Calcium Carbide Producton Feasibility Study

Project proposal for Calcium carbide Acetylene gas production plant 2022
Table of Contents
1. SUMMARY........................................................................................................................................1
2. PRODUCT DESCRIPTION AND APPLICATION............................................................................2
3. MARKET STUDY AND PLANT CAPACITY..................................................................................3
3.1. Market Study...............................................................................................................................3
3.1.1. Past Supply and Present Demand....................................................................................3
3.1.2. Demand Projection..............................................................................................................4
3.1.3. Pricing and Distribution.......................................................................................................5
3.2. PLANT CAPACITY AND PRODUCTION PROGRAM...........................................................6
3.2.1. Plant Capacity......................................................................................................................6
3.2.2. Production Program.............................................................................................................6
4. MATERIALS AND INPUTS..............................................................................................................7
4.1. MATERIALS..............................................................................................................................7
4.2. UTILITIES..................................................................................................................................8
5. TECHNOLOGY AND ENGINEERING.............................................................................................8
5.1. TECHNOLOGY..........................................................................................................................8
5.1.1. Production Process...............................................................................................................8
5.1.2. Environmental Impact Assessment......................................................................................9
5.2. ENGINEERING..........................................................................................................................9
5.2.1. Machinery and Equipment...................................................................................................9
5.2.2. Land, Buildings & Civil Works.........................................................................................10
6. HUMAN RESOURCE AND TRAINING REQUIREMENT............................................................11
6.1. HUMAN RESOURCE REQUIREMENT.................................................................................11
6.2. TRAINING REQUIREMENT...................................................................................................11
7. FINANCIAL ANALYSIS.................................................................................................................12
7.1. Underlying Assumption.............................................................................................................12
7.2. TOTAL INITIAL INVESTMENT COST.................................................................................13
7.3. PRODUCTION COST..............................................................................................................14
7.4. FINANCIAL EVALUATION...................................................................................................15
7.4.1. Profitability........................................................................................................................15
7.4.2. Ratios.................................................................................................................................15
7.4.3. Break-even Analysis..........................................................................................................15
By KTKM gps system and trading plc 1

7.4.4. Pay-back Period.................................................................................................................16
7.4.5. Internal Rate of Return.......................................................................................................16
7.4.6. Net Present Value..............................................................................................................16
8. ECONOMIC AND SOCIAL BENEFITS..........................................................................................17
8.1. Profit Generation.......................................................................................................................17
8.2. Tax Revenue..............................................................................................................................17
8.3. Import Substitution and Foreign Exchange Saving....................................................................17
8.4. Employment and Income Generation........................................................................................17
8.5. Diversification and Inter Sectoral linkage..................................................................................18
9. Appendix...........................................................................................................................................19
By KTKM gps system and trading plc 2

1. EXECUTIVE SUMMARY
1. Project Name Calcium. Carbide and acetylene gas production plant

2. Project promoter Kirubel Mulugeta
3. Project Type Chemical production
4. Project promoter Kirubel Mulugeta the promoter is the invester who have
different work experience in the country is the owner.
5. Nationality Ethiopian
6. Project. Location Oromia Region, Oromia special zone Surrounding
Finfinne, Akaki Wereda, Specific kebele will be decided
by Government body.
7. Land size requirements
8. Total Investment Capital
9. Job Opportunity
10. Benefit Expected
11. Expected beneficiaries
12. Market destination
13. Source of finance
14.
This profile envisages the establishment of a plant for the production of calcium carbide with a
capacity of 922 tons of per annum and 152.88 ton Acetylene gas per annum. The plant will be
installed in Oromia Region, Finnfine area zone, Gelan town administration Locality. The raw
materials for the production of calcium carbide are lime stone and coal and electrode paste. And
the raw material for the production Acetylene gas is calcium carbide and water which is found in
the area so the raw material supply will be local only electrode paste is imported. Also coal is
found in Oromia region, JIMMA zone and lime stone is found in MUGER gorge AND ABAY
river near FELEKLEK and near FECHE at JEMA GORGE. So the raw material accessibility
will be local.
Calcium carbide when combined with water produces acetylene gas, which is used in welding
and cutting torches. Calcium carbide also constitutes a key component of most polyvinyl
chloride (PVC) production. It is also used in production of calcium Cyanamid (a nitrogen
fertilizer) and in iron (foundry) and steel industries as a desulfurization reagent.
KTKM GPS Systems and Trading PLCPage 1 of 29

Since there are no local producers of calcium carbide the demand for the product is entirely met
through import. The present (2022) demand for the products is estimated at 1657 tons per
annum. The demand is projected to reach 3908 tons by the year 2031.
The principal raw materials required are lime, coal and electrode paste. Lime and coal are
available locally while and electrode paste, which have to be imported till local production starts.
The total investment cost of the project including working capital is estimated at Birr 80.48
million. From the total investment cost the highest share (Birr 76.76 million or 95.4%) is
accounted by fixed investment cost followed by initial working capital (Birr 8.1 million or
14.5%) and pre operation cost (Birr 500,000 or 1%). From the total investment cost Birr 17.36
million or 21.57% is required in foreign currency.
The project is financially viable with an internal rate of return (IRR) of 37% and a net present
value (NPV) of Birr 47.9 million, discounted at 18% and 24.6 million discounted at 25 %.
The project can create employment opportunities for 77 permanent persons. The
establishment of such factory will have a foreign exchange saving effect to the country by
substituting the current imports up to 25 million USD. The project will also create backward and
forward linkage with the chemical production sub sector and the manufacturing sector
respectively and also generates income for the Government in terms of tax revenue and payroll
tax.
2. PRODUCT DESCRIPTION AND APPLICATION
Calcium carbide is an inorganic chemical compound with the chemical formula of CaC2 having
numerous industrial applications.
Major application of calcium carbide
- Produces acetylene gas, which is used in welding and cutting torches.
- Polyvinyl chloride (PVC) production.
- production of calcium Cyanamid (a nitrogen fertilizer),

