DEPARTMENT OF ACCOUNTING and finance

Project analysis and evaluation

Group Assignment i
BUSINESS PROPOSAL
Group member’s id no
1. BIRUKTAWIT MULUKEN UU72063R
2. EDEN ARGAW UU71978R
3. EYERUSALEM SISAY UU71968R
4. KIDIST BERIHU UU71951R
5. NATHNAEL GETU UU71941R
6. SELAMAWIT AMBACHEW UU71877R
7. SOLOME GETAHUN UU71857R
Section: - BA1R1N14/10
Submitted to: - TEACHER DEREGE
ADDIS ABABA
NOVEMBER, 2020
 Our Motivational quotes

“A big business starts small”

Richard Branson

“On my own I will just create, and if it works, it works, and if it

doesn’t, i will create something else. I don’t have any limitations on
what I think I could do or be”
Oprah Winfrey

“There are no secrets to success. It is the result of preparation, hard

work, & learning from failure”
Colin Powell

“Never start a business just to ‘make money’. Start a business to make

a difference”
Marie Forleo
 ACKNOWLEDGEMENT

We would like to thank and appreciate our teacher and instructor

(Teacher Derege) for giving us this assignment it helped us to challenge
ourselves, do lots of researches and helped us to develop our report
writing and also helps us think about our future possibilities. Thanks are
due to all the others who encouraged us to complete our assignment.
Last but not least, thanks go to our families and friends, who have
supported us through their knowledge, financially and emotional
support.

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 Thank you.

TABLE OF CONTENTS
ACKNOWLEDGEMENT................................................................................................................I

LIST OF TABLES........................................................................................................................IV

LIST OF FIGURES........................................................................................................................V

1. EXECUTIVE SUMMARY......................................................................................................1

2. INTRODUCTION....................................................................................................................2

3. NAME OF BUSINESS............................................................................................................2

5. BUSINESS OBJECTIVE.........................................................................................................3

6. BUSINESS STRATEGY.........................................................................................................4

6.1. MARKETING STRATEGY.............................................................................................4

6.2. COMPETITIVENESS STRATEGY................................................................................4

7. MARKET AND DEMAND ANALYSIS................................................................................6

7.1. CHARACTERISTICS OF THE MARKET.....................................................................7

7.2. DEMAND FORECASTING AND MARKET PLANNING..........................................12

8. TECHNICAL ANALYSIS.....................................................................................................14

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 8.1. MATERIAL INPUTS AND UTILITIES.......................................................................14

8.2. MANUFACTURING PROCESS AND TECHNOLOGY.............................................17

8.3. PRODUCTS/SERVICE TO BE OFFERED...................................................................18

8.3.1. TYPES OF INJERA/ PRODUCT:..............................................................................18

8.3.2. INJERA MAKING PROCESS...................................................................................20

8.3.3. PACKAGING OF INJERA.........................................................................................21

8.4. PLANT CAPACITY.......................................................................................................22

8.5. BUSINESS LOCATION AND SITE.............................................................................22

8.5.1. ESTIMATE OF THE COST OF LAND.................................................................23

8.5.2. PRELIMINARY ENVIRONMENTAL IMPACT ASSESSMENT........................23

8.6. MACHINERY, EQUIPMENT AND VEHICLE............................................................24

8.7. STRUCTURE INCLUDING FURNITURE AND CIVIL ENGINEERING WORKS..25

8.8. ORGANIZATION LAYOUTS AND HUMAN RECOURSES.....................................26

8.8.1. ORGANIZATION LAYOUT.................................................................................26

8.8.2. HUMAN RESOURCE............................................................................................27

8.9. WORK SCHEDULE.......................................................................................................28

9. FINANCIAL ANALYSIS......................................................................................................29

9.1. INITIAL PROJECT FINANCING.................................................................................29

9.2. DEPRECIATION EXPENSE.........................................................................................29

9.3. INCOME STATEMENT................................................................................................30

9.4. BALANCE SHEET........................................................................................................31

9.5. CASH FLOW STATEMENT.........................................................................................33

9.6. LOAN PAYMENT SCHEDULE OR PAY BACK PERIOD........................................34

9.7. NET PRESENT VALUE AND PROFITABILITY INDEX..........................................34

10. ECONOMIC/SOCIAL COST BENEFIT ANALYSIS......................................................35

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11. ENVIROMENTAL IMPACT ANALYSIS........................................................................36

12. CONCLUSION...................................................................................................................37

12.1. MAJOR ADVANTAGES OF THE PROJECT..........................................................37

12.2. DRAWBACKS OF THE PROJECT...........................................................................37

12.3. CHANCES OF IMPLEMENTING THE PROJECT..................................................38

ANNEX I: REFERENCE..............................................................................................................39

List of tables
Table 7.1: Survey result of market and demand gap…………………………………………….11

Table 7.2: Annual Projected Income Statement…………………………………………………13

Table 8.1: Annual projected cost of raw materials………………………………………………16

Table 8.2: Annual projected cost of Auxiliary materials………………………………………...16

Table 8.3: Annual projected cost of Utilities…………………………………………………….17

Table 8.4: Cost of Machineries, Equipment’s and a Vehicle……………………………………24

Table 8.5: Civil work estimated cost…………………………………………………………….25

Table 8.6: Human resource salary……………………………………………………………….27

Table 8.7: Project implementation schedule…………………………………………………28

Table 9.1: Initial Project Financing………………………………………………………….......29

Table 9.2: Depreciation Expense………………………………………………………………..30

Table 9.3: Income Statement…………………………………………………………………….30

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Table 9.4: Balance Sheet…………………………………………………………………………32

