Executive Summary.....................................................................................................................................

3
Introduction.................................................................................................................................................4
Beneficiaries (Target Group)........................................................................................................................5
Project Justification.....................................................................................................................................5
Objective of the Project...............................................................................................................................6
The Economic Significance of the Project....................................................................................................6
Supply of Quality.....................................................................................................................................6
Source of revenue...................................................................................................................................6
Employment Opportunity........................................................................................................................7
Save and Generate the Country Exchange...............................................................................................7
Benefit for the Local Community.............................................................................................................7
Stimulate for Local Economy...................................................................................................................7
Location and Premises Required.............................................................................................................7
Market Study of Mixed Used Commercial Complex....................................................................................8
Market Study...........................................................................................................................................8
Demand Factors for Processed Service Items......................................................................................8
Market Study.......................................................................................................................................8
Market Potential and Demand Gap for Mixed use Building..............................................................10
Infrastructure Development......................................................................................................................11
Market Completion............................................................................................................................12
Target Customers..............................................................................................................................13
Market Prospects...............................................................................................................................13
Marketing Strategy and Promotion...................................................................................................14
Mixed Used Commercial Complex Mainly on Banking and Cafeterias Capacity and production program
...............................................................................................................................................................14
Banking and Cafeteria Capacity.........................................................................................................14
Production program Banking and Cafeteria Service..........................................................................14
Pricing....................................................................................................................................................14
Product Nature, Production Process and Technology...............................................................................15
Product Nature, Service and Characteristics.........................................................................................15
Production Process, Design and Technology.........................................................................................16
Technology and Engineering.............................................................................................................16

1
 Production Process............................................................................................................................16
Quality Control......................................................................................................................................17
Machinery and Equipment....................................................................................................................17
Source of Technology............................................................................................................................17
Project Design and Engineering.............................................................................................................17
Plant Lay Out and Construction Works..................................................................................................18
Manpower and Organizational Management............................................................................................18
Man Power............................................................................................................................................18
Organizational Structure and Management..........................................................................................18
Financial Requirement and Analysis..........................................................................................................21
Total Initial Investment Cost.................................................................................................................21
Fixed Investment...............................................................................................................................21
Financial Analysis and Statements........................................................................................................24
Underlying Assumption.....................................................................................................................24
Sources of Fund.................................................................................................................................25
Loan Repayment Schedule................................................................................................................25
Depreciation Schedule.......................................................................................................................26
Revenue Projection............................................................................................................................26
Balance Sheet (Beginning)................................................................................................................26
Income Loss Statement......................................................................................................................27
Cash Flow Statement.........................................................................................................................27
Financial Evaluation...................................................................................................................................28
Economic Benefits.....................................................................................................................................29
Environmental Impact of the Project.........................................................................................................29
Future Development and Exit Strategies...................................................................................................31
Project implementation program..............................................................................................................31

2
 Executive Summary
1. Project Type Mixed Use Commercial Complex G+2 Building
2. Project Owner Kindu Kassahun Tamirat (Private Owner)
3. Nationality Ethiopian
4. Project Location Oromia Regional State, Illuababor Yayo Woreda Yayo
Town , Kebele 01
5. Projection Composition Commercial Complex like Banking, Supermarket, and
Related Services for Domestic and Local Market
6. Land Source Government
7. Land Use Required Commercial
8. Premises Required 500m2
9. Total Initial Investment Br 2,000,00 of which 20% equivalent to finance by the
Cost/ETB/ owners’ equity and rest %80 Br 8,000,000 equivalent
financed 34,102,805 through Bank Loan
10. Employment Opportunity 25 Permanent Individuals and 100 Temporary and
Loading unloading total 175 individuals Will be hired.
11. Benefits of the Factory for Supply Producers of Quality Banking , Supermarket,
Region/Country Shopping, Guest rooms, Supply Standard Company
Service and Renting Halls in fair price, Source of
Revenue, Employment Opportunity, Stimulate the Local
community, Stimulate the local Economy and
technology transfer, Recreational Area for Guest and
Local community.

3
 Introduction

In Ethiopia Private Investment Interest has been increasingly from year to year and an
investment constraint has been over a decade since it adopted the free market economy policy. In
this new Economic, investment of private sector happens to determinant factor of economic
Development of the country. It is usually considered as the engine of an economy both efforts of
the private as well as the public sector .there are investments that could not be undertaken by
private sector due to its difficult nature i.e. high initial capital and long gestation period.

According, to the latest growing consumer economies in Ethiopia with a current population of
110 million. The transformation of Ethiopia from an agricultural economy to a fast-upcoming
industrial economy in the sub-Saharan Africa (SSA) is incredible. According to the United
Nations Development Programmers (UNDP) 2015 Human Development Index, Ethiopia is one
of the top ten countries that have seen the most gains particularly between 2010 and 2015. A
decade ago Ethiopia looked like the country to be invariably famous for its coffee and culture,
but today, the fashion and textile industry clearly identifies the country as the
Based on the new economic policy proclamation of the EFDR government many investors have
initiated to invest their money on various investment opportunities, especially in industry sector.
However, many of the investors prefer to invest in capital and regional city. Zonal towns and
remote woreda are less preferable to investors. In order to Overcome, Motivate Farmers, MSEs
and Private Owners Oromia Regional state approved New Investment Regulation No. 208/2012.

