Modern Garment For Export

Project Profile on the Establishment of Modern
Garment for Export and Re-Export Making

Plant
Tinsae Habtam and friends Partenership union

/ትንሳኤ ሀብታም እና ጓደኞቻቸዉ ህብረት ሽርክና ማህበር/
JUl 2022
Bahir dar
Table of Contents
1. Executive Summary..................................................................................1
2. Product Description and Application....................................................1
3. Market Study, Plant Capacity and Production Program...................1
3.1 Market Study.......................................................................................................1
3.1.1 Present Demand and Supply........................................................................1
3.1.2 Projected Demand........................................................................................2
3.1.3 Pricing and Distribution...............................................................................3
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...........................4
5. Location and Site.....................................................................................4
6. Technology and Engineering.................................................................4
6.1 Production Process...............................................................................................4
6.2 Machinery and Equipment...................................................................................6
6.3 Civil Engineering Cost........................................................................................7
7. Human Resource and Training Requirement......................................7
7.1 Human Resource..................................................................................................7
7.2 Training Requirement..........................................................................................8
8. Financial Analysis...................................................................................8
8.1 Underlying Assumption.......................................................................................8
8.2 Investment............................................................................................................9
8.3 Production Costs................................................................................................10
8.4 Financial Evaluation..........................................................................................10
9. Economic and Social Benefit and Justification..................................11
ANNEXES....................................................................................................13
1. Executive Summary
The project envisages production of 220,000 men’s dress shirt per annum for export. The total
investment outlay requirement of the project including the working capital is estimated at about
Birr 5 million; of which nearly Birr 2.1 million is the cost of the working capital and Birr 1.5
million is for machinery and equipments. Based on the cash flow statement, the calculated
internal rate of return (IRR) and simple rate of return (SRR) of the project are 44.9 % and 41,
respectively. The net present value (NPV) at 18 % discounting rate is about Birr 4,548 thousand.
The plant is expected to create employment opportunities for about 101 persons.
2. Product Description and Application

The garment work consists of the manufacturing of clothing by cutting and sewing fabrics.
Garment is one of the major activities that consume huge labor. The major input for garment
production is different types of textile fabrics. Important garment products include shirts, shorts,
T-shirts, under wears, fur apparel, pants, trousers, sport wears, work clothes and jackets.
This project envisages to make men’s dress shirt. Men' shirt, among various kinds of clothing,
has wide adaptability and is consumed in huge quantity throughout the world. Transporting the
product is easy too; therefore, if the factory can produce quality shirt at a cost which can compete
internationally, geographical limitation of the factory location is practically nil for both local
consumption and export.
3. Market Study, Plant Capacity and Production Program

