FOOD COMPLEX Tegene Adama

Project Proposal for Food Complex 2020
PROJECT PROPOSAL
FOR
FOOD COMPLEX FACTORY

(Wheat, Pasta, Macaroni, Biscuit, Gum ,Candy and
Other Related)
PROJECT TO BE IMPLEMENTED IN OROMIA REGIONAL STATE,
EAST SHOA ZONE, ADAMA WOREDA
PROMOTER: TEKLE MAMO DEME
Aug, 2021
Addis Ababa, Ethiopia
Promoter: -Tekle Mamo Deme Page 1

Table of contents
I. Executive Summary
1. Introduction
1.1 Background …………………………………….…………………………….……….5
1.2 Objectives of the product ……………………………………………..…...…………..7
1.3 The project Description and Application ……………….…...……….……………….7
1.4 Location Map of the Area …………………………….……………………..
………....8
2. General Market Study and Plant Capacity
2.1 Past Supply and Present Demand…………………………………………….………..9
2.2 Project Demand ………………………………………………..……………………..11
2.3 Pricing and Distribution …………………………………………….…………….…12
2.4 Plant Capacity and Production Programmed ……………………………..………..12
2.5 Material and Inputs…………………………………………………………………..13
2.6 Land requirement and land use plan……………………………………..…….....…13
2.7 Technology and Engineering…………………………..……………………….....….15
3. Organization Structure, Management and Manpower
3.1 Man power Requirement ………………………………………………...............…..16
3.2 Organizational Structure……………………………………………………...…..….17
3.3 Organizational Management duties and Responsibilities……………………....…....18
4. Financial Requirement and Analysis
4.1. Total Initial Investment Cost………………………………………………………...20
4.1.1. Fixed Investment …………………………………………………………….……24

4.1.2. Initial Working Capital……………………………………………………………23
4.2. Financial Analysis and Statements ………………………………………..………...23
4.2.1. Underlying
Assumption………………………..........................................................23
4.2.2. Source of Fund ………………………………………………………………….....24
4.2.3. Loan Repayment Schedule
…………………………………………………….......24
4.2.4. Annual depreciation schedule of the fixed asset ( birr)…………………..............25
4.2.5. Balance Sheet (Beginning)………………………………………………….……..25
4.2.6. Net working Capital………………………………………………………….........26

4.2.7. Income/Loss ………………………………………………………….....................27

4.2.8. Cash Flow
Analysis………………………………………………………………...28
4.2.9. Profitability……………………………………………………...……..…………..29
4.2.10. Pay-Back Period……………………………………………………….…………...30
5. Environmental Impact of the project
5.1 Socio Economics Environments …………………………………………………….…...….31

5.2 Environmental Impact Assessment of the Project …………………………………...……...31

I. EXECUTIVE SUMMARY
1 Project Type Food Complex Industry
1.1. Status News
1.2. Sector Manufacturing ( Different Food complex)
2 Project Owner Tekle Mamo Deme
3 Nationality Ethiopian
4 Project Location Oromia Region,

East Zone,
Adama Woreda
5 Project Accommodation  Wheat Flour
 Bread Improver
 Pasta
 Macaroni
 Biscuit
 Starch
 Different Related to Food Processing
6 Premises Required 10,000 M2 or 1 Hek.
7 Total Capital  The total of birr 76, 000,000 is required.

 From this 30% (birr 22,800,000.00) will be covered by the

promoter of the project,
 While the rest 70% (birr 53,200,000.00) `will be covered by
bank loan.
 Loan Repayment Period:- 5 years
 Interest Rate:- 9-12 %
8 Employment The total manpower requirement for the plant will be 230 employees
Opportunity at full capacity.
 Permanent Workers 100

 Skilled 50
 Unskilled 50
 Temporary Worker 130
 Skilled 100
 Unskilled 30
9 Benefits of the factory Produce and supply different Food Complex Source of revenue,
for the region/ country create employment opportunity, save foreign currency, benefit for the
local community, stimulate the local economy and transfer
technology

