PROJECT PROPOSAL ON THE ESTABLISHMENT OF

ANIMAL FEED

PRODUCION AND PROCESSING PLANT

PROJECT OWNER: HAJI ZENYNUDDIN ABABULGU

ABAMILKI

LOCATION:- OROMIA REGINAL STATE

JIMMA ZONE OMO NADA WOREDA ,JATO ABE
KABELE

AUG., 2021
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Table of Contents
EXCUTIVE SUMMARY ............................................................................................................................................................ 7

1. INTRODUCTION ................................................................................................................................................................. 8

1.1 Background .................................................................................................................................................... 8

1.2 The Promoters ............................................................................................................................................... 9
1.3.Location ......................................................................................................................................................................... 9

1.4 Project Goal and Purpose .............................................................................................................................. 9

1.5. The significance of the project ..................................................................................................................... 9
1.6 Socio-Economic benefit ............................................................................................................................... 10
1.7. Investment opportunities ........................................................................................................................... 10
Incentives ....................................................................................................................................................... 12
1.9. Challenges/Constraints............................................................................................................................... 12
Strategic options for challenges .................................................................................................................... 12
2. PRODUCT DESCRIPTION AND APPLICATION.................................................................................................................... 13

2.1 Overview ...................................................................................................................................................... 13

2.2.Products ................................................................................................................................................... 13
2.2.1 Molasses ............................................................................................................................................... 13
2.2.2 Cereal brains ......................................................................................................................................... 14
2.2.3 Oilcakes ................................................................................................................................................. 14
2.2.3 Brewery By-products ............................................................................................................................ 14
2.3. Beneficiaries of the project..................................................................................................................... 14
3. MARKET STUDY ............................................................................................................................................................... 15

3.1. Market Study Supply and Demand ............................................................................................................. 15

3.2 Demand Projection ...................................................................................................................................... 15
Table 1: Projected Demand for Manufacture Animal Feed (Tons) ........................................................................... 16

3.3 Pricing and Distribution ............................................................................................................................... 17

3.4. PromotionStrategy .................................................................................................................................... 17
3.5 Competition ................................................................................................................................................. 17
3.6 Market location (for final products and raw materials) ....................................................................................... 17
3.7. Beneficiary .................................................................................................................................................. 18
3.7.1.Socio-Economic Benefit for the Society ............................................................................................... 18
3.7.2. Economic Benefit for the Community ................................................................................................. 18

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 3.7.3. Economic Benefit for the Country ....................................................................................................... 18
4. Plant Capacity and Production Program ......................................................................................................................... 20

4.1. Plant Capacity ............................................................................................................................................. 20

4.2. Production Program................................................................................................................................... 20
Table 2: Annual Production Program at Full Capacity Operation.................................................................. 20
4.3. Materials and Inputs ................................................................................................................................... 20
4.3.1.Raw Materials ....................................................................................................................................... 20
4.3.2 Auxillary ................................................................................................................................................ 21
4.3.3.Utilities.................................................................................................................................................. 22
5. TECHNOLOGY AND ENGINEERING................................................................................................................................... 23

5.1. Technology Production Process................................................................................................................. 23

Process Flow Diagram .................................................................................................................................... 23
5.2. Engineering ................................................................................................................................................. 23
5.2.1.Machinery and equipment ....................................................................................................................... 23
5.2.2. Land, Building and Civil Works............................................................................................................. 24
 Land and Location ..................................................................................................................................... 25
 Site Development ..................................................................................................................................... 25
Layout and Civil Works .................................................................................................................................. 25
B. Vehicle ............................................................................................................................................................................ 26

5.2.3. Human Resource Requirement ........................................................................................................... 27

5.2.4 Operating Expenses ............................................................................................................................ 28
5.3. FINANCIAL FEASIBILITY ............................................................................................................................... 29
5.3.1. Basic Assumptions for Financial Analysis............................................................................................. 29
5.3.1.3 Working Capital ................................................................................................................................. 30
5.3.1.4 Financing Considerations ................................................................................................................... 30
5.3.1.5 Credit Information ............................................................................................................................. 30
5.4. FINANCIAL ANALYSIS ...................................................................................................................................... 31
5.4.2 Proposed Financing Scheme ................................................................................................................. 32
5.4.3 Total Revenue ....................................................................................................................................... 33
5.4.5 Cash flow............................................................................................................................................... 34
5.4.6.Measure of project worthiness ............................................................................................................ 35
I. Internal Rate of Return .............................................................................................................................. 35
II. Net present value...................................................................................................................................... 35
6. Environmental Consideration .......................................................................................................................................... 36

6.1 Environmental Impact Assessments ............................................................................................................ 36

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7. CONCLUSIONS ................................................................................................................................................................. 36

References ........................................................................................................................................................................... 37

APPENDIX ............................................................................................................................................................................ 38

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 LIST OF TABLE
Table 1 General Information .................................................................................................................... 6
Table 2 Feeding General Formula .......................................................................................................... 13
Table 3 Projected Demand for Manufacture Animal Feed (Tons) ......................................................... 16
Table 4 Annual Production Program at Full Capacity Operation ........................................................... 20
Table 5 Annual Raw Materials Requirement at Full Capacity and Estimated Costs ............................. 21
Table 6Annual Auxiliary Materials Requirement at Full Capacity and Costs ....................................... 21
Table 7Annual Utilities Requirement and Estimated Costs ................................................................... 22
Table 8 Machinery and Equipment Requirement and Estimated Costs ................................................. 24
Table 9 Land ,Building and Construction............................................................................................... 26
Table 10 Office Equipments ................................................................................................................... 26
Table 11 pre service expense .................................................................................................................. 29
Table 12 depreciation schedule .............................................................................................................. 29
Table 13 loan repayment schedule ......................................................................................................... 31
Table 14 Initial Investment Cost (Birr) .................................................................................................. 32
Table 15 Purchase and Sales Estimation Feed Purchase and Sales ..................................................... 33
Table 16 Income Statement .................................................................................................................... 33
Table 17 Balance sheet ........................................................................................................................... 34
List of Figure
Figure 1 Flow Diagram ........................................................................................................................... 23
List of Annex
Annex 1 Sales ......................................................................................................................................... 38
Annex 2 operating cost ........................................................................................................................... 38
Annex 3 Annex 2. operating cost ........................................................................................................... 39
Annex 4 discounted cash flow ................................................................................................................ 39
Annex 5 undiscounted cash flow ............................................................................................................ 40

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 GENERAL INFORMATION OF THE PROJECT
Table 1 General Information
Project name animal feed producion and processing plant
1
2 Project owner Haji Zenudin Aba Bulgu Aba Milki
3 Nationality Ethiopian
4 Project location Jato Abe kebele, Omo Nada district Jimma Zone, Oromia
regional state

5 Project Sector Agriculture

6 Premises 5 hectares
required

7 Initial A total investment of the project is estimated to be birr

investment cost 6,666,439.34 mil From this 20% (1333287.868) will be covered
by the promoter of the project while the rest 80 %
(5333151.472) will be covered by financial institutions.