3.1 Market Study
3.1.1 Present Demand and Supply
Textile and garment industry has enormous potential and opportunities for progress. The demand
for garment in the world market is increasing. Garment products of Ethiopia have high market
demand in many parts of the world, particularly in the United States of America, Western Europe
and Japan. Cotton garments have wide adaptability and are consumed in huge quantity
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throughout the world. Therefore, there will be sufficient demand for the product in the
international markets if the factory can produce at a cost which can compete internationally.
However, although there is a high potential for the production of raw materials, such as textile
and leather, the garment industry has not yet developed in the country. The demand for garment
products, in various parts of the world is steadily growing. There is high potential for cotton
production; which supplies basic raw materials for the textile factories, which in turn, are major
raw material suppliers for the garment industry. The textile fabric, which is the major potential
input for garment production, is produced in various textile factories in the country.
Garment industry is labor intensive, requires relatively small capital investment and has high
market demand in the world market; all of these conditions are in line with the country’s
requirement. Moreover, there is an opportunity to get skilled manpower for making the product
as there is a Textile and Garment Industry Support Institute at the Bahir Dar University for
training professional skilled manpower.
The existing potential for cotton and textile production and the availability of cheap labor is one
the major parameters for considering the sub-sector as one of the strategic export- promoting
sector in the country. Thus, the garment and textile industry has been identified as one of
strategic economic areas that have been given great attention and support by the government.
Given the potential of the raw material and the priority of the government for the textile and
garment sub-sector, the garment industry has a major role to play in the Region’s economy in
general and export trade in particular.
3.1.2 Projected Demand
As it is said above, there is no demand constraint for standard exportable men’s dress shirts. As
long as the factory can produce the product up to the standard and at a cost which can compete
internationally, any factory with such small capacity normally faces a perfectly elastic demand
curve; it can sell all of its output at the international price. Therefore, there will be sufficient
demand for the product in the international markets.
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3.1.3 Pricing and Distribution
65% of the product will be exported to the international market. The average wholesale
price of LDC made standard exportable men’s dress shirt ranges from Birr 312 (USD 6) per
piece up to Birr 390 (USD 7.5) per piece. The envisaged project plans to sell its products at
average factory gate price of Birr 312 per piece (USD 6). The product will find its market outlet
by searching the international market through its marketing staff.
3.2 Plant Capacity
The minimum economic capacity of men’s dress shirt making unit is around 1600 shirts per day
or 390,000 pieces per annum. It has one line and operates in two shift basis for 275 working
days. The working days are set by deducting all Sundays and public holidays, and assuming that
annual maintenance works and unexpected work interruptions will take 25 days.
3.3 Production Program
The production program follows gradual capacity utilization due to market and technological
reasons. Since this project targets to export 65% its products to international market, some
time is required to secure a reasonable market size; while the technology refers to the speed with
which the operators assimilate the process know how. Accordingly, 50 % and 75 % capacity
utilization are assumed for the first and the second years of the operation, respectively. The third
year onwards, 100 % capacity utilization is assumed.
4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials
80% of raw materials obtained from local textile factories fabrics which are obtained from
factories such as Arba minch Textile Factory, Akkaki Textile Factory, Bahir Dar Textile Factory,
Dire-Dawa Textile Factory, Kombolcha Textile Factory and Awassa Textile Factory; and some
other raw materials like Internal linings, Sewing Thread and Buttons are imported from countries
such Italy.
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4.2 Annual Requirement and Cost of Raw Materials and Utilities
The annual requirements of main raw materials at 100 % capacity utilization with their
associated costs are given in Table 4.1.
Table 4.1
ANNUAL RAW MATERIAL REQUIREMENT
(AT FULL CAPACITY)
Cost(In Birr)
No Raw Material Unit Qty.
F.C L.C Total
2
1 Cotton Fabrics M 290,000 8,700,000 5,800,000
2 Internal Lining Dozen 18,333 220,000 220,000
3 Sewing Thread Ton 1.1 66,000 66,000
4 Buttons Packet 3,520 70,400 70,400
Total 356,400 8,700,000 9,056,400
Electricity and water requirement is about25.2 KWH and 1,000 m 3. The total annual cost of
utility at full capacity is equal to Birr 96,136
Table 4.2
UTILITIES REQUIREMENT
No. Utility Requirement Unit Price Cost

(Annual) (Birr)
1. Electricity 15,200 KWH Birr 4.68 /KWH 71,136
2. Water 1,000 m3 25 Birr m3 25,000
Total 96,136
5. Location and Site

For its convenience for the market and raw materials and its access to the facilities of the city
product to different parts of the world, among ANRS’s towns Bahir dar is an appropriate choice
to establish exportable men’s dress shirt making factory in Amhara region.
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6. Technology and Engineering
6.1 Production Process
Making of men’s dress shirt involves the following major steps.
1) Cutting Process
In the cutting process, the cloth is cut to the proper sizes, then is inspected, assorted, and
arranged to facilitate flow to the sewing process. Cut cloth must be combined with the
interlining, if to be applied. The cutting process consists of the following four processes:
(1) Drawing
A paper pattern is placed on the cloth and the pattern is copied on the cloth.
(2) Cloth Laying

The cloth is spread and piled on the cutting table.
(3) Cutting
The cloth is cut by a knife-type cutting machine or a die cutting machine.
(4) Arrangement
The cut cloth and interlining are inspected, assorted, and bundled, and a slip is attached to the
bundle.
2) Sewing Process
In the sewing process, the cut cloth is sewn one by one and the whole cloths are made into the
finished product. Generally, each part of shirt is made at different section and the shirt is made in
an integrating way. As the workers become specialized the work is mastered in a short time, and
efficiency is improved. 80 % of the direct labor of the sewing factory serves for the sewing
process.
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3) Finishing Process
In the finishing process the completely sewn shirt is inspected, pressed for body finishing and
collar finishing, ironed to the proper shape and then folded and packaged.
There is no alternative technology in sewing men’s dress shirt.
6.2 Machinery and Equipment
The lists of machinery and equipments required to establish a men’s dress shirt making is given
below
6.1 LIST OF MACHINERY AND EQUIPMENT
1. Blind stitch machine…………………………………..………10

