Investment Office ANRS
Project Profile on the Establishment
of Baby Food 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.......................4
3.1Market Study...............................................................................................................4
3.1.1Present Demand and Supply................................................................................4
3.1.2Projected Demand................................................................................................5
3.1.3Pricing and Distribution.......................................................................................6
3.2Plant Capacity.............................................................................................................7
3.3Production Program....................................................................................................7
4.Raw Materials and Utilities.......................................................................7
4.1Availability and Source of Raw Materials..................................................................7
4.2Annual Requirement and Cost of Raw Materials and Utilities...................................7
5.Location and Site........................................................................................8
6.Technology and Engineering.....................................................................8
6.1Production Process......................................................................................................8
6.2Machinery and Equipment..........................................................................................9
6.3Civil Engineering Cost..............................................................................................10
7.Human Resource and Training Requirement.......................................11
7.1Human Resource.......................................................................................................11
7.2Training Requirement...............................................................................................11
8.Financial Analysis....................................................................................12
8.1Underlying Assumption ...........................................................................................12
8.2Investment.................................................................................................................13
8.3Production Costs.......................................................................................................14
8.4Financial Evaluation.................................................................................................14
9.Economic and Social Benefits and Justification....................................16
ANNEXES....................................................................................................18
1. Executive Summary
The project envisages production of 10,000 tons of baby food per annum. The total
investment requirement of the project is estimated at about Birr 44.9 million; of which
Birr 28 million is the cost of working capital and Birr 5.6 million is planned to finance
the cost of building and civil-works while Birr 9.2 million is for machinery and
equipment. Based on the cash flow statement, the calculated internal rate of return (IRR)
and simple rate of return of the project are 22.4 % and 19.5, respectively. And the net
present value (NPV) at 18 % discounting rate is Birr 4,799 thousand. The plant is
expected to create employment opportunities for about 157 persons.
2. Product Description and Application
Infant food is a supplementary food prepared for children below the age of two. Infant
food relieves mothers from intensive breast-feeding. The main ingredients in the
preparation of infant food are pulses, soybean, milk, potato, corn and fruits. Generally,
the mixture of these ingredients is kept in such a way to fulfil the nutrition requirements
in child feeding. Carbohydrates and proteins are the major nutrient elements. Infant food
is prepared in a factory or at home. They are delivered in cans of 400/500 grams or in
plastic containers of 1kg each. Sweetness, palatability, and tenderness are the basic
requirements for infant food. Infant food is served diluted in water and boiled to form a
stew or soup. They are also served as batter for spoon feeding. The main objective of
preparing baby food is to give the necessary nutrition to infants in addition to their
mother milk so that the babies are healthy and fit both physically and mentally.
3. Market Study, Plant Capacity and Production
Program
3.1
Market Study
3.1.1 Present Demand and Supply
Currently, there are few baby food producing factories in Ethiopia. Among which, Fafa
Food Factory is the oldest one. However, the range of products they produce and the
quality is limited. In particular, Fafa baby food production is mainly geared towards
meeting relief requirements. It is freely distributed to children in drought affected areas
Year E.C.
Domestic Production of
Baby Food
(In Tons)
1988
804
1989
1176
1990
1171
1991
1546
1992
2496
1993
2923
1994
2304
1995
3845
1996
4620
1997
3207
1998
3643
by NGOs. There is no separate data for domestic production of baby food; in the
available statistical reports, production of baby food is lumped with other locally
produced composite flours, such as Dube, Miten and Edget composite flours. Here, based
on factories output for few years, local production of baby food is estimated for the
period between 1988 E.C and 1998E.C (Table 3.1).
Table 3.1
DOMESTIC PRODUCTION OF BABY FOOD
Besides, there is some supply of baby food through imports.
Like the domestic
production, except for the year 1999/2000 E.C, import statistics does not separately show
baby food; rather, it lumps a variety of related products together. In the year 1999 E.C,
nearly 62 tons of baby food is imported with at cost of Birr 2.1 million.
