Project Profile on the Establishment of Modern

Garment and its accessories Making Plant

Mekelle ,Ethiopia

Project promoter: selam Afera

Mobile:251914730282
 Table of Contents

I. Executive Summary............................................................................ 1

II. Product Description and Application...................................................3

III. Market Study, Plant Capacity and Production Program.......................4

Market Study............................................................................................................................................ 4
Present Demand and Supply................................................................................................................4
Projected Demand....................................................................................................................................5
Pricing and Distribution.............................................................................................................................6
Plant Capacity........................................................................................................................................... 6
Production Program..................................................................................................................................6

IV. Raw Materials and Utilities.................................................................6

Availability and Source of Raw Materials..................................................................................................6
Annual Requirement and Cost of Raw Materials and Utilities...................................................................8

V. Location and Site.............................................................................. 10

VI. Technology and Engineering.............................................................10

Production Process.................................................................................................................................10
Making Garment production process.................................................................................................10
plastic button production process......................................................................................................11
Plastic zippers production process.....................................................................................................12
Machinery and Equipment......................................................................................................................12
Civil Engineering Cost..............................................................................................................................15

VII. Human Resource and Training Requirement.....................................16

Human Resource.....................................................................................................................................16
 P a g e |3

Training Requirement.............................................................................................................................17

VIII. Financial Analysis........................................................................17

Underlying Assumption...........................................................................................................................17
Investment..............................................................................................................................................18
Production Costs.....................................................................................................................................19
Sales revenue..........................................................................................................................................19
Financial Evaluation................................................................................................................................20
Profitability.........................................................................................................................................20
Breakeven Analysis.............................................................................................................................20
Payback Period...................................................................................................................................20
Simple Rate of Return.........................................................................................................................20
Internal Rate of Return and Net Present Value..................................................................................20
Sensitivity Analysis.............................................................................................................................21

IX. Economic and Social Benefit and Justification...................................21

Profit Generation....................................................................................................................................21
Tax Revenue............................................................................................................................................21
Employment and Income Generation.....................................................................................................21
Pro-Environment Project.........................................................................................................................22

ANNEXES................................................................................................ 23
ANNEX 1: projected income statement.....................................................................................................1
ANNEX2: operating cash flow....................................................................................................................2
ANNEX3: Loan repayment schedule..........................................................................................................3
 P a g e |1

I. Executive Summary
According to 2017 trade report, by International Trade Center (ITC), the total apparel products
imported by the world was about 196,786,089,000 USD in value, from which about 83,324,000.00
USD was imported by Ethiopia. Taking these values as a base line and average growth rate of 2%
and 4% respectively, the present (2013’s) world import demand for apparel products is estimated to
be 204,736,247,000.00 USD, which is approximately about 50 billion pieces/year, and the amount to
be imported by Ethiopia is estimated to reach 90,123,238.00 USD, which is approximately about
22million pieces/year. There is a total production capacity of about 73 million woven and knitted
garments existing current in the country, from which only about 75% (56.25 million pieces) is utilized
yet. In the previous year, about 27.5% (15.48 million pieces) of total production was exported by the
country. Based on the above assumptions, there exists about 25% (18.25 million pieces) unutilized
capacity, currently, which would cover about 13 million pieces of local demand proportionately.
Hence, deducting 13 million from 22 million, we get 9 million capacity gaps to meet only the local
extra demands for various garment products. The import demand is likely to reach at 60 billion
pieces/year globally, and 31.5 million pieces/year for Ethiopia by the year 2025.

This project profile envisages the establishment of a garment and its accessories making plant
which is to be engaged in production of different apparel products such as trouser, jacket, coat,
shirt, blouses, baby garments, plastic buttons and plastic zippers with a capacity of 74, 662 pieces of
clothes,384,000 gross of plastic buttons and 60000 meters of plastic zippers s per annum.

The total investment cost is estimated to be Birr 5,299,888, The owner shall contribute 20 % of the
finance in the form of equity while the remaining 80 % is to be financed by bank loan. out of which
60% is required for plant and machinery, 40% is for working capital.

The project is financially viable the that it will reach breakeven point approximately at 36% of the
capacity and has a payback period of 2years. Based on cash flow statement (See Annex 2) the
 P a g e |2

calculated internal rate of return (IRR) of the project is 98 % and the net present value (NPV) at 18 %
discount is Birr 10.4 million.

The project is found to be financially viable and earns on average a profit of Birr 5.7 million per year and Birr 28.7
million within the project life. Such result induces the project promoters to reinvest the profit which, therefore,
increases the investment magnitude in the region.

