ANRS INVESTMENT COMMISSIN

www.investamhara.gov.et

Project Profile on the Establishment of Plastic

Tanks Making Plant

Development Studies Associates

(DSA)

October 2008
Addis Ababa
 Table of Contents

1. Executive Summary..................................................................................1
2. Product Description and Application....................................................1
3. Market Study, Plant Capacity and Production Program...................2
3.1 Market Study.......................................................................................................2
3.1.1 Present Demand and Supply........................................................................2
3.1.2 Projected Demand........................................................................................2
3.1.3 Pricing and Distribution...............................................................................2
3.2 Plant Capacity......................................................................................................3
3.3 Production Program.............................................................................................3
4. Raw Materials and Utilities....................................................................3
4.1 Availability and Source of Raw Materials...........................................................3
4.2 Annual Requirement and Cost of Raw Materials and Utilities...........................3
5. Location and Site.....................................................................................4
6. Technology and Engineering.................................................................4
6.1 Production Process...............................................................................................4
6.2 Machinery and Equipment...................................................................................4
6.3 Civil Engineering Cost........................................................................................5
7. Human Resource and Training Requirement......................................5
7.1 Human Resource..................................................................................................5
7.2 Training Requirement..........................................................................................6
8. Financial Analysis...................................................................................6
8.1 Underlying Assumption.......................................................................................6
8.2 Investment............................................................................................................7
8.3 Production Costs..................................................................................................8
8.4 Financial Evaluation............................................................................................9
9. Economic and Social Benefit and Justification..................................10
ANNEXES ...................................................................................................11
 1. Executive Summary

This project profile deals with the establishment of Plastic Tanks Making Plant in
Amhara National Regional State. The following presents the main findings of the study.

Demand projection divulges that the domestic demand for plastic plates, dishes and lunch
boxes is substantial and is increasing with time. The present demand for plastic tanks is
estimated at 115,000pcs. The demand is expected to grow to 142988 in the year 2019.
The proposed plant has a capacity to produce 6000 plastic tanks in a year.

The total investment requirement including working capital is estimated at Birr 11.9
million out of which Birr 5.6 million is for machinery and equipment. The foreign
component of the investment is about 70%. The plant will create employment
opportunities for 24 persons.

The project is financially viable with an internal rate of return (IRR) of 20.18% and net
present value (NPV) of Birr 970,180 discounted at 18%.

In addition to this, the proposed project possesses wide range of economic and social
benefits such as increasing the level of investment, tax revenue, employment creation and
diversification of the economy.

Generally the project is technically feasible, financially and commercially viable as well
as socially and economically acceptable. Hence the project is worth implementing.

2. Product Description and Application

Plastic liquid storage tanks are made from linear low density polyethylene/low Density
Polyethylene. These tanks are light in weight and therefore easy to install. No painting or
power proofing is required. The tanks can be made in a variety of designs.

1
 3. Market Study, Plant Capacity and Production
Program

3.1 Market Study

3.1.1 Present Demand and Supply

There are about 2.4 million urban households in Ethiopia. If we assume only 5% of the
urban households afford to purchase one water tanker, the annual household demand
stands at 120,000pcs. The demand from the other construction and business sectors is
estimated at 5000pcs. The domestic production is about 10,000 pcs. The demand gap
therefore is 115,000.

3.1.2 Projected Demand

The future demand is projected assuming the current demand will increase by 2% per
annum. The future demand is depicted in Table 1.

Table 1: Projected Demand

Year Demand (pcs)
2016 134741
2017 137436
2018 140184
2019 142988
2020 145848
2021 148765
2022 151740
2023 154775
2024 157870
2025 161027
2026 164247
2027 167532

3.1.3 Pricing and Distribution

The price is set based on the existing prices of Roto and JEEPE tanks. The exiting retail
price is abut Birr 2823. The factory selling price of the envisaged plant is set at Birr

2
20,528. It is assumed that this price will enable the plant to be competitive. The exiting
network of whole sales can be used for distribution.

