Binder Final Submit

ADDIS ABABA INSTITUTE of TECHNOLOGY
SCHOOL OF MECHANICAL
AND
INDUSTRIAL ENGINEERING
Post Graduate program
In
Industrial Engineering
Term paper on
Feasibility of modern
Printing and Publishing
Plant
INSTRUCTOR; Dr. GULELAT
SUBMITTED BY; MASRESHA TASEW GSE/5744/09
FANTANESH MAEREGU GSE/1633/09
March 10, 2017

Acknowledgment
First of all, we would like to give thank God for making all things possible for the success of this
work. We are grateful to a significant number of individuals for their help, support, advice,
encouragement and other forms of technical assistance during the writing of this paper.
We are also grateful to our instructor Dr.-Glelat Gatew support, and encourage to see things
more detailed and for his comments.
Table of Contents
Executive Summary ......................................................................................................................1
1. Introduction ..........................................................................................................................3
1.1. World printing history ...................................................................................................3
1.2. Ethiopian printing history … .........................................................................................4
2. Objective………………………………………………………………………………...……8
2.1. General objective………………...……………………………..……………………….8
2.2. Specific objective………………………………………………...…………………………………………………..8
3. Market study…………………………………………………………………………………8
3.1. General analysis of the market for entire industry…………………………………...8
3.2. Competition…………………………………………………………………………......9
3.3. Demand analysis……………………………………………………………………….10
3.4. Supply analysis………………………………………………………………………....13
3.5. Demand –supply gap analysis………………………………………………………....14
3.6. Price strategy………………………………………………………………………….. 15
3.7. Marketing strategy…………………………………………………………………….16
4. Technical Feasibility Study………………………………………………………………...17
4.1. Location………………………………………………………………………………...17
4.2. Civil work design and construction………………………………………………..…18
4.3. Theoretical capacity of machineries and capacity utilization……………………….19
4.4. List and cost breakdown of machinery & equipment……………………………….22
4.5. Availability of utilities and infrastructure……………………………………..……..23
4.6. Materials for use/input (availability & cost)……………………………………..…..23
4.7. Production process………………………………………………………….……….…24
4.8. Environmental Impact Assessment...............................................................................29
5. Project Implementation Schedule…………………………………………………...…….30
6. Organization, Management, Manpower Requirement and Availability………………..31
7. Projected Financial Study……………………………………………………………….....32
7.1. Investment outlay............................................................................................................32
7.2. Production, revenue and operating costs estimate………………………………..…33
7.3. Project financial results (profit and loss, cash flow and balance sheet)……………35
8. Socio-economic Aspects………………………………………………………………….…38
8.1 Social Feasibility…………………………………………………………………….…38
8.2 Technology Assessment………………………………………………………..………38
9. Possible Risk Factors (Threats)…………………………………………………………....38
10. Conclusion and Recommendation…………………………………………………………40
11. Annexes……………………………………………………………………………...………41
Annexes
Annex 11.1. Manpower requirement, and corresponding salaries/wages expense
Annex 11.2. Computer and Accessories
Annex 11.3. Office furniture and fitting
Annex 11.4. Utility Services
Annex 11.5. Miscellaneous Expenses
Annex 11.6. Building and Civil Works
Annex 11.7. Fixed Asset Depreciation
List of Tables
Table 1: Student enrollment of Ethiopia (2004-2008 E C)
Table 2: Forecasted students enrollment (2009-2012)
Table 3: Estimated Demand of Printed materials (‘000,000 birr)
Table 4: Imported books from 2006-2008
Table 5: Annual production report from Major book printers
Table 6: Supply forecast for printing (Import, public and private) in birr
Table 7: Estimated Demand-supply gap of Printed materials in birr
Table 8: summary of construction area and cost Table
9: List of machinery with their respective cost Table
10: List of equipments with their respective cost Table
11: materials requirement & their respective cost Table
12: tentative project schedule
Table 13: Fixed and Working Capital expenditure.
List of fig and Graph
Graph 1: Estimated Demand- Supply Gap
Fig 1: Process Flow (Off-Set Printing)
Fig 2: Possible waste indication diagram of the industry
Fig: 3 Organo-gram of the industry
Executive Summary
The establishment of modern books publishing & printing plant would help to alleviate the criti-
cal problem. The country is facing in supplying text books to satisfy the ever increasing needs of
students in the country, as well as different literature books that are facing also problems reflect-
ed by high cost of printing & late deliveries.
Accordingly, this feasibility study is conducted to demonstrate viability of publishing and books
printing plant. Both primary and secondary data were employed for preparing this feasibility
study. Industry intelligence has also been critically employed for this study. Simple analyses like
ratio, trend analysis, NPV, and payback period have been employed to analyze cost and benefit
of the project. The study encompasses, market assessment, financial analysis, and risk assess-
ment. Crude data (figures) on the sector by existing statistical reports, and lack of detail investi-
gation upon the publishing and printing services has been the major limitation for the study.
Demand for printing services in the Ethiopia is mainly acquainted with various social and busi-
ness sectors like education, trade and service, communication (print media) and others. Though
the country has started publishing and printing services long years ago, the expansion of the in-
dustries to meet a growing demand of the service is still slighter. Currently, the major printing
presses in Ethiopia that dominate the printing and publishing industry or market dominants are
the government owned ones. However, seeing the profitability of the sector, the private printing
presses are flourishing. Studies shows that, demand-supply gap prevailing in the printing and
publishing service industry gets wider and wider creating vast opportunity for prospective inves-
tors.
The plant is planned to utilize modern printing technology that has succeeding process passing
through design, prepress, printing, binding/finishing and delivery stages. The industry utilizes
raw materials like ink, paper, plates, chemicals and other substitutes principally from import.
Moreover, the plant will not have significant impact on the environment as it would have a poli-
cy statement that encompasses waste management, recycling, and resource management. The
project will also be socially responsible besides making return for the owner through creating job
opportunities, source of income for government, and encourage import substitution strategy.
Hence, the project is socially and environmentally friendly.
Shortage of foreign currency, government regulation to cut import (to adjust BOP), scarcity of
finance (contractionary monetary policy), and tough competition (comparative advantage of in-
1
dustry players or government printing industries) are some of the threats for project under con-
sideration.
Finally, financial projection of this study shows that the project requires investment and fixed
capital amounting birr 648.7 million which will be financed by the project owner & through bank
loan. Profit/loss statement of the study reveals that the project will make profit in all project pe-
riods with average net income of about birr 219.3 million per annum. The project will generate pos-
itive net cash-flow starting from the first year. Likewise, estimating discounted cash-flow which considers
time value of money is of paramount importance. Accordingly, the Net Present Value (NPV) which
aids whether to accept or reject the project is positive 718.8 million @16% and the net present
value ratio (NPVR) is greater than 1 (1.11) while the IRR (internal Rate of return) of the project
is 17. 44%. Therefore the project is acceptable and viable for implementation. Moreover, the
payback period of only 2 years apparently minimizes any risk in regaining/recouping the initial
investment.
2
1. Introduction
1.1 World printing history
The history of printing is associated with the inherent need of human beings to communicate bet-
ter to each other. By learning to write and communicate graphically, our ancestors overcame a
major limitation in spoken communication further enhancing direct contact between people.
However, there were important problems to be overcome before our civilization could make
maximum use of the graphic communication process. Challenges to find materials for writing
and printing needed to be solved and they had to be invented and developed. Devising ways and
means to reproduce many copies of a message were also essential. The ever growing need to
communicate efficiently for solving each other’s problems enabled our ancestors to learn better
`ways of communication and as they did, the graphic arts industry grew. Eventually, a variety of
techniques for reproducing many copies of graphic message was developed which is today
known as “Printing”.
In its earliest form, printing was done from hand-carved wooden blocks. The complete mes-
sage was cut in reverse in to the block. Then the block was inked and pressed against the
material to be printed. This is called relief printing. The Japanese used this technique as ear-
ly as 770 A.D and the Chinese are credited with producing the first printed book, the Di- amond
Sutra in 868 A.D.
A major limitation of wood block printing is that each new message requires carving a new block
of wood, and carving is a slow and tedious process. This limitation was overcome with the invi-
tation of movable type.
Movable type consists of individual letters of the alphabet that can be assembled to produce a
printed message, disassembled then assembled again to form a new message. Movable type cha-
racters made from hardened clay were used in China as early as 1041 A.D. By the middle of the
13th century, Koreans were casting type in bronze.
In 1439 Johann Gutenberg became the first European to print from movable type. It is not
known whether he invented the process on his own or if he was aware of the developments that
had occurred in the orient. Not only did Gutenberg print from movable type, but even more im-
portant, he developed a practical means of casting type.
3
Early printing was done on hand-operated wooden presses. The printing of 250 sheets of paper in
Gutenberg’s time was considered a full day’s work and by the Middle Century, 2000 sheets a
day could be printed. Today, high-speed presses can print many thousands of sheets with high
quality in a single hour.
Printing was introduced in England about 1476 by William Caxton who bought equipment from
the Netherlands to establish a press at Westminster. Among the books issued from Caxton’s
press were Chaucer’s the Canterbury Tales, Fables of Aesop and many other popular works,
Caxton even inserted various parts of the Bible into other book that he printed because English
translation of the Bible was prohibited by church and state. The New Testament wasn’t printed
in English until 1525, and it was as late as 1535 before a complete Bible was printed in England.
The predecessor of the modern Oxford University press was established in 1585. Since that date
the press has operated continuously, probably the longest period of any printing, establishment in
history.
The art of printing spread rapidly throughout Europe soon after Gutenberg began his printing ac-
tivities. By the end of the 15th century, printing was firmly established in England and from
there moved to the American colonies.
The first printing press in America was set up in the Massachusetts Bay Colony in 1639. Steven
Daye, the first American Printer, operated this press. His first book, the whole book of Psalms
was printed in1640. Typesetting, printing and binding of the 1700 copies of the 300-page book
took almost a full year to complete.
The most famous American printer was Benjamin Franklin. Franklin established his own printing
business in Philadelphia in 1728 and his most notable publications included the Pennsylvania
Gazettes, a leading colonial newspaper, and Poor Richard’s Almanacs, issued in 1732.
Today, the printing industry is among highly advanced and rapidly growing sector, and a multi-
billion business industry across the globe, which was corroborated on the study by German based
Frankfurt Business Club that shows the global trade of the printing industry amounted to USD
151 billion in 2014. This figure is much higher than the widely popular global film industry
business which registered USD 133 billion in the same year.
4
1.2 Ethiopian printing history
The printing industry, the 5th largest of the global manufacturing industries, is considered a ma-
jor communications tool serving several sectors of the economy, including national agencies, lo-
cal government, the private sector, financial institutions, publishers, distribution services and
manufacturing industries. Its customers range from major institutions to small businesses (Mani-
la, 2011). Since the researcher has done research in Ethiopia, it is more important to know about
the printing history in the country.
In ancient times, Ethiopians had been printing on erected stones, tombs, cave walls, stelaes and
other objects. As Ethiopia is endowed with its own alphabets, Ethiopian Scribes were writing
with quills and ink on “Brana” (a paper made of dried animal skin). This method was costly both
in terms of time and effort. So the number of copies for distribution was very limited. As a result,
quite a number of people were forced to live under the dark veil of illiteracy and ignorance with-
out enjoying the sweet taste of literature and the freedom to acquire knowledge and undertake
researches.
However, with the introduction of printing press to Ethiopia, a large volume of newspapers,
magazines, books and other related materials were reproduced. This in turn, brought the rapid
expansion of modern education and civilization among the people of Ethiopia. The first modern
printing press in Ethiopia is believed to have been established during the reign of Emperor Theo-
dros by the Religious Missionaries of Europe in 1863 and the name of the printing press was known
as “Atse Theodros Printing Service”. In due course, different printing presses were set up in
Massawa, Keren, and Harar by the religious missionaries (Berhanana selam, 2009).
The first government printing press in Addis Ababa was established in 1906 during the reign of
Emperor Menelik II around Arada. The Emperor established the printing press primarily to print
the newspaper called “Aemero” (intelligence). Secondly the printing press was geared for the
production of receipts, vouchers, registration books, cards, writing pads and other materials for
official use. The printing plant had three names: “Ye Ethiopia Matemia”, “Ye Mengist Matema”,
and Merha Tibeb”. The name “Merha Tibeb” was obtained from the name given to the first ma-
nually operated machine made in France (Berhanana selam, 2009).
“Aemero” was founded by an Armenian business man named A.E. Kavadian in 1902. It was
launched weekly in Amharic. The earliest issues were written by hand and had circulation of on-
ly 24 copies a week. But a few months later, a copy machine was obtained and the circulation
rose to 200 copies. The Emperor was very happy with the publication and promised to buy a new
printing machine from Europe. But “Aemero” stopped publication in 1903 and the machine did
not arrive until 1906. On due course of time, “Aemero resumed publication in the late 1914, but
5
again stopped in 1916 because its editor was pro-German and it became out of publication with the
orders of the Ethiopian government since Ethiopia was not in good terms with Germany
(Berhanana selam, 2009).
Emperor Minilik, who is the founder of modern Ethiopia, played a significant role in establishing
diplomatic relations with European states. This helped many foreigners to establish printing presses
in the capital city, Addis Ababa. The starting of Minilik II School, first in the country had its share
of increasing the literates among the people to enjoy the printed word. Haile Selassie I evinced
interest in the establishment of a printing press as well as the publication of newspapers and
educational materials.
The first commercial printing press was founded in Addis Ababa in 1913 by M. Desvages, a French
businessman. The press printed books and newspapers. The newspaper printed by this press was
named as “Yetor Wore” (War News) between the years 1914 and 1918. Moreover, a journal
entitled” “Goha Tsebah” (Dawn), edited by Herey Wolde Selassie was also printed in this press
in 1917. The educational and other developments of this pre-war period were accom- panied by a
significant expansion of printing presses, and printed literature in general (Berhanana selam, 2009).
By the eve of the Italian war there were thus seven printing presses in Addis Ababa: the Gov-
ernment press, which Emperor Menilek had founded in 1910; the press of "Le Courrier d'Ethi-
opie", which had been set up in 1913; the Emperor's "Berhanena Salam" (Light and Peace) press,
established in 1923; three presses dating from 1926, namely, the "Goha-Tsebah" or "Dawn"
printing press, the "Hermis" printing press, which printed "L'Ethiopie Commerciale", the "Louc"
printing press, founded by an Armenian, H. Bagdassarian; and the "Artistic Printing Press",
founded in 1934 by two other Armenians, E. and G. Dierrahian (Berhanana selam, 2009).
Bole Printing Enterprise was also established in1955 by an individual named Petros Aslania who
was an Ethiopian national by law and an Armenian by birth. He had started printing in his resi-
dential house which was located around Ras Mekonnen Dildiy with manpower not more than 4
employees. He had used a single hand driven machine and its capacity was limited only to print-
ing of different Envelopes and Cinema Posters (Berhanena Selam, 2009).
Until 1990’s running the print media in general was the responsibility and function of the gov-
ernment. The landmark event in the history of print media in Ethiopia began after the Ethiopian
Peoples’ Revolutionary Democratic Front (EPRDF) came to power in May 1991. EPRDF soon
declared the adoption of the 1948 Universal Declaration of Human Rights in its’ Charter, and
freedom of the press and speech. The Censor Department of the Ministry of Information was ab-
olished and hopes for democratization and freedom of expression emerged again. For the first
6
time in Ethiopia’s long history, the private sector became involved in the print media field with
confidence. Though the printing industry has a short history in Ethiopia, it has played quite a
significant role in shaping the modern educational, social, economic, cultural, and political situa-
tions of the country. It has contributed much to the propagation of education, religion, national
economy and governmental orders and regulations.
Currently there are over 600 private and public enterprises in the sector they are not fully engaged
in printing and publication works. Most of them are doing small businesses like making posters,
photo printing, laminating, photocopying as well as silk printing or printing images on t-shirts and
it’s believed only few of them are equipped with advanced technology, while the majorities are using
old machinery. Among the chronic problems affecting the printing industry in the country, the
following are the salient ones:-
• Lack of trained manpower,