1. INTRODUCTION
The agriculture sector dominates the overall economic activities of the country. Since the launch
of the new market-oriented economic policy of the existing government, Ethiopia is showing
significant progress in all economic sectors. The sector is appreciated for its dominant role in the
country’s foreign exchange earning, employment creation and gross national product. Besides,
the agricultural sector supplies the industry sector with the required raw materials and also
creates markets for the out put of the latter. However, the sector remained back ward and as a
result, has negatively affected the over all performance of the economy of the country.
So to introduction yeast and how to used in baking bread, like that of agriculture remained
backward and had been characterized by poor performance. This reached its worst position
especially during the past regime because of the ill-advised economic policy of the government
used to follow. But together with the coming to power of the present government after the
overthrow of the dergue regime, the situation started changing in favor of the country’s
economy. Consequently, the overall performance of the economy has been improving and has
resulted in the economic development that has been achieved with in past few years.
There are various reasons behind this. Above all, the government after it has seized the power
had shown its keen interest and dedication to exert all necessary efforts towards the development
of the economy. This was clearly indicated in the economic policy issued during the transitional
period. Besides, various investment codes were issued following the issuance of the new
economic policy.

Currently, in order to encourage private investment and to attract capital technology and know-
how to the country comprehensive packages of incentives are granted to investor by the
investment proclamation.
1.1 Background
To introduction to yeast its instant yeast can be known by several different names these include
 Wheat Flour, pasta, macaroni, biscuit ,

 Quick rise yeast , rapid rise yeast,
 Fast rising yeast or bread machine yeast
 The instant type of yeast will have a quicker raising time for the dough
 Instant yeast has a much faster raising time
 Than the dry yeast known as active dry yeast and fresh yeast
The new economic policy of our country guarantees investors in the various areas of investment
incentive for investors legislated by federal and regional governments further flourished the
environment and attracted a number of local and foreign investors. As the country is part of the
world, its liberal economic policy paves market oriented economic system. The country in its
investment policy opens the door for investors in various sectors. The government has
recognized the participation of private sectors in all possible and feasible investment fields which
in effect could play vital role in satisfying the growing demand in the respective sector. Because
of the fact that the economic policy of Ethiopia is became one of the attracting nations for
investment. To this end, there is increasing private sector participation in all sectors including
manufacturing, industry, agro industry and service delivery etc. Next to agriculture, the industry
sector has a contribution of about 15% to GDP of the economy.

Hence it is accumulative experience which entities him to Food Complex in newly grow thing
Adama Woreda. Adama is a Woreda in central Ethiopia. Located in the East Zone of the Oromia
Region, this Woreda has a latitude and longitude of 8°55′N 38°37′E and an elevation of 2,356
meters (7,730 feet) above sea level. The oromia investment commission has been exporting it is
maximum effort to expand investment opportunities in the region so has to faster the
development of the region and sub during the city being enemy that is the trap of poverty.
Therefore aside with the government duties and responsibility visited on it.
1.2 Objectives of the Project

The main objective of the project is to satisfy the growing demand of highly Food Complex by
supplying quality product type. More specifically the project is intended to:-
 To establish
 Wheat Flour, Pasta, Macaroni, Biscuit
 Yeast ,Bread Improver ,Shanty Cream, Snacks Nuts ,Super ghetto, Starch and
 Other related products
Different Related to Food Processing, factory for local and foreign to meet the increasing
demand for these type of output, production, preparation & supply of quality product services at
fair and competitive price and also important as a source of revenue for the promoter through
domestic and foreign market in which a reasonable amount of profit could be realized.
In addition to this the overall objective of the project under consideration is to contribute to the
development process in the country by taking part in the manufacturing sector.
1.3 The Product Description and Application
Food Complex, is many raw materials used wheat flour and others Yeast Bread, Improver Shanty
Cream, Cereal, Snacks Nuts, Starch, candy, chocolate & confectionary is processed based on a
sweetener, which may be sugar or honey, to which other ingredients are added, such as flavors &
spices, nuts, fruits, vegetable fats and oils, gelatin, emulsifiers, colorings, egg, milk products,
chocolate or cacao to produce different kinds of fruit, vegetable and other related products. The
treatments of these ingredients with different heat levels determine the types of products. This is

