Investment Office ANRS

Project Profile on the Establishment

of Fruit Based Drinks Processing
PLANT

Development Studies
Associates (DSA)

October 2008
Addis Ababa

Table of Contents
Table of Contents.....................................................................................................2
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.........................................................................................................................6
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 ..............................................................................8
6.1Production Process..................................................................................................................8
6.2Machinery and Equipment......................................................................................................8
6.3Civil Engineering Cost............................................................................................................9

7.Human Resource and Training Requirement..................................................10

7.1Human Resource...................................................................................................................10
7.2Training Requirement...........................................................................................................11

8.Financial Analysis...............................................................................................11
8.1Underlying Assumption .......................................................................................................11
8.2Investment.............................................................................................................................12
8.3Production Costs...................................................................................................................13
8.4Financial Evaluation.............................................................................................................13

9.Economic and Social Benefit and Justification................................................15

ANNEXES..............................................................................................................16

1. Executive Summary
This profile provides basic information on the production of 3,250 tons of Fruit-Based Drinks
per annum. The total investment requirement of the project is estimated at about Birr 31.7
million; of which Birr 21 million is for machinery and equipment while Birr 4.8 million is the
cost of working capital. Based on the cash flow statement, the calculated internal rate of return
(IRR) and simple rate of return of the project are 20.1 % and 18.3 %, respectively. And the net
present value (NPV) at 18 % discounting rate is Birr 2,320 thousand. The plant is expected to
create employment opportunities for about 60 persons.

2. Product Description and Application

There are variety of fruit type from which drinks or juices can be made. The common fruits from
which fruit drinks or juices are made are orange, grapes, pineapples, mangoes, papayas and other
fruits of the citrus family. The juices or drinks are consumed usually during breakfast time or in
refreshment hours.
Processed fruits and drinks are normally made available in packed cans, bottles, plastic pouches
& cartons for commercial purposes. Fruit based drinks are basically prepared by adding water,
sugar and possibly acid and flavouring agents to the fruit juice.

3. Market Study, Plant Capacity and Production Program

3.1

Market Study
3.1.1 Present Demand and Supply

Currently, there are three main sources for the supply of fruit based drinks and juices in the
country. The largest sources of supply for fruit based drinks and juices are households, snack
shops, pastries, coffee shops, restaurants, hotels and juice houses. It is almost impossible to
estimate the volume of supply from these scattered sources. The other domestic sources are
Fruits Processing Plants located in the country. The two fruit processing plants located in the
country are Merti Fruits Processing Plant located in the Awash Valley and Sabata Agro-industry
(which is mainly a milk processing plant) located at Sabata town which is 20 Km from Addis.
3

The volume of supply from these sources is limited. Particularly, the orange juice (note the plant
processes only orange juice) supply from Marti has been declining throughout the past ten years
while the supply of fruit based drinks from the Sabata Agro-industry is very small and its sale is
limited to Addis and the nearby towns. The third source of supply is import; which is the largest
source of fruit based drinks and juices in the country. During the last 15 years, because of the
relatively better availability of foreign exchange, imports of fruits drinks and juices have been
growing fast. Now all the so-called super-markets and even small and large grocery stores are
filled with imported fruit drinks and juices. Table 3.1 shows the past trend of imports of fruit
based drinks.
The main determining factors for the demand of fruit juices and drinks are income and
population size especially urban population. Admittedly, consumption of fruit juices and drinks
in the ANRS is confined to a small section of the urban population. However, the estimated
amount of fruit based drinks consumption in ANRS is not too small to establish a fruit based
processing plant in the region.

Table 3.1
Imports of Fruit Based Drinks
Year E.C
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999

In Tons
2,402
2,474
2,548
2,625
2,703
2,785
2,868
2,954
3,043
3,134

3.1.2 Projected Demand

Demand for fruit based juices depend upon population size, consumer preferences, consumer
income, prices of the commodity, prices of substitutes, etc. Because of lack of consumption data,
the demand for fruit based drinks is projected using the following assumptions.
-

Estimated country population - 77 million

4

Estimated population of ANRS - 20 million

Urban population (15%) of
Country
ANRS
Average urban population growth 5 % annum
Average family size - 6 person /household
Potential urban consumers 10 % of the households
Per capita consumption liter per week or 26 liter (Kg) /annum

Accordingly the projected demand is shown in Table 3.2.