Table 9.5: Cash Flow Statement…………………………………………………………………33

Table 9.6: Pay Back Period………………………………………………………………………34

Table 9.7: NPV and PI computation……………………………………………………………..34

List of figures

Figure 7.1: Ethiopian population growth………………………………………………………….6

Figure 7.2: Demand of INJERA………………………………………………………………......8

Figure 7.3: Different types of food served in Ethiopian restaurants………………………………8

Figure 8.1: White TEFF……………………………………………………………………….....14

Figure 8.2: Red/Brown TEFF……………………………………………………………………15

Figure 8.3: Rice…………………………………………………………………………………..15

Figure 8.4: White INJERA………………………………………………………………………18

Figure 8.5: Red/Brown INJERA…………………………………………………………………18

Figure 8.6: Zebra INJERA……………………………………………………………………….19

Figure 8.7: DERKOSH INJERA………………………………………………………………...19

Figure 8.8: INJERA making and preparation……………………………………………….......21

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Figure 8.9: INJERA packaging…………………………………………………………………..21

Figure 8.10: Area and places of the project implementation…………………………………….22

Figure 11.1: Laketch low energy MITAD and electric MITAD………………………………...36

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 Business Proposal for engotcha injera

1. EXECUTIVE SUMMARY
This business plan is for a manufacturing type of business organization which is engaged in a
producing INJERA to the local market. The location of the project is around ADDISU GEBEYA
which is located in Addis Ababa Ethiopia GULELE sub city.

Our customers in this proposal are chosen based on their business profession. Most of them will
be in service giving business and the others will be retailers. The serving giving business
includes small food places mostly known as mother places in the city, food service restaurants
that are in need of our service and hotels that serve foods. When it comes to retailers most of
them are shops that sell different kinds of staffs including INGERA and supermarkets. Most of
the consumers of retailers are households.

The legal system also allows new entrants into business to setup different type of businesses. The
production capacity y of the facility is assumed to be 4,000 INJERA per day. Total land area
required is 2000 square meters out of which all of it is already built and it will be rental. The
total investment requirement is estimated at approximately Birr 6,595,400. The plant will create
employment opportunities for 17 individuals and provide steady and secure income for local
farmers and suppliers. The project is financially viable with a profitability index of 2.4. Thus,
investing on INJERA business in Ethiopia is a profitable business.

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2. INTRODUCTION
INJERA has been eaten by Ethiopians for centuries and it defines the local cuisine and cultural
traditions. Ethiopia is often portrayed in the media only for its poverty and food crisis, while the
country has so many unique traditions to offer, besides, INJERA is a very healthy food. TEFF,
the grain used to produce authentic INJERA, has high nutritional values.

Ethiopia is considered the center of origin of TEFF. Nutritionally, 100 g of TEFF grains have
357 kcal, similar to that of wheat and rice. Yet, its grains are comparably rich in iron, calcium,
and fiber. TEFF with 11% of protein is an excellent source of essential amino acids, especially
lysine: the amino acid that is most often deficient in grains. TEFF grains are low on the glycemic
index, which makes them suitable for people with Type 2 diabetes. The grains are also gluten-
free. This, in particular, attracts individuals who suffer from gluten intolerance or celiac disease;
a study of 1,800 people with celiac disease reports that regular consumption of TEFF
significantly reduced their symptoms. With an increasing number of health-conscious consumers
across the world, INJERA has become one of the demanded foods around the globe.

3. NAME OF BUSINESS
For this business proposal we have thought long and hard what to name out business and we
decided to name it ENGOTCHA INJERA. ENGOTCHA is an Amharic word Ethiopian mothers
and ancestors used to describe the last piece of INJERA usually given to their children while it’s
hot or fresh out of oven. It’s also the last piece of INJERA Ethiopian mothers use to teach their
daughters how to make INJERA on traditional Ethiopian stove, in the country known us
METAD. This will help their daughters learn on how to make it and perfect it, and us it gets
better the number of INJERAS the daughter makes also increases.

Considering this we decided to use the name ENGOTCHA to imply this business is not just
money making place but also it’s our starting point for the futures to come, like the daughter who
is learning from the last in order to perfect it and start from the first. It also represents the love
that mothers give to their child by teaching and thinking of their child all the time, so we would

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like to express our love and dedication of our work to our customers since all of our customers
are partners for life.

4. ADDRESS OF THE BUSINESS

Our business location and site is located in ADDISU GEBEYA GULELE sub city, Addis Ababa
Ethiopia. The site selection will play vital role in inviting new customers as a result business
profitability increases. The selected site is favorable because it’s located near MERKATO which
makes it easy to get anything that is needed for the production process.

5. BUSINESS OBJECTIVE
Our core priority is to deliver our customer with the best customer service with good quality
product.

 To provide quality to the community at large

 To contribute for the country’s development
 Creating job opportunity.
 Creating proper segmentation of target customers.
 Ensuring sustainable income and
 Increase our market share through providing quality product
 To provide healthy and fresh INJERA to interested customers.
 To increase the income level of the project owners
 To fill the gap between demand and supply

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6. BUSINESS STRATEGY
Our main strategy is quality and fatefulness. Our main goal is to satisfy the customers, customers
are kings in the business world. We have to work hard, be strong, be dependent and make our
customers proud.

6.1. Marketing Strategy

Now a day no business is done without marketing. Marketing has become an important aspect
for a business to succeed. As a startup company in order to be recognized by customers
marketing is important. There are different ways to do marketing and promoting.

 Through business cards: even though business card is small it marketers have been using
it for centuries its effective, minimum cost and also if we make the design unique it will
be an advertisements.
 Flyers: just like business cards flyers have been around a long time and they are also
effective.
 Banners: a banner is another way of advertising since it will be hanged on higher place
lots of people will see it
 Social media: social media have consumed everyday lives of everyone. It’s an effective
way of advertising.
 Websites: just like social media websites help us meet with customers easily and
effectively. These are some of the ways that we are going to promote our products.

6.2. Competitiveness strategy

In a business world competition is unavoidable, but we have to be better than our competitors so
the customers can choose us.

Advantages over Competitors:

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Our advantage from our competitors is first we have done survey research and found out the gap
and the customers in need, second we use a quality Raw Materials compared to our competitors,
third we are customer oriented while they are profit oriented. We also use websites for order and
reservations.

Quality Assurance

For quality assurance purposes, all our materials are high quality and are done in a clean
environment.