2. Single needle lock stitch sewing machine…………………….200
3. 4-thread overlock chain stitch sewing machine……………...20
4. Top and bottom coverage chain stitch machine……………...5
5. Feed of the arm machine……………………………………..…10
6. 3-thread overlock machine……………………………………...20
7. 2 Needle zig zag chain stitch sewing machine…………………10
8. Multi thread chain stitch machine……………………………...15
9. Button hole lock stitch sewing machine………………………..10
10. Zig zag lock stitch sewing machine……………………………10
11. Button attaching sewing machine…………………………….10
12. 5-thread overlock sewing machine…………………………….20
13. 2-Needle chain stitch machine…………………………………20
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14. 2-Needle lock stitch sewing machine…………………………..60
15. Velcro tape attach sewing machine…………………………….10
16. Multi thread multi needle chain stitch sewing machine……….10
16. Eye let hole chain stitch sewing machine……………………….5
17. Fusing machine ………………………………………………….15
Total ……………………………………....……………………460 Machines
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TABLE 6.1
LIST OF MACHINERY AND EQUIPMENT
The total cost of machinery/equipment is estimated at Birr 8 million all of which is in foreign
currency. With lease financing opportunity in Development bank of Ethiopia it’s affordable
Within our capital.
Civil Engineering Cost
The building area required by the plant is estimated to be 1500 m 2, and it costs Birr 1,200,000.
This would include cost of land preparation and associated civil works. The total land area of the
plant, including the open space, is 9,000 m2 and its lease cost equals Birr 1,920,000. The cost of
the land lease is as per ANRS land lease rate for Bahir dar which is equal to Birr 240 per square
meter for industrial purpose.
7. Human Resource and Training Requirement

7.1 Human Resource
Details of the manpower requirement of the plant is shown in Table 7.1
Table 7.1
MANPOWER REQUIREMENT
Description No Monthly Annual
Salary (Birr) Salary (Birr)
A. Administration
1. Manager 1 3000 36000
2. Marketing Manager 1 2000 24000
3. Supervisors 2 1000 24000
4. Technicians 2 1000 24000
5. Personnel Officer 1 1000 12000
6. Accountant 1 1000 12000
7.Seretary 1 800 9600
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8. Cashier 1 600 7200
9. Storekeeper 1 600 7200
10.Guards 4 300 14400
Sub-total 15 170,400
B. Production
11. Skilled Workers (Tailors and 55 1000
Others) 55,000
12. Semi-skilled Workers 30 600
(laborers) 18,000
Benefits (20%)
2,916,000
101 3,499,200
The total annual wages and salary, including 20 % benefits, amount to Birr 3,499,200.
7.2 Training Requirement
One month on job training is required for the technical personnel. And, this can be managed by
hiring two experts in the area from the technology suppliers.
8. Financial Analysis
8.1 Underlying Assumption
The financial analysis of Men’s Dress Shirt Making plant is based on the data provided in the
preceding chapters and the following assumptions.
A. Construction and Finance
Construction Period 2 Years

Source Of Finance 40% Equity and 60% 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 the Fixed Investment
9
B. Depreciation
Building 5%
Machinery And Equipment 10%
Office Furniture 10%
Vehicles 20%
Pre-Production (Amortization) 20%
10
C. Working Capital (Minimum Days of Coverage)
Raw Material-Local 30 Days

Raw Material-Foreign 120 Days
Factory Supplies In Stock 30 Days
Spare Parts In Stock And Maintenance 30 Days
Work In Progress 10 Days
Finished Products 15 Days
Accounts Receivable 30 Days
Cash In Hand 30 Days
Accounts Payable 30 Days
8.2 Investment
The total investment cost of the project including working capital is estimated at Birr 5 million as
shown in Table 8.1 below. The owner shall contribute 40 % of the finance in the form of equity
while the remaining 60 % is to be financed by bank loan.
Table 8.1
Total Initial Investment
Items L.C F.C Total

Land
1,920,000 1,920,000
Building And Civil Works
3,200,000 3,200,000
Office Equipment
300,000 300,000
Vehicles
1,000,000 1,000,000
Plant Machinery & Equipment
8,000,000 8,000,000
Total Fixed Investment Cost
6,420,000 8,000,000 14,420,000
Pre Production Capital
Expenditure* 500,000 500,000
Total Initial Investment
6,920,000 8,000,000
Working Capital at Full Capacity
3,810,000 1,270,000 5,080,000
Total 10,730,000 9,270,000 20,000,000
*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.
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8.3 Production Costs
The total production cost at full capacity operation is estimated at Birr 11.1 million (See Table
8.2). Raw materials and utilities account for 85.8 %.
Table 8.2
PRODUCTION COST AT FULL CAPACITY
Raw Material Requirement Cost
1.Local Raw Materials 8,700,000
2.Foreign Raw Materials 356,400
Total Production Cost at full Capacity

Items Cost
1. Raw materials 9,056,400
2. Utilities 39,610
3. Wages and Salaries 866,880
4. Spares and Maintenance 84,164
Factory Costs 10,047,054
5. Depreciation 248,055
6. Financial Costs
300,718
Total Production Cost 10,595,826
8.4 Financial Evaluation
I. Profitability
According to the projected income statement (See Annex 4) the project will generate profit
beginning from the first year of operation and increases on wards. The income statement and
other profitability indicators also show that the project is viable.
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II. Breakeven Analysis
The breakeven point of the projects is given by the formula:
BEP = Fixed Cost