based on the fact that when sugar is boiled, it goes through different stages from soft to hard in
crystallization process.
The steps in yeast bread production is :- benching allow the dough to rest before shaping -
makeup and panning- proofing-baking-cooling-storing and etc
1.4 Location Map of the Area.
The project under study is planned to be located in Oromia National Regional State, East shoa
zone, at Adama on the east part of the country. The Woreda is located at about 130 KMs away
from the capital of the country/Addis Ababa. The total land required for the project is about M2
10,000.

Infrastructure of the area is well developed (Road, Electric power, at the area and banking,
insurance, health facilities, education, etc at the Woreda of Adama ). Some of the reasons behind
selecting the area are:-
 Proximity to the major potential market for the out put

 Availability of relatively raw material and infrastructure facilities such as
 Transportation networks which connect it to Addis Ababa and all the regional parts of the
country.
 Public utilities such as electricity, telecommunication, services, financial institutions, and
other social infrastructures such as schools, hotel, health centers and the like.
 Availability of skilled and semi-skilled man power,
 Prospective of future development.
1.5. Brief History of the Promoter

 The Promoter is many experience on food complex and different business actives Mr.
AMSAL TADESE HUNDE planned the new of buildings, installed machineries, other
requirements and the project is operational, of Wheat Flour, Macaroni, Pasta, Biscuit and
Others related Factory and supplying to the local market and created job opportunity for the
local peoples. The financial performance of the factory was viable.

2. GENERAL MARKET STUDY AND PLANT CAPACITY

A. MARKET STUDY
2. 1. Past Supply and Present Demand
In Ethiopia, the rural population used to consume flour made from cereals by traditional means at
home. Grain mills, however, are expanding deep into rural areas reducing labour and time for
women, replacing home-made flour consumption of industrially processed flour, however, is still
insignificant in rural Ethiopia.
Urban dwellers, on the other hand, consume more and more flour produced by flour mills thus
shifting to manufactured flour. Urban house-holds also consume food items like bread, biscuits
and cakes prepared at home or in bakeries and pastries from industrially processed flour.
The demand for wheat flour is met through both local production and imports. The apparent
consumption of flour, comprising both domestic production and Biscuits are very popular food
items. They are pleasant in taste and do not require cocking and hence ready to be served. The
local demand for biscuits is met both by domestic production and imports.

2.1.1. Objective of the Project
The main objective of this factory is to manufacture, cost effective, market oriented, client based
and quality Wheat Flour, Macaroni, Pasta, Biscuit and Others related for local market.
2.1.2. 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:
2.1.3. 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, payroll tax and VAT are collected from undertaking business activities. Therefore, the
project will serve as sources of revenue for both the region and nation as a whole.
2.1.4. 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 project will hire 230 (100 permanent and 130 on temporarily basis)
citizens.
2.1.5. Save/Generate the Country Foreign Exchange
All types of the envisioned products (Produced by the project) are mostly imported from abroad.
By producing in Ethiopia, the factory will save the foreign currency of the nation.
By minimizing the market demand and supply gab for these products, the factory will help to
reduce the nation’s foreign exchange cost to import these products. This will save the foreign
exchange resource of the nation.
2.1.6. Benefit For The Local Community

As a corporate responsibility the promoter will engage in different development activities on the
surrounding areas. This will better worse the community and contribute for the development of
the nation.
2.1.7. Stimulate The Local Economy
This factory has positive externality in the country that will encourage the economic movement
of local economy. There will be economic relationship and transactions among different factors.