In the project life under consideration, the region will collect about Birr 12.3 million from corporate tax payment
alone (i.e. excluding income tax, sales tax and VAT). Such result creates additional fund for the regional
government that will be used in expanding social and other basic services in the region

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 3.5 million per year. This would be one of the commendable accomplishments of the project.

The proposed production process is environment friendly.

 P a g e |3

II. Product Description and Application

The envisaged plant is designed to produce Garment, plastic buttons and plastic zippers. Accordingly garment the
first line product of the plant. 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.

Product Mix quantity in(pcs) Quantity (Kg)

Men's suits, jackets, trousers etc & shorts (1 pc = 1.75kg) 9,253
5,287.69
Men's Shirts (1 pc = 350gm) 9,253
26,438.29
Women's blouses and shirts 7,403
24,675.83
(1 pc = 300gm)
Women's suits, jackets, dresses skirts etc & shorts (1 pc = 7,403
1.25kg) 5,922.20

Babies Garments (1 pc = 300gm) 3,701

12,338.00
Total 37,014
74,662.00

Plastic button is the second line product of the plant. Buttons are made from horns, bones, metals or from
synthetic materials like celluloid, acrylic sheet etc. Nowadays plastic buttons are most popular although buttons
from other materials are also made for various purposes. Needless to say, polyester buttons have become
synonymous with shirt buttons, because nowadays if one says “polyester button,” it is understood to mean shirt
buttons, leaving it to enjoy the largest demand in the button industry.
 P a g e |4

Zippers also another product of the envisioned plan are used for opening and closing attachments to garments and
bags. Metallic zippers are now becoming obsolete (at least for garment uses), and plastic version are taking their
places. Plastic zippers can either be nylon or polyester type. This profile considers nylon-type plastic zippers. The
sizes of zippers are determined by the width across the chain measured in mm.

III. Market Study, Plant Capacity and Production Program

Market Study
Present Demand and Supply

Textile and garment industry have 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 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,
 P a g e |5

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.

Projected Demand

According to 2017 trade report, by International Trade Center (ITC), the total apparel products
imported by the world was about 196,786,089,000 USD in value, from which about 83,324,000.00
USD was imported by Ethiopia. Taking these values as a base line and average growth rate of 2%
and 4% respectively, the present (2013’s) world import demand for apparel products is estimated to
be 204,736,247,000.00 USD, which is approximately about 50 billion pieces/year, and the amount
to be imported by Ethiopia is estimated to reach 90,123,238.00 USD, which is approximately about
22million pieces/year. There is a total production capacity of about 73 million woven and knitted
garments existing current in the country, from which only about 75% (56.25 million pieces) is
utilized yet. In the previous year, about 27.5% (15.48 million pieces) of total production was
exported by the country. Based on the above assumptions, there exists about 25% (18.25 million
pieces) unutilized capacity, currently, which would cover about 13 million pieces of local demand
proportionately. Hence, deducting 13 million from 22 million, we get 9 million capacity gaps to
meet only the local extra demands for various garment products. The import demand is likely to
reach at 60 billion pieces/year globally, and 31.5 million pieces/year for Ethiopia by the year 2025.

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.
 P a g e |6

Pricing and Distribution

The average wholesale price of LDC made standard exportable men’s dress shirt ranges from Birr 1120 (USD 20)
per piece up to Birr 197 (USD 3.7) per piece. The envisaged project plans also to sell plastic buttons with Birr 5.40
per gross and plastic zipper with 60 Birr per meter.

Plant Capacity
The project envisages production of 74, 662 pieces of clothes,384,000 gross of plastic buttons and 60,000 meters
of plastic zippers per annum. It has one line and operates in one 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.

Production Program

The production program follows gradual capacity utilization due to market and technological reasons. Since this
project targets the 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, 85 % and
90 % capacity utilization are assumed for the first and the second years of the operation, respectively. The third
year onwards, 100 % capacity utilization is assumed.

IV. Raw Materials and Utilities

Availability and Source of Raw Materials

The main raw materials for the plant will be the textiles fabrics which are obtained from factories such as Almeda
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 outside countries.