TABLE 3.2
PROJECTED DEMAND FOR FRUIT BASED DRINKS
Year E.C
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

At ANRS (In Tons)

At Country Level(In Tons)
7800
30030
8190
31532
8600
33108
9029
34763
9481
36502
9955
38327
10453
40243
10975
42255
11524
44368
12100
12705

46586
48916

As indicated in Table 3.2, the projected national demand for fruit based drinks reaches 38,327
tons and 48,916 tons in 2005 E.C and 2010 E.C, respectively. Similarly, the projected ANRS
demand for fruit based drinks reaches 9,955 tons and 12,705 tons in 2005 E.C and 2010 E.C,
respectively. This can justify the establishment of a number of small or a medium size fruit based
drinks and juices producing plant in the ANRS.

3.1.3 Pricing and Distribution

The prices of the commodity under discussion are based upon raw material costs, processing
efficiency and demand and supply equilibrium. In the market a litre of both locally produced and
imported fruit based drinks is sold between Birr 12 and Birr 20.This project envisaged to produce
a quality fruit based drinks that can compete with Sabatas Mama Juice and most imported fruit
5

based drinks; and plans to sell its products to wholesalers at Birr 10 per liter. The viable
distribution method is selling to wholesalers or authorized marketing firm which will sell to end
consumers through its chain selling to supermarkets.

3.2

Plant Capacity

The selected capacity of the plant for fruit processing and soft-drink production is medium-sized
one. An output of approximately 3,250 tons of finished juice per annum is envisaged based on
one shift operation of 275 working days in a year. The working days are set by deducting
Sundays and public holidays in a given year, and by assuming that annual maintenance works
and unexpected work interruptions take 25 days.

3.3

Production Program

As there are competing brands in the market, and the plant is new and is equipped with new
machinery, production build-up is made by starting at reduced capacity. In other words, the low
production level at the initial stage is helpful to develop substantial market outlets for the
product. Similarly, machinery operators will also get enough time to develop the required skills
and experience. For this, the plant will be operated at 60 %, 75% and 90 % of its installed
capacity in the first year, the second and the third year of operation, respectively.

4. Raw Materials and Utilities

4.1

Availability and Source of Raw Materials

The main raw materials that are necessary to produce fruit based drinks are different variety of
fruits. Almost all the lowland parts of ANRS are suitable to produce different fruits including
mango, papaya and others. Therefore, it is easy to procure raw material as long as the plant is
situated in the appropriate location.

4.2

Annual Requirement and Cost of Raw Materials and Utilities

The principal raw materials for the production of fruit based drinks are mango, orange, pin apple,
peach and other fruits. Preservatives and packing materials like bottles or cans made of plastic
and paper are some of the auxiliary materials demanded by the fruit juice plant. The quantities
and costs of the raw and auxiliary materials are shown in Table 4.1.
6

TABLE 4.1
RAW & AUXILARY MATERIALS REQUIREMENT
No

Description

Qty
Tons

Fruits

Bottles

and

Cans

3
4

(No).
Sugar
Preservatives

&

8000

Unit
Price
Birr
2000

3,000,000

0.5

300

7000

F.C

L.C

Total

16,000,00

16,000,000

0
1,500,000

1,500,000

2,100,000

2,100,000
1000,000

19,600,00

20,600,00

1000,000

Other Chemicals
Total

1000,000

The major utilities required for the plant are water and electricity. Water is used for washing the
fruits as well as for steam generation. Electric power is used as an energy source for boiler and
for driving the motors of the production machinery. The annual consumption of these utilities in
terms of quantity are 15,000m3 and 425 MWH for water and electricity, respectively. In terms of
value electricity is estimated to be Birr 233,750 where as that of water is Birr 39,750.
Table 4.2
UTILITIES REQUIREMENT
No.
1.
2.

Utility
Electricity
Water
Total

Requirement
(Annual)
425 MWH
15,000 m3

Unit Price
Birr0.55 /KWH
Birr2.65 /m3

Cost
(Birr)
233,750
39,750
273,500

5. Location and Site

For its convenience to procure the raw materials (i.e. variety of fruits), Shewa-Robit is an
appropriate place to establish a fruit processing and canning plant in the ANRS.