8 Employment At full capacity the farm will hire a total of Workers 24 labor
opportunity force. From the total employee 4 are permanent and 20
temporary or seasonal

9 Technology Molasses processing

10 Market share For Domestic

11 Benefits of the Source of income ,employment, value add in agricultural sector,
project foreign currency earning and transformation of agricultural
technology etc

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EXCUTIVE SUMMARY

According to CSA 2011/12 the animals feed requirement per annum is 95.83 million tons dry
matter but the available feed is 65.64 million tones dry matter per annum. The difference between
the supply and demand shows 30.2million tones dry matter shortage per annum.

This feasibility study envisages the establishment of a plant for the production of animal feed with
a capacity of 5,000 tons per annum. The plant can produce by 85% capacity in early years. Animal
feed is prepared for consumption by livestock. It contains protein, minerals and other nutrients
which are useful for beef, egg and milk production as well as survival and growth of the animals.

The principal raw materials required are oil cake, molasses, bone meal, bran of cereals, maize, salt
and limestone which are all available locally and premixes imported from abroad. The total
investment cost of the project is estimated at Birr 6,666,439.34. From this 80 % (5333151.472)
banks loan and 20% (1333287.868)own equity of the investor. The investor can get lease financing
for machineries and equipment from Ethiopian development bank. Also the investor will have get
loan for working capital from commercial bank of Ethiopia.

The project can create employment for 32 persons. The project will create backward linkage with
the agriculture and agro processing sectors and forward linkage with the livestock sector and also
generates income for the Government in terms of tax revenue and payroll tax.

Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life continually with promising demand for product. The project financial
measurement(NPV & IRR) shows as the project is accepted & has good return for the investors.

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1. INTRODUCTION
1.1 Background

Ethiopia has a large livestock population and diverse genetic resources, diverse agro-ecologies
suitable for different kinds of Livestock production. However, the productivity and economic
contribution of Livestock sector much below the potential due to shortage of feed supply in terms
of both quantity and quality. According to CSA 2011/12 the animals feed requirement per annum
is 95.83 million tons dry matter but the available feed is 65.64 million tones dry matter per annum.
The difference between the supply and demand shows 30.2 million tones dry matter shortage per
annum. The main sources of animal feeds are Natural pastures Crop residues ,Conserved forages,
Agro industrial by products /wheat bran, Wheat midillings.oil cakes etc/ and Processed compound
feeds.

Feed cost accounts for 60 to 70% of the total cost of Livestock production shortage of feed and
escalating price of Livestock feed is adversely affecting the productivity and profitability of
Commercial livestock operations. The feed milling industry and modern live stock production both
are interdependent. The feed milling industry depends on the growth or success of commercial live
stock production. The market for different compound feeds are concentrated along the Addis
Abeba-Adama corridor, where the feed processing industries and modern Livestock farms
(Poultry, dairy, pig, cattle fattening) are concentrated.

The existing feed industries capacity of the feed mills range widely from 20 quintals to 125 quintals
per hour. The standard for feed mills is 2000 hours of operation annually but, feed mills in Ethiopia
generally operating much lower than this standard i.e.below30 % of their designing capacity. The
sources of compound feed production are purchased grains, agro-industrial-by products and
imported vitamins and Minerals. Hence it is feasible for local and foreign investors to be engaged
in field of animal feed industries in order to enhance feed development and full fill the shortage of
animal feed supply both in quantity and quality in Ethiopia.

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1.2 The Promoters
This project is intended for privately owned cattle feed production and processing Agro-Industry, ideally
located In Jimma Zone,Omo Nada Woreda,Jato Abe Kebele Administration. The anticipated “Cattle
Feed Production and Processing Project” is initiated and owned by Mr. Haji Zienadin Aba Bulgu
Aba Mikli . Previously, he was engaged with various businesses. He also possesses cattle fatteening and
dairy production farming experience. During his engagement in different business, the desire to get
involved in social entrepreneurship aroused in him. Mr. Haji Zienadin Aba Bulgu Aba Mikli is social
responsible and also active member since today.

1.3.Location
This project will be implemented on certified land of ha, 5 ha in Jato Abe kebele for animal feed
production and processing at Jimma Zone, Omo Nada district,Jato Abe Kebele. The woreda is
located about 360 km along the main road to the South west of EthiopiaThe proposed area has an
elevation of minimum 2050 and maximum 2070 m.a.s.l, which is suitable for cattle, forage
production (Omo Nada district land administration and use office 2011).

1.4 Project Goal and Purpose

The overall goal of the project is to contribute towards the economic development of Ethiopia
through using the existing investment opportunities in the Country and taking advantage of the
expressed policy incentives that emphasize on greater commercialization of agriculture and
enhancing private sector development.

The main objective of the said project is to producing and processing forage products for local
markets and to maximize profit so as to sustain the project.
In line with this the following are specific objects of the project.
 To introduce modern Cattle Feed production and processing technologies to the surrounding
locality.
 To create job opportunity for skilled and unskilled local citizens.
 To create market linkages with small holder farmers in the town and its surroundings etc

1.5. The significance of the project

The proposed project deemed to add to the economic development of the nation in general and
zone and the town in specific with following ways:

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 A. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income taxes,
payroll income tax and VAT are collected from undertaking business activities. Therefore, the
proposed project will serve as sources of revenue for the districts as well as for the region.
B. Employment opportunity
One of the problems that our country faced is the problems of unemployment. Therefore, the
current objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self-employment or employment in
other organization. Hence, this proposed project will hire 4 individuals permanently and more than
32 individual temporary during construction phase of the proposed project. C. Sources of foreign
Currency.
Inadequate foreign currency in the country is one of macroeconomic problem, thus the agricultural
sector especially the livestock and meat export is a promising sector that alleviate the problem.
In addition to serving as a source of employment and income for the region, the project will
contributed the current deficiency of foreign currency in the country by earning exported meat in
to different countries.

1.6 Socio-Economic benefit

1. The project will create additional means of employment for both skilled, semi skilled and casual
laborers in the area.
2. Aside from the increase in income of the owner, the project would activate the economy especially
in the continuous production of milk and milk products. It will also encourage entrepreneurs in the
country to engage in milk processing and milk production.
3. The expected increase income of the permanent and temporary employees’ beneficiaries would
eventually contribute to good health and nutrition in the family and allow them to access better
education for their children, improve sanitation and provide for the necessities in the household.

Duration of the project: 10 years

1.7. Investment opportunities

 High livestock population & Diverse agro-ecologies

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 There is an increasing trend of intensification of livestock production especially the
poultry industry. This opens the opportunity for a substantial increase in the demand
of compound feeds

 A welcome trend in the increase of the commercial orientation of animal production

in Ethiopia; the breeds/strains of animals have also started to change in line with
advanced countries.