Sale –Variable Cost at full capacity.
The project will break even at 18 % of capacity utilization
III. Payback Period

Investment cost and income statement projection are used in estimating the project payback
period. The project will payback fully the initial investment less working capital in two years.
IV. Simple Rate of Return

The project’s simple rate of return (SRR) is given by the formula:
SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 41 % at full capacity utilization.
V. Internal Rate of Return and Net Present Value

Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR) of the
project is 44.9 % and the net present value (NPV) at 18 % discount is Birr 4,548 thousands.
VI. Sensitivity Analysis

The sensitivity test result which undertaken by increasing the cost of production by 10 % still
indicates that the project would be viable.
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:
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A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 2.8 million per
year and Birr 27.5 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.
B. Tax Revenue
In the project life under consideration, the region will collect about Birr 6.6 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region
C. Export Promotion and Foreign Exchange Earning
Based on the projected figure we learn that in the project life an estimated amount of US Dollar
12.2 million will be earned as a result of the proposed project. This will create an additional hard
currency to be allocated on vital and strategic sectors
D. Employment and Income Generation
The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide permanent employment to 65 professionals as well as support
stuffs. Consequently the project creates income of Birr 867 thousands per year. This would be
one of the commendable accomplishments of the project.
E. Pro Environment Project
The proposed production process is environment friendly.
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10. Specifications Sewing Machines we use
1. Blind stitch machine
 Brand: JACK
 Bed type: Cylinder
 No. of Needle: 1 (curved needle is used) Thread: 1
 Stitch Class: 101
 RPM: 3000+
Applications / Uses of blind stitch sewing machines: Used on blazer, towser hem purpose
2. Single needle lock stitch sewing machine
 Brand: JACK
 Bed type: Flat
 No. of Needle: 1
 RPM: 4000 (We can use 5000 rpm)
 Drop feed mechanism.
Applications / Uses: Suitable for sewing various shirts, suits, especially for collar, front of
garment
Fig: Stitch of Single needle lock stitch sewing machine
3. 4-thread overlock chain stitch sewing machine
 Brand: JACK
 Bed type: Flat
 Thread: 4 (2 for lopper, 2 for needle)
 Stitch Class: 514
 RPM: 3000+
 Seam: Superimposed seam
Applications / Uses: Knit garments joining purpose.
Fig: Inside stitch of 4-thread overlock chain stitch sewing machine Fig: Top side stitch of 4-
thread overlock chain stitch sewing machine
4. Top and bottom coverage chain stitch machine
1. Brand: JACK
2. Industrial Name: Flat lock
3. Bed type: Cylinder
15
4. No. of Needle: 2 (Maximum usable 3 needle)
5. Thread: 4 (1 for looper, 3 for needle)
6. RPM: 3000+
7. Seam: Edge neatening seam
Applications / Uses: Stitching on T-shirt bottom hem, used on knit garments top stitch.
Fig: Stitch of Top and bottom coverage chain stitch machine
5. Feed of the arm machine
 Brand: JUKI
 Bed type: Arm bed
 No. of Needle: 2 (Depend on looper)
 Thread: 4
 Stitch class: 401
 RPM: 3000+
 Seam: Lapped seam
 Lap folder used for folding the fabric
Applications / Uses: Used on woven garments, side seam, back yokw join, slip join, commonly
used on flat tubular operation.
Fig: Stitch of Feed of the arm machine
6. 3-thread overlock machine
 Brand: JUKI
 Bed type: Flat
 Looper: 2
 Thread: 3
 RPM: 3000+
 Seam: Edge neatening seam
Applications / Uses: Used on woven garments and single fabric edge finishing
7. 2 Needle zig zag chain stitch sewing machine
 Brand: KANSAI
 Bed type: Flat
 Looper: 2
 RPM: 3000+
16
 Seam: Flat seam
Applications / Uses: Decoration purpose used.
Fig: Stitch of 2 Needle zig zag chain stitch sewing machine
8. Multi thread chain stitch machine
 Brand: KANSAI
 No. of Needle: 1 (auto movable needle)
Applications / Uses: The design of the decoration is pre-install in the software of this machine.
It is used in fabric edge.
Fig: Stitch of Multi thread chain stitch machine
9. Button hole lock stitch sewing machine
 Brand: BROTHER
 Bed type: Raised bed
 Thread: 3
You may also like: Button Hole Machine: Parts, Specification and Working Principle
Applications / Uses: Create button hole on the fabric, it operating by machine computer panel.
Fig: Stitch of Button hole lock stitch sewing machine
10. Zig zag lock stitch sewing machine
 Brand: JUKI
 Bed type: Flat
Applications / Uses: Decoration purpose.
Fig: Stitch of Zig zag lock stitch sewing machine
11. Button attaching sewing machine
 Brand: BROTHER
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Applications / Uses: Attaching the 2/4-hole button on fabric
Fig: Stitch of Button attaching sewing machine
12. 5-thread overlock sewing machine
 Brand: JUKI
 Looper: 3
 Seam: Superimpose
Applications / Uses: Use on woven garments joining purpose.
Fig: Stitch of 5-thread overlock sewing machine
13. 2-Needle chain stitch machine
 Brand: JUKI
 Bed type: Flat
 Looper: 2
 Thread: 4
Applications / Uses: Use on Top stitching, back yoke joining purpose.
Fig: Stitch of 2-Needle chain stitch machine
14. 2-Needle lock stitch sewing machine
 Brand: GEMSY
 Bed type: Flat
 Bobbin: 2
 No. of Needle: 2 (It is also possible to work by turning off the one needle)
Applications / Uses: Use on pocket join, commonly used on denim and jeans garments.
Fig: Stitch of 2-Needle lock stitch sewing machine
15. Velcro tape attach sewing machine
 Brand: GEMSY
 Needle: 1
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Applications / Uses: Attaching the labels on the fabric, also used on decoration purpose.
Fig: Stitch of Velcro tape attach sewing machine
16. Multi thread multi needle chain stitch sewing machine
 Brand: GEMSY
 Industrial Name: KANSAI
 No. of needle: 4 (12 needle, 12 looper usable)
 Thread: 24
Applications / Uses: Box plate of the shirt can be sewn, used on woven and knit garments.
Fig: Stitch of Multi thread multi needle chain stitch sewing machine
16. Eye let hole chain stitch sewing machine
 Brand: DURKOPP ADLER