6. Technology and Engineering

6.1

Production Process

The fruit is fed into the brush washing machine. The remaining impurities are then removed by
an air-injection washing machine. It then passes to the sorting line where damaged fruit is
eliminated. The citrus fruit is transported to the fruit extraction device, which is connected to the
oil separating device and the oil expeller device. Whole fruits are sorted according to size. After
sorting according to size, the fruit passes in groups into the juice maker. From there the juice is
delivered by pump to the clarification device where solid impurities are removed. Mixed with
syrup, the purified fruit juice is pumped to the homogenizer. It passes through a preheated, an
aerator and a condenser and is delivered to the homogenizer by screw pump. The homogenizer
makes the micro-structure of the juice more homogeneous and improves its quality. The juice is
then delivered to the pasteurizer and pumped in. It is sterilized by being kept for a period at the
proper temperature. On leaving the pasteurizer, the juice passes either to the juice store or to the
filling and bottling section. The filling machine fills the juice into bottles, jars or plastic
containers.
Alternatively, fruit based drinks can be made using a cheaper production methods which require
a high proportion of manual work. However, it is not advisable to prepare fruit based drinks by
such method due to the problems that are related with quality control.

6.2

Machinery and Equipment

The selected plant is equipped with automatic machinery lines which require a relatively small
amount of labor. Details of the required machinery & equipments are listed in Table 6.1.

TABLE 6.1
MACHINERY & EQUIPMENTS REQUIRED
Description:
Brush-Type Fruit Washer
Air-Injection Fruit Washer
Fruit Sorting Line
Extraction Device
Oil Separation Device
Oil Expeller
Fruit Sorting Device
Juice Processor
Clarificator
Cleaning Device
Homogenizer
Pasteurizer
Process Pipeline
Automatic Equipment
Electric Fittings And Materials
Special Tools
Air Compressor
Filler
Pot Manufacturing Device
Water Preparation Unit
Diesel Electric Power Station
Steam Boiler
Lathe
Bench Drill
Milling Machine
Bench Grinder
Mechanic's Tool Kit
Electrician's Tool Kit
Tool Cabinet With Tools

Quantity:
1
1
1
1
1
1
1
2
2
2
2
2
1 Set
1 Set
1 Set
1 Set
1
1
1
1
1
1
1
1
1
1
1
1
1

The estimated total price of machinery and equipment is approx. Birr 21,000,000. Of the total
machinery and equipment cost, nearly 18,000,000 or 85 .7 % is in foreign currency.
Suppliers Address:
Labh Machines Pvt Ltd
309, Chitrath Complex, Near Hotel Presilent lec.g. Road
Navarangapura, Ahmedabad-380009, Gujarat, India

6.3

Civil Engineering Cost

The total land area requirement of the plant including provision for open space is 4000 square
meters. Of this, about 1000m2 is for the production, 750m3 for storage of fresh fruits and about
250 m2 for offices and laboratory. Total cost of building is calculated to be Birr 4 millions. The
9

land lease value is about Birr 110,400 thousands; which is based on the land lease price of
Shewa-Robit for industrial purpose- which is Birr 27.60 per square meter. Of the total cost of the
lease, 5 % is paid in the beginning while the rest will be paid in 40years.

7. Human Resource and Training Requirement

7.1

Human Resource

The list of manpower requirement is shown in Table 7.1.

Description

Table 7.1
MANPOWER REQUIREMENT
No. Monthly Salary
Annual
(Birr)
Salary (In Birr)

A. Administration
1. Manager
2.Chemical Engineer
3 Chemist
4. Technicians
5. Personnel Officer
6. Accountant
7.Seretary
8.Slaesman
9. Storekeeper
10.Guards
11. Driver
Sub-total
B. Production
1. Skilled workers (operators)
2. Unskilled Workers (laborers)

1
1
2
3
1
1
1
1
1
4
2
18

5000
3000
2300
2000
2000
2000
1300
1300
600
300
600

18
24

600
300

Benefits (20%)

60000
36000
55200
72000
24000
24000
15600
15600
7200
14400
14400
338400
129600
86400

110880
60

665,280

The total annual wages and salary, including 20 % benefits, amount to Birr 665,280.

10

7.2

Training Requirement

The plant is expected to be operated by competent and experienced production personnel. For
this purpose, appropriate training programme has to be designed and conducted for about 15
days. Training can be carried out during erection and commissioning period. Accordingly,
skilled operators, supervisors and quality control personnel will be trained, possibly by an expert
from technology supplier.