 The improved breeds are dependent on commercial mixed feeds. This is expected
to continue at a faster rate in the future;  Rapid expansion of
 Feed lot operations more than 120 with a holding capacity of
702000/operations
 Dairy, poultry and pig farms
 Presence of agro industrial by products (flour mills, oil, sugar factories)
 5 years GTPII plan of the country (2014/15-2019/20) aimed at filling the
identified feed deficient gap
 Price increment of feed from time to time
 Prospects of marked Increased consumer demands for Livestock products
 Prospects for increase in availability of raw materials &equipment i.e. Increase in
the production of especially maize, Soybeans & oilseeds in terms of yield per unit
area and encouraging development in manufacture of small capacity feed milling
and mixing equipment locally
 The industries are importing premixes from abroad revealing existence of
investment opportunities
 Fostering development of agro-industries( Increased availability of ingredients

 Increased consumer demands as a result of forecasted increase in income and

purchasing power of the population;
 Potentially high demand in neighboring countries for compound feeds and livestock
products and the comparative advantage of Ethiopia in supplying this demand.

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 Incentives
 Duty free feed machineries and necessary equipments
 Land
 Better Government support and investment policy
 Credit access in lease financing (20:80)

1.9. Challenges/Constraints

 Shortage of feed ingredient supply due to Inadequate production& Poor efficiency of

utilization of available feed resources
 Soaring of ingredient/compound feed prices due to shortage of feed ingredient supply; high
transport costs; poor market orientation of feed production.
 Poor quality of ingredients: due to adulteration common practice. ; lack of access to feed
laboratories resulting in no possibilities for checking on quality and deterioration in feed
quality during storage common
 Lack of knowledge and skills for Feed industry personnel in Ration formulation ;Feed
milling technology and Skills on physical tests on feed ingredient &mixed feed quality
Strategic options for challenges

 To increase production of quality feed in large-scale commercial operations, government

investment policy needs to make large plots of land and credit available to investors at
reduced rates to encourage them to invest in animal feed production and processing.
 The government needs to promote establishment and use of oil extraction and flour milling
factories so that more by-products are made available for feed processing industries. Taxes
or quotas also need to be levied to discourage imports.
 To promote the production of yellow maize for poultry.
 The Government needs to ensure that seasonal fluctuations in ingredients and compound
feed prices are minimized and ensure sustainable feed production by advising feed
processors to develop storage capacity for processed feeds and the ingredients required to
produce these feeds.

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 2. PRODUCT DESCRIPTION AND APPLICATION
2.1 Overview
Animal feed is a kind of feed prepared for oxen, cows, sheep, goat, poultry etc. reared for their
milk, meat and egg. It contains protein, minerals and other nutrients which are useful for milk egg
and beef production as well as survival and growth of the animals. Animal feed can be prepared from
oil cakes, agro - residues, flour mill by - products, cereals, molasses, minerals and vitamins etc. The
major animal feed consumers are large and small scale cattle rising and fattening farms. Table 2
Feeding General Formula
Raw materials Amount Cattle feed/per day Kg Per cycle
(Kg)

Cereal bran (wheat) 15% 2.4 216

Oil seed (Noug cake) 5% 0.8 72

Lime 5% 0.8 72
Salt 5% 0.8 72
Molasses 20% 2.8 252
Total 50% 7 630

2.2.Products
2.2.1 Molasses
Molasses is a thick, viscous material, which is a by-product of the sugar industry. Being a
concentrated by-product, it provides a range of trace minerals and a complete mixture of vitamins.
It is high in soluble carbohydrates. Although a cheaper source of energy, it is not commonly used
by farmers due to difficulty in handling. Molasses can be included in ration by mixing it with other
concentrates in the form of licks.

Byproducts of Sugar The sugar industry in Ethiopia have factories at four sites: Wonji, Shoa,
Methara, and Finchaa. The present area of cane is 20,000 ha the estimated yield of cane tops being
six tons of dry matter per hectare, or 120,000 tons of dry matter per year. Production of molasses
is estimated at 78,700 tons. Of this amount, about 30,000 tons of sugar is exported annually.
Currently the establishment of Arjo Didesa Sugarfactory which will be implemented within a short
period of time, to develop about 80,000 ha of sugar plantation in the middle Didessa river basin is
found relatively near to our project provide molasses for our project.

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2.2.2 Cereal brains
Cereal brans are high in phosphorus, trace minerals and also a range of vitamins. In addition they
provide a slow release amino acid source from the relatively insoluble proteins to the microbes.
Cereals and Pulses Cereal straw from, barley, teff and wheat is the largest component of livestock
diet. Straw is stacked after threshing. Then, it is fed to animals during the dry season.

2.2.3 Oilcakes
Oilcakes are an excellent concentrate feed for ruminant livestock. Ethiopia grows most of the
temperate and sub-tropical oilseed plants such as linseeds, Niger seeds, groundnuts (peanuts),
rapeseeds, sesame, sunflower and cotton. The processing of oilseeds is widely practiced at the
household level, or in small village mills. Oil seed by product will also obtained from Jimma
cooking Oil industry

2.2.3 Brewery By-products

Brewery Byproducts Brewer's grains are valued for animal’s sources at Bedele brewing factory
brewing factory in Bedele town at a distance of 100 km from the project area.

2.3. Beneficiaries of the project

The beneficiaries may be private institutions, governmental and non-governmental organizations.
New entrepreneurs may start their business as an individual, proprietary concern, partnership firm
or a joint stock company. Generally,

 Owners
 The project will create a job opportunity for 86 employees
 The surrounding community
 District, regional and federal government
 Agricultural research institutes
 Agricultural technology and equipment suppliers

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3. MARKET STUDY
3.1. Market Study Supply and Demand

Ethiopia has a significant number of cattle. However, the production of cattle feed is not sufficient
to support the development of this activity. Livestock feed includes natural pastures, crop residues,
cultivated forages and agro-industrial by-products. But, the importance of natural pasture is
gradually declining because of the expansion of crop production into grazing lands, redistribution
of communal lands to the landless and land degradation. Commercial fattening and animal
breeding enterprises have also grown significantly since recently. The establishment of these kind
enterprises would increase the demand for cattle feed. Moreover, many animal feeds have
alternative uses either for human consumption or for industrial use. There is also direct competition
between human and livestock for cereal grains. The country faces severe feed shortage due to
either the seasonality in the availability and the poorly developed animal feed conservation method
for use during lean years. The current national animal feed demand is estimated at 95.83 million
tons of DM, whereas the supply thereof amounts only to 65.6 million tons of DM (CSA 2011/12)—
leaving an unsatisfied huge gap

