ANRS INVESTMENT COMMISSIN

www.investamhara.gov.et

Project Profile on the Establishment of Bamboo

Furniture producing plant

Development Studies Associates

(DSA)

July 2016 Revised

Bahir Dar
 Table of Contents

1. Executive Summary...................................................................1
2. Product Description and Application.....................................1
3. Market Study, Plant Capacity and Production Program.....2
3.1 Market Study.......................................................................................................2
3.1.1 Present Demand and Supply........................................................................2
3.1.2 Projected Demand........................................................................................2
3.1.3 Pricing and Distribution...............................................................................4
3.2 Plant Capacity......................................................................................................4
3.3 Production Program.............................................................................................4
4. Raw Materials and Utilities.....................................................4
4.1 Availability and Source of Raw materials...........................................................4
4.2 Annual Requirement and Cost of Raw Materials and Utilities...........................5
5. Location and Site......................................................................5
6. Technology and Engineering...................................................6
6.1 Production Process...............................................................................................6
6.2 Machinery and Equipment...................................................................................6
6.3 Civil Engineering Cost........................................................................................7
7. Human Resource and Training Requirement.......................8
7.1 Human Resource..................................................................................................8
7.2 Training Requirement..........................................................................................8
8. Financial Analysis....................................................................8
8.1 Underlying Assumption.......................................................................................8
8.2 Investment..........................................................................................................10
8.3 Production Costs................................................................................................10
8.4 Financial Evaluation..........................................................................................11
9. Economic and Social Benefit and Justification....................12
ANNEXES.....................................................................................13
 1. Executive Summary
This profile provides basic information on the production of 2500 tables and 10,000 chairs from
bamboo tree in Amhara Region.

The demand for bamboo based furniture in urban areas of the region is expected to grow from
12,660 sets in 2001 to 19,546 sets in 2010.

The initial investment cost of the plant is estimated at Birr 1,408,614 of which building
accounts for 68%.

The Project will generate employment opportunities for about 11 people.

The net present value (NPV) of the project is birr 1.74 million birr at a discount rate of 18% &
the internal rate of return (IRR) is 48.4%.

2. Product Description and Application

Bamboo furniture is furniture made from bamboo trees. The furniture is used in homes,
traditional restaurants, hotels, recreational areas and in some offices and large commercial
centers. The furniture includes tables, chairs, shelves and other household items. Now days
furniture like, Beds, Baskets, doors and windows are also made from bamboo tree.

At present artisans engaged in bamboo articles production are developing all over the country in
general and in Amhara Region in particular.

1
 3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

Wood and metal based furniture has now a day become very expensive and the price is
exorbitantly growing from year to year due to increasing scarcity & rising price of timber. Wood
based furniture is getting out of reach for households even in the middle & higher income
bracket. Second-hand furniture is expensive for many low and medium income families. The
price for a full set of sofa, made in modern local wood working enterprises, ranges from Birr
10,246 to Birr 76,980 in most urban centers of the country.
It is becoming extremely difficult for a newly couple and young people who secure their first job
and who want to live independently of their parents to acquire decent household furniture due to
the high cost of the product.
Plastic furniture & articles can be good substitute for wood furniture. But the price is still higher
that households with lower income bracket can not manage to get hold of them. In these respect
the best substitute one can think of is bamboo-based furniture especially for lower income
households & even for middle & higher income households at country and regional level.

3.1.2 Projected Demand

Currently there are about 2.41 million urban populations (projection for 2000 1) in Amhara
Region, which is equivalent to 547,200 families. As estimated by DSA, 30% of the urban
population does not have modern sets of furniture. The remaining 70 percent use traditional or
home made furniture. For example, for sitting purposes, people use “medeb”. A raised place
made of mud and built around the inner edge of the house. They rarely use tables, if they use, the
tables are crudely made from unprocessed logs.

1
Years in this document are in Ethiopian calendar.

2
The demand for bamboo based furniture is directly related to the rate of new family formation.
Therefore it is necessary to project the growth of new families, and then work backward to arrive
at a corresponding demand for bamboo furniture.

