472077599 Kindye Garment Factory Proposal

JENFOK TRADING PLC GARMENT FACTORY 2020
PROJECT PROPOSAL FOR GARMENT

FACTORY
PROMOTER: JENFOK TRADING PLC

Contact person: Kindye Teka
Mobile: 0913049214
SUBMITTED TO: BAHIR DAR CITY TRADE,INDUSTRYAND MARKET

DEVELOPMENT DEPARTMENT
MARCH, 2020
PREPARED BY: ERZA CONSULTING PLC BAHIR DAR, ETHIOPIA
 ADDRESS: BAHIR DAR
 KEBELLE-07
 AMBAYE BUILDING, B-11
 MOBILE: 0912902525
 Website: www.erzaconsulting.com 0
JENFOK TRADING PLC GARMENT FACTORY
2020
Table of Contents
Executive
summary ...........................................................................
............................................................ 1
1.
Introduction ......................................................................
..................................................................... 2
1.1 Company
Ownership .........................................................................
........................................... 2
1.2
Vision ............................................................................
................................................................ 2
1.3 Mission
Statement .........................................................................
................................................ 2
1.4 The key success factors of the
project ...........................................................................
............... 2
1.5 Goals and
Objectives ........................................................................
............................................ 3
1.6 SWOT
Analysis ..........................................................................
.................................................. 3
1.6.1
Strengths .........................................................................
...................................................... 3
1.6.2
Weaknesses ........................................................................
................................................... 3
1.6.3
Opportunities......................................................................
................................................... 3
1.6.4
Threats............................................................................
....................................................... 4
1.7 Product Description and
Application .......................................................................
..................... 4
2 Market Feasibility
Analysis ..........................................................................
........................................ 5
2.1 Market
Potential .........................................................................
................................................... 5
2.2 Supply-Demand
Analysis ..........................................................................
................................... 5
2.3 Projected
Demand ............................................................................
............................................. 1
2.4 Pricing and
Distribution ......................................................................
.......................................... 4
3 Technical Feasibility
Analysis ..........................................................................
...................................... 6
3.1 Location and
Site ..............................................................................
............................................ 6
3.2 Land, Buildings and Civil
Works .............................................................................
.................... 6
3.3 Plant capacity and production
program............................................................................
............. 8
3.3.1 Plant
capacity ..........................................................................
.............................................. 8
3.3.2 Production
program ...........................................................................
................................... 8
3.4 Raw Materials and
utilities .........................................................................
.................................. 9
3.4.1 Raw
Materials .........................................................................
.............................................. 9
3.4.2
Utilities .........................................................................
....................................................... 10
3.5 Technology and
Engineering .......................................................................
............................... 10
3.5.1 Production
process ...........................................................................
.................................. 10
3.5.2 Source of
Technology ........................................................................
................................. 14
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3.5.3 Machinery and
Equipment .........................................................................
......................... 15
3.6 Project implementation
schedule ..........................................................................
...................... 17
4 Management and Organizational
feasibility .......................................................................
................ 19
4.1 Human Resource
Requirement .......................................................................
............................ 19
4.2 Training
requirement........................................................................
........................................... 20
5 Financial
Analysis ..........................................................................
...................................................... 21
5.1 Underlying
Assumption ........................................................................
...................................... 21
5.2 Pre-production
Expenses...........................................................................
.................................. 22
5.3 Total Investment
Cost ..............................................................................
................................... 22
5.4 Production
Cost ..............................................................................
............................................. 23
5.5 Financial
Evaluations .......................................................................
........................................... 23
5.5.1
Profitability......................................................................
.................................................... 23
5.5.1 Financial
Ratios ............................................................................
....................................... 23
5.5.2 Break-even
Analysis ..........................................................................
.................................. 24
5.5.3 Payback
Period ............................................................................
........................................ 24
5.5.4 Internal Rate of
Return ............................................................................
........................... 24
5.5.5 Net Present
Value .............................................................................
.................................. 25
5.6 Economic
benefits ..........................................................................
............................................. 25
5.6.1 Earning foreign
currency ..........................................................................
........................... 25
5.5.2 Job
creation ..........................................................................
............................................... 25
5.5.3 Tax
Revenue ...........................................................................
............................................. 25
ANNEXES ...........................................................................
......................................................................... A
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List of Tables
Table 1: Export plan of knitted and woven garment
6
Table 2: List of apparel products exported from year 2008 up to 2017/ Export in
Net-Mass (Kg) 7
Table 3: Export in CIF Value (USD)
7
Table 4: List of apparel products imported from year 2008 up to 2017 Import in Net-
Mass (Kg) 8
Table 5: Import in CIF Value (USD)
8
Table 6: World and Ethiopian Apparel Import projections for years 2011 -2022
2
Table 7: Apparel Supply Gaps Projected for the years 2017-2022
3
Table 8፡ World supply gap
3
Table 9፡ Summary of Apparel Surplus Import Demand Projected for the coming 6 years
3
Table 10: Sales plan for the envisaged project (Export & Local sales)
4
Table 11: Estimated Average selling price per unit kilogram for different product
categories 5
Table 12: Project construction area requirement (in m2)
7
Table 13: Annual Sales plan for the envisaged plant
8
Table 14: Production Program
9
Table 15: Raw materials requirement and Cost at full capacity
10
Table 16: Utilities Requirement and Cost at full capacity
10
Table 17: Machinery and Equipment Requirement and Cost
15
Table 18: Furniture and office equipment and vehicles
17
Table 19: Project implementation schedule
18
Table 20: Man power Requirement and annual salary
19
Table 21: Design, consultancy, training and test run cost
22
Table 22: Total Initial Investment
22
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Executive summary
This project envisages the establishment of Garment factory. The business is owned
by
JENFOK TRADING PLC. The total land requirement is 30,000m2.
The investment cost of the project including working capital is estimated at Birr
50.065 million.
The owner will contribute 25% (12,516,269.61) of the finance in the form of equity
while the
remaining 75% (37,548,808.84) is to be financed by bank loan.The raw materials
required to
produce garments include fabrics, buttons, sewing threads, and accessories like
zipper, shoulder
pad, labels etc. The raw materials are locally available.
The project is financially viable with an internal rate of return (IRR) of 23% and
a net present
value (NPV) of Birr 98,061,806.10 discounted at 12%.The project can create
employment for
520 workers.
The establishment of such factory will have a foreign exchange saving effect to the
country by
substituting the current imports and also increase hard currency by exporting 60%
of the
products to south Sudan, Somali, Djibouti and Kenya. The project will also create
backward
linkage with the textile fabrics and forward linkage with the households and also
generate
income for the Government in terms of payroll tax.
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2020
1. Introduction
1.1 Company Ownership
The business is a sole company established in Bahir Dar city. The company wants to
establish its
Garment manufacturing business. Currently the company involves in Business and
management
consulting business. The business name is JENFOK TRADING PLC Garment factory. The
company will be hire other staff members and operate the company efficiently and
effectively.
The plan will conceive and developed by those individuals, with the intent to apply
their
extensive experience and contacts in the industry to build a successful profitable
company.
1.2 Vision
The company vision is providing quality Garment products for international and
domestic
market, creating welfare for the community, establishing an integrated, sustainable
and profitable
leader industry in Ethiopia. We establish and maintain everlasting relationship
with consumers of
our products, suppliers including stake holders.
1.3 Mission Statement
JENFOK TRADING PLC Garment factory is a manufacturing company dedicated in
producing textile products and convertingtextile fabrics and apparels into
commercially viable
garment products, utilizing environmentally friendly manufacturing methods. We
intend to make
enough profit to generate a significant return for our investors and to finance
continued growth
and continued development in quality products. We will also maintain a friendly,
fair, and
creative work environment, which respects diversity, new ideas and hard work.
1.4 The key success factors of the project
 There are textile factories which provide fabrics and apparels with in the
region and also
we will produce textile products.
 Secure Supply- Contract for supply of fabric products from textile
factories
 Prime business location for proposed Garment factory.
 Producing Quality products
 Reasonable and competitive charges, positioned against competitors.
 On time delivery of clothes can leave good impression on the customers.
 Technical and efficient labor
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2020
 There should be advertisement on websites, local cable and banners.
1.5 Goals and Objectives

Currently, the garment products are imported from abroad in large amount. The
foreign currency
issue is difficult to import and meet the demand for garment products. Establishing
Garment
manufacturing company will minimize such problems and this motivated me to invest
on the
sector. Some of the objectives of the company are:
 To form a Garment production company in Bahir Dar city
 To develop a business centered around sound business practice
 To ensure that garment products manufacturing is sustainable in Bahir
Dar city
 To create jobs
To establish an efficient and quality Garment products manufacturing factory in
Bahir Dar city
and attain mean annual profit of over ETB 19,594,531.96 at the 1st year of project
implementation, by investing a total ETB 50.065 million.
1.6 SWOT Analysis

Before making the decision to invest in the Garment business, one should carefully
analyze the
associated risk factors. A SWOT analysis will help in analyzing these factors,
which play an
important role in making the decision.
1.6.1 Strengths
 Continuous availability of raw material, i.e. high volume of fabric and
apparel suppliers.
 Availability of low cost labor
 Product affordable to all income groups
 Wide range of target market
1.6.2 Weaknesses
 Inexperienced technical staff
1.6.3 Opportunities
 The rapid growth of customers for garment products proportional to
population growth.
 Supports and available incentives from the government
 Export opportunity
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2020
1.6.4 Threats
 Government policy on garment products
 Fluctuation in the price of the fabrics.
 Power interruptions
1.7 Product Description and Application

