Investment Office ANRS

Project Profile on the Establishment

of Organic Fertilizer Producing
Plant

Development Studies
Associates (DSA)

October 2008
Addis Ababa

Table of Contents
1.Executive Summary...................................................................................3
2.Product Description and Application.......................................................3
3.Market Study, Plant Capacity and Production Program.......................3
3.1Market Study...............................................................................................................3
3.1.1Present Demand and Supply................................................................................3
3.1.2Projected Demand................................................................................................4
3.1.3Pricing and Distribution.......................................................................................5
3.2Plant Capacity.............................................................................................................5
3.3Production Program....................................................................................................6

4.Raw Materials and Utilities.......................................................................6

4.1Availability and Source of Raw Materials..................................................................6
4.2Annual Requirement and Cost of Raw Materials and Utilities...................................6

5.Location and Site........................................................................................7

6.Technology and Engineering ....................................................................7
6.1Production Process......................................................................................................7
6.2Machinery and Equipment..........................................................................................7
6.3Civil Engineering Cost................................................................................................8

7.Human Resource and Training Requirement.........................................8

7.1Human Resource.........................................................................................................8
7.2Training Requirement.................................................................................................9

8.Financial Analysis......................................................................................9
8.1Underlying Assumption .............................................................................................9
8.2Investment.................................................................................................................10
8.3Production Costs.......................................................................................................11
8.4Financial Evaluation.................................................................................................11

9.Economic and Social Benefit and Justification.....................................12

14
ANNEXES....................................................................................................14

1. Executive Summary
This project envisages production of 642 tons of organic fertilizer per annum. The total
investment requirement of the project including the working capital is estimated at about
Birr 397 thousand; of which Birr 200 thousand is the cost of the building and Birr 12o
thousand is for machinery and equipments while nearly Birr 50 thousand is for working
capital. Based on the cash flow statement, the calculated internal rate of return (IRR) and
simple rate of return (SRR) of the project are 40.7 % and 43.9 %, respectively. The net
present value (NPV) at 18 % discounting rate is about Birr 378 thousand. The plant is
expected to create employment opportunities for about 5 persons.

2. Product Description and Application

Organic fertilizer is made by converting straw in to compost by bringing the straw in
contact with suitable converting medium produced by a small quantity of carefully
measured mineral salts and water to promote development of aerobic micro-organisms.
The straw compost when incorporated with the soil will promote the development of
micro flora which is essential for plants to assimilate minerals in the soil. Organic
fertilizer increases the productivity of soil from 50 to 130 percent.

3. Market Study, Plant Capacity and Production

Program
3.1

Market Study
3.1.1 Present Demand and Supply

With declining soil fertility because of soil erosion, farms in many parts of the country
need fertilizer to maintain and/or increase their level of productivity. Presently almost the
entire requirement of fertilizer is met though imports which have adverse effects on the
countrys limited foreign exchange resources.
The import data of artificial fertilizers for the past ten years is given below.

TABLE 3.1
IMPORT OF FERTILIZER
Year E.C
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999

Amount(In Tons)
186,534
228,816
155,082
182,739
319,412
121,036
455,605
299,497
356,065
312,576

Source: Compiled from CSAs Import Data of Different Years

In the past ten years alone, the country imported more than 2.6 million tons of artificial
fertilizers; which was over 260 thousand tons per annum, on average. Of the total
artificial fertilizer consumption, ANRS shares around 32 % or 838 thousand tons in the
decade under consideration or 84 thousand tons per annum (on average). If there is a
market for a chemical and artificial fertilizer, there will definitely be a market for a
natural fertilizer.
The production of organic fertilizer in the country will partially substitute imported
fertilizer and it will be used by many low income farmers because of its lower prices. The
ANRS being the largest grain growing region in the country produces the largest volume
of straw which can be used as the main raw material for producing organic fertilizer.
With the severe soil erosion affecting the region and the consequent decline of soil
fertility, the establishment of small plants to produce organic fertilizer will be rewarding
to investors as well as farmers of the region.