To estimate the present demand for cattle feed the cattle population, the recommended average
feed consumption and constraints such as awareness and income of potential users as well as products
adaptability are considered. Accordingly, the total cattle population for the country is estimated to
be about 53.6 million (LSA report, 2014) and the recommended rate is 2 kg/head a day. If the total
population was to be fed with improved feed, 37.5 million tons would be needed. However,
considering the constraints mentioned earlier, conservatively only 10% of the population are assumed
to be relevant. Hence, the national present effective demand is estimated at 3.7 million tons which
show that there is large scope to increase production of industrially processed feed. Furthermore, the
enterprises in Addis Ababa are assumed to capture 10% of the market (considering Addis Ababa’s
advantage; central location, availability of better infrastructure and other facilities). Accordingly, the
present effective demand is 370,000 tons.
3.2 Demand Projection

The demand for industrially processed animal feed will ultimately depend on the awareness of
farmers on the importance of the product, size of animal population and development of modern
animal farms. The government’s livestock policy objectives in the GTP are to increase livestock
productivity through increases in improved breed’s provision, animal health and increase forage
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 production. Naturally, there are things that can be done to improve natural feed sources. However,
there will be limitations due to factors enumerated above. Moreover, forage production alone is
unlikely to satisfy the existing demand. One of the possible ways of overcoming these limitations
is through increased production and supply of industrially processed feed. By considering the
extension program being implemented by the Ministry of Livestock resource Development and
Fish as well as other NGOs which is likely to impact demand for manufactured feeds positively
(through awareness creation) and declining importance of natural pasture and the competing
demands, as well as development of market oriented livestock production, an annual growth rate
of 5% is applied in projecting the demand for the product.

Moreover, during the projection period the enterprise to be established in Addis Ababa is assumed
to capture 10% of the market (considering Addis Ababa’s advantage i.e. central location,
availability of better infrastructure and other facilities).

Accordingly, Table 3 depicts the projected demand for manufactured animal feed at national level,
unsatisfied demand and market share for Addis Ababa based enterprise(s).

Table 3 Projected Demand for Manufacture Animal Feed (Tons)

Year Projected Existing Demand Addis

Demand Production Supply Ababa’s
Capacity Gap Market
Share

2018 4,958,354 19,392 4,938,962 493,896

2019 5,206,272 19,392 5,186,880 518,688
2020 5,466,585 19,392 5,447,193 544,719
2021 5,739,914 19,392 5,720,522 572,052
2022 6,026,910 19,392 6,007,518 600,752

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3.3 Pricing and Distribution

Prices of animal feed depend upon the composition of the mix and the nutrients. The Current
average price is Birr 660/quintal. This has been taken as ex-factory price for the envisaged project.
Current practice of feed product distribution involves sales at factory gate and to supply to major
towns by opening sales store. The project can use both distribution mechanisms to expand its
market outlets.

3.4. PromotionStrategy
In view of the fact that we are new on the market we intend to undertake adequate advertising of
our name and products we offer. This is to instill awareness and knowledge of our existence in the
market place, which hopefully shall convert into market share. A constant look out will be made
of any special editions in the social media, local newspaper, local FM and TV. Which may provide
an opportunity for us to advertise our products and business name

3.5 Competition
There are different private small scale farm and household farm competitor in Omo Nada district
and Jimma town. At city level one small scale dairy farm and 10 small scale farm at woreda level.
But this farm unit not got modern cattle feed at sufficient quantity and quality. Due to this not
strong completion between them.
We distinguish ourselves from them by providing better quality milk at reasonable prices, and
delivering both fresh and special package refrigerated milk to the customer door.

3.6 Market location (for final products and raw materials)

1. Nada,Asandabo,Boneya,Ale,Gona Omo,Dalota in omo nad and Omo Beyam district

2. Sarbo,Dimtu,Sokoru ,Danaba Town(Kersa,Tiroafata,Sokoru district respectively)

3. Jimma market

4. Addis Ababa market

The selling process of the dairy farm products will be facilitate from Nada to every surrounding
market by the project sales men’s on carrying by Isuzu.

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3.7. Beneficiary

3.7.1.Socio-Economic Benefit for the Society

The socio-economic impact of the project is expected to be positive, as the operational area is
devoid of major any potential displacement/ eviction or conflicts. The positive impacts are more
pronounced in view of the development of an abandoned and uninhabited rural area, bringing large
employment opportunities to the surrounding peoples.

 As the project requires labour for undertaking its operational activities, a number of people will
have the opportunity of being employed in the project. In this regard, the project will create new
employment post for about 30 individuals on permanent basis and for up to more than 20 casual
labourers. Since the project use own dairy production and rely on milk collected from
surrounding farmers, the farmers would have a guaranteed buyer from which, they could get
consistent and better financial gains as far as they could engage in such business.

 Important social aspect of the project is that it would increase supply of milk and related products
which consumptions is beneficial in many ways and helps in battling various diseases
 The expected increase in income of the permanent & temporary employees would eventually
contribute to good health & nutrition in the family and allow them to access better education for
their children, improve sanitation and provide for the necessities in the household.

3.7.2. Economic Benefit for the Community

The creation of substantial direct and indirect employment opportunities with potential for out-growers
will have impact for increasing incomes and skill of the rural community. There will also be good
opportunities for out-growers linkages with the surrounding farmers and the use of the project’s
facilities, knowledge and experience, thereby increasing the economic activities of the inhabitants of
the area. Promotion and transfer of new agricultural technology that could be adaptable to the
surrounding farming community and improve their skills through training and sharing of the project
experiences will also be another benefit for the community.

3.7.3. Economic Benefit for the Country

This Proposed project will have significant economic benefits, both to the national economy of the
country at large, and the region in particular in which the project is to be established.

The specific direct benefits will include;

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 • Development of uninhabited part of the country and exploitation of hitherto abandoned physical
resources of the particular area through the establishment of modern livestock agriculture.
• Aside from the increase in income of the owner, the project would activate the economy
especially in the continuous production and supply of processed milk & milk products. Being
efficient in terms of business returns and thus considered as a role model, we hope, this project
will also encourage other entrepreneurs in the country to engage in milk processing industry.
• Supply of agricultural commodities to the national and export markets, thereby enlarging the
domestic basket of food items and contributing to the foreign exchange balance of the country,
both through generation of foreign exchange and import substitution.
• Provision of physical and social infrastructure, thereby creating conducive and suitable
environment for regional development.
• Substantial increase regional government revenue, through direct & indirect taxation.

The country will get the contribution in its national income through domestic consumption and
export. This project will provide employment opportunity to the local population, this will raise
the living standards of the people working in this project, and they also learn the latest technologies
in animal feed production and fattening and also make use of them in their own farm. The regional
government will also generate the revenue in the form of land rent will be an additional source of
income on land resources.

The company, which is making investment on the land and doing lot of agricultural production
(production of grass and alfalfa for feed processing) activities in developing the land will be
benefitted in terms of return on their investment during the lease period.