Applications / Uses: Create button hole on the blazer, Jacket
Fig: Stitch of Eye let hole chain stitch sewing machine
17. Fusing machine
 Brand: HASHIMA
 Roller: 2
Applications / Uses: It is suitable for woven/knitting fabrics. Whole role fabric and interlining
are fusible because the pressure is applied for a short time on the interlining and the fabric.
Fig: Fusing machine
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ANNEXES
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Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
Capacity Utilization (%) 0 0 50% 75% 100% 100%
1. Total Inventory 0.00 0.00 1535980.67 2303971.00 3071961.34 3071961.34
Raw Materials in Stock- Total 0.00 0.00 552305.45 828458.18 1104610.91 1104610.91
Raw Material-Local 0.00 0.00 474545.45 711818.18 949090.91 949090.91
Raw Material-Foreign 0.00 0.00 77760.00 116640.00 155520.00 155520.00
Factory Supplies in Stock 0.00 0.00 5615.51 8423.27 11231.03 11231.03
Spare Parts in Stock and Maintenance 0.00 0.00 4590.74 6886.10 9181.47 9181.47
Work in Progress 0.00 0.00 140387.84 210581.75 280775.67 280775.67
Finished Products 0.00 0.00 280775.67 421163.51 561551.35 561551.35
2. Accounts Receivable 0.00 0.00 720000.00 1080000.00 1440000.00 1440000.00
3. Cash in Hand 0.00 0.00 49444.91 74167.36 98889.82 98889.82
CURRENT ASSETS 0.00 0.00 1753120.12 2629680.18 3506240.25 3506240.25
4. Current Liabilities 0.00 0.00 720000.00 1080000.00 1440000.00 1440000.00
Accounts Payable 0.00 0.00 720000.00 1080000.00 1440000.00 1440000.00
TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 1033120.12 1549680.18 2066240.25 2066240.25
INCREASE IN NET WORKING CAPITAL 0.00 0.00 1033120.12 516560.06 516560.06 0.00
1
Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
PRODUCTION
5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100% 100%
1. Total Inventory 3071961.34 3071961.34 3071961.34 3071961.34 3071961.34 3071961.34
Raw Materials in Stock-Total 1104610.91 1104610.91 1104610.91 1104610.91 1104610.91 1104610.91
Raw Material-Local 949090.91 949090.91 949090.91 949090.91 949090.91 949090.91
Raw Material-Foreign 155520.00 155520.00 155520.00 155520.00 155520.00 155520.00
Factory Supplies in Stock 11231.03 11231.03 11231.03 11231.03 11231.03 11231.03
Spare Parts in Stock and Maintenance 9181.47 9181.47 9181.47 9181.47 9181.47 9181.47
Work in Progress 280775.67 280775.67 280775.67 280775.67 280775.67 280775.67
Finished Products 561551.35 561551.35 561551.35 561551.35 561551.35 561551.35
2. Accounts Receivable 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00
3. Cash in Hand 98889.82 98889.82 98889.82 98889.82 98889.82 98889.82
CURRENT ASSETS 3506240.25 3506240.25 3506240.25 3506240.25 3506240.25 3506240.25
4. Current Liabilities 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00
TOTAL NET WORKING CAPITAL REQUIRMENTS 2066240.25 2066240.25 2066240.25 2066240.25 2066240.25 2066240.25
INCREASE IN NET WORKING CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00
2
Annex 2: Cash Flow Statement (in Birr)
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 1472861.25 3539101.50 7320000.00 10260000.00 13560000.00 13200000.00
1. Inflow Funds 1472861.25 3539101.50 720000.00 360000.00 360000.00 0.00
Total Equity 589144.50 1415640.60 0.00 0.00 0.00 0.00
Total Long Term Loan 883716.75 2123460.90 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 720000.00 360000.00 360000.00 0.00
2. Inflow Operation 0.00 0.00 6600000.00 9900000.00 13200000.00 13200000.00
Sales Revenue 0.00 0.00 6600000.00 9900000.00 13200000.00 13200000.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 1472861.25 1472861.25 7577225.22 9318641.71 12541381.45 11622720.90
4. Increase In Fixed Assets 1472861.25 1472861.25 0.00 0.00 0.00 0.00
Fixed Investments 1402725.00 1402725.00 0.00 0.00 0.00 0.00
Pre-production Expenditures 70136.25 70136.25 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 1753120.12 876560.06 876560.06 0.00
6. Operating Costs 0.00 0.00 5063563.79 7580024.06 10096484.33 10096484.33
7. Corporate Tax Paid 0.00 0.00 0.00 0.00 766423.02 784466.09
8. Interest Paid 0.00 0.00 760541.31 360861.32 300717.76 240574.21
9.Loan Repayments 0.00 0.00 0.00 501196.27 501196.27 501196.27
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 0.00 2066240.25 -257225.22 941358.29 1018618.55 1577279.10
Cumulative Cash Balance 0.00 2066240.25 1809015.03 2750373.31 3768991.86 5346270.96
3
Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
1. Inflow Funds 0.00 0.00 0.00 0.00 0.00 0.00
Total Equity 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loan 0.00 0.00 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 0.00 0.00 0.00 0.00
Sales Revenue 13200000.00 13200000.00 13200000.00 13200000.00 13200000.00 13200000.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
4. Increase In Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 0.00 0.00 0.00 0.00
6. Operating Costs 10096484.33 10096484.33 10096484.33 10096484.33 10096484.33 10096484.33
8. Interest Paid 180430.66 120287.11 60143.55 0.00 0.00 0.00
9. Loan Repayments 501196.27 501196.27 501196.27 0.00 0.00 0.00
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 1619379.58 1653063.72 1695164.21 2238460.97 2238460.97 2238460.97
Cumulative Cash Balance 6965650.54 8618714.26 10313878.47 12552339.44 14790800.41 17029261.37
4
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
Year 1 Year 2 1 2 3 4
Sales Revenue 0.00 0.00 6600000.00 9900000.00 13200000.00 13200000.00
2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
3. Increase in Fixed Assets 1472861.25 1472861.25 0.00 0.00 0.00 0.00
4. Increase in Net Working Capital 0.00 0.00 1033120.12 516560.06 516560.06 0.00
5. Operating Costs 0.00 0.00 5063563.79 7580024.06 10096484.33 10096484.33
NET CASH FLOW -1472861.25 -1472861.25 503316.09 1803415.88 2586955.61 2319049.58
CUMMULATIVE NET CASH FLOW -1472861.25 -2945722.50 -2442406.41 -638990.53 1947965.07 4267014.66
Net Present Value (at 18%) -1472861.25 -1248187.50 361473.78 1097614.58 1334322.92 1013677.95
Cumulative Net present Value -1472861.25 -2721048.75 -2359574.97 -1261960.39 72362.53 1086040.48
5
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
5 6 7 8 9 10
Sales Revenue 13200000.00 13200000.00 13200000.00 13200000.00 13200000.00 13200000.00
2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
3. Increase in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
4. Increase in Net Working Capital 0.00 0.00 0.00 0.00 0.00 0.00
5. Operating Costs 10096484.33 10096484.33 10096484.33 10096484.33 10096484.33 10096484.33
NET CASH FLOW 2301006.52 2274547.10 2256504.03 2238460.97 2238460.97 2238460.97
CUMMULATIVE NET CASH FLOW 6568021.17 8842568.27 11099072.31 13337533.28 15575994.25 17814455.22
Net Present Value (at 18%) 852365.39 714037.27 600316.19 504674.62 427690.35 362449.45
Cumulative Net present Value 1938405.86 2652443.14 3252759.33 3757433.94 4185124.29 4547573.74
Net Present Value (at 18%) 4,547,573.74
Internal Rate of Return 44.9%
6
Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 50% 75% 100% 100% 100%
1. Total Income 6600000.00 9900000.00 13200000.00 13200000.00 13200000.00

