table 1

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 Table 1. Premises Required and Land Use Plan

No Descriptions Required area in M2

1 Production hall 2,500

1.1 Workshop 1,700
1.2 Inspection room 400
2 Warehouse 1,500
2.2 Raw materials and inputs 1,000
2.3 Finished products 650
3 Office and Showroom 500
3.1 Office 250
3.2 Show room 500

3.3 Worker Canteen 250

4 Walk way and loading unloading area 500
5 Green area 250

  Total 10,000

8
1.4. Location Map of the Area

9
2. MARKET STUDY AND PLANT CAPACITY

2.1. Market Study

2.1.1.Demand and Supply Analysis

The market potential is great because the construction industry is among the fastest
growing sectors of our economy. There is a lot of demand for doors, gates, windows
and burglar proofing etc. This sector is still informal as there are very many small scale
firms spread in major towns and trading centres in the country.

Besides, the demand for nails goods is increasing with the growth in investment in
different sectors. Consumer demand in the country is growing for metal products.
Increase in purchasing power and changes in designs tend to increase the demand still
further. In addition, demand for Ethiopian nails products are exports market has gone up
considerably in recent years. This aspect is relevant for the marble and terrazzo
manufacturing industry.

At present most of the marble and terrazzo factories are involved in manufacturing
construction materials, etc. The main target market of these plant is government and
next the private individuals.

Manufacturing of modern marble and terrazzo is being introduced to substitute import

products .A few of the plant are also involved in machine modification works and use as
import substitution. Even though under and over design of modifying machines occur
during their start time they have proved that nothing is impossible if financial strength is
kept. Most of the workshops are also involved in producing construction materials. In
this regard, the establishments of this plant will be helpful in terms of increasing the
countries supply- demand gap by substituting exported items of the sector. The major
products which will be produced by the cluster are described in the table below:-

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 2.1.2. Market Prospects

From the above market demand and supply analysis for marble and terrazzo products,
there exist huge market gab in Ethiopian market. Hence, the envisioned factory will be
successful by entering in to this market.

2.1.3.Marketing Strategy and Promotion

The company will follow the following promotional methods:

 Electronic Medias

 Advertising(Media, flayer and news paper)

 Public Relations

 Branding

The marketing strategy mainly focus on the satisfying the needs, orders and the
requirement of the customers.

2.1.4.Target customers
The In local market, the requirement for marble and terrazzo products can be
categorized into four namely:
 Construction sector
 Newly built house
 For dowry;
 For renovation;
 For Institutional buyer.
 For offices (public & private sector)

The majority of customers in the domestic market belong to first and second category.
These customers require glass and other home products for their newly built houses
and usually buy range of products like marble and terrazzo, with other materials (door

and window) for their entire house.

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 2.2. Plant Capacity and Production Program

Considering the gradual growth of demand and the time required to develop the
required skill the rate of capacity utilization during the first, second and third year of
production will be 70%, 85% and 100% respectively. Full capacity utilization will be
reached during the third year of operation. The plant will operate 262 days per year.

2.3.  Pricing

It would be important to examine the possible level of price based on the competitor’s
action. In this connection, the existing average prices of similar metal workshop in Addis
Ababa were assessed for the benefit of comparison. Based on the existing price in the
market the firm stetted the price as follows;

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3. PRODUCTION AND TECHNOLOGY

3.1. Product Nature and Description

The factory will produce different products based on the customer desire and request. In
general the following products are designed by the plant to be produced

The envisioned plant will produce different marble and terrazzo products based on the
customer desire and order. Besides, it will undertake different maintenance on demand
base.

3.2. Raw materials and Input

The major raw materials required for the production of the marble and terrazzo
products include The required raw materials will be imported from foreign

Different inputs and supplies are necessary to finalize those products.

3.3. Technology
Technologies used in this engineering plant use sophisticated and latest machineries for
a quality and branded products which are export standard. In different stage of
manufacturing- extreme care is required to ensure smooth polishing and proper platting.

3.4. Production Description

In general glass work will have four production parts after the product idea are
generated. i.e., Design, Prototype, Develop and production.