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4. PLANT CAPACITY AND PRODUCTION PROGRAM
4.1. Plant Capacity
Based on the projected demand for animal feed shown in the market study and considering the
minimum economic scale of production, the envisaged plant is planned to have a capacity of
15,000 tons of animals feed per annum. This capacity is proposed on the basis of a single shift of 8
hours per day and 250 working days per annum.

4.2. Production Program

The envisaged plant will start operation at 85% of its rated capacity which will grow to 95% in the
second year. Full capacity production will be attained in the third year and onwards. Details of
annual production program are shown in Table 4
Table 4 Annual Production Program at Full Capacity Operation

Item Description Unit of Production Year

No. Measure
1st 2nd 3rd &
Onwards

1 Animal feed Ton 5000 6000 7000

2 Capacity utilization rate % 85 95 100

4.3. Materials and Inputs

4.3.1.Raw Materials
The basic raw materials required for the production of animal feed include oil cake, molasses, bone
meal, bran of cereals, maize, salt and limestone. All of the raw materials can be available locally.
The annual requirement for raw materials at full capacity production and the estimated costs are
given in Table 5.

20
Table 5 Annual Raw Materials Requirement at Full Capacity and Estimated Costs
Item Raw Materials Unit of Required Unit Cost (000 Birr)
No. Measure Qty Price,
L.C. Total
1 Oil cake Ton 6000 16,962.00 16,962.00
2827

2 Bran of cereals Ton 3657 4000 14,628.00

13,497.2

3 Cotton seed Ton 2090 2800 5852.00 132.0

4 Maize Ton 2582 4,000 10,328.00 21,092.0
5 Salt Ton 85 1500 127.50 127.50

6 Limestone (ground) Ton 63 250 15.75

15.75

7 Barce ton 1437 3000 4311.00

3,980.0

8 Premixes Ton 9 122167 - - 1099.5

Total 1099.5 51,624.25 52,723.75

The only auxiliary materials required for the operation of the envisaged plant are 50 kg plastic
sacks and twine rope that are also available locally. The annual requirement for auxiliary materials
at full capacity production of the plant and the estimated costs are given in Table 6.
4.3.2 Auxillary
Table 6Annual Auxiliary Materials Requirement at Full Capacity and Costs

SN Description Measurement Qty Unit cost in Birr Total cost in Birr.

1 Sacks 50 kg pc 5000 20 100000
2 Twine rope kg 200 1000 200000

21
4.3.3.Utilities
The utilities required for the envisaged plant comprise electric power, water and fuel oil. Electric
power is required to run the production machinery and to provide lighting for the plant. Water is
required for general purpose and for the boiler which generates hot water to be supplied to the
molasses tank. Fuel oil is required for the boiler. The annual requirement for utilities at full
capacity production and the estimated costs are shown in Table 7.

Table 7Annual Utilities Requirement and Estimated Costs

Item Description Unit of Required Unit Cost, ('000 Birr)
No. Measure Qty Price
(Birr)

L.C. Total

1 Electric power kWh 450,000 0.579 280 280

2 Water m3 5,000 10.00 50.00 50.00

Total 330.00 330.00

22
5. TECHNOLOGY AND ENGINEERING
5.1. Technology Production Process
The major operations involved in the production of animal feed are: raw materials preparation,
primary crushing, assorting and measuring, molasses mixing, and fine crushing and packing.

Raw and auxiliary materials are first charged into silos and tanks where they are made ready for
further processing. They are then processed by primary crusher. Crushed materials are further
separated by means of a lifter, and then stored in the assorting tanks according to the kind of raw
materials.
In assorting and measuring operations, small amounts of additives are charged into the bins
containing different assortments of raw materials. The raw materials stored in the assorting tanks
are measured in accordance with the desired proportion.

The raw materials are then mixed by means of a mixer. In this process, fatty ingredients are added
to the materials in order to raise the nutritional value of the feed. The feed obtained from the mixer
is blended with molasses. Finally, the product is weighed and packed in plastic or jute bag.

Process Flow Diagram

Figure 1 Flow Diagram

5.2. Engineering
5.2.1.Machinery and equipment

23
 Plant machinery and equipment required for the envisaged project comprise raw materials tanks,
screen shakers, hammer mill, blender, bagging machine, pellet making machine, boiler, etc. The
total cost of machinery and equipment is estimated at Birr 3.87 million, out of which Birr . List of
plant machinery and equipment and the estimated costs are shown in Table .

Table 8 Machinery and Equipment Requirement and Estimated Costs

SN Description Measurement Qty Unit cost in Total cost in
Birr Birr.
1 Tank and silo for raw and auxiliary 1 196,000.00
196000
materials set
2 1 1,200,000.00
Metal screen and shaker 1200000
set
3 1 196,000.00
Hammer mill (crusher) 196000
set
4 1 400,000.00
Weighing scale (5 tons) 400000
set
5 1 400,000.00
Bagging machine 400000
set
6 1 400,000.00
Dust collector 400000
set
7 1 200,000.00
Product tank 200000
set
8 1 147,000.00
Boiler 147000
set
9 Generater 2 392,000.00
196000
set
10 (Security Equipment) Unit 1 40000 40,000.00
Total 3,871,000.00

5.2.2. Land, Building and Civil Works

Total land requirement for the envisaged plant is 5ha, of which 4.8ha is earmarked for dairy farm
and 0.2 ha for processing plant building and storage for raw material and finished product at Jato
Abe kebele.

24
  Land and Location
i) The total space required for buildings, product store, plant installation and raw material store and
other accessory will be 0.2 ha and about 5 hectares of land for dairy farming and feeding plot. The exact
design and details of the built up area has to be decided in consultation with the plant and machinery
supplier or with a professional consultant.

ii) The location of site should have proximity to road facilities, services, such as water, electricity
and social infrastructure, etc.

 Site Development
i) Preferably the entire site should be fenced with grass/bush or compound wall is constructed with
gates at suitable places

ii) Internal roads should be of cobble depending upon the soil conditions, rainfall and the number of
animals moving every day.

iii) Proper drainage arrangements should be made to ensure cleanliness.

The estimated total cost required for site development is 5000.00 birr

Layout and Civil Works

Layout

The total covered area depends on the processes involved, products manufactured, the quantity of
manufactured feed production and processing handled and the equipment chosen product
manufacturing.