Based on this Regulation, Ato Kindu Kassahun Tamirat Private Owner shows Good innovation
among the established and G+3 modern commercial complex Supply in national wide
particularly in Yayo Woreda, Yayo Kebele 01 to Open The Modern Commercial Complex
Service Access. Like most Business venture the project aims to maximize return on invested
capital. In a process of attaining this basic idea it also benefits for the total community through
creation of employment, tax revenue generation and etc.
Therefore, the promoter of this project who has been living in the project area and engaged in
various business activities now days he wants to invest his capital on aforementioned project at
remote area which has scarcity of Services in Illubabor zone particularly Yayo Woreda,Yayo
Kebele 01 site.

4
 Beneficiaries (Target Group)
In consideration of the general improvement that the project intends to generate in the Mixed
used Commercial Complex (Banking, Supermarket, and Related Services) value chain, the direct
beneficiaries that will be the target of the project are:
 The residents of towns, Cities, Villages in rural areas.
 Different Zonal Employees and NGOs.
 The different Super market in the country
 Government Workers club.
 Hotels and Restaurants.
 Small shops.
 Other retailers and Wholesalers.
 Neighborhood Woreda and towns Like , Hurumu, Ilu Darma and Buno Bedele Zone

When the G+3 Mixed used Commercial Complex (Banking, Supermarket, and Related Services)
improve the beneficiaries /the targeted groups, Due to this the living condition, health status,
productivity and quality of life of the beneficiary/ target groups will be enhanced.

Project Justification
Although Ethiopia has been passing through dynamic, fast and double digit economic growth in
all sectors of Economy for the last two Decades, Service Sectors has to be viewed in the context
of the low level of Development that Seeks more Investment on it. At The present the
government of Ethiopia Has Implementing the 10 Years growth and Transformational plan III
that aimed to achieve Wider Development Spectrum in all Sectors to the Nation under the
Category of Middle income Earner.

In addition to the above facts, the following Points Further explains the rationale for
Establishment for The Envisioned Factor by The Owner.

 High Population Growth.

 High Consumption and Foreign Income.
 Favourable and Attractive Investment incentives packages by the government.
 Availability of Skilled Labor Force at Reasonable Price.
 Availability of Raw Materials and Inputs For the production of Processed Complex.

5
 Objective of the Project

To Establish Modern G+3 Mixed Used Commercial complex Building processing Service
mainly on Banking, Supermarket, and Related Services in order to increase the income of
increasing traders deriving and community, create job opportunity, Generate income for woreda,
play Vital role in order to generate currency to country and from sustainable production,
processing and marketing of the Ethiopian service on International, Domestic and Local Market.

The Economic Significance of the Project

Ethiopia is where Fast growth sub-Saharan Country in service. The project is now developed in
various parts of the world; Ethiopia Itself accounts for around 0.5% of the global Service Mixed
Used Commercial Complex .Service is important to the economy of Ethiopia; Around 31% of
foreign income comes from service with an estimated 8 million of the population relying on
some aspect of services for their live hood .

Supply of Quality
By producing and supply quality and diversified Banking and cafeteria products project will
satisfy the consumers. Besides, the project will add to job and income opportunity of the citizens.

Source of revenue
As public Policy of any Nation, The Government Collects forms of taxes Different Business
Income taxes, VAT and payroll Taxes are collected form undertaking Business activities.
Therefore, the Factory will serve as source of Revenue for both the region and Nation in General.

Employment Opportunity
One of the problems that our country faces high level of unemployment, Therefore, the current
objective of the government is working on tackling the problem of unemployment and fostering
there development process either through self-employment to re-employment in other
organization Hence, this factory will hired 25 Permanent Individuals and 80 total 105 individuals
Will be hired also for 65 individuals for loading/unloading based on daily Worker Market scale.

Save and Generate the Country Exchange

The project will help to reduce the nations for Exchange cost to sell this product to other
Neighierhood Woredas/towns. Besides in the future, when the Service start export to global
market the nation will generate foreign currency from this specific project;

Benefit for the Local Community

As a corporate Responsibility the Service will engage in Different Development activities on the
Surrounding areas. This will Better worth the Community and Contribute for the Development of
the region.

6
 Stimulate for Local Economy
This Factor has positive eternality in the woreda as well as Zonal that will encourage the
economic movement of local economy. There will be economic relationship and transactions
among different actors.

Location and Premises Required

i. Location
The G+3 Mixed Used Commercial Complex project is located in Illubabor Zone, Yayo Woreda,
Yayo Town, Kebele 01

The Main Justification behind the Selection of this location is;

 Availability of Raw Materials.