The demand for baby food is related to population growth and income growth. In mid
1999 E.C, there were 3.3 million children within the age of 0-4 years in the AN RS.
Babies between the ages of 4 months and 2 years, which require baby food, constitute
nearly half of this figure. These babies constitute about 8.5 percent of the population of
the region. But, there is no single plant or factory in the region which prepares baby food
even though the ingredients for making such food is available in the region.
3.1.2 Projected Demand
Feeding babies with additional food normally starts at the age of four months. However,
mothers may start earlier or later than this period to feed their babies with additional
food. Its demand depends upon income of the households and price of baby food. In this
connection to this, the urban parents relatively better provide baby food to their offspring
than the rural parents. However, due to the low standard of living of the population, it is a
very small segment of the Ethiopian urban households that can provide their babies with
baby food. By taking consumption per capita of babies for countries with the same per
5
capita income as that of Ethiopia, per capita baby food consumption has been estimated
at 20.8 kg/annum. This is the lowest per capita consumption of baby food in the world.
Based on the above assumption, the current demand for baby food in the ANRS alone
amounts to 34,320 tons. The demand for baby food is projected by relating future demand
to population growth- i.e. the number of babies born each year (See Table 3.2).
TABLE 3.2
PROJECTED DEMAND FOR BABY FOOD
Year E.C.
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
At national Level
(In Tons)
34320
35350
36410
37502
38628
39786
40980
42209
43476
44780
46123
At ANRS Level
( In Tons)
8580
8837
9103
9376
9657
9947
10245
10552
10869
11195
11531
Table 3.2 shows that the demand for baby food grows from 34,320 tons in 1999 E.C to
40,980 tons in 2004 E.C and 46,123 tons in 2009 E.C at the national level. Similarly,
ANRSs demand (roughly estimated proportionally by taking population size of the
relevant age bracket) will reach 9,947 tons and 11,531 tons in 2004 E.C and 2009 E.C,
respectively. These figures clearly justify the establishment of a medium scale baby food
producing plant in ANRS.
3.1.3 Pricing and Distribution
There are different types of locally made and imported baby food in the domestic market.
As compared to the local ones, the imported items are sold at very high price; and this
makes them inaccessible to low income families. The current market prices of most
popular imported baby foods (such as Cerilac and Cerifam) range from Birr 40 up to Birr
55 per can (400 mg). In contrast, the average market prices of the local products (such as
Fafa and its local substitutes) range between Birr16 and Birr 20 per Kg. This project
6
envisages producing baby food with a quality better than the existing local products; and
it plans to sell it at Birr 16 per Kg. The product is to be distributed through wholesale
network to all parts of the country.
3.2
Plant Capacity
According to demand projections and minimum economical plant size, a plant with an
annual production capacity of 10,000 tons is envisaged by this project. The plant will
operate 275 days a year. Sundays and national holidays, account for 65 days a year for
maintenance and repair work as well as for unexpected work interruption additional 25
days are assigned.
3.3
Production Program
The production programme is designed in such a way that the plant will start production
at 75 % of its capacity in the first year. During the second and third years, the plant will
produce 85 % and 100 % of its capacity, respectively. The capacity build-up is required
to introduce the operators and technicians with the new machines. And also, some time is
necessary to introduce the brand, and to penetrate the competitive baby food market.
4. Raw Materials and Utilities
4.1
Availability and Source of Raw Materials
All the necessary raw materials to produce baby food are available in the ANRS.
4.2
Annual Requirement and Cost of Raw Materials and
Utilities
Raw materials and utilities required for the production of 15,000 tons of infant food are
indicated in Table 4.1. The principal raw materials are corn, beans, peas and soybeans.