3.1.2 Projected Demand

Looking at the past trend of fertilizer import it is possible to forecast the future demand
for the product for the coming decade. If we take the import of fertilizer in the year 1999
E.C as a base figure and the growth rate of the agriculture sector (which is reported to be
more than 10 % in the past three years) to project the future demand for fertilizer we will
have the following projection.
4

TABLE 3.2
PROJECTED DEMAD FOR FERTILIZER
Year E.C
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

AT National Level
(In 000 Tons)
344
379
417
458
504
554
610
671
738
812
893

At ANRS Level
(In 000 Tons)
110
121
133
147
161
177
195
215
236
260
286

The national demand for fertilizer is expected to reach 554 thousand ton and 893 in 2005
E.C. and 2010 E.C, respectively. Similarly, demand for fertilizer at ANRS level is
expected to reach 177 thousand ton and 286 in 2005 E.C. and 2010 E.C, respectively.
This situation clearly necessitates the establishment of several medium scale fertilizer
producing plants in the country.

3.1.3 Pricing and Distribution

The price of imported fertilizer is usually subsidized; and varies from time to time.
Currently, the prices of urea is about Birr 2800 per ton while that of DAP is around Birr
3200 per ton. The price of the envisaged project would be Birr 1000 per ton which have a
reasonable gap with the price of imported fertilizer.

3.2

Plant Capacity

Since the project is to rely on straw as a raw material input, the capacity of the organic
fertilizer plant is determined on the basis of the available quantity of straw. In other
words, although the demand for fertilizer would justify the setting up of a large plant, the
supply of straw around the project location is the main constraining factor that determines
the choice of plant capacity. Therefore, the magnitude of straw in the ANRS has to be
taken into consideration.
5

In 1999 E.C the total production of grain is estimated to reach 150 million quintal. Of this
total production, more than 30 %( 45 million quintals) is from Amhara region. Some 15
million quintals of straw can be obtained as a residual of the 45 million quintal grain
harvest of the Amhara region. If we divide this total straw by the existing 140 weredas of
the region, each wereda of ANRS can have 107143 thousand quintals of straw per
annum. If we assume that the envisaged organic fertilizer producing plant is able to
collect 3 % of the straw obtained in the wereda where it is located, it can have 321 tons
straw per annum as a raw material. This enables the plant to produce 6,420 quintals (642
tons) of organic fertilizer with 50 % humidity content per annum.
The envisaged plant is to operate 8 hours a day for 275 days in a year on a single shift
basis. This is set by deducting all Sundays and holidays in a year, and by assigning 25
days for annual maintenance and unexpected work interruptions.

3.3

Production Program

The plant will operate at 60 % and 80 % capacity in the first and second years,
respectively. The plant will achieve 100 % capacity in the third year of operation. Due to
the facts that, in the beginning, there is some problem to collect straw efficiently, the
production build up is made to start at relatively low level (60 %) and then gradually rise
to full capacity.

4. Raw Materials and Utilities

4.1

Availability and Source of Raw Materials

The entire grain growing areas of ANRS can be taken as sources of raw material for the
production of organic fertilizer from straw.

4.2

Annual Requirement and Cost of Raw Materials and

Utilities

As stated earlier, the quantity of straw annually required to produce 642 tons of organic
fertilizer will be 321 tons.

TABLE 4.1
RAW & AUXILARY MATERIALS REQUIREMENT
No
1
2
3

Description
Straw
Chemicals(Additives)
Paper Bags (Piece)

Qty
Tons
321
3.2
6420

Unit
Price
Birr
400
10000
1

F.C

Pieces
Total

L.C

Total

128,400
32,000

128,400
32,000

6420
166,820

6,420
166,820

The utilities required for the plant are electricity and water. The annual consumption of
electricity and water is estimated to be 20,000 KWH and 1000m 3, respectively. The total
annual cost is estimated at Birr 13,650.

5. Location and Site

As a very good grain producing woreda, Debre-Sina is an appropriate choice for the
establishment of organic fertilizer producing plant in the region.

6. Technology and Engineering

6.1

Production Process

The main production process include milling the straw by the use of a hammer mill,
mixing chemical additives in to the mass of straw, arranging the milled straw in piles and
regularly watering and turning of the piles. Main machinery includes hammer mills,
mixing equipment and tools and other accessories.

6.2

Machinery and Equipment

Main machinery includes hammer mills, mixing equipment and tools and other
accessories.
The total cost of machinery/equipment is estimated at Birr 120 thousand all of which is
required in foreign currency.