- iron (foundry)
- steel industries
- desulfurization reagent in the production of ductile iron and steel
- Slag modifier/conditioner (reducer) in steel production.
- steel making Calcium carbide is used in the desulfurization of iron (pig iron, cast iron
and steel),
- as a fuel in steelmaking to extend the scrap ratio to liquid iron, depending on
economics and as a powerful deoxidizer at ladle treatment facilities.
- For PVC production
Major uses of Acetylene gas (C2H2 )
- For welding and cutting.
- In most repair work shops.
- For factories
3. MARKET STUDY AND PLANT CAPACITY
3.1. MARKET STUDY
3.1.1. Past Supply and Present Demand
All the demand for calcium carbide in Ethiopia has been met from abroad, mainly from China.
Other suppliers of the product to the Ethiopian market are European and Middle East countries
such as Germany, Italy and Jordan. The historical import data of calcium carbide is shown in
Table 3.1.
Table 3.1
Import of calcium carbide
Year Quantity Value
(Tons) (‘000 Birr)
2012 930.4 15,763
2013 1002.5 19,406
2014 1074.5 23,048

2015 1146.6 26,691
2016 1218.6 30,333
2017 1290.7 33,976
2018 1362.7 37,618
2019 1434.8 41,261
2020 1506.8 44,903
2021 1601.0 48,546
2022 1677.9 52,188
Source: - Ethiopian Revenues and Customs Authority.
As shown in Table 3.1, import of calcium carbide exhibits year-to-year fluctuation without a
clear trend. The fluctuation of the imported quantity is believed to be due to stock carry over
from a period in which import was high to the period of following year. For example, the
quantity imported in year 2010 was 551 tons but in 2020 it is 1506.8 tons.
Despite the fluctuations, the general observed trend is to be increasing. The yearly average
quantity of import in the early years of the data set, i.e. 2010--2020, was about 11.39 tons.
In the absence of a clear growth trend in the import data and the analysis carried above, it is
considered as reasonable to assume that the present demand for the product would be the average
of the imported quantity of the recent two years i.e. years 2018 and 2019. Accordingly the
present (year 2019) effective demand for calcium carbide is estimated at 1434.8 tons.
The demand for the Acetylene gas is very high in the country due to increasing growth of the
construction sector , paint industry, soil treatment, and soap industry. The demand is supplied by
Chora gas and chemical, Gats Solar Engineering, Gab Ethiopia plc and some small companies.
The demand is very high.
3.1.2. Demand Projection
The future demand for calcium carbide depends mainly on the growth of the Basic Metal and
Engineering Industries, which are using it to produce acetylene gas for welding and cutting

metals in conjunction with oxygen. Up to recently, the only plant in Ethiopia which imports
calcium carbide for the sake of producing and marketing acetylene gas to final users is Chora
Gas and Chemicals Factory in Addis Ababa, whereas the rest buy the carbide and produce
acetylene in their workshops by adding water to it.
Nearly all-large factories with workshops use calcium carbide as a source of acetylene by
reacting it with water. Sugar factories of Wonji, Methara and Fincha, the tire factory in Addis
Ababa, metal fabricating plants in Kaliti and various metal engineering related industries under
the Ministry of Defense, could be cited as significant consumers of calcium carbide, among
many others. In addition, highly significant groups of consumers of the product for the same
purpose are heavy vehicles assembly plants (cargo, fuel and public transport) such as Mesfin
Industrial Engineering, MARU, AMCE, and other automotive garages.
As mentioned earlier, future demand for calcium carbide is contingent upon growth of the
national economy, especially the basic metals and engineering sector. Growth of this sector in
Ethiopia is very encouraging due to the conducive investment climate and the high priority given
to the manufacturing sector in general and to the basic metals and engineering sub-sector in
particular.
Assuming that the basic metal engineering sector will grow by a rate higher than the average
national economic growth rate of 10% in the recent past, future demand for calcium carbide is
projected to grow by 10% annually as shown in Table 3.2.
Table 3.2Projected demand for calcium carbide (tons)
Year Quantity
(Tons)
2023 2005.6
2024 2206.2
2025 2426.8
2026 2669.5
2027 2936.4
2028 3230
2029 3553.1
2030 3908.4
2031 4155.94
2032 4451.7
The demand projection, executed in Table 3.2, reveals that the demand for calcium carbide will
grow from 2005.6.5 tons in the year 2023 1to 4451.7 tons by the year 2033.
3.1.3. Pricing and Distribution
From the local distribution and retail price of calcium carbide in the country, which is 50 and 80
birr respectively, our price is 165 birr per kg. the price for the Acetylene gas which is in 50kg
pp bag is 185 birr factory outlet price.
The end users of the product can be categorized in to two groups. The first group is those that
produce acetylene for other end users while the second group requires calcium carbide to
produce acetylene only for its own use. By considering the type of end users a combination of
direct sale to bulk consumers (such as acetylene plants) and the use of agents/distributors to
small quantity purchasers (such as garages) is recommended for the envisaged project. In this
regard trading companies which are currently importing and distributing the product could also
serve as intermediate agents of distribution for a local producer.
3.2. PLANT CAPACITY AND PRODUCTION PROGRAM
3.2.1. Plant Capacity
As per the market information obtained above, the envisaged plant is proposed to have capacity
of 450 tons per annum calcium carbide and 9000 ton Acetylene gas on a single shift of 8 hours
per day and 300 working days per annum.