Risk analysis

In the event of a major change in the market, we might see some reduction in revenue. We have
to secure more customers before that happen. For example like in the current state because of the
pandemic out break most of the restaurants were shut down this will have a major effect on sales
considering most of our customers are restaurant owners. In order to avoid this we have to be
creative and deliver the products safely and also provide other services that are needed.

SWOT Analysis
For every business the company strength, weakens, opportunity and treat must be studies

 Strengths: Good management, Best marketing strategy, Quality of the product

Customer oriented
 Weakness: new for the business,

 Opportunity : Government policy regulating job creation, availability of supplies

 Treats: Highly experience compotators with good will

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7. MARKET and DEMAND ANALYSIS
According to demographic projections from the most recently available census or demographic
data, Ethiopia has the second largest population rate. The new high growth of population mostly
is from the urban or in the city area. Figures from the Ethiopian Central Statistics Agency,
project the urban population is will triple to 42.3 million by 2037, growing at 3.8% a year.
According to the 2015 Ethiopia Urbanization Review, the rate of urbanization will be even
faster, at about 5.4% a year. That would mean a tripling of the urban population even earlier by
2034, with 30% of the country’s people in urban areas by 2028.

Figure 7.1: Ethiopian population growth

Source: Worldometer Elaboration of data by United Nations, Department of Economic and

Social Affairs, Population Division. 

Addis Ababa which is the capital city of Ethiopia, since it has good infrastructures and the
people have access to almost everything it’s one of the highest growth rate or urbanization in the
country. Following that the demand for food will also increase as the population of the capital
city increases.

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INJERA is one of the highest demanded foods in the city. Even though most of the households
prepare their own INJERA at their place, now days the demand for market INJERA has
increased significantly. This is because most of the people that live in the city are workers, these
workers most of the time dine outside their homes or buy INJERA from the market because most
of the time they don’t have time to prepare INJERA since it takes time to prepare. Also another
reason is there is a high shortage of electricity in the city this makes it difficult to prepare
INJERA when needed. So the demand for INJERA increases because of these reasons.

INJERA is one of the healthiest and convenient foods based on TEFF. It is Ethiopian traditional
food and eaten with WETE in every meal. It’s an everyday meal for Ethiopians and on average
almost 99.6% of the population consumes INJERA daily. The growing desire for convenience
among consumers leading increasingly busy lifestyles and desiring for a simple life style, is
creating a high business opportunities in the INJERA business.

7.1. Characteristics of the market

A. Demand in past and present

Even though Ethiopia is the largest producer of TEFF the county neither imports nor exports
TEFF.  This is because the TEFF production and value chain in Ethiopia largely rely on
traditional practices, and the TEFF market is limited by the government’s export ban. But it is
still possible to export INJERA and even have high demand around the world this is because
millions of Ethiopian immigrants’ demand who remain attached to the cooking culture of their
homeland. It is believed the demand for INJERA might be exponentially increased due to its high
nutritional values and gluten free grain crop. This is concluded based on the past rising of the
need for INJERA.

According to CSA agricultural Sample Surveys, 2003/2004–2013/2014 INJERA exports from

Ethiopia has increased significantly. This shows the potential the INJERA business has on export
which also benefit the countries economy.

Figure 7.2: Demand of INJERA

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Source: CSA agricultural Sample Surveys, 2003/2004–2013/2014 INJERA exports from
Ethiopia, by value, 2008–2015.

Even though the export market is limited and could be challenging because of the government
ban, there is a high consumption need inside the country in all over the region especially in the
capital city Addis Ababa.

B. Market Segmentation

INJERA is consumed by all groups of people; especially the older generation prefers INJERA
and tries to avoid other foods that have wheat in it. Most of the citizen of Addis Ababa is
workers so most of the time they are regulars in different restaurants around the city. Restaurants
are the main customers of the INJERA business. Both the younger and older generation consume
INJERA daily in a small and big restaurants based on their income or daily allowance. These
restaurants deliver all the foods that the customer needs with different varieties mostly foods are
presented with INJERA.

Figure 7.3: Different types of food served in Ethiopian restaurants

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C. Pricing

The current market price of INJERA in Addis Ababa is between 7-12 Birr/INJERA. The Product
the products will be delivered directly to the customers to avoid unnecessary price increment
which will affect the purchasing power of customers. In the future there is a plan so that the
products can be distributed by establishing own distributing stores in towns or distribution of the
products could be undertaken through small retail outlets as well as large wholesalers like
supermarkets and catering establishments.
The price of a product in the market is an important factor influencing consumer demand. Hence
to be marketable, the price will be affordable and will be in the consideration of the market or
competitors price. The price will be set considering the customers preference in order to do that
the costs involved in raw material procurement, processing, packaging, storage, marketing and
distribution must be kept as low as possible. We can make that happen by directly buying the
raw materials from the main distributers of farmers and also avoid unnecessary costs that might
increase the value of the product.

D. Method of distribution and sales promotion

Our method of distribution varies with the nature of the quantity of the product and the place of
the customers. This is to avoid unnecessary costs and to preserve time. Depending on the
quantity and place most of the small food sellers around ADDISU GEBEYA are located around
one places of the market which is hard for a vehicles to enter and deliver in order to solve that
there will be a delivery person who will deliver the products to those place by foot it’s not only
in ADDISU GEBEYA but other places also have the same structure of business which makes it
easier to access all the small food business customers at ones which will make them one of our
largest buyers. Hence, the places mostly are opened at the same place and time and also are order
constant number of products at a time at a specific time, this make it easy for our delivery person
to deliver the product at once.

The other mode of delivery is through minivan cars this are to deliver for customers that orders a
large quantity of products and have a great distance from the business places. These customers
mostly are big restaurants, retailers, hotels, supermarkets and others that are in the food making
businesses.

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Sales promotion and marketing

Marketing is the most important thing for a business; it’s a way of communication with
customers. It is the bridge that connects a company and customers. The customers will access the
product they desire, the price, the quantity and other factors about the product through this
means. It also boosts morale and increase the productivity of a company. Considering all the
above points, for marketing and promotion the estimated budget will be 15,000 ETB especially
for the first year of the operation since it is the time for new business to meet customers for the
first time.