Machinery Suppliers Address:

LAXMI EN-FEB
25, Nilisin Plot, Phase 1,GIDC Vatav, Ahmedabad,
Gujarat, India

6.3

Civil Engineering Cost

The building area required by the plant is estimated to be 100m2, and it costs Birr
200,000. This would include cost of land preparation and associated civil works. The
total land area of the plant, including the open space, is 500 m 2 and its lease cost equals
Birr 9,950. The cost of the land lease is as per ANRS land lease rate for Debre-Sina
which is equal to Birr 19.90 per square meter second grade land for industrial purpose. Of
the total cost of the lease, 5 % is paid in the beginning while the rest will be paid in 40
years.

7. Human Resource and Training Requirement

7.1

Human Resource

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

S/
N
1.
2.
3.
4.

TABLE 7.1
LIST OF MANPOWER REQUIREMENT
Description
No.
Monthly Salary
Required
(Birr)
Plant Manager
1
2000
Skilled (Operators)
1
800
Laborers
2
300
Guards
2
300
Benefits 20 % of Basic Salary
Total
5

Annual Salary
(Birr)
24,000
9,600
7,200
7,200
9,600
57,600

The total annual wages and salary, including 20 % benefits, amount to Birr 57,600.

7.2

Training Requirement

One week on job training is required for the technical personnel. And this can be
managed by hiring one expert in the area locally.

8. Financial Analysis
8.1

Underlying Assumption

The financial analysis of Organic Fertilizer manufacturing plant is based on the data
provided in the preceding chapters and the following assumptions.
A. Construction and Finance
Construction Period

2 Years

Source Of Finance

40% Equity and 60% Loan

Tax Holidays

2 Years

Bank Interest Rate

12%

Discount For Cash Flow

18%

Value Of Land

Based on Lease Rate of ANRS

Spare Parts, Repair & Maintenance

3% of the Fixed Investment

B. Depreciation
Building

5%

Machinery And Equipment

10%

Office Furniture

10%

Vehicles

20%

Pre-Production (Amortization)

20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local

30 Days

Raw Material-Foreign

120 Days

Factory Supplies In Stock

30 Days

Spare Parts In Stock And Maintenance

30 Days

Work In Progress
Finished Products
Accounts Receivable
Cash In Hand
Accounts Payable

10 Days
15 Days
30 Days
30 Days
30 Days

8.2

Investment

The total investment cost of the project including working capital is estimated at Birr 397
thousand as shown in Table 8.1 below. The owner shall contribute 40 % of the finance in
the form of equity while the remaining 60 % is to be financed by bank loan.
TABLE 8.1
TOTAL INITIAL INVESTMENT
Items
Land
Building And Civil Works
Office Equipment
Vehicles
Plant Machinery & Equipment
Total Fixed Investment Cost
Pre Production Capital
Expenditure*
Total Initial Investment
Working Capital at Full Capacity
Total

L.C

F.C

Total

498

498

200,000

200,000

10,000

10,000

120,000

120,000

210,498

120,000

330,498

10,525

6,000

16,525

221,022

126,000

347,022

49,794
270,816

0
126,000

49,794
396,816

*Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee
during construction and expenses for companys establishment, project administration expenses,
commission expenses, preproduction marketing and interest expenses during construction.

10

The foreign component of the project accounts for Birr 126 thousand or 31.8 % of the
total investment cost.

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 303 thousand (See
Table 8.2). Raw materials and utilities account for 59.9 %.

TABLE 8.2
PRODUCTION COST AT FULL CAPACITY
Raw Material
Requirement
1. Local Raw Materials
2. Foreign Raw Materials

Cost
166,820
0

Total Production Cost at Full Capacity

Items
Cost
1. Raw Materials
2. Utilities

13,650

3. Wages and Salaries

57,600

4. Spares and Maintenance

Factory Costs
5. Depreciation
6. Financial Costs

Total Production Cost

8.4

166,820

9,915
247,985
26,305
28,571
302,861

Financial Evaluation
I.

Profitability

According to the projected income statement (See Annex 4) the project will generate
profit beginning from the first year of operation and increases on wards. The income
statement and other profitability indicators also show that the project is viable.

11

II.

Breakeven Analysis

The breakeven point of the projects is given by the formula:

BEP =
Fixed Cost
Sale Variable Cost
at full capacity.
The project will break even at 17.9 % of capacity utilization
III.

Payback Period

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

Simple Rate of Return

The projects simple rate of return (SRR) is given by the formula:

SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 43.9 % at full capacity utilization.
V.