3.2.2. Production Program
In order to develop the operators’ skill in production and quality control, it is vital to have a
gradual capacity buildup. In addition to this, a period is required to penetrate to the market.
Hence, it is assumed that the plant will go into full capacity operation in three years’ time
starting with 70% capacity in the first year, 90% during the second year and then to full capacity
during the 3rd year and then after. The production program of the envisaged plant is given in
Table 3.3.
Table 3.3 Production program of the envisaged calcium carbide plant
Production Year
prodction year 1 2 3 4 5
capacity utilization 70% 90% 100% 100% 100%
product type
calcium carbide(25kg) 25,469 32,746 36,384 36,384 36,384
Acetylene gas(kg) 107,016 137,592 152,880 152,880 152,880
Production Year Continued

prodction year 6 7 8 9 10
capacity utilization 100% 100% 100% 100% 100%
product type
calcium carbide(25kg) 36,384 36,384 36,384 36,384 36,384
Acetylene gas(kg) 152,880 152,880 152,880 152,880 152,880
4. MATERIALS AND INPUTS

4.1. MATERIALS
The principal raw materials required are lime, coal and electrode paste. Lime is available locally
coal is also available locally, and while electrode paste will be imported. But the country has a
high potential of coal at different location but its beneficiation is not yet started. Packing material
is the only auxiliary material required by the envisaged plant. The total annual cost of raw

materials is estimated at Birr 18.97. The annual requirement of raw material and their estimated
costs are presented in Table 4.1.
Table 4.1 Annual requirements for raw and auxiliary materials and their cost
Description Qty Unit Price
Total
In Birr
Price In Birr
L.C F.C Total
Lime (tons) 3,240 2,500 8,100,000 0 8,100,000
Coal (tons) 929 25,000 23,220,000 0 23,220,000
electrode paste (tons) 20 200,000 4,000,000 4,000,000
pp bag(25kg) with liner 36,384 25.0 909,600 0 909,600
Total 32,229,600 4,000,000 36,229,600
4.2. UTILITIES
Utilities required are electricity and water. The total annual cost of utilities is estimated at Birr
953,640. The annual quantities and cost of utilities are estimated as shown in Table 4.2.
Table 4.2 Annual utilities requirement& cost

Utility Requirement Unit Price (in Cost (in Birr)
(Annual) birr)
Electricity in kwh 1,440,000 2.00 2,880,000
Water in m3 1,800 3.00 5,400
oil and lubricant 1,000 200.00 200,000
fuel 90,000 32.00 2,880,000
Total 5,965,400
5. TECHNOLOGY AND ENGINEERING

5.1. TECHNOLOGY
5.1.1. Production Process
The production process for calcium carbide production in an industrial arc furnace is
held by metering the ingredients and prepare for one batch then feed to the electric arc
furnace with feeder. The electric arc furnace will heat to the required temperature to melt
the ingredients which is 1850 to 22000C. The electrode used is a graphite electrode. The
reaction is endothermic which requires 460kJ/mole of the product. Then the molted
product will be cooled in a cooler then crushed screened and packed in 25 kg pp bag
lined with LDPE liner to protect from moisture.
5.1.2. Environmental Impact Assessment

The only adverse impact to be generated during the production process of calcium
carbide is dust pollution. The technology selected is seamless and equipped with a dust
collection facility such as bag filter, wet scrubber, etc. Hence, there is no adverse impact
on the environment.
5.2. ENGINEERING
5.2.1. Machinery and Equipment
The total cost of machinery and equipment is estimated at Birr 41.85 million of which
Birr 17.36 million or 353,077 US Dollar is required in foreign currency. The list of
machinery and equipment required for the envisaged plant is given in Table 5.1.
Table 5.1 List of machinery & equipment
Total Price In
SN Equipme nt Quantity(se t) Supplie r
Birr
1 Calcium carbide making plant 1 8,000,000.00
2 Acetylin making and filling plant incl 1 9,360,000.00
sub total (required in forign) 17,360,000.00
3 Transformer and power supply 1 1,000,000.00
Total 18,360,000.00
vhicles
1 landcruser 1 3,000,000.00
2 pickups 1 2,500,000.00
3 coaster 1 4,000,000.00
4 backho loder 1 2,000,000.00
5 dump truck 2 10,000,000.00
Total 39,860,000.00
spare part lumpsum(5% ) 1,993,000.00
Total price 41,853,000.00

5.2.2. Land, Buildings & Civil Works
The total area required by the project is 10,000m2, of which 2000 m2 is built-up area. The cost
of building at unit cost of Birr 5,000 per m2 is, thus, estimated at Birr 10,000,000.
This would include cost of land preparation and associated civil works. The total land area of the
plant, including the open space, is 10,000 m2 and its lease cost equals Birr 7,539,000 per spm.
The cost of the land lease is as per ONRS land lease rate for Gelan town which is equal to Birr
7539 per sqm for industrial purpose. Of the total cost of the lease 10 % is paid in the beginning
while the rest will be paid in 40 years.
6. HUMAN RESOURCE AND TRAINING REQUIREMENT
6.1. HUMAN RESOURCE REQUIREMENT
Total human resource required is 63 persons. The total annual cost of human resource is
estimated at Birr 1,515,000. The details of the human resource requirement and the estimated
annual labor cost including employees’ benefit are given in Table 6.1.
Table 6.1
Human resource requirement and estimated labor cost(birr)