• Absence of standardization in the sector
• Double taxation
• Lack of adequate supply of input materials, both in quality and quantity,
• Lack of maintenance service for printing machinery & equipment, and
• Under capacity utilization, inefficiency & inability to compete against global industry play-
ers.
• Low government intervention as well as lack of coordination among pertinent stakeholders.
On the other hand, the market for the printing industry in the country is gorgeous. A simple dem-
onstration is that disregarding the vast commercial printing demand, the demand for text books alone
is very high. For example, last year the Ministry of Education secured fund from the World Bank
amounting USD 142,021,322.00 for printing of text books. Unfortunately, local printing industries
couldn’t benefit from such lucrative business opportunity due to lack of competence and inability to
fulfill WB requirements to participate in the tender. Most of the budget went to printing companies
from UK, UAE, China and Uganda.
Now days the government will provide support to the sector as the printing sector's growth re-
flects the country's continual development move. Enhancing local printing and publishing enter-
prises is crucial to curtail foreign currency outflow to oversee printing and publication service
abroad.
7
2. Objective
The printing industry is one of the largest and most geographically diverse manufacturing indus-
tries in Ethiopia and Ethiopia needs a print technology transformation. Therefore we conduct this
feasibility study in order to fulfill the following objectives
2.1 General objective

To study the feasibility of modern Publishing & Printing press business.
2.2 Specific objective

To demonstrate viability of publishing and printing plant.
To establish and maintain competent printing press in the existing market.
3. Market study
3.1 General analysis of the market for entire industry
The importance of the printing and graphic arts sector is often under-estimated. Due to stability
& consecutive growth in economy in last several consecutive years, there has been a positive
trend in all major Business sectors of the country. Print media is one of the most effective and
economical Mediums of communication and promotion and is used by all major businesses.
Since the invention of printing press in 1436 by Gutenberg of Germany, it has contributed a lot
towards evolution of humanity. Its significance in day to day business promotion and marketing
cannot be ignored.
In today’s competitive environment, businesses require appropriate marketing & Promotional tools
to build product recognition in the market. For some printed products, such as packaging, there is
no substitute. For others such as magazines, newspapers, catalogs and books electronic equivalents
exist. The internet, mobile communication, and tablet publishing have already had a profound
impact on the printing industry. Stating that print is dead overlooks many of the key advantages
of printed communication.
• Many types of print media (newspapers and magazines) still have a loyal readership.
They remain a valuable part of the marketing mix of advertisers.
• Print allows for easy distribution to a particular geographical region.
• Many printed publications have a reputation that is as yet unrivaled by on-line or elec-
tronic media.
• Print media are often more engaging than their electronic counterparts.
8
Most people assume e-communication is more environmentally friendly than print. While this
may be true in some cases, it is not always so.
• The argument overlooks the environmental impact of producing reading devices, the sto-
rage and distribution of data and the electricity needed to power reading devices.
• People incorrectly assume their home printer has the same environmental impact as in-
dustrial printing presses. In reality, a commercial printing press can produce 100 A4 pag-
es using the same amount of energy that a laser printer at home needs to print one single
page.
• The production of paper is becoming more energy efficient. Since 1990 the use of water
has been reduced by over 60%. Energy consumption has dropped 20%.
• Paper is increasingly recycled. In 2009 around 65% of all paper was recycled in Europe.
The US paper industry hopes to recover 55 percent by 2012.
• Once a publication is produced long-term storage and re-reading require no additional
energy. (https://www.prepressure.com/printing)
Generally from brochures to Packaging all are means of effective sales promotion tools and re-
quire services of Printing press .Major share of customers for printing press are educational insti-
tutions, trade and service sectors, government offices, entertaining industries, and others. Educa-
tion sector requires extensive services of printing press, in the form of books and others. The
Government of Ethiopia has realized the importance of increasing the literacy rate to jump start
economic growth and alleviate poverty in the country.
Due to economic stability in the last consecutive years, a handsome amount of investment has taken
place in the country’s business sectors .Hence, the publishing and printing services are among the
arena needing investment to satisfy broad demand-supply gap.
3.2 Competition
Printing presses are one of the infrastructures for textual content development, i.e, Newspapers,
magazines, brochures, posters, etc. Assessment of Printing presses shows that there are about
300 printing presses in Addis Ababa. Of these, the large ones (Berhanena Selam, Commercial,
Artistic, and Bole) are government Printing presses. The largest private printing Houses are Ye-
katit Paper Converting, Mega, United, National, and Central Printing Presses. The rest are me-
dium to small printing Houses with some of this printing press being specialized in the printing
of exercise books, receipts, brochures etc.
9
With regard to the regions, there are small printing presses in Harar, Mekelle, Gondar, Awassa,
Jima and Bahir Dar towns. The small size and poor quality of these regional printing Houses
have contributed to the demand of the big printing presses in Addis Ababa. On the other hand,
the Wonji paper mill which was established in 1970 is satisfying about 20% of the demand for
paper of printing presses in the country, while the rest of the demand is covered by Imports.
Therefore, it is imperative for investing on modern printing and publishing industry with appro-
priate technology & machinery, as well as adequate organization and management system to be
partakers of this highly attractive business opportunity
3.3 Demand analysis
Demand for Printing services in the Ethiopia is mainly acquainted with various social and busi-
ness sectors like education, trade and service, communication (print media), and others. Though
the country has started publishing and printing services a long year ago, the expansion of the in-
dustries to meet a growing demand of the service is still slighter.
The demand of printing and publishing services in Ethiopia has a great prospective for partakers
or companies involved in rendering the services. Ethiopia is among countries having large popu-
lation in Africa. This entails higher or growing opportunity for the printing services suppliers
through printing of books, magazines, newspapers, and other related services.
In today’s world printing services are highly imperative for day-to-day life of mankind. Printing
of new publications or the new books printed with new titles as summarized by the United Na-
tions Educational, Scientific and Cultural Organization (UNESCO) reveals this fact. UNESCO
monitors both number and type of book published per year as an important index of standard of
living and education, and of a country’s self-awareness.
Number of published new titled or