8. Financial Analysis
8.1

Underlying Assumption

The financial analysis of Fruit Based Drinks producing 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

2Years

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%

11

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 31.7
million 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

5,520

5,520

4,000,000

4,000,000

100,000

100,000

500,000

500,000

3,000,000

18,000,000

21,000,000

7,605,520

18,000,000

25,605,520

380,276

1,280,276

7,985,796

18,000,000

26,885,796

4,394,883
12,380,679

436,364
18,436,364

4,831,246
31,717,042

*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.

The foreign component of the project accounts for Birr 21 million or 58.1 % of the total
investment cost.
12

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 30.2 million (See Table
8.2). Raw materials and utilities account for 76.6 % or 20.9 million.

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

19,600,000
1,000,000

Total Production Cost at full Capacity

Items
Cost
1. Raw materials
2. Utilities

273,500

3. Wages and Salaries

665,280

4. Spares and Maintenance

768,166

Factory Costs
5. Depreciation
6. Financial costs

Total Production Cost

8.4

20,600,000

22,306,946
2,666,055
2,283,627
27,256,628

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.

13

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 29.1 % 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 four 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 18.3 % 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 20.1 % and the net present value (NPV) at 18 % discount is Birr 2,320 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.

14

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
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 4.1 million per
year and Birr 41.4 million 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 17.2 million 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
As there is no enough production of Fruit-Based Drinks in the country, 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 30 million 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 60 professionals as well as support
stuffs. Consequently the project creates income of birr 665 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.
15

ANNEXES

16

17

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

CONSTRUCTION

PRODUCTION

Year 1

Year 2

50%

70%

90%

100%

0.00

0.00

2557777.26

3580888.16

4603999.07

5115554.52

0.00

0.00

906000.00

1268400.00

1630800.00

1812000.00

Raw Material-Local

0.00

0.00

687818.18

962945.45

1238072.73

1375636.36

Raw Material-Foreign

0.00

0.00

218181.82

305454.55

392727.27

436363.64

Factory Supplies in Stock

0.00

0.00

9388.64

13144.09

16899.55

18777.27

Spare Parts in Stock and Maintenance

0.00

0.00

32240.88

45137.23

58033.58

64481.76

Work in Progress

0.00

0.00

234715.91

328602.28

422488.65

469431.83

Finished Products

0.00

0.00

469431.83

657204.56

844977.29

938863.66

2. Accounts Receivable

0.00

0.00

1636363.64

2290909.09

2945454.55

3272727.27

3. Cash in Hand

0.00

0.00

47694.00

66771.60

85849.20

95388.00

0.00

0.00

3335834.90

4670168.86

6004502.81

6671669.79

4. Current Liabilities

0.00

0.00

1636363.64

2290909.09

2945454.55

3272727.27

Accounts Payable

0.00

0.00

1636363.64

2290909.09

2945454.55

3272727.27

TOTAL NET WORKING CAPITAL REQUIRMENTS

0.00

0.00

1699471.26

2379259.76

3059048.27

3398942.52

INCREASE IN NET WORKING CAPITAL

0.00

0.00

1699471.26

679788.50

679788.50

339894.25

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%

5115554.52

5115554.52

5115554.52

5115554.52

5115554.52

5115554.52

1812000.00

1812000.00

1812000.00

1812000.00

1812000.00

1812000.00

Raw Material-Local

1375636.36

1375636.36

1375636.36

1375636.36

1375636.36

1375636.36

Raw Material-Foreign

436363.64

436363.64

436363.64

436363.64

436363.64

436363.64

Factory Supplies in Stock

18777.27

18777.27

18777.27

18777.27

18777.27

18777.27

Spare Parts in Stock and Maintenance

64481.76

64481.76

64481.76

64481.76

64481.76

64481.76

Work in Progress

469431.83

469431.83

469431.83

469431.83

469431.83

469431.83

Finished Products

938863.66

938863.66

938863.66

938863.66

938863.66

938863.66

2. Accounts Receivable

3272727.27

3272727.27

3272727.27

3272727.27

3272727.27

3272727.27

95388.00

95388.00

95388.00

95388.00

95388.00

95388.00

6671669.79

6671669.79

6671669.79

6671669.79

6671669.79

6671669.79

4. Current Liabilities

3272727.27

3272727.27

3272727.27

3272727.27

3272727.27

3272727.27

Accounts Payable

3272727.27

3272727.27

3272727.27

3272727.27

3272727.27

3272727.27

TOTAL NET WORKING CAPITAL REQUIRMENTS

3398942.52

3398942.52

3398942.52

3398942.52

3398942.52

3398942.52

0.00

0.00

0.00

0.00

0.00

0.00

Capacity Utilization (%)