TABLE 4.1
RAW MATERIALS AND INPUTS
Raw Materials
Corn
Annual
Requirement
( In Tons)
9000
Unit Price
In Birr
Total Cost
In Birr000
2500
22500
7
Sweet Potato
Soy bean
Bean
Peas
Milk
Fruit
Sub. Total
Contingency
Packing, cans
Packing, plastics
Total
7200
3000
3000
3000
4500
300
3000
8000
6000
6000
5000
5000
15000 pcs
22500 pcs
2.5
0.15
21600
24000
18000
18000
22500
1500
128,100
12,810
37.5
3.4
140,950.9
TABLE 4.1
ANNUAL UTILITY REQUIREMENT
Utilities
Electricity
Water
Annual
Requirement
4,667,200 KWH
16,000 m3
Unit Price
Birr 0.55 / KWH
Birr 2.65/m3
Total
(In Thousands)
2,567
42.4
2,609.4
5. Location and Site
For its convenience to procure the necessary raw materials and to distribute the product to
different parts of the country, Debre-Markos is an appropriate place to establish a baby
food producing plant.
6. Technology and Engineering
6.1
Production Process
Raw materials from the silos are first conveyed to respective separation and cleaned from
external matter. Then they are weighed and processed in their individual machines. Beans
and peas are roasted, and milled after roasting. Others are scoured and milled. After
milling, the processed materials are stored in their individual bins. Once all ingredients
are prepared, according to the proportion of the mix
they are led
to the mixer; and
mixed fruit and dehydrated milk are added in the mixer. Finally, the mixture is led to the
8
rotary distributor where the product is ready for packing, or it is directed to finished
product silo and stored.
Alternatively, it is possible to establish a high technology baby food processing plant
with a smaller capacity and minimal, but relatively skilled, labour force. In this case, the
plant requires computerized machineries and a sophisticated laboratory. This would make
the project capital intensive and very expensive.
6.2
Machinery and Equipment
Principal production machinery for preparing infant food are the roaster, mills, grinders,
mixers, storage bins and screw conveyors and bucket elevators. A list of machinery and
equipment for the proposed plant is given in Table 6.1.The total cost of Machinery and
Equipment is Birr 9.2 million. ). Of the total cost of the raw material, Birr 8.2 million or
89.1 % is in foreign currency.
TABLE 6.1
MACHINERY AND EQUIPMENT
No
Item
Quantity
1
Storage bin, 75 tons
5 pcs
2
Bucket elevator
12 pcs
3
Screen conveyor
7 pcs
4
Drum lieve
1 pc
5
Magnetic separator
1 pc
6
Vibro stiner
2 pcs
7
Roaster
1 pc
8
Scourer
1 pc
9
Grinding mill
1 pc
10
Hammer mill
1 pc
11
Roller mill
1 pc
12
Weighers
4 pcs
13
Dehuller
1 pc
14
Aspirator
1 pc
15
Dehydrator
1 pc
16
Mixer
1 pc
17
Rotary distributor
1 pc
18
Packing machine
1 pc
19
Plane siftes
1 pc
20
Laboratory Equipments
1 set
Estimated Total Cost including Freight and Insurance is
Birr 9.2 Million
Machinery Suppliers Address:
Labh Group of Companies Snacks Plant Division
403-405, Time Square, Near Pariseema Complex,
C.G. Road, Ahmedabad, Gujarat,380006,
India
6.3
Civil Engineering Cost
Due to technological and engineering requirements the production hall shall have a two
story building with a total floor area of 2,800m 2, and it costs Birr 5.6 million. This would
include cost of land preparation and associated civil works. The total land area of the
plant including the open space is 3000 m 2. The cost of the land lease is Birr 163,770
10
which is as per ANRS land lease rate for Debre-Markos (which is equal to Birr 54.59 per
sq meter for industrial purpose). Of the total cost of the lease 5 % is paid at the beginning
while the rest will be paid in 40 years.
7. Human Resource and Training Requirement
7.1
Human Resource
Manpower requirements for the envisaged plant and annual salary expenditure are given
in Table 7.1.
