Contents

Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................4
Beneficiaries (Target Group)........................................................................................................................5
Project Justification.....................................................................................................................................5
Objective of the Project...............................................................................................................................6
The Economic Significance of the Project....................................................................................................6
Supply of Quality.....................................................................................................................................6
Source of revenue...................................................................................................................................6
Employment Opportunity........................................................................................................................6
Save and Generate the Country Exchange...............................................................................................6
Benefit for the Local Community.............................................................................................................6
Stimulate for Local Economy...................................................................................................................7
Location and Premises Required.............................................................................................................7
Market Study of Mixed Used Commercial Complex....................................................................................8
Market Study...........................................................................................................................................8
Demand Factors for Processed Service Items......................................................................................8
Market Study of Mixed Used Commercial Complex Mainly Banking, Supermarket and Bed Room
Capacity...................................................................................................................................................8
Market Potential and Demand Gap for dry Mixed use Building..........................................................9
Infrastructure Development......................................................................................................................11
Market Completion............................................................................................................................12
Target Customers..............................................................................................................................13
Market Prospects...............................................................................................................................13
Marketing Strategy and Promotion...................................................................................................13
Mixed Used Commercial Complex Mainly on Banking, Super market, Supermarket and Bed Room
Capacity and production program.........................................................................................................14
Production program Banking, , Bed room and Supermarket Service................................................14
Pricing....................................................................................................................................................14
Product Nature, Production Process and Technology...............................................................................15
Product Nature, Service and Characteristics.........................................................................................15

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Product Nature, Production Process and Technology...............................................................................16
Product Nature, Service and Characteristics.........................................................................................16
Production Process, Design and Technology.........................................................................................17
Technology and Engineering.............................................................................................................17
Production Process............................................................................................................................17
Quality Control......................................................................................................................................18
Machinery and Equipment....................................................................................................................18
Source of Technology............................................................................................................................18
Project Design and Engineering.............................................................................................................18
Plant Lay Out and Construction Works..................................................................................................18
Manpower and Organizational Management............................................................................................19
Man Power............................................................................................................................................19
Organizational Structure and Management..........................................................................................19
Financial Requirement and Analysis..............................................................Error! Bookmark not defined.
Total Initial Investment Cost......................................................................Error! Bookmark not defined.
Fixed Investment...................................................................................Error! Bookmark not defined.
Expenses....................................................................................................Error! Bookmark not defined.
Financial Analysis and Statements.............................................................Error! Bookmark not defined.
Underlying Assumption.........................................................................Error! Bookmark not defined.
Sources of Fund.....................................................................................Error! Bookmark not defined.
Loan Repayment Schedule....................................................................Error! Bookmark not defined.
Depreciation Schedule...........................................................................Error! Bookmark not defined.
Revenue Projection...............................................................................Error! Bookmark not defined.
Balance Sheet (Beginning).....................................................................Error! Bookmark not defined.
Income Loss Statement.........................................................................Error! Bookmark not defined.
Cash Flow Statement.............................................................................Error! Bookmark not defined.
Profitability............................................................................................Error! Bookmark not defined.
Pay-Back Period.....................................................................................Error! Bookmark not defined.
Environmental Impact of the Project.........................................................................................................29
Future Development and Exit Strategies...................................................................................................31
Project implementation program..............................................................................................................32

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 Executive Summary
1. Project Type First Star Hotel
2. Project Owner Ato Ayeta Keneni Bedada (Private Owner)
3. Nationality Ethiopian
4. Project Location Oromia Regional State, Illuababor Bure Woreda,Bure
Town, 01 kebele
5. Projection Composition Commercial Complex like Restaurant, Grocery, Beauty
Salon and Bed Room for Domestic and Local Customers
6. Land Use Required Commercial
7. Premises Required 1788m2
8. Total Initial Investment Br 1,660,365 of which 30% equivalent to finance by the
Cost/ETB/ owners’ equity and rest %70 Br 3,874,185 equivalent
financed 5,534,550 through Bank Loan
9. Employment Opportunity 23 Permanent Individuals and 7 Temporary total 30
individuals Will be hired.
10. Benefits of the Factory for Supply Producers of Quality Supermarket Services
Region/Country Products, Guest and Bed rooms, Supply Standard Bank
Service in fair price, Source of Revenue, Employment
Opportunity, Stimulate the Local community, Stimulate
the local Economy and technology transfer,
Recreational Area for Guest and Local community.