3.4.1.Production Process
Activities performed to change a raw material into output product are called production
process. Production process, which is practiced by most of the workshops, is similar. In
broad, production process comprises pre-production, on-production and postproduction.

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 A. Pre- production
Preparation and arrangement of resources are under this stage. The question what to
do? Where to do it? When to do it? Who to do it? All are answered at this phase of
production process.

A well prepared and arranged resources results in production cost reduction and
meeting due time.

Some of the activities involved at this stage are:

 Purchasing of raw material

 Making a design
 Material selection
 Adopting flexibility of production places
 Hiring of skilled workers
 Inspection of raw-material

B. On-production
The already prepared and arranged materials, machineries and human resources are
organized to start the real production process. The strength of this stage depends on
the pre-production stage. It needs a managerial skill to coordinate the resources to
achieve desire product.

Some of the activities involved in this stage are:

 Cutting of raw materials according to the specified dimension with tolerance

 Joining the raw materials according to the design
 Quality control of the welding joints
 Checking up functionality of product

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 C. Post production
Post production is the final stage where preparation of product for shipment under
taken. Now the product has got the required design but needs polishing to give good
appearance.

Some of the activities involved in this stage are:

 Cutting
 Shaping
 Cleaning etc.

Note: Quality inspection activity is practical in all stages to keep the quality of the
product and to decrease scraps and reworks.

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The marble and terrazzo work and fabrication industry is primarily concerned essentially
forming operations. In view of the high cost of most new equipment and the relatively
long lead-time necessary to bring new equipment into operation, changes in production
methods and products are made only gradually; even new process technologies that
fundamentally change the industry are only adopted over long periods of time.

Shearing operations cut materials into a desired shape and size and include punching,
piercing, blanking, cutoff, parting, shearing, and trimming activities. Basically, these
produce holes or openings, or produce blanks or parts, the most common hole-making
operation being punching. Cutoff, parting, and shearing are similar operations with
different applications.

3.5. Machinery and Equipment

The following are the list of necessary machineries and equipments for the envisioned
metal and iron workshop plant;

 Cutting machine

 Shaping machine

 Portable electric hand grinder

 Portable drill machine

 Circular cutting of machine

 Centre

 Air compressor

 Hydraulic press

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  Oxy-Acetylene equipment

 Bedding borderer

 Work bench

 Shaping machine

 Active reactive

 Generator

 Founder fun

 power hack saw

 Electrical saw

 Electrical hydraulic press

 Electrical and manual press

 Portable rotary machine

 Worker Safety kit

3.6. Project Design and Engineering

The proposed project comprises stock of different components to be executed at

different phases of the project life. These activities include: Design and Construction of
various buildings (workshops), importing of machineries, additive chemicals and other
raw materials, import of product transporting medium vehicle.

3.7. Building and Construction Works

A very simple building may suffice for an initial startup, the main consideration being the
security of the equipment and secure connections to electrical supply. The building will

17
have to be designed along factory production lines allowing for smooth transitioning of
the raw materials into completed products and optimized for maximum efficiencies.

3.8. Utilities

A number of utilities would be put in place in order to ensure smooth functioning of the
factory. These utilities include:

 Water Supply,

 Supplementary Electricity supply,

 Telephone line

 Paved Road Transportation,

 Drainage Facility

4. MANPOWER AND ORANIZATIONAL MANAGEMENT

4.1. Manpower

At the top of the organizational structure, there will be a general manager with the
responsibility of supervising the overall activity of the factory. Depending up on the
nature of the center and the amount of work to be performs; there will be auxiliary units
under the general manager. Employees under each unit will be supervised by the unit
head that is accountable for the general manager.

The company will use efficient trained staffs in the area of marketing to be competitive
in the market. The opportunities of being serviced by well skilled professionals well
enable the company to evaluate the internal weakness and strength of the company as
well as to assess the global opportunity and risks in the world market so that the
company can cope up with the dynamics of the market situation.

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The company will hire 262 employees.