The garment work consists of the manufacturing of clothing by cutting and sewing
fabrics.
Garment is one of the major activities that consume huge labor. The major input for
garment
production is different types of textile fabrics. Important garment products
include shirts, shorts,
T-shirts, under wears, fur apparel, pants, trousers, sport wears, work clothes and
jackets, women
dresses and children clothes. Traditional clothes are also produced in our company
by traditional
weavers.
This project envisages making men’s, women’s and children’s dresses and traditional
clothes.
Transporting the product is easy too; therefore, if the factory can produce quality
products at a
cost which can compete internationally.
Different fabric types; such as cotton fabrics, polyester fabrics, nylon fabrics,
polyester-cotton
blended fabrics, denim fabrics, and others, are used to manufacture these products
tailored to
customers’ requirement.
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2 Market Feasibility Analysis
2.1 Market Potential

The proposed business mainly targets both the domestic and international market.
The business
should therefore be located within the industrial area of Bahir Dar city
Administration. The
major target customers for the garment products are households, hotels, school age
students,
bank and insurance workers, executive bodies and all human beings generally.
2.2 Supply-Demand Analysis

The population of the world is ever growing and almost reaching seven billion at
this point in
time. Besides this, the economy of majority of the world population is also seen
increasing from
time to time. This was due to the economic policy improvements adopted by most part
of the
world continents like Africa, East and Middle Asia, and South America to increase
the welfare of
their people. And it is obvious that the more improved the economic welfare of
people, the more
they expend on purchase of apparel and food.
Therefore, as long as the people’s expending capacity continues improving parallel

with
population growth, it makes this time the most strategic for textile industries in
general and
garment factories in particular than ever before.
Besides the globally increasing demands for textile products, there are also a
number of
advantages and incentives that motivate project promoters in Africa in general and
in Ethiopia in
particular. Among these are:
 Tax free and unlimited quota market for textile products in economic giant
continents
like US and Europe.
 75% by 25% loan scheme of Development Bank of Ethiopia
 Provision of land necessary for investment at reduced rate
 Duty free import of machineries and equipment’s, construction materials
(those not
available locally), and spare parts (whose value not greater than 15% of
that of
investment capital goods)
 Exemption from export tax on local products
 Duty drawback schemes on export sales
 2 to 7 or more years’ income tax exemption, for exporting investors
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2020
 3 to 5 years holiday for loan repayment
 Provisions of loss carry forward privileges, for about half of the tax
exemption period,
and other.
Along with the above incentives and motivations the textile manufacturing
industries are
migrating to Africa and other poor countries due to the increase of labor cost in
countries like
Turkey, Italy and others. On the contrary, Ethiopia has relatively lower cost labor
force and good
source of raw material. All the listed reasons fueled the textile sector to show up
dramatic change
in number and influence the economy of the country.
Even though, there is apparel production capacity of about 20 million pieces of

woven garment
and 53 million pieces of knitted garments per year in the country (attainable
capacity in
2015/16- source TIDI), there is still bigger domestic and international apparel
product demand.
The market segment for proposed project is 70% targeted to the international market
and 30% to
local market for the coming 5 years. Ethiopia has exported few amount of apparel
products for
the past 5 years despite the fact that the market for developing nations are still
at large and the
government had planned in its five years’ Growth and transformation plan (GTP-2) to
export
apparel products as it is depicted in the following table.
Table 1: Export plan of knitted and woven garment
Year(EC) Knitted Garment Weaved Garment Total
Growth Rate
(million USD) (million USD) (million USD)
(%)
2016/17 35 30 65
-
2017/18 70 60 130
100
2018/19 158 135 293
125
2019/20 245 210 455
55
2020/21 350 300 650
43
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Table 2: List of apparel products exported from year 2009 up to 2018/ Export in
Net-Mass (Kg)
Products Category 2009 GC 2010 GC 2011 GC 2012
GC 2013 GC 2014 GC 2015 GC 2016 GC 2017 GC
2018 GC
Men's suits, jackets,
trousers etc& shorts 159.00 35,781.00 26,074.80
73,497.80 127,464.73 101,580.33 230,794.83 63,259.93
79,146.87 NA
Men's Shirts 0 26,898.00 113,882.10
34,918.02 137,871.68 34,035.38 133,414.37 37,887.51
84,623.30 NA
Women's blouses and shirt 0 0 16,053.00
3,343.10 14,044.80 4,588.74 3,329.15 79,551.63
17,302.40 NA
Women's suits, jackets,
NA
dresses skirts etc& shorts 2,608.00 10,929.00 56,354.30
168,343.60 132,173.75 114,430.25 178,382.56 29,748.88
15,147.27
Babies Garment 12,000.00 3,206.00 1,617.00
190.00 60.00 0 0 619.00
62.00 NA
Sub Total 14,767.00 76,814.00 213,981.20
280,292.52 411,614.96 254,634.70 545,920.91 211,066.95
196,281.84 NA
Others 35,716.00 41,306.00 481,825.90
156,163.38 90,865.30 97,335.35 251,502.14 172,913.76
573,969.23 NA
TOTAL SUM 50,483.00 118,120.00 695,807.10
436,455.90 502,480.26 351,970.05 797,423.05 383,980.71
770,251.07 NA
Source: Extracted from Ethiopian Custom & Revenue

Authority’s Report Data Base
Table 3: Export in CIF Value (USD)

Products Category 2009 GC 2010 GC 2011 GC 2012 GC
2013 GC 2014 GC 2015 GC 2016 GC 2017 GC
2018 GC
trousers etc& shorts 1252.66 109,395.38 133,701.84
416,199.55 256,069.92 383,349.92 640,583.54 181,833.87
372,782.61 5,523,000.00
Men's Shirts 0 81,672.84 296,523.54
150,779.52 332,130.43 161,705.54 897,504.22 173,275.85
302,803.55 3,010,000.00
Women's blouses and shirt 0 0 104,850.00 9,673.67
24,351.95 15,328.78 17,170.95 134,671.80 114,523.37
1,707,000.00
dresses skirts etc& shorts 29,985.70 109,022.94 252,770.04
558,504.26 387,911.84 180,010.20 932,301.12 80,681.26
75,125.11 934,000.00
Babies Garment 14,927.52 4,789.11 2,601.42 913.75
651.59 0 0 4,465.41 556.88
1,000.00
Sub Total 46,165.88 304,880.27 790,446.84
1,136,070.75 1,001,115.73 740,394.44 2,487,559.83 574,928.19
865,791.52 11,175,000.00
Others 93,812.56 136,632.52 1,281,530.73 712,240.8
283,456.27 389,269.79 1,211,135.26 949,765.65 5,504,117.22
3,904,000.00
TOTAL SUM 139,978.44 441,512.79 2,071,977.57
1,848,311.55 1,284,572.00 1,129,664.23 3,698,695.09 1,524,693.84
6,369,908.74 15,079,000.00
Authority’s Report Data Base (for 2009-2018) and from International
Trade Center’s Report Data Base (for 2018)
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2020
Table 4: List of apparel products imported from year 2009 up to 2018
Import in Net-Mass (Kg)
Products Category 2009 GC 2010 GC 2011 GC
2012 GC 2013 GC 2014 GC 2015 GC 2016 GC
2017 GC 2018 GC
trousers etc& shorts 3,386,339 3,158,269 3,117,306.1
3,338,977.9 3,975,624.03 4,607,668.03 4,174,741.29 2,803,183.56
2,567,027.71 NA
Men's Shirts 1,058,841.00 1,075,427.00 1,166,219.67
1,362,717.44 1,400,606.93 1,261,987.18 1,090,756.96 858,196.92
1,089,465.78 NA
Women’s Blouse &
NA
Shirts 1,424,375.00 3,352,335.00 4,408,382.15
5,282,327.25 4,428,796.86 3,909,073.72 3,793,738.67 3,086,521.82
3,559,410.19
NA
dresses skirts etc&
shorts 733,204.00 1,094,561.00 1,732,912.63
2,025,307.75 1,895,197.33 1,940,545.21 2,158,051.19 2,386,480.43
3,126,041.46
NA
Babies Garments 1,024,064.00 1,091,768.00 1,272,262.00
1,332,488.86 1,930,724.17 1,564,047.98 1,517,166.18 1,822,585.25
1,879,744.86
Sub Total 7,626,823.00 9,772,360.00 11,697,082.55
13,341,819.20 13,630,949.32 13,283,322.12 12,734,454.29
10,956,967.98 12,221,690.00 NA
Others 2,475,492.00 3,875,495.00 3,467,175.47

3,505,380.22 3,782,793.26 4,237,241.26 4,048,017.78 4,080,570.40
4,672,460.83 NA
TOTAL SUM 10,102,315.00 13,647,855.00 15,164,258.02

16,847,199.42 17,413,742.58 17,520,563.38 16,782,472.07
15,037,538.38 16,894,150.83 NA

Authority’s Report Data Base
Table 5: Import in CIF Value (USD)
Products Category 2008 GC 2009GC 2010 GC
2011 GC 2012 GC 2013 GC 2014 GC 2015 GC
2016 GC 2017 GC
trousers etc& shorts 13,766,670.83 13,130,278.60 15,001,308.90
17,974,381.63 21,889,123.00 27,225,822.62 23,062,478.78
18,855,294.69 18,717,243.38 27,843,000.00
Men's Shirts 2,789,159.25 3,120,870.93 4,394,774.93
5,401,072.27 6,247,318.39 5,660,860.32 4,315,687.65
3,953,866.70 5,282,019.74 18,992,000.00
Women’s Blouse &
Shirts 4,045,438.95 7,245,238.58 10,129,091.21
15,484,537.70 14,248,330.31 15,172,403.72 15,250,053.17
14,174,649.41 18,983,938.03 7,109,000.00
Women's suits,
jackets, dresses
skirts etc& shorts 3,264,093.32 5,306,697.13 7,667,497.75
9,547,458.51 8,900,725.81 11,233,351.41 11,693,413.43
15,651,913.47 21,326,958.79 5,801,000.00
Babies Garments 2,963,509.05 3,761,129.44 5,278,856.55
5,986,315.18 9,204,267.31 7,254,710.43 5,974,899.67
8,188,282.53 8,610,384.69 2,402,000.00
Sub Total 26,828,871.40 32,564,214.68 42,471,529.34
54,393,765.29 60,489,764.82 66,547,148.50 60,296,532.70
60,824,006.80 72,920,544.63 62,147,000.00
Others 7,855,640.01 12,833,379.91 11,622,542.29
13,378,082.75 14,295,128.35 18,309,526.87 18,820,719.88
22,052,314.54 25,984,858.8 21,179,000.00
TOTAL SUM 34,684,511.41 45,397,594.59 54,094,071.63
67,771,848.04 74,784,893.17 84,856,675.37 79,117,252.58
82,876,321.34 98,905,403.43 83,326,000.00
Authority’s Report Data Base (for 2009-2018) and from International
Trade Center’s Report Data Base (for 2018)
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2020
2.3 Projected Demand