Introduction
In Ethiopia Private Investment Interest has been increasingly from year to year and an
investment constraint has been over a decade since it adopted the free market economy policy. In

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this new Economic, investment of private sector happens to determinant factor of economic
Development of the country. It is usually considered as the engine of an economy both efforts of
the private as well as the public sector .there are investments that could not be undertaken by
private sector due to its difficult nature i.e. high initial capital and long gestation period.

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

Based on this Regulation, Ato. Ayeta Keneni Bedada is Private Owner who and shows Good
innovation among the Established and Fuel station Supply in national wide particularly in Bure
woreda 01 kebele to Commercial Complex like Restaurant, Grocery and Bed Room Supply
Service Access. Like most Business venture the project aims to maximize return on invested
capital. In a process of attaining this basic idea it also benefits for the total community through
creation of employment, tax revenue generation and etc.
Therefore, the promoter of this project who has been living in the project area and engaged in
various business activities now days he wants to invest his capital on aforementioned project at
remote area which has scarcity of Services in Illubabor zone particularly Bure Woreda, Bure
Town, Kebele 01 site.

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 Beneficiaries (Target Group)
In consideration of the general improvement that the project intends to generate in the Mixed
used Commercial Complex (For Restaurant, Grocery and Bed Room services) value chain, the
direct beneficiaries that will be the target of the project are:
 The residents of towns, Cities, Villages in rural areas
 Different Zone Employees and NGOs
 Government Workers Office
 Hotels and Restaurants
 Small shops
 Other retailers and Wholesalers.
 Neighborhood Woreda Halu and Sibo Town as well as Gambella Regional Sate
 Trucker,Bus Riders etc

When the Commercial Complex like Restaurant, Grocery and Bed Room Start Service improve the
beneficiaries /the targeted groups, Due to this the living condition, health status, productivity and
quality of life of the beneficiary/ target groups will be enhanced.

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

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

 High Population Growth.

 High Vehicles growth
 Shortage of Different types of fuels
 High Consumption and Foreign Income.
 Favorable and Attractive Investment incentives packages by the government.
 Availability of Skilled Labor Force at Reasonable Price.
 Availability of Raw Materials and Inputs For the production of Processed Complex.

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 Objective of the Project

To Establish Commercial Complex like Restaurant, Grocery and Bed Room Service mainly on in
order to increase the income of increasing traders deriving and community, create job
opportunity, Serving Community in fair price, Generate income for woreda, play Vital role in
order to generate currency to country and from Sustainable Service, processing and marketing of
the Ethiopian service on Domestic and Local Market.

The Economic Significance of the Project

Ethiopia is where growth Sub-Saharan Country in service fast. The project is now developed in
various parts of the world; Ethiopia Itself accounts for around 0.5% of the global Service.
Service is important to the economy of Ethiopia; Around 31% of Domestic income comes from
service with an estimated 15 million of the population relying on some aspect of services for
their live hood.

Supply of Quality
By producing and supply quality and diversified Commercial Complex like Restaurant, Grocery
and Bed Room products project will satisfy the consumers. Besides, the project will add to job and
income opportunity of the citizens.

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

Employment Opportunity
One of the problems that our country faces high level of unemployment, Therefore, the current
objective of the government is working on tackling the problem of unemployment and fostering
there development process either through self-employment to re-employment in other
organization Hence, this factory will hired 23 Permanent Individuals and 7 Temporary total 30
individuals Will be hired.