 The Absence of this Services
 The new proposed Road support to Collect Raw materials and to let the finished products to
market.
 Availability of labor force
 Conducive investment policy and Governance
 Environmentally healthy for the production of processed foods.
ii. Premises Required
The total land holding of the project is 500m 2; the premises required planned as follows in table
below. Table Premises required and Land Use Plan;

SN Description Land `Requirement/M2

1 Mixed Used Commercial Complex (G+3) Building 250
2 Ware House 100
3 Green Area and Parking 75
4 Treatment and Waste Disposal Area 75
Total 500M2

7
 Market Study of Mixed Used Commercial Complex
Market Study
Demand Factors for Processed Service Items

Market Study
Demand Factors for Processed Services
There exit main demand factors for processed Services particularly, Banking, Supermarket, and
Related Services. The most Factors are fast economic growth and population (Demography)
Factors Such as indicated below.
1. Fast Economy Growth

The Ethiopian Economy has been experiencing dynamic and double digit growth that
experienced annual average growth of 11.4% in past 8 years. According to Ministry of Finance
and economic Development, The Forecasted Economic Growth the Economic Growth (GDP at
Constraint Basic Price) For 2011/12 is estimated to be 10%. As per the Estimates, Annual
Growth rate of the major sectors, i.e. Agriculture, industry and service were 8.4%, 10.6 and
13.0%, respectively and their shares out of the total GDP Were 42%, 13% and 45%,
Respectively. This Continuous and a two digit high growth would place Ethiopia among the fast
growing countries in Sub-Saharan African Countries.

As sector of the economy, The Agriculture, Service and Construction sector also Growth with
Double digit with the average annual growth 10.31%, 13% and 12% respectively in the past 8
years. As shown in the table below the growth of the sectors directly related with the economy as
parts of the economy

8
 Trends in performance of the Economy Growth Rates G.C %
Item 2005/6 2006/7 2007/8 2008/9 209/10 2010/11 2012/13 2013/14
GDP1990/00 11.7 12.6 11.5 111.5 11.6 11.6 10.4 10
Agriculture 16.9 13.5 10.9 9.4 7.5 6.4 7.6 8.4
Industry 11.6 9.4 10.2 10.2 10.4
Service 6.3 12.8 13.3 14.3 17 21 23 25
SOURCE; MoFED & UNDP (Ethiopian Calendar)

His Fast Growth of these sectors resulted from different bodies like government, on governments
and private activities in Ethiopia are growing in the fastest rate. Moreover, the current five years
Ethiopian growth and transformational plan will expand the economic growth paramount level
by harnessing the resource and expanding Services. Hence as, one component of Basic
consumption goods, the fast growth will increase the demand items particularly supermarkets,
Cafeteria and different other enriched items.

2. Population and Population Growth(Demography)

The rate of growth of the urban population is increasing from year to year. The latest report of
the unite fund for population agency revealed that Ethiopia’s population has reached 110 million
which puts Ethiopia as the second most populous country in Africa. According to the central
statistics Authority (CSA), Current population growth is estimated to be 28% per annum and the
growth rate is expected to remain above 2% for the next 20 years. Rural population is growing at
about 3.0% while the urban population is growing at about 4.3%. Total population is projected to
reach 140 million by 2030. In Ethiopia, of the total population, about 20.0% is estimated to
reside in urban areas. The trends suggest that the size of urban population is likely to continue to
grow at high speed in the future. The share of urban population will rise from 16.0% in 2005 to
about 25% by 2030 nearly 35 million of the total 140 million will live in cities and towns by
2030. As a result from big population and population growth, which kids and youth account the
major shares, the demand for construction materials items and Cinema and meeting halls and
also Guests and Local Communities for Bed Room and different other enriched Service items.

9
 Market Potential and Demand Gap for Mixed use Building

As indicated earlier, the fast economic Development of the country at large and development of
the town with its business activities in particular have increased the demand for commercial
complex Mainly Sales and Distributors, Cinema and Meeting Halls and Bed Room business with
respect to the existing supply. Very popular in developing countries and now it has created well
market potential in our country also and is becoming popular item. The factors governing its
demand are;

1. Increasing population of the country.

2. Rapid industrialization in the country.
3. Increasing in the purchasing and demanding capacity of people.
4. Durability of the product
5. Challenge in people’s habits as Culture
6. It is ready to Buy and Sell product.
7. Convenience of preparation

In Ethiopia though there is different Mixed Used Commercial Complex, they are not serving
quality and Quantity Services.

Supply and demand balance Consumer interest in making ethical Service, purchasing and
using decisions of market and has grown in recent years. However, willingness to used ethical
products may not translate into actual purchases. For a majority of end-users, price and intrinsic
quality are more important than certified compliance with a code of conduct or standard.
Therefore, the potential size of the market for service is restricted. At the same time, the supply
of such Services and products is not necessarily always demand driven and may result in
oversupply.
Therefore, while service delivering definitely adds to a service image and may enhance its value,
certification by itself is not a guarantee of premium prices in the longer term. Producers must
also bear in mind that the overall levels of premiums are likely to decrease as availability grows

10
Therefore, the majority of service and finished Products is exported to Neighborhood
town/woredas to service rendering. Hence, this project deemed to bridge the demand gaps for
processing products in our woreda by locally producing as Domestic and National Markets.