1. Total Inventory
Raw Materials in Stock-Total

3. Cash in Hand
CURRENT ASSETS

INCREASE IN NET WORKING CAPITAL

Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION

PRODUCTION

Year 1

Year 2

10343949.00

13742891.52

16636363.64

21654545.45

27654545.45

30327272.73

10343949.00

13742891.52

1636363.64

654545.45

654545.45

327272.73

Total Equity

4137579.60

5497156.61

0.00

0.00

0.00

0.00

Total Long Term Loan

6206369.40

8245734.91

0.00

0.00

0.00

0.00

0.00

0.00

1636363.64

654545.45

654545.45

327272.73

2. Inflow Operation

0.00

0.00

15000000.00

21000000.00

27000000.00

30000000.00

Sales Revenue

0.00

0.00

15000000.00

21000000.00

27000000.00

30000000.00

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

10343949.00

10343949.00

14699571.23

15935169.63

21585998.51

22642458.12

4. Increase In Fixed Assets

10343949.00

10343949.00

0.00

0.00

0.00

0.00

Fixed Investments

9851380.00

9851380.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

492569.00

492569.00

0.00

0.00

0.00

0.00

5. Increase in Current Assets

0.00

0.00

3335834.90

1334333.96

1334333.96

667166.98

6. Operating Costs

0.00

0.00

7526596.10

10457899.10

13389202.10

14854853.60

7. Corporate Tax Paid

0.00

0.00

0.00

0.00

3008567.96

3555585.14

8. Interest Paid

0.00

0.00

3837140.23

1734252.52

1445210.43

1156168.34

9.Loan Repayments

0.00

0.00

0.00

2408684.05

2408684.05

2408684.05

10.Dividends Paid

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

0.00

3398942.52

1936792.41

5719375.82

6068546.95

7684814.61

Cumulative Cash Balance

0.00

3398942.52

5335734.93

11055110.75

17123657.70

24808472.31

TOTAL CASH INFLOW

1. Inflow Funds

Total Short Term Finances

3. Other Income

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

4

PRODUCTION
5
30000000.00

6
30000000.00

7
30000000.00

8
30000000.00

9
30000000.00

10
30000000.00

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

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

Sales Revenue

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

21772961.68

21659740.50

21457411.04

18846397.52

18846397.52

18846397.52

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

14854853.60

14854853.60

14854853.60

14854853.60

14854853.60

14854853.60

7. Corporate Tax Paid

3642297.76

3818118.67

3904831.29

3991543.92

3991543.92

3991543.92

8. Interest Paid

867126.26

578084.17

289042.09

0.00

0.00

0.00

9. Loan Repayments

2408684.05

2408684.05

2408684.05

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

8227038.32

8340259.50

8542588.96

11153602.48

11153602.48

11153602.48

Cumulative Cash Balance

33035510.64

41375770.14

49918359.11

61071961.58

72225564.06

83379166.54

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

5

CONSTRUCTION

PRODUCTION

Year 1

Year 2

TOTAL CASH INFLOW

0.00

0.00

15000000.00

21000000.00

27000000.00

30000000.00

1. Inflow Operation

0.00

0.00

15000000.00

21000000.00

27000000.00

30000000.00

Sales Revenue

0.00

0.00

15000000.00

21000000.00

27000000.00

30000000.00

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

10343949.00

10343949.00

9226067.36

11137687.61

14068990.61

18750332.99

3. Increase in Fixed Assets

10343949.00

10343949.00

0.00

0.00

0.00

0.00

Fixed Investments

9851380.00

9851380.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

492569.00

492569.00

0.00

0.00

0.00

0.00

4. Increase in Net Working Capital

0.00

0.00

1699471.26

679788.50

679788.50

339894.25

5. Operating Costs

0.00

0.00

7526596.10

10457899.10

13389202.10

14854853.60

6. Corporate Tax Paid

0.00

0.00

0.00

0.00

0.00

3555585.14

NET CASH FLOW

-10343949.00

-10343949.00

5773932.64

9862312.39

12931009.39

11249667.01

CUMMULATIVE NET CASH FLOW

-10343949.00

-20687898.00

-14913965.36

-5051652.97

7879356.42

19129023.43

Net Present Value (at 18%)