From previously presented export and import records (Table 2, 3, 4 and 5) of
apparel products of
the nation, the following facts could be recognized after thorough analysis made on
it.
Export on apparel products in general and some products like: women’s blouses,
shirts, skirts,
trousers shorts, and Men’s shirts, trousers and shorts in particular had been
increasing from year
to year for the last ten years. Only in 2018, about 11 million USD total sales had
been made for
the mentioned products, which is about 136% greater than that of the preceding
year, 2017
(Table 3).
Import of these same products had been also increasing consecutively from year 2008
(which
was about 26.8 million USD) to year 2016 (which was about million 72.9 USD). The
increment
from year 2008 to 2016 was 172%. In 2018, the sales became 62.15 million USD which
was by
14.7% less than that of 2017. The reduction in import could be logically related to
the increment
in production and local sales of the nation, although there is large imbalance
still, which is about
-51.15 million USD, when calculated for the mentioned products only for the year,
2018 (Table 3
and 5).
From this analysis it can be reasonably concluded that export of apparel products
in general and
those mentioned products in particular, will be expected to increase for the coming
ten years
also. Besides these analyses, the report of “International Trade Center (ITC)”
indicates that for
the year 2012, the total world import of apparel products was about
196,786,089,000.00 USD,
from which about 83,324,000.00 USD (0.04%) was imported by Ethiopia. On the other
hand,
the total value exported by Ethiopia in this same year was only 15,078,000.00 USD,
according to
the report, which amounts to only 0.008% of the total amount imported by the world
(196,702,765,000.00 USD), excluding that of Ethiopia.
According to this report (ITC report), the average growth rate for apparels’ world
import for the
years 2015 - 2018 was 2%, and about 16% for the years 2017-2018. The Import growth
rate for
Ethiopia was reported as 4% for the years 2015 -2018 and 7% for the years 2017-
2018. (But
according to data obtained from ECRA, it was indicated that there was reduction in
import by
14.7% for the year 2017-2018, which was noted as the result of data differences
from one source
to the other).
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2020
Likewise; regarding export, it was indicated in the ITC report that the growth rate
was 93% for
the year 2015-2018 and 267% for the years 2017-2018, for Ethiopia.
According to the Growth and Transformation Plan (GTP 2) of the country, it was
targeted to
increase the export of apparel products, in general, as presented in table 2 above.
Therefore, assuming that the world and national imports continues to increase with
the same
average growth rate of the year 2015 – 2016, which is 2% and 4% respectively; and
taking the
values of 2018 as the base line, which was 196,786,089,000.00 USD and 83,324,000.00
USD
respectively, we can predict that the demands of apparel products in general to
have the
following trends.
Table 6: World and Ethiopian Apparel Import projections for years 2019 -2024
Year World Import (USD) National Import World /Except
Ethiopia/
(USD) Import
(USD)
2019 221,613,098,100.00 105,431,441.90
221,507,666,658.10
2020 226,045,360,000.00 109,648,699.60
225,935,711,300.40
2021 230,566,267,200.00 114,034,647.60
230,452,232,552.40
2022 235,177,592,600.00 118,596,033.50
235,058,996,566.50
2023 239,881,144,400.00 123,339,874.80
239,757,804,525.20
2024 244,678,767,300.00 128,273,469.80
244,550,493,830.20
Assuming that the factories available in the year 2019 are remaining to exist and
continue to
produce and sale the amount imported in that year, we can calculate the supply gaps
resulted in
the market because of the demand growths in the following consecutive years. These
can be
obtained by deducting the supply of the year 2019 from the projected ones for the
years covered
in the plan, as presented in Table 7.
Considering the export and import situations of apparel products at national and
global levels, we
can reasonably conclude that there is very huge market demand for the mentioned
products both
locally and globally. Therefore, it will be the matter of competing and taking the
market share
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2020
Table 7: Apparel Supply Gaps Projected for the years 2019-2024
Year National Import National Supply Supply Gap

(USD)
(USD) (USD)
2019 105,431,441.90 83,324,000.00
22,107,441.90
2020 109,648,699.60 83,324,000.00
26,324,699.60
2021 114,034,647.60 83,324,000.00
30,710,647.60
2022 118,596,033.50 83,324,000.00
35,272,033.50
2023 123,339,874.80 83,324,000.00
40,015,874.80
2024 128,273,469.80 83,324,000.00
44,949,469.80
Table 8፡ World supply gap

Year World /Except Ethiopia/ World /Except for World
Supply Gap
Import (USD) Ethiopia/ Supply (USD)
(USD)
2019 221,507,666,658.10 196,702,765,000.00
24,804,901,658.10
2020 225,935,711,300.40 196,702,765,000.00
29,232,946,300.40
2021 230,452,232,552.40 196,702,765,000.00
33,749,467,552.40
2022 235,058,996,566.50 196,702,765,000.00
38,356,231,566.50
2023 239,757,804,525.20 196,702,765,000.00
43,055,039,525.20
2024 244,550,493,830.20 196,702,765,000.00
47,847,728,830.20
Therefore, surplus demands for apparel products at world level and national level
could be
summarized as follows.
Table 9፡ Summary of Apparel Surplus Import Demand Projected for the coming 6 years
Year World Surplus Import National Surplus Import Total
Surplus Import
Demand (USD) Demand (USD) Demand
(USD)
2019 24,804,901,658.10 22,107,441.90
24,827,011,117.00
2020 29,232,946,300.40 26,324,699.60
29,259,273,018.00
2021 33,749,467,552.40 30,710,647.60
33,780,180,219.00
2022 38,356,231,566.50 35,272,033.50
38,391,505,610.00
2023 43,055,039,525.20 40,015,874.80
43,095,057,411.00
2024 47,847,728,830.20 44,949,469.80
47,892,680,312.00
3
2020
Therefore; the world surplus demand presented in table 9 can be taken as a base to
set the
capacity of the plant for export sales, and the total national demand for import,
as projected and
presented in Table 7, can be used as a base to set the capacity of the plant for
local market.
Accordingly, 0.02% of the world surplus demand of year 2019’s projection for
apparel demand,
which is 4,960,980.33 USD, for export; and 2% of the 2019’s national total demand,
which is
2,108,628.84 USD, for local market are considered to set the total production
capacity of the
plant to be envisaged.
The average price per unit kilogram of garment products varies from year to year
due to the
effect of factors like inflation and others. An average of 5% increment in average
selling price
per unit kilogram of the products is assumed to calculate the sales achievement
over the plan
year.
The following Table portrays the amount planned for export and local market, which
is
calculated based on assumptions stated above.
Table 10: Sales plan for the envisaged project (Export & Local sales)
Year World Surplus Export Plan National Total Local Sales
Total Sales
Import Demand (USD) Import Plan (USD)
Plan
(USD) Demand (USD)
2019 24,804,901,658.10 4,960,980.33 105,431,441.90 2,108,628.84
7,069,609.17
2020 29,232,946,300.40 5,209,029.35 109,648,699.60 2,214,060.28
7,423,089.63
2021 33,749,467,552.40 5,469,480.81 114,034,647.60 2,324,763.30
7,794,244.11
2022 38,356,231,566.50 5,742,954.85 118,596,033.50 2,441,001.46
8,183,956.32
2023 43,055,039,525.20 6,030,102.60 123,339,874.80 2,563,051.53
8,593,154.13
2024 47,847,728,830.20 6,331,607.73 128,273,469.80 2,691,204.11
9,022,811.84
As presented in the table about 60% of the total sale will be targeted for export
and the remaining
40% is reserved for local market.
2.4 Pricing and Distribution
Based on import data analyzed for the year 2018, the average price per unit
kilogram of garment
products was 16.143 USD, which is equivalent to Birr 452. (Source: Data analyzed by
Marketing Directorate of TIDI, based on ERCA’s Annual Import Report) Assuming this
price to
increase by 5% in the coming year, 16.95USD is taken as the average selling price
for products
4
2020
of the envisaged company. One dollar exchange rate is 28 birr is considered for
this analysis. The
project will export 65% of its product for Sudan, Kenya and Djibouti.
Table 11: Estimated Average selling price per unit kilogram for different product
categories
Product Mix U/M Unit Price Share of
Product Price Share
(USD/Kg) Mix (%)
(USD)
Men's suits, jackets, trousers etc& shorts Kg 18 25
4.5
Men's Shirts Kg 16.8 25
4.2
Women's blouses and shirts Kg 16.25 20
3.25
Women's suit, jackets, dresses skirts etc… Kg 16.5 20
3.3
Babies Garments Kg 17 10
1.7
Average Selling Price 100
16.95
Note that products mentioned as “men’s …” and “women’s …” covers all the sizes from
small to
extra-large sizes, which are dressed by boys, girls, men, and women.
5
2020
3 Technical Feasibility Analysis

3.1 Location and Site
Proximity to customers is one of the main factors which influence the choice of
location for a
project. The proposed project focuses on solving the problems of the community by
establishing
Garment factory and providing garment products in affordable price.
The selection of a particular site also considers the convenience of the market
environment and
the raw material availability. So the project will run in Bahir Dar city industry
zone.
3.2 Land, Buildings and Civil Works
The total area of land required for the envisaged plant is 30,000 m2 out of which
18,000 square
meters is a built-up area.
According to the Federal Legislation on the Lease Holding of Urban Land