TABLE 7.1
MANPOWER REQUIREMENT
Post
1. Plant Manager
2. Engineers
3. Chemists
4. Administrator
5. Accountant
6. Salesman
7. Sales Clerks
8. Secretary
9. Cashier
10. Operators
11. Labors
12. Mechanics and Electricians
13. Guards
14. Driver
Benefits 20 %
Total
No
1
2
2
1
2
3
10
2
1
10
100
15
6
2
Salary/Month
Birr/Worker
4000
3000
1500
2500
1200
1500
800
850
800
800
400
1000
400
800
157
Total
(In Birr)
48000
72000
36000
30000
28800
54000
96000
20400
9600
96000
480000
180000
28800
19200
239,760
1,438,560
Total annual salary expenses including benefits is Birr 1,438,560.
7.2
Training Requirement
Two months on-the-job training and follow-up program is needed; and this can be
managed by procuring two experts from the technology suppliers.
11
8. Financial Analysis
8.1
Underlying Assumption
The financial analysis of the baby food producing plant is based on the data provided in
the preceding sections 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 fixed investment
B. Depreciation
Building
5%
Machinery and equipment
10%
Office furniture
10%
Vehicles
20%
Pre-production (amortization)
20%
12
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 45
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
L.C
Building
Office Equipment
Vehicles
Machinery & Equipment
Total Fixed Investment
Pre production
Total Initial Investment
Working Capital
Total
F.C
Total
8,189
8,189
5,600,000
5,600,000
500,000
500,000
750,000
750,000
1,000,000
8,200,000
9,200,000
7,858,189
8,200,000
16,058,189
802,909
802,909
8,661,098
8,200,000
16,861,098
28,061,663
36,722,761
0
8,200,000
28,061,663
44,922,761
*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.
13
Of the total investment outlay, working capital accounts for 62.5 % while plant and
machinery, and building and construction costs are 20.5 % and 12.5 %, respectively. The
foreign component of the project accounts for Birr 8.2 million or 18.3 % of the total
investment cost.
8.3
Production Costs
The total production cost at full capacity operation is estimated at Birr 149.7 millions
(See Table 8.2).Of the total production costs, raw materials and utilities account for 96 %.
TABLE 8.2
TOTAL PRODUCTION COST
IN BIRR
Raw Material
Requirement
1.Local Raw Material
2.Foreign
Cost
140,950,900
0
Total Production Cost at full Capacity
Items
Cost
1. Raw materials
2. Utilities
2,609,400
3. Wages and Salaries
1,438,560
4. Spares and Maintenance
Factory costs
5. Depreciation
6. Financial costs
Total Production Cost
8.4
140,950,900
481,746
145,480,606
1,560,582
2,695,366
149,736,553
Financial Evaluation
14
I.
Profitability
According to the projected income statement (see Annex 4) the project will generate
profit beginning from the first year of operation which increases onwards. The income
statement and other profitability indicators also show that the project is viable.
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 16.3 % 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 is given by the formula:
SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 19.5 % 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 22.4% and the net present value(NPV) at 18 % discount is Birr 4,799
thousands.
VI.
Sensitivity Analysis
The sensitivity test result when undertaken by increasing the cost of production by 10 %
still indicates that the project would be viable.
15
9. Economic and Social Benefits and Justification
Based on the foregoing presentation and analysis, we can say 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 6.99
million per year and Birr 69.95 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 26.3 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result
creates 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 of baby food.
That is, based on the projected figure we learn that in the project life an estimated amount
of US Dollar 153 million will be saved as a result of the proposed project. This will
create room for the saved hard currency to be allocated to other vital and strategic sectors.
D. Employment and Income Generation
The proposed project is expected to create employment opportunity for several citizens of
the region. That is, it will provide permanent employment to 157 professionals as well as
support staff. Consequently the project creates income of Birr 1,438 thousand per year.
This would be one of the commendable accomplishments of the project.
16
E. Pro Environment Project
The proposed production process is environment friendly.
F. Diversification and InterSectoral linkage.
The proposed project helps to diversify ANRS and Ethiopian economy. It contributes to
industrialization of the region as well as the countys economy.