No Country Year re edition books in ascending order
1 China 2013 440,000
2 United States 2013 304,912
3 United Kingdom 2011 184,000
4 Russia 2013 101,981
5 India 2013 90,000
6 Japan 2013 82,589
7 Germany 2011 82,048
8 Iran 2014 72,871
9 Italy 2013 61,966
10 South Korea 2014 47,589
10
11 Spain 2011 44,000
12 Turkey 2014 50,752
13 France 2011 41,902
14 Australia 2014 28,234
15 Taiwan 2010 28,084
16 Argentina 2014 28,010
17 Vietnam 2009 24,589
18 Indonesia 2009 24,000+
19 Poland 2015 21,130
20 Brazil 2012 20,792
Source: Wikipedia ® Project
Besides, it’s highly imperative to see the demand of printing services for major sectors below
Education Sector
Education sector is the major segment to which printing services mandatorily supplies services in
bulk number. For example, Commercial Printing Press is the primarily book printers with a bulk
of sales revenue from printing books including text books.
The printing service demand of this sector is directly related to students enrollment ration in the
country. This can be seen from the following tables stating the enrollment so far and forecasted
enrollment of students.
Table 1: Student enrollment of Ethiopia (2004-2008 E C).
Indicators 2004 2005 2006 2007 2008

pre-primary education 382,741 1,622,762 2,012,473 2,498,360 2,958,803
Kindergarten - 397,861 478,534 486,393 522,106
"O" Class - 1,031,151 1,242,108 1,578,494 1,916,823
Child to Child - 193,750 291,831 433,473 519,874
Primary Education 16,718,111 16,989,784 17,388,295 18,139,200 18,691,217
1st Cycle (1-4) 11,254,696 11,425,055 11,913,430 12,539,260 12,781,278
2nd Cycle (5-8) 5,463,415 5,564,729 5,474,865 5,599,940 5,909,940
Secondary Education 1,750,134 1,766,011 1,899,731 1,998,355 2,108,115
1st Cycle (9-10) 1,461,918 1,442,226 1,541,238 1,609,315 1,682,341
2nd Cycle (11-12) 288,216 323,785 358,493 389, 040 425,774
TEACHER EDUCATION 164,501 173,517 173,628 170,160 169,382

TECHNICAL AND VOCA-
TIONAL EDUCATION AND
TRAINING (TVET) 371,347 320,225 237,877 238,049 352,144
HIGHER EDUCATION 464,703 519,770 585,152 627,453 761,595
Undergraduate Degree 444,553 494,110 553,848 593,571 729,028
Postgraduate Degree 20,150 25,660 31,304 33,882 32,567
Source: Ethiopian ministry of education, 2007 E C education statistics annual report
11
The above table reveals that there is high enrollment in Ethiopia with increasing population
enrollment entailing high education resource demand mainly textbook. In the year 2008
79,563,523 text books distribute for only 18,927,380 grade 1-8 students with the ratio of 4.2. There
is outlay of money for printing textbook by the government. The ministry of education spent about
birr 120 billion budget* for education out of which the expenditure for printing and publishing
holds remarkable amount. Ethiopian ministry of education, education statistics annual report,
2007 EC
Table 2: Forecasted students enrollment (2009-2012)
Enrollment
Rate (%) 2009 2010 2011 2012 2013
pre-primary educa-
tion 15.5 3,417,417 3,947,117 4,558,920 5,265,553 6,081,714
Primary Education
12.5 21,027,619 23,656,071 26,613,080 29,939,715 33,682,179
Secondary Educa-
tion 20.4 2,538,170 3,055,957 3,679,372 4,429,964 5,333,677
TEACHER EDU-
CATION 8.2 183,271 198,299 214,560 232,154 251,191
TECHNICAL AND
VOCATIONAL
EDUCATION AND
TRAINING (TVET) 18.7 440,789 523,217 621,059 737,197 875,053
HIGHER EDUCA-
TION 20.2 915,437 1,100,355 1,322,627 1,589,798 1,910,937
Total 28,522,703 32,481,016 37,009,618 42,194,381 48,134,751
Source: Ethiopian ministry of education, education statistics annual reports
Number of enrollment determines printing of textbooks which hence correlated with printing
service demand. According to the statistics report of Ministry of Education, the planed ratio of
text books to number of students is 1:1. Accordingly, the number of text books must comply with
the number of enrollments. In addition to the text book there is need of additional books, journals,
reference books, proceedings, annual reports, research results, fiction books etc. Therefore in
order to fulfill the demand most of the organizations go to abroad because of the limited capacity
and quality of existing printing companies.
Forecasted demand for printing Books can be seen in the following table:
Table 3: Estimated Demand of Printed materials (‘000,000 birr)
YEAR 2009 2010 2011 2012 2013

ESTIMATED
4,877 5,554 6,328 7,215 8,231
DEMAND
12
3.4 Supply analysis
A. Imported books
The limited number of printing company and there minimum capacity many of books imported
from abroad according to Ethiopian printing and publishing association the local printing com-
panies fulfill 20- 25 percent of the demand which indicate that most of the companies have li-
mited capacity .
According to Ethiopian customs and revenue authority imported data the number of imported
books from abroad will increase time to time
Table 4: Imported books from 2006-2008
2014/2006 EC 2015/ 2007 EC 2016/ 2008 EC Total

Number Total price of Number Total price Number Total price of Number of Total price of the
of book the book in of book of the book of book the book in birr book im- book in birr
Country imported birr imported in birr imported ported
United
Kingdom 7,315,621 91,354,212.21 3,151,761 44,878,845.22 370,204 13,107,032.45 10,837,586 149,340,089.88
India 3,497,669 83,366,660.34 8,877,619 109,682,080.9 29,023,066 460,666,662.99
41,398,354 653,715,404.29
China 1,916,283 5,108,204.88 5,326,037 9,190,609.67 4,219,711 11,998,138.46
11,462,031 26,296,953.01
Korea 572,715 20,853,899.23 0 0 287,462 10,205,181.35
860,177 31,059,080.58
United 478,647 9,557,479.61 155,095 3,532,911.35 31,600 459,511.77 665,342 13,549,902.73
Arab
Emirate
Egypt 449,252 12,642,867.77 299,188 8,572,447.37 801,408 21,671,881.45
1,549,848 42,887,196.59
United 144,654 27,554,254.13 214,656 22,013,313.60 458,979 36,638,214.64
state
818,289 86,205,782.37
Kenya 127,896 1,215,007.18 33,781 944,600.37 3,166 121,462.26
164,843 2,281,069.81
Germany 23,023 2,590,156.29 854,308 1,882,059.74 61,336 730,358.63
938,667 5,202,574.66
South 20,447 453,642.64 1,774 131,999.90 3,355 995,523.94
Africa
25,576 1,581,166.48
other 477,305 25,302,667.38 792,659 32,128,293.95
514590 24921443.03 1,784,554 82,352,404.36
Total 15,025,526 279,999,051.66
19708893 232957162.1 35776893 581515411 70,505,267 1,094,471,624.76
Source: Ethiopian revenue and customs authority web page
13
B. Locally printed books
Most book printing presses other than BSPE that have dominated the printing and publishing
services are Artistic, Bole, and Commercial from government owned industries; and Yekatit Pa-
per Converting and Mega from private ones. The status of books published in thses industries from
2006 – 2008 fiscal years can be seen hereunder:
Table 5: Annual production report from Major book printers
Annual Book production
No Company 2006 2007 2008 Total
1 Brehanena Selam
printing press 32,511,000 26,991,365 98,818,691 158,321,056
2 Commercial print-
ing press
876,582 1,035,782 2,678,934 4,591,298
3 Artistic printing
press 7,549,823 12,004,332 8,004,004 27,558,159
4 Mega printing
press 13,458,920 23,976,000 34,139,850 71,574,770
5 Bole printing press
7,007,450 4,684,350 9,263,870 20,955,670
Total 61,403,775 68,691,829 152,905,349 283,000,953
Source: Annual report of each company
Table 6: Supply forecast for printing (Import, public and private) in birr
Total Supply (Import, % incre-
Year Private and Public) ment
2009 1,475,937,736.00 8.49%
2010 1,601,244,849.79 8.49%
2011 1,737,190,537.53 8.49%
2012 1,884,678,014.17 8.49%
2013 2,044,687,177.57 8.49%
2014 2,218,281,118.95 8.49%
2015 2,406,613,185.95 8.49%
2016 2,610,934,645.43 8.49%
2017 2,832,602,996.83 8.49%
2018 3,073,090,991.26 8.49%
Source: Feasibility Study on Large and Medium Scale Industries, Addis Ababa
3.5 Demand –supply gap analysis
From the above mentioned data commercially book printed matters, the teaching and learning
materials for both primary, secondary, and the adult literacy program are inadequately supplied.
Customers bitterly complain that their printing orders are quite behind schedule.
14
Table 7: Estimated Demand-supply gap of Printed materials in birr
Forecasted Forecasted Unsatisfied
Year Demand Supply Demand
2009 4,877,382,213.00 1,475,937,736.00 3,401,444,477.00
2010 5,554,253,736.00 1,601,244,849.79 3,953,008,886.21
2011 6,328,644,678.00 1,737,190,537.53 4,591,454,140.47
2012 7,215,239,151.00 1,884,678,014.17 5,330,561,136.83
2013 8,231,042,421.00 2,044,687,177.57 6,186,355,243.43
Source: Feasibility Study on Large and Medium Scale Industries, Addis Ababa
Graph 1: Estimated Demand- Supply Gap
10,000,000,000.00
8,000,000,000.00
6,000,000,000.00
Forecasted Demand
4,000,000,000.00
Forecasted Supply
2,000,000,000.00 Unsatisfied Demand
0.00
2009 2010 2011 2012 2013
The demand-supply gap prevailing in the industry gets wider and wider creating gorgeous oppor-
tunity for potential investors. This vividly leaves a wide room for additional printing capacity
and publication services to alleviate shortage of books (text books) printings, the existing indus-
try should get improved and other industries should participate to address the prevailing problems
and fulfill demands of the outlying cities other than Addis Ababa.
The establishment of this plant, therefore, certainly contributes a great role in satisfying the exist-
ing gap with respect to printing services through providing competitive, efficient and quality ser-
vices to the market.
3.6 Price strategy
Pricing strategy should depend on rational market price by adding profit margin upon cost of
production. Hence, it should be set in a manner that should comply appropriately and profitably
for the high-end, products offered. The revenue structure has to match with cost structure, so that
revenue we earn will be better than the expense we incur. Hence, cost plus reasonable profit
strategy will be employed.
15
3.7 Marketing strategy
The project under consideration to own marketing advantage utilizes various promotional mixes
that include wide range of tools till the simplest mixes. Hence, pamphlets, brochures, flyers, and
newspaper advertising is employed as main way to reach clients. Commercial advertisements
like TV ads would also be utilized. Moreover, credit facilities, transport facilities, discounting
methodology and other customer retention strategies should be employed for targeted marketing
objectives. Greetings and holiday wishes are also other methodologies or tools of promoting the
project. Eye-catching name signs around gates of cities and around the industry will be installed
well. Other significant promotion tools will be utilized depending on status of the industry.
16
4. Technical Feasibility Study
4.1 Location
Selecting a location involves large commitments of capital as a result it must be done with ut- most
care. The problem of plant location is defined as the determination of that location which, in
consideration of all factors affecting delivered-to-customers cost of the products to be manu-
factured, will after the enterprise the greatest advantage to be obtained by virtue of its location. The
conditions that lead to plant location problem include expansion, decentralization and economic
factors such as a shift of the market or an inadequate labor supply. In order to establish the modern
printing and publishing company in Ethiopia we chose two places Oromia (around Addis Ababa)
and Addis Ababa. Based on the following criteria we will try to select the most appropriate area
for the company.
4.1.1 Markets: The market growth potential and the location of competitors are important
factors that could influence the location. As we have seen in the introduction there are
about 600 printing companies in Ethiopia and almost more than 300 printing companies
located in Addis Ababa and oromia (around Addis Ababa) among this only about 8-10
companies are large capacity the rest are small and medium scale. Due to the limited
number of a large and modern printing plant, the printing demand for all kinds of books
become increasing very rapidly all over the country therefore in order to address the
customers need and as a center both Addis Ababa and oromia (around Addis Ababa)
preferable places.
4.1.2 Raw materials and supplies: The main materials needed for printing are paper and ink;
and these products are mostly imported. There are two paper manufacturing companies
in Ethiopia around Wonji they satisfy 20-25 % the rest 70-75% satisfies from abroad. Most
of the suppliers paced around Addis Ababa so in order to be near to these potential suppliers Addis
Ababa will be preferable place.
4.1.3 Manpower supply: The availability of skilled manpower, the prevailing wage pattern,
living costs and the industrial relations situation influence the location. The printing
technology shows a remarkable progress from time to time. From counting A BC it has
now shifted to 3 D printing. The modernization of industry demand skilled man power but
in our country most of printing machine operators gained their skill from experience. There
are two training centers Artistic and Berhanena Selam with limited training topics
Graphics design, Cost estimation and specific machine operation. The biggest limited
skilled manpower on machinery maintenance holds by specific experienced machine op-
17
erators and machine supplier employees. Most of these operators and machine supplier
located in Addis Ababa due to this reason selecting Addis Ababa will be fair.
4.1.4 Transportation facilities: Adequate transportation facilities are essential for the eco-
nomic operation of production system. For companies that produce or buy heavy bulky
and low value per ton commodities, water transportation could be an important factor in
location plants. In this case both Addis Ababa and oromia (around Addis Ababa) has good
transportation facility.
4.1.5 Infrastructure: This factor refers to the availability and reliability of power, water, fuel
and communication facilities in addition to transportation facilities. In the case infra-
structure also both Addis Ababa and oromia (around Addis Ababa) has good transporta-
tion facility.
4.1.6 Topography: The topography, soil structure and drainage must be suitable. AS we have
get flat and proper land both Addis Ababa and oromia (around Addis Ababa) can be sut-
able.
4.1.7 Land costs: According to Ethiopian factor cost 2015 the land cost around oromia region
and Addis Ababa is a bit different there for investing in Addis Ababa will be more pre-
ferable than oromia region. The challenge here will be getting the better place for build-
ing industry.
Therefore , by the above mentioned reasons Addis Ababa will be the 1st preferable
place because of nearness to the raw material and the availability of skilled man power
and oromia (Around Addis Ababa) region will be the 2nd preferable place.
4.2 Civil work design and construction
For the establishment of this project, the company needs to get total area of 5000 m2 with a con-
sideration of future expansion. This area should take from the Government by leas and the build-
ing has vast room for production & warehouse (store), while the compound can accommodate
various facilities for any services that may be required during the operation of the plant, infra-
structures and others. The buildup area of the plant will be 1375 m2 with the height of 5m and
the total cost of which can be summarized here-below:
18
Table 8: summary of construction area and cost
Total Cost (in