Socio-Economic Consideration
Yayo Woreda is one of the Ilubabor zone woreda, It is divided in to 15 kebeles, with population
of 72,000 according to 2013 G.C census and from available information there is extended
increase in population year to year in the town. Besides, this recently rural kebeles also included
to the town boundary. However, in the town there is a Lack of business/Service centres on the
other hand majorities’ merchandise, daily workers, students and government, NGOs and private
workers as well as guests are living in the town those who are needs commercial goods/services.

The Overall development of the region and the Woreda/town as well as existing inadequate
supply of business centre and modern mixed used centre accommodation and related services
facility in the town laid down bases for intended project to be promoted in the area.

Therefore, the building of proposed investment project would have its own significant role in
reducing the shortage of such services in the town.

Infrastructure Development
The current conditional of development infrastructure is one of the major point in selecting
location and site of establishing and business activity. Development of Asphalt and Gravel roads,
availability of water, power, Communication Facilities and availability of social service, are
included under this category.

Yayo Woreda and Surrounding area have an undeveloped network of the mentioned roads and
facilities, Since Yayo is town of Woreda government infrastructure development is relatively
more developed than Small Kebeles found under Yayo Woreda administration, other social and
economic institutions like Education and Health institutions While Banking, Cafeteria and Bed
Rooms and related services are rare.

Demand Analysis

Many Government, University and NGO organization/Institutions has been increasing in the
woreda it became a commercial activities of Ilubabor zone, Likewise, NGOs, High Schools,
Municipal Community and Surrounding area are Considered as demand of Sales and
Distributors, and Meeting services, in addition to this many huge government and private

11
projects are undertaken in the surrounding districts, Which will be attracts many people many
people as guests as a guests and living in the town and its market opportunity which increasing
the demand of commercial/Services business center in the town.

Supply Analysis

As a for mentioned in demand discussion it indicated a Very huge gap in relation to high
potential demand and supply of business center for Modern Mixed Used Commercial/Services
sector in Yayo Kebele.

The gap Analysis between demand and supply

There is an average gap between existing supplies on Commercial complex Services (Sales and
Distributors of construction Banking, Cafeteria and Bed Room) as compared with demand, the
intended project which expected to begin operation also an able to gap. This indicates Even the
Community gots different types of service and products from neigherhood woredas and towns
like Hurumu Woreda and Ilu Derma Municipal to household consumption in the previous year.
This figures double in the current year and increase by constant rate with predicated service
production. That is why the promoter’s decided to establish a firm using the opportunity of fund
from own contribution alongside initiating private investment participating in the business to
establish the firm to cover the whole demand preparing favourable investment precondition.

Market Completion

There are different competitors in the market competing with this envisaged project in the
market.

 Those importing majority service from abroad neighborhood villages and towns
 Those servicing rendering in domestic market and international market
 The potential competitors who deemed to engage in similar production line.

Therefore, there are different forms of competition that my face this project. These are price and
no price based competition. Moreover, the different competitors may compete with the project
under discussion his diversified marketing strategies that could enable it cope with the different
competitors in the market. In addition, it will frequently conduct competitors research which

12
focuses on, the strength and weaknesses the different competitor’s strategies. The techniques’
they use in rendering the service, their customer handling methods and others. Then it will devise
different strategies like.

1. Diversification of Services, product and product line

2. Diversified Promotional Tools
3. Lowering prices by increasing Services which will result in the decrease in
their per-unit cost of production and Give Services Up to Villages.
4. Diversified customer centric marketing strategies.

Target Customers

The Target Customers of the envisioned Factory are;

 The residents of Municipal, Villages in rural areas

 The different Shops
 Yayo Fertilizer Industry and others
 Metu University and Yayo Technic College
 Government and Non-Government Workers club
 Small shops
 Other retailers and Wholesalers.

Market Prospects
From above market demand and supply analysis for the Mixed Used Commercial service
(Banking, Supermarket, and Related Services). There is Exists Very Huge market gap in Our
Woreda. Hence, the factory will be pioneer and very successfully by entering in to this market.

Marketing Strategy and Promotion

The company will follow the following promotional methods;

 Website Development
 Advertising( Media, player and Newspaper)
 Public Relation
 Branding

13
Mixed Used Commercial Complex Mainly on Banking and Cafeterias Capacity and
production program

Banking and Cafeteria Capacity

Based on Company Capacity and program this plant assumed to produce Based on Demand
Capacity of Area will Serve Customers. At full capacity Banking utilization (Third year)
operating 320 days a year and 14 hours (2 shifts) per day for Bed Room and Cafeteria and 364
days a year and 24 hours (3 Shifts) for Bed room.

Production program Banking and Cafeteria Service

Considering the gradual growth of demand and time required to develop the required skill of rate
of capacity utilization during the first, second and third year of production will be 60, 80 and
100% respectively.

Pricing

It would be important to examine the possible level of price based on the competitors’ action. In
this consideration, the existing average retail prices of similar imported products were assessed
for the benefit of comparison. Based on the Existing price in the market the firm settled the price
as follows;

14
 Product Nature, Production Process and Technology

Product Nature, Service and Characteristics.

The Company wills Serve Guest and Local Community, Distribute and Sell and produce

different kinds Construction materials, Entertain Different Services and Different Rendering

based on the customer preferences.