For the purposes of demand projection and to arrive at a reasonable figure for bamboo furniture,
the following assumptions are developed.

a) In Ethiopia the rate of urbanization is 5.5% per annum and average family size is 4.4 people.
b) The current (2007) urban population of Amhara Region is estimated at 3 million. This
indicates that at list 375000 new families are created annually.
c) Due to social & economic factors, it is assumed that 40% of these families (15,000) are in
need of bamboo furniture thus suggesting the present demand to be 15,000 sets per annum.

Based on these assumptions the future demand for bamboo furniture is projected as shown in
Table 1. Demand has increased from 18416 sets of bamboo furniture in 2008 to 31453 sets in
2018. This indicates that the market potential for the product seems to be available in the region
provided that high standard & quality bamboo furnitures are produced

Table .1
PROJECTED DEMAND FOR BAMBOO BASED FURNITURE
Year Quantity/sets/
2009 19429
2010 20498
2011 21625
2012 22814
2013 24068
2014 25391
2015 26787
2016 28260
2017 29814
2018 31453

3
 3.1.3 Pricing and Distribution

At present the price of bamboo furniture varies considerably depending on the quality of
workmanship and size. In this profile, considering the high standard of the product to be
produced by the unit under consideration the ex-factory price for a set of bamboo furniture is
Birr 770 .This is equivalent to one table with four chairs.

The product is assumed to be distributed to the consumers through wholesalers, retailers and
factory sales. Special arrangements could also be made depending on the type of the clients.

3.2 Plant Capacity

The envisaged plant, at the initial stage, can be made to produce tables and chairs. At later stage,
the plant can diversify its production to baskets, and bamboo-based doors and windows. Thus,
the plant is designed to produce 2500 tables and 10,000 chairs (1 table x 4 chairs) operating 275
days a year, and 8 hours a day in a single shift. Sundays and national holidays are taken into
consideration in setting the number of working days.

3.3 Production Program

The plant will start production at 75% of its capacity. Then, it will build up production to 85%
and 100% in the successive years. The gradual capacity build up is suggested to develop
substantial market outlets for the product and enable the operators to get adequate time to
develop the required skills and experience.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw materials

Bamboo trees grow extensively in the western parts of Awi Zone, East Gojjam Zones and along
the border areas of Beneshangule Gumuz and North Gondar Zone. The trees also grow in the
western parts of North Gondar Zone of Amhara Region.

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 4.2 Annual Requirement and Cost of Raw Materials and Utilities

The major raw material is bamboo tree. Bamboo furniture does not require much other input to
produce except varnish and black oil. They do not even need nails to join different parts of the
furniture. In addition, they need simple machines for their processing. All these will make
bamboo furniture less expensive to produce and possibly reasonably cheap to buy
The total annual expenditure for raw and auxiliary materials required by the plant is estimated at
Birr 954,420. Details are shown in Table 2.

Table 2
ANNUAL RAW MATERIALS REQUIREMENT AND COST

No. Item F.C L.C Total

1. Raw Bamboo - 436,220 436,220
2. Varnish & Block oil - 25,660 25,660
3. Others - 12,830 12,830
Sub total 474,710 474,710
4 Utilities - 5,000 5,000
Total   954,420

5. Location and Site

It is clearly understood that bamboo based furniture are heavy & large in volume & therefore it is
difficult to transport them over long distance because of high cost of transport. Hence, this is a
kind of plant that will be built on a site near an area where large consumers, like Bahir Dar or in
towns located near the source of row material, like  Dangela and Kosso-Ber.

5
 6. Technology and Engineering
6.1 Production Process

The major operations involved in the production of bamboo furniture (tables & chairs) are as
follows.

First raw bamboo is cooked and dried. Then it is split and cut into required thickness and size by
tools prepared for this purposes. The framework required for the specific product is then
prepared. Bamboo splits are then inter-woven according to the design and required strength.
Varnishes can be applied on the product to produce fine and attractive finish.

An alternative technology could be labor intensive and include the production of beds, cup
boards and many other house and office equipments.

Source of technology, and the technical data and information are compiled from the document of
the Development Agency for Handicrafts and Small Industry (DAHSI).