Save and Generate the Country Exchange

The project will help to Save Exchange cost to buy this product from other Neighierhood Zones
and Gambella Region. Besides in the future, when the Service start Service to stakeholders will
generate fuel products from this specific project;

Benefit for the Local Community

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

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

Location and Premises Required

i. Location
The Commercial Complex is located in Illubabor Zone, Bure Woreda, Bure Town, Kebele 01.

The Main Justification behind the Selection of this location is;

 Availability of Raw Materials.

 The Absence of this Services
 The new Road support to Collect Raw materials and to let the finished products to market.
 Availability of labor force
 Conducive investment policy and Governance
 Environmentally healthy for the production of processed foods.
ii. Premises Required
The total land holding of the project is 1780m 2, the premises required planned as follows in table
below.

Table Premises Required and Land Use Plan;

SN Description Land `Requirement/M2

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

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

Market Study of Banking, Supermarket and Bed Room Capacity

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

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

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

Trends in performance of the Economy Growth Rates %

Item 2005/6 2006/7 2007/8 2008/9 209/10 2010/11 2011/12 2012/13
GDP1990/00 11.7 12.6 11.5 111.5 11.6 11.6 10.4 10
Agriculture 16.9 13.5 10.9 9.4 7.5 6.4 7.6 8.4
Industry 11.6 9.4 10.2 10.2 10.4
Service 6.3 12.8 13.3 14.3 17 21 23 25
SOURCE; MoFED & UNDP (Ethiopian Calendar)

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

2. Population and Population Growth(Demography)

The rate of growth of the urban population is increasing from year to year. The latest report of
the unite fund for population agency revealed that Ethiopia’s population has reached 97 million
which puts Ethiopia as the second most populous country in Africa. According to the central
statistics Authority (CSA), Current population growth is estimated to be 28% per annum and the
growth rate is expected to remain above 2% for the next 20 years. Rural population is growing at
about 3.0% while the urban population is growing at about 4.3%. Total population is projected to
reach 140 million by 2030. In Ethiopia, of the total population, about 20.0% is estimated to
reside in urban areas. The trends suggest that the size of urban population is likely to continue to
grow at high speed in the future. The share of urban population will rise from 16.0% in 2005 to
about 25% by 2030 nearly 35 million of the total 140 million will live in cities and towns by
2030. As a result from big population and population growth, which kids and youth account the
major shares, the demand for food items and Supermarket and also Guests and Local
Communities for Restaurant, Grocery and Bed Room and different other enriched Service items.

Market Potential and Demand Gap for dry Mixed use Building

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

1. Increasing population of the country.

2. Rapid industrialization in the country.
3. Increasing in the purchasing and demanding capacity of people.

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 4. Durability of the product
5. Challenge in people’s habits as Culture
6. It is ready to Buy and Sell product.
7. Convenience of preparation

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

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

Therefore, the majority of service and finished Products is exported to Neighborhood

town/woredas to service rendering. Hence, this project deemed to bridge the demand gaps for
processing products in our woreda by locally producing as Domestic and National Markets.

Socio-Economic Consideration
Bure Woreda is one of the Ilubabor zone woreda, It is divided in to 21 Rural and urban kebeles,
with population of 72,000 according to 2013 E.C census and from available information there is
extended increase in population year to year in the town. Besides, this recently rural kebeles also
included to the town boundary. However, in the town there is a Lack of business/Service centers
on the other hand majorities’ merchandise, daily workers, students and government, NGOs and
private workers as well as guests are living in the town those who are needs commercial
goods/services.

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

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

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

Bure Town and Surrounding area have a well-developed network of the mentioned roads and
facilities, Since Bure Woreda,Bure Town, Kebele 01 is local town government infrastructure
development is relatively more developed than small Kebeles found under Bure Town
administration, other social and economical institutions like banking Education and Health
institutions are also sufficiency present.