 Permanent workers 140

 Skilled 100
 Unskilled 40
 Temporary workers 122
 Skilled 30
 Unskilled 80

The total number of manpower, Manpower list, qualification and salary are listed in the
table below.

SN Description No Qualification Monthly Annual

Salary in Br Salary in Br
I Permanent worker        
1 General manager 1 BA in industrial 15,000 180,000
Engineering
2 Vise Manager 1 BA in industrial 12,000 144,000
Engineering
3 Secretary 5 secret science & office 4,000 240,000
mgt
4 Production Manager 1 BSC in Industrial 5,500 66,000
Engineering
5 Human resource 1 BA in HRM 10,000 120,000
head
5.1. Personnel 10 BA in HRM 2,800 336,000
6 Machine Operators 15 10+2 in general 2,000 360,000
Mechanic
7 Technicians 10 different professions 5,000 600,000
8 production experts 21 BSC in Industrial 8,000 2,016,000
Engineering
9 Marketing head 1 BA in Marketing 5,500 66,000
Management
9.1. Sales person 10 marketing and related 6,000 720,000
9.2. Purchaser 5 Diploma in Pur. & 1,800 108,000
Supplies Management
10 Finance head 1 BA in Accounting 5,500 66,000

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 SN Description No Qualification Monthly Annual
10.1. Accountant 5 Diploma in 1,150 Salary69,000
in Br
Accounting
10.2. Cashier 3 10+2 in bookkeeping 1,300 46,800
10.3. Store keeper 5 10+2 in logistic 1,300 78,000
management
11 Cleaner 15 Unskilled 650 117,000
12 Driver 20 10 completed 1,200 288,000
13 Guards/Security 10 Basic 700 84,000
  Sub Total 140     3,704,800
II Temporary        
1 Electrician 5 10+2 in General 1,050 63,000
Electricity
  supporting stuff 25 different professions 5,000 1,500,000
2 Laborer 80 Unskilled 1,200 1,152,000
  Sub Total 110     2,715,000
  Grand total 262     5,600,000.00

4.2. Organizational Structure and management

The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
a general manager with the responsibility of supervising the overall activity of the plant.
Employees under each unit will be supervised by the department head that is
accountable for the general manager. General Manager is accountable to the owner of
the factory as indicated in figure 3

Fig 3 Organizational Structure

Owner/s

General
Secretary
Manager

Production Admin. & Marketing &

Dept. Finance Dept. Sales Dept.

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 Hence the following section deals with the duties and responsibilities of some
departments.

1. Manager
Duties and responsibilities

 She/he will plan, organize, direct and control the overall activities of the plant
 She/he will devise policies and strategies that will enable the plant to be
profitable.
 She/he will incorporate modern technological innovation that will facilitate the
service delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human
resources of the factory so as to achieve the short and long run objectives of the
organization.

2. The Production Department

Duties and responsibilities:-

It is the core department of the project center and it has the following responsibilities.

 Design and prepared prototype marble based products based on the plant
standard and customer preferences
 Use modern manufacture, processing technologies that will enhance the quality
of those products.
 Produce quality marble and terrazzo products that will enable the factory
competent both in the domestic and international market.
 Control on the quality of raw materials, inputs, quality of the product and also the
overall production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final glass products
3. Administration and Finance Department
Duties and responsibilities:-

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  Will plan, organize direct and control the financial transaction of the factory by
using the entire necessary document.
 Will develop sound financial control system by developing modern financial
control systems.
 Will prepare the annual financial statements and prepare condensed reports for
the general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include:
effective handling of the different inventories of the machineries, equipments, raw
materials, finished products, and devise strategies of controlling against fraud
and damage.
 Manage and execute the company national and international procurement
procedure
 Administer and control the company logistic resource
 Provide and manage general supportive service to the factory.

4. Marketing and Sales Department

Duties and responsibilities:-

 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Gather information on new products, designs, fashions, profiles etc
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of
the company

4.3. Training Requirement

The production employees of the plant expected to take basic marble production skill
training for 7 days. In addition training could be given to the mechanic and to the

22
supervisor will also take skill training from one of TVET Colleges or similar undertaking
factories in Addis Ababa.