This Include Service Rendering likes;

 Renting Building For private and Government For Meeting and Cinemas

 Renting Bed Rooms For Guests and Local Community,

Sales and Distributes Construction Materials like;

 Different types and Sizes of Metals

 Dying, Fibres and Related Products

 Galvanized and Non Galvanized Construction materials.

3.2. Raw Materials and Input

The raw material for the envisaged company will be collected from different domestic suppliers.

Raw Materials Like, Wood, Fabricated and Metal Products for Sales and Distributors Bed Room,

packed products. Besides, all Products use different type of packing materials.

15
 Production Process, Design and Technology

Technology and Engineering

It is obvious from the objectives of the proposed project that is construction of mixed used
Commercial Complex G+3 Building. Hence, the technology and techniques to be used will be
the technique and techniques used in construction industry.

Production Process
The main process of establishing modern Commercial Complex Mainly Banking, Cafeteria and
Related Services at Yayo Woreda, Yayo town, Kebele 01 include studying the Market, Securing
land, Construction Building, Equipping and Furnishing the building and starting the operation of
the business. In which the process is outlined as follows;
Start

Preparation of Design

Resource Mobilization
Fig. Construction Work process flow chart
Each step moves the construction works nearer to finish. Hence, Each and Every step needs its
own technologies as well as techniques/
The project will be aimed to build modern Mixed Used Commercial Complex G+3 Building in
Yayo Woreda, Yayo town Kebele 01. It consists, Commercial Complex Mainly Banking,
Cafeteria and Related Services and etc.
1/2
The Establishment of the project will take 1 year. This establishes period is time required to
establish various types of activities which include the following.
 Clear demolishing of project area with local authorities.
 Site Grubbing uprooting and Clearing.
 Block Excavation the project site to reduce elevation
 Preparation of site plan from condition of proposed block type and size
 Survey and set the blocks location from the plan

16
  Material transportation and production of material for the civil construction
 Construction of Building and Fencing of the compound, Preparation of parking, safety
tanker, Greenery
 Supply of Power Water and telephone services and other remaining infrastructure
development.

Quality Control

Quality assurance and control ensures that the Institution is safe, unadulterated, properly
labelled, and meets all Company quality specifications and any government regulations. The
quality control department inspects all raw materials and all components furnished by Domestic
and Local suppliers when they arrive at the factory. These items are matched with plans and
specifications. The parts are again checked along every by the makers, receivers, or persons who
add the components along the assembly line. Independent quality control inspectors examine the
product at various stages of assembly and when it is finished.

Machinery and Equipment

The factory will use Machineries for Banking, Cafeteria and Related Services Services Mainly
from Ethiopia

Source of Technology
The Company will use world standard production technology mainly from Ethiopia

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,
importing of machineries and vehicle.

Plant Lay Out and Construction Works

As Indicated in part above the total land requirement for the project is estimated to be 500M 2.
The buildings are planned to accommodate Banking, Cafeteria and Related Services and other
utility requirements as well as office and a show room/Constructions.

17
 Manpower and Organizational Management
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 service. Depending up on nature of the center or amount of
work to be performs; there will be auxiliary units under the general manager. Employees under
each unit head that is accountable for the general manager.

The company will use efficient trained staffs in the area of marketing to be competitive supplier
of processed services to the market. The opportunities of being serviced by well skilled
professional’s well enable the company to evaluate the internal weakness strength of the
company as well as to assess the global opportunity and risks in the world market so that the
company cope up with the dynamics of the market situation. The company will hire 175
Permanent and Temporary employees.

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 activities of the plant. Employees
under each unit will be supervised by the department head that is accountable to the owner of the
factor as indicated below.

18
 Project
Owner/Chair
man

General
Manager

Cashier/Secretary

Biulding Admn &

Constructio
Adm Stor Finanace
& Tech.Unit
unit

Table; Organizationa1 Structure

1. Manager
Duties and Responsibilities
 She/he will plan, Organize, Direct and Control the overall activities of the Mixed
Used Commercial Complex.
 She/he wills device policies and strategies that will enable factory to be
profitable.
 She/he will incorporate modern technological innovation that will facilitate the
service delivery of the project center and increase customer satisfaction.

19
  She/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. Construction and Technical Unit

Duties and responsibilities

 Design, Maintain and prepare the Different types of different products based on
Plant standard and customer preferences.
 Use modern manufacture, processing technologies that will enhance the
qualities of Mixed Used Commercial Complex.
 Produce quality Different types of Wood, Construction and Metal products that
will enable the factory competent both in domestic market.
 Control on the quality of raw materials, inputs, quality of product and also
overall sold product
 Moreover control over the quality of the sold and final product.
3. Administration and Finance Department
Duties and Responsibilities;
 Will plan, organize direct and control the financial transaction of the service,
renting and sales 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 considered reports
for general manager, owner and other concerned government body.
 They Control Human and Non-Human resources of the plant.
 Manage and Executive the company national procurement procedure.
 Administer and control the company logistic resource.
 Provide and manage General supportive service to the plant and sales
4. Marketing and Sales Department
Duties and Responsibilities;
 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Provide cost estimates for pricing
 Gather Information of new design, profile
 Approval of new product profile and brand plan analyses market research.
 Plan and execute sales.
 Will develop effective customer handling strategies.
 Will develop the marketing strategies for future project centers development.