Demand Analysis

Many Government and NGO organization/Institutions has been increasing in the Town. it
became a commercial activities of Ilubabor zone, Likewise, Mettu University Health College,
Different Government and private Colleges and Red-Star, Techno Serve and GIZ NGOs, High
Supermarkets, Town Community and Surrounding area are Considered as demand of Banking,
Supermarket and Bed Room services, in addition to this many huge government and private
projects are undertaken in the surrounding districts, Which will be attracts many people many
people as guests as a guests and living in the town and its market opportunity which increasing
the demand of commercial/Services business center in the town.

Supply Analysis

As a for mentioned in demand discussion it indicated a huge gap in relation to high potential
demand and supply of business center for modern Mixed Used Commercial/Services sector in
Bure Woreda,Bure Town, Kebele 01 town.

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 The gap Analysis between demand and supply

There is an average gap between existing supplies on Commercial complex Services ( Restaurant,
Grocery and Bed Room) as compared with demand, the intended project which expected to begin
operation also an able to gap. This indicates different types of service and products transported in
and out illegally to and from neigherhood Zones and Region like Buno Bedele and Gambela to
household consumption in the previous year. This figures double in the current year and increase
by constant rate with predicated service production. That is why the promoter’s decided to
establish a firm using the opportunity of fund from own contribution alongside initiating private
investment participating in the business to establish the firm to cover the whole demand
preparing favorable investment precondition.

Market Completion

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

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

Therefore, there are different forms of competition that my face this project. These are price and
no price based competition. Moreover, the different competitors may compete with the project
under discussion his diversified marketing strategies that could enable it cope with the different
competitors in the market. In addition, it will frequently conduct competitors research which
focuses on, the strength and weaknesses the different competitor’s strategies. The techniques’
they use in rendering the service, their customer handling methods and others. Then it will devise
different strategies like.

1. Diversification of Services, product and product line

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

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 Target Customers

The Target Customers of the envisioned Factory are;

 The residents of towns, Cities, Villages in rural areas

 The different Shops
 Government and Non-Government Workers club
 Hotels
 Small shops
 Other retailers and Wholesalers.

Market Prospects
From above market demand and supply analysis for the Mixed Used Commercial Complex
Restaurant, Grocery and Bed Room like Hot Drinks, Beverage and Lunch and Dinner). There is
Exists Huge market gap in Our Woreda. Hence, the factory will be pioneer and very successfully
by entering in to this market.

Marketing Strategy and Promotion

The company will follow the following promotional methods;

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

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

Production program Banking, Bed room and Supermarket Service

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

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

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 Product Nature, Production Process and Technology

Product Nature, Service and Characteristics.

The Company wills Serve for Guests and Local Community, Restaurant, Grocery and Bed Room

and Sell and produce different kinds of Foods and Drinks Supermarket products and Different

Rendering based on the customer preferences.

This Include Service Rendering likes;

 Renting Building For private and Government Banks

 Renting Bed Rooms For Guests and Local Community,

Supermarket Service like;

 Hot Drinks and Beverage

 Breakfast, Lunch and Dinner

 Bread, Cakes and related services.

3.2. Raw Materials and Input

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

Raw Materials Like, Wood and Metal Products For Bank and Bed Room, packed products, Cold

and Hot drinks and Bread and Cake Manufacture services. Besides, all Products use different

type of packing materials.

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 Product Nature, Production Process and Technology

Product Nature, Service and Characteristics.

The Company will Serve Guest and Local Community, Bankers and Sell and produce different

kinds of Foods and Drinks Supermarket products and Different Rendering and Creating College

Education for community based on the customer preferences.

This Include Service Rendering likes;

 Renting Bed Rooms For Guests and Local Community,

Supermarket Service like;

 Different types of Foods

 Hot Drinks and Beverage

 Breakfast, Lunch and Dinner

 Bread, Cakes and related services.