(Proclamation No
721/2004) in principle, urban land permit by lease is on auction or negotiation
basis, however,
the time and condition of applying the proclamation shall be determined by the
concerned
regional or city government depending on the level of development.
However, the Federal Legislation on the Lease Holding of Urban Land apart from
setting the
maximum has conferred on regional and city governments the power to issue
regulations on the
exact terms based on the development level of each region.
In Bahir dar, the City’s Administration is directly responsible in dealing with

matters concerning
land. However, regarding the manufacturing sector, industrial zone preparation is
one of the
strategic intervention measures adopted by the City Administration for the
promotion of the
sector and all manufacturing projects are assumed to be located in the developed
industrial
zones.
Moreover, the Bahir darcity Administration has recently adopted a new land lease
floor price for
plots in the city. The new prices will be used as a benchmark for plots that are
going to be
auctioned by the city government or transferred under the new “Urban Lands Lease
Holding
Proclamation.”
The highest rate of the industrial Zone will be applicable in most areas of the
city that are
considered to be main industrial areas that entertain high level of business
activities.
6
2020
The price rate ranges from Birr 0.75 cents to Birr 60 per m2.Accordingly, in order
to estimate the
land lease cost of the project, it is assumed that all new manufacturing projects
will be located in
industrial zones. Therefore, for the project a land lease rate of Birr 60 per m2
which is the
highest price of the industrial zone is adopted.
On the other hand, some of the investment incentives arranged by the Bahir dar City
Administration on lease payment for industrial projects are granting longer grace
period and
extending the lease payment period. The criterions are creation of job opportunity,
foreign
exchange saving, investment capital and land utilization tendency etc. For the
purpose of this
project, the five years grace period, 40 years payment completion period and 10%
down payment
is used. The land lease period for industry is 80 years.
Accordingly, the total land lease cost at a rate of Birr 60 per m2 is estimated at
Birr 1,800,000 of
which 10% or Birr 180,000 will be paid in advance. The remaining Birr 1,720,000
will be paid in
equal installments within 40 years i.e. Birr 26,700 annually. The total
construction cost is
estimated about birr 22,250,000.
Table 12: Project construction area requirement (in m2)
No Description Quantity M2 Unit cost

Total cost
1 Raw material store 2,000.00 1,500.00
3,000,000.00
2 Processing line 7,000.00 1,500.00
10,500,000.00
3 Product store 2,500 1,500.00
3,750,000.00
4 Administrative Office 800 1,500.00
1,200,000.00
5 Cafeteria 400 1,500.00
600,000.00
6 Reception area 600 1,500.00
900,000.00
7 Guard house 200 1,000.00
200,000.00
8 Parking 4500 200
900,000.00
Sub total 18,000.00
21,050,000.00
8 Loading, Circulation, green area, etc 12,000.00 100
1,200,000.00
Total land area 30,000.00
22,250,000.00
7
2020
3.3 Plant capacity and production program

3.3.1 Plant capacity
Based on sales plan and the average sales price, we can get that the annual
production capacity of the
plant will be 740,275 Kg of garments totally. From the total products: - 25%
(185,068Kg) will be:
Men's suits, jackets, trousers etc& shorts; 25% (185,068Kg) will be: Men's
Shirts; 20% (156,058Kg)
will be: Women's blouses and shirt; 20% (148,055) will be: Women's suits,
jackets, dresses skirts etc&
shorts; and 10% (74,027Kg) will be: Babies Garments.
The following Table presents summary of the production capacity of the plant,
converting the
measuring units from Kg to pieces. Total of 320 working days per annum, 8 hour
per day in one shift
is assumed to set the plant capacity.
Accordingly, a total of 1,826,562 pieces of different garments will be
produced on 100% capacity
utilization, and a total of Birr 479,404,074, with average exchange rate of 1
USD = 30 Birr) sales is
planned to be achieved.
Table 13: Annual Sales plan for the envisaged plant
Annual Production Average
Selling Price
Product Mix Capacity Unit Price
Quantity Quantity /piece
(USD) (Birr ’000)
(Kg) (Piece) (USD)
Men's suits, jackets, trousers, 185,069 246,759 13.50
3,331,246.50 93,274,902.00
jeansetc& shorts (1 pc = 750 gm)
Men's Shirts (1 pc = 350gm) 185,068 528,768 5.88
3,109,155.84 87,056,363.52
Women's blouses and shirts 148,055 493,517 4.88
2,408,362.96 67,434,162.88
(1 pc = 300gm)
Women's suits, jackets, dresses 148,055 246,758 9.90
2,442,904.20 68,401,317.60
skirts, etc& shorts (1 pc = 600 gm)
74,028 246,760 5.10
1,258,476.00 35,237,328.00
Babies Garments (1 pc = 300gm)
740,275 1,762,562 7.12
12,549,441.44 351,404,074.00
Total
Traditional clothes 64,000 71.43
128,000,000
Grand total 1,826,562
479,404,074.00
Note that the average weight for unit product categories is taken by
estimation, taking the size
(small – extra-large) and material variations (cotton, polyester, nylon,
etc...) in to considerations.
3.3.2 Production program
The planned capacity will be achieved in the fourth year of the establishment
year of the factory.
In a period of 12 months project time, the project will be realized. It is
estimated that production
8
2020
starts at 85% plant capacity in the first year, 95% in the second year, and 100% in
the third year
and will continue to work with this capacity for the coming 10 years. Since
production capacity
of garment factory is highly dependent on operator’s performance, here the average
attainable
Ethiopian machine operator’s performance is taken in to consideration to determine
the overall
capacity of the envisaged plant. The factory is assumed to work 320 days in a year
and 8 hours
per day in a single shift.
Table 14: Production Program
Product Categories U/M Plant Capacity Utilization
1st year 2nd year 3rd
year and
(85%) (95%) above
(100%)
Men's suits, jackets, trousers Pcs
246,759
etc& shorts 209,745 234,421
Men's Shirts >> 449,453 502,330
528,768
Women's blouses and shirts >> 419,489 468,841
493,517
Women's suits, jackets, dresses
246,758
skirts etc& shorts >> 209,744 234,420
Babies Garments >> 209,746 234,422
246,760
Traditional garments >> 54,400 60,800
64,000
Total >> 1,552,578 1,735,234
1,826,562
The factory will have a set up to accommodate production facilities for both
knitted and woven
garment products. Based on assumptions stated above the plant will have a total
capacity of
manufacturing 5,508 pieces of varies woven and knitted garments and 200 complete
traditional
clothes on average per day in one shift. Depending on the simplicity of the product
type and
improvement in operators’ performance, even more production capacity could be
achieved with
the same plant setup.
3.4 Raw Materials and utilities
3.4.1 Raw Materials
The raw materials required to produce Garment s include embroidery treads, mag,
fabrics,
buttons, sewing threads, and accessories like zipper, shoulder pad, labels etc.
Except some
materials and accessories which are not produced locally, for a short run, all the
raw materials
will be purchased locally. However, in the near future all the raw materials will
be expected to be
available locally as there are a number of projects in the pipeline and also some
bonded
9
2020
warehouses to be opened locally by foreign manufacturers. Table 16 below presents
annual
requirements and corresponding costs of raw materials at full production capacity.
Table 15: Raw materials requirement and Cost at full capacity
S/N material type U/M Qty unit Price

Total Cost
1 Fabric Kg 822,289.00 320
263,132,480.00
2 Buttons Kg 22554 162
3,653,748.00
3 Sewing thread Kg 9789 245
2,398,305.00
4 Embroidery treads 128,000.00 120
15,360,000.00
5 Yarn 12,800.00 1,000.00
12,800,000.00
6 Mag 64,000.00 180
11,520,000.00
7 Accessories - Lump sum -
6,440,263.00
8 Packing material - >>>> -
8,064,158.00
Grand Total
323,368,954.00
3.4.2 Utilities
Electricity and water are the two major utilities required by the envisaged plant.
Total annual
cost of major utility items at full operation capacity of the plant is Birr
4,528,000.00. Details are
shown in the table below:
Table 16: Utilities Requirement and Cost at full capacity
No. Description Unit Qty. Unit price (Birr)
Cost ( Birr)
1 Electricity kWh 500,000 0.59
295,000.00
2 Water m3 65,000 8.2
533,000.00
4 fuel oil Lt 200,000 18
3,600,000.00
6 Telephone and internet Birr
100,000.00
Total
4,528,000.00
3.5 Technology and Engineering