3.2 Plant Capacity

The plant can produce 6000 plastic tanks in a year when it operates at full capacity,
assuming that the plant operates 275 days in year and 8 hours in a day. The annual
working days is calculated after subtracting holydays and possible technical stoppages.

3.3 Production Program

The exiting demand enables the plant to start operation at relatively high capacity. Thus,
the proposed production program is to start at 80%, increase its capacity to 90% in the
second year and attain full capacity starting from the third year 100%.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials

Most raw materials should be imported. The list and prices are shown in table 2.

4.2 Annual Requirement and Cost of Raw Materials and

Utilities

Table 2: raw material Requirements at Full Capacity

No Qty Price
. Material (ton) Local Foreign Total
1 Low Density Polyethylene 185 1,519,07 6,076,28 7,595,360
/LDPE/ 2 8
2 Carbon black 4.625 23,736 94,942 118,678
3 Hinges and inserts 0 25,660 0 25,660
Total 189.6 1,568,46 2,405,00 7,739,698
3 8 0

3
4
 5. Location and Site

This plant can be located either in Bahir Dar or Combolcha. Both cities have sufficient
infrastructure and market.

6. Technology and Engineering

6.1 Production Process

The production process involves three stations (a) load/unload, (b) oven, and (c) cooling
and the carousel is rotated from one rotation to the next. In a three arm machine one arm
is always in each of the three stations. The required amount of powder after mixing with
carbon black is fed into open mould at the loading station. This is followed by rotation
around two perpendicular axes, the powder rolling off the mould walls tends to go to the
lowest point of the mould by the force of gravity. Depending on the shape of the article
being made, it can be an advantage to vary one or both rotational directions and speeds
simultaneously or alternatively during the process. The carousel is rotated to take the
mould to the oven station. Here, the mould is heated until the powder is melted. The melt
temperature should be chosen so that thermal degradation of polymer running off the
melt from the mould wall is avoided. It is possible to influence the wall thickness of the
mouldings by carefully controlling the temperature within the mould. After completion of
the fusion the mould carrier automatically assumes the preselected demoulding position,
where moulding is unloaded from mould.

6.2 Machinery and Equipment

The required machineries and equipments are listed below. The total cost of the listed
machineries is estimated at Birr 5.6 million. The detail is shown in Table 3.

5
 Table 3: Machinery and Equipments
Item Description Qty.
1 Carousel rotational moulding machine – 1
complete with equipments such as turret,
arms, hot air oven, cooling unit and
control desk
2 Pulveriser model M PU 400 1
3 Extruder 65 mm 1
Total

Alternative Technology: Increased Fire Resistance

When the proposed version plastic fuel tank is exposed to fire, the plastic either melts or
decomposes and allows the contents to flow out and add fuel to the fire. The alternative is
to produce that are moulded in cross linked resin. Cross linked plastic does not melt
when heated. But as the temperature of the plastic increases, the plastic begins to
decompose and burn. When exposed to a fire, a non-cross linked plastic tank may fail in
approximately 11/2 minutes and a cross linked plastic tank of the same size and shape
may fail in 21/2 - 3 minutes.

Supplier Address:
16-118 Li'l Li'l Street
Keaau, HI 96749
Phone: 800-870-5494
Fax: 808-966-5455
E-mail : sales@chemtainerofhawaii.com

6.3 Civil Engineering Cost

The plant requires 500m2 of land, of which 250m2 is for buildings; the lease cost is
estimated at Birr 30,000. Building and civil works costs are estimated at Birr 1,283,000.

7. Human Resource and Training Requirement

7.1 Human Resource
The human resource requirement is shown in Table 4.

6
 Table 4: Human Resource Requirement
Salary/Wage (Birr)

Job Title No. Monthly Annual

1 General Manager 1 7,698 92,376
2 Operators 10 3,079 369,504
3 Secretary 1 2,053 24,634
5 Accountant 1 2,566 30,792
6 Sales man 1 2,566 30,792
7 Driver 1 2,053 24,634
8 Cashier 1 2,053 24,634
9 Security 1 2,053 24,634
10 Clerks 2 1,283 30,792
11 Janitor 3 898 32,332
12 Guards 3 898 32,332
Total 25 717,454
Employment Benefits 20% of Annual
Salary 143,491
860,944

7.2 Training Requirement

Training is important. Birr 76,980 is allotted for this purpose in pre-start capital.