6.2 Machinery and Equipment

Equipment required by the plant are a range of wood working tools together with benches. Hand
saws, knives, vises, hand drills, etc. are some of the useful appliances required by the plant. The
complete list together with the cost is given in Table 3. The plant will require about Birr 12,830
to purchase office and equipment.

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 Table 3
TOTAL FIXED INVESTMENT COST
No. Qty (n) Cost (Birr)
F.C L.C T.C
1 Knives (pcs) 15 pcs 962.25 962.25
2 Hacksaw (with blades) 7 pcs 898.1 898.1
3 Drilling machine 2 sets 10264 10264
4 Grinding machine 4 sets 20528 20528
5 LPG Torch (with gas cylinders) 5 sets 10264 10264
6 Vise (with benches) 6 pcs 7698 7698
7 Files As req. 1283 1283
8 Wood lathe 1 pc 115470 115470
9 Power saw 1 pc 38490 38490
10 Other items - 12830 12830
Total Cost 218687.35 218687.35
The promoter can reach a machinery supplier through the following address.

Bao Anh Minh Co., ltd

106 Nguyen Du Str., Hai Ba Trung Dist.
Ha Noi, Viet Nam
Vietnam 10000Tel : 84-04-942-9792
Fax : 84-04-942-9791
Homepage : http://www.handicraftvn.vn

Such machinery are available in India, China or it could be produced by local workshops.

6.3 Civil Engineering Cost

The plant will require about 1000 m2 of space of which 250 m2 will be for built up area.
Estimating the unit cost (per m2) of building at Birr 3,849, the total expenditure for building will
be Birr 962,250.

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 7. Human Resource and Training Requirement

7.1 Human Resource

The plant will require about 11 human resources as presented in Table 4.

Table 4
MANPOWER REQUIREMENT
Description Qty. Monthly Salary Annual
(No.) per person Expenditure
A. Administration
Plant Manager 1 3849
46188
Clerk 1 1925
23100
General Services 3 2309
27708
B. Production
0
Operators 2 1925
23100
Laberor 4 1026
12312
Total
132408
Benefits (20% )
26481
Grand Total 11
158890

7.2 Training Requirement

Employees of this plant need to have basic experience and or skill. For further training, an
institution engaged in offering skill development in bamboo production, design & development
called Development Agency for Handicrafts and Small Industry (DAHSI) can provide
employees with required training at reasonable cost.

8. Financial Analysis
8.1 Underlying Assumption
The financial analysis of bamboo furniture manufacturing plant is based on the data provided in
the preceding chapters and the following assumptions.

8
 A. Construction and Finance

Construction period 2 years

Source of finance 30% equity and 70% loan
Tax holidays 3 years
Bank interest rate 12%
Discount for cash flow 18%
Value of land Based on lease rate of ANRS
Spare Parts, Repair & Maintenance 3% of fixed investment

B. Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
Pre-production (amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30 days

Raw Material-Foreign 120 days
Factory Supplies in Stock 30 days
Spare Parts in Stock and Maintenance 30 days
Work in Progress 10 days
Finished Products 15 days
Accounts Receivable 30 days
Cash in Hand 30 days
Accounts Payable 30 days

9
 8.2 Investment
The total investment cost of the project including working capital is estimated to Birr 1.4 million
as shown in table 5 below. The Owner shall contribute 30% of the finance in the form of equity
while the remaining 70% is to be financed by bank loan.

Table 5: Total initial investment

  LC FC Total
Land
3,000   3,000
Building
962,250 962,250
Office equipment
12,830 12,830
Vehicles
machinery & equipment
218,687 218,687
Total Fixed Investment
1,196,767 1,196,767
Pre production
60,073 60,073
Total Initial Investment
1,256,840 1,256,840
Working capital
151,774 151,774
Total 1,408,614 1,408,614

*Pre-production capital expenditure includes - all expenses for pre-investment studies,

consultancy fee during construction and expenses for company‘s establishment, project
administration expenses, commission expenses, preproduction marketing and interest expenses
during construction.