2. TECHNOLOGY AND ENGINEERING

A. TECHNOLOGY
1. Production Process
The production process of wheat flour consists of four major operations:-

• Wheat Intake and Pre-Cleaning,
• Wheat Cleaning and preparation,
• Milling, and Packing and Dispatching.
Wheat Intake and Pre-cleaning:- The major unit operations are dumping, conveying, weighing,
pre-cleaning and conveying to storage silos or transferring to the working bins of the cleaning
room.
Wheat Cleaning and Preparation: - The main unit operations involved are weighing,
screening, destining, impurity separation, ferromagnetic separation, scouring, aspiration,
dampening, tempering and ventilating.
Milling: - Major operations involved are weighing, breaking open, scalping, scratching,
detaching, sifting, purifying, milling (grounding), resifting and entoleting.
Packing and Dispatching: - The major operations involved are collection of flour streams and
bran, mixing and aerating, resifting, entoleting, packing, sewing, loading and dispatching. The
process does not release any pollutant to the environment.
2. Machinery and Equipment

The major plant machinery and equipment required for the envisaged plant comprise mixers,
laminator, cutting machine, moulding machine, baking oven, conveyors, etc. The plant
machinery and equipment required and their estimated costs are given
3. Economic activity of Area

Most of the residents of the Country earn its living means from business activity, even though
the number of civil servants can’t be under mined. The location of the Woreda on a get way to
many zonal Woredas facilitated by types, quantity of transactions being under taken, & different
types of private industries are allocated in the Woreda. Bars, restaurants, hotels, pastry,
recreation centers and Industrialization area are flourishing as well as response to demand from
the business community. This is further facilitated by the number of daily arrivals from different
enroot to Addis Ababa.
2.2.2. Land Use Plan
The Promoter acquired a total of 10,000 M2 areas of land the promoter had been using the land
and planned to use it as indicated in table below.
Table: Land Use Plan for Wheat Flour, Biscuit, Pasta and related product Factory
SN Description Land Requirement (M2)

1 Production Hall 5,000
2 Office Building 1,500
3 Guard house 500
4 Toilet and shower room 500
5 Warehouse 500
6 Raw material Store 500
8 End product Store 500
9 Show room 500
10 Parking and others 500
Total 10,000 m2
2.2.3. Pricing and Distribution

The current price of flour at Addis Ababa is Birr 385 per quintal. For this project, an ex-Factory
price of Birr 370 per quintal is proposed. Flour is an industrial as well as a consumer product.
Bakeries and pastries could be supplied directly at factory gate or through intermediaries.

Households could be supplied through retailers as well as with distribution centers to be

established by the new project itself. The prices of most biscuit brands are within reach of
ordinary people’s budget. Biscuits are, therefore, in demand in both urban and rural areas of the
country. There are also many convenient outlets for biscuits including neighborhood and village
shops. The general situation in the market for biscuits is going towards full-fledged competition
through brand development, range of products offered, delivery, advertisements and packaging.
The price of biscuits varies with the brands and their contents and packaging are also different.
The average price some of the most popular brands is Birr 4/100 gm. On the basis of this price
level and taking in to account a margin of 25% for wholesalers and distributors, the
recommended ex-factory price for the new project is Birr 3.20/100gm.
2.3. PLANT CAPACITY AND PRODUCTION PROGRAMME
2.3.1 Plant Capacity
According to the market study, the unsatisfied demand of wheat flour in the year 2008 will be
65,445 tones, whereas this demand will grow to 384,611 tons by the year 2020. Taking only
about 50% of the demand of the year 2008, the envisaged plant will have an annual capacity of
processing 41,000 tones pure wheat and produce 31,160 tons of wheat flour and 9,840 tones of
bran. The plant will operate 3 shifts of 24 hours a day, and for 300 days a year.
Based on the outcome of market study and considering the minimum economic scale of
production, the envisaged plant will have production capacity of 1,500 tons of hard biscuits per
annum. This capacity is proposed on the basis of a single shift of 8 hours per day and 320
working days per annum
2.3.2. Production Programmed

The plant will start operation at 75% of its installed capacity during the first year, and will
increase production to 85% in the second year, and then to 100% in the third year and then after.
Year 1 2 3-10
Capacity utilization (%) 75 85 100
Production Flour 23,370 26,486 31,160

