Wegagen Bank SC- Credit Appraisal & Port. Mgt.

April 15, 2024

1. Customer Information:

Borrower/Applicant: Double S Business Group PLC Date Business Established: 1990

Branch: H/Giorgis Date Credit Relationship Started: 2013
Business Address: Total Applicant’s Credit Exposure: 10,000,000.00
Region: 14City/Town: A.A Sub City/: Arada Sister Company/s Credit Exposure:
Credit Exposure Grand Total:10,000,000.00
Customer Classification: Previous Credit Risk Grade:B
Current Credit Risk Grade: B
Corporate Risk grade of sister company(s):
x
Commercial Reason for change of Grade (in short):
Improved financial positions.

Ownership: PLC Collateral to loan ratio: 3.21:1.

Business/Economic Sector: Manufacturing Credit Facility Utilization:
Policy Exception:
Business type/Line: Manufacturing of foam & sponge Yes No
Trade License No.: AR/AA/14/670/4020407/2007 x
If Yes state Briefly:
Renewed up to: 2015EC ___________________________________________
___________________________________________
TIN: 0000007260 PERFORMERS :
Financial Statement: CRM : Yeneneh Mulatu
Audited up to: 07/07/2023 CA : Nigussie Tadesse
Interim for: 09/03/24
Credit Approving Committee
Auditor: Abreham Berhanu & Co.
CAC –1 CAC –2 xCAC –3
Opinion: Unqualified Qualified Disclaimer
CAC –4
x x x Loan Workout x
As At: 07/07/23
Paid up Capital:100,208,000.00 Date Application Received:
 By CRM : 12/04/2024
Capital Employed:245,289,000.00
 By CA: 13/04/2024
Tangible Net Worth:231,739,000.00
 Last doc. received :-
Sales :270,739,000.00
 Date analysis started: 15/04/2024
Operating Profit margin: 14.21%
Net profit margin: 9.23%  Date analysis completed : 15/04/2024

Current Ratio: 7.40:1

Bank Debt/TNW ratio:0.03 Decision Date:______________________

Total liability/TNW ratio:0.14:1

Net Profit/Loss: 23,117,000.00
Working Capital Requirement/Birr Sales: 0.06

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24
Wegagen Bank SC- Credit Appraisal & Port. Mgt. April 15, 2024

2. Current Request:

The applicant in its letter reference no. ደ/100/261/16 dated 03/08/2016 E.C has requested us
renewal of existing OD facility limit of birr 10, 000,000.00 for farther period of one year.
3. Purpose:

The applicant has request for renewal of the existing overdraft facility in order to augment the
working capital requirement of its day to day business activities.
4. Collateral:
The applicant offers a Commercial building as collateral for the request. Detail information
regards to the offered collateral has presented under the table.

Estimated Value of the Collateral

Security Description Construction Date Est. Est. by
Location Total
value
Com. Building owned by the 22,050,000.00 10,005,747.95 32,055,747.95
applicant identified under LHC
69% 31% 100%
no.ቦሌ/7/276/7/ሊዝድ/0357/2509 (After Discounting 10,005,747.95 29,850,747.95
81/01, located at Addis Ababa location value by 10/03/2 Behailu
2 Girma
city, Bole sub city, Woreda-07 10%)

19,845,000.00
66% 34% 100%
Comment on collaterals:
 The building is surfaced in 3150 m 2 of compound area& the location value covers 68.79% of
total estimation value.
 As per the banks assessor report the collateral is located at marketable and developing
area.
Collateral analysis
 The security/collateral coverage (the security - to loan request ratio);
Total estimation value after discount = 29,850,747.94= 2.98:1.
O/D Limit 10,000,000.00
 The excess margin of collateral value against OD facility is birr 19,850,747.94
5. Borrower’s Background:
5.1. Establishment & Business Objective;
The PLC was founded on the year 1990 by three relatives with an initial capital of Birr
2,000,000.00 which was later raised to Birr 100,208,000.00 with the company’s intension to
participate in manufacturing of spring & sponges & textile.