 Grocery and restraunt Services

3.2. Raw Materials and Input

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

Raw Materials Like, Wood and Metal Products For Restaurant, Grocery and Bed Room, packed

products, Cold and Hot drinks and Bread and Cake Manufacture services. Besides, all Products

use different type of packing materials.

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 Production Process, Design and Technology

Technology and Engineering

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

Production Process

The main process of establishing modern Commercial Complex Mainly Restaurant, Grocery and
Bed Room and at Bure Woreda, Bure Town, Kebele 01 include studying the market, Securing
land, Construction Building, Equipping and Furnishing the building and starting the operation of
the business. In which the process is outlined as follows;
Start

Preparation of Design

Resource Mobilization
Fig. Construction Work process flow chart
Each step moves the construction works nearer to finish. Hence, Each and Every step needs its
own technologies as well as techniques/
The project will be aimed to build modern Mixed Used Commercial Complex Building in
Ilubabor Zone Capital town Bure Woreda, Bure Town, Kebele 01 Town. It consists, Commercial
Complex Restaurant, Grocery, Bed Room and Various Services and etc.
The Establishment of the project will take 1 year. This establishes period is time required to
establish various types of activities which include the following.
 Clear demolishing of project area with local authorities.
 Site Grubbing uprooting and Clearing.

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  Block Excavation the project site to reduce elevation
 Preparation of site plan from condition of proposed block type and size
 Survey and set the blocks location from the plan
 Material transportation and production of material for the civil construction
 Construction of Building and Fencing of the compound, Preparation of parking, safety
tanker, Greenery
 Supply of Power Water and telephone services and other remaining infrastructure
development.

Quality Control

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

Machinery and Equipment

The factory will use Machineries for Restaurant, Grocery and Bed Room service Mainly from
Turkey and Ethiopia

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

Project Design and Engineering

The proposed project comprises stock of different components to be executed at different phases
of the project life. These activities include design and construction of various buildings,
importing of machineries and vehicle.

Plant Lay Out and Construction Works

As Indicated in part above the total land requirement for the project is estimated to be 1788M 2.
The buildings are planned to accommodate Restaurant, Grocery, Bed Room, Store, Office and
guarding House and other utility requirements as well as office and a show room/Constructions.

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 Manpower and Organizational Management
Man Power
At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the service. Depending up on nature of the center or amount of
work to be performs; there will be auxiliary units under the general manager. Employees under
each unit head that is accountable for the general manager.

The company will use efficient trained staffs in the area of marketing to be competitive supplier
of processed services to the market. The opportunities of being serviced by well skilled
professional’s well enable the company to evaluate the internal weakness strength of the
company as well as to assess the global opportunity and risks in the world market so that the
company cope up with the dynamics of the market situation. The company will hire 45
employees.

Organizational Structure and Management

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activities of the plant. Employees
under each unit will be supervised by the department head that is accountable to the owner of the
factor as indicated below.

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 Project
Owner/Chair
man

General
Manager

Cashier/Secretary

Biulding Admn &

Constructio
Adm Stor Finanace
& Tech.Unit
unit

Table; Organizationa1 Structure

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

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  She/he will plan, organize, direct and control the human and non-human
resources of the plant so as to achieve the short and long run objectives of the
organization.
2. Construction and Technical Unit

Duties and responsibilities

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

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 Financial Requirement and Analysis

Total Initial Investment Cost

The total amount of money that is required to establish the envisaged factory is
estimated to be: 5,534,550.00

Table the total Initial Investment Cost

SN Description Cost in ETB Birr

1 Land, Building and Construction 1,397,500
2 Factory Machineries 1,000,00
3 Vehicles 1,000,000
4 Equipment and tools 600,000
5 Furniture 201,000
Total Fixed Investment Cost 4,198,550