17
ANNEXES
18
Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION
PRODUCTION
Year 1
Year 2
Capacity Utilization (%)
0.00
0.00
75%
85%
100%
100%
1. Total Inventory
0.00
0.00
32247396.67
36547049.56
42996528.89
42996528.89
0.00
0.00
11532346.36
13069992.55
15376461.82
15376461.82
Raw Material-Local
0.00
0.00
11532346.36
13069992.55
15376461.82
15376461.82
Raw Material-Foreign
0.00
0.00
0.00
0.00
0.00
0.00
Factory Supplies in Stock
0.00
0.00
120306.43
136347.28
160408.57
160408.57
Spare Parts in Stock and Maintenance
0.00
0.00
39415.55
44670.96
52554.07
52554.07
Work in Progress
0.00
0.00
3007660.65
3408682.07
4010214.21
4010214.21
Finished Products
0.00
0.00
6015321.31
6817364.15
8020428.41
8020428.41
2. Accounts Receivable
0.00
0.00
13090909.09
14836363.64
17454545.45
17454545.45
3. Cash in Hand
0.00
0.00
331196.73
375356.29
441595.64
441595.64
0.00
0.00
34137156.12
38688776.94
45516208.17
45516208.17
4. Current Liabilities
0.00
0.00
13090909.09
14836363.64
17454545.45
17454545.45
Accounts Payable
0.00
0.00
13090909.09
14836363.64
17454545.45
17454545.45
TOTAL NET WORKING CAPITAL REQUIREMENTS
0.00
0.00
21046247.03
23852413.30
28061662.71
28061662.71
INCREASE IN NET WORKING CAPITAL
0.00
0.00
21046247.03
2806166.27
4209249.41
0.00
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%
42996528.89
42996528.89
42996528.89
42996528.89
42996528.89
42996528.89
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
15376461.82
Raw Material-Foreign
0.00
0.00
0.00
0.00
0.00
0.00
Factory Supplies in Stock
160408.57
160408.57
160408.57
160408.57
160408.57
160408.57
Spare Parts in Stock and Maintenance
52554.07
52554.07
52554.07
52554.07
52554.07
52554.07
Work in Progress
4010214.21
4010214.21
4010214.21
4010214.21
4010214.21
4010214.21
Finished Products
8020428.41
8020428.41
8020428.41
8020428.41
8020428.41
8020428.41
2. Accounts Receivable
17454545.45
17454545.45
17454545.45
17454545.45
17454545.45
17454545.45
441595.64
441595.64
441595.64
441595.64
441595.64
441595.64
45516208.17
45516208.17
45516208.17
45516208.17
45516208.17
45516208.17
4. Current Liabilities
17454545.45
17454545.45
17454545.45
17454545.45
17454545.45
17454545.45
Accounts Payable
17454545.45
17454545.45
17454545.45
17454545.45
17454545.45
17454545.45
TOTAL NET WORKING CAPITAL REQUIREMENTS
28061662.71
28061662.71
28061662.71
28061662.71
28061662.71
28061662.71
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
3. Cash in Hand
CURRENT ASSETS
INCREASE IN NET WORKING CAPITAL
Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION
PRODUCTION
Year 1
Year 2
8430548.96
36492211.67
133090909.09
137745454.55
162618181.82
160000000.00
8430548.96
36492211.67
13090909.09
1745454.55
2618181.82
0.00
Total Equity
3372219.59
14596884.67
0.00
0.00
0.00
0.00
Total Long Term Loan
5058329.38
21895327.00
0.00
0.00
0.00
0.00
0.00
0.00
13090909.09
1745454.55
2618181.82
0.00
2. Inflow Operation
0.00
0.00
120000000.00
136000000.00
160000000.00
160000000.00
Sales Revenue
0.00
0.00
120000000.00
136000000.00
160000000.00
160000000.00
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
8430548.96
8430548.96
150704386.77
136941688.16
163381908.98
156177126.56
4. Increase In Fixed Assets
8430548.96
8430548.96
0.00
0.00
0.00
0.00
Fixed Investments
8029094.25
8029094.25
0.00
0.00
0.00
0.00
Pre-production Expenditures