5. FINANCIAL REQUIRMENT and ANALYSIS

5.1. Total Initial Investment Cost

The total amount of initial investment capital money that is required to establish the
envisaged factory is estimated to be birr 76,000,000

Table Total initial Investment Capital

No Description Cost  
1 Fixed Investment    

1.1 Land, Building and Construction 22,000,000 0.00

1.2 Machines and Equipment’s 18,548,200 0.00

1.3 Vehicles and Motors 5,600,000 0.00

1.4 Office Furniture and Equipment 0.00

3,500,000
Total Fixed Investment Cost 49,648,200 0.00

2 Operating Expense   0.00

2.1 Raw Materials Purchase and Products 14,735,000 0.00

2.2 Salary Expense 5,000,000 0.00

2.3 Other Operating Expense 4,000,000 0.00

2.4 Pre-operating Expense 2,616,800 0.00

Total Operating Expense 26,351,800 0.00

Total Investment Cost 76,000,000 0.00

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5.1.1. Fixed Investment
A. Land, Building & Construction
Land Unit cost in br. Total cost in br.
Requirement(M2)
Descriptions
Production hall 4000 1,394. 5,578,000
987
5 3,454,500
Workshop 3500
Inspection room 500 987 493,500

Warehouse 2500 950 2,375,000

Raw materials and 900 900,000
inputs 1000
Finished products 1500 950 1,425,000
Office and 2000 1,010 2,020,000
Showroom
Office 500 1,000 500,000

1,000 1,000,000
Show room 1000
1,000 500,000
Worker Canteens 500
Walk ways and
loading unloading 200 200,000
area 1000
54,00
108 0
Green area 500
Land lease 50,00
initial(10%) of 80 5 0
years 10,000
  18,550,000
Total 10,000

A. Machineries And Equipments

The list of required machinery and equipment is indicated in Table below. The total cost
of machinery and equipment is estimated at Birr 18,548,200

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 B. Vehicles
SN Description Qty Unit Price Total Price(Birr) Remark
1 Pick Up model 20/21 1 2,200,000 2,200,000 Duty Free
2 Service Bus 2 1,300,000 2,600,000 Duty Free
3 Mini Bus 1 800,000 800,000 Duty Free
Total 4,300,000 5,600,000

C. Office Equipment’s
SN Description Qty Unit cost (Br). Total cost (Br).
1 Managerial chair with tables 3 10,000.00 30,000.00
2 Secretarial chairs with table 1 50000 5,000.00
3 Office Chairs with tables 6 1,350.00 8,100.00
4 Computer with printer 5 20,000.00 100,000.00
5 Shelf 1 3,500.00 3,500.00
7 Telephone machine set 2 1,500.00 3,000.00
8 Filing Cabinets 2 2,000.00 4,000.00
9 Machine Assembly, chair and table     2,000,000
10 Decoration (Carpet & Curtain)     7,500.00
11 Reserved 1,339,000
Total     3,500,000.00

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 4.1. Initial Working Capital
The initial working capital is estimated to be birr. 26,351,800.00 birr

A. Annual Production Cost at Full Capacity

i. Raw Materials and Inputs

The major raw materials and auxiliaries required for the production of
modern Marble and marble products shown in Table 4.1 below. All the
raw and auxiliary materials are to be imported.

Sr. Description UOM Qty Unit Total Cost

No Cost in in Br.
Br
1 Cubic 1,2
2,400,000
Marble sheet ft 2,000 00
2 terrazzo plate Pcs 1,2
2,400,000
2,000 00
3 Pcs 2
400,000
Tube Pipe 2,000 00
4 Angles lines Pcs 1,0
2,000,000
2,000 00
5 Pkt 1
300,000
Welding Rods 2,000 50
6 Pcs 2
400,000
Grilling Disc 2,000 00
7 Pkt 1,5
3,000,000
Filler paste 2,000 00
8 pair 1
300,000
Hinges 2,000 50
9 Pcs 1,1
2,200,000
U channel 2,000 00
10 Other Inputs(locks, glue, nails, screw Tapestry dressing, matters, LS     604,000
11 Other Machine supplies LS Lump  
750,000
sum
  Grand Total       14,754,000