Sales Revenue 6600000.00 9900000.00 13200000.00 13200000.00 13200000.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 4859544.54 7289316.81 9719089.08 9719089.08 9719089.08
VARIABLE MARGIN 1740455.46 2610683.19 3480910.92 3480910.92 3480910.92
(In % of Total Income) 26.37 26.37 26.37 26.37 26.37
3. Less Fixed Costs 452073.75 538761.75 625449.75 625449.75 625449.75
OPERATIONAL MARGIN 1288381.71 2071921.44 2855461.17 2855461.17 2855461.17
4. Less Cost of Finance 760541.31 360861.32 300717.76 240574.21 180430.66
5. GROSS PROFIT 527840.40 1711060.12 2554743.41 2614886.96 2675030.51
6. Income (Corporate) Tax 0.00 0.00 766423.02 784466.09 802509.15
7. NET PROFIT 527840.40 1711060.12 1788320.38 1830420.87 1872521.36
RATIOS (%)
Gross Profit/Sales 8.00% 17.28% 19.35% 19.81% 20.27%
Net Profit After Tax/Sales 8.00% 17.28% 13.55% 13.87% 14.19%
Return on Investment 32.38% 46.09% 41.68% 41.32% 40.96%
Return on Equity 26.33% 85.35% 89.20% 91.30% 93.40%
7
Annex 4: NET INCOME STATEMENT (in Birr):Continued
PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%
1. Total Income 13200000.00 13200000.00 13200000.00 13200000.00 13200000.00