5 Pre service Expense 51,500

6 Initial Working Capital 1,021,000
Total 5,271,000
Contingency (5%) 273,550
Total Initial Investment Cost 5,534,550

Fixed Investment
A. Building and Construction

SN Description Land Unit Cost in Total Cost in

Requirement(M2) ETB ETB
1 Construction of Mixed 1000 10,100 1,010,000
Use Building
2 Parking 250 5200 130,000
3 Greenery area 250 5200 130,000

74 Store 288 127,000

Total 1,397,500

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

SN Description Unit Qty Total Cost

1 Supermarket Machine SETS 1SET 1,000,000
with accessory with
CFT(%5)
Total 1,000,000

22
 C. Vehicles

SN Description Qty Unit Price Total Price Remark

In ETB in ETB
1 Transportation 1 700,000 700,000
Truck
3 Generator With 1 300,000 300,000
Installation
Total 1,000,0000

D. Equipment and tools

The initial Equipment and Tools for Commercial Complex Services is estimated
to be 600,000 ETB

E. Furniture

SN Description Unit Qty Total Cost

1 Office Furniture 20 3100 62,000
2 Resident House Furniture 80 2000 160,000
3 Mixed Use and Facility 18 2500 91,000
Furniture
Total 201,000

E. Initial Working Capital

The initial Working Capital is estimated to be 1,021,000 ETB

F. Pre-Service Expense

SN Description Cost in ETB

1 Project Proposal 10,000
2 Licensing 1,500
3 Worker Capacity Training 40,000
Total 51,500

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 Expenses
I. Raw Material and Inputs.
The Factory will purchase the raw Materials from Different parts Oromia
Illubabor Zone Bure Woreda Especially from Farmers and MSE.

Year Total RM Cost/ETB

1 400,565
2 534,086
3-10 667,608

II. Salary Expense

SN Description No Qualification Monthly Annual

Salary ETB Salary ETB
1 General Manger 1 BA/Mgt 4,500 54,000
2 Production manager 1 BSC/Mech. 4,000 46,000
and Quality Control Engineer
3 Machine Operator 4 Diploma Machine 2,000 24,000
4 Electrician 2 Dip Electricity 2,000 24,00
4 Administer and 1 BA/Purchasing 3,000 36,000
Finance Dept.
5 Purchase and store 1 Dip/Acct 2,000 24,000
Keeper
7 Marketing and Sales 1 BA/Marketing 3,000 36,000
8 Accountant 1 Dip/Acct 2,000 24,000
9 Cashier 2 Dip/Acct 2,000 24,000
10 Driver 2 10th Complete 1600 19,200
11 Cleaner 2 Unskilled 800 7,200
12 Public Relation 1 Dip/Mgt 2,000 24,000
13 Load unload 7 Basic 800 12,000
Total 328,400

24
 III. Other operating Expenses

SN Description Annual Cost ETB Assumption Used

1 Property And Insurance 86,168 1.5%ofFixed Investment Cost
2 Audit and legal fee 12000 1000 per month
3 Uniform 9570 33*350 birr
4 Telephone, Fax and 12,000 1000per month
Postal
5 Cleaning Goods Supplies 9600 800 per month
6 Repair and Maintenance 86,168 1.5%ofFixedInvestment Cost
7 Stationery and other 12,000 1000 per month
office Supplies
8 Electricity 120,000 10,000 per month
9 Water 6500 1.5*3,000m3
10 Fuel 240,000 6000litr*20/year
12 Oil and Lubricant 24,,000 %10 of fuel Cost
13 Miscellaneous Expense 24,000 2000/Month
Total 605,446

Financial Analysis and Statements

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

A. Construction and Finance

Construction Period 1 years
Source of Finance 30% equity and 70% Loan
Tax Holidays 2 years
Bank Interest Rate 10%
Raw Materials and Operating Cost Increase By 5% after 3 Years
Salary and Wages increase by 2% after 3 Years
Price of Processed food Products Will Increase By 5% after 3 years
B. Depreciation
Building 5%
Office Furniture 10%
Machinery Equipment 10%
Vehicles 20%