3.5.1 Production process
Generally, apparel manufacturing process involves Product Design, Fabric Selection
and
Inspection, Patternmaking, Grading, Marking, Spreading, Cutting, Bundling, Sewing,
Pressing or
Folding, Finishing and Detailing, Dyeing and Washing, QC etc.
10
2020
The major processes involved in the production processes of apparel products of the
envisaged
factory are discussed as under.
Receiving fabrics
Under this process step the fabric to be used in production process of apparels
will be received
from the supplier. Depending on the type of procurement and type of products, the
supplier could
be either the manufacturer, or whole seller or retailer. The fabrics received from
the supplier are
preserved in the raw material stores temporarily before they are issued for next
step.
Fabric Relaxing
“Relaxing” refers to the process that allows material to relax and contract prior
to being
manufactured. This step is necessary because the material is continually under
tension
throughout the various stages of the textile manufacturing process, including
weaving, dyeing,
and other finishing processes. The relaxing process allows fabrics to shrink so
that further
shrinkage during customer use is minimized.
Fabric relaxing could be done either manually or mechanically. Manual fabric
relaxing typically
entails loading the bolt of fabric on a spinner and manually feeding the material
through a piece
of equipment that relieves tension in the fabric as it is pulled through.
Mechanical fabric relaxing
performs this same process in an automated manner.
Quality assurance process is integrated into this process to ensure that the
quality of the fabric
meets customer standards. This step is performed by manually spot-checking each
bolt of fabric
using a backlit surface to identify manufacturing defects such as color
inconsistency or flaws in
the material. Fabrics that fail to meet customer standards are returned to the
supplier
(manufacturer or whole seller of retailer).
Spreading, Form Layout, and cutting
After fabric has been relaxed, it is transferred to the spreading and cutting area
of the garment
manufacturing facility. The fabric is first cut into uniform plies and then spread
either manually
or using a computer-controlled system in preparation for the cutting process.
Fabric is spread to:
 allow operators to identify fabric defects;
 control the tension and slack of the fabric during cutting; and
 Ensure each ply is accurately aligned on top of the others.
The number of plies in each spread is dependent on the fabric type, spreading
method, cutting
equipment, and size of the garment order.
11
2020
Next, garment forms or patterns are laid out on top of the spread, either manually
or programmed
into an automated cutting system. Lastly, the fabric is cut to the shape of the
garment forms
using either manually operated cutting equipment or a computerized cutting system.
Embroidery and Screen Printing
Embroidery and screen printing are two processes that occur only if directly
specified by the
customer; therefore, these processes are commonly subcontracted to off-site
facilities.
Embroidery is performed using automated equipment, often with many machines
concurrently
embroidering the same pattern on multiple garments. Each production line may
include between
10 and 20 embroidery stations. Customers may request embroidery to put logos or
other
embellishments on garments.
Screen printing is the process of applying paint-based graphics to fabric using
presses and textile
dryers. Specifically, screen printing involves sweeping a rubber blade across a
porous screen,
transferring ink through a stencil and onto the fabric. The screen printed pieces
of fabric are then
dried to set the ink. This process may have varying levels of automation or may
largely be
completed at manually operated stations. Like embroidery, screen printing is wholly
determined
by the customer and may be requested to put logos or other graphics on garments or
to print
brand and size information in place of affixing tags.
Sewing
Garments are sewn in an assembly line, with the garment becoming more complete as
it
progresses down the sewing line. Sewing machine operators receive a bundle of cut
fabric and
repeatedly sew the same portion of the garment, passing that completed portion to
the next
operator. For example, the first operator may sew the collar to the body of the
garment and the
next operator may sew a sleeve to the body. Quality assurance is performed at the
end of the
sewing line to ensure that the garment has been properly assembled and that no
manufacturing
defects exist. When needed, the garment will be reworked or mended at designated
sewing
stations. This labor-intensive process progressively transforms pieces of fabric
into designer
garments.
Spot Cleaning and Laundry
In addition to identifying manufacturing defects, employees tasked with performing
quality
assurance are also looking for cosmetic flaws, stains, or other spots on the
garment that may have
occurred during the cutting and sewing processes. Spots are often marked with a
sticker and
12
2020
taken to a spot-cleaning area where the garment is cleaned using steam, hot water,
or chemical
stain removers.
Some customers request that a garment be fully laundered after it is sewn and
assembled;
therefore, garment factories often have an on-site laundry or have subcontract
agreements with
off-site laundry operations. Commercial laundry facilities are equipped with at
least three types
of machines: washers, spinners, and dryers. Some facilities also have the
capability to perform
special treatments, such as stone- or acid-washing.
Ironing
After a garment is fully sewn and assembled, it is transferred to the ironing
section of the facility
for final pressing. Each ironing station consists of an iron and an ironing
platform. The irons are
similar looking to residential models, but have steam supplied by an on-site
boiler. Workers
control the steam with foot pedals and the steam is delivered via overhead hoses
directly to the
iron. In most facilities, the ironing platforms are equipped with a ventilation
system that draws
steam through the ironing table and exhausts it outside the factory.
Packaging and Shipping
In the last steps of making a product retail-ready, garments are folded, tagged,
sized, and
packaged according to customer specifications. Also, garments may be placed in
protective
plastic bags, either manually or using an automated system, to ensure that the
material stays
clean and pressed during shipping. Lastly, garments are placed in cardboard boxes
or pp bags
and shipped to client distribution centers to eventually be sold in retail stores,
or to customers, if
they are produced on orders.
13
2020
Fabric Reception
Fabric Relaxing
Fabric Spreading, Form

Layout, and Cutting
Sewing
Inspection
Spot cleaning and

Laundry
Ironing
Packing
Apparel Shipping
Figure 1: Apparel production process flow chart
3.5.2 Source of Technology

The machinery and equipment required to manufacture apparel products are
conventional and
available in different technological levels, in general. Selection among
alternatives was made based
on the competitive advantages it provides to the stakeholder in the context of the
country. The major
criterions taken in to consideration are: resource utilization (especially labor),
job opportunity,
operability, and maintainability. Therefore; the labor intensive machineries and
equipment’s are
selected for the envisaged plant. Suppliers of labor intensive technologies are
available in Europe,
Asia and Far East.
14
2020
3.5.3 Machinery and Equipment
The envisaged plant is planned to produce knitted and woven garments,traditional
clothes and
jeans products and therefore the machineries and equipment’s to be purchased will
be in such a
way as to accommodate all required facilities. The list of machinery and equipment,
quantity and
associated costs are presented in Table 17. As shown in the table, the total cost
of machinery and
equipment is estimated Birr 28,894,078.45.
Table 17: Machinery and Equipment Requirement and Cost
No Item Name QTY Unit price

Total cost
1 Single needle LOCK STITCH MACHINE 60 14,767.70
886,062.00
2 2 needle 4thread over lock 12 14,767.70
177,212.40
3 Blind stitch 2 33,010.15
66,020.30
4 2 Needle flatbed Bottom cover stitch Belt –loop making 1 42,888.38
42,888.38
5 12 Needle flatbed Double chain stitch 5 47,380.74
236,903.70
6 Double needle lock stitch machine 6 33,985.77
203,914.62
7 Basis –Cutting &winding machine 1 33,915.42
33,915.42
8 Flatbed top bottom cover stich machine univ. type 3 40,898.01
122,694.03
9 Cylinder-bed top&bottm cover stitch machine 3 53,366.91
160,100.73
10 2 Needle 5thread over lock machine 8 15,960.20
127,681.60
11 SNLSmachine with vertical EDGETRIMMER 6 22,240.69
133,444.14
12 Single needle flatbed double chain stitch machine 2 42,144.90
84,289.80
13 Feed of the arm2-needle double chain stitch machine 5 69,470.91
347,354.55
14 Computer control button sewing machine 2 74,315.65
148,631.30
15 Computer control BARTACKING Machine 2 51,045.09
102,090.18
16 Computer control bottomholing machine 3 72,569.02
217,707.06
17 Fusing press machine 2 50,623.75
101,247.50
18 Trade terminal machine 1 20,698.38
20,698.38
19 Vacuum table with standard buck 18 10,473.88
188,529.84
20 Stain removing machine 1 27,930.34
27,930.34
21 Full steam Iron 18 1,918.92
34,540.56
22 Steam generating Boiler 6 27,600.89
165,605.34
23 Spreader machine 2 47,841.54
95,683.08
24 Spreader Table 2 73,602.38
147,204.76
25 Pneumatic collar Turing machine 1 20,199.62
20,199.62
26 Air compressor 1 157,053.82
157,053.82
Sub total 4,095,919.25
4,049,603.45
15
2020
1 Finishing machinery
2 Steam boiler 120 kw 1 50,400.00
50,400.00
3 Steam boiler 75 kw 1 32,500.00
32,500.00
4 Iron 50 11,684.00
584,200.00
5 Full steam iron 100 5,800.00
580,000.00
6 Steam iron hose 300 1,760.00
528,000.00
7 Shirt iron press (box plate) 5 3,500.00
17,500.00
8 “ “ “ (back) 5 3,500.00
17,500.00
9 “ “ “ (said) 5 3,500.00
17,500.00
10 “ “ “(collar) 3 3,500.00
10,500.00
11 Court “ “( solder ) 2 3,500.00
7,000.00
12 “ “ “ (front master ) 2 3,500.00
7,000.00
13 “ “ “ (back) 1 3,500.00
3,500.00
14 “ “ “ (front) 1 3,500.00
3,500.00
15 “ “ “ (solder) 1 3,500.00
3,500.00
16 “ “ “ (side) 1 3,500.00
3,500.00
17 “ “ “ (collar) 1 3,500.00
3,500.00
18 Thread sacker 2 2,500.00
5,000.00
19 Shirt folding machine 3 17,500.00
52,500.00
21 Sacker for court 1 24,500.00
24,500.00
22 Compressor (350 kg) 1 54,200.00
54,200.00
23 Catron banding machine 2 16,500.00
33,000.00
24 Snap button machine (panama tic) 15 13,545.00
203,175.00
25 needle detector (metal caking )machine 1 21,000.00
21,000.00
26 stane removing (sport cleaning ) 3 12,500.00
37,500.00
Sub total
2,300,475.00
1 Complete Jeans Machine 1 set 2,300,000.00
2,300,000.00
2 Traditional weaving machine 500 10,000.00
5,000,000.00
Knitting machine
1 Circular knitting machine
2 Tubular circular knitting machine three thread 1,312,000.00
fleece 30” g 5
6,560,000.00
3 Single jersey Tubular circular knitting machine 8 268,000.00
2,144,000.00
Sub total
8,704,000.00
Grand total
18,854,078.45
16
2020
Table 18: Furniture and office equipment and vehicles
Item Quantity Unit cost
Total cost
Computer 10 10,000
100,000
Printer 4 10,000
40,000
Photocopy machine 1 30,000
30,000
Telephone sets 6 500
3,000
Table 50 3,000
150,000
Chair 50 2,000
100,000
Shelf 12 4,000
48,000
Miscellaneous
30,000
Total
501,000
Vehicles
Toyota hilux-4wd double 1 1,500,000.00
1,500,000.00
Total
1,500,000.00
3.6 Project implementation schedule