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 B. Salary Expense
As indicated in part three of this study, the total cost of salary and wage is estimated to be
5,600,000 birr.
C. Other Operating Expenses
SN Description Annual Cost in Br. Assumption Used
1 Property Insurance 30,091.95 10% of Fixed investment cost
2 Audit and Legal Fee 10,000 10% of Salary
3 Uniforms 1,600 1% of FC
4 Telephone, Fax and Postal 1,000 1000per month
5 Cleaning Gods Supplies 2,000.00 70*60br
6 Repair and Maintenance 50,229.88 900 per month
7 Advertisement 2,000.00 1000 per month
9 Stationery and other office 1,000.00 700 per month
supplies
10 Electricity 1,000.00 0.45*150,000W per year
11 Water 5,00.00 2*1000 m3 per year
12 Fuel 90,000.00 6500 lit*20 per year
13 Oil and lubricant 1,000.00 10% of fuel cost
14 Miscellaneous Expense 1,000.00 3,000 br month
15 Other related reserved 3,200,000
  Total 4,000,000  
D. Pre -Service Expense
SN Description Cost in br.
1 Project proposal 10,000.00
2 Licensing fee and others lizi payment 2,450,800
3 Promotion and adverting 50,000
4 Workers capacity Building 50,000
5 EIA 40,000
  Total 2,616,800

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 E. Financial Analysis and Statements

i. Underlying Assumption
The financial analysis of the envisioned Modern construction materials and gypsum product is
based on the data provided in the preceding sections and the following assumptions.
A. Construction and Finance
 Construction Period ………………………………………………………….…18 Months
 Source of finance……………………………………………..…30% equity and 70% loan
 Bank interest rate …………………………………………………………..…………10 %
 Tax holidays ………………………………………………………………………2 years
 Operating costs increase by……………………………………………..………………2%
 Operating costs and raw material increased by………………………………...………5%
 Utilities and operation expense …………………..…increase 3% per annum after 2ndyear
 Wages and Salary increase…………………………Increase 3% Per annum after 2 nd year

 Sales …………………………………………..increase by 5 % per annum after 2nd year

B. Depreciation
 Building…………………………………………………………………………….5%
 Machinery and Equipment ………………………………………………………..15%
 Office Furniture……………………………………………………………………20%

 Vehicles ………………………………………………………………………..…..15%

C. Working Capital
 Accounts Receivable…………………………………………………………….30 days
 Raw material Local …………………………………………………………..…..30 days
 Work in progress…………………………………………………………………5 days

 Finished Production ……………………………………………………………..30 days

 Cash in hand ……………………………………………………………………...5 days
 Accounts payable …………………………………………………………….…..30 days

ii. Source of Fund

SN Description % share Amount(in birr)
1 Owners Share 30 22,800,000
2 Bank Loan 70 53,200,000
Total 100 76,000,000

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 iii. Loan Repayment Schedule
Year Principal Payment Interest (10%) Total Annual Payment Remaining Balance

0 0 0 0 53,200,000

1 5,320,000 5,320,000 10,640,000 47,880,000

2 5,320,000 4,788,000 10,108,000 42,560,000

3 5,320,000 4,256,000 9,576,000 37,240,000

4 5,320,000 3,724,000 9,044,000 31,920,000

5 5,320,000 3,192,000 8,512,000 26,600,000

6 5,320,000 2,660,000 7,980,000 21,280,000

7 5,320,000 2,128,000 7,448,000 15,960,000

8 5,320,000 1,596,000 6,916,000 10,640,000

9 5,320,000 1,064,000 6,384,000 5,320,000

10 5,320,000 532,000 5,852,000 0

i. Annual depreciation schedule of the fixed Asset ( birr)

Amount of
Rate of
values of Capital Depreciation
No Capital Assets depreciation
assets (Br.) estimated
(%)
(Br.)