-10343949.00

-8766058.47

4146748.52

6002507.80

6669670.79

4917333.13

Cumulative Net present Value

-10343949.00

-19110007.47

-14963258.96

-8960751.16

-2291080.37

2626252.76

2. Other Income

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION

10

TOTAL CASH INFLOW

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

1. Inflow Operation

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

Sales Revenue

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

18497151.37

18672972.27

18759684.90

18846397.52

18846397.52

18846397.52

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

14854853.60

14854853.60

14854853.60

14854853.60

14854853.60

14854853.60

6. Corporate Tax Paid

3642297.76

3818118.67

3904831.29

3991543.92

3991543.92

3991543.92

NET CASH FLOW

11502848.63

11327027.73

11240315.10

11153602.48

11153602.48

11153602.48

CUMMULATIVE NET CASH FLOW

30631872.07

41958899.80

53199214.90

64352817.38

75506419.85

86660022.33

Net Present Value (at 18%)

4261017.92

3555837.56

2990352.79

2514647.39

2131057.11

1805980.60

Cumulative Net present Value

6887270.69

10443108.24

13433461.03

15948108.42

18079165.53

19885146.14

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

Net Present Value (at 18%)

Internal Rate of Return

19,885,146.14

37.7%

Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION

50%

70%

90%

100%

100%

15000000.00

21000000.00

27000000.00

30000000.00

30000000.00

15000000.00

21000000.00

27000000.00

30000000.00

30000000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

7195489.50

10073685.30

12951881.10

14390979.00

14390979.00

7804510.50

10926314.70

14048118.90

15609021.00

15609021.00

52.03

52.03

52.03

52.03

52.03

2468134.20

2521241.40

2574348.60

2600902.20

2600902.20

5336376.30

8405073.30

11473770.30

13008118.80

13008118.80

35.58

40.02

42.50

43.36

43.36

4. Less Cost of Finance

3837140.23

1734252.52

1445210.43

1156168.34

867126.26

5. GROSS PROFIT

1499236.07

6670820.78

10028559.87

11851950.45

12140992.54

0.00

0.00

3008567.96

3555585.14

3642297.76

1499236.07

6670820.78

7019991.91

8296365.32

8498694.78

Gross Profit/Sales

9.99%

31.77%

37.14%

39.51%

40.47%

Net Profit After Tax/Sales

9.99%

31.77%

26.00%

27.65%

28.33%

Return on Investment

23.84%

36.44%

35.65%

39.24%

38.88%

Return on Equity

15.56%

69.24%

72.86%

86.11%

88.21%

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%

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

30000000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

14390979.00

14390979.00

14390979.00

14390979.00

14390979.00

15609021.00

15609021.00

15609021.00

15609021.00

15609021.00

52.03

52.03

52.03

52.03

52.03

2303874.60

2303874.60

2303874.60

2303874.60

2303874.60

13305146.40

13305146.40

13305146.40

13305146.40

13305146.40

44.35

44.35

44.35

44.35

44.35

578084.17

289042.09

0.00

0.00

0.00

5. GROSS PROFIT

12727062.22

13016104.31

13305146.40

13305146.40

13305146.40

6. Income (Corporate) Tax

3818118.67

3904831.29

3991543.92

3991543.92

3991543.92

7. NET PROFIT

8908943.56

9111273.02

9313602.48

9313602.48

9313602.48

Gross Profit/Sales

42.42%

43.39%

44.35%

44.35%

44.35%

Net Profit After Tax/Sales

29.70%

30.37%

31.05%

31.05%

31.05%

Return on Investment

39.39%

39.03%

38.67%

38.67%

38.67%

Return on Equity

92.47%

94.57%

96.67%

96.67%

96.67%

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
Year 1

Year 2

PRODUCTION
1

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

10343949.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
10343949.00
0.00
9851380.00
492569.00
0.00
0.00
0.00
10343949.00
0.00
0.00
0.00
6206369.40
6206369.40
0.00
4137579.60
4137579.60
0.00
0.00

24086840.52
3398942.52
0.00
0.00
0.00
0.00
0.00
3398942.52
0.00
20687898.00
9851380.00
9851380.00
985138.00
0.00
0.00
0.00
24086840.52
0.00
0.00
0.00
14452104.31
14452104.31
0.00
9634736.21
9634736.21
0.00
0.00