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24
Wegagen Bank SC- Credit Appraisal & Port. Mgt. April 15, 2024

The detail of the share distribution is depicted in the table below, but it minute for the resent
capital distributions was not submitted:-
Name of shareholder No. of Shares Par Value Total share Value
Sisay Fikadu Wendemagegn 3,131 16,000.00 50,096,000.00
Selamawit Abate Yesigat 2,506 16,000.00 40,096,000.00
Bitaniya Sissay Fikadu 626 16,000.00 10,016,000.00
Total 6263 48,000.00 100,208,000.00

5.2. Management/Board Profile;

The PLC is managed by the major shareholder Ato Sisay Fikadu, who has developed many years of
experience in trade business. He is supported by well experienced and qualified staff as depicted in
the table below:-
No. Name of Employee Position Qualification Year of Exp.
1. Selamawit Mebratu Finance Manager BA in Accounting 9 years
2. Tsehay Kebede Sen. Accountant BA in Accounting 7 years
3. Alemnesh Negash Jun. Accountant BA in Accounting 8 years
4. Eyasu Kifle Internal Auditor Diploma in ACCT 10 years
5. Atsede Kassa Senior Secretary Diploma in Sec. Science 10years
6. Akalu Tadesse Store Keeper Diploma in Management 12years
7. Ato Girma Shuma Chemist BSc. In Chemical Eng
8. Askalemariam Legese Salesman Diploma in Accounting
9. Bethelehem Ayele Junior Secretary Diploma in IT 7Years
10. Habtamu Alemayehu File Operator Diploma in IT 6 Year

5.3. Key Customers and Suppliers of the Business:

Currently, the applicant is engaged in import of raw plastic materials, and raw material for foam
production, aluminum works and manufactures foam, pp sacks, plastic shelter and locally
named “Shera” and distributes them on whole sale base in the local market.

6. Credit Exposure:
6.1. With our Bank (Past and Present);
The applicant, Double S Business Group Plc has a long time relationship with our bank H/Giorgis
branch as depositor and borrower.
6.1.1. Outstanding Facility
Amount/ limit Date Expiry O/s balance as
Facility Type status
granted granted date 12/04/2024
OD limit 10,000,000.00 15/4/23 15/04/2024 8,826,281.64 Pass
Total 10,000,000.00 Cr.1,278,810.95

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24
Wegagen Bank SC- Credit Appraisal & Port. Mgt. April 15, 2024

6.1.2. Past Credit History

As tabulated below, the following summery indicated details of settled credit facilities.

Type of Facility Amount Granted Date Granted Expiry Date Status Remark
T/L 15,000,000.00 27/06/13 27/06/17 Settled Settled After due date
Permanent LC 6,000,000.00 10/01/16 10/01/17 Settled Expired
Total 21,000,000.00

6.2. With other Bank (Past and Present);

As per the credit information received from National Bank of Ethiopia database under Enquiry
ID no.2206260 dated on 13/04/2024; the applicant has no any outstanding credit facilities with
other banks.
The CRB report of the major shareholders are not submitted to evaluate the credit status and
settlement manner of the business company owners(shareholders).
7. Account Utilization and Business Performance:
7.1. OD account performance
OD Limit 10,00,000.00 period coverage APR 2023- APR 2024
Debit Credit Highest Highest
Turnover Turnover Debit %age credit %age
-9,863,553.74 98.63% 1,729,911.34 Cr
126,883,490.01 117,630,233.11
12.7X 11.76X -9,862,303.74 98.62% 481,584.63 Cr
-9,672,765.37 96.73% 387,288.19 Cr

The applicant’s O/D account utilization shows a total credit turnover of Birr 11.76 million with the
swing running from a maximum debit balance of Birr 9.8 million to maximum credit balance of
birr 1.7 million for the 12 months transaction ended April 12, 2024. The applicant’s total debit
turnover is 12.7 times O/D limit and shows credit balance starting from April15, 2023 to April 15,
2024 period of business. This implies that the applicant’s O/D utilization of the applicant in terms
of swing, credit turnover, and debit turnover and credit balance criteria shows very good
performance.
Financial Statement Analysis:

The applicant has presented an audited financial statement for the period ended July 07, 2019,
2020, 2021, 2022 and 2023 was also attached. Additionally it submitted interim financial
statement of March 09, 2024. Based on these audited figures applicant’s financial stand is
interpreted as follows:-

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24
Wegagen Bank SC- Credit Appraisal & Port. Mgt. April 15, 2024