20
 Financial Requirement and Analysis
Total Initial Investment Cost
The total amount of money that is required to establish the envisaged factory is
estimated to be: 34,102,805.00

Table the total Initial Investment Cost

SN Description Cost in ETB Birr

1 Land, Building and Construction 10,375,000
2 Factory Machineries 6,000,00
3 Vehicles 6,000,000
4 Equipment and tools 3,401,100
5 Furniture 1,095,000
Total Fixed Investment Cost 26,871,100

5 Pre service Expense 103,000

6 Initial Working Capital 4,600,000
Total 30,574,100
Contingency (5%) 1,528,705
Total Initial Investment Cost 34,102,805

Fixed Investment
A . Building and Construction

SN Description Land Unit Cost in Total Cost in

Requirement(M2) ETB ETB
1 Production and Building 250 30,000 7,500,000
for (G+4) Building
2 Ware House 100 20,000 2,000,000
3 Green Area and Parking 75 16500 1,237,500
4 Treatment and Waste 75 16500 1,237,500
Disposal Area
7 Replacement of 900,000
Municipal House,
Design and Supervision
8 Land Lease /For 500,000
Commercial Area/
Total 10,375,000

21
 B. Factory Machineries
The Factory will use for Commercial Complex. Hence estimated cost of this
machinery will be as follows.

SN Description Unit Qty Total Cost

1 Marketing Hall and SETS 1SET 6,000,000
Supermarket with
CFT(%5)
Total 6,000,000

C. Vehicles

SN Description Qty Unit Price Total Price Remark

In ETB in ETB
1 Transportation 3 3,900,00 3,900,00
Truck
3 BICUP Car 3 2,100,000 2,100,000
Total 6,000,000

D. Equipment and tools

The initial Equipment and Tools for Commercial Complex Services is estimated
to be 3,401,100 ETB
E. Furniture

SN Description Unit Qty Total Cost

1 Office Furniture 20 12,000 240,000
2 Resident House Furniture 80 9000 720,000
3 Mixed Use and Facility 18 7500 135,000
Furniture
Total 1,095,000

E. Initial Working Capital

The initial Working Capital is estimated to be 3,600,000 ETB

F. Pre-Service Expense

SN Description Cost in ETB

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 1 Project Proposal 20,000
2 Licensing 3000
3 Worker Capacity Training 800,000
Total 103,000

Expenses
I. Raw Material and Inputs.
The Factory will purchase the raw Materials from Different parts Oromia regional
State Illubabor Zone, from Farmer and MSE.

Year Total RM Cost/ETB

1 3,600,565
2 4,800,753
3-10 6,000,941

II. Salary Expense

SN Description No Qualification Monthly Annual

Salary Salary ETB
ETB
1 General Manger 1 BA/Mgt 4,500 74,000
2 Production manager 4 BSC/Mech. 4,000 192,000
and Quality Control Engineer
3 Electrician 8 Dip Electricity 2,000 192,000
4 Administer and 4 BA/Purchasing 3,000 144,000
Finance Dept
5 Purchase and Store 4 Dip/Acct 2,000 96,000
Keeper
7 Marketing and Sales 4 BA/Marketing 3,000 144,000
8 Accountant 4 Dip/Acct 2,000 96,000
9 Cashier 8 Dip/Acct 2,000 192,000
10 Driver 8 10th Complete 1600 124,000
11 Cleaner 8 Unskilled 800 130,000
12 Public Relation 6 Dip/Mgt 2,000 116,000
13 Load unload 100 Basic 800 400,000
Total 2,270,400

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 III. Other operating Expenses

SN Description Annual Cost ETB Assumption Used

1 Property And Insurance 511,542.075 1.5%ofFixed Investment Cost
2 Audit and legal fee 12000 1000 per month
3 Uniform 9570 33*350 birr
4 Telephone, Fax and 12,000 1000per month
Postal
5 Cleaning Goods Supplies 9600 800 per month
6 Repair and Maintenance 511,542.075 1.5%ofFixedInvestment Cost
7 Stationery and other 12,000 1000 per month
office Supplies
8 Electricity 120,000 10,000 per month
9 Water 6500 1.5*3,000m3
10 Fuel 240,000 6000litr*20/year
12 Oil and Lubricant 24,,000 %10 of fuel Cost
13 Miscellaneous Expense 24,000 2000/Month
Total 1,591,759.15

Financial Analysis and Statements

Underlying Assumption
The Financial Analysis of the Envisioned plant is based on the Data provided in the
preceding sections and the Following Assumptions.