27222440.23
8671569.83
947629.52
234715.91
469431.83
1636363.64
47694.00
5335734.93
0.00
18550870.40
19702760.00
0.00
985138.00
2137027.60
0.00
0.00
27222440.23
1636363.64
1636363.64
0.00
14452104.31
14452104.31
0.00
9634736.21
9634736.21
0.00
0.00

32139122.41
15725279.61
1326681.32
328602.28
657204.56
2290909.09
66771.60
11055110.75
0.00
16413842.80
19702760.00
0.00
985138.00
4274055.20
0.00
0.00
32139122.41
2290909.09
2290909.09
0.00
12043420.26
12043420.26
0.00
9634736.21
9634736.21
0.00
0.00

37404975.72
23128160.52
1705733.13
422488.65
844977.29
2945454.55
85849.20
17123657.70
0.00
14276815.20
19702760.00
0.00
985138.00
6411082.80
0.00
0.00
37404975.72
2945454.55
2945454.55
0.00
9634736.21
9634736.21
0.00
9634736.21
9634736.21
0.00
0.00

43619929.71
31480142.11
1895259.03
469431.83
938863.66
3272727.27
95388.00
24808472.31
0.00
12139787.60
19702760.00
0.00
985138.00
8548110.40
0.00
0.00
43619929.71
3272727.27
3272727.27
0.00
7226052.16
7226052.16
0.00
9634736.21
9634736.21
0.00
0.00

0.00
0.00
0.00
0.00

0.00
0.00
0.00
0.00

0.00
1499236.07
0.00
1499236.07

1499236.07
6670820.78
0.00
6670820.78

8170056.85
7019991.91
0.00
7019991.91

15190048.75
8296365.32
0.00
8296365.32

10

Annex 5: Projected Balance Sheet (in Birr):

Continued

PRODUCTION
5

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

49709940.43
39707180.43
1895259.03
469431.83
938863.66
3272727.27
95388.00
33035510.64
0.00
10002760.00
19702760.00
0.00
985138.00
10685138.00
0.00
0.00
49709940.43
3272727.27
3272727.27
0.00
4817368.10
4817368.10
0.00
9634736.21
9634736.21
0.00
0.00

56210199.94
48047439.94
1895259.03
469431.83
938863.66
3272727.27
95388.00
41375770.14
0.00
8162760.00
19702760.00
0.00
985138.00
12525138.00
0.00
0.00
56210199.94
3272727.27
3272727.27
0.00
2408684.05
2408684.05
0.00
9634736.21
9634736.21
0.00
0.00

62912788.90
56590028.90
1895259.03
469431.83
938863.66
3272727.27
95388.00
49918359.11
0.00
6322760.00
19702760.00
0.00
985138.00
14365138.00
0.00
0.00
62912788.90
3272727.27
3272727.27
0.00
0.00
0.00
0.00
9634736.21
9634736.21
0.00
0.00

72226391.38
67743631.38
1895259.03
469431.83
938863.66
3272727.27
95388.00
61071961.58
0.00
4482760.00
19702760.00
0.00
985138.00
16205138.00
0.00
0.00
72226391.38
3272727.27
3272727.27
0.00
0.00
0.00
0.00
9634736.21
9634736.21
0.00
0.00

81539993.86
78897233.86
1895259.03
469431.83
938863.66
3272727.27
95388.00
72225564.06
0.00
2642760.00
19702760.00
0.00
985138.00
18045138.00
0.00
0.00
81539993.86
3272727.27
3272727.27
0.00
0.00
0.00
0.00
9634736.21
9634736.21
0.00
0.00

90853596.33
90050836.33
1895259.03
469431.83
938863.66
3272727.27
95388.00
83379166.54
0.00
802760.00
19702760.00
0.00
985138.00
19885138.00
0.00
0.00
90853596.33
3272727.27
3272727.27
0.00
0.00
0.00
0.00
9634736.21
9634736.21
0.00
0.00

23486414.07
8498694.78
0.00
8498694.78

31985108.85
8908943.56
0.00
8908943.56

40894052.40
9111273.02
0.00
9111273.02

50005325.42
9313602.48
0.00
9313602.48

59318927.90
9313602.48
0.00
9313602.48

68632530.37
9313602.48
0.00
9313602.48

11