The major activities to be carried during the project implementation period are
grouped under the
following four major categories. These are:
1. Activation and organization activities
2. Operation activates
3. Construction and erection
4. Performance testing
Activation and organization activities
These are activities that need to be carried as a pre-requisite for the project to
become operational
or they are preliminary activities. The tentative list of activities under this
category is: Necessary
document collection, such as preliminary designs, plant layout, technological
drawing of plant
and machinery, architectural drawing of the plant building and civil works and
specification of
building, process machinery, auxiliary equipment’s and utility equipment,0btain
investment
license and trade registration and ownership of project area submitting feasibility
study and other
legal documents to the bank for financial arrangement.
Operational activities:
The project operational activities will actually start after securing the land from
the municipality.
And the next activity will be organizing the project management and undertaking
steps to get the
required fund from lending banks and concluding financial agreement.
17
2020
Establishing project criteria early before starting design, is critical to the
success of the optimized
project. The team entity must develop a clear, mutually held understanding of all
project and
team entity goals, values, and objective. A concise description of project scope
and program,
along with a preliminary budget aligned with the scope is vital to setting a
project up for success.
Construction and Erection
The development of a construction plan is very much analogous to the development of
a good
facility design. The time schedule for construction and erection has been
standardized through
identification of the following requirements.
Performance testing activities
Performance testing will be carried right after completion of plan Erection and the
normal
production operation of the plan starts after 12 months of project implementation.
Training of the
recruited personnel is carried out within a period a month.
Table 19: Project implementation schedule
No Activity First
year quarters of 2018
1. Activation and organization activities 1
2 3 4
Preparing necessary documentation
Procuring consultant for detailed project design
Plan check approvals secured
Procuring construction consultants
2. Operational activates
Recruiting project implementing staff
Completing financial arrangements
Arrangement for acquisition of machinery & equipment
3 Construction Erection
Site facility establishing & material mobilization
Site preparation and foundation work
Finishing the civil work
Erection of machinery
4 Performance testing & production activities
Training of recruited personal
Performance testing
Actual production starts
18
2020
4 Management and Organizational feasibility

4.1 Human Resource Requirement
The total human resource requirement of the envisaged project is 520 persons.
Details of the
human resource requirement and estimated annual labor cost including fringe
benefits are given
in the Table 20 below.
Table 20: Man power Requirement and annual salary
S/N Description No Monthly salary Annual

salary
1 Factory Manager 1 10,000.00

120,000.00
2 Executive Secretary 1 2,500.00
30,000.00
3 Departmental Secretaries 2 4,000.00
48,000.00
4 Production and Tech Manager 1 8,000.00
96,000.00
5 Quality Head 1 6,500.00
78,000.00
6 Production supervisor 2 12,000.00
144,000.00
7 Quality Control supervisor 2 12,000.00
144,000.00
8 Mechanical maintenance supervisor 1 3,500.00
42,000.00
9 Electrical maintenance Supervisor 1 3,500.00
42,000.00
10 traditional weavers 75 500,000.00
6,000,000.00
11 Machine Operators 100 600,000.00
7,200,000.00
12 operator helpers 40 160,000.00
1,920,000.00
13 spinning 50 400,000.00
4,800,000.00
14 Wilders 35 140,000.00
1,680,000.00
15 Warping 15 30,000.00
360,000.00
16 Ironing 30 60,000.00
720,000.00
17 Packaging 10 20,000.00
240,000.00
18 Cutting 50 100,000.00
1,200,000.00
19 Knitting operator 20 80,000.00
960,000.00
20 Helper 50 100,000.00
1,200,000.00
21 Quality Inspectors 1 2,500.00
30,000.00
19
2020
22 Mechanic 1 3,500.00
42,000.00
23 Electrician 1 3,500.00
42,000.00
24 Marketing Manager 1 8,000.00
96,000.00
25 Sales person 3 9,000.00
108,000.00
26 Administration manager 1 8,000.00
96,000.00
27 General service personnel 1 6,000.00
72,000.00
28 HR Personnel 1 4,000.00
48,000.00
29 Nurse 2 6,000.00
72,000.00
30 Guard 6 6,000.00
72,000.00
31 Messengers 1 2,000.00
24,000.00
32 Driver 1 10,000.00
120,000.00
33 Cleaner 5 4,000.00
48,000.00
34 Financial manager 1 8,000.00
96,000.00
35 Accountant 1 4,000.00
48,000.00
36 Cashier 2 3,000.00
36,000.00
37 Purchasers 2 6,000.00
72,000.00
38 Store Keepers 2 6,000.00
72,000.00
Sub Total 520 2,351,500.00
28,218,000.00
Employee Benefit (10%) 235,150.00
2,821,800.00
Grand Total 2,586,650.00
31,039,800.00
4.2 Training requirement

On job training for operators and short term trainings for supervisors,
technicians, and designers is
planned, with estimated cost of Birr 100,000.00.
20
2020
5 Financial Analysis
5.1 Underlying Assumption
The financial analysis of the envisaged plant is based on the data provided in the
preceding
chapters and the following assumptions.
Financial Assumptions
A. Construction and Finance
Construction period 12 months
Source of Finance 25% equity and 75% Loan from bank
Tax Holidays 5 years
Bank Interest rate 11.50%
Discount for cash flow 12%
Value of Land Birr 60/M2
Spare parts & Repair and Maintenance 5% of the fixed investment
B. Depreciation & Amortization
Building 5%
Machinery and Equipment 10%
Office Furniture 10%
Vehicles 10%
C. Working Capital(Minimum day of coverage)
Raw Material Local 30 days

Raw Material Foreign 120 days
Factories supplies in stock 30 days
Spare part in stock and Maintenance 60 days
Work in Progress 5 days
Finished Product 20 days
Account receivable 30 days
Cash in Hand 20 days
Accounts payable 30 days
21
2020
5.2 Pre-production Expenses

The total cost required for design, consultancy, training and commissioning is
estimated to be
Birr 260,000.00.
Table 21: Design, consultancy, training and test run cost
S/N Description Estimated
Budget(Birr)
1 Engineering, Design & consultancy fee
60,000.00
2 Training
100,000.00
3 Commissioning and test run with 10% contingency
50,000.00
4 Other pre-production expenses
50,000.00
Total
260,000.00
Remark: Other pre-production expenses include costs like costs of registration,

licensing and
formation of the company including legal fees, commissioning
expenses, etc.
5.3 Total Investment Cost

The investment cost of the project including working capital is estimated at Birr
50.065 million.
The owner shall contribute 25% (12,516,269.61) of the finance in the form of equity
while the
remaining 75% (37,548,808.84) is to be financed by bank loan.
Table 22: Total Initial Investment
No Item Total
1 Fixed asset
1.1 Land 180,000.00
1.2 Building and Civil Work 22,250,000.00
1.3 Office Equipment 501,000.00
1.4 Vehicles 1,500,000.00
1.5 Plant machinery and equipment 18,854,078.45
Total Fixed investment cost 43,285,078.45
2 Pre-Production 260,000.00
3 Working capital at full capacity 6,520,000.00
Total 50,065,078.45
Equity 12,516,269.61
Loan 37,548,808.84
22
2020
5.4 Production Cost

The total production cost at full capacity operation is estimated at Birr 365
million. Raw
materials account for 88.59%, while the rest together costs 11.41% of the total
production cost.
No Items Cost (in Birr)
%
1 Raw Material and Inputs 323,368,954.00
88.59%
2 Utilities 4,528,000.00
1.24%
3 Maintenance and repair (5%) 1,042,753.92
0.29%
4 Labor direct 31,039,800.00
8.50%
5 Overhead cost 500,000.00
0.14%
6 Administration Costs 500,000.00
0.14%
7 Cost of marketing and distribution 500,000.00
0.14%
Total Operating Costs 361,479,507.92
99.04%
8 Depreciation 3,198,007.85
0.88%
9 Insurance 323,288.09
0.09%
Total Production Cost 365,000,803.86
100.00%
5.5 Financial Evaluations

5.5.1 Profitability
Based on the projected profit and loss statement, the project will generate a
profit beginning from the
first year of operation and increase on wards throughout its operation life. Annual
net profit after tax
will grow from Birr 5.642 million to Birr 24.35 million during the life of the
project. Moreover, at
the end of the project life the accumulated cash flow amounts to Birr 162.893
million.
5.5.1 Financial Ratios
In financial analysis financial ratios and efficiency ratios are used as an index
or yard stick for
evaluating the financial position of a firm. It is also an indicator for the
strength and weakness of the
firm or a project. Some of these ratios calculated for the first year of the
project life are:
Return on sales = Net income/Revenue

= 5,642,485.93/383,467,612.00
= 0.018 (1.8%)
23
2020
Return on equity = Net profit/Equity
= 5,642,485.93/12,516,269.61
= 0.45 (45%)
Return on investment = Net profit/Total Investment
= 5,642,485.93/50,065,078.45
= 0.11 (11%)
These financial ratios for all years of the operation life of the project are found
to be satisfactory and
hence indicate that it is profitable and viable.
5.5.2 Break-even Analysis
The break-even analysis establishes a relationship between operation costs and
revenues. It indicates
the level at which costs and revenue are in equilibrium.
BEP = Fixed Cost/ (Average Unit selling price – Average Variable cost per unit
product)
Fixed costs: 43,105,078.45
Average Sales price per unit: 223
Average Variable cost per unit: 176.96
Break-even point (units): 934,991
Break-even point (total sales): 208,559,834.38
5.5.3 Payback Period