8. Financial Analysis
8.1 Underlying Assumption
The financial analysis of this plant is based on the data provided in the preceding sections
and the following assumptions.
A. Construction and Finance
Box 1: Construction and Finance

Construction period 2 years

Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 12%
Discount for cash flow 18%
Value of land Based on lease rate of ANRS
Spare Parts, Repair & Maintenance 3% of fixed investment
B. Depreciation

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 Box 2: Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
Pre-production (amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Box 3: Working Capital (in days)

Raw Material-Local 30
Raw Material-Foreign 120
Factory Supplies in Stock 30
Spare Parts in Stock and Maintenance 30
Work in Progress 10
Finished Products 15
Accounts Receivable 30
Cash in Hand 30
Accounts Payable 30

8.2 Investment

The Total Initial Investment including working capital is estimated at Birr 11.98 million
of which Birr 5.64 million is for plant machinery and equipments. The foreign
component amounts to 70%. The detail is shown in Table 5.

8
 Table 5: Total Initial Investment & Working Capital

Total Initial Investment

Item Cost
Land 30,000.00
Building and civil works 1,283,000.00
Office equipment 192,450.00
Vehicles 641,500.00
Plant machinery & equipment 5,645,200.00
Total Fixed Investment 7,792,150.00
Pre production capital expenditure* 388,299.95
Total Initial Investment 8,180,449.95
Working capital at full capacity 3,806,046.70
Total 11,986,496.65
*Pre-production capital expenditure includes - all expenses for pre-
investment studies, consultancy fee during construction and expenses for
company‘s establishment, project administration expenses, commission
expenses, preproduction marketing and interest expenses during
construction.

8.3 Production Costs

The total production cost at full capacity is estimated at Birr 10.58 million. The details
are shown in Table 6.

Table 6: Production Cost at Full capacity

Total Production Cost at Full Capacity

Items Cost
1. Raw materials 7,739,697.50
2. Utilities 39,625.00
3. Wages and Salaries 860,944.32
4. Spares and Maintenance 232,979.97
Factory costs 8,873,246.79
5. Depreciation 853,874.99
6. Financial costs
861,144.90
Total Production Cost 10,588,266.68

9
 8.4 Financial Evaluation

I. Profitability
The income statement (Annex 4) shows that the proposed project generates profit starting
from the first year of operation. Profit starts at Birr 33625 in first year and reach about
Birr 19.52 million in the eight year of the project life. Gross Profit to Sales ratio starts at
0.34% and reaches 22.65% at eight year. Return on Equity starts at 0.70% and reaches
40.81%. The total profit to be earned during the whole ten years of operation amounts to
Birr 15.03 million. These indicators prove that the project is profitable.

II. Breakeven Analysis

The breakeven analysis shows that the Total Revenue equals the Total Cost at 33.1% of
capacity which is achieved at the first year of operation.

III. Payback Period

The project pays back its initial investment during the first half of the third year:

IV. Simple Rate of Return

The simple interest rate is 16.2%

V. Internal Rate of Return and Net Present Value

The Internal Rate of Return is 20.44% and the Net Present Value at 18% discount rate per
annum is Birr 6,092,703 (See Annex 3).

VI. Sensitivity Analysis

A ten percent decrease in sales revenue reduces the total profit to Birr . A 10% increase in
price of inputs decreases the total profit to Birr 8,911,208.

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 9. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained
earlier. In general the envisaged project promotes the socio-economic goals and
objectives stated in the strategic plan of the Amhara National Regional State. These
benefits are listed as follows:

A. Profit Generation

The project is found to be financially viable and earns a total profit of Birr 15,083,966
within the project life.

B. Tax Revenue

In the project life under consideration, the government will collect about Birr 5.86
million from corporate tax payment alone (i.e. excluding income tax, sales tax and VAT).

C. Import Substitution and Foreign Exchange Saving

The project has strong import substitution effect..