No Description Area (in m2) birr)
Production Room 5,700,000
1 Building 300
6,375,000
2 Stores Building 375
Offices and Services 3,570,000
3 Building 210
8,330,000
4 Infrastructure 490
2,397,500
5 Contingency
26,372,500
TOTAL 1,375
Source: Specification & Bill of Quantity for Construction. Note that, the detail component of
civil work can be referred under Annex 11.6.
4.3 Theoretical capacity of machineries and capacity utilization
4.3.1 Assumptions
The following assumptions were taken in to consideration while forecasting the theoretical ca-
pacity of machines and capacity utilization also for financial status (later) of the project under
consideration:
Operating and Production Assumptions:

♠ Effective operational hours per day 6 or 1 shift;
♠ Days operational per month 25;
♠ Days operational per year 302;
♠ Volume of production at full capacity (@market price) on 1st year=60%;
♠ Capacity growth rate (10 % per year); and
♠ Maximum attainable capacity utilization (@market price) =82%.
♠ Market share from the supply demand analyses gap= 15% (producing 31,000,000
books annually)
♠ Operation startup date will be 2010 , January E.C
Product Mix:
♠ Books 95 %;
♠ Magazines and Others 5%.
19
4.3.2 Machine capacity and utilization calculation
As we have mentioned on the product mix assumption the basic product will be different books.
In order to produce this book the basic machineries those are directly related to the capacity of
the plant will be the printing machines the rest are auxiliary in order to have effective and effi-
cient plant. Based on this we calculate the printing machine capacity hereunder:
For printing machine by assuming most of the books are B serious especially B5 size (17.6 cm
*25.0 cm) with the average pages of 192 or 0.27 kg we select:
1. Four units color web offset printing machines.

Max. Printing area 630 x 890 mm
Max. Printing speed 35,000 sph
𝑠 ℎ𝑖 𝑖𝑐 𝑠
𝑚𝑚𝑚𝑚𝑚𝑚ℎ𝑖𝑖 𝑖 𝑚𝑚𝑚𝑚𝑐𝑐𝑚𝑚𝑚𝑚𝑖𝑖𝑐 𝑐 = 35,000 ∗ 64 𝑐 𝑚𝑚𝑝𝑝𝑖𝑖𝑠
ℎ𝑟𝑟
𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑𝒑
𝑚𝑚𝑚𝑚𝑚𝑚ℎ𝑖𝑖 𝑖 𝑚𝑚𝑚𝑚𝑐𝑐𝑚𝑚𝑚𝑚𝑖𝑖𝑐 𝑐 = 𝟐𝟐, 𝟐𝟐𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐
𝒉𝒉𝒉𝒉
The number of books per hour will be:

𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠 2,240,000 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠
= = 𝟏𝟏𝟏��, 𝟔𝟔𝟔𝟔𝟔𝟔
ℎ𝑟𝑟 192 ℎ𝑟𝑟
To get annual capacity

6ℎ𝑟𝑟 𝑑𝑑𝑚𝑚𝑐𝑐𝑠 ℎ𝑟𝑟
𝐴𝐴𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑖 𝑒𝑒𝑒𝑒𝑖 𝑚𝑚𝑐𝑐𝑖 𝑒𝑒𝑖 𝑤𝑤𝑏𝑏𝑟 𝑏𝑏𝑖 𝑖 𝑝𝑝 ℎ𝑟𝑟 = ∗ 302 = 1812
𝑑𝑑𝑚𝑚𝑐𝑐 𝑐 𝑖 𝑚𝑚𝑟𝑟 𝑐 𝑖 𝑚𝑚𝑟𝑟
Annually produced books will be

11,667𝐵𝐵𝑏𝑏 𝑏 𝑏𝑠 1812ℎ𝑟𝑟
𝐴𝐴𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏 𝑐 𝑟 𝑏 𝑑𝑑𝐴𝐴𝑚𝑚𝑐𝑐 = ∗ = 𝟐𝟐𝟏��, 𝟏𝟏𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒑��/𝒚𝒚𝒑𝒑𝒑𝒑𝒉𝒉
ℎ𝑟𝑟 𝑐 𝑖 𝑚𝑚𝑟𝑟
2. Single color sheet feed offset printing machine (perfecting)

Max. printing speed 15,000 sph
20
Max. Sheet size 720 x 1,040 mm
ℎ𝑟𝑟
21
𝑚𝑚𝑚𝑚𝑚𝑚ℎ𝑖𝑖 𝑖 𝑚𝑚𝑚𝑚𝑐𝑐𝑚𝑚𝑚𝑚𝑖𝑖𝑐 𝑐 = 𝟐𝟐𝟒𝟒𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐
𝒉𝒉𝒉𝒉

𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠 960,000 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠
= = 𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐


2500 𝐵𝐵𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠 1812ℎ𝑟𝑟
𝐴𝐴𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏 𝑐 𝑟 𝑏 𝑑𝑑𝐴𝐴𝑚𝑚𝑐𝑐 = ∗ = 𝟐𝟐, 𝟐𝟐𝟓𝟓𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒑��/𝒚𝒚𝒑𝒑𝒑𝒑𝒉𝒉
3. Speed Master B2 serious

ℎ𝑟𝑟
𝑚𝑚𝑚𝑚𝑚𝑚ℎ𝑖𝑖 𝑖 𝑚𝑚𝑚𝑚𝑐𝑐𝑚𝑚𝑚𝑚𝑖𝑖𝑐 𝑐 = 𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐
𝒉𝒉𝒉𝒉

𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠 40,000 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠
= = 𝟐𝟐𝟐𝟐𝟒𝟒

22
208 𝐵𝐵𝑏𝑏𝑏𝑏𝑏𝑏𝑠𝑠 1812ℎ𝑟𝑟
𝐴𝐴𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏 𝑐 𝑟 𝑏 𝑑𝑑𝐴𝐴𝑚𝑚𝑐𝑐 = ∗ = 𝟓𝟓𝟔𝟔𝟔��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒃𝒑��/𝒚𝒚𝒑𝒑𝒑𝒑𝒉𝒉
Therefore in order to produce the assumed market share books 31,000,000 books/ year 1 web
offset , 2 color sheet feed off set and 2 speed master printing machine will be enough.
23
4.4 List and cost breakdown of machinery & equipment
Based on the calculated printing machine capacity the rest of machineries are presented below.
All the machineries and equipments are assumed to be purchased from various sources under du-
ty free tax (10%), VAT (15%) and withholding tax. (As per the pro-forma collected from savvy
P.L.C, vanguard Technology P.L.C, Orbis Trading , and Technical Center Share Company & other
suppliers).
Table 9: List of machinery with their respective cost
No Description psc Unit price Total price