Civil Works

The total area of land required for the project is about 8hectares. The total built-up area will be
5,000 square meters and the estimated cost will amount to Birr 522,500. Including land meant for
feed production and processing.
25
 A. Land ,Building and Construction

SN Description Measurement
Table 9
1 Office table with chair Unit Land
2 Shelf Unit
3 Filing cabinets Unit
4 Guest chairs Unit
5 Fax & Telephone machine Unit
Total
,Building and Construction
S.N Description of works Total Cost in birr

1 Buildings and other structures 500,000.00

2 Site Development 5,000.00

3 Design and supervision 10,000.00
st
4 1 Year land lease & (10%) down payment

7500
Total 522,500.00
B. Vehicle
SN Description UOM Qty Unit Cost in Total cost in
Fr. Birr
1 Pickup Unit 1 100,000.00 100,000.00

2 Mini Isuzu 1 300,000.00 300,000.00

3 Tractor 1 600,000.00 600,000.00

Total 1,000,000.00

A. Office Equipments
Table 10 Office Equipments

26
5.2.3. Human Resource Requirement
The total human resource required for the envisaged plant 32
persons. The human resource required and the estimated annual
labor cost including the fringe benefits is shown in Table 11.

Table 11: Human Resource Requirement and Estimated Cost .

SN Position No Qualification Monthly Annual
salary in salary
Birr in Birr
Plant
1 1 5,000 60,000
manager

2 Secretary 1 2008 24,096

Accountant
3 2 1,600 19,200
– clerk

4 Personnel 1 2008 24,096

5 Salesperson 1 1200 14,400

6 Cashier 1 1200 14,400

Store
7 1 1000 12,000
keeper
Production
8 1 2500 30,000
supervisor
Quality
9 1 2500 30,000
controller
10 Mechanic 1 2500 30,000
11 Electrician 1 2500 30,000
12 Operator 2 2,500 30,000
13 Laborer 10 1200 14,400
14 Cleaner 3 1000 12,000
15 Driver 2 1500 18,000
16 Guard 3 1,200 14,400
Total 24 376,992
Benefit 75,398
(20%)
Grand 452,390
Total

27
 Training Requirement
Two weeks on the job training should be given for production supervisor, 6
operators, quality controller, a mechanic and an electrician by the advanced
technician of the machinery supplier on operation, quality control and
maintenance of machinery and equipment. The cost of training is estimated
at Birr 180,000.

5.2.4 Operating Expenses

List of Items unit List of Items

SN

3 Stationery supplies no Stationery supplies

4 Promotional Cost time Promotional Cost

5 Property Insurance time Property Insurance

6 loading and unloading time wage payment

7 water consumption kw water payment

8 Electric consumption kw Electric

consumption

9 Fuel lit Fuel

10 Oil & Iubricants lit Oil &

Iubricants
11 Telephone & fax 10 Telephone &
fax
12 Repair expense time Repair expense

13 Miscellaneous costs Miscellaneou costs

Total 13 Total

28
Table 11 pre service expense

5.2.5 Pre-service Expenses

SN Description Cost in birr

1 Project proposal & EIA 20,000.00

2 Licensing fee and
others
Total 20,000.00

5.3. FINANCIAL FEASIBILITY

5.3.1. Basic Assumptions for Financial Analysis
5.3.1.1 Project Life
According to the implementation plan of the project, the implementation period allocated for the
entire project from the start to the final commissioning is one year. With regard to operational life
of the project, 10 Years is considered.

5.3.1.2. Depreciation and Amortization

The following depreciation rates are applied to depreciate the assets of the project:

• Buildings and associated Civil works 10%, linear to scrap Value

• Machinery and Equipment’s 10%, linear to scrap Value
• Pre-production expenditure 10%, linear to scrap value Table 12 depreciation schedule

5.1.1 Depreciation
Schedule
SN Description Original Depreciation Depreciation per
Value in Birr rate in % year in Birr
1 Construction and Building 522,500.00 10 52,250.00
2 Bldg. machines & 3,871,000.00 10 387,100.00
Equipments
3 Vehicle 1,000,000.00 5 50,000.00
4 Office Equipment 33,500.00 10 3,350.00
Total 5,427,000.00 492,700.00

29
5.3.1.3 Working Capital
The working capital requirement of the project during operation is calculated on the basis of the
minimum days of coverage needed for the different elements of the working capital. Hence, the
minimum days are specified as follows and the detail is attached in the annex part.

5.3.1.4 Financing Considerations

The project planned to produce detergent materials by mobilizing fund from equity and bank loan.
The bank loan is proposed to cover 80% of the total project establishment cost while the rest 20%
will be covered from equity.

The following factors are taken into considerations with regard loan to be borrowed from domestic
banks

• Interest rate on loan borrowed is assumed to 8.5 % which is line with the lending interest rate of the
investment bank in the country for prioritized projects.
• Grace period is assumed to be at least for one-year period which is assumed during the
implementation period until the company enters the market
• The total loan is expected to be repaid in period of seven

5.3.1.5 Credit Information

Based on the several assessments of the project, the project requires a loan of Birr1.4from external
sources. As the detail assessment results shows the loan will be settled without any problem. The
loan will be obtained from development bank of Ethiopia. It will be paid in seven equal instalments
starting from the fourth year of the project.
The principal repayment shall be made based on the amortization loan repayment system. An
interest rate of 8.5 % will be paid for the loan per annum on the outstanding balance payable on
yearly basis together with the principal repayment amount. The loan repayment schedule is
summarized by the table 13.

Table 13 loan repayment schedule

30
 Total annual
Principal Payment in
year payment intrest rate(8.5%) ETB year ending balance
0 5333151.472

1 533315.15 453317.88 986633.02 4799836.32

2 533315.15 407986.09 941301.23 4266521.18
3 533315.15 362654.30 895969.45 3733206.03
4 533315.15 317322.51 850637.66 3199890.88
5 533315.15 271990.73 805305.87 2666575.74
6 533315.15 226658.94 759974.08 2133260.59
7 533315.15 181327.15 714642.30 1599945.44
8 533315.15 135995.36 669310.51 1066630.29
9 533315.15 90663.58 623978.72 533315.15

10 45331.78751 0

5.4. FINANCIAL ANALYSIS

The financial analysis of the animal feed project is based on the data presented in the previous
chapters and the following assumptions:-
Construction period 1 year
Source of finance : 25% own equity and 75 % Bank loan in lease financing.
Tax holidays 3 years
Bank interest 12%
Discount cash flow 12%
Accounts receivable 30 days
Raw material local 30 days
Work in progress 1 day
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days
Repair and maintenance 5% of machinery cost
Total processed feed production 127,500qt
Current average selling price of animal feeds 690birr/qt

31
 5.4.1. Total Initial Investment Cost
The total investment cost of the project including working capital is estimated as indicated bellow
(See Table 14).