D. Employment and Income Generation

The proposed project is expected to create employment opportunity to 25 persons. That

is, it will provide permanent employment to professionals as well as support staff.
Consequently the project creates income of Birr 860,944 per year. This would be one of
the commendable accomplishments of the project.

E. Diversification and InterSectoral linkage.

The proposed project helps to diversify ANRS and Ethiopian economy. It contributes to
industrialization of the economy. It has a potential to strengthen the linkage between the
manufacturing and the trade sub-sectors.

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ANNEXES

12
 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
Capacity Utilization (%) 0 0 80% 90% 100% 100%
1. Total Inventory 0 0 5231812.268 5885788.16 6539766.618 6539766.618
Raw Materials in Stock- Total 0 0 2288097.068 2574108.56 2860122.618 2860122.618
Raw Material-Local 0 0 137919.934 155160.888 172399.276 172399.276
Raw Material-Foreign 0 0 2150177.134 2418950.238 2687720.776 2687720.776
Factory Supplies in Stock 0 0 8380.556 9430.05 10476.978 10476.978
Spare Parts in Stock and Maintenance 0 0 18618.896 20946.258 23273.62 23273.62
Work in Progress 0 0 209539.56 235730.722 261924.45 261924.45
Finished Products 0 0 419076.554 471461.444 523846.334 523846.334
2. Accounts Receivables 0 0 1119710.024 1259672.494 1399637.53 1399637.53
3. Cash in Hand 0 0 81432.01 91608.766 101788.088 101788.088
CURRENT ASSETS 0 0 4144854.668 4662960.86 5181069.618 5181069.618
4. Current Liabilities 0 0 1119710.024 1259672.494 1399637.53 1399637.53
Accounts Payable 0 0 1119710.024 1259672.494 1399637.53 1399637.53
TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 3025144.644 3403288.366 3781432.088 3781432.088
INCREASE IN NET WORKING CAPITAL 0 0 3025144.644 378143.722 378143.722 0

1
 Annex 1: Continued
PRODUCTION YEARS
5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100% 100%
1. Total Inventory 6539766.618 6539766.618 6539766.618 6539766.618 6539766.618 6539766.618
Raw Materials in Stock-Total 2860122.618 2860122.618 2860122.618 2860122.618 2860122.618 2860122.618
Raw Material-Local 172399.276 172399.276 172399.276 172399.276 172399.276 172399.276
Raw Material-Foreign 2687720.776 2687720.776 2687720.776 2687720.776 2687720.776 2687720.776
Factory Supplies in Stock 10476.978 10476.978 10476.978 10476.978 10476.978 10476.978
Spare Parts in Stock and Maintenance 23273.62 23273.62 23273.62 23273.62 23273.62 23273.62
Work in Progress 261924.45 261924.45 261924.45 261924.45 261924.45 261924.45
Finished Products 523846.334 523846.334 523846.334 523846.334 523846.334 523846.334
2. Accounts Receivables 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53
3. Cash in Hand 101788.088 101788.088 101788.088 101788.088 101788.088 101788.088
CURRENT ASSETS 5181069.618 5181069.618 5181069.618 5181069.618 5181069.618 5181069.618
4. Current Liabilities 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53
Accounts Payable 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53
TOTAL NET WORKING CAPITAL REQUIREMENTS 3781432.088 3781432.088 3781432.088 3781432.088 3781432.088 3781432.088
INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 3733627.508 7515059.596 11383710.02 11686962.47 12969962.47 12830000
1. Inflow Funds 3733627.508 7515059.596 1119710.024 139962.47 139962.47 0
Total Equity 1493450.49 3006022.812 0 0 0 0
Total Long Term Loan 2240177.018 4509034.218 0 0 0 0
Total Short Term Finances 0 0 1119710.024 139962.47 139962.47 0
2. Inflow Operation 0 0 10264000 11547000 12830000 12830000
Sales Revenue 0 0 10264000 11547000 12830000 12830000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 3733627.508 3733627.508 12963634.71 10417744.46 11938315 11325718.42
4. Increase In Fixed Assets 3733627.508 3733627.508 0 0 0 0
Fixed Investments 3555834.5 3555834.5 0 0 0 0
Pre-production Expenditures 177793.008 177793.008 0 0 0 0
5. Increase in Current Assets 0 0 4144854.668 518106.192 518106.192 0
6. Operating Costs 0 0 7087982.254 7964864 8841743.18 8841743.18
7. Corporate Tax Paid 0 0 0 0 778675.794 819172.406
8. Interest Paid 0 0 1730797.792 809904.014 674922.15 539937.72
9.Loan Repayments 0 0 0 1124867.684 1124867.684 1124867.684
10.Dividends Paid 0 0 0 0 0 0
Surplus Deficit) 0 3781432.088 -1579924.69 1269220.58 1031647.47 1504281.576
Cumulative Cash Balance 0 3781432.088 2201507.398 3470725.412 4502375.448 6006654.458