1 Land, Building and Construction 22,000,000 5 1,100,000

2 Machines and Equipment’s 18,548,200 15 2,782,230
3 Vehicles and Motors 5,600,000 15 840,000
4 Office Equipment 3,500,000 20 700,000
  Total 49,648,200   5,422,230

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 Balance Sheet
Asset
Current Asset  
Cash 11,400,000
Inventory of raw materials and inputs 15,200,000
Total Current Asset 26,600,000
Fixed Asset  
Land, Building and Construction 21,280,000
Machineries and Equipment’s 16,720,000
Office Equipment 1,520,000
Vehicles 2,280,000
Total fixed Asset 41,800,000
Total Asset  
Liability  
Account payable 53,200,000
Owners Equity 22,800,000
Capital  
Total Liability & Owners’ Equity 76,000,000

Income Loss Statement

Revenue Year 1 Year 2 Year 3-10
Sales 4,500,000 4,725,000 4,961,250
Sales expenses (5%)* 225,000 236,250 248,063
265,075,09
Purchase of Raw Material 15,200,000 265,075,095
5
-
Gross profit -10,700,000 -260,350,095 260,113,84
5
Expenses    
Salary Expense 7,600,000 7,980,000 8,379,000
Operating Expenses 2,280,000 2,394,000 2,513,700
Pre-operating Expense 1,520,000 1,596,000 1,675,800
Deprecation Building 1,064,000 1,064,000 1,064,000
Deprecation machine 2,508,000 2,508,000 2,508,000
Deprecation Vehicles 456,000 456,000 456,000
Deprecation office Equip 228,000 228,000 228,000
Lease Expense 3,000,000 3,000,000 3,000,000
Interest Expense 5,320,000 4,788,000 532,000
Total Expense  23,976,000 24,014,000 20,356,500
Profit Before Tax 4,500,000 4,725,000 4,961,250

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Tax(30% ) 1,350,000 1,417,500 1,488,375
Net Profit 3,150,000 3,307,500 3,472,875

Cash Flow Statement

 
         

Particulars Year0 Year I Year II Year III-XI

A. Cash Inflow 0      
·  Own equity 22,800,000      
·  Bank loan 53,200,000      
·  Depreciation 0 4,256,000 4,256,000 4,256,000
·  Net profit 0 3,150,000 3,307,500 3,472,875
Total inflow
76,000,000 7,406,000 7,563,500 7,728,875
B.  Cash outflow    
0  
·   Fixed capital    
41,800,000  
·  Working capital    
26,600,000  
. Contingency (Lump sum) 7,600,000    
10%  
·  Loan repayment
  5,320,000 4,788,000 532,000
Total outflow
76,000,000 5,320,000 4,788,000 532,000
Net inflow (A-B)
0 2,086,000 2,775,500 7,196,875
Cumulative balance
0 2,086,000 2,775,500 7,196,875

4.1.1.Profitability
According to the projected income statement, the project will start generating profit in
the 1st year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is
viable.

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 4.1.2.Break-Even Analysis
The break-even point of the project including cost of finance when it starts to operates
at full capacity (year 3) is estimated by using income statement projection.

BE = Fixed Cost / Sales – Variable cost = 57%

4.1.3.Pay-Back 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 with in 9 year of operation.

6. FUTURE DEVELOPMENT

Every business undertakings be it large or small should have future development plan.
It is a plain fact that business activities are undertook in a dynamic business nature and
different environment. Therefore, the factory will have an expansion phase depending
on the condition of the industry character particularly in producing the Profile itself by
installing the plant. In this regard, the Factory will expand its capacity and production
varieties.

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7. ENVIRONMENTAL IMPACT OF THE PROJECT

7.1. Socio-Economic Environment

The owner will provide the land on lease bases, and all required compensation will be
paid for the project. The Livelihood of the local peoples around the project area is rural
dwellers of various occupation and economic background.

7.2. Environmental Impact Assessment of the Project

Environmental aspects are fundamental for the sustainability assessment of the current
and novel designs of any new project. In this regard the plant will undertake a separate
and detail Environmental impact Assessment.

To assess the impacts and design mitigation measure if any adverse impacts are there
so as to make the project benefited more society and nation.

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