Internal Rate of Return and Net Present Value

Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR)
of the project is 40.7 % and the net present value (NPV) at 18 % discount is Birr 378
thousands.
VI.

Sensitivity Analysis

The sensitivity test result which undertaken by increasing the cost of production by 10 %
still indicates that the project would be viable.

9. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained
earlier. In general, the envisaged project promotes the socio-economic goals and
objectives stated in the strategic plan of the Amhara National Regional State. These
benefits are listed as follows:
12

A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 149
thousand per year and Birr 1.5 thousand within the project life. Such result induces the
project promoters to reinvest the profit which, therefore, increases the investment
magnitude in the region.
B. Tax Revenue
In the project life under consideration, the region will collect about Birr 550 thousand
from corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such
result create additional fund for the regional government that will be used in expanding
social and other basic services in the region.

C. Import Substitution and Foreign Exchange Saving

The commencement of this project relieves a portion of the import burden. That is, based
on the projected figure we learn that in the project life an estimated amount of US Dollar
467 thousand will be saved as a result of the proposed project. This will create room for
the saved hard currency to be allocated on other vital and strategic sectors.

D. Employment and Income Generation

The proposed project is expected to create employment opportunity to several citizens of
the country. That is, it will provide permanent employment to 5 professionals as well as
support stuffs. Consequently the project creates income of Birr 58 thousands per year.
This would be one of the commendable accomplishments of the project.
E. Pro Environment Project
The proposed production process is environment friendly.

13

ANNEXES

14

Annex 1: Total Net Working Capital Requirements (in Birr)

CONSTRUCTION

PRODUCTION

Year 1

Year 2

60%

70%

80%

100%

0.00

0.00

36131.91

42153.89

48175.88

60219.85

0.00

0.00

10919.13

12738.98

14558.84

18198.55

Raw Material-Local

0.00

0.00

10919.13

12738.98

14558.84

18198.55

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

0.00

0.00

179.54

209.46

239.38

299.23

Spare Parts in Stock and Maintenance

0.00

0.00

648.98

757.14

865.30

1081.63

Work in Progress

0.00

0.00

4488.38

5236.44

5984.51

7480.63

Finished Products

0.00

0.00

8976.76

10472.89

11969.01

14961.27

2. Accounts Receivable

0.00

0.00

33617.45

39220.36

44823.27

56029.09

3. Cash in Hand

0.00

0.00

4663.64

5440.91

6218.18

7772.73

0.00

0.00

63493.87

74076.18

84658.49

105823.12

4. Current Liabilities

0.00

0.00

33617.45

39220.36

44823.27

56029.09

Accounts Payable

0.00

0.00

33617.45

39220.36

44823.27

56029.09

TOTAL NET WORKING CAPITAL REQUIRMENTS

0.00

0.00

29876.42

34855.82

39835.22

49794.03

INCREASE IN NET WORKING CAPITAL

0.00

0.00

29876.42

4979.40

4979.40

9958.81

Capacity Utilization (%)

1. Total Inventory
Raw Materials in Stock- Total

CURRENT ASSETS

Annex 1: Total Net Working Capital Requirements (in Birr)

(continued)

PRODUCTION
5

10

100%

100%

100%

100%

100%

100%

60219.85

60219.85

60219.85

60219.85

60219.85

60219.85

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

18198.55

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

299.23

299.23

299.23

299.23

299.23

299.23

Spare Parts in Stock and Maintenance

1081.63

1081.63

1081.63

1081.63

1081.63

1081.63

Work in Progress

7480.63

7480.63

7480.63

7480.63

7480.63

7480.63

Finished Products

14961.27

14961.27

14961.27

14961.27

14961.27

14961.27

2. Accounts Receivable

56029.09

56029.09

56029.09

56029.09

56029.09

56029.09

3. Cash in Hand

7772.73

7772.73

7772.73

7772.73

7772.73

7772.73

105823.12

105823.12

105823.12

105823.12

105823.12

105823.12

4. Current Liabilities

56029.09

56029.09

56029.09

56029.09

56029.09

56029.09

Accounts Payable

56029.09

56029.09

56029.09

56029.09

56029.09

56029.09

TOTAL NET WORKING CAPITAL REQUIRMENTS

49794.03

49794.03

49794.03

49794.03

49794.03

49794.03

0.00

0.00

0.00

0.00

0.00

0.00

Capacity Utilization (%)