A. Construction and Finance

Construction Period 1 years
Source of Finance 30% equity and 70% Loan
Tax Holidays 2 years
Bank Interest Rate 10%
Raw Materials and Operating Cost Increase By 5% after 3 Years
Salary and Wages increase by 2% after 3 Years

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 Price of Processed food Products Will Increase By 5% after 3 years
B. Depreciation
Building 5%
Office Furniture 10%
Machinery Equipment 10%
Vehicles 20%
C. Working Capital
Accounts Receivable 30 Days
Raw Material Local 30 Days
Work in Progress Daily
Finished Product 5 Days
Accounts Payable 30 Days

Sources of Fund
SN Description % Share Amount in ETB
1 Owners Share 70 23,871,963.50
2 Bank Loan 30 10,230,841.50
Total 100 34,102,805

Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Remaining
Payment in ETB Balance in ETB
0 0 0 0 23,871,963.50
1 23,871,963.50 2,387,196.35 4,774,392.70 21,484,767.15
2 23,871,963.50 2,148,476.715 4,535,673.065 19,097,570.80
3 23,871,963.50 1,909,757.08 4,296,953.43 16,710,374.45
4 23,871,963.50 1,671,037.445 4,058,233.795 14,323,178.10
5 23,871,963.50 1,432,317.81 3,819,514.16 11,935,981.75
6 23,871,963.50 1,193,598.175 3,580,794.525 9,548,785.40
7 23,871,963.50 954,878.54 3,342,074.89 7,161,589.05
8 23,871,963.50 716,158.905 3,103,355.255 4,774,392.70
9 23,871,963.50 477,439.72 2,864,636.07 2,387,196.35
10 23,871,963.50 238,719.635 2,625,915.985 0

Depreciation Schedule
SN Description Original Value Depreciation Rate Depreciation per
In ETB in % Year
1 Construction and Civil 10,375,000 5 518,750

25
 Work
2 Machinery & Equipment 6,000,000 10 600,000
3 Vehicles 6,000,000 20 1,200,000
4 Office Equipment 1,095,000 10 109,500
Total 26,871,100 2,428,250

Revenue Projection
Based On the price and the Capacity Program of The factory indicated in previous
Chapter, the revenue of the Factory projected as indicated in the table below.

SN Description Qty Year 1/birr Year 2/birr Year 3-10/birr

1 Profit from Commercial ETB 10,359,132 13,812,176 17,265,200
Complex and other
Related Products
Total Revenue Project. Birr 10,359,132 13,812,176 17,265,220

Balance Sheet (Beginning)

Asset
Current Asset Value in ETB
Cash 2,631,705
Inventory of Raw Materials and 4,600,000
Inputs
Total Current Asset 7,231,705.00
Fixed Asset
Land, Building and Construction 10,375,000
Machineries and Equipment’s 9,401,000
Vehicles 6,000,000
Office Equipment 1,095,000
Total Fixed Asset 26,871,100.00
Total Asset 34,102,805.00
Liability
Account Payable 23,871,963.50
Owner Equity
Capital 10,230,841.50
Total Liability and Owners Equity 34,102,805.00

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 Income Loss Statement

Revenue Year 1 Year 2 Year 3-10

Sales Revenue 13,359,132 16,812,176 20,265,220
Purchase of Raw Material 3,200,565 4,600,753 6,000,941
Gross Profit 10,158,567 12,211,423 14,264,279
Expenses
Salary Expense 1,362,240 1,816,320 2,270,400
Other Operating Expenses 955,055.49 1,273,407.32 1,591,759.15
Deprecation Building 518,750 518,750 518,750
Depreciation Mach and 600,000 600,000 600,000
Equipment
Depreciation Vehicles 1,200,000 1,200,000 1,200,000
Depreciation Of Office 109,500 109,500 109,500
Equipment
Interest Expense 2,387,196.35 2,148,476.715 1,074,238.35
Urban Land Payment 50,000 30,000 24,000
Total Expense 7,182,742 7,696,454 7,388,648
Profit Before Tax 2,975,825 4,515,969 6875631
Tax(%30) 892,747.50 1,354,490.70 2,062,689.30
Net Profit 2,083,077.50 3,161,478.30 4,812,941.70

Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3-10
Equity Capital 10,230,841.50
Loan Principal 23,871,963.50
Net Sale 13,359,132 16,812,176 20,265,220
Total Cash In Flow 34,102,805 13,359,132 16,812,176 20,265,220
Purchase of Raw 0 3,200,565 4,600,753 6,000,941
Materials
Salary Expense 0 1,362,240 1,816,320 2,270,400
Investment 34,102,805 0 0 0
Other Operating cost 0 955,055.49 1,273,407.32 1,591,759.15
Loan Repayment 0 2,387,196.35 2,148,476.715 1,074,238.35
Land payment 0 50,000 30,000 24,000
Tax Payment 0 892,747.50 1,354,490.70 2,062,689.30
Total Payment 34,102,805 8,847,804 11,223,448 13,024,028

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 Deficit/Cash Surplus 0 8,847,804 11,223,448 13,024,028
Cumulative Cash 0 8,847,804 20,071,252 33,095,280
Return to Equity 0 8,847,804 11,223,448 13,024,028

Financial Evaluation
1. Profitability

According to the projected income statement, the project will start generating profit in the 3 rd
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.

2. Break-even Analysis

The break-even point of the project including cost of finance when it starts to operates at full
capacity (year 4) is estimated by using income statement projection.