3
 Annex 2: Continued
PRODUCTION YEARS
5 6 7 8 9 10
TOTAL CASH INFLOW 12830000 12830000 12830000 12830000 12830000 12830000
1. Inflow Funds 0 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0
2. Inflow Operation 12830000 12830000 12830000 12830000 12830000 12830000
Sales Revenue 12830000 12830000 12830000 12830000 12830000 12830000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 11231230.61 11158076.51 11063588.69 9844230.626 9844230.626 9844230.626
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0
6. Operating Costs 8841743.18 8841743.18 8841743.18 8841743.18 8841743.18 8841743.18
7. Corporate Tax Paid 859666.452 921496.788 961993.4 1002487.446 1002487.446 1002487.446
8. Interest Paid 404953.29 269968.86 134984.43 0 0 0
9. Loan Repayments 1124867.684 1124867.684 1124867.684 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus Deficit) 1598769.394 1671923.488 1766411.306 2985769.374 2985769.374 2985769.374
Cumulative Cash Balance 7605423.852 9277347.34 11043758.65 14029530.59 17015299.96 20001069.33

4
 Annex 3: Discounted Cash Flow-Total Capital Invested (Birr)
CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 10264000 11547000 12830000 12830000
1. Inflow Operation 0 0 10264000 11547000 12830000 12830000
Sales Revenue 0 0 10264000 11547000 12830000 12830000
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 3733627.508 3733627.508 10113129.46 8343005.156 9219886.902 9660913.02
3. Increase in Fixed Assets 3733627.508 3733627.508 0 0 0 0
Fixed Investments 3555834.5 3555834.5 0 0 0 0
Pre-production Expenditures 177793.008 177793.008 0 0 0 0
4. Increase in Net Working Capital 0 0 3025144.644 378143.722 378143.722 0
5. Operating Costs 0 0 7087982.254 7964864 8841743.18 8841743.18
6. Corporate Tax Paid 0 0 0 0 0 819172.406
NET CASH FLOW -3733627.508 -3733627.508 150870.536 3203994.844 3610113.098 3169086.98
CUMULATIVE NET CASH FLOW -3733627.508 -7467252.45 -7316381.914 -4112387.07 -502273.972 2666813.008
Net Present Value (at 18%) -3733627.508 -3164090.978 108354.482 1950049.662 1862056.39 1385237.138
Cumulative Net present Value -3733627.508 -6897715.92 -6789364.004 -4839314.342 -2977257.95 -1592020.814

5
 Annex 3: Continued
PRODUCTION YEARS
5 6 7 8 9 10
TOTAL CASH INFLOW 12830000 12830000 12830000 12830000 12830000 12830000
1. Inflow Operation 12830000 12830000 12830000 12830000 12830000 12830000
Sales Revenue 12830000 12830000 12830000 12830000 12830000 12830000
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 9701409.632 9763239.968 9803734.014 9844230.626 9844230.626 9844230.626
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 8841743.18 8841743.18 8841743.18 8841743.18 8841743.18 8841743.18
6. Corporate Tax Paid 859666.452 921496.788 961993.4 1002487.446 1002487.446 1002487.446
NET CASH FLOW 3128590.368 3066760.032 3026265.986 2985769.374 2985769.374 2985769.374
CUMULATIVE NET CASH FLOW 5795403.376 8862163.408 11888426.83 14874196.2 17859968.14 20845737.52
Net Present Value (at 18%) 1158928.768 962732.408 805103.028 673159.308 570475.686 483452.362