401454.71
401454.71
0.00
0.00
0.00
0.00
5. Increase in Current Assets
0.00
0.00
34137156.12
4551620.82
6827431.22
0.00
6. Operating Costs
0.00
0.00
110016425.33
124663352.52
146633743.30
146633743.30
7. Corporate Tax Paid
0.00
0.00
0.00
0.00
2733092.75
2894814.69
8. Interest Paid
0.00
0.00
6550805.31
3234438.77
2695365.64
2156292.51
9.Loan Repayments
0.00
0.00
0.00
4492276.06
4492276.06
4492276.06
10.Dividends Paid
0.00
0.00
0.00
0.00
0.00
0.00
Surplus(Deficit)
0.00
28061662.71
-17613477.67
803766.38
-763727.16
3822873.44
Cumulative Cash Balance
0.00
28061662.71
10448185.04
11251951.42
10488224.26
14311097.70
TOTAL CASH INFLOW
1. Inflow Funds
Total Short Term Finances
3. Other Income
Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5
160000000.00
6
160000000.00
7
160000000.00
8
160000000.00
9
160000000.00
10
160000000.00
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
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
Sales Revenue
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
155799775.37
155515598.75
155138247.56
150268620.31
150268620.31
150268620.31
4. Increase In Fixed Assets
0.00
0.00
0.00
0.00
0.00
0.00
Fixed Investments
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. Increase in Current Assets
0.00
0.00
0.00
0.00
0.00
0.00
146633743.30
146633743.30
146633743.30
146633743.30
146633743.30
146633743.30
7. Corporate Tax Paid
3056536.63
3311433.13
3473155.07
3634877.01
3634877.01
3634877.01
8. Interest Paid
1617219.38
1078146.26
539073.13
0.00
0.00
0.00
9. Loan Repayments
4492276.06
4492276.06
4492276.06
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Surplus(Deficit)
4200224.63
4484401.25
4861752.44
9731379.69
9731379.69
9731379.69
Cumulative Cash Balance
18511322.32
22995723.57
27857476.01
37588855.70
47320235.39
57051615.08
TOTAL CASH INFLOW
1. Inflow Funds
Interest on Securities
3. Other Income
TOTAL CASH OUTFLOW
6. Operating Costs
10.Dividends Paid
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
4
CONSTRUCTION
PRODUCTION
Year 1
Year 2
TOTAL CASH INFLOW
0.00
0.00
120000000.00
136000000.00
160000000.00
160000000.00
1. Inflow Operation
0.00
0.00
120000000.00
136000000.00
160000000.00
160000000.00
Sales Revenue
0.00
0.00
120000000.00
136000000.00
160000000.00
160000000.00
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
8430548.96
8430548.96
131062672.36
127469518.79
153576085.46
149528557.99
3. Increase in Fixed Assets
8430548.96
8430548.96
0.00
0.00
0.00
0.00
Fixed Investments
8029094.25
8029094.25
0.00
0.00
0.00
0.00
Pre-production Expenditures
401454.71
401454.71
0.00
0.00
0.00
0.00
4. Increase in Net Working Capital
0.00
0.00
21046247.03
2806166.27
4209249.41
0.00
5. Operating Costs
0.00
0.00
110016425.33
124663352.52
146633743.30
146633743.30
6. Corporate Tax Paid
0.00
0.00
0.00
0.00
2733092.75
2894814.69
NET CASH FLOW
-8430548.96
-8430548.96
-11062672.36
8530481.21
6423914.54
10471442.01
CUMMULATIVE NET CASH FLOW
-8430548.96
-16861097.93
-27923770.29
-19393289.08
-12969374.53
-2497932.52
Net Present Value (at 18%)
-8430548.96
-7144533.02
-7945039.04
5191914.22
3313383.66
4577163.81
Cumulative Net present Value
-8430548.96
-15575081.98
-23520121.02
-18328206.80
-15014823.14
-10437659.33
2. Other Income
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
(Continued)
PRODUCTION
10