The other required raw materials for the plant are for plastic button and this will be acrylic sheet and urea
formaldehyde. Both of them are imported items and the raw materials for zippers are plastic zippers, the cloth or
fabric where the zippers are sewed, the sewing thread used to sew the zipper and the small plastic or metal parts
at the tips of the zipper. The cloth and thread can be obtained from domestic factories. The metal or the plastic
parts have to be imported.
 P a g e |7

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 FOR GARMENT
(AT FULL CAPACITY)

Material Unit
type U/M Qty Price Total Cost
Fabric kg 39,014 255 9,948,684.75
Buttons kg 778 152.5 118,638.14
5
Sewing thread kg 439 149.1 65,522.00
Accessories - Lump - 172,013.15
sum
Packing - >> >> - 103,207.90
material
10,408,065.9
3
 P a g e |8

TABLE 4.2
ANNUAL RAW MATERIAL REQUIREMENT FOR PLASTIC BUTTON
(AT FULL CAPACITY)

No Raw Material Unit Qty. Cost (In

Birr)
F.C L.C Total
1 Acrylic Sheet Tons 6.5 618,252 618,252
2 Urea Formaldehyde Tons 12 392,823 392,823
3 Packaging lamp 50,553 50,553
sum
Total 1,011,07 50,553 1,061,628
5

TABLE 4.3
ANNUAL RAW MATERIAL REQUIREMENT FOR PLASTIC ZIPPERS
(AT FULL CAPACITY)

Item Quantity Cost Total total

- Nylon Filament Yarn 400 kg 150/kg 200,00 3
0 600,000.00

- Cotton Tape 1,250,000m 60/100m 250,00 3

0 750,000.00

- Components (Top, Bottom, Slider and 3,400,000 270/1000 306,00 3

etc) sets m 0 918,000.00

- Packaging 80,000 3
240,000.00
Total 836,00
 P a g e |9

0 2,508,000.00

Electricity and water requirement is about 126 MWH and 1,000 m 3. The total annual cost of utility at full capacity is
equal to Birr 70,730.00.

Table 4.4: UTILITIES REQUIREMENT

Utility Annual Requirement (KWh/year) Unit Total Cost (Birr)

price/KWh

Electric power 12600KWh 0.55 6,930.00

Water 1000 M3 3.8 3,800.00
Fuel and oils 1200lit 50 60,000.00
70,730.00

V. Location and Site

For its convenience to procure raw materials and its access to the capital city to export the product to different
parts of the world, among TNRS’s towns Mekelle is an appropriate choice to establish exportable standard
garments and its accessories making plant in Tigray region.

Accordingly, the promoter of the project is committed to provide 500 m2 workshop via rent.
 P a g e | 10

VI. Technology and Engineering

Production Process

Making Garment production process

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.
 P a g e | 11

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.

plastic button production process

The acrylic sheets are cut into required pieces i.e. 1inch to 1.5 inch and 2 inch width on the sheet cutting machine.
Round pieces of actual size of the buttons are then made on a drill machine with the help of a hollow mill cutter.
Thereafter, proper designing/ shaping is done on the buttons by the designing /shaping machine. The designing of
the type of fish eye is obtained with the help of slotting machine. Other such type of suitable designs can also be
made with the help of slotting machine which is attached to the designing/shaping machine. After the completion
of the above process, the buttons are polished. Lastly 2 to 4 holes as may be required are made in bottom. This is
done on the hole-master machine. The following is the sequence of operation:

1. Cutting of acrylic sheet to rough shaped buttons

2. Cutting to required size and shape

3. Forming of designs on the front surface

4. Drilling of holes

5. Polishing of buttons

6. Packing

For urea formaldehyde buttons, the molding powder is first converted in to tablets of suitable size and width by
tableting machine. These tablets are preheated in an oven and thereafter, compression molded in to buttons by a
semi-automatic compression molding machine. The molded buttons are buffed if necessary and then packed.

Currently, there is no alternative technology to make plastic buttons.

 P a g e | 12

Plastic zippers production process

The production process of plastic zippers involves the following major manufacturing operations:

- Nylon monofilament yarn is formed into double coils through the application of heat.

- After sewing, the chain is provided with the help of a sewing machine for joining to the tape.

- After sewing, the chain is provided with teeth using automatic gaping machine.

- Bottom stops are provided with the help of a semi-automatic bottom stop attaching machine.

- The required length of chain is cut using a cutting machine.

- The hand grip is fixed manually and clamped pneumatically.

- The top stop is attached using semi-automatic machine.

Alternatively, it is possible to make polyester-type plastic zippers with different technology

 P a g e | 13

Machinery and Equipment

The lists of machinery and equipment required to establish a men’s dress shirt making is given below (Table 6.1).