Description No Monthly Salary Annual Salary (In
(In Birr) Birr)
A. Administration
Plant manager 1 40,000 480,000
technologist 4 40,000 1,920,000
shift manager 3 25,000 900,000
electrician, mechanic 2 20,000 480,000
safty person 3 15,000 540,000
Skilled Workers 8 15,000 1,440,000
Unskilled Workers 30 4,000 1,440,000
Personnel Head 1 25,000 300,000
store keeper 3 10,000 360,000
Accountant 3 25,000 900,000
Casher 1 8000 96,000
Security 10 5,000 600,000
Ganitors 8 3,500 336,000
Total 77 9,792,000
Employment Benefits 20% of Annual Salary 1,958,400
Total 11,750,400
6.2. TRAINING REQUIREMENT
The production and technical head, mechanic, electrician and quality control worker need at least
two weeks training on the technology, maintenance and quality control. For the rest, on-the-job
training will be sufficient in the time of installation and commissioning by the specialists. Total
training cost is estimated at about Birr 500,000.
7. FINANCIAL ANALYSIS
7.1. UNDERLYING ASSUMPTION

The financial analysis of plywood producing plant is based on the data provided in the preceding
chapters and the following assumptions.
A. Construction and Finance
Construction period 1 year

Source of finance 20% equity and 80% loan
Tax holidays 2 years
Bank interest rate 18%

Discount for cash flow 18%

Based on lease rate of ONRS
Value of land Gelan City Adminstration locality
Spare Parts, Repair & Maintenance 5% of 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
Raw Material-Foreign 180
Factory Supplies in Stock 30
Spare Parts in Stock and Maintenance 30
Work in Progress 1
Finished Products 15
Accounts Receivable 30
Cash in Hand 5
Accounts Payable 30
7.2. TOTAL INITIAL INVESTMENT COST
The total investment cost of the project including working capital is estimated at Birr
55.2million (See Table 7.1). From the total investment cost the highest share (Birr 46.55
million 84.4%) is accounted by fixed investment cost followed by initial working capital (Birr
8.2 million or14.75%) and pre operation cost (Birr 500,000 or 1%). From the total investment
cost Birr 9.8 million or 17.7% is required in foreign currency.

Table 7.1
Initial investment cost in birr
sn Items L.C F.C Total % contribution
1 Land 7,539,000 7,539,000 9.37
2 Building And Civil Works 10,000,000 10,000,000 12.43
3 Office Equipment 1,000,000 1,000,000 1.24
4 Vehicles 39,860,000 - 39,860,000 49.53
5 Plant Machinery & Equipment 18,360,000 18,360,000 22.81
Total Fixed Investment Cost 58,399,000 18,360,000 76,759,000 95.37
6 Pre Production Capital Expenditure* 500,000 500,000 0.62
Total Initial Investment 58,899,000 18,360,000 77,259,000 95.99
7 Working Capital at Full Capacity 3,223,493 3,223,493 4.01
Total Initial Investment 62,122,493 18,360,000 80,482,493 100.00
* N.B Pre operating cost include project implementation cost such as installation, startup,
commissioning, project engineering, project management etc and capitalized interest during
construction.
** The total working capital required at full capacity operation is Birr 4.62 million. However, only the
initial working capital of Birr 3.22 million during the first year of production is assumed be funded
through external sources. During the remaining years the working capital requirement will be
financed by funds generated internally (for detail working capital requirement see Appendix 7.A.1).
7.3. PRODUCTION COST
The annual production cost at full operation capacity is estimated at Birr 7.2 million (see Table
7.2). The cost of raw material account for 46.9 % of the production cost. The other major
components of the production cost are salaries and wedge, depreciation, financial costs which
account for 15.2%, 13.6% and 1.6%, respectively. The remaining is the share of administration
and sales, repair and maintenance financial cost. For detail production cost see Appendix 7.A.2.
Table 7.2Annual production cost at full capacity (year three)

Raw Material Requirement Cost % contribution
1.Local Raw Material 32,229,600 42.01
2.Foreign Raw Materials 4,000,000 5.21
Total Production Cost at full Capacity

Items Cost % contribution
1. Raw Materials 36,229,600 47.22
2. Utilities 5,965,400 7.78
3. Wages and Salaries 11,750,400 15.32
4. Spares and Maintenance 3,837,950 5.00
5. Admintration and sales 2,889,168 3.77
Factory costs 57,783,350 75.32
5. Depreciation 10,508,000 13.70
6. Financial Costs
8,428,218 10.99
Total Production Cost
76,719,568 100
7.4. FINANCIAL EVALUATION
7.4.1. Profitability
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax is Birr 22.5 million during the life of the project.
Moreover, at the end of the project life the accumulated net cash flow amounts to Birr 155.6
million. For profit and loss statement and cash flow projection see Appendix 7.A.3 and 7.A.4,
respectively.