The payback period is defined as the period required recovering the original
investment outlay
through the accumulated net cash flows earned by the project. Accordingly, based on
the
projected cash flow it is estimated that the project’s initial investment will be
fully recovered
within 3.26 years.
5.5.4 Internal Rate of Return
The internal rate of return (IRR) is the annualized effective compounded return
rate that can be
earned on the invested capital, i.e., the yield on the investment. Put another way,
the internal rate
of return for an investment is the discount rate that makes the net present value
of the
investment's income stream total to zero. It is an indicator of the efficiency or
quality of an
investment. A project is a good investment proposition if its IRR is greater than
the rate of return
that could be earned by alternate investments or putting the money in a bank
account.
24
2020
Accordingly, the IRR of this project is computed to be 23 % indicating the
viability of the
project.
5.5.5 Net Present Value
Net present value (NPV) is defined as the total present (discounted) value of a
time series of cash
flows. NPV aggregates cash flows that occur during different periods of time during
the life of a
project in to a common measuring unit i.e. present value. It is a standard method
for using the time
value of money to appraise long-term projects. NPV is an indicator of how
much value an
investment or project adds to the capital invested. In principal a project is
accepted if the NPV is non-
negative. Accordingly, the net present value of the project at 12% discount rate is
found to be Birr
237.462 million which is acceptable.
5.6 Economic benefits
5.6.1 Earning foreign currency
In addition to saving hard currency by substituting import of garment products, the
project will have
a role of earning of foreign currencies by exporting 60 % of its products.
5.5.2 Job creation
This project creates permanent job opportunities for 520 persons.
5.5.3 Tax Revenue
In the project life under consideration, the region will collect about Birr 4.616
million from corporate
income tax. Such result create additional fund for the government that will be used
in expanding
social and other basic services in the region.
Impact on Environment
The project is purely environment friendly. The proposed project is an exemplary
business solution
for environmental pollution. The experience of this business can be used to tackle
other
environmental problems as well.
25
2020
ANNEXES
1A: Sales projection volume in birr
Description Year 1 Year 2 Year 3
Year 4 Year 5
products in kg 592,220.00 666,247.50 740,275.00
740,275.00 740,275.00
unit price 474.60 498 523
549 577
Sub total 281,067,612.00 332,011,116.68
387,346,302.79 406,713,617.93 427,049,298.82
Traditional clothes in pcs 51,200.00 57,600.00 64,000.00
64,000.00 64,000.00
unit price 2000 2,100 2,205
2,315 2,431
Sub total 102,400,000.00 120,960,000.00
141,120,000.00 148,176,000.00 155,584,800.00
Total 383,467,612.00 452,971,116.68
528,466,302.79 554,889,617.93 582,634,098.82
1B: Sales projection volume in birr

Description Year 6 Year 7 Year
8 Year 9 Year 10
products in kg 740,275.00 740,275.00
740,275.00 740,275.00 740,275.00
unit price 606 636 668
701 736
Sub total 448,401,763.76 470,821,851.95
494,362,944.55 519,081,091.78 545,035,146.37
Traditional clothes in pcs 64,000.00 64,000.00
64,000.00 64,000.00 64,000.00
unit price 2,553 2,680 2,814
2,955 3,103
Sub total 163,364,040.00 171,532,242.00
180,108,854.10 189,114,296.81 198,570,011.65
Total 611,765,803.76 642,354,093.95
674,471,798.65 708,195,388.58 743,605,158.01
A
2: Depreciation forecasting
No Cost Items Original value Depreciation and
Amortization % Annual depreciation
1 Building and civil work 5%
1,112,500.00
22,250,000.00
2 Machinery and equipment 5%
1,885,407.85
18,854,078.45
3 Vehicles 1,500,000.00 10%
150,000.00
4 Office furniture and equip. 501,000.00 10%
50,100.00
Total 43,105,078.45
3,198,007.85
3: Annual repair and maintenance expenses
No Cost Items Original value Maintenance rate
Annual maintenance cost
1 Machinery and equipment 18,854,078.45 5%
942,703.92
2 Vehicles 1,500,000.00 5%
75,000.00
3 Office furniture and equip. 501,000.00 5%
25,050.00
Total 20,855,078.45
1,042,753.92
B
2020
4: loan repayment schedule
Loan Amount 37,548,808.84 Scheduled Payment
6,510,107.72
Annual Interest Rate 11.50 % Scheduled Number of Payments
10.00
Loan Period in Years 10 Actual Number of Payments
10.00
Number of Payments Per Year 1 Total Early Payments
-
Start Date of Loan 11/28/2019 Total Interest
27,552,268.39
Payment Date Beginning Scheduled Total Principal
Interest Ending Cumulative
Balance Payment Payment
Balance Interest
11/28/2020 37,548,808.84 6,510,107.72 6,510,107.72 2,191,994.71
4,318,113.02 35,356,814.13 4,318,113.02
11/28/2021 35,356,814.13 6,510,107.72 6,510,107.72 2,444,074.10
4,066,033.63 32,912,740.03 8,384,146.64
11/28/2022 32,912,740.03 6,510,107.72 6,510,107.72 2,725,142.62
3,784,965.10 30,187,597.41 12,169,111.75
11/28/2023 30,187,597.41 6,510,107.72 6,510,107.72 3,038,534.02
3,471,573.70 27,149,063.39 15,640,685.45
11/28/2024 27,149,063.39 6,510,107.72 6,510,107.72 3,387,965.43
3,122,142.29 23,761,097.96 18,762,827.74
11/28/2025 23,761,097.96 6,510,107.72 6,510,107.72 3,777,581.46
2,732,526.27 19,983,516.50 21,495,354.00
11/28/2026 19,983,516.50 6,510,107.72 6,510,107.72 4,212,003.33
2,298,104.40 15,771,513.18 23,793,458.40
11/28/2027 15,771,513.18 6,510,107.72 6,510,107.72 4,696,383.71
1,813,724.02 11,075,129.47 25,607,182.42
11/28/2028 11,075,129.47 6,510,107.72 6,510,107.72 5,236,467.83
1,273,639.89 5,838,661.64 26,880,822.31
11/28/2029 5,838,661.64 6,510,107.72 5,838,661.64 5,167,215.55
671,446.09 - 27,552,268.39
C
Financial Statements
5A: Projected Income statement
Year 4 Year 5
Total Sales 311,787,612.00 368,299,116.68 429,682,302.79
451,166,417.93 473,724,738.82
COGS 258,695,163.20 305,583,661.53 356,514,271.79
374,339,985.37 393,056,984.64
Gross profit 53,092,448.80 62,715,455.15 73,168,031.00
76,826,432.55 80,667,754.18
Expenses
Utility expense 4,528,000 4,980,800.00 5,478,880.00
6,026,768.00 6,629,444.80
Salary & benefit 31,039,800.00 32,591,790.00 34,221,379.50
35,932,448.48 37,729,070.90
Admin. Cost 1,000,000.00 1,050,000.00 1,102,500.00
1,157,625.00 1,215,506.25
Overhead cost 1,000,000.00 1,050,000.00 1,102,500.00
1,157,625.00 1,215,506.25
Maintenance & repair 1,042,753.92 1,042,753.92 1,042,753.92
1,042,753.92 1,042,753.92
Depreciation 3,198,007.85 3,198,007.85 3,198,007.85
3,198,007.85 3,198,007.85
Insurance 323,288.09 323,288.09 323,288.09
323,288.09 323,288.09
Marketing & promotion 1,000,000.00 1,000,000.00 1,000,000.00
1,000,000.00 1,000,000.00
Interest 4,318,113.02 4,066,033.63 3,784,965.10
3,471,573.70 3,122,142.29
Total expenses 47,449,962.87 49,302,673.48 51,254,274.46
53,310,090.03 55,475,720.34
EBT 5,642,485.93 13,412,781.66 21,913,756.54
23,516,342.52 25,192,033.84
Income Tax (30%)
Net Income 5,642,485.93 13,412,781.66 21,913,756.54
23,516,342.52 25,192,033.84
Withdrawal (20%) 846,372.89 2,011,917.25 3,287,063.48
3,527,451.38 3,778,805.08
Retained earning 4,796,113.04 11,400,864.41 18,626,693.06
19,988,891.14 21,413,228.76
D
5B: Projected Income statement
Gross Sales Year 6 Year 7 Year 8
Year 9 Year 10
Total Sales 497,410,975.76 522,281,524.55 548,395,600.78
575,815,380.82 604,606,149.86
COGS 412,709,833.88 433,345,325.57 455,012,591.85
477,763,221.44 501,651,382.51
Gross profit 84,701,141.89 88,936,198.98 93,383,008.93
98,052,159.38 102,954,767.35
Expenses
Utility expense 7,292,389.28 8,021,628.21 8,823,791.03
9,706,170.13 10,676,787.14
Salary & benefit 39,615,524.44 41,596,300.67 43,676,115.70
45,859,921.48 48,152,917.56
Admin. Cost 1,276,281.56 1,340,095.64 1,407,100.42
1,477,455.44 1,551,328.22
Overhead cost 1,276,281.56 1,340,095.64 1,407,100.42
1,477,455.44 1,551,328.22
Maintenance & repair 1,042,753.92 1,042,753.92 1,042,753.92
1,042,753.92 1,042,753.92
Depreciation 3,198,007.85 3,198,007.85 3,198,007.85
3,198,007.85 3,198,007.85
Insurance 323,288.09 323,288.09 323,288.09
323,288.09 323,288.09
Marketing 1,000,000.00 1,000,000.00 1,000,000.00
1,000,000.00 1,000,000.00
Interest 2,732,526.27 2,298,104.40 1,813,724.02
1,273,639.89 671,446.09
Total expenses 57,757,052.97 60,160,274.41 62,691,881.44
65,358,692.25 68,167,857.08
EBT 26,944,088.92 28,775,924.57 30,691,127.49
32,693,467.13 34,786,910.27
Income Tax (30%) 8,083,226.68 8,632,777.37 9,207,338.25
9,808,040.14 10,436,073.08
Net Income 18,860,862.24 20,143,147.20 21,483,789.24
22,885,426.99 24,350,837.19
Withdrawal (20%) 2,829,129.34 3,021,472.08 3,222,568.39
3,432,814.05 3,652,625.58
Retained earning 16,031,732.91 17,121,675.12 18,261,220.86
19,452,612.94 20,698,211.61
Total profit 197,401,463.36
Average 19,740,146.34
E
6A: Projected Balance Sheet
Year 4 Year 5
ASSET
Current Asset
Cash 6,780,000.00 5,802,126.18 17,956,924.34
37,056,482.63 57,204,847.59
Accounts Receivable 4,032,785.45 3,841,149.12
3,484,389.71 3,022,315.94
Finished goods inventory 2,688,523.64 2,560,766.08
2,322,926.47 2,014,877.30
Total current asset 6,780,000.00 12,523,435.27 24,358,839.55
42,863,798.81 62,242,040.83
Fixed assets
Land 1,800,000.00 1,800,000.00 1,800,000.00
1,800,000.00 1,800,000.00
Building and infrastructure 22,250,000.00 21,137,500.00 20,080,625.00
19,076,593.75 18,122,764.06
vehicles 1,500,000.00 1,363,636.36 1,239,669.42
1,126,972.20 1,024,520.18
Machinery and equipment 18,854,078.45 16,968,670.61 15,271,803.54
13,744,623.19 12,370,160.87
Furniture and equipment 501,000.00 455,454.55 414,049.59
414,049.59 376,408.72
Total fixed asset 44,905,078.45 41,725,261.51 38,806,147.55
36,162,238.73 33,693,853.83
Total asset 51,685,078.45 54,248,696.78 63,164,987.10
79,026,037.54 95,935,894.66
Liabilities & owners’ equity
Long term liabilities
Lease payable 1,620,000.00 1,579,500.00 1,539,000.00
1,498,500.00 1,458,000.00
Long term debt 37,548,808.84 35,356,814.13 32,912,740.03
30,187,597.41 27,149,063.39
Total long term liabilities 39,168,808.84 36,936,314.13 34,451,740.03
31,686,097.41 28,607,063.39
Owners’ equity
Paid up capital 12,516,269.61 12,516,269.61 12,516,269.61
12,516,269.61 12,516,269.61
Retained earning 4,796,113.04 16,196,977.45
34,823,670.51 54,812,561.66
Total capital 12,516,269.61 17,312,382.65 28,713,247.07
47,339,940.13 67,328,831.27
Total capital and liabilities 51,685,078.45 54,248,696.78 63,164,987.10
79,026,037.54 95,935,894.66
F
2020
6B: Projected Balance Sheet
Year 9 Year 10
ASSET
Current Asset
Cash 78,428,118.76 93,880,278.06
109,987,957.70 126,750,802.69 144,164,955.65
Accounts Receivable 2,420,986.73 1,733,703.52 928,646.70
53,403.54
Finished goods inventory 1,613,991.15 1,155,802.35 619,097.80
35,602.36
Total current asset 82,463,096.65 96,769,783.93
111,535,702.20 126,839,808.59 144,164,955.65
Fixed assets
Land 1,800,000.00 1,800,000.00
1,800,000.00 1,800,000.00 1,800,000.00
Building and infrastructure 17,216,625.86 16,355,794.57
15,538,004.84 14,761,104.60 14,023,049.37
vehicles 931,381.98 846,710.90
769,737.18 699,761.07 636,146.43
Machinery and equipment 11,133,144.78 10,019,830.31
9,017,847.27 8,116,062.55 7,304,456.29
Furniture and equipment 376,408.72 342,189.74
342,189.74 311,081.58 311,081.58
Total fixed asset 31,457,561.34 29,364,525.51
27,467,779.03 25,688,009.80 24,074,733.67
Total asset 113,920,657.99 126,134,309.44
139,003,481.23 152,527,818.38 168,239,689.32
Liabilities and equity
Accounts payable
1,536,225.82
Total current liabilities
1,536,225.82
Lease payable 1,417,500.00 1,377,000.00
1,336,500.00 1,296,000.00 1,255,500.00
Long term debt 23,761,097.96 19,983,516.50
15,771,513.18 11,075,129.47 5,838,661.64
Total long term liabilities 25,178,597.96 21,360,516.50
17,108,013.18 12,371,129.47 7,094,161.64
Owners’ Equity
Paid up capital 12,516,269.61 12,516,269.61
12,516,269.61 12,516,269.61 12,516,269.61
Retained earning 76,225,790.42 92,257,523.32
109,379,198.45 127,640,419.30 147,093,032.24
Total capital 88,742,060.03 104,773,792.94
121,895,468.06 140,156,688.91 159,609,301.86
Total capital and liabilities 113,920,657.99 126,134,309.44
139,003,481.23 152,527,818.38 168,239,689.32
7A: Projected cash flow statement
G
2020
Description year 0 Year 1 Year 2 Year
3 Year 4 Year 5
Inflow
Owners contribution 12,516,269.61
Loan 37,548,808.84
Sales revenue 311,787,612.00 368,299,116.68
429,682,302.79 451,166,417.93 473,724,738.82
Total cash inflow 311,787,612.00 368,299,116.68
429,682,302.79 451,166,417.93 473,724,738.82
Cash out flow
COGS 258,695,163.20 305,583,661.53
356,514,271.79 374,339,985.37 393,056,984.64
Total operating costs 44,251,955.03 46,104,665.64
48,056,266.61 50,112,082.19 52,277,712.50
Income tax - - -
- -
Loan repayment 2,191,994.71 2,444,074.10
2,725,142.62 3,038,534.02 3,387,965.43
Withdrawal 846,372.89 2,011,917.25
3,287,063.48 3,527,451.38 3,778,805.08
Total Cash outflow 305,985,485.82 356,144,318.51
410,582,744.50 431,018,052.96 452,501,467.65
Investment 50,065,078.45
Net inflow (50,065,078.45) 5,802,126.18 12,154,798.16
19,099,558.29 20,148,364.97 21,223,271.17
Cumulative cash 5,802,126.18 17,956,924.34
37,056,482.63 57,204,847.59 78,428,118.76
H
7B: Projected cash flow statement
Year 9 Year 10
Inflow
sales revenue 497,410,975.76 522,281,524.55 548,395,600.78
575,815,380.82 604,606,149.86
Total cash inflow 497,410,975.76 522,281,524.55 548,395,600.78
575,815,380.82 604,606,149.86
Cash out flow
COGS 412,709,833.88 433,345,325.57 455,012,591.85
477,763,221.44 501,651,382.51
Total operating costs 54,559,045.12 56,962,266.56 59,493,873.60
62,160,684.40 64,969,849.23
Income tax 8,083,226.68 8,632,777.37 9,207,338.25
9,808,040.14 10,436,073.08
Loan Repayment 3,777,581.46 4,212,003.33 4,696,383.71
5,236,467.83 5,167,215.55
Withdrawal 2,829,129.34 3,021,472.08 3,222,568.39
3,432,814.05 3,652,625.58
Total Cash outflow 481,958,816.47 506,173,844.91 531,632,755.79
558,401,227.87 585,877,145.95
Investment
Net inflow 15,452,159.29 16,107,679.64 16,762,844.99
17,414,152.95 18,729,003.91
cumulative cash balance 93,880,278.06 109,987,957.70 126,750,802.69
144,164,955.65 162,893,959.55
I
2020
8A Net present value of income (Discounting at
12%)
Year 4 Year 5
CF 5,802,126.18 12,154,798.16 19,099,558.29
20,148,364.97 21,223,271.17
Discount factor 1 0.89 0.8
0.71 0.64
PV of income 5,802,126.18 10,817,770.36 15,279,646.63
14,305,339.13 13,582,893.55
cumulative pv of income 5,802,126.18 16,619,896.54 31,899,543.17
46,204,882.30 59,787,775.85
8B Net present value of income (Discounting at