E. Consumers or customers

When any one runs a business the first thing that should be into consideration is the customers
who are the pillars of any business. The first priority should be the satisfaction of customers.
This business proposal is part of food industry, and people are really sensitive about the food
they consume and want the best in any way.

Our customers in this proposal are chosen based on their business profession. Most of them will
be in service giving business and the others will be retailers. The serving giving business
includes small food places mostly known as mother places in the city, food service restaurants
that are in need of our service and hotels that serve foods. When it comes to retailers most of
them are shops that sell different kinds of staffs including INGERA and supermarkets. Most of
the consumers of retailers are households.

F. Supply and competition

When it comes to supply there are direct contacts with the farmers in the country that produces
the grains needed and also available transportation that could deliver the product needed for
production. Even if time comes and couldn’t get in contact with the farmers that could deliver
the products needed, ADDISU GEBEYA is really close to MERKATO which is the biggest
market place in Africa and could provide us with the raw materials needed for production at any
time.

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According to survey result conducted there are around 70 restaurants including small and big
restaurants around ADDISU GEBEYA, and these restaurants some of them make their own
INJERA. Also most of them relay on manufacturers to get the product. Also there are around 17
retailers and around 12 mini markets that sell INJERA. These places mostly depend on two
major INJERA producers that are found in the area, but since the demand is a high they couldn’t
satisfy the needs around the area.

Table 7.1: Survey result of market and demand gap

Supply of INJERA per day on average

No Producers Number of INJERA per day
1. Producer 1 1000/ day
2. Producer 2 2000/day
Total 3000/day
Market demand according to survey 7075/day
Demand gap according to survey 4075/day

Source: survey result

From the survey result done there is 4075 INJERA per day gap between the production and the
demand needed. This result shows that there is an opportunity for new entrant to the market.

G. Future Growth

The business is planned to be conducted around ADDISU GEBEYA and most of our customers
will be institutes that are already exist in the area. For the future after our product is in the market
and after our customers are familiar with it, our product will expand to other areas using different
marketing strategies that are mentioned above.

Our expected Clients will be new business owners that are opening in the futures, existing
restaurants, hotel and supermarkets that exist within our working area and outside our working
areas, weeding and event planners and other interested parties.

H. Government policy

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The government is open for new business ideas and opportunities. The government policy is also
inviting for business starters and simple in the beginning of the business. The government
support by providing trade license and tin numbers sometimes the government even provides a
place to conduct the business and loan opportunities for new business starters. The entry barrier
for new business is simple and one can start as long as they are financially capable. Therefore,
the planned business should have got favorable economic and politically viable field to engage in
the INJERA business.

7.2. Demand forecasting and market planning

Demand forecasting is done from the data gathered both from primary and secondary sources. It
is estimating the future or the objective that the company sets to accomplish. There are different
forecasting methods but the widely used are qualitative and quantitative methods. In order to
forecast it deeply looks in to the size of the market both in volume and in value, the various
consumer segments and buying patterns, the competition, and the economic environment in
terms of barriers to entry and regulation. For this business jury of executive opinion method is
used.

Also will put price segmentation into consideration, for this business it will utilize the average
whole sale pricing method. In this method, the company will set a price that is convenient for all
products and customers, but also will put in to consideration the return that will be gained from
the business.

The demand is expected to raise 15 % for the next 3 years compared to the survey done. Also
through deep analysis and through marketing, it’s assumed there will be customers in other area
that are interested in the products.

FORECASTED REVENUE FOR ENGOTCHA INJERA

Estimated sales income annually for the first year of the business, Projected Income Statement

Table 7.2: Annual Projected Income Statement

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 ENGOTCHA INJERA
Annual Projected Income Statement

Total Revenue 9,920,000

Total Expense (6,450,974 )

Contribution Margin 3,469,026

Fixed cost (Depreciation Cost) (104,995 )

Income before tax 3,364,031

Tax (35% of Income before tax) (1,177,410.85 )

Net income after tax 2,186,620.15

Estimated sales per day = estimated quantity X average unit price

4000 X 8 = 32,000

Estimated sales annually = Estimated sales per day X estimated working days annually

32,000 X 310 = 9,920,000

 The first year computation shows according to the demand there is 4075 INJERA per day
gap in order to fill the gap 4000 INJERA per day are projected to be made, which will
give us 2,186,620.15 net incomes.

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8. TECHNICAL ANALYSIS
Technology Feasibility is performed to determine the potential economic viability of a process or
technology, and helps to identify which technologies have the greatest likelihood of economic
success. Results from technology feasibility analysis efforts provide input to balanced portfolio
development and technology validation plans. The economic competitiveness of a technology is
assessed by evaluating its implementation costs for a given process compared to the costs
incurred by current technology. These analyses are therefore useful in determining which
projects have the highest potential for near mid and long-term success.

8.1. Material Inputs and Utilities

A. Raw materials
Our products cannot be done without raw materials. Raw materials are the base of every product.
The main raw material for INJERA is TEFF. When buying TEFF there are stages, for the main
product, first stage or in Amharic (Andena Dereja or magna) TEFF which is known us the best
TEFF will be used. It is chosen to make the best product as possible and to satisfy the customers.
The raw materials will be bought from the local farmers, which produce a quality TEFF and are
available any time with relatively low cost.

Two types of TEFF will be used:

1. The first one is white TEFF- White TEFF is favored but merely grows in some specific
areas/regions of Ethiopia. It requires the most accurate growing conditions and is the
most expensive type considering the other types of TEFFs.
Figure 8.1: White TEFF

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 2. Red/brown TEFF - Red/brown TEFF is cheapest and the least preferred type, which
contains highest iron (Fe) content. It is a great source of essential amino acids,
particularly lysine, which is the most deficient in grain foods. Considering the benefits
these days there is high demand of it.
Figure 8.2: Red/Brown TEFF

 The other raw material needed is rice: rice contains more fiber than processed foods. Fiber can
lower cholesterol and reduce your risk of heart disease and stroke. Since fiber makes you feel
full, you may find it easier to maintain a healthy weight. Rice contains vitamins and minerals that
help the blood transport oxygen and perform other vital functions.
Figure 8.3: Rice

Taking the raw materials above its assumed the following projected cost of raw materials
annually all the raw materials are bought from local farmers and they are number 1 in quality.