7.4.2. Ratios
In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for
evaluating the financial position of a firm. It is also an indicator for the strength and weakness of
the firm or a project.
Ratios (%)
Gross Profit/Sales 23% 25% 27% 27%
Net Profit After Tax/Sales 23% 25% 19% 19%
Return on Investment 27% 27% 27% 27%
Return on Equity 121% 149% 123% 123%
SRR 45%
break even 51%
Using the year-end balance sheet figures and other relevant data, the most important ratios such
as return on sales which is computed by dividing net income by revenue, return on assets
(operating income divided by assets), return on equity (net profit divided by equity) and return
on total investment (net profit plus interest divided by total investment) has been carried out over
the period of the project life and all the results are found to be satisfactory.
7.4.3. Break-even Analysis
The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point for capacity utilization and sales value estimated by using income statement projection are
computed as followed.
Break -Even Capacity utilization = 51%
7.4.4. Pay-back Period
The pay- back period, also called pay – off period is defined as the period required for recovering
the original investment outlay through the accumulated net cash flows earned by the project.

Accordingly, based on the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 4 years.
7.4.5. Internal Rate of Return

The internal rate of return (IRR) is the annualized effective compounded return rate that can be
earned on the invested capital, i.e., the yield on the investment. Put another way, the internal rate
of return for an investment is the discount rate that makes the net present value of the
investment's income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater than the rate of return
that could be earned by alternate investments or putting the money in a bank account.
Accordingly, the IRR of this project is computed to be 37% indicating the viability of the
project.
7.4.6. Net Present Value

Net present value (NPV) is defined as the total present (discounted) value of a time series of cash
flows. NPV aggregates cash flows that occur during different periods of time during the life of a
project in to a common measuring unit i.e. present value. It is a standard method for using the
time value of money to appraise long-term projects. NPV is an indicator of how much value an
investment or project adds to the capital invested. In principle, a project is accepted if the NPV is
non-negative. Accordingly, the net present value of the project at 18% discount rate is found to
be Birr 47.9illion which is acceptable. For discounted rate at 25% the NPV is 24.5 million. For
detail discounted cash flow see Appendix 7.A.5.
8. ECONOMIC AND SOCIAL BENEFITS
The envisaged project possesses wide range of benefits where it promotes the socio-economic
goals and objectives stated in the strategic plan of the Oromia National Regional State. These
benefits are listed as follows
8.1. Profit Generation

The project is found to be financially viable and earns Birr 224.9 million within the project life.
Such result induces the project promoters to reinvest the profit which, therefore, increases the
investment magnitude in the region.
8.2. Tax Revenue
In the project life under consideration, the region will collect about Birr 71 million from
corporate tax payment alone. Such result create additional fund for the regional government that
will be used in expanding social and other basic services in the region
8.3. Import Substitution and Foreign Exchange Saving
Based on the projected figure we learn that in the project life an estimated amount of 27.3
million us dollar will be saved as a result of the proposed project which is the purchased cost of
the products. This will create room for the saved hard currency to be allocated on other vital and
strategic sectors
8.4. Employment and Income Generation
The proposed project is expected to create 77 jobs. This is one of the commendable
accomplishments of the project.
8.5. Diversification and Inter Sectoral linkage.
The proposed project helps to diversify ONRS’ and Ethiopian economy. It contributes to
industrialization of the ONRS as well as the country as a whole. It also has a potential to
strengthen the linkage between the manufacturing and the trade sub-sectors.


9. Appendix
FINANCIAL ANALYSES SUPPORTING TABLES

Project proposal for Calcium carbide and Acetylene gas production plant Establishment 2022
KTKM
Annex 1: Total Net Working Capital Requirements (in Birr)
Construction Production
year 0 year 1 1 2 3 4
Capacity Utilization (%) - 0 70% 90% 100% 100%
Current Assets - - 10,253,618 11,535,321 12,817,023 12,817,023
1. Total Inventory - - 5,813,618 6,540,321 7,267,023 7,267,023
a. Raw Materials in Stock - - 2,948,640 3,317,220 3,685,800 3,685,800
1. Raw Material-Local - - 2,148,640 2,417,220 2,685,800 2,685,800
2. Raw Material-Foreign - - 800,000 900,000 1,000,000 1,000,000
b. Factory Supplies in Stock - - - - - -
c. Spare Parts in Stock and Maintenance - - 255,863 287,846 319,829 319,829
d. Work in Process - - 154,089 173,350 192,611 192,611
e. Finished Products - - 2,455,026 2,761,904 3,068,783 3,068,783
2. Accounts Receivable - - 2,220,000 2,497,500 2,775,000 2,775,000
3. Cash in Hand - - 2,220,000 2,497,500 2,775,000 2,775,000
Current Liabilities - - 7,030,125 7,285,281 8,193,078 8,193,078
1. Accounts Payable - - 266,667 300,000 333,333 333,333
2. Loan Repayment - - 1,341,375 1,341,375 1,341,375 1,341,375
3. Interest - - 702,352 702,352 702,352 702,352
4. Coorporate Tax - - - - 702,352 702,352
5. salary and wadge - - 979,200 1,101,600 1,224,000 1,224,000
6, land lease value - - 3,392,550 3,392,550 3,392,550 3,392,550
7. utilities - - 347,982 447,405 497,117 497,117
Total net working capital - - 3,223,494 4,250,039 4,623,945 4,623,945
Increase in working capital - - 3,223,494 1,026,546 373,906 -