TOTAL CASH INFLOW
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
1. Inflow Operation
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
Sales Revenue
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
149690279.93
149945176.43
150106898.37
150268620.31
150268620.31
150268620.31
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
146633743.30
146633743.30
146633743.30
146633743.30
146633743.30
146633743.30
6. Corporate Tax Paid
3056536.63
3311433.13
3473155.07
3634877.01
3634877.01
3634877.01
NET CASH FLOW
10309720.07
10054823.57
9893101.63
9731379.69
9731379.69
9731379.69
CUMMULATIVE NET CASH FLOW
7811787.55
17866611.12
27759712.75
37491092.44
47222472.13
56953851.82
Net Present Value (at 18%)
3819045.47
3156460.82
2631942.59
2193998.63
1859320.87
1575695.66
Cumulative Net present Value
-6618613.86
-3462153.04
-830210.45
1363788.18
3223109.06
4798804.71
Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW
4. Increase in Net Working Capital
5. Operating Costs
Net Present Value (at 18%)
Internal Rate of Return
4,798,804.71
22.4%
Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
75%
85%
100%
100%
100%
120000000.00
136000000.00
160000000.00
160000000.00
160000000.00
120000000.00
136000000.00
160000000.00
160000000.00
160000000.00
Other Income
0.00
0.00
0.00
0.00
0.00
2. Less Variable Cost
109420385.91
124009770.69
145893847.88
145893847.88
145893847.88
10579614.09
11990229.31
14106152.12
14106152.12
14106152.12
8.82
8.82
8.82
8.82
8.82
2156621.31
2214163.71
2300477.31
2300477.31
2300477.31
8422992.79
9776065.60
11805674.82
11805674.82
11805674.82
4. Less Cost of Finance
6550805.31
3234438.77
2695365.64
2156292.51
1617219.38
5. GROSS PROFIT
1872187.47
6541626.83
9110309.18
9649382.31
10188455.43
0.00
0.00
2733092.75
2894814.69
3056536.63
1872187.47
6541626.83
6377216.43
6754567.61
7131918.80
Gross Profit/Sales
2%
5%
6%
6%
6%
Net Profit After Tax/Sales
2%
5%
4%
4%
4%
Return on Investment
22%
24%
20%
20%
19%
Return on Equity
10%
36%
35%
38%
40%
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%
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
160000000.00
Other Income
0.00
0.00
0.00
0.00
0.00
2. Less Variable Cost
145893847.88
145893847.88
145893847.88
145893847.88
145893847.88
14106152.12
14106152.12
14106152.12
14106152.12
14106152.12
1989895.42
1989895.42
1989895.42
1989895.42
1989895.42
12116256.70
12116256.70
12116256.70
12116256.70
12116256.70
4. Less Cost of Finance
1078146.26
539073.13
0.00
0.00
0.00
5. GROSS PROFIT
11038110.45
11577183.57
12116256.70
12116256.70
12116256.70
6. Income (Corporate) Tax
3311433.13
3473155.07
3634877.01
3634877.01
3634877.01
7. NET PROFIT
7726677.31
8104028.50
8481379.69
8481379.69
8481379.69
Gross Profit/Sales
7%
7%
8%
8%
8%
Net Profit After Tax/Sales
5%
5%
5%
5%
5%
Return on Investment
20%
19%
19%
19%
19%
Return on Equity
43%
45%
47%
47%
47%
Capacity Utilization (%)
1. Total Income
Sales Revenue
VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)
RATIOS (%)
Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION
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
8430548.96
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
8430548.96
0.00
8029094.25
401454.71
0.00
0.00
0.00
8430548.96
0.00
0.00
0.00
5058329.38
5058329.38
0.00
3372219.59
3372219.59
0.00
0.00
0.00
0.00
0.00
0.00