1 Pre-press system
Graphic editing computers
2 60,000 120,000
CTP system for Max. plate size of 1080 x 850 mm with
plate processor (thermal) UV type 1 4,500,000 4,500,000
Sub-total
3 4,560,000 4,620,000
2 Printing
Four color web offsets press
Max. Printing area 630 x 890 mm
Max. printing speed 35,000 sph 1 40,000,000 40,000,000
Single color sheet feed offset press (perfecting)
Max. Printing speed 15,000 sph
Max. sheet size 720 x 1,040 mm
2 8,000,000 16,000,000
Four color sheet fed offset press (cover printing)
Max. Sheet size 720 x 1040 mm
Max. printing speed 15,000 sph
1 13,500,000 13,500,000
Speed master Small size numbering
2 1,000,000 2,000,000
Sub-total
6 50,350,000 71,500,000
3 Finishing/post press/
Inline Gathering, perfect binding, 3knife trimmer and
compensation stalker
1 19,000,000 19,000,000
Folding machine
1 2,750,000 2,750,000
Single knife cutter
1 6,000,000 6,000,000
Punching Machine
1 700,000 700,000
Gungstiching machine
1 6,500,000 6,500,000
Sub-total
5 34,950,000 34,950,000
Total 111,070,000
4 Contingency (5%)
5,553,500
Grand Total
116,623,500
24
Table 10: List of equipments with their respective cost
No Description psc Unit price Total price
Compressor 11 bar
1 100- 150 lit 1 75,000 75,000
2 Forklift 5.5 tone 1 3,500,000 3,500,000
Generator 315 KVA
with fuel tank and
3 power factor 1 2,500,000 2,500,000
4 Small pallet truck 1 1,000,000 1,000,000
Total 7,050,000
Selection of the machineries and equipments stated above considers the landed cost prices de-
pending on production capacity and strength of machineries. It also includes training and instal-
lation and commissioning costs. When looking the status of existing machineries in the local
market, majority of them are outdated and long served ones. Hence, we recommend acquiring
new/original machineries with high production capacity, best quality, and speed. Moreover, hav-
ing these machineries would aid to own better market advantage.
4.5 Availability of utilities and infrastructure
The availability infrastructure in Addis Ababa is more or less in a good position. The very big
problem is the luck of water and electricity, since this problem is a country wise problem we can
provide other solution using water tanker for now but for the future the company will facilitate
ground water sources. For the electricity we can use 315 KVA power generators in order to mi-
nimize the bottle neck due to power.
4.6 Materials for use/input (availability & cost)
The principal raw materials used by the graphic arts industry are inks and substrates (manly Pa-
per). Paper is the biggest individual manufacturing input, often amounting to 25 percent of reve-
nues. Printing papers are often coated, and are bought in sheets or rolls from distributors. Print-
ing enterprises generally don’t keep large inventories of paper as requirements change from job
to job. Instead, they rely on distributors to provide the many varieties and grades. Inks, films, plates,
cleaning solvents, processing chemicals (developers, fixers. wash baths, reducers, and in-
tensifiers), plate processing chemicals, fountain solutions, cleaning solvents, and rags are other
major raw material. Respective cost of each raw material will be attached on.
25
Since paper is taking 80% total input of printing plant we calculate the annual need of paper as
follows:
31 ,00 ,000 𝑏 𝑏 𝑏 𝑏 𝑠
∗ 192 𝑐 𝑚𝑚𝑝𝑝𝑖𝑖𝑠
𝑐 𝑖 𝑚𝑚 𝑟
𝐴𝐴𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑖 𝑖 𝑖 𝑑𝑑 𝑏𝑏𝑒𝑒 𝑐 𝑚𝑚𝑐𝑐𝑖 𝑟 =
32
𝐴𝐴𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑖 𝑖 𝑖 𝑑𝑑 𝑏𝑏𝑒𝑒 𝑐 𝑚𝑚𝑐𝑐𝑖 𝑟 = 186,000,000 𝑐 𝑠 𝑚𝑚 𝑏𝑏𝑒𝑒 𝑐 𝑚𝑚𝑐𝑐𝑖 𝑟 = 𝟓𝟓𝟔𝟔𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝑟 𝑖 𝑖 𝑚𝑚
For producing different books we need 3 types of paper according to their quality and weight per
square centimeter (GSM)
60 𝑝𝑝𝑚𝑚 𝑐 𝑚𝑚𝑐𝑐𝑖 𝑟 = 372,000 ∗ 20% = 74,400 𝑟 𝑖 𝑖 𝑚𝑚 = 1562.4 𝑇𝑇𝑏𝑏𝑖𝑖 𝑖 𝑟 𝑖 𝑖𝐴
Table 11: materials requirement & their respective cost
S/N ITEMS COST

UOM Qty IMPORT TOTAL
UNIT
PRICE
1 60 GRAM REEL PAPER TONE 1562.4 2,6320 41,122,368.00
2 70 GRAM REEL PAPER " 911.4 2,6000 23,696,400.00
3 80 GRAM REEL PAPER " 7291.2 2,5840 188,404,608.00
4 CTP PLATE PCS 10,000 120.00 1,200,000.00
5 DEVELOPER LTRS 10,000 95.00 4,750,000.00
6 GUM KG 50,000 195.00 390,000.00
7 INK TON 2,000 104,000.00 12,480,000.00
8 HOT MELT GLUE TON 120 126,750.00 13,942,500.00
9 FOUNTAIN SOLUTION LTRS 110 130.00 3,900,000.00
10 EVERY DAY PLATE LTRS 30,000 470.00 4,700,000.00
CLEANER
11 250G COVER SHEET TON 10,000 4,320.00 43,200,000
12 OTHER 5% 20,017,125.00
Total
354,675,170
NB. There are two local paper manufacturers with 20% capacity of the total demand if we get the
chance to bay the papers we can minimize the paper cost 5-7%.
4.7 Production process
4.7.1 Overview
Printing Industry generates a wide range of products which require in every step of our everyday
life. Starting from Newspapers, Magazines, Books, and Post Cards to Memo Pads and Business
Order Forms each are the products of Printing Industry. Other than the direct contributions, there
24
are many indirect influences of Printing Industry upon the economy. This is because all the activ-
ities like Binding, Embossing which generate considerable amount of income and employment
are related closely with the Printing Industry. Packaging industry and Advertising Industry in many
ways depend on the Printing Industry. In the Printing Industry, the main Printing Tech- niques that
are used are:
♣ Lithography-This technique emphasizes on economical use of color.

♣ Flexography- This technique produces vibrant colors and is used for printing news-
papers and books.
♣ Gravure-This technique is famous for Print Quality and Print Formats and is mainly
used for product printing to be used in packaging industry.
♣ Letterpress-This technique is used when printing is done on raised surfaces.
♣ Screen Printing-This technique is mainly used to Print designs on fabrics.
Firms in the printing industry produce a wide array of printed products as well as materials
used in the printing process. Some of the products produced within the industry include:
1) Publication printing: books, pamphlets, newspaper, periodicals, magazines, journals;

2) Commercial printing: business and office forms, brochures, posters, envelopes, pro-
motions/advertising materials, calendars, calling cards, greeting cards;
3) Security printing: documentary stamps, postal stamps, bank forms and passbooks, le-
gal tender, examination booklets;
4) Office supply printing: continuous forms for computer printers, invoices, receipts,
and other business forms;
5) Special printing: packaging: folding cartons, boxes, containers;
6) Software-related services: pre-printing services, such as typesetting, color separa-
tions, electronic stripping, image manipulations, and graphic illustrations.
7) Other services: plate making services, book repairing and book binding.
The printing processes are distinguished by the method of image transfer and by the general type
of image carrier employed. Depending upon the process, the printed image is transferred to the
substrate either directly or indirectly. In direct printing the image is transferred directly from the
image carrier to the substrate. In indirect, or offset, printing, the image is first transferred from
the image carrier to the blanket cylinder and then to the substrate (Kirk-Othmer, 1982).
25
4.7.2 Process Flow
Each printing process can be divided into three major steps(Flows):
A. Prepress:
Mostly this process starts with the Design/Creative Stage. In this Stage the designer prepares the
design of the product taking into account the overall look and feel of the paper. Text to be
printed is typed and graphics to be shown are created. Designing of graphics is of two types,
halftone and line art. Halftone is the reproduction of continuous-tone artwork (such as a photo-
graph) through the application of a screen that converts the image into dots of various sizes. Line
art is the art that is made up of continuous lines such as pen & ink drawings or typefaces. There
is no tonal difference from one area to another. After designing the designer sets page layout and
sent the design to the next pre-press department.
In this department the operation encompass a series of steps during which the idea for a printed
image is converted into an image carrier such as a plate, cylinder, or screen.
Here we can use two different technologies to transfer the image from image to plate
I. Old plate making technology
1) The artwork is transformed to negative film either by imaging a digital file through
an image setter, or by shooting reflective artwork with a copy camera.
2) The pages are stripped together into a flat that reflects how the pages will be printed
on the press sheet.
3) The flat is burned onto a metal plate.
4) After the flat is burned onto the plate, the plate washed in the developing chemical.
This developed plate is wrapped around the press cylinder.
Advantage
If we take the sample from the customer in hard copy
It requires less investment
Disadvantage
It is time consuming process (taking the photo of each page of the hard copy and time for
draying the film)
Need more labor
High rework(waste)
Always the sample will provide with hard copy
The dark room is Hazardous for the operators since we are using rays
26
II. CTP (Computer To plate)
(1) Take the sample from the customer (hard copy or soft copy) and load on the com-
puter
(2) Make an adjustment based on the customer requirement on the computer (Graphic
design )
(3) Print the sample on plate
Advantage
Less time consuming
Less labor (Graphic designer and CTP machine operator)
Produce large amount of plate at a time
Less rework (wastage)
Higher flexibility to take the sample from the customer
Disadvantage
High cost of investment
Requires skilled man power
B. Press
Refers to actual printing operations, ink is applied to the plate and the image is transferred to the substrate
(paper). The paper is fed through the press from a pile of paper already cut to the size of the ma-
chine. Offset printing presses print at a high speed. When a printing plate is made, the printing
image is rendered ink-receptive and water repellent, while the non-printing areas are rendered
water-receptive and ink-repellent.
The ink is distributed to the plates through a series of rollers. On the press, the plates are dam-
pened, first by water rollers, and then ink rollers. The rollers distribute the ink from the ink foun-
tain onto the plates. The image area of the plates picks up ink from the ink rollers. The water rollers
keep the ink off of the non image areas of the plate. Each plate then transfers its image to a rubber
blanket that in turn transfers the image to paper. The plate itself does not actually touch the paper.
All of this occurs at a high speed. During the process the machine man checks the blending of inks
to maintain the color control. Print quality is checked frequently by the press operator.
The main printing process used is offset lithography, using either individual sheets or continuous
rolls of paper (Web presses). Sheet fed presses print up to 16 pages of letter-sized product at a time,
at speeds up to 15,000 impressions per hour. Web presses print 32 pages at a time at speeds over
40,000 impressions per hour, and are usually used for production runs of more than 50,000 copies.
Presses usually print in one, two, four, or six colors; some presses can print eight. Digital
27
presses are increasing in use, especially for print runs less than 5,000 pieces. Digital technology
is also becoming the norm in pre-media services and design (First Research, 2009).
C. post press:
Primarily involves the assembly of printed materials and consists of any trimming, folding, perforat-
ing, and collating, stitching, or gluing operations as required. Printing Press performs the trim-
ming and folding in-house, and works closely with an outside bindery on the collating, stitching
and gluing.
Companies that provide all three services first prepare the material for printing in the prepress
department, then produce the pages on the pressroom floor, and finally trim, bind, or otherwise
ready the material for distribution in the post press department (EPA, 1994).
Process Flow (Off-Set Printing)
Fig 1: Process Flow (Off-Set Printing)
28
4.8 Environmental Impact Assessment
The printing industries are among environmentally positive and negative externality producers.
Positive externality is produced as they create vast job opportunity, and add to national income
account. Conversely, industries release wastes like ink, paper, plates, oil and other chemicals.
Typical Lithographic Printing Process and Principal Releases to the Environment can be seen from
the following diagram.
Fig 2: Possible waste indication diagram of the industry
Moreover, the energy consumption of the industry is huge. However, since the energy consumed
by the project under consideration depends on hydro-electric it’s environmental friendly and
doesn’t create harm with this respect. The water and leaking gasoline will be properly managed.
Moreover, the the Industry will have a Policy Statement that should focus on the Environment
pertaining to:
Sustainable development;
Environmental management;
Resource management;
29
Waste management;
Recycling;
Continuous improvement in environmental performance; and
Management ranging from solvents and chemicals to waste paper and noise.
Consequently, the factory will not have significant impact on the environment.
5. Project Implementation Schedule