Table 14 Initial Investment Cost (Birr)

SN Description Cost in Birr
1 Land, building & construction
522,500.00
2 machines & Equipments 3,871,000.00
3 Vehicle 1,000,000.00
4 Office Equipment 33,500.00
Total fixed investment cost 5,427,000.00

6 Salary expense 452,390.40

7 Operation Expense 161,009.00
8 Pre service Expense 20,000.00
9 Other Cost
Raw material cost(Ingredients) 100,400.00

Total Working capital 633,399.40

Sub total 6,060,399.40
10 Contingency (10%) 606,039.94

Total initial investment capital 6,666,439.34

* The above table show that the total needed initial cost the animal feed processing plant. Hence
6,666,439.34birr is required to start and implement the project. The source finance is from banks
5333151.472Birr(80%) and Own equity 1333287.868birr(20%).
5.4.2 Proposed Financing Scheme
The bank borrowing is proposed to cover 80% of the total investment cost whereas the rest will be
covered by company equity 20%. See Table below.
Owners
20% 1333287.868
equity
Bank loan 80% 5333151.472

Total 100% 6,666,439.34

32
 5.4.3 Total Revenue
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax increases from Birr 4,200,000.00 at the beginning of the project
to Birr 9000000 during the fifth year of operation year. The detail is
presented in the table 15 below
Table 15 Purchase and Sales Estimation Feed Purchase and Sales
Purchase of feed in qt Processed feed sales
year Purchase of feed in qt unit cooast total coast Processed feed sales unit sell total sell
1 5,000.00 300 1,500,000.00 5,000.00 690 3450000
2 7,000.00 320 2,240,000.00 7,000.00 700 4900000
3 8,000.00 350 2,800,000.00 8,000.00 700 5600000
4 10,000.00 350 3,500,000.00 10,000.00 720 7200000
5 12,000.00 350 4,200,000.00 12,000.00 750 9000000

5.4.4. Project Income Statement

Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax increases from Birr 1,666,687.91at the beginning of the
project to Birr 5,333,726 during the fifth year of operation year. The detail is presented in the table
16 below.
Table 16 Income Statement

Revenue Year 1 Year 2 Year 3 year 4 and after year 5

Feed sell 3,450,000.00 4,900,000.00 5,600,000.00 7,200,000.00 9000000

Expenses
Salary Expense 452,390.40 452,390.40 452,390.40 452,390.40 452,390.4
Operating Expenses 161,009.00 161,009.00 161,009.00 161,009.00 161,009.0
Deprecation Bld. 0.00 0.00 492,700.00 492,700.00 492,700.0
Machineries ,Equiq &
vehicle
Interest Expense3 453,317.88 407,986.09 362,654.30 317,322.51 271,990.7
Lease payment4 2,300.00 2,300.00 2,300.00 2,300.00 2,300.00
Total Expense 1,069,017.28 1,023,685.49 1,471,053.70 1,425,721.91 1,380,390
Profit before Tax 2,380,982.72 3,876,314.51 4,128,946.30 5,774,278.09 7,619,609
Tax (30%) 714,294.82 1,162,894.35 1,238,683.89 1732283.426 2285882.9
Net profit 1,666,687.91 2,713,420.16 2,890,262.41 4,041,994.66 5,333,726

33
5.4.5 Cash flow
The projected cash flow of the envisaged project shows that the project would generate positive
net cash flows throughout the operation years. Cumulative cash flow generated by the project
towards the end of the first operation year will amount to Birr 2,805,202.50At the end of the project
life, this amount will rise to Birr 18,939,006.65 in the fifth year.The detail is presented in table 17
below.

Table 17 Balance sheet

Year Year 0 Year 1 Year 2 Year 3 year 4 Year 5
Equity 1999931.80
Capital 2
Loan 4666507.53
principal 8
Net sale 0 3,450,000.0 4,900,000.0 5,600,000.0 7,200,000.0 9,000,000.0
0 0 0 0 0
Total 6,666,439 3,450,000.0 4,900,000.0 5,600,000.0 7,200,000.0 9,000,000.0
Cash in 0 0 0 0 0
flow
Cash
payment
Salary 0 452,390.40 452,390.40 452,390.40 452,390.40 452,390.40
Expense
Investmen 0 0 0 0 1
t 5,427,000
Pre 20,000 0 0 0 0 0
operating
Expense
Operating 0 161,009.00 161,009.00 161,009.00 161,009.00 161,009.00
Cost
Loan 0 986,633.02 941,301.23 895,969.45 850,637.66
repayment 805305.87
Lease 0 2,300.00 2,300.00 2,300.00 2,300.00 2,300.00
payment
Tax 0 714,294.82 1,162,894.3 1,238,683.8 1,732,283.4 2,285,882.9
payment 5 9 3 6
Total 5,447,000.0 1,864,236.8 2,267,504.5 2,297,962.3 2,746,230.0 3,254,498.8
payment 0 4 9 4 9 3
Net Cash 1,219,439.3 1,585,763.1 2,632,495.4 3,302,037.6 4,453,769.9 5,745,501.1
flow 4 6 1 6 1 7

34
 Beginning 1,219,439.3 2,805,202.5 5,437,697.9 8,739,735.5 13,193,505.
cash balance 4 0 1 7 49
Ending
Cash 13,193,505.4 18,939,006.6
Balance 2,805,202.50 5,437,697.91 8,739,735.57 9 5

5.4.6.Measure of project worthiness

I. Internal Rate of Return

The internal rate of return (IRR) is an indicator of the efficiency or quality of an investment. A
project is a good investment proposition if its IRR is greater than the rate of return that could be
earned by alternate investments or putting the money in a bank account. Accordingly, the IRR of
the project after tax is computed to be 161 % indicating the viability of the project.

II. Net present value

Net present value (NPV) is defined as the total present (discounted) value of a time series of cash flows.
NPV aggregates cash flows that occur during different periods of time during the life of a project into a
common measuring unit i.e. present value. It is a standard method for using the time value of money to
asses’ long-term projects. NPV is an indicator of how much value an investment or project adds to the
capital invested. In principle a project is accepted if the NPV is non-negative. Accordingly, the net

present value of the project at 10% discount rate is found to be Birr 11,598,347.75 which is

acceptable.

35
6. Environmental Consideration
6.1 Environmental Impact Assessments
This project is designed to cultivate and promote the production of quality milk by maintaining the
existing environmental system. It also intends to protect the environment from the possible risks.
The project will have no negative environmental impact in the areas as shown under:
Run-off control:
The feedlot and processing facilities will be constructed so as to meet existing environmental
compliance if any. Construction of effluent treatment plant is necessary in case of multiproduct
large size plants for treating the effluents before discharging for proper disposal. The milk
processing plants has to be hygienically designed and easily cleaned to prevent contamination of
products by insects, birds, rodents or microorganisms.
The dairy products plant does not have any pollutant emitted from the production process, except
the washing water, which has to be connected to appropriate sewerage line to get rid of. Thus, the
envisaged project is environment friendly. A grass/forage filter composed of elephant grass will
be planted in area of 1 times the feedlot area to take care of the effluents as such type of grass
plants could be used to filter liquid wastes. waste management:
During the 2nd half of the first year of the project, biogas digester with a volume of 100 m3 will be
constructed so that, all manure wastes from the barns will be used to produce biogas fuel for the
project consumption. So as to doso, during construction of the barns, floor slope will be made
appropriate for gravity flow of liquid manure to the digester, and in addition, the remaining manure,
which could not flow as liquid, will be daily collected and dumped in the digester so as to keep the
barns clean as well as to alleviate the environmental problems associated with manure wastes.
Air Pollution: dust and odor problems will be minimized by proper site selection. Prevailing
winds and habitable structures will be considered to avoid air pollution problem.