(tonnes) Bran 7,380 8,364 9,840
(tonnes) Biscuit 1,125 1,275 1,500
(tonnes) Macaroni 1,125 1,275 1,500
(tonnes) Pasta 1,125 1,275 1,500
% Capacity utilization rate 75 85 100
2.3.3 MATERIALS AND INPUTS

A. RAW MATERIALS
Various types of biscuits do exist depending on the ingredients used and manufacturing process
employed. The envisaged plant will produce hard biscuit. The raw materials required for
production of hard biscuit comprise wheat flour, sugar, shortenings, salt, Sal volatile, sweet jelly,
glucose, and starch. The major raw materials like wheat flour and sugar can be obtained locally
from flour mills and sugar factories while the remaining 8 raw materials will be imported.
Annual requirement for raw materials at full production capacity of the envisaged plant and the
estimated costs are given
The principal raw material for flour production is wheat grain. Flour for baking bread is
produced from hard wheat or a blend of hard and soft wheat, while flour for cakes and biscuits is
milled from soft wheat. Wheat can be available in different part of the region. The impurity rate
for local wheat should not exceed 8%.
B. 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, Paved Road
Transportation, Drainage Facility.

3. MANPOWER, OGANIZATION STRUCTURE AND MANAGEMENT
3.1 Man Power
At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the plant. It is always true that Organization and Management
of the project plays a key role and bear direct impact on the success and profitability of the
project. 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.
Therefore, it must particularly to the project under consideration, to give especial affection to
select and recruit the appropriate total manpower requirement for the plant will be employees at
full capacity.
I) Permanent Workers :- 100

 Skilled :-50
 Unskilled:-50
II) Temporary Workers:-130
 Skilled :-100
 Unskilled:-30

1.1.2. Salary Expense
The total number of manpower, manpower list, qualification, and salary and sex composition are
listed in the table below.
S Monthly
N Description No Qualification Salary Annual Salary
1 General Manager 1 BA in Business Management 10,000.0 120,000.00
0
2 Production Manager 1 BSC in industrial Engineering 5,000.00 60,000.00
3 Supervisor 1 BSC in Production 4,000.00 48,000.00
Technology
4 Secretary 1 Diploma In Secretarial 2,000.00 24,000.00
Science
5 Public Relation 1 Dip in Social Science 4,000.00 48,000.00
Officer
6 Personnel 1 Dip in HRM 4,000.00 48,000.00
7 Planning Officer 1 Dip in Economics/Statistics 4,000.00 48,000.00
8 General service 1 Dip in management 5,000.00 60,000.00
9 Color Operator 1 Diploma in Chemical 4,000.00 48,000.00
Engineer
10 Hydraulic 1 10+2 in general Mechanic 5,000.00 60,000.00
Technician
11 Machine Operators 4 10+2 in general Mechanic 5,000.00 240,000.00
12 Marketing head 1 BA in Marketing management 5,000.00 60,000.00
13 Purchaser 1 Diploma in Purch. & Suppli 5,000.00 60,000.00
mgt
14 Administer 1 Dip in Management 5,000.00 60,000.00
15 Sales person 3 Diploma in sales management 5,000.00 180,000.00
16 Finance head 1 Dip in Accounting 5,000.00 60,000.00
17 Accountant 1 Diploma in Accounting 5,000.00 60,000.00
18 Electrician 1 10+2 in general electricity 5,000.00 60,000.00

19 Cashier 1 10+2 in bookkeeping 3,000.00 36,000.00

20 Cleaner 4 Unskilled 3,000.00 144,000.00
21 Driver 2 10 completed 3,000.00 72,000.00
22 Gardner 2 Unskilled 2,500.00 60,000.00
23 Guards/Security 4 Basics 2,000.00 96,000.00
24 Helpers and laborers 194 10 completed 1,395.00 3,247,560.00
Grand Total 230 4,999,560.00
3.2. Organizational Structure
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 manager with the
responsibility of supervising the overall activity of the plant. Depending up on the nature of the
center and the amount of work to be performs; there exist auxiliary units under the general
manager.
Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by the owners.
Owner
General Manager
Executive
Secretary
Production
Department Admin & Finance Commercial
Department Department