1. Total Inventory
Raw Materials in Stock-Total
Raw Material-Local

CURRENT ASSETS

INCREASE IN NET WORKING CAPITAL

Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION

PRODUCTION

Year 1

Year 2

173511.19

223305.21

341777.45

365122.91

416482.91

524805.82

173511.19

223305.21

33617.45

5602.91

5602.91

11205.82

Total Equity

69404.48

89322.09

0.00

0.00

0.00

0.00

Total Long Term Loan

104106.71

133983.13

0.00

0.00

0.00

0.00

0.00

0.00

33617.45

5602.91

5602.91

11205.82

2. Inflow Operation

0.00

0.00

308160.00

359520.00

410880.00

513600.00

Sales Revenue

0.00

0.00

308160.00

359520.00

410880.00

513600.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

173511.19

173511.19

274910.39

250945.05

319636.87

391415.73

4. Increase In Fixed Assets

173511.19

173511.19

0.00

0.00

0.00

0.00

165248.75

165248.75

0.00

0.00

0.00

0.00

8262.44

8262.44

0.00

0.00

0.00

0.00

5. Increase in Current Assets

0.00

0.00

63493.87

10582.31

10582.31

21164.62

6. Operating Costs

0.00

0.00

148029.03

172110.32

196191.61

244354.19

7. Corporate Tax Paid

0.00

0.00

0.00

0.00

49372.33

67168.10

8. Interest Paid

0.00

0.00

63387.50

28570.78

23808.98

19047.19

9.Loan Repayments

0.00

0.00

0.00

39681.64

39681.64

39681.64

10.Dividends Paid

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

0.00

49794.03

66867.06

114177.86

96846.04

133390.09

Cumulative Cash Balance

0.00

49794.03

116661.09

230838.95

327684.98

461075.07

TOTAL CASH INFLOW

1. Inflow Funds

Total Short Term Finances

3. Other Income

Fixed Investments
Pre-production Expenditures

Annex 2: Cash Flow Statement (in Birr): Continued

PRODUCTION
5
513600.00

6
513600.00

7
513600.00

8
513600.00

9
513600.00

10
513600.00

0.00

0.00

0.00

0.00

0.00

0.00

Total Equity

0.00

0.00

0.00

0.00

0.00

0.00

Total Long Term Loan

0.00

0.00

0.00

0.00

0.00

0.00

Total Short Term Finances

0.00

0.00

0.00

0.00

0.00

0.00

2. Inflow Operation

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

Sales Revenue

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

366917.85

364576.09

361242.83

318227.93

318227.93

318227.93

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Investments

0.00

0.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

6. Operating Costs

244354.19

244354.19

244354.19

244354.19

244354.19

244354.19

7. Corporate Tax Paid

68596.63

71016.67

72445.21

73873.74

73873.74

73873.74

8. Interest Paid

14285.39

9523.59

4761.80

0.00

0.00

0.00

9. Loan Repayments

39681.64

39681.64

39681.64

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

146682.15

149023.91

152357.17

195372.07

195372.07

195372.07

Cumulative Cash Balance

607757.22

756781.13

909138.30

1104510.37

1299882.44

1495254.51

TOTAL CASH INFLOW

1. Inflow Funds

Interest on Securities
3. Other Income
TOTAL CASH OUTFLOW
4. Increase In Fixed Assets

5. Increase in Current Assets

10.Dividends Paid

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

CONSTRUCTION

PRODUCTION

Year 1

Year 2

TOTAL CASH INFLOW

0.00

0.00

308160.00

359520.00

410880.00

513600.00

1. Inflow Operation

0.00

0.00

308160.00

359520.00

410880.00

513600.00

Sales Revenue

0.00

0.00

308160.00

359520.00

410880.00

513600.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

173511.19

173511.19

177905.44

177089.72

201171.01

321481.09

3. Increase in Fixed Assets

173511.19

173511.19

0.00

0.00

0.00

0.00

Fixed Investments

165248.75

165248.75

0.00

0.00

0.00

0.00

8262.44

8262.44

0.00

0.00

0.00

0.00

4. Increase in Net Working Capital

0.00

0.00

29876.42

4979.40

4979.40

9958.81

5. Operating Costs

0.00

0.00

148029.03

172110.32

196191.61

244354.19

6. Corporate Tax Paid

0.00

0.00

0.00

0.00

0.00

67168.10

NET CASH FLOW

-173511.19

-173511.19

130254.56

182430.28

209708.99

192118.91

CUMMULATIVE NET CASH FLOW

-173511.19

-347022.38

-216767.82

-34337.54

175371.45

367490.37

Net Present Value (at 18%)