KTKM
Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
Production
5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%
Current Assets 12,817,023 12,817,023 12,817,023 12,817,023 12,817,023 12,817,023
1. Total Inventory 7,267,023 7,267,023 7,267,023 7,267,023 7,267,023 7,267,023
Raw Materials in Stock-Total 3,685,800 3,685,800 3,685,800 3,685,800 3,685,800 3,685,800
Raw Material-Local 2,685,800 2,685,800 2,685,800 2,685,800 2,685,800 2,685,800
Raw Material-Foreign 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Factory Supplies in Stock 0 0 0 0 0 0
Spare Parts in Stock and Maintenance 319,829 319,829 319,829 319,829 319,829 319,829
Work in Progress 192,611 192,611 192,611 192,611 192,611 192,611
Finished Products 3,068,783 3,068,783 3,068,783 3,068,783 3,068,783 3,068,783
2. Accounts Receivable 2,775,000 2,775,000 2,775,000 2,775,000 2,775,000 2,775,000
3. Cash in Hand 2,775,000 2,775,000 2,775,000 2,775,000 2,775,000 2,775,000
Current Liabilities 8,193,078 8,193,078 8,193,078 8,193,078 8,193,078 8,193,078
Accounts Payable 333,333 333,333 333,333 333,333 333,333 333,333
Loan Repayment 1,341,375 1,341,375 1,341,375 1,341,375 1,341,375 1,341,375
Interest 702,352 702,352 702,352 702,352 702,352 702,352
Coorporate Tax 702,352 702,352 702,352 702,352 702,352 702,352
5. salary and wadge 1,224,000 1,224,000 1,224,000 1,224,000 1,224,000 1,224,000
6, land lease value 3,392,550 3,392,550 3,392,550 3,392,550 3,392,550 3,392,550
7. utilities 497,117 497,117 497,117 497,117 497,117 497,117
Total net working capital 4,623,945 4,623,945 4,623,945 4,623,945 4,623,945 4,623,945
Increase in working capital 0 0 0 0 0 0

KTKM
Annex 2: Cash Flow Statement (in Birr)

Year 0 Year 1 1(70%) 2(90%) 3(100%) 4(100%)
Total cash in flow - 80,482,493 86,040,000 102,172,500 107,550,000 107,550,000
1. Inflow Funds - 80,482,493 - - - -
Total Equity - 22,262,493 - - -
Total Long Term Loan - 58,220,000 - - -
Total Short Term Finances - - - - -
2. Inflow Operation - - 117,448,800 132,129,900 146,811,000 146,811,000
Sales Revenue - - 117,448,800 132,129,900 146,811,000 146,811,000
Interest on Securities - - - - -
3. Other Income - - - - -
Total cash out flow - 80,482,493 77,781,522 77,811,434 95,367,364 94,085,662
4. Increase In Fixed Assets - 77,259,000 - - - -
Fixed Investments 76,759,000 - - -
Pre-production Expenditures 500,000 - - -
5. Increase in Current Assets - 3,223,493 7,030,125 1,281,702 1,281,702 -
6. Operating Costs - - 46,226,680 52,005,015 57,783,350 57,783,350
7. Corporate Tax Paid - - - - 11,777,595 11,777,595
8. Interest Paid - - 8,428,218 8,428,218 8,428,218 8,428,218
9. Loan Repayments - - 16,096,499 16,096,499 16,096,499 16,096,499
10.Dividends Paid - - - - - -
Surplus(Deficit) - - 8,258,478 24,361,066 12,182,636 13,464,338
Cumulative Cash Balance - - 8,258,478 32,619,543 44,802,179 58,266,517

KTKM
Annex 2: Cash Flow Statement (in Birr): (Continued)

Production
5 6 7 8 9 10
Total cash in flow ############ 107,550,000.00 107,550,000.00 107,550,000.00 107,550,000.00 -
1. Inflow Funds - - - - - -
Total Equity - - - - - -
Total Long Term Loan - - - - - -
Total Short Term Finances - - - - - -
2. Inflow Operation 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000
Sales Revenue 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000
Interest on Securities - - - - - -
3. Other Income - - - - - -
Total cash out flow 94,085,662 94,085,662 94,085,662 94,085,662 94,085,662 94,085,662
4. Increase In Fixed Assets - - - - - -
Fixed Investments - - - - - -
Pre-production Expenditures - - - - - -
5. Increase in Current Assets - - - - - -
6. Operating Costs 57,783,350 57,783,350 57,783,350 57,783,350 57,783,350 57,783,350
7. Corporate Tax Paid 11,777,595 11,777,595 11,777,595 11,777,595 11,777,595 11,777,595
8. Interest Paid 8,428,218 - - - -
9. Loan Repayments 16,096,499 - - - -
10.Dividends Paid - - - - - -
Surplus(Deficit) 13,464,338 13,464,338 13,464,338 13,464,338 13,464,338 13,464,338
Cumulative Cash Balance 71,730,855 85,195,193 98,659,531 112,123,869 125,588,207 139,052,545

KTKM
Annex 3: Discounted cash Flow - Capital Invested

Year 0 Year 1 1 2 3 4
Total cash in flow 0 0 86,040,000 102,172,500 107,550,000 107,550,000
1. Inflow Operation 0 0 117,448,800 132,129,900 146,811,000 146,811,000
Sales Revenue 0 0 117,448,800 132,129,900 146,811,000 146,811,000
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
Total cash out flow 0 80,482,493 68,536,186 67,410,431 83,810,694 82,528,992
3. Increase in Fixed Assets 0 77,259,000 0 0 0 0
Fixed Investments 0 76,759,000 0 0 0 0
Pre-production Expenditures 0 500,000 0 0 0 0
4. Increase in Net Working Capital 0 3,223,493 7,030,125 1,281,702 1,281,702 0
5. Operating Costs 0 0 36,981,344 41,604,012 46,226,680 46,226,680
6. Corporate Tax Paid 0 0 0 0 11,777,595 11,777,595
7. Interest Paid 8,428,218 8,428,218 8,428,218 8,428,218
8. Loan Repayment 16,096,499 16,096,499 16,096,499 16,096,499
Net cash flow 0 (80,482,493) 17,503,814 34,762,069 23,739,306 25,021,008
Comulative net cash flow 0 (80,482,493) (62,978,679) (28,216,611) (4,477,305) 20,543,703
Present Value (at 18%) 0
Net Present Value (at 18%) 0 24,515,888