Pre- Packing
treatment
Admin. & Financial
Inspection HRM
Marketing Sales
Fig: Organizational Structure
Hence the following section deals with the duties and responsibilities of some departments.
3.3. Organizational Management Duties and responsibilities
1. General Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory 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
plant so as to achieve the short and long run objectives of the organization.
2. The Manufacturing Department
Duties and responsibilities:-
It is the core department of the project center and has the following responsibilities.
 Use modern manufacture, processing and technologies that will enhance the quality
of those products.
 Produce quality product that will enable the center competent both in the domestic
and international market.
 Use appropriate technology to manage its products.
 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 products
3. Administration and Finance Department

 Will plan, organize direct and control the financial transaction of the plant 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 promoter national and international procurement procedure
 Administer and control The promoter logistic resource
 Effectively administer the promoter Procurement process domestically as well as
internationally.
 Manage the public relation of The promoter/factory with external parties/stakeholders
 Provide and manage general supportive service to the plant.
4. Commercial Department
 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing ...
 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of The
promoter
All workers have responsibilities on each activity they assigned for.

B. TRAINING REQUIREMENT
The production supervisor and skilled workers require few weeks training on machine operation
and production technology. Training is assumed to be entertained during the erection and
commissioning period and the cost is in built there and hence about Birr 25,000 is sufficient to
cover expenses associated with the training programmed.
4. FINANCIAL REQUIREMENT AND ANALYSIS
4.1. Total Initial Investment Cost
The total cost of money that is required to estimate the envisaged Food Complex product is 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 3,500,000 0.00
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
4.1.1. Fixed Investment
Building and Construction
No Description Land requirement (M2) Unit cost in Br. Total Cost in Br.
1 Production Hall 5,000 2650 13,250,000

2 Office Building 1,500 1000 1,500,000
3 Guard house 500 1000 500,000
4 Toilet and shower room 500 1000 500,000

5 Warehouse 500 1100 550,000

6 Raw material Store 500 1200 600,000
7 End product Store 500 1200 600,000
8 Show room 500 1100 550,000
9 Parking and others 500 1000 500,000
Total 10,000.00 11250
4.1.2. Required Machinery

A. Total Cost Machinery and Equipment for Wheat flour and macaroni and Pasta
No Description Qty Unit Price Total Cost Total
(Birr)
1 Fully Automatic Wheat flour Milling No 2 4,274,100 8,548,200
processing machine with accessories
2 Fully Automatic Fast Delivery pasta macaroni “ 2 5,000,000 10,000,000

spaghetti Wheat flour Milling processing
machine with accessories
Total 18548200
4.1.3. 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 800000
4.1.4. 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 78350
4.2. INITIAL WORKING CAPITAL

The initial working capital is established to be 26,351,800.00 birr
4.2.1. Material and Inputs

A. Raw and Auxiliary Materials
The major raw materials and auxiliaries required for the production of Food Complex shown in
Table 4.1 below. All the raw and auxiliary materials are to be imported.
Sr. Description Unit Of Annual Unit Price Total Price (CIF)
No. Measure Quantity (CIF)
1 Different Food Complex kuntal 5,894 2,500 14,735,000
materials
Total 0
4.2.2. Salary Expense

As indicated in part three of this study, the total cost of salary and wage is estimated to be
5,000,000 birr.
4.2.3. 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
4.2.4. 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 140000

4.1. Financial Analysis and Statements
4.1.1. Underlying Assumption

The financial analysis of the envisioned Food Complex industry 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
4.1.2. Source of Fund

S Description % share Amount(in birr)
N
1 Owners Share 30 22,800,000
2 Bank Loan 70 53,200,000
Total 100 76,000,000
4.1.3. 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

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 Equipments 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
4.1.4. Annual depreciation schedule of the fixed Asset ( birr)
4.1.5. Balance Sheet (Beginning)
Asset
Current Asset Value in Br
Cash 3,551,800
Inventory of raw material and input 22,800,00