Sales Revenue 13200000.00 13200000.00 13200000.00 13200000.00 13200000.00
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 9719089.08 9719089.08 9719089.08 9719089.08 9719089.08
VARIABLE MARGIN 3480910.92 3480910.92 3480910.92 3480910.92 3480910.92
3. Less Fixed Costs 597395.25 597395.25 597395.25 597395.25 597395.25
OPERATIONAL MARGIN 2883515.67 2883515.67 2883515.67 2883515.67 2883515.67
4. Less Cost of Finance 120287.11 60143.55 0.00 0.00 0.00
5. GROSS PROFIT 2763228.56 2823372.12 2883515.67 2883515.67 2883515.67
6. Income (Corporate) Tax 828968.57 847011.64 865054.70 865054.70 865054.70
7. NET PROFIT 1934259.99 1976360.48 2018460.97 2018460.97 2018460.97
RATIOS (%)
Gross Profit/Sales 20.93% 21.39% 21.84% 21.84% 21.84%
Net Profit After Tax/Sales 14.65% 14.97% 15.29% 15.29% 15.29%
Return on Investment 40.99% 40.63% 40.27% 40.27% 40.27%
Return on Equity 96.48% 98.58% 100.68% 100.68% 100.68%
8
Annex 5: Projected Balance Sheet (in Birr)
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 1472861.25 5011962.75 6259803.15 7829667.00 9476791.10 10806015.70
1. Total Current Assets 0.00 2066240.25 3562135.15 5380053.50 7275232.10 8852511.20
Inventory on Materials and Supplies 0.00 0.00 562511.70 843767.56 1125023.41 1125023.41
Work in Progress 0.00 0.00 140387.84 210581.75 280775.67 280775.67
Finished Products in Stock 0.00 0.00 280775.67 421163.51 561551.35 561551.35
Accounts Receivable 0.00 0.00 720000.00 1080000.00 1440000.00 1440000.00
Cash in Hand 0.00 0.00 49444.91 74167.36 98889.82 98889.82
Cash Surplus, Finance Available 0.00 2066240.25 1809015.03 2750373.31 3768991.86 5346270.96
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 1472861.25 2945722.50 2697668.00 2449613.50 2201559.00 1953504.50
Fixed Investment 0.00 1402725.00 2805450.00 2805450.00 2805450.00 2805450.00
Construction in Progress 1402725.00 1402725.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 70136.25 140272.50 140272.50 140272.50 140272.50 140272.50
Less Accumulated Depreciation 0.00 0.00 248054.50 496109.00 744163.50 992218.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 1472861.25 5011962.75 6259803.15 7829667.00 9476791.10 10806015.70
5. Total Current Liabilities 0.00 0.00 720000.00 1080000.00 1440000.00 1440000.00
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 883716.75 3007177.65 3007177.65 2505981.37 2004785.10 1503588.82
Loan A 883716.75 3007177.65 3007177.65 2505981.37 2004785.10 1503588.82
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 589144.50 2004785.10 2004785.10 2004785.10 2004785.10 2004785.10
Ordinary Capital 589144.50 2004785.10 2004785.10 2004785.10 2004785.10 2004785.10
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward 0.00 0.00 0.00 527840.40 2238900.53 4027220.91
9.Net Profit After Tax 0.00 0.00 527840.40 1711060.12 1788320.38 1830420.87
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 0.00 0.00 527840.40 1711060.12 1788320.38 1830420.87
9
Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 12177340.78 13610404.50 15085568.71 17104029.68 19122490.65 21140951.62
1. Total Current Assets 10471890.78 12124954.50 13820118.71 16058579.68 18297040.65 20535501.62
Inventory on Materials and Supplies 1125023.41 1125023.41 1125023.41 1125023.41 1125023.41 1125023.41
Work in Progress 280775.67 280775.67 280775.67 280775.67 280775.67 280775.67
Finished Products in Stock 561551.35 561551.35 561551.35 561551.35 561551.35 561551.35
Accounts Receivable 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00
Cash in Hand 98889.82 98889.82 98889.82 98889.82 98889.82 98889.82
Cash Surplus, Finance Available 6965650.54 8618714.26 10313878.47 12552339.44 14790800.41 17029261.37
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 1705450.00 1485450.00 1265450.00 1045450.00 825450.00 605450.00
Fixed Investment 2805450.00 2805450.00 2805450.00 2805450.00 2805450.00 2805450.00
Construction in Progress 0.00 0.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 140272.50 140272.50 140272.50 140272.50 140272.50 140272.50
Less Accumulated Depreciation 1240272.50 1460272.50 1680272.50 1900272.50 2120272.50 2340272.50
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 12177340.78 13610404.50 15085568.71 17104029.68 19122490.65 21140951.62
5. Total Current Liabilities 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00 1440000.00
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 1002392.55 501196.27 0.00 0.00 0.00 0.00
Loan A 1002392.55 501196.27 0.00 0.00 0.00 0.00
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 2004785.10 2004785.10 2004785.10 2004785.10 2004785.10 2004785.10
Ordinary Capital 2004785.10 2004785.10 2004785.10 2004785.10 2004785.10 2004785.10
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought Forward 5857641.78 7730163.14 9664423.13 11640783.61 13659244.58 15677705.55
9. Net Profit After Tax 1872521.36 1934259.99 1976360.48 2018460.97 2018460.97 2018460.97
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 1872521.36 1934259.99 1976360.48 2018460.97 2018460.97 2018460.97
10

