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Published by: big john on Jun 07, 2013
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Investment Office ANRS
Project Profile on the Establishmentof Absorbent cotton Making plant
Development StudiesAssociates (DSA)
October 2008Addis Ababa
Table of Contents
1.Executive Summary
This project profile deals with the establishment of absorbent cotton making plant inAmhara National Regional State. The following presents the main findings of the study.Demand projection divulges that the domestic demand for absorbent cotton is substantialand is increasing with time. Accordingly, the planned plant is set to produce 160 tonannually. The total investment cost of the project including working capital is estimatedat Birr 12.89 million and creates 40 jobs and Birr 554.4 thousands of income.The financial result indicates that the project will generate profit beginning from the firstyear of operation. Moreover, the project will break even at 24.6% of capacity utilizationand it will payback fully the initial investment less working capital in 3 years. The resultfurther shows that the calculated IRR of the project is 28% with NPV of Birr 5,276,413.57In addition to this, the proposed project possesses wide range of economic and social benefits such as increasing the level of investment, tax revenue, employment creation andimport substitution.Generally, the project is technically feasible, financially and commercially viable as wellas socially and economically acceptable. Hence the project is worth implementing.
2.Product Description and Application
Absorbent cotton is sterilized, deoiled and bleached loose cotton wadding. Originallyabsorbent cotton was developed for the purpose of medical use. At present absorbentcotton is used for sanitary use and in surgical operation as well as for ordinary dailyliving. Since absorbent cotton is a material which comes in direct contact with the human body, it must satisfy the pharmacopeia requirements. In Ethiopia absorbent cotton isusually needed by women during their menstruation period and hence the viability of establishing the plant is examined from this point of view.1

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