25
 C. Working Capital
Accounts Receivable 30 Days
Raw Material Local 30 Days
Work in Progress Daily
Finished Product 5 Days
Accounts Payable 30 Days

Sources of Fund
SN Description % Share Amount in ETB
1 Owners Share 30 1,660,365
2 Bank Loan 70 3,874,185
Total 100 5,534,550

Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Remaining
Payment in ETB Balance in ETB
0 0 0 0 5,534,550
1 5,534,550 553,455 1,106,910 4,981,095
2 5,534,550 498,109.5 1,051,564.50 4,427,640
3 5,534,550 442,764 996,219 3,874,185
4 5,534,550 387,418.50 940,873.5 3,320,730
5 5,534,550 332,073 885,528 2,767,275
6 5,534,550 276,727.5 830,182.50 2,213,820
7 5,534,550 221,382 774,837 1,660,365
8 5,534,550 166,036.50 719,491.50 1,106,910
9 5,534,550 110,691 664,146 553,455
10 5,534,550 55,345.50 608,800.50 0.00

Depreciation Schedule
SN Description Original Value Depreciation Rate Depreciation per
In ETB in % Year
1 Construction and Civil 1,397,000 5 69,850.00
Work
2 Machinery & Equipment 1,6000,000 10 160,000
3 Vehicles 1,000,000 20 200,000
4 Office Equipment 201,000 10 20,100
Total 4,756,000 449,950

26
 Revenue Projection
Based On the price and the Capacity Program of The factory indicated in previous
Chapter, the revenue of the Factory projected as indicated in the table below.

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

1 Profit from Banking, ETB 2,758,160 3,810,880 4,843,600
Super Market, Bed Room
and other Related
Products
Total Revenue Project. Birr 2,758,160 3,810,880 4,843,600

Balance Sheet (Beginning)

Asset
Current Asset Value in ETB
Cash 315,550.00
Inventory of Raw Materials and 1,021,000
Inputs
Total Current Asset 1,336,550
Fixed Asset
Land, Building and Construction 1,397,000.00
Machineries and Equipment’s 1,600,000.00
Vehicles 1,000,000
Office Equipment 201,000
Total Fixed Asset 4,198,000
Total Asset 5,534,550
Liability
Account Payable 3,874,185
Owner Equity
Capital 1,660,365
Total Liability and Owners Equity 5,534,550

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 Income Loss Statement

Revenue Year 1 Year 2 Year 3-10

Sales Revenue 3,058,160 4,110,880 5,143,600
Purchase of Raw Material 400,565 534,086 667,608
Gross Profit 2,657,595 4,560,794 4,475,992
Expenses
Salary Expense 197,040 246,300 328,400
Other Operating Expenses 363,264 454,080 605,440
Deprecation Building 69,850 69,850 69,850
Depreciation Mach and 160,000 160,000 160,000
Equipment
Depreciation Vehicles 200,000 200,000 200,000
Depreciation Of Office 20,100 160,000 160,000
Equipment
Interest Expense 553,455 498,109.50 249,054.75
Rural Land Payment 3,000 3,000 3,000
Total Expense 1,566,709 1,791,340 1,775,745
Profit Before Tax 1,090,886 2,769,454 2,854,412
Tax(%30) 327,267.80 830,836.20 856,323.60
Net Profit 763,620.20 1,938,617.80 1,998,088.40

Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3-10
Equity Capital 1,660,365
Loan Principal 3,874,185
Net Sale 3,058,160 4,110,880 5,143,600
Total Cash In Flow 5,534,550 3,058,160 4,110,880 5,143,600
Purchase of Raw 0 400,565 534,086 667,608
Materials
Salary Expense 0 197,040 246,300 328,400
Investment 5,534,550 0 0 0
Other Operating cost 0 363,264 454,080 605,440
Loan Repayment 0 553,455 498,109.50 249,054.75
Land payment 0 3,000 3,000 3,000
Tax Payment 0 327,267.80 830,836.20 856,323.60
Total Payment 5,534,550 1,844,592 2,566,412 2,709,826
Deficit/Cash Surplus 0 1,844,592 2,566,412 2,709,826
Cumulative Cash 0 1,844,592 4,411,004 7,120,830
Return to Equity 0 1,844,592 2,566,412 2,709,826

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 Financial Evaluation
1. Profitability

According to the projected income statement, the project will start generating profit in the 3 rd
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is viable.