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Project Profile on the Establishment of Modern

Garment for Export and Re-Export Making

Tinsae Habtam and friends Partenership union

2. Product Description and Application

3. Market Study, Plant Capacity and Production Program

3.1.1 Present Demand and Supply

3.1.2 Projected Demand

3.2 Plant Capacity

3.3 Production Program

4. Raw Materials and Utilities

No. Utility Requirement Unit Price Cost

5. Location and Site

Making of men’s dress shirt involves the following major steps.

(2) Cloth Laying

There is no alternative technology in sewing men’s dress shirt.

6.2 Machinery and Equipment

6.1 LIST OF MACHINERY AND EQUIPMENT

1. Blind stitch machine…………………………………..………10

5. Feed of the arm machine……………………………………..…10

6. 3-thread overlock machine……………………………………...20

7. 2 Needle zig zag chain stitch sewing machine…………………10

8. Multi thread chain stitch machine……………………………...15

9. Button hole lock stitch sewing machine………………………..10

10. Zig zag lock stitch sewing machine……………………………10

11. Button attaching sewing machine…………………………….10

12. 5-thread overlock sewing machine…………………………….20

13. 2-Needle chain stitch machine…………………………………20

15. Velcro tape attach sewing machine…………………………….10

16. Multi thread multi needle chain stitch sewing machine……….10

16. Eye let hole chain stitch sewing machine……………………….5

17. Fusing machine ………………………………………………….15

Total ……………………………………....……………………460 Machines

Civil Engineering Cost

7. Human Resource and Training Requirement

7.2 Training Requirement

A. Construction and Finance

Construction Period 2 Years

Raw Material-Local 30 Days

Items L.C F.C Total

Total Production Cost at full Capacity

8.4 Financial Evaluation

BEP = Fixed Cost

The project will break even at 18 % of capacity utilization

III. Payback Period

IV. Simple Rate of Return

V. Internal Rate of Return and Net Present Value

VI. Sensitivity Analysis

9. Economic and Social Benefit and Justification

C. Export Promotion and Foreign Exchange Earning

D. Employment and Income Generation

E. Pro Environment Project

The proposed production process is environment friendly.

1. Blind stitch machine

2. Single needle lock stitch sewing machine

Fig: Stitch of Single needle lock stitch sewing machine

3. 4-thread overlock chain stitch sewing machine

Applications / Uses: Knit garments joining purpose.