TABLE 6.1: Garment production machineries and equipment’s

Unit
Description Qty. Price in birr
Single needle stitching machine 4 33600
134,400.00
Double needle stitching machine 4 42000
168,000.00
Over lock machine 2 44800
89,600.00
Inter lock (cover stitch) machine 2 44800
89,600.00
Bar tacking machine 1 44800
44,800.00
Blind stitch machine 1 12600
12,600.00
Zigzag sewing machine 1 140000
140,000.00
Waist stitching machine 1 33600
33,600.00
Button hole making machine 1 84000
84,000.00
Button attaching machine 1 84000
84,000.00
Thread winding machine 1 4480
4,480.00
Collar turning machine 1 75600
75,600.00
Cuff turning machine 1 75600
75,600.00
Band knife 1 151200
151,200.00
Vertical blade cutter 1 31920
 P a g e | 14

31,920.00
Drilling machine 1 31920
31,920.00
Spreading and Cutting Table (manual) 1 75600
75,600.00
Fusing machine 1 15120
15,120.00
Electrical portable ironing machine 4 3024
12,096.00
Steam ironing machine 2 14952
29,904.00
Vacuum Ironing table 2 14952
29,904.00
total 34
1,413,944.00

TABLE 6.2Plastic button MACHINERY & EQUIPMENT

Item Number UC TC
1. Acrylic Button Section
1.1 Sheet Cutting Machine 1
1.2 Drilling Machine 1
1.3 Design/Shaping Machine 1
1.4 Hole-Master Machine 1
1.5 Grinding/Polishing Machine 1
2. Urea Formaldehyde
2.1 Power Operated Tableting Machine 1
2.2 Semi-automatic Compression Molding Machine with 10 HP, 1
Working Press 50 MT, Table size 16x 18 inch
2.3 Heating Oven 3x4x4 1
2.4 Polishing Barrels (Wooden Hexagonal shape fitted with driving 1
motor)
2.5 Dies and Molds set
2.6 Weighing Balance, Caliper, Gauges etc set
 P a g e | 15

Total Lumpsum 450.000

TABLE 6.3: Plastic and polyester zippers

Item Number UC TC
- Coiling machine 1

- Chair sewing machine 1

- Gaping machine 1

- Semi-automatic bottom stop machine 1

- Semi-automatic slide attaching machine 1

- Semi-automatic top stop machine 1

- Cutting machine 1

- Space parts accessories set

Total Lump sum 1,500,000

The total cost of machinery/equipment is estimated at Birr 3,363,944.00 all of which is in foreign currency.

Civil Engineering Cost

The building area required by the plant is estimated to be 500 m 2, and its rent cost is Birr 600,000 per annum. This
would include cost of land preparation and associated civil works. The total floor area of the plant, including the
open space, is 800 m2.

VII. Human Resource and Training Requirement

Human Resource

Details of the manpower requirement of the plant is shown in Table 7.1

 P a g e | 16

Table 7.1: MANPOWER REQUIREMENT

Description No Monthly Salary Annual

(Birr)
Salary (Birr)

A. Administration
1. Manager 1 9000 108000
2. Marketing Manager 1 6000 72000
3. Supervisors 2 3000 72000
4. Technicians 2 3000 72000
5. Personnel Officer 1 3000 36000
6. Accountant 1 3000 36000
7.Seretary 1 2400 28800
8. Cashier 1 2400 28800
9. Storekeeper 1 2400 28800
10.Guards 4 2400 115200
Sub-total 15 597,600
B. Production
11. Skilled Workers (Tailors and Others) 40 4000 1920000
12. Semi-skilled Workers (laborers) 10 2400 288000
sub total 2,208,000
Total 2,805,600
benefit 65 701,400
Grand Total 65 3,507,000

The total annual wages and salary, including 25 % benefits, amount to Birr 3,507,000.
 P a g e | 17

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.

VIII. Financial Analysis

Underlying Assumption

The financial analysis of Garment and its accessories 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 20% Equity and 80% Loan

Tax Holidays 2 Years

Bank Interest Rate 12.5%

Discount for Cash Flow 18%

Spare Parts, Repair & Maintenance 3% of the Fixed Investment

B. Depreciation

Building 5%

Machinery And Equipment 10%

Office Furniture 10%

Vehicles 20%

Pre-Production (Amortization) 20%

 P a g e | 18

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

Investment
The total investment cost of the project including working capital is estimated at Birr 5.3 million as shown in Table
8.1 below. The owner shall contribute 20 % of the finance in the form of equity while the remaining 80 % is to be
financed by bank loan basically for machinery and equipment and raw materials demanding hard currency.