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Table 8.1: Annual projected cost of raw materials

ENGOTCHA INJERA
Projected Cost of Raw materials annually
Type Quantity in quintal Price per quintal Total

White TEFF 630 4,000 2,520,000

Red/brown TEFF 300 3,500 1,050,000

Rice 111.6 2,250 251,100

Total raw material cost 3,821,100

B. Auxiliary materials

The other materials are auxiliary materials. These materials are as use full as raw Martials and
the product can’t be produced without them. Like the raw material auxiliary materials play an
important role in the production process.

Table 8.2: Annual projected cost of Auxiliary materials

ENGOTCHA INJERA
Projected Cost of Auxiliary materials annually

Type Quantity in quintal or Price per Total

Kg quintal or Kg
Maize or Corn 558q 1400 781,200

Gomenzer used for stove 300 Kg 35 10,500

Packaging and sticker 12 Kg 80 960

Cleaning materials - - 15,000

Total Auxiliary material 807,660

C. Utilities

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Utilities like electric power, water, telephone and internet bill and others are used in a large
amount. These utilities are available with a fair cost.

Table 8.3: Annual projected cost of Utilities

ENGOTCHA INJERA
Projected Cost of utilities
Type Quantity in q Price per q, Kg Total
or month
Buna/ coffee Geleba 3720q 100 372,000
Wood one pack wood 744 pack 60/pack 44,640
carries 20 piece
Electricity bill - 5000 60,000
Water bill - 1500 18,000
Telephone and Internet - 1,000 12,000
bill
Gas Expense - 1000 12,000
Total cost of utilities 518,640

8.2. Manufacturing Process and Technology

The feasibility study should define the technology required for a particular project, evaluate
technological alternatives and select the most appropriate technology in terms of optimum
combination of project components. The various implications of the acquisition of such
technology should be assessed, including contractual aspects of technology licensing when
applicable. In most industrial subsectors, the market for technology tends to be imperfect and
increasing as products become more sophisticated. Thus, while various alternative production
technologies may be available for the manufacture of relatively simple consumer goods,
technological choices decrease with the production of more sophisticated products.

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8.3. Products/Service to Be Offered

8.3.1. TYPES OF INJERA/ PRODUCT:

WHITE INJERA

Figure 8.4: White INJERA

This type of INJERA is widely used and widely demanded. It’s going to be our main product and
based on the survey done it’s widely consumed. Its main ingredient is 95% white TEFF, 4.5%
rice and 0.5% maize. This will enhance the quality and make it appealing for the appetite.

RED/BROWN INJERA

Figure 8.5: Red/Brown INJERA

This type of INGERA is called brown INJERA but most of the time in the country its known us
red or black INJERA. It’s our second main INJERA and made of 100% red/brown TEFF.

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ZEBRA INJERA

Figure 8.6: Zebra INJERA

This type of INJERA is a combination of both white and red/brown TEFF which are prepared
separately and made together. This is widely used on different events like a weeding. Most of the
time this type of INJERA is made after an order is made which makes it a unique and pretty
product.

DERKOSH INJERA

Figure 8.7: DERKOSH INJERA

DERKOSH INJERA is usually sold packed and it’s also widely exported to different country
because is easy and confortable to carry and also it have a last long without going bad. While
making INJERA some of the time there is a tear and sometimes it’s not the quality needed when

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this happens they are turned into DERKOSH INJERA. It can be both a combination of white and
red/brown TEFF.

8.3.2. INJERA MAKING PROCESS

INJERA as one of the traditional food in Ethiopia it has a process that came along the tradition,
and it’s the same for all product.

A. SIEVING

After the TEFF is purchased from the local farmers it is will be turned into TEFF flour, then the
flour is generally sieved before using it to make the INJERA. This is because to aerate the flour,
to remove coarse particles and other impurities and to make the TEFF flour more homogeneous.

B. MIXING

Mixing of the TEFF flour and ingredients involves i.e. hydration & blending, dough
development and dough breakdown. The process of mixing begins with hydration of the TEFF
flour with formula ingredients. The mixing is done in the mixing machine this is chosen to use
time effectively and efficiently, also to avoid wastage of products and to reduce man power. It’s
mixed until the ingredients are well blended together.

C. FERMENTATION

INJERA is one of fermented products; it usually takes from 2 -3 days to properly ferment.
Fermentation is achieved by absite which is traditional yeast. After the fermentation it’s
knocked back by punching of the mixture to get the quality that is desired. The knock back has
the objectives of equalizing dough temperature throughout the mass, reducing the effect of
excessive accumulation of carbon dioxide within the dough mass and introduces atmospheric
oxygen for the stimulation of yeast activity.

D. SCALING

Since INJERA is made traditionally there is a traditional jar used for each INJERA making
which is accurate for INJERA making. The INJERA is done on the METAD which is a
traditional name for stove.

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Figure 8.8: INJERA making and preparation

8.3.3. PACKAGING OF INJERA

The main functions of a package are to containing the product, to protect the product, to help in
selling of the product and to satisfy the customers. The packaging is done for supermarket and
DERKOSH INJERA customers. The other products are delivered in a delivery box that is safe
for transportation. The packaging is done carefully and appropriately.

Figure 8.9: INJERA packaging

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8.4. Plant Capacity

Our feasible normal plant capacity as a starts is 4000 INJERA per day, this is considering all
factors constant. Our plant has the capacity to produce more but considering it’s a startup
company we took the minimum amount of production possible.

Since we live in a developing country there are different constraints like shortage of electricity,
shortage of water supply and other constraints. To avoid this we have prepared a strategy for
example our product is not only electricity dependent we also use other power sources like wood
energy it’s traditional but effective. Another example is for the shortage of water supply we plan
to buy water container that is enough for production.