KTKM
Annex 3: Discounted cash Flow - Capital Invested (Continued)
Production
5 6 7 8 9 10
Total cash in flow 107,550,000 107,550,000 107,550,000 107,550,000 107,550,000 107,550,000
1. Inflow Operation 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000
Sales Revenue 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
Total cash out flow 82,528,992 82,528,992 82,528,992 82,528,992 82,528,992 82,528,992
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 46,226,680 46,226,680 46,226,680 46,226,680 46,226,680 46,226,680
6. Corporate Tax Paid 11,777,595 11,777,595 11,777,595 11,777,595 11,777,595 11,777,595
7. Interest Paid 8,428,218 8,428,218 8,428,218 8,428,218 8,428,218 8,428,218
8. Loan Repayment 16,096,499 16,096,499 16,096,499 16,096,499 16,096,499 16,096,499
Net cash flow 25,021,008 25,021,008 25,021,008 25,021,008 25,021,008 25,021,008
Comulative net cash flow 45,564,711 70,585,719 95,606,727 120,627,735 145,648,743 170,669,751
Present Value (at 18%) -
Net Present Value (at 18%) 47,905,866 47,905,866 47,905,866 47,905,866 47,905,866 24,515,888
Internal Rate of Return 37%

KTKM
Annex 4: Net Income Statement

year 1 year2 1 2 3 4
Capacity Utilization (%) 70% 90% 100% 100%
1. Total Income 86,040,000 96,795,000 107,550,000 107,550,000
Sales Revenue 117,448,800 132,129,900 146,811,000 146,811,000
Other Income - - - -
2. Less Variable Cost 36,826,360 41,429,655 46,032,950 46,032,950
variable margin 49,213,640 55,365,345 61,517,050 61,517,050
(In % of Total Income) 43% 43% 43% 43%
3. Less Fixed Costs 22,258,400 22,258,400 22,258,400 22,258,400
operational margin 63,781,600 74,536,600 85,291,600 85,291,600
(In % of Total Income) 26% 23% 21% 21%
4. Less Cost of Finance 8,428,218 8,428,218 8,428,218 8,428,218
5. Gross profit 26,955,240 33,106,945 39,258,650 39,258,650
6. Income (Corporate) Tax - 11,777,595 11,777,595
7. Net profit 26,955,240 33,106,945 27,481,055 27,481,055
Ratios (%)
Gross Profit/Sales 23% 25% 27% 27%
Net Profit After Tax/Sales 23% 25% 19% 19%
Return on Investment 27% 27% 27% 27%
Return on Equity 121% 149% 123% 123%
SRR 45%
break even 51%

KTKM
Annex 4: Net Income Statment :Continued

Production
5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100% 100%
1. Total Income 107,550,000 107,550,000 107,550,000 107,550,000 107,550,000 107,550,000
Sales Revenue 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000 146,811,000
Other Income 0 0 0 0 0 0
2. Less Variable Cost 46,032,950 46,032,950 46,032,950 46,032,950 46,032,950 46,032,950
variable margin 61,517,050 61,517,050 61,517,050 61,517,050 61,517,050 61,517,050
(In % of Total Income) 0 0 0 0 0 0
3. Less Fixed Costs 22,258,400 22,258,400 22,258,400 22,258,400 22,258,400 22,258,400
operational margin 85,291,600 85,291,600 85,291,600 85,291,600 85,291,600 85,291,600
(In % of Total Income) 0 0 0 0 0 0
4. Less Cost of Finance 8,428,218 8,428,218 8,428,218 8,428,218 8,428,218 8,428,218
5. Gross profit 39,258,650 39,258,650 39,258,650 39,258,650 39,258,650 39,258,650
6. Income (Corporate) Tax 11,777,595 11,777,595 11,777,595 11,777,595 11,777,595 11,777,595
7. Net profit 27,481,055 27,481,055 27,481,055 27,481,055 27,481,055 27,481,055
Ratios (%)
Gross Profit/Sales 27% 27% 27% 27% 27% 27%
Net Profit After Tax/Sales 19% 19% 19% 19% 19% 19%
Return on Investment 27% 27% 27% 27% 27% 27%
Return on Equity 123% 123% 123% 123% 123% 123%