Year 2
44922760.64
28061662.71
0.00
0.00
0.00
0.00
0.00
28061662.71
0.00
16861097.93
8029094.25
8029094.25
802909.43
0.00
0.00
0.00
44922760.64
0.00
0.00
0.00
26953656.38
26953656.38
0.00
17969104.25
17969104.25
0.00
0.00
0.00
0.00
0.00
0.00
PRODUCTION
1
59885857.20
44585341.16
11692068.34
3007660.65
6015321.31
13090909.09
331196.73
10448185.04
0.00
15300516.04
16058188.50
0.00
802909.43
1560581.89
0.00
0.00
59885857.20
13090909.09
13090909.09
0.00
26953656.38
26953656.38
0.00
17969104.25
17969104.25
0.00
0.00
0.00
1872187.47
0.00
1872187.47
2
63680662.52
49940728.36
13251010.79
3408682.07
6817364.15
14836363.64
375356.29
11251951.42
0.00
13739934.16
16058188.50
0.00
802909.43
3121163.77
0.00
0.00
63680662.52
14836363.64
14836363.64
0.00
22461380.32
22461380.32
0.00
17969104.25
17969104.25
0.00
0.00
1872187.47
6541626.83
0.00
6541626.83
3
68183784.70
56004432.43
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
10488224.26
0.00
12179352.27
16058188.50
0.00
802909.43
4681745.66
0.00
0.00
68183784.70
17454545.45
17454545.45
0.00
17969104.25
17969104.25
0.00
17969104.25
17969104.25
0.00
0.00
8413814.31
6377216.43
0.00
6377216.43
4
70446076.25
59827305.86
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
14311097.70
0.00
10618770.39
16058188.50
0.00
802909.43
6242327.54
0.00
0.00
70446076.25
17454545.45
17454545.45
0.00
13476828.19
13476828.19
0.00
17969104.25
17969104.25
0.00
0.00
14791030.73
6754567.61
0.00
6754567.61
Annex 5: Projected Balance Sheet (in Birr):
Continued
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
5
73085718.99
64027530.49
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
18511322.32
0.00
9058188.50
16058188.50
0.00
802909.43
7802909.43
0.00
0.00
73085718.99
17454545.45
17454545.45
0.00
8984552.13
8984552.13
0.00
17969104.25
17969104.25
0.00
0.00
21545598.35
7131918.80
0.00
7131918.80
6
76320120.24
68511931.74
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
22995723.57
0.00
7808188.50
16058188.50
0.00
802909.43
9052909.43
0.00
0.00
76320120.24
17454545.45
17454545.45
0.00
4492276.06
4492276.06
0.00
17969104.25
17969104.25
0.00
0.00
28677517.15
7726677.31
0.00
7726677.31
7
79931872.67
73373684.17
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
27857476.01
0.00
6558188.50
16058188.50
0.00
802909.43
10302909.43
0.00
0.00
79931872.67
17454545.45
17454545.45
0.00
0.00
0.00
0.00
17969104.25
17969104.25
0.00
0.00
36404194.46
8104028.50
0.00
8104028.50
8
88413252.37
83105063.87
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
37588855.70
0.00
5308188.50
16058188.50
0.00
802909.43
11552909.43
0.00
0.00
88413252.37
17454545.45
17454545.45
0.00
0.00
0.00
0.00
17969104.25
17969104.25
0.00
0.00
44508222.97
8481379.69
0.00
8481379.69
9
96894632.06
92836443.56
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
47320235.39
0.00
4058188.50
16058188.50
0.00
802909.43
12802909.43
0.00
0.00
96894632.06
17454545.45
17454545.45
0.00
0.00
0.00
0.00
17969104.25
17969104.25
0.00
0.00
52989602.66
8481379.69
0.00
8481379.69
10
105376011.75
102567823.25
15589424.46
4010214.21
8020428.41
17454545.45
441595.64
57051615.08
0.00
2808188.50
16058188.50
0.00
802909.43
14052909.43
0.00
0.00
105376011.75
17454545.45
17454545.45
0.00
0.00
0.00
0.00
17969104.25
17969104.25
0.00
0.00
61470982.35
8481379.69
0.00
8481379.69
10