8.5. Business Location and Site

Our business location and site is located in ADDISU GEBEYA GULELE sub city, Addis Ababa
Ethiopia. The site selection will play vital role in inviting new customers as a result business
profitability increases. The selected site is favorable because it’s located near MERKATO which
makes it easy to get anything that is needed for the production process.

Figure 8.10: Area and places of the project implementation

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It will serve the society by producing and distributing variety of high quality of INJERAS
needed of the community around. The site chosen has an easy transportation access and is car
friendly so the desired amount of products can be put out.

8.5.1. Estimate of the cost of land

Since the business id production type of business, a 2000 /square that has service rooms for
office and employees boarding is chosen. This is temporarily until we become financially strong
and buy a permanent land for our working place. The survey conducted suggested that the site
chosen costs 20,000 rent/ month. Main factors influencing choice of business location is
community factors, surrounding areas, product accessibility and transportation accessibility.

Annual cost of land = 20,000 X 12 = 240,000

8.5.2. Preliminary environmental impact assessment

Project would have either positive or negative effect on the environment, now days, due to the
damaging condition of the global environment it is given high attention to issues related to
environment. Every countries in the world gives consideration for the betterment of global
environmental situation, especially as per the current agreement those developed nations who
have a major role in the infectivity of the environment with the release of huge amount of
industrial wastes raises a fund for third world country as a compensation and to contribute for the
betterment of the condition. Ethiopia is one of the third world countries that play a significant
role to solve the problem.

For any project environmental impact assessment is to be considered in the implementation of

the project. Environmental friendly projects are given more support than others. Project can
affect the environment or affected by the environment. In relation to this, our business project
does may have a small air pollution on the environment in order to minimize the air pollution we
will be using mainly electricity. But there will be no water, noise and other pollutions on the
environment. In order to minimize the pollution as low as possible other than the usage of
electricity we will be using technological low high consumption stoves that are environmental
friendly and are built in our country.

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8.6. Machinery, Equipment and vehicle

Whenever a business starts cost is necessary since without cost there can’t be instruments that
can produce the products. For our business machineries, equipment’s and a vehicle to transport
the products are necessary. The table below shows all the necessary machineries, equipment’s
and a vehicle

Table 8.4: Cost of Machineries, Equipment’s and a Vehicle

ENGOTCHA INJERA
Estimated Cost of Machineries, Equipment’s and a Vehicle
Type Quantity Single Price Total
A. Machineries
Flour mixer 3 45,000 135,000
Electric MITAD (stove) 9 2,000 18,000
Lacketch MITAD 9 3,000 27,000
Total cost of Machineries 180,000
B. Equipment’s
1000 liter Jar 18 850 15,300
ABSIT pot 6 1,200 7,200
ABSIT stove 6 350 2,100
SEFED 100 50 5,000
Workers Uniform 25 100 2,500
Workers bed 10 2,500 25,000
Mattress and blanket 10 1,500 15,000
Water container 1 11,000 11,000
10,000L (roto)
Office equipment
Office chair 8 1,000 8,000
Table 5 3,500 17,500

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File cabinet 3 4,500 13,500
computers 3 4,500 13,500
Other minor materials - - 6,000
Total cost of Equipment 141,600
C. Vehicle
Minivan (Damas car) 1 200,000 200,000
Total cost of Vehicle 200,000
Total A+B+C 521,600

8.7. Structure Including Furniture and Civil Engineering

Works

Since we are renting a place for our business project, we don’t need much civil work.
Considering this there won’t be much cost.

PRE-PREPARATION

Ceramic coating of walls and floors, celling work, electrical installations and pipe lines are the
only necessary civil work.

Table 8.5: Civil work estimated cost

ENGOTCHA INJERA
Estimated cost of civil work
Civil works Estimated cost
Cement work for floor and wall 5,000

Celling work 6,500

Pipe line 3,000
electrical installations 3,000
Total civil work 17,500

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8.8. Organization Layouts and Human Recourses

8.8.1. Organization Layout

The Company lay out is as following:

I. Top Level/ General Manager

The purpose of top level manger is
 Plan and develop strategies, policies, procedures and systems
 Coordinate the overall activities of the Company
 Pass strategic decisions
 Manage over all process with the help of other managers

 Recruit and assign competent manpower for the firm

II. Finance manager or Accountant
The purpose of finance manager is
 Collect payments
 Coordinate and supervise the purchase activities
 Financial analysis and reporting Financial report
 Payroll preparation, payment and recording
III. Marketing Manager
The purpose of marketing manager is
 Coordinate and supervise production
 Lead the sales operation and forecast the financial condition of the Company
 Lead the promotional and advertisement activity
 Report the Financial status to the General Manager
IV. Store Manager
The purpose of store manager is
 Follow and control cleanness and wellbeing of the Store.
 Report the status of Stock of supplies to the General Manager.
 Record the what’s coming in and out of the store

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 8.8.2. Human Resource

A production cannot happen without people, for our business we plan to recruit the best, careful
and most disciplined employees that we can be proud of. Unemployment in our country is
increasing significantly, considering this our company aims at creating job opportunities for the
unemployed people.

The total needed human resource and salary is shown below.

Table 8.6: Human resource salary

ENGOTCHA INJERA
Projected Human resource salary

Position Quantity Salary per Total Monthly Total Annual Salary

person Salary
Top Manager 1 8,000 8,000 96,000

Finance and Marketing 2 5,000 10,000 120,000

Manager
Store Manager 1 3,500 3,500 42,000

Sales 1 2,500 2,500 30,000

INJERA Makers 8 3,000 24,000 288,000

Driver 1 3,500 3,500 42,000

Helpers and Janitors 3 1000 3,000 36,000

Total Salary Expense 654,000

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8.9. Work Schedule

According to the plan and survey result we have projected the implementation of the
business. The following table shows the whole schedule process.