As we have mentioned on the assumption this project will start the operation tentatively on Janu-
ary 2010 E.C. based on this the overall project schedule will present hereunder:
Table 12: tentative project schedule
Implementation period/months
No Activities
1 2 3 4 5 6 7 8
1 Site selection XXX
2 Funding XXX
3 Construction design XXX XXX
4 Buildings Construction XXX XXX XXX XXX
Tendering, Order &
5 Delivery of Machinery XXX XXX XXX
& RM
Machinery installation
6 XXX XXX XXX
& commissioning
Hiring & Training of
7 XXX XXX
Staff
8 Begin operation XXX XXX
30
6. Organization, Management, Manpower Requirement and Availability
The project will have both technical and non-technical staffs from higher stage of structure till
the bottom level. Accordingly, the industry will have about 60 staffs the detail of which can be
seen in annex 11.1, manpower requirement. All manpower can be accessed from local market while
training for the staff has been assumed to be given by local professionals so as to develop and
upgrade skill of technical or core staff. The organo-gram of the industry is hereunder:
General
Manager
Finance and Production and

Supply & Sales
Adminisration Technical
Cost & Accounts Personnel General Service Quality Control Sales Unit
Maintenance Supply
Pre--press Delivery Unit
Printing/press
Binding and
Finishing/ post
press
Fig: 3 Organo-gram of the industry
31
7. Projected Financial Study
7.1 Investment outlay
The total investment to be deployed by the owner for the establishment of the plant is about Birr
648.8 million. Breakdown of the overall investment (fixed and working capital) summary will be
detailed here below:
Table 12: Fixed and Working Capital expenditure.
No Investment Breakdown Value (in Birr) %

1 Fixed Capital
1.1 Machineries and equipments 123,673,500 19.06
1.2 Land lease 75,635,000 11.66
1.3 Computer and Accessories 400,000 0.06
1.4 Motor Vehicle 1,900,000 0.29
1.5 Furniture and Fittings 418,155 0.06
1.6 Building and Civil works 26,372,500 4.07
1.7 Pre-operating Expenses 1,500,000 0.23
1.8 Design and supervision work 300,000 0.05
Sub-total 230,199,155.00 35.5
2 Working Capital
2.1. Raw material stock 354,675,170 54.67
2.2. Wages and salaries 2,470,800 0.38
2.3. Utility Services 518,800 0.08
2.4. Miscellaneous exp. 1,180,100 0.18
2.5 Workers benefit 743,400 0.11
Sub-total 359,588,270 55.43
Total 589,787,425
Contingency (10%) 58,978,742 9.09
GRAND TOTAL 648,766,167 100
The investment cost of the project as detailed above sums about birr 648.8 million out of which
123.6 million (19.1%) for machineries and equipments and 354.6 million (54.7) for raw material
is the largest segment of the investment.
Note
1) All machineries and raw materials will be imported.
2) The actual cost of machinery may vary as the final price will be determined based on the offer of competi-
tive bidders.
3) The cost on raw material will be revolving and if we need to minimize this cost we can import 50% or 6
month consumption.
32
7.2 Production, revenue and operating costs estimate
Operating and Production Assumptions:
♠ Effective operational hours per day 6 or 1 shift;
♠ Days operational per month 25;
♠ Days operational per year 302;
♠ Volume of production at full capacity (@market price) on 1st year=60%;
♠ Capacity growth rate (10 % per year); and
♠ Maximum attainable capacity utilization (@market price) =82%.
♠ Market share from the supply demand analyses gap= 15% (producing 31,000,000
books annually)
♠ Operation startup date will be 2010 , January E.C
Product Mix:
♠ Books 95 %;
♠ Magazines and Others 5%.
Economic and Financial Assumptions:
♠ Wages growth rate 10% per year;
♠ Raw material price growth rate 10% per year;
♠ Finished product price growth rate 7.5% per year;
♠ Project life (Years) 10;
Depreciation Assumptions (Straight-line through the following rates on each year)
♠ Machineries/equipments 10%;
♠ Computer and Accessories 25%;
♠ Office furniture and fittings 20%; and
♠ Building and construction 5%.
7.2.1 Production
Based on the above assumptions on the 1st year operation we produce 60% of the total plan
which is 18,600,000 books/year for these there are so many reasons
1) Time for the operators trained and correlate themselves with the machineries
2) Since all the machineries are new the starting efficiency well be relatively low
3) Promoting the plant to the market
4) Smoothing the whole actual operation will be time taking.
33
7.2.2 Revenue
Proposed selling price of each sheet/page will be 0.12 birr/page including 20% profit. Therefore:
𝑏𝑏𝑖𝑖𝑟 𝑟
𝑠 𝑖 𝐴 𝐴 𝑖 𝑖 𝑝 𝑐 𝑟 𝑖 𝑚𝑚𝑖𝑖 𝑏𝑏𝑒𝑒 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏 = 192 𝑐 𝑚𝑚𝑝𝑝𝑖𝑖 ∗ 0.12 = 23.04 𝑏 𝑖 𝑟 𝑟
𝑐 𝑚𝑚𝑝𝑝𝑖𝑖
𝑚𝑚𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑟 𝑖 𝑒 𝑖 𝑖 𝐴𝐴 = 31,000,000 ∗ 23.04 = 𝟔𝟔𝟏𝟏𝟐��, 𝟐𝟐𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝑏 𝑖 𝑟 𝑟
60% 𝑐 𝑟 𝑏 𝑑𝑑𝐴𝐴𝑚𝑚𝑐𝑐𝑖 𝑏 𝑖 𝑚𝑚𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑟 𝑖 𝑒 𝑖 𝑖 𝐴𝐴 = 18,600,000 ∗ 23.04 = 𝟐𝟐𝟐𝟐𝟒𝟒, 𝟐𝟐𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝑏 𝑖 𝑟 𝑟
If we produce at full capacity on the 1st year we can return the overall investment on that year but
in actual case it is not possible for the above mentioned reasons
7.2.3 Operational expense

Employment salary with payable pension
= 2,470,800 ∗ 1.11 = 𝟐𝟐, 𝟔𝟔𝟐𝟐𝟐��, 𝟐𝟐𝟒𝟒𝟒𝟒 𝐁𝐁𝐁𝐁𝐁𝐁𝐁𝐁
General Administrative expense (Stationery, Parts and tools, Fuel, Lubricant, Safety ma-
terials, Machinery and labor insurance, Utility, Training, OH Costs etc…)
= 𝟓𝟓, 𝟗𝟗𝟐𝟐𝟐��, 𝟓𝟓𝟐𝟐𝟐𝟐 𝐁𝐁𝐁𝐁𝐁𝐁𝐁𝐁