Cumulative Net present Value -433092.046 529640.362 1334743.39 2007902.698 2578378.384 3061830.746

Net Present Value (at 18%) 3061830.746

Internal Rate of Return 27%

6
 Annex 4: NET INCOME STATEMENT (in Birr)
PRODUCTION YEARS
1 2 3 4 5
Capacity Utilization (%) 80% 90% 100% 100% 100%
1. Total Income 10264000 11547000 12830000 12830000 12830000
Sales Revenue 10264000 11547000 12830000 12830000 12830000
Other Income 0 0 0 0 0
2. Less Variable Cost 6748995.692 7592619.512 8436243.332 8436243.332 8436243.332
VARIABLE MARGIN 3515004.308 3954380.488 4393756.668 4393756.668 4393756.668
(In % of Total Income) 87.7572 87.7572 87.7572 87.7572 87.7572
3. Less Fixed Costs 1056737.818 1089993.178 1123248.538 1123248.538 1123248.538
OPERATIONAL MARGIN 2458269.056 2864387.31 3270508.13 3270508.13 3270508.13
(In % of Total Income) 61.584 63.6368 65.433 65.433 65.433
4. Less Cost of Finance 1730797.792 809904.014 674922.15 539937.72 404953.29
5. GROSS PROFIT 727471.264 2054483.296 2595588.546 2730570.41 2865554.84
6. Income (Corporate) Tax 0 0 778675.794 819172.406 859666.452
7. NET PROFIT 727471.264 2054483.296 1816910.186 1911400.57 2005888.388
RATIOS (%)
Gross Profit/Sales 7.09% 17.79% 20.23% 21.28% 22.33%
Net Profit After Tax/Sales 7.09% 17.79% 14.16% 14.90% 15.63%
Return on Investment 23.43% 26.35% 22.15% 21.79% 21.43%
Return on Equity 16.17% 45.66% 40.38% 42.48% 44.58%

7
 Annex 4: Continued
PRODUCTION YEARS
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 12830000 12830000 12830000 12830000 12830000

Sales Revenue 12830000 12830000 12830000 12830000 12830000
Other Income 0 0 0 0 0
2. Less Variable Cost 8436243.332 8436243.332 8436243.332 8436243.332 8436243.332
VARIABLE MARGIN 4393756.668 4393756.668 4393756.668 4393756.668 4393756.668
(In % of Total Income) 87.7572 87.7572 87.7572 87.7572 87.7572
3. Less Fixed Costs 1052131.848 1052131.848 1052131.848 1052131.848 1052131.848
OPERATIONAL MARGIN 3341624.82 3341624.82 3341624.82 3341624.82 3341624.82
(In % of Total Income) 66.716 66.716 66.716 66.716 66.716
4. Less Cost of Finance 269968.86 134984.43 0 0 0
5. GROSS PROFIT 3071655.96 3206640.39 3341624.82 3341624.82 3341624.82
6. Income (Corporate) Tax 921496.788 961993.4 1002487.446 1002487.446 1002487.446
7. NET PROFIT 2150159.172 2244649.556 2339137.374 2339137.374 2339137.374
RATIOS (%)
Gross Profit/Sales 23.94% 24.99% 26.05% 26.05% 26.05%
Net Profit After Tax/Sales 16.76% 17.50% 18.23% 18.23% 18.23%
Return on Investment 21.51% 21.15% 20.79% 20.79% 20.79%
Return on Equity 47.79% 49.89% 51.99% 51.99% 51.99%
Annex 5: Projected Balance Sheet (in Birr)