BE = Fixed Cost / Sales – Variable cost = 38 %

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 within 4 4/12 years.

4. Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 13% and the net present
value at 8.5% discount rate is Birr 2.29 million.

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 Economic Benefits
The project can create employment for 175 persons. In addition to supply of the domestic needs,
the project will generate Birr 0.4 million per annum in terms of tax revenue when it starts to
operate at full capacity. Moreover, the Regional Government can collect employment, income
tax and sales tax revenue. The establishment of such factory will have a foreign exchange saving
effect to the country by substituting the current imports.

Environmental Impact of the Project

The biggest risk that could lead stagnation or even the failure of the project stems from the
limited degree of development of raw materials harvesting mechanisms. The contractor shall
take all precautions for safeguarding the environment during the course of the construction of
the works. He shall abide by all prevalent laws, rules and regulations governing pollution and
environment protection

The contractor shall prohibit employees from authorized use of explosives, Poaching Wild life
and cutting trees. The contractor shall be responsible for the action of his employees. The
contractor is expected to arrange and execute the works in such a way that Existing
environmental conditions are not deteriorated. Borrow pits and dumping sites used during
construction shall be coinstated of project owner cost by grass and/or tree plantation.

Written instruction/approval must be given to seek from the on-site manager regarding
protection and reinstatement of environment throughout the contract period. Failure in
compliance with on-site manager instructions in respect of overall standard will lead to
reduction or withhold of payment.

Further, any serious deterioration in the environment including pollution attribute to contractor
as determined by the onsite manager, May result deduction of actual expenditures incurred in
their reinstatement done through separate agency, from any money due to the contractor.

Environmental protection works, among others shall also include the following; disposal of
and construction waste, materials in excess of the requirements for permanent works and
unsuitable materials shall be disposed of in locations and in the manner as agreed with the

29
contractor. The location of disposal sites shall be such as not to promote instability,
destruction of properties and public service systems. Exposed areas of such disposal sites shall
be suitably dressed and planted with suitable vegetation.

The contractor shall plan his works in such a way that there’s no spillage of products to the
surface or sub-surface water. Environmental assessment is must be undertaken before a project
carried out. There are several environmental impact assessments, which aimed to assess the
impact the impact of the intended project up on the surrounding living and non- living things.
Environmental problems such as indiscriminate disposal of solid and poor handling of liquid
wastes are among the existing environmental problems in the town, the building which
consists mixed use commercial complex and cafeteria services activities to be constructed on
500m2 plot of land with the intention of considering environmental problems from the 1 st
phase up to past of the project. As matter of facts, Solid Wastes to be generated during the
initial phase of project implementation and its operational phase are to be addressed by
integrated solid management approach. In Similar way for liquid waste with placement of
appropriate septic tanks and other sanitary utilities moreover, continual assessment of the
possible effects and/or impacts of the project to the environment is carried out at regular basis.

To this end, during the preparation of project proposal it also conducted feasibility study of the
project, as a result the proposed project is commercial/service sector which no relation with
chemicals that affects the given environment condition and also the area land using is
commercials purpose and already occupied by the promoter so that, no dislocation of the
people and loss of neighborhood property values as well as no loss of ecological assets.

Solid and liquids wastes are expected that affect the given environment but, the project
proposal also included the strategy of proper disposing methods. These are placement septic
tank with construction proper sewerage system for liquid wastes and constructing proper
sanitary land fill for solid wastes.

Future Development and Exit Strategies

Every Business undertaking is it small or large should have future Development plan. It is
plain fact that business activities are undertaken in a dynamic and turbulent environment.
Hence, to overcome or minimize the risks of uncertain future business should devise effective

30
 strategies that enable them to be successful in their operation. The first strategy is
Diversification of its Activities to different other Business Forms. The Second future
Development Plan of the project is expanding its Branches in many parts of the Zonal/Region.

The third strategy of the Center is making a joint venture with other similar Business.

The final Strategy of the center is selling and Servicing to other organization or Individuals
local, Domestic and internationally.

Project implementation program

This project is designed or construction of Modern Mixed used Commercial Complex building
G+3 and thus expected to take few months’ time to be implemented. The implementation period
is supposed to be about 18 months/1 1/2 Year starting from the date of the project approval,
Agreement and Design license hand over. This is assumed to be nearly enough since some tasks
like feasibility study, site plan mapping are accomplished by the respective.

Table: - Project implementation Schedule

Activity
No
Apr-May

Oct-Nov
Jan -Feb

Jul-Aug

Remark
March
Aug -

Oct -

June

Sept
July

Dec

Jan
1 Site Exploration
2 Site Grubbing Uprooting and * *
clearing
3 Bulk of the project site
Excavation
4 Preparation of the site plan
from the condition of
proposed block type and size
5 Survey and set the blocks * * *
location from the site plan
6 Construction of store house
7 Material Transportation and * * *
production of material civil
construction
8 Construction of Mixed Used
Commercial Complex the

31
 compound
9 Construction of Waste
treatment/Safety Tanker
10 Preparation of green area and * * *
parking
11 Supply of power and other
infrastructure services

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