Total Current Asset 26,351,800
Fixed Asset
Land, Building and Construction 22,000,000
Machineries and Equipment 18,548,200
Office Equipment 3,500,000
Vehicles 5,600,000
Total Fixed Asset 79551800
Total Asset 76,000,000
Liability

Account Payable 53,200,000
Owner Equity
Capital 22,800,000
Total Liability and Owners Equity 76,000,000




4.2.7. 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.
4.2.8. 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 at the 3 years of operation.
5. ENVIRONMENTAL IMPACT ASSESSMENT OF THE PROJECT

5.1 Socio Economics Environments
The owner will provide the land on bases and all required compensation will be paid for the
project. The livelihood of the local people around the project area is rural dweller of various
occupation and economic background.
5.2 Environmental Impact Assessment of the Project

Environmental aspects are fundamental for the sustainability assessment of the current
competition marketing related plant. In this regard the factory will undertake a separate and
detail Environmental impact Assessment.

FOOD COMPLEX Tegene Adama

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FOOD COMPLEX Tegene Adama

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Project Proposal for Food Complex 2020

FOOD COMPLEX FACTORY

PROJECT TO BE IMPLEMENTED IN OROMIA REGIONAL STATE,

EAST SHOA ZONE, ADAMA WOREDA

PROMOTER: TEKLE MAMO DEME

Addis Ababa, Ethiopia

Promoter: -Tekle Mamo Deme Page 1

4.1. Total Initial Investment Cost………………………………………………………...20

4.1.1. Fixed Investment …………………………………………………………….……24

Promoter: -Tekle Mamo Deme Page 2

4.2.7. Income/Loss ………………………………………………………….....................27

5.1 Socio Economics Environments …………………………………………………….…...….31

Promoter: -Tekle Mamo Deme Page 3

1 Project Type Food Complex Industry

1.1. Status News

1.2. Sector Manufacturing ( Different Food complex)

2 Project Owner Tekle Mamo Deme

4 Project Location Oromia Region,

6 Premises Required 10,000 M2 or 1 Hek.

7 Total Capital  The total of birr 76, 000,000 is required.

Promoter: -Tekle Mamo Deme Page 4

 From this 30% (birr 22,800,000.00) will be covered by the

 Permanent Workers 100

Promoter: -Tekle Mamo Deme Page 5

Promoter: -Tekle Mamo Deme Page 6

 Wheat Flour, pasta, macaroni, biscuit ,

Promoter: -Tekle Mamo Deme Page 7

1.2 Objectives of the Project

1.3 The Product Description and Application

Promoter: -Tekle Mamo Deme Page 8

1.4 Location Map of the Area.

Promoter: -Tekle Mamo Deme Page 9

 Proximity to the major potential market for the out put

1.5. Brief History of the Promoter

Promoter: -Tekle Mamo Deme Page 10

2. GENERAL MARKET STUDY AND PLANT CAPACITY

Promoter: -Tekle Mamo Deme Page 11

2.1.1. Objective of the Project

2.1.2. The Economic Significance of the Project

2.1.3. Source of Revenue

Promoter: -Tekle Mamo Deme Page 12

2.1.4. Employment opportunity

2.1.5. Save/Generate the Country Foreign Exchange

2.1.6. Benefit For The Local Community

2.1.7. Stimulate The Local Economy

Promoter: -Tekle Mamo Deme Page 13

2. TECHNOLOGY AND ENGINEERING

The production process of wheat flour consists of four major operations:-

2. Machinery and Equipment

3. Economic activity of Area

Promoter: -Tekle Mamo Deme Page 14

2.2.2. Land Use Plan

SN Description Land Requirement (M2)

2 Office Building 1,500

3 Guard house 500

4 Toilet and shower room 500

6 Raw material Store 500

8 End product Store 500

9 Show room 500

10 Parking and others 500

2.2.3. Pricing and Distribution

Promoter: -Tekle Mamo Deme Page 15

Households could be supplied through retailers as well as with distribution centers to be