Table 8.7: Project implementation schedule

ENGOTCHA INJERA
Projected implementation schedule

Activity Start date Completion date

Acquiring license October 15, 2021 November 15, 2021

Renting of property November 20, 2021 November 30, 2021

Construction of civil work December 1, 2021 December 15, 2021

Purchase of equipment and machine December 20, 2021 December 30, 2021

Acquisition of furniture December 20, 2021 December 20, 2021

Employment December 21, 2021 December 30, 2021

Employee training January 03, 2022 January 10, 2022

Procurement of raw material January 03, 2022 January 15, 2022

Advertising and promotion January 02, 2022 Till the end

Business start January 20, 2022 January 20, 2025

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9. FINANCIAL ANALYSIS
Financial analysis is must for any start up business, since we have to know if the business is
profitable or not. Also it shows our investors or financial institute it’s a good business plan and
that they should invest in it if not it’s not worth the time.

9.1. Initial Project Financing

Table 9.1: Initial Project Financing

ENGOTCHA INJERA
Projected project financing Annually

Statement Capital (60%) Loan (40%) Total Investment

Physical Asset 312,960 208,640 521,600

Working capital 3,633,780 2,422,520 6,056,300

Land Preparation Expense 17,500 - 17,500

Total Investment 3,964,240 2,631,160 6,595,400

9.2. Depreciation expense

According to Ethiopian tax law the depreciation is taken by pooling system which has different
percentages for different assets. According to the law Building depreciates 5%, Intangible assets
depreciate 10%, Computer and computer related assets depreciate 25% and other assets 20%.
According to the law based on our assets, Machinery, equipment other than computer and
vehicle falls under category other asset which is 20% and computer falls under category
computer and computer related assets which is 25%.

Depreciation expense on Machinery, Equipment and vehicle for three year working period is
shown in the next table:

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Table 9.2: Depreciation Expense

ENGOTCHA INJERA
Projected Depreciation Expense Annually
Statement Year 1 Year 2 Year 3
Book value for Machinery, equipment other than 508,100 406,480 325,184
computer and vehicle
Depreciation 101,620 81,296 65,036.8
Computer 13,500 10,125 7,593.75
Depreciation for Computer 3,375 2,531.25 1,898.4
Total Depreciation 104,995 83,827.25 66,935.2

9.3. Income Statement

Income statement shows the profit and loss ratio of the project. The following table shows the
projected income statement of the business for three years. We assumed the interest rate for the
loan is 15 %

Table 9.3: Income Statement

ENGOTCHA INJERA
Annually Projected Income Statement in Birr

Statement Year 1 Year 2 Year 3

A. Sales 9,920,000 11,408,000 13,119,200

Cost and Expense

B. Raw Material 3,821,000 4,394,150 5,053,272.5

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 C. Gross profit A-B 6,099,000 7,013,850 8,065,927.5

D. Auxiliary Materials 807,660 928,810 1,068,130

E. Salary Expense 654,000 696,000 738,000

F. Rent Expense 240,000 240,000 240,000

G. Depreciation Expense 104,995 83,827.25 66,935.2

H. Advertisement and Promotional Expense 15,000 10,000 10,000

I. Interest Expense 394,674 263,116 131,558

J. Utility Expense 518,640 544,572 571,800

K. Total Cost and Expense 2,734,969 2,766,352.25 2,826,423.2

L. Net Income Before Tax C-K 3,364,031 4,247,497.75 5,239,504.3

M. Income Tax Payable 1,177,410.85 1,486,624.21 1,833,826.51

Net Income After Tax L-M 2,186,620.15 2,760,873.54 3,405,677.8

9.4. Balance sheet

The balance sheet shows the asset, liability and capital of the project. The following table shows
the projected balance sheet of the business for three years.

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Table 9.4: Balance Sheet

ENGOTCHA INJERA
Annually Projected balance Sheet
Statement Year 1 Year 2 Year 3
1. Current Assets
2. Cash 4,873,153.33 5,750,890.33 6,720,273.12
3. Total current assets 4,873,153.33 5,750,890.33 6,720,273.12
4. Fixed assets:
5. Machinery, equipment and Vehicle 508,100 406,480 325,184
6. Computer 13,500 10,125 7,593.75
7. Total fixed assets (5 + 6) 521,600 406,605 332,777.75
8. Accumulated depreciation 104,995 83,827.25 66,935.2
9. Net book value of fixed assets (7 – 8) 416,605 332,777.75 265,842.55
Total assets ( 3+9) 5,289,758.33 6,083,668.08 6,986,115.67
10. Current liabilities:
11. Rent payable 240,000 240,000 240,000
12. Salary payable 654,000 696,000 738,000
13. Tax payable 1,177,410.85 1,486,624.21 1,833,826.51
14. Interest payable 394,674 263,116 131,558
15. Total current liability(11 + 12 + 13+14) 2,226,084.85 2,445,741.21 2,703,384.51
16. Long term liability 877,053.33 877,053.33 877,053.33
17. Total liability (15+16) 3,103,138.18 3,322,794.54 3,580,437.84
18. Contributed Capital 1,858,627.13 2,346,742.509 2,894,826.13
19. Retained earnings 15% of net income 327,993.023 414,131.015 510,851.67
20. Total owner’s equity (18+19) 2,186,620.15 2,760,873.54 3,405,677.8
Total liability and owner’s equity (17 +20) 5,289,758.33 6,083,668.08 6,986,115.67

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 9.5. Cash Flow Statement
The following table shows the projected cash flow statement of the business for three years.
Table 9.5: Cash Flow Statement
ENGOTCHA INJERA
Annually Projected Cash Flow Statement
Statement Year 0 Year 1 Year 2 Year 3
Cash in flow
Own equity 3,964,240
Loan Received 2,631,160
Cash Sales 9,920,000 11,408,000 13,119,200
Total Cash Inflow 6,595,400 9,920,000 11,408,000 13,119,200
Cash out flow
Investment Expense 312,960
Raw material 3,821,000 4,394,150 5,053,272.5
Auxiliary materials 807,660 928,810 1,068,130
Salary 654,000 696,000 738,000
Depreciation 104,995 83,827.25 66,935.2
Salary 654,000 696,000 738,000
Rent 240,000 240,000 240,000
Utility Expense 518,640 544,572 571,800
Advertisement Expense 15,000 10,000 10,000
Interest Expense 394,674 263,116 131,558
Loan Repayment 877,053.33 877,053.33 877,053.33
Total Cash outflow 312,960 8,087,022.33 8,733,528.58 9,494,749.03
Net Cash Out flow 1,832,977.67 2,674,471.42 3,624,450.97
Beginning cash balance 312,960 2,145,937.67 4,820,409.09
Ending cash Balance 2,145,937.67 4,820,409.09 8,444,860.06