Table 8.1: Total Initial Investment

Items L.C F.C Total

Office Equipment 250,000 250,000
Plant Machinery & Equipment - 3,363,944 3,363,944
Total Fixed Investment Cost 250,000 3,363,944 3,613,944
Pre-Production Capital Expenditure* 150,000 150,000
Total Initial Investment 400,000 3,363,944 3,763,944
Working Capital at Full Capacity 764,199 771,745 1,535,944
Total 1,164,199 4,135,689 5,299,888
 P a g e | 19

*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.

The foreign component of the project accounts for Birr 1.5 million or 33 % of the total investment cost.

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

item TC
raw material 14,152,681.00
salary and wage 3,507,000.00
workshop rent 600,000.00
utility 70,730.00
spare and maintenance 100,918.32
Total direct cost 18,431,329.32
depression 336,394.40
interest 420,493.00
Total production cost 19,188,216.72

Sales revenue

sales revenue at full capacity

sales revenue 22,036,807.41
Garment 2,073,600.00
plastic button 3,600,000.00
plastic zipper 27,710,407.41
Total sales revenue 18,431,329.32
 P a g e | 20

Financial Evaluation

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.

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 36 % of capacity utilization

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.

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 120 % at full capacity utilization.

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 98 % and
the net present value (NPV) at 18 % discount is Birr 10.4 million.

Sensitivity Analysis
The sensitivity test result which undertaken by increasing the cost of production by 10 % still indicates that the
project would be viable.
 P a g e | 21

IX. 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 TIGRAY National Regional State. These
benefits are listed as follows:

Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 5.7 million per year and Birr 28.7
million within the project life. Such result induces the project promoters to reinvest the profit which, therefore,
increases the investment magnitude in the region.

Tax Revenue

In the project life under consideration, the region will collect about Birr 12.3 million from corporate tax payment
alone (i.e. excluding income tax, sales tax and VAT). Such result creates additional fund for the regional
government that will be used in expanding social and other basic services in the region

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 3.5 million per year. This would be one of the commendable accomplishments of the
project.

Pro-Environment Project

The proposed production process is environment friendly.

P a g e | 22
 P a g e | 23

ANNEXES
 P a g e |1

ANNEX 1: projected income statement

years 100% 1(85%) 2(90%) 3(100%) 4(100%) 5(100%)

sales revenue 22,036,807.41 18731286.3 19833126.67 22,036,807.41 22,036,807.41 22,036,807.41
Garment 2,073,600.00 1,762,560.00 1,866,240.00 2,073,600.00 2,073,600.00 2,073,600.00
plastic button 3,600,000.00 3,060,000.00 3,240,000.00 3,600,000.00 3,600,000.00 3,600,000.00
plastic zipper 27,710,407.41 23,553,846.30 24,939,366.67 27,710,407.41 27,710,407.41 27,710,407.41
Total sales revenue 18,431,329.32 15,666,629.92 16588196.39 18,431,329.32 18,431,329.32 18,431,329.32
direct cost 9,279,078.09 7,887,216.37 8,351,170.28 9,279,078.09 9,279,078.09 9,279,078.09
Deprecession 336,394.40 336,394.40 336,394.40 336,394.40 336,394.40 336,394.40
EBIT 8,942,683.69 7,550,821.97 8,014,775.88 8,942,683.69 8,942,683.69 8,942,683.69
interest expense 420,493.00 420,493.00 336,394.40 252,295.80 168,197.20 84,098.60
EBT 8,522,190.69 7,130,328.97 7,678,381.48 8,774,486.49 8,858,585.09
8,690,387.89
Tax expense 2,556,657.21 2,139,098.69 2,303,514.44 2,632,345.95 2,657,575.53
2,607,116.37
Net income 5,965,533.48 4,991,230.28 5,374,867.04 6,142,140.54 6,201,009.56
6,083,271.52
 P a g e |2

ANNEX2: operating cash flow

operating cash flow

discount rate 18%
Initial investment -5299888.11
return from year 4,991,230.28
1
return from year 5,374,867.04
2
return from year 6,083,271.52
3
return from year 6,142,140.54
4
return from year5 6,201,009.56
NPV $10,484,022.82
IRR 98%
 P a g e |3

ANNEX3: Loan repayment schedule

years 1 2 3 4 5
Begging Balance 3,363,944
2,691,155.20 2,018,366.40 1,345,577.60 672,788.80
interest Rate 0.125 0.125 0.125 0.125 0.125
interest
420,493.00 336,394.40 252,295.80 168,197.20 84,098.60
principal
672,788.80 672,788.80 672,788.80 672,788.80 672,788.80
P a g e |4
P a g e |5
P a g e |6
P a g e |7
P a g e |8