7.2. Condition of fixed assets

As per provisional financial statement of 07/07/23 states that the applicant has fixed asset & financial
asset having a book value of birr 16.9 million.
Activity/Sales ratio
Description 7/7/2019 7/7/2020 7/7/2021 9/3/2022 7/7/2023 9/3/2024
Annual Sales ‘000 133,669 128,135 148,971 267,358 270,739 270,739
Sales growth rate -4.14% 16.26% 79.47% 1.26% 35.19%

Liquidity Position
PERIOD ENDED 7/7/2019 7/7/2020 7/7/2021 9/3/2022 7/7/2023 9/3/2024
Current Ratio: 1.13 1.91 13.74 12.04 7.40 7.84
Quick Asset Ratio: 0.74 0.64 6.65 10.69 6.94 6.90

Profitability Ratio
PERIOD ENDED 7/7/2019 7/7/2020 7/7/2021 9/3/2022 7/7/2023 9/3/2024
Net profit ‘000 15,866 25,022 12,916 2,245 23,117 23,117
Gross Profit Margin (%): 22.43% 34.24% 17.93% 17.32% 21.23% 21.23%
Op. Profit Margin (%): 16.11% 27.76% 11.77% 12.78% 14.21% 14.21%
Net Profit Margin (%): 11.87% 19.53% 8.67% 10.37% 9.23% 9.23%

Leverage Ratio
PERIOD ENDED 7/7/2019 7/7/2020 7/7/2021 9/3/2022 7/7/2023 9/3/2024
Tangible Net Worth ‘000 118,196 125,904 168,078 231,739 245,289 301,619
Total Liabilities/TNW 1.05 0.94 0.28 0.08 0.14 0.14
Bank Debt/TNW 0.09 0.04 0.01 0.01 0.03 0.03

Working capital management

Period 7/7/2019 7/7/2020 7/7/2021 9/3/2022 7/7/2023 9/3/24
Stock Turnover (Days): 160 646 300 85 28 50
Debtors T/O (Days): 97 151 38 34
Creditors T/O (Days): 385 474 28
 The sales of the applicant have shown increased sales growth during the year under reviewed
except for the period ended July 07, 2020.
 Profitability ratios give an indication of the efficiency of the operations of the business. The
operating & net profit margin of the applicant shows good profit margin, operating as well as net
profit but in unstable manner.
 One can conclude from the above current (in all covered year) and quick ratios (except in the year
2019&2020) that, the applicant is capable to back up his current obligation from his current assets
easily.
 Gearing/Leverage ratios reflect the reliance on the business on internal sources rather than
external financial sources of capital except in the year ended 2019 &2020.
 Has very good OD account utilizing performance in terms of debit turnover, swings and credit
balance measurements.

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24
Wegagen Bank SC- Credit Appraisal & Port. Mgt. April 15, 2024

8. Request Assessment/ Working Capital Determination:

The request assessment for the renewal of O/D was determined by the applicants O/D
utilization, sales turnover and profitability of the business. Since the applicant total debit
turnover is pretty higher than the O/D limit and shown multiple times credit balance starting
from April12, 2023 to April 12, 2024 within 12 months and this implies that the applicant’s O/D
utilization of the business is very good and it is recommended to renew the facility.

9. Recommendation:
9.1. Bases for Recommendation
Strong Points
 The applicant has very good OD utilization performance
 The applicant is a long time customer as depositor/creditor
 The company is led by well qualified and experienced management team.
 Good financial position as measured by different financial parameters tools
 The applicant provides building collateral for the outstanding loans.
Weak points
 Unstable and below interest rate sales profit margin.
 Pension fund clearance is not submitted
9.2. Recommendation:
 Based on the foregoing analysis, I recommend renewal of existing manufacturing
overdraft facility limit of birr 10,000,000.00/Ten million birr only/ for further period of
one year starting from date of approval at the prevailing interest rate against pledged
building collateral having an estimated value of birr 32,055,747.95.
Remark:-
 The CRM should collect shareholders credit report and Pension fund clearance subsequent
to approval.
Prepared by Reviewed by

Nigussie Tadesse Michael H/Giorgis

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24
Wegagen Bank SC- Credit Appraisal & Port. Mgt. April 15, 2024

Sr. Credit Analyst Manager, Credit Analysis

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Double S Business Group PLC Annex to LAF No. WB/CRM/YEN/009/24