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 9.6. Loan Payment Schedule or Pay Back Period

Pay Back Period is the period on which the loan is paid back fully. On this case we took a three
year period to pay back the loan

Table 9.6: Pay Back Period

ENGOTCHA INJERA
Annually Projected Pay Back Period
Year Outstanding Principal Installment Interest Rate Total Payment
Payable 15%
1 2,631,160 877,053.33 394,674 1,271,727.33
2 1,754,106.67 877,053.33 263,116 1,140,169.33
3 877,053.33 877,053.33 131,558 1,008,611.33
Total 0 2,631,160 789,348 3,420,508

9.7. Net Present Value and Profitability Index

Net present value and profitability index shows weather the project should be accepted or not.
For NPV and PI computation 12% return rate or discount rate was chosen.

Table 9.7: NPV and PI computation

Year Investmen Total Cost Discount Present Gross benefit Discount Present value
t and Expense factor value of cost factor Of benefit
0 312,960 312,960 1 312,960
1 2,734,969 0.893 2,442,327.32 6,099,000 0.893 5,446,407
2 2,766,352.25 0.797 2,204,782.74 7,013,850 0.797 5,590,038.45
3 2,826,423.2 0.712 2,012,413.32 8,065,927.5 0.712 5,742,940.38
Total 312,960 8,329,016.45 6,972,483.38 21,178,777.5 16,779,385.83

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Net present value (NPV)
NPV = Present value of gross benefit - Present value of gross cost

NPV = 16,779,385.83 - 6,972,483.38

NPV = 9,806,902.45

The net present value is greater than zero. This means that the project owner will recover the
investment it is profitable so it should be accepted.

Profitability Index (PI)

PI = Present Value of gross benefit / Present Value of gross cost

PI = 16,779,385.83 / 6,972,483.38

PI = 2.4

The ratio is greater than one. This means that the project owner will recover the investment it is
profitable so it should be accepted.

10. ECONOMIC/SOCIAL COST BENEFIT ANALYSIS

Considering the increasing of unemployment rate new business are welcome any time since it
will reduce the problem. Our business plan will create job for lots of employees. The “invisible
hand” would ensure that what is good for the investor will be good for the country, and that what
the developing country needs will be attractive to the private investor.

In the classical economic world and in the thinking of most businessmen, market prices are the key
to an efficient allocation of capital, labor, material, and other resources in the economy. Thus the
prices the businessman pays for his inputs reflect the value of those inputs to the economy.

Also its small business considering the big factories and plants, it will have good benefit for the
surroundings. Since most of the material needed is near the working place it will benefit the
peoples around.

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11. ENVIROMENTAL IMPACT ANALYSIS
Environmental Impact Assessment (EIA) is a process of evaluating the likely environmental
impacts of a proposed project or development, taking into account inter-related socio-economic,
cultural and human-health impacts, both beneficial and adverse.

Environmental impact of technologies

As stated above in preliminary environmental impact assessment, our business gives a great
focus on environmental preservation. For any project environmental impact assessment is to be
considered in the implementation of the project. Environmental friendly projects are given more
support than others. Project can affect the environment or affected by the environment. In
relation to this, our business project does may have a small air pollution on the environment in
order to minimize the air pollution we will be using mainly electricity. But there will be no
water, noise and other pollutions on the environment. In order to minimize the pollution as low
as possible other than the usage of electricity we will be using technological low high
consumption stoves that are environmental friendly and are built in our country.

Figure 11.1: Laketch low energy MITAD and electric MITAD

An Environmental Impact Assessment is an assessment of the likely human environmental health

impact, risk to ecological health, and changes to nature's services that a project may have. The
principal paths of impact are: pollution impacts, and noise effects, ecology impacts and the likes.
Our projects have positive impact on the environment because it encourages low energy sources.
The business has an advantage of this, which takes small area for installation and which also uses
electric power that reduces the emission of gaseous and the other advantage of the technology.

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There is no major pollution problem associated with this industry except for disposal of waste
which should be managed appropriately. Our business gives emphasis for protecting
environment and support’s our country’s green development policy. Hence our business does not
use any anti water polluting chemicals and we remove the waste materials in modern way. The
site will cleaned up according to state regulations.

12. CONCLUSION
Considering the profit that will be earned if is implemented properly, this project is profitable
and continuous for a long run. Since the population growth is still growing the demand could be
greater that the projected demand.

12.1. Major Advantages of the project

 This project fills the gap between demand and supply

 It creates job opportunity for the unemployed

 It will contributes for the country’s economy Growth

 In the long term our project will create revenue to the government treasury in the form of

tax

 It will open doors for other business

 In the long run it can bring foreign exchange currencies through export business.

12.2. Drawbacks of the project

The drawback of the project is if loan is not guaranteed and if we couldn’t find an investor, it
will be hard to start the business. Also in the future if there is new entry or a new computation
the market will be small so there should be a strategy to attract customers other than the working
area.

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12.3. Chances of implementing the project
This project has a high probability of being implemented because:

 Availability of reasonable cost of labor force,

 Availability of infrastructure,

 Availability of potential market.

 Drastic increase in cosmetics and beauty salon demand.

 cheap house rent from the college

 There is less competition in the market

 There is high demand

 Access to credit provision with low interest rates

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Annex I: Reference

 Fikadu, Asmiro, Wedu Tsega and Derseh, Endalew, (2019), Review on Economics of
TEFF in Ethiopia, academy Journal, Addis Ababa University, Ethiopia

 Louis T. (2018), Social Cost/Benefit Analysis for MNCs, academy Journal,

 Padró and V. Putsche (2099) Survey of the Economics of Hydrogen Technologies, C.E.G.

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