Selling Expenses (5% of total revenue)= 428,544,000 ∗ .05 = 𝟐𝟐𝟏��, 𝟐𝟐𝟐𝟐𝟔��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝑏 𝑖 𝑟 𝑟
𝑻𝑻𝒃𝒃𝑻𝑻𝒑𝒑𝑻𝑻 𝑬𝑬𝑬𝑬𝒑𝒑𝒑𝒑𝑬𝑬𝒑𝒑𝒑𝒑 = 𝟐𝟐, 𝟔𝟔𝟐𝟐𝟐��, 𝟐𝟐𝟒𝟒𝟒𝟒 + 𝟓𝟓, 𝟗𝟗𝟐𝟐𝟐��, 𝟓𝟓𝟐𝟐𝟐𝟐 + 𝟐𝟐𝟏��, 𝟐𝟐𝟐𝟐𝟔��, 𝟐𝟐𝟐𝟐𝟐𝟐
𝑻𝑻𝒃𝒃𝑻𝑻𝒑𝒑𝑻𝑻 𝑬𝑬𝑬𝑬𝒑𝒑𝒑𝒑𝑬𝑬𝒑𝒑𝒑𝒑 = 𝟐𝟐𝟒��, 𝟏𝟏𝟏𝟏𝟐��, 𝟐𝟐𝟒𝟒𝟒𝟒 𝑩𝑩𝑩𝑩𝒉𝒉𝒉𝒉
Cost of goods sold (COGS): All the costs involved in selling a product that is raw ma-
terial and other expenses.
𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 = 212,805,102 + 28,112,000 = 𝟐𝟐𝟐𝟐𝟐��, 𝟗𝟗𝟏𝟏𝟔��, 𝟏𝟏𝟗𝟗𝟐𝟐 𝑩𝑩𝑩𝑩𝒉𝒉𝒉𝒉
𝑮𝑮𝒉𝒉𝒃𝒃𝒑𝒑𝒑𝒑 𝑷𝑷𝒉𝒉𝒃𝒃𝑷𝑷𝑩𝑩𝑻𝑻 = 𝑅𝑅𝑖𝑖𝑒 𝑖 𝑖 𝐴𝐴𝑖𝑖 − 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶
𝑮𝑮𝒉𝒉𝒃𝒃𝒑𝒑𝒑𝒑 𝒑𝒑𝒉𝒉𝒃𝒃𝑷𝑷𝑩𝑩𝑻𝑻 = 428,544,000 − 240,917,190 = 𝟏𝟏𝟒𝟒𝟔𝟔, 𝟔𝟔𝟐𝟐𝟔��, 𝟒𝟒𝟏𝟏𝟐𝟐 𝑩𝑩𝑩𝑩𝒉𝒉𝒉𝒉
Income Tax Expense = Gross profit X 30%
𝑰 𝑬𝑬𝑰𝑰𝒃𝒃𝑰𝑰𝒑𝒑 𝑻𝑻𝒑𝒑𝑬𝑬 𝑬𝑬𝑬𝑬𝒑𝒑𝒑𝒑𝑬𝑬𝒑𝒑𝒑𝒑 = 187,626,810 ∗ 30% = 𝟐𝟐𝟔��, 𝟐𝟐𝟒𝟒𝟒𝟒, 𝟐𝟐𝟐𝟐𝟓𝟓 𝑩𝑩𝑩𝑩𝒉𝒉𝒉𝒉
Net income (Net Profit) = Gross profit – Income tax expense
𝑵𝑵𝒑𝒑𝑻𝑻 𝒑𝒑𝒉𝒉𝒃𝒃𝑷𝑷𝑩𝑩𝑻𝑻 @𝟏𝟏𝒑𝒑𝑻𝑻 𝒚𝒚𝒑𝒑𝒑𝒑𝒉𝒉 = 187,626,810 − 56,288,043
𝑵𝑵𝒑𝒑𝑻𝑻 𝒑𝒑𝒉𝒉𝒃𝒃𝑷𝑷𝑩𝑩𝑻𝑻 @𝟏𝟏𝒑𝒑𝑻𝑻 𝒚𝒚𝒑𝒑𝒑𝒑𝒉𝒉 = 𝟏𝟏𝟓𝟓𝟏��, 𝟓𝟓𝟓𝟓𝟒��, 𝟔𝟔𝟔𝟔𝟔𝟔 𝑩𝑩𝑩𝑩𝒉𝒉𝒉𝒉
NB: This profit doesn’t consider depreciation. The profit which include the depreciation
will present in the net profit/ loss statement table hereunder
34
7.3 Project financial results (profit and loss, cash flow and balance sheet)
7.3.1 Profit/loss statement
Profit/loss statement of the study reveals that the project will make profit in all project periods with average net income of about birr 219.3
million per annum.
Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Income
Sales Revenue
428,544,000 537,509,000 676,822,752 727,584,458 782,084,430 840,836,405 904,507,150 972,276,870 1,045,338,625 1,123,665,680
Cost of Goods Sold
240,917,190 278,287,240 325,109,094 325,658,550 325,997,657 326,643,058 327,357,143 360,138,941 396,203,935 437,208,834
Gross Sales Reve-
nue 187,626,810 259,221,760 351,713,658 401,925,908 456,086,773 514,193,347 577,150,007 612,137,929 649,134,690 686,456,846
General Expenses
Salaries for Em-
ployees 2,742,588 3,047,015 3,385,234 3,760,995 4,178,465 4,642,275 5,157,568 5,730,058 6,366,094 7,072,730
Depreciation 152,764,155 138,761,549 126,112,645 114,680,227 104,341,878 94,988,245 86,521,461 78,853,863 71,906,840 65,609,833
Pre operating exp.
1,500,000
Utility Service Ex-
penses 518,800 622560 747072 971194 1262552 1578190 1972737 2465921 2959106 3550927
Workers benefit 743,400 892080 1070496 1391645 1809138 2261423 2826779 3533473 4240168 5088201
Miscellaneous Ex-
penses 1,180,100 1416120 1699344 2209147 2871891 3589864 4487330 5609163 6730995 8077194
selling Expense 21,427,200 26,875,450 33,841,138 36,379,223 39,104,222 42,041,820 45,225,358 48,613,844 52,266,931 56,183,284
Total Expenses
180,876,243 171,614,774 166,855,929 159,392,431 153,568,146 149,101,817 146,191,232 144,806,322 144,470,134 145,582,169
Total Income be-
fore tax 6,750,567 87,606,986 184,857,729 242,533,478 302,518,627 365,091,530 430,958,775 467,331,607 504,664,556 540,874,677
Income Tax (30%)
2,025,170 26,282,096 55,457,319 72,760,043 90,755,588 109,527,459 129,287,632 140,199,482 151,399,367 162,262,403
Net Income After
Tax 4,725,397 61,324,890 129,400,411 169,773,434 211,763,039 255,564,071 301,671,142 327,132,125 353,265,189 378,612,274
35
7.3.2 Cash flow statement NPV and IRR
The project will generate positive net cash-flow starting from the first year. Likewise, estimating discounted cash-flow which considers time value of money is
of paramount importance. Accordingly, the Net Present Value (NPV) which aids whether to accept or reject the project is positive 718.8 million
@16% and the net present value ratio (NPVR) is greater than 1 (1.11) while the IRR (internal Rate of return) of the project is 17. 44%. There-
fore the project is acceptable and viable for implementation. Moreover, the payback period of only 2 years apparently minimizes any risk in re-
gaining/recouping the initial investment.
`DESCRIPTION YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
CASH INFLOW
NET INCOME AFTER 4,725,397 61,324,890 129,400,411 169,773,434 211,763,039 255,564,071 301,671,142 327,132,125 353,265,189 378,612,274
TAX
DEPRECIATION 152,764,155 138,761,549 126,112,645 114,680,227 104,341,878 94,988,245 86,521,461 78,853,863 71,906,840 65,609,833
BANK LOAN
OWNERS EQUITY 648,766,167
NET CASH INFLOW 648,766,167 157,489,552 200,086,439 255,513,056 284,453,661 316,104,917 350,552,316 388,192,603 405,985,988 425,172,029 444,222,107
CASH OUTFLOW
INITIAL INVESTMENT - 648766167
NET CASH OUTFLOW –648766167 157,489,552 200,086,439 255,513,056 284,453,661 316,104,917 350,552,316 388,192,603 405,985,988 425,172,029 444,222,107
NET CASH IN- 157,489,552 200,086,439 255,513,056 284,453,661 316,104,917 350,552,316 388,192,603 405,985,988 425,172,029 444,222,107
FLOW/OUTFLOW
CUMULATIVE CASH - 157,489,552 357,575,991 613,089,047 897,542,708 1,213,647,625 1,564,199,941 1,952,392,544 2,358,378,532 2,783,550,561 3,227,772,668
INFLOW
DCF @16% 1 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386
PV
648,766,167 143,158,003 165,271,399 191,890,305 194,281,850 196,301,153 197,711,506 199,142,805 189,595,456 180,272,940 171,469,733
NPV@12% 1,007,148,248
NPV@16% 718,883,677
NPV@18% 608,912,172
NPVR 1.11
IRR 17.44
PBP 2 YEARS
36
7.3.3 Balance sheet
DESCRIPTION YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
CASH & BANK

157,489,552 200,086,439 255,513,056 284,453,661 316,104,917 350,552,316 388,192,603 405,985,988 425,172,029 444,222,107
FIXED ASSETS
230,199,155 188,763,307 154,785,912 126,924,448 104,078,047 85,343,999 69,982,079 57,385,305 47,055,950 38,585,879 31,640,421
WORKING CAPI-
TA 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012 418,567,012
TOTA ASSETS 648,766,167

764,819,871 773,439,363 801,004,516 807,098,720 820,015,928 839,101,407 864,144,920 871,608,950 882,324,920 894,429,540
OWNER’S EQUITY 648,766,167

648,766,167 648,766,167 648,766,167 648,766,167 648,766,167 648,766,167 648,766,167 648,766,167 648,766,167 648,766,167
RETAINED EARN-
ING
4,725,397 66,050,287 190,725,301 299,173,845 381,536,473 467,327,110 557,235,213 628,803,267 680,397,314 731,877,463
TOTAL LIAB. &

CAP.
648,766,167 764,819,871 773,439,363 801,004,516 807,098,720 820,015,928 839,101,407 864,144,920 871,608,950 882,324,920 894,429,540
37
8. Socio-economic Aspects
8.1 Social Feasibility
The project benefits the owner, local community and the government. The project will create vast
job opportunities that will have a growing number through its production periods. The government
will get profit tax, and income tax from employees, customs duty on import, and saving of foreign
currency due to import substitution. The project will also draw the attention of other investors to
come and invest in the arena. In the second phase, the number of employees is expected to increase
(both clerical and non-clerical staff). Hence, the project is socially and environmentally friendly.
8.2 Technology Assessment
Technology is among important tool to win the market competition and make ample return for the
owner. The industry analysis made reveals that some printing presses are continuously updating and
modernizing their equipments with the most current. But majority of existing industries esp. small-
scale printing industries hold conventional and old machineries. From the assessment and industry
survey, it’s assumed that the project owner purchases modern and digital offset printing machineries
that aid to provide better quality service with better price. Maintenance and Repair of machineries
would also be made timely to operate efficiently.
9. Possible Risk Factors (Threats)
Risk, at the general level, involves the occurrence probability of adverse events and the conse- quences
of the event. Risk reduction is made by trading off associated costs and benefits. Consider- ing risk
assessments within the context of political, social, and economic realities makes risk management
decisions. On top of this, here are the possible risk factors of the project:
Foreign Currency Shortage: - Like many other developing countries, Ethiopia’s Heavy and
sudden fluctuations in quantity and price of exports could create a serious problem in balance-
of-payments (BOP), national income, investment as well as the overall growth of less
developed countries. This would have direct effect on the sector since the instability will also
constrain the country’s ability to import goods that are deemed essential for the operation of
the project. Hard currency shortage of the country put hurdle to the project under considera-
tion in importing machineries and equipments timely which requires lofty hard currency.
38
Hence, importing machineries and equipments promptly through all possible approach is rec-
ommended.
Government Regulations: - the government of Ethiopia at current state encourages import sector.
However, given negative BOP (Balance of Payment) it may cut imports (through quotas,
taxes, or direct control) to adjust the economy. Accordingly, fiscal policy employed by the
government in forms of taxes and quotas are threat factor for project under consideration which
depends on bulk import of raw-materials. To solve such impediments, buying raw materials
in bulk is advisable. Publishing and printing industries in the year 2014 spent more than
143,435 US $ for purchase of raw materials which makes Ethiopia rank 53 from the world
(sours FAOSTAT). Likewise, raw materials stockholding period for publishing and printing
industries is longer, 171 days, as per CSA report.
Scarcity of Finance: - Given the need for big working capital, finance can be another possible
risk in profitably running the project. However, if the company operates efficiently, it can
generate the necessary revenue required to cover its working capital needs. It also can secure
loan from banks.
Competition: - the other threat factor for the project under consideration is competition. The
prevailing competition from existing industries including those under government ownership
would be stiff. Because the comparative advantage they own from maintaining customer re-
lationship with the government offices/organs is well-built. Hence, rendering broad and qual-
ity services entails the project to own better marketing advantage in the industry, particularly
government& private institutions, focusing on the education sector.
39
10. Conclusion and Recommendation
There exists wide demand-supply gap in publishing and printing services in Ethiopia. The printing and
publishing presses in the country are not satisfying the prevailing demand of the public promptly and
in required manner. There are dissatisfied customers with existing market suppliers due to inef-
ficiency in fulfilling orders with the required quality, quantity & desired delivery time. Particularly,
supply of text books has been a major problem for the education sector in general. Even today, nu-
merous publishing & printing services are met from foreign supply, with all their well known short-
comings.
The establishment of this project, in addition to be financially rewarding, it also contributes enorm-
ously for saving the huge amount of hard currency spent every year, as well as to creating job oppor-
tunity for our citizens & providing quality printing materials at competitive prices and guarantying
on time delivery, particular text books to our students.
Hence, it’s recommended that investor materialize this project within the shortest time possible to
benefit from this very attractive return.
40
11. Annexes
11.1 Manpower requirement and corresponding salaries/wages expense
Ser. No Position No of Staff Salary/head per month Monthly Total Annual Salary Exp.
1 GM Office
1.1 General Manager 1 15,000 15,000 180,000
1.2 Executive Secretary 1 5,000 5,000 60,000
Sub-total 2 20,000 20,000 240,000
2 Internal Auditor 1 8,000 8,000 96,000
Sub-total 1 8,000 8,000 96,000
3 Finance and Admin. Dep't
3.1 Dep't Manager 1 10,000 10,000 120,000
3.2 Secretary 1 3,500 3,500 42,000
3.3 Accountant 1 3,500 3,500 42,000
3.4 Purchaser 2 3,500 7,000 84,000
3.5 Store Keeper 2 3,200 6,400 76,800
3.6 Driver 3 2,500 7,500 90,000
3.7 Guard 4 1500 6,000 72,000
3.8 Cleaner 2 1500 3,000 36,000
Sub-total 16 29,200 46,900 562,800
4 Production and Technical Dep't
4.1 Dep't Manager 1 10,000 10,000 120,000
4.2 Secretary 1 3,500 3,500 42,000
4.3 Graphic Designer 3 4,000 12,000 144,000
4.4 Machine Operator for web 2 5,000 10,000 120,000
4.5 Machine Operator 4 4,000 16,000 192,000
4.6 Ass. machine operators 6 2,500 15,000 180,000
4.7 Technician 2 4,000 8,000 96,000
4.8 Quality Controller 1 4,000 4,000 48,000
4.9 Ass. Quality Controller 1 2,500 2,500 30,000
4.10 Camera Operator 1 3,000 3,000 36,000
4.11 Binders 10 1,500 15,000 180,000
4.12 Deliverers (loading and Unloading) 3 1500 4,500 54,000
Sub-total 35 45,500 103,500 1,242,000
5 Marketing and Planning Dep't
5.1 Dep't Manager 1 10,000 10,000 120,000
5.2 Secretary 1 3,500 3,500 42,000
5.3 Sales/cost estimator 2 4,000 8,000 96,000
5.4 Customer Service 2 3,000 6,000 72,000
5.5 Sub-total 6 20,500 27,500 330,000
TOTAL 60 123,200 205,900 2,470,800
6 Workers benefit 30% 743,400
Grand Total 3,221,400
41
11.2 Computer and Accessories
NO ITEM QUANTITY UNIT PRICE TOTAL PRICE