12%))
Year 9 Year 10
CF 15,452,159.29 16,107,679.64 16,762,844.99
17,414,152.95 18,729,003.91
Discount factor 0.57 0.51 0.45
0.4 0.36
PV of income 8,807,730.80 8,214,916.62 7,543,280.25
6,965,661.18 6,742,441.41
cumulative pv of income 68,595,506.64 76,810,423.26 84,353,703.51
91,319,364.69 98,061,806.10
IRR = 23%

472077599 Kindye Garment Factory Proposal

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JENFOK TRADING PLC GARMENT FACTORY 2020

PROJECT PROPOSAL FOR GARMENT

PROMOTER: JENFOK TRADING PLC

SUBMITTED TO: BAHIR DAR CITY TRADE,INDUSTRYAND MARKET

1.5 Goals and Objectives

1.6 SWOT Analysis

1.7 Product Description and Application

2 Market Feasibility Analysis

2.1 Market Potential

2.2 Supply-Demand Analysis

Therefore, as long as the people’s expending capacity continues improving parallel

Even though, there is apparel production capacity of about 20 million pieces of

Source: Extracted from Ethiopian Custom & Revenue

Table 3: Export in CIF Value (USD)

Others 2,475,492.00 3,875,495.00 3,467,175.47

TOTAL SUM 10,102,315.00 13,647,855.00 15,164,258.02

Source: Extracted from Ethiopian Custom & Revenue

2.3 Projected Demand

Year National Import National Supply Supply Gap

Table 8፡ World supply gap

3 Technical Feasibility Analysis

According to the Federal Legislation on the Lease Holding of Urban Land

In Bahir dar, the City’s Administration is directly responsible in dealing with

No Description Quantity M2 Unit cost

3.3 Plant capacity and production program

S/N material type U/M Qty unit Price

3.5 Technology and Engineering

Fabric Spreading, Form

Spot cleaning and

Figure 1: Apparel production process flow chart

3.5.2 Source of Technology

No Item Name QTY Unit price

3.6 Project implementation schedule

4 Management and Organizational feasibility

S/N Description No Monthly salary Annual

1 Factory Manager 1 10,000.00

4.2 Training requirement

Raw Material Local 30 days

5.2 Pre-production Expenses

Remark: Other pre-production expenses include costs like costs of registration,

5.3 Total Investment Cost

5.4 Production Cost

5.5 Financial Evaluations

Return on sales = Net income/Revenue

5.5.3 Payback Period

1B: Sales projection volume in birr

8B Net present value of income (Discounting at

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