-173511.19

-147043.38

93546.79

111032.70

108165.56

83976.95

Cumulative Net present Value

-173511.19

-320554.57

-227007.77

-115975.07

-7809.51

76167.44

2. Other Income

Pre-production Expenditures

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

10

TOTAL CASH INFLOW

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

1. Inflow Operation

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

Sales Revenue

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

312950.82

315370.85

316799.39

318227.93

318227.93

318227.93

3. Increase in Fixed Assets

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Investments

0.00

0.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

5. Operating Costs

244354.19

244354.19

244354.19

244354.19

244354.19

244354.19

6. Corporate Tax Paid

68596.63

71016.67

72445.21

73873.74

73873.74

73873.74

NET CASH FLOW

200649.18

198229.15

196800.61

195372.07

195372.07

195372.07

CUMMULATIVE NET CASH FLOW

568139.54

766368.69

963169.30

1158541.37

1353913.44

1549285.51

Net Present Value (at 18%)

74326.78

62229.09

52356.47

44047.82

37328.66

31634.46

Cumulative Net present Value

150494.22

212723.32

265079.79

309127.61

346456.27

378090.73

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

Net Present Value (at 18%)

378,090.73

40.7%

Internal Rate of Return

Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION

60%

70%

80%

100%

100%

308160.00

359520.00

410880.00

513600.00

513600.00

308160.00

359520.00

410880.00

513600.00

513600.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

130663.74

152441.03

174218.32

217772.90

217772.90

177496.26

207078.97

236661.68

295827.10

295827.10

57.60

57.60

57.60

57.60

57.60

43670.26

45974.26

48278.26

52886.26

52886.26

133826.00

161104.71

188383.42

242940.84

242940.84

43.43

44.81

45.85

47.30

47.30

4. Less Cost of Finance

63387.50

28570.78

23808.98

19047.19

14285.39

5. GROSS PROFIT

70438.50

132533.93

164574.43

223893.65

228655.45

0.00

0.00

49372.33

67168.10

68596.63

70438.50

132533.93

115202.10

156725.56

160058.81

Gross Profit/Sales

22.86%

36.86%

40.05%

43.59%

44.52%

Net Profit After Tax/Sales

22.86%

36.86%

28.04%

30.52%

31.16%

Return on Investment

35.51%

42.19%

35.93%

44.30%

43.94%

Return on Equity

44.38%

83.50%

72.58%

98.74%

100.84%

Capacity Utilization (%)

1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

6. Income (Corporate) Tax

7. NET PROFIT
RATIOS (%)

Annex 4: NET INCOME STATEMENT (in Birr):Continued

PRODUCTION

10

100%

100%

100%

100%

100%

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

513600.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

217772.90

217772.90

217772.90

217772.90

217772.90

295827.10

295827.10

295827.10

295827.10

295827.10

57.60

57.60

57.60

57.60

57.60

49581.29

49581.29

49581.29

49581.29

49581.29

246245.81

246245.81

246245.81

246245.81

246245.81

47.95

47.95

47.95

47.95

47.95

9523.59

4761.80

0.00

0.00

0.00

5. GROSS PROFIT

236722.22

241484.02

246245.81

246245.81

246245.81

6. Income (Corporate) Tax

71016.67

72445.21

73873.74

73873.74

73873.74

7. NET PROFIT

165705.55

169038.81

172372.07

172372.07

172372.07

Gross Profit/Sales

46.09%

47.02%

47.95%

47.95%

47.95%

Net Profit After Tax/Sales

32.26%

32.91%

33.56%

33.56%

33.56%

Return on Investment

44.16%

43.80%

43.44%

43.44%

43.44%

Return on Equity

104.40%

106.50%

108.60%

108.60%

108.60%

Capacity Utilization (%)

1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)
4. Less Cost of Finance

RATIOS (%)

Annex 5: Projected Balance Sheet (in Birr)

CONSTRUCTION

PRODUCTION

TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9.Net Profit After Tax
Dividends Payable
Retained Profits

Year 1
173511.19
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
173511.19
0.00
165248.75
8262.44
0.00
0.00
0.00
173511.19
0.00
0.00
0.00
104106.71
104106.71
0.00
69404.48
69404.48
0.00
0.00
0.00
0.00
0.00
0.00