1 COMPUTER LCD (DELL 17" PENTIUM IV) 10 15,000 150,000
WITH VARIOUS SOFTWARE’S
2 MACINTOSH COMPUTER 2 60,000 120,000
3 PRINTER (HP LASERJET) 6 4,500 27,000
4 POWER BACKUP (UPS CS 650) 2 6,000 12,000
5 COLOR SCANNER (FLATBED 1 5,000 5,000
A3 SIZE HIGHER RESOLUTION)
6 A3 PROOFING COLOR PRINTER 1 7,000 7,000
OTHERS 79,000
TOTAL 400,000
42
11.3 Office furniture and fittings
No Item Quantity Unit Price Total Price
1 Cash Safe 1 10,500 10,500
2 Managerial chair 5 1,300 6,500
3 Coat Hunger 10 900 9,000
4 Computer stand 8 1300 10,400
5 Dark room safelight 1 10,000 10,000
6 Dixon Angle shelf 1 25,000 25,000
7 Divider 24 120 2,880
8 Double pedestal table 25 3,000 75,000
9 Electrical calculator 5 2,500 12,500
10 Filing cabinet 2 4,000 8,000
11 Fire extinguisher 5 4,500 22,500
12 Guest chair 10 800 8,000
13 Light table for strip- 2 6,500 13,000
ping
14 Metal clip board 2 15,000 30,000
15 Scissors 25 85 2,125
16 Shelf 5 3,150 15,750
17 Swivel chair 25 1,300 32,500
18 Telephone apparatus 10 550 5,500
19 Carpet Lump sum 50,000 50,000
20 Vacuum cleaner 3 6,000 18,000
21 Wall watch 5 200 1,000
22 Others 50,000
Total 418,155
43
11.4 Utility Services
NO ITEM TOTAL COST
1 WATER 13,800
2 ELECTRICITY 345,000
3 TELECOMMUNICATION AND 150,000
POSTAL SERVICES
4 SANITATION FEE 4,000
5 OTHERS 6,000
TOTAL 518,800
11.5 Miscellaneous Expenses

NO ITEM TOTAL COST
1 INSURANCE 288,700
2 FUEL AND LUBRICANTS 60,500
3 MAINTENANCE AND REPAIR OF MACHINERIES 175,000
4 UNIFORM AND OUTFITS 50,000
5 ADVERTISING EXP. 200,000

6 COMMISSION AND ALLOWANCES FOR EM- 150,000
PLOYEES
7 TRAINING (ASSUMED ONE MONTH SALARY) 205,900
8 OTHERS 50,000
TOTAL 1,180,100
44
11.6 Building and Civil Works
NO ITEM DESCRIPTION AREA (M2)
1 PRODUCTION
1.1 PRODUCTION ROOM 175
1.2 PRINTING ROOM 100
1.3 DARK ROOM 25
SUB-TOTAL 300
2 STORES
2.1 RAW MATERIALS STORE ROOM 150
2.2 FINISHED GOODS STORE ROOM 150
2.3 GARBAGE MATERIALS STORE ROOM 50
2.4 OTHER MATERIALS STORAGE ROOM (OIL, 25
ENVELOP, ETC)
SUB-TOTAL 375
3 OFFICES AND SERVICES
3.1 MAIN OFFICE 150
3.2 ELECTRIC ROOM 5
3.3 STAFF TOILET 20
3.4 OTHER SERVICES 35
SUB-TOTAL 210
4 INFRASTRUCTURE
4.1 ENTRANCE GETS 20
4.2 FENCES -
4.3 MASONRY WITH GRILL 20
4.4 PARKING 350
4.5 DITCHES 50
4.6 OTHERS 50
SUB-TOTAL 490
GRAND TOTAL (BUILT-UP) 1,375
COMPOUND (PLOT AREA) 3,625
TOTAL LAND AREA 5,000
45
11.7 Schedule of Depreciation Expenses
S/N DESCRIPTION YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10
1 MACHINERY
& EQUIP-
MENT 123,673,500 111,306,150 100,175,535 90,157,982 81,142,184 73,027,966 65,725,169 59,152,652 53,237,387 47,913,648
2 COMPUTER
400,000 300,000 225,000 168,750 126,563 94,922 71,192 53,394 40,046 30,035
3 MOTOR VE-
HICLES 1,900,000 1,767,000 1,643,310 1,528,278 1,421,299 1,321,808 1,229,281 1,143,231 1,063,205 988,781
4 FURNITURE
& FITTINGS 418,155 334,524 267,619 214,095 171,276 137,021 109,617 87,694 70,155 56,124
5 BUILDING &
CIVIL WORKS 26,372,500.00 25,053,875.00 23,801,181.00 22,611,122.00 21,480,556.00 20,406,528.00 19,386,202.00 18,416,892.00 17,496,047.00 16,621,245.00
TOTAL 152,764,155 138,761,549 126,112,645 114,680,227 104,341,878 94,988,245 86,521,461 78,853,863 71,906,840 65,609,833
46
12. Bibliography (References)
Berhanena Selme Printing Enterprise official website;
Berhanena selam, Commercial, Bole, Mega, Artistic printing press annual reprt;
CSA, large and medium scale manufacturing and electricity survey, 2009/10;
Ethiopian Investment Agency, Annual Reports;
Ethiopian Ministry of Education, Education Statistics Report, 2007;
Internet;
Printing press pre-feasibility study on small and medium enterprise development authority, gov-
ernment of Pakistan, 2007;
Economic Financial Analysis For Engineering & Project Management
Wikipedia Free Encyclopedia Project.
47
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ADDIS ABABA INSTITUTE of TECHNOLOGY

INSTRUCTOR; Dr. GULELAT

SUBMITTED BY; MASRESHA TASEW GSE/5744/09

FANTANESH MAEREGU GSE/1633/09

March 10, 2017

• Lack of trained manpower,

2.1 General objective

2.2 Specific objective

Number of published new titled or

Table 1: Student enrollment of Ethiopia (2004-2008 E C).

Indicators 2004 2005 2006 2007 2008

TEACHER EDUCATION 164,501 173,517 173,628 170,160 169,382

Source: Ethiopian ministry of education, 2007 E C education statistics annual report

Table 3: Estimated Demand of Printed materials (‘000,000 birr)

YEAR 2009 2010 2011 2012 2013

Table 4: Imported books from 2006-2008

2014/2006 EC 2015/ 2007 EC 2016/ 2008 EC Total

2009 2010 2011 2012 2013

3.6 Price strategy

4.2 Civil work design and construction

Total Cost (in

4.3 Theoretical capacity of machineries and capacity utilization

Operating and Production Assumptions:

1. Four units color web offset printing machines.

The number of books per hour will be:

To get annual capacity

Annually produced books will be

2. Single color sheet feed offset printing machine (perfecting)

The number of books per hour will be:

To get annual capacity

Annually produced books will be

3. Speed Master B2 serious

The number of books per hour will be:

To get annual capacity

Table 9: List of machinery with their respective cost

No Description psc Unit price Total price

No Description psc Unit price Total price

4.5 Availability of utilities and infrastructure

4.6 Materials for use/input (availability & cost)

S/N ITEMS COST

♣ Lithography-This technique emphasizes on economical use of color.

♣ Screen Printing-This technique is mainly used to Print designs on fabrics.

1) Publication printing: books, pamphlets, newspaper, periodicals, magazines, journals;

Process Flow (Off-Set Printing)

Fig 1: Process Flow (Off-Set Printing)

Fig 2: Possible waste indication diagram of the industry

5. Project Implementation Schedule

1 Site selection XXX

Finance and Production and

Pre--press Delivery Unit

Fig: 3 Organo-gram of the industry

Table 12: Fixed and Working Capital expenditure.

No Investment Breakdown Value (in Birr) %

1) All machineries and raw materials will be imported.

𝑚𝑚𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑟 𝑖 𝑒 𝑖 𝑖 𝐴𝐴 = 31,000,000 ∗ 23.04 = 𝟔𝟔𝟏𝟏𝟐��, 𝟐𝟐𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝑏 𝑖 𝑟 𝑟

60% 𝑐 𝑟 𝑏 𝑑𝑑𝐴𝐴𝑚𝑚𝑐𝑐𝑖 𝑏 𝑖 𝑚𝑚𝑖𝑖 𝑖𝐴𝐴𝑚𝑚𝐴𝐴 𝑟 𝑖 𝑒 𝑖 𝑖 𝐴𝐴 = 18,600,000 ∗ 23.04 = 𝟐𝟐𝟐𝟐𝟒𝟒, 𝟐𝟐𝟐𝟐𝟐��, 𝟐𝟐𝟐𝟐𝟐𝟐 𝑏 𝑖 𝑟 𝑟

7.2.3 Operational expense

= 𝟓𝟓, 𝟗𝟗𝟐𝟐𝟐��, 𝟓𝟓𝟐𝟐𝟐𝟐 𝐁𝐁𝐁𝐁𝐁𝐁𝐁𝐁

𝑵𝑵𝒑𝒑𝑻𝑻 𝒑𝒑𝒉𝒉𝒃𝒃𝑷𝑷𝑩𝑩𝑻𝑻 @𝟏𝟏𝒑𝒑𝑻𝑻 𝒚𝒚𝒑𝒑𝒑𝒑𝒉𝒉 = 𝟏𝟏𝟓𝟓𝟏��, 𝟓𝟓𝟓𝟓𝟒��, 𝟔𝟔𝟔𝟔𝟔𝟔 𝑩𝑩𝑩𝑩𝒉𝒉𝒉𝒉

CASH & BANK

TOTA ASSETS 648,766,167

OWNER’S EQUITY 648,766,167

TOTAL LIAB. &

8.2 Technology Assessment