KTKM
annex 5: Projected Balance Sheet (in Birr)
Year 1 Year 2 1 2 3 4
Total assets - 77,259,000 105,776,999 116,506,126 127,235,253 132,445,709
1. Total Current Assets - - 28,517,999 39,247,126 49,976,253 55,186,709
Inventory on Materials and Supplies - - 245,720 276,435 307,150 307,150
Work in Progress - - 427,087 597,921 768,756 854,173
Finished Products in Stock - - 12,812,596 17,937,635 23,062,673 25,625,193
Accounts Receivable - - 12,812,596 17,937,635 23,062,673 25,625,193
Cash in Hand - - 2,220,000 2,497,500 2,775,000 2,775,000
Cash Surplus, Finance Available - - - - - -
Securities - - - - - -
2. Total Fixed Assets, Net of Depreciation - 77,259,000 77,259,000 77,259,000 77,259,000 77,259,000
Fixed Investment - 76,759,000 - - - -
Pre-Production Expenditure - 500,000 - - - -
Less Accumulated Depreciation - - 10,508,000 10,508,000 10,508,000 10,508,000
3. Accumulated Losses Brought Forward - - - - - -
4. Loss in Current Year - - - - - -
Total liabilities - - 6,859,006 8,785,117 10,711,229 11,674,285
5. Total Current Liabilities - - 5,517,631 7,443,742 9,369,854 10,332,910
Accounts Payable - - 4,815,279 6,741,391 8,667,503 9,630,558
Bank Overdraft - - 702,352 702,352 702,352 702,352
6. Total Long-term Debt - - 1,341,375 1,341,375 1,341,375 1,341,375
7. Total Equity Capital - 77,259,000 98,917,994 107,721,009 116,524,024 120,771,424
8. Reserves, Retained Profits Brought Forward - 386,295 494,590 538,605 582,620 603,857
9.Net Profit After Tax - - 26,955,240 33,106,945 27,481,055 27,481,055
Dividends Payable -
Retained Profits - - 26,955,240 33,106,945 27,481,055 27,481,055

KTKM
Annex 5: Projected Balance Sheet (in Birr): Continued
Production
5 6 7 8 9 10
Total assets 132,445,709 132,445,709 132,445,709 132,445,709 132,445,709 132,445,709
1. Total Current Assets 55,186,709 55,186,709 55,186,709 55,186,709 55,186,709 55,186,709
Inventory on Materials and Supplies 307,150 307,150 307,150 307,150 307,150 307,150
Work in Progress 854,173 854,173 854,173 854,173 854,173 854,173
Finished Products in Stock 25,625,193 25,625,193 25,625,193 25,625,193 25,625,193 25,625,193
Accounts Receivable 25,625,193 25,625,193 25,625,193 25,625,193 25,625,193 25,625,193
Cash in Hand 2,775,000 2,775,000 2,775,000 2,775,000 2,775,000 2,775,000
Cash Surplus, Finance Available 0 0 0 0 0 0
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 77,259,000 77,259,000 77,259,000 77,259,000 77,259,000 77,259,000
Fixed Investment 0 0 0 0 0 0
Pre-Production Expenditure 0 0 0 0 0 0
Less Accumulated Depreciation 10,508,000 10,508,000 10,508,000 10,508,000 10,508,000 10,508,000
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
Total liabilities 11,674,285 11,674,285 11,674,285 11,674,285 11,674,285 11,674,285
5. Total Current Liabilities 10,332,910 10,332,910 10,332,910 10,332,910 10,332,910 10,332,910
Accounts Payable 9,630,558 9,630,558 9,630,558 9,630,558 9,630,558 9,630,558
Bank Overdraft 702,352 702,352 702,352 702,352 702,352 702,352
6. Total Long-term Debt 1,341,375 1,341,375 1,341,375 1,341,375 1,341,375 1,341,375
7. Total Equity Capital 120,771,424 120,771,424 120,771,424 120,771,424 120,771,424 120,771,424
8. Reserves, Retained Profits Brought Forward 603,857 603,857 603,857 603,857 603,857 603,857
9.Net Profit After Tax 27,481,055 27,481,055 27,481,055 27,481,055 27,481,055 27,481,055
Dividends Payable 0 0 0 0 0 0
Retained Profits 27,481,055 27,481,055 27,481,055 27,481,055 27,481,055 27,481,055

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Project proposal for Calcium carbide Acetylene gas production plant 2022

By KTKM gps system and trading plc 1

By KTKM gps system and trading plc 2

1. Project Name Calcium. Carbide and acetylene gas production plant

KTKM GPS Systems and Trading PLCPage 1 of 29

2. PRODUCT DESCRIPTION AND APPLICATION

KTKM GPS Systems and Trading PLCPage 2 of 29

3. MARKET STUDY AND PLANT CAPACITY

3.1. MARKET STUDY

3.1.1. Past Supply and Present Demand

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Source: - Ethiopian Revenues and Customs Authority.

3.1.2. Demand Projection

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Table 3.2Projected demand for calcium carbide (tons)

3.1.3. Pricing and Distribution

3.2. PLANT CAPACITY AND PRODUCTION PROGRAM

3.2.1. Plant Capacity

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Table 3.3 Production program of the envisaged calcium carbide plant

Production Year Continued

4. MATERIALS AND INPUTS

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Total 32,229,600 4,000,000 36,229,600

Table 4.2 Annual utilities requirement& cost

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5. TECHNOLOGY AND ENGINEERING

5.1.1. Production Process

5.1.2. Environmental Impact Assessment

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5.2.1. Machinery and Equipment

Table 5.1 List of machinery & equipment

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6. HUMAN RESOURCE AND TRAINING REQUIREMENT

6.1. HUMAN RESOURCE REQUIREMENT

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7.1. UNDERLYING ASSUMPTION

Construction period 1 year

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Discount for cash flow 18%

C. Working Capital (Minimum Days of Coverage)

7.2. TOTAL INITIAL INVESTMENT COST

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7.3. PRODUCTION COST

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Total Production Cost at full Capacity

7.4. FINANCIAL EVALUATION

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7.4.3. Break-even Analysis

Break -Even Capacity utilization = 51%

7.4.4. Pay-back Period

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7.4.5. Internal Rate of Return

7.4.6. Net Present Value

8. ECONOMIC AND SOCIAL BENEFITS

8.1. Profit Generation

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