7. CONCLUSIONS
As it is known Ethiopia has huge investment potentials for feed processing industry subsector, and
the climatic condition is favorable for growing different vegetation and crops which are an
excellent source of processed fodder preparation.
The financial analysis of this feed processing investment pre-feasibility study shows that the
project is worth profitable and acceptable as the discounted measures of the project worth shows
positive trend if investors are engaged in the area.

36
References
Central Statistical Authority. (2011/12). The animals feed requirement per annum. Addis
Ababa,Ethiopia

Ethiopian Plan Commision GTPII plan of the country. (2014/15-2019/20). filling the identified
feed deficient gap. Addis Ababa,Ethiopia

Ministry of urban & Housing Development Federal Legislation on the Lease Holding of Urban
Land (Proclamation No 721/2004).urban land permit by lease on auction or negotiation
basis.Addis Ababa,Ethiopia

37
APPENDIX
Annex 1 Sales

Description Project year

1 2 3 4 5 6 7 8 9 10
Cattle Feed
sale 3,450,000 4,900,000 5,760,000 7,500,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000
no
5000 7000 8000 10000 12000 12000 12000 12000 12000 12000
unit price
690 700 720 750 750 750 800 800 800 800

Annex 2 operating cost

Operating years of the project

1 2 3 4 5 6 7 8 9 10
Description
A. Direct cost

Raw Material Cost

161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009
Sub-total 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009
Total Direct cost
161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009 161,009
B. Indirect cost
 Wages and Salary 452,390 452,390 452,390 452,390 452,390 452,390 452,390 452,390 452,390 452,390

 Repair and Maintenance 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
 Property Insurance 84,009.00 84,009.00 84,009.00 84,009.00 84,009.00 84,009.00 84,009.00 84,009.00 84,009.00 84,009.00
 Utility 0 0 0 0 0 0 0 0 0 0

38
  Land lease 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300 2,300
 Advertising and 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
Promotion
 Miscellaneous Expense 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
 578,699.40
Total operating cost 739,708
739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708

Annex 3 Annex 2. operating cost

Operating years of the project

Description 1 2 3 4 5 6 7 8 9 10
Sales Revenue 4,900,000
3,450,000 5,600,000 9,000,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000
Less: Operating cost 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708

Income before Depreciation and interest 2,710,292 4,160,292 4,860,292 8,260,292 8,260,292 8,260,292 8,860,292 8,860,292 8,860,292 8,860,292

Less: interest 453,317.88 407,986.09 362,654.30 317,322.51 271,990.73 226,658.94 181,327.15 135,995.36 90,663.58 45331.78751

Income before Depreciation 2,256,974 3,752,306 4,497,637 7,942,969 7,988,301 8,033,633 8,678,964 8,724,296 8,769,628 8,814,960

Less: Depreciation 0 0 492,700 492,700 492,700 492,700 492,700 492,700 492,700 492,700

Profit /Loss Before Tax 2,256,974 3,752,306 4,497,637 7,942,969 7,988,301 8,033,633 8,678,964 8,724,296 8,769,628 8,814,960

Less: Tax (30%) 677,092.12 1,125,691.65 1,349,291.19 2,382,890.73 2,396,490.26 2,410,089.80 2,603,689.33 2,617,288.87 2,630,888.41 2,644,487.94

Net Profit or Loss After Tax 1,579,881.61 2,626,613.86 3,148,346.11 5,560,078.36 5,591,810.61 5,623,542.86 6,075,275.11 6,107,007.37 6,138,739.62 6,170,471.87

Annex 4 discounted cash flow

Investment
Project Life years
Description Year
0 1 2 3 4 5 6 7 8 9 10

39
 INFLOW
Net sales
0 3,450,000 4,900,000 5,600,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000
revenue
TOTAL
INFLOWS 0 3,450,000 4,900,000 5,600,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000

OUTFLOWS
Investment - -
cost 5,427,000 -
- - - - - - -
Operating
0 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708
cost
Income tax 0 677,092 1,125,692 1,349,291 2,382,891 2,396,490 2,410,090 2,603,689 2,617,289 2,630,888 2,644,488
TOTAL
OUTFLOWS 5,427,000 1,416,801 1,865,400 2,089,000 3,122,599 3,136,199 3,149,798 3,343,398 3,356,997 3,370,597 3,384,196

NET CASH
FLOW 5,427,000.00 2,033,199.48 3,034,599.95 3,511,000.41 5,877,400.87 5,863,801.34 6,450,201.80 6,256,602.27 6,243,002.73 6,229,403.19 6,215,803.66
Annex 5 undiscounted cash flow

Project Years

Investment Year Operating years

Description 0 1 2 3 4 5 6 7 8 9 10
INFLFOWS
Inflow Funds
Own Equity 1,333,288
Long-term Loan 5,333,151 0 0
Inflow Operations 3,450,000 4,900,000 5,600,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000
Sales revenue 0 3,450,000 4,900,000 5,600,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000
TOTAL INFLOWS 6,666,439 3,450,000 4,900,000 5,600,000 9,000,000 9,000,000 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000
OUTFLOWS
Investment cost 5,427,000 0 0 0 0 0 0 0 0 0 0
Operating cost 0 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708 739,708
Financing Cost
· Principal 0 0 0 0 533,315 533,315 533,315 533,315 533,315 533,315 533,315

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 ·Interest 0 453,318 407,986 362,654 317,323 2,396,490 226,659 181,327 135,995 90,664 45,332
Income Tax 0 677,092 1,125,692 1,349,291 2,382,891 271,991 2,410,090 2,603,689 2,617,289 2,630,888 2,644,488
TOTAL OUTFLOWS
5,427,000 1,870,118 2,273,386 2,451,654 3,973,237 3,941,505 3,909,772 4,058,040 4,026,308 3,994,576 3,962,843
NET CASH FLOW
1,239,439 1,579,882 2,626,614 3,148,346 5,026,763 5,058,495 5,690,228 5,541,960 5,573,692 5,605,424 5,637,157
BEGINNING CASH BALANCE

0 1,239,439 2,819,321 5,445,935 8,594,281 13,621,044 18,679,540 24,369,767 29,911,727 35,485,419 41,090,844
ENDING CASH BALANCE
0 2,819,321 5,445,935 8,594,281 13,621,044 18,679,540 24,369,767 29,911,727 35,485,419 41,090,844 46,728,001

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