Year 2
396816.40
49794.03
0.00
0.00
0.00
0.00
0.00
49794.03
0.00
347022.38
165248.75
165248.75
16524.88
0.00
0.00
0.00
396816.40
0.00
0.00
0.00
238089.84
238089.84
0.00
158726.56
158726.56
0.00
0.00
0.00
0.00
0.00
0.00

1
500872.36
180154.96
11747.64
4488.38
8976.76
33617.45
4663.64
116661.09
0.00
320717.40
330497.50
0.00
16524.88
26304.98
0.00
0.00
500872.36
33617.45
33617.45
0.00
238089.84
238089.84
0.00
158726.56
158726.56
0.00
0.00
0.00
70438.50
0.00
70438.50

Annex 5: Projected Balance Sheet (in Birr):

2
599327.55
304915.13
13705.58
5236.44
10472.89
39220.36
5440.91
230838.95
0.00
294412.43
330497.50
0.00
16524.88
52609.95
0.00
0.00
599327.55
39220.36
39220.36
0.00
198408.20
198408.20
0.00
158726.56
158726.56
0.00
0.00
70438.50
132533.93
0.00
132533.93

3
680450.93
412343.48
15663.52
5984.51
11969.01
44823.27
6218.18
327684.98
0.00
268107.45
330497.50
0.00
16524.88
78914.93
0.00
0.00
680450.93
44823.27
44823.27
0.00
158726.56
158726.56
0.00
158726.56
158726.56
0.00
0.00
202972.43
115202.10
0.00
115202.10

4
808700.66
566898.19
19579.40
7480.63
14961.27
56029.09
7772.73
461075.07
0.00
241802.48
330497.50
0.00
16524.88
105219.90
0.00
0.00
808700.66
56029.09
56029.09
0.00
119044.92
119044.92
0.00
158726.56
158726.56
0.00
0.00
318174.53
156725.56
0.00
156725.56

Continued

PRODUCTION
5

10

10

TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9. Net Profit After Tax
Dividends Payable
Retained Profits

929077.83
713580.33
19579.40
7480.63
14961.27
56029.09
7772.73
607757.22
0.00
215497.50
330497.50
0.00
16524.88
131524.88
0.00
0.00
929077.83
56029.09
56029.09
0.00
79363.28
79363.28
0.00
158726.56
158726.56
0.00
0.00
474900.09
160058.81
0.00
160058.81

1055101.75
862604.25
19579.40
7480.63
14961.27
56029.09
7772.73
756781.13
0.00
192497.50
330497.50
0.00
16524.88
154524.88
0.00
0.00
1055101.75
56029.09
56029.09
0.00
39681.64
39681.64
0.00
158726.56
158726.56
0.00
0.00
634958.90
165705.55
0.00
165705.55

1184458.92
1014961.42
19579.40
7480.63
14961.27
56029.09
7772.73
909138.30
0.00
169497.50
330497.50
0.00
16524.88
177524.88
0.00
0.00
1184458.92
56029.09
56029.09
0.00
0.00
0.00
0.00
158726.56
158726.56
0.00
0.00
800664.46
169038.81
0.00
169038.81

1356830.99
1210333.49
19579.40
7480.63
14961.27
56029.09
7772.73
1104510.37
0.00
146497.50
330497.50
0.00
16524.88
200524.88
0.00
0.00
1356830.99
56029.09
56029.09
0.00
0.00
0.00
0.00
158726.56
158726.56
0.00
0.00
969703.27
172372.07
0.00
172372.07

1529203.06
1405705.56
19579.40
7480.63
14961.27
56029.09
7772.73
1299882.44
0.00
123497.50
330497.50
0.00
16524.88
223524.88
0.00
0.00
1529203.06
56029.09
56029.09
0.00
0.00
0.00
0.00
158726.56
158726.56
0.00
0.00
1142075.34
172372.07
0.00
172372.07

1701575.13
1601077.63
19579.40
7480.63
14961.27
56029.09
7772.73
1495254.51
0.00
100497.50
330497.50
0.00
16524.88
246524.88
0.00
0.00
1701575.13
56029.09
56029.09
0.00
0.00
0.00
0.00
158726.56
158726.56
0.00
0.00
1314447.41
172372.07
0.00
172372.07

11