2. Break-even Analysis

The break-even point of the project including cost of finance when it starts to operates at full
capacity (year 3) is estimated by using income statement projection.

BE = Fixed Cost / Sales – Variable cost = 35 %

3. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered within 7 years.

4. Internal Rate of Return and Net Present Value

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

Economic Benefits
The project can create employment for 45 persons. In addition to supply of the domestic needs,
the project will generate Birr 0.4 million per annum in terms of tax revenue when it starts to
operate at full capacity. Moreover, the Regional Government can collect employment, income
tax and sales tax revenue. The establishment of such factory will have a foreign exchange saving
effect to the country by substituting the current imports.

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 Environmental Impact of the Project

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

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

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

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

Environmental protection works, among others shall also include the following; disposal of
and construction waste, materials in excess of the requirements for permanent works and
unsuitable materials shall be disposed of in locations and in the manner as agreed with the
contractor. The location of disposal sites shall be such as not to promote instability,
destruction of properties and public service systems. Exposed areas of such disposal sites shall
be suitably dressed and planted with suitable vegetation.

The contractor shall plan his works in such a way that there’s no spillage of products to the
surface or sub-surface water. Environmental assessment is must be undertaken before a project
carried out. There are several environmental impact assessments, which aimed to assess the
impact the impact of the intended project up on the surrounding living and non- living things.

30
Environmental problems such as indiscriminate disposal of solid and poor handling of liquid
wastes are among the existing environmental problems in the town, the building which
consists mixed use commercial complex and Supermarket services activities to be constructed
on 500m2 plot of land with the intention of considering environmental problems from the 1 st
phase up to past of the project. As matter of facts, Solid Wastes to be generated during the
initial phase of project implementation and its operational phase are to be addressed by
integrated solid management approach. In Similar way for liquid waste with placement of
appropriate septic tanks and other sanitary utilities moreover, continual assessment of the
possible effects and/or impacts of the project to the environment is carried out at regular basis.

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

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

Future Development and Exit Strategies

Every Business undertaking is it small or large should have future Development plan. It is
plain fact that business activities are undertaken in a dynamic and turbulent environment.
Hence, to overcome or minimize the risks of uncertain future business should devise effective
strategies that enable them to be successful in their operation. The first strategy is
Diversification of its Activities to different other Business Forms. The Second future
Development Plan of the project is expanding its Branches in many parts of the Zonal/Region.

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

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

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 Project implementation program

This project is designed or construction of Modern Mixed used Commercial Complex building
Star and thus expected to take few months’ time to be implemented. The implementation period
is supposed to be about 12 months / 1 Year starting from the date of the project approval,
Agreement and Design license hand over. This is assumed to be nearly enough since some tasks
like feasibility study, site plan mapping are accomplished by the respective.

Table: - Project implementation Schedule

Activity
No

Remark
March
April

April
May

May
June
Nov

July
Dec

Feb

Jun
Jan
1 Site Exploration
2 Site Grubbing Uprooting and * *
clearing
3 Bulk of the project site
Excavation
4 Preparation of the site plan
from the condition of
proposed block type and size
5 Survey and set the blocks * * *
location from the site plan
6 Construction of store house
7 Material Transportation and * * *
production of material civil
construction
8 Construction of Mixed Used
Commercial Complex the
compound
9 Construction of Waste
treatment/Safety Tanker
10 Preparation of green area and * * *
parking
11 Supply of power and other
infrastructure services

32