8
 CONSTRUCTION PRODUCTION YEARS
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 3733627.508 11248684.54 14550805.79 19001879.2 21413226.38 24205647.65
1. Total Current Assets 0 3781432.088 6346362.066 8133688.838 9683442.5 11187724.08
Inventory on Materials and Supplies 0 0 2315099.086 2604484.868 2893873.216 2893873.216
Work in Progress 0 0 209539.56 235730.722 261924.45 261924.45
Finished Products in Stock 0 0 419076.554 471461.444 523846.334 523846.334
Accounts Receivables 0 0 1119710.024 1259672.494 1399637.53 1399637.53
Cash in Hand 0 0 81432.01 91608.766 101788.088 101788.088
Cash Surplus, Finance Available 0 3781432.088 2201507.398 3470725.412 4502375.448 6006654.458
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 3733627.508 7467252.45 6749503.76 6031755.07 5314006.38 4596257.69
Fixed Investment 0 3555834.5 7111669 7111669 7111669 7111669
Construction in Progress 3555834.5 3555834.5 0 0 0 0
Pre-Production Expenditure 177793.008 355583.45 355583.45 355583.45 355583.45 355583.45
Less Accumulated Depreciation 0 0 717748.69 1435497.38 2153246.07 2870994.76
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 3733627.508 11248684.54 14550805.79 19001879.2 21413226.38 24205647.65
5. Total Current Liabilities 0 0 1119710.024 1259672.494 1399637.53 1399637.53
Accounts Payable 0 0 1119710.024 1259672.494 1399637.53 1399637.53
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 2240177.018 6749211.236 6749211.236 5624343.552 4499473.302 3374605.618
Loan A 2240177.018 6749211.236 6749211.236 5624343.552 4499473.302 3374605.618
Loan B 0 0 0 0 0 0
7. Total Equity Capital 1493450.49 4499473.302 4499473.302 4499473.302 4499473.302 4499473.302
Ordinary Capital 1493450.49 4499473.302 4499473.302 4499473.302 4499473.302 4499473.302
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 727471.264 2781954.56 4598864.746 6510265.316
9.Net Profit After Tax 0 0 727471.264 2054483.296 1816910.186 1911400.57
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 1454942.528 4836437.856 6415777.498 8421665.886

Annex 5: Continued
PRODUCTION YEARS

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 5 6 7 8 9 10
27,187,044.5
TOTAL ASSETS 6 30506766.01 33965685.25 38738450.38 43416725.13 48094999.88
1. Total Current Assets 12786493.47 14458416.96 16224828.26 19210597.64 22196367.01 25182136.39
Inventory on Materials and Supplies 2893873.216 2893873.216 2893873.216 2893873.216 2893873.216 2893873.216
Work in Progress 261924.45 261924.45 261924.45 261924.45 261924.45 261924.45
Finished Products in Stock 523846.334 523846.334 523846.334 523846.334 523846.334 523846.334
Accounts Receivables 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53
Cash in Hand 101788.088 101788.088 101788.088 101788.088 101788.088 101788.088
Cash Surplus, Finance Available 7605423.852 9277347.34 11043758.65 14029530.59 17015299.96 20001069.33
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 3878509 3231877 2585245 1938613 1291981 645349
Fixed Investment 7111669 7111669 7111669 7111669 7111669 7111669
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 355583.45 355583.45 355583.45 355583.45 355583.45 355583.45
Less Accumulated Depreciation 3588743.45 4235375.45 4882007.45 5528639.45 6175271.45 6821903.45
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 27187044.56 30506766.01 33965685.25 38738450.38 43416725.13 48094999.88
5. Total Current Liabilities 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53
Accounts Payable 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53 1399637.53
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 2249737.934 1124867.684 0 0 0 0
Loan A 2249737.934 1124867.684 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 4499473.302 4499473.302 4499473.302 4499473.302 4499473.302 4499473.302
Ordinary Capital 4499473.302 4499473.302 4499473.302 4499473.302 4499473.302 4499473.302
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 8516153.704 10666315.44 12910962.43 15250099.81 17589237.18 19928377.12
9. Net Profit After Tax 2005888.388 2150159.172 2244649.556 2339137.374 2339137.374 2339137.374
Dividends Payable 0 0 0 0 0 0
Retained Profits 10522044.66 12816474.61 15155611.99 17589237.18 19928377.12 22267514.49

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