8.3 Production Costs

The production cost of the plant is estimated to be Birr 842 thousands as shown in table 6
bellow.

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 Table 6
Total Production Cost at full Capacity
Items Cost
1.      Raw materials 474,710
2.      Utilities 5,000
3.      Wages and Salaries 158,890
4.      Spares and Maintenance 35,903
Factory costs 674,503
5.      Depreciation 83,280
6.      Financial costs
84,799
  Total Production Cost 842,581

8.4 Financial Evaluation

I. Profitability
According to the income statement of the project, the bamboo furniture production plant will
generate profit starting from the first year of operation. The return on investment and return on
equity of the project are 58% and 101%, respectively.

II. Breakeven Analysis

The break even point of the project is estimated by using income statement projection.
The plant breaks even at 14.8% of capacity utilization

III. Payback Period

The project will pay back fully the initial investment in two year time.

IV. Simple Rate of Return

The simple rate of return of the project at its full capacity utilization is 54.5%.

V. Internal Rate of Return and Net Present Value

The simple rate of return of the project at its full capacity utilization is 55.5%.

11
 VI. Sensitivity Analysis
The project will absorb shocks if prices increase by 10%.

9. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained earlier. In
general the envisaged project saves deforestation of big trees, promotes the socio-economic goals
and objectives stated in the strategic plan of the Amhara National Regional State. These benefits
are listed as follows

A. Profit Generation

The project is found to be financially viable and earns on average a profit of birr 0.64 million per
year and birr 6.41 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.

B. Tax Revenue

In the project life under consideration, the region will collect about birr 2268.34 thousand from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region

C. Employment and Income Generation

The proposed project is expected to create employment opportunity to 11 citizens. Consequently

the project creates income of birr 158.89 thousands per year. This would be one of the
commendable accomplishments of the project.

D. Pro Environment Project

The proposed production process is environment friendly.

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ANNEXES

13
14
 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0.00 0.00 75% 85% 100% 0%

1. Total Inventory 0.00 0.00 132724.9644 150421.64 176966.6277 0

Raw Materials in Stock- Total 0.00 0.00 38839.89976 44018.5753 51786.55012 0

Raw Material-Local 0.00 0.00 38839.89976 44018.5753 51786.55012 0

Raw Material-Foreign 0.00 0.00 0 0 0 0

Factory Supplies in Stock 0.00 0.00 685.48124 776.88216 913.95788 0

Spare Parts in Stock and Maintenance 0.00 0.00 2949.05248 3342.26632 3932.06142 0

Work in Progress 0.00 0.00 17136.87704 19421.7974 22849.17794 0

Finished Products 0.00 0.00 34273.75408 38843.5948 45698.33022 0

2. Accounts Receivable 0.00 0.00 157459.1002 178453.6247 209945.4499 0

3. Cash in Hand 0.00 0.00 19944.82518 22604.12494 26593.10024 0

CURRENT ASSETS 0.00 0.00 271288.9644 307460.84 361718.6277 0

4. Current Liabilities 0.00 0.00 157459.1002 178453.6247 209945.4499 0

Accounts Payable 0.00 0.00 157459.1002 178453.6247 209945.4499 0

TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 113829.8898 129007.1896 151773.1778 0

INCREASE IN NET WORKING CAPITAL 0.00 0.00 113829.8898 15177.32548 22765.98822 -151773.1778

1
 Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
PRODUCTION
  5 6 7 8 9 10

Capacity Utilization (%) 100% 100% 100% 100% 100% 100%

1. Total Inventory 176966.6277 176966.6277 176966.6277 176966.6277 176966.6277 176966.6277

Raw Materials in Stock-Total 51786.55012 51786.55012 51786.55012 51786.55012 51786.55012 51786.55012

Raw Material-Local 51786.55012 51786.55012 51786.55012 51786.55012 51786.55012 51786.55012

Raw Material-Foreign 0 0 0 0 0 0

Factory Supplies in Stock 913.95788 913.95788 913.95788 913.95788 913.95788 913.95788

Spare Parts in Stock and Maintenance 3932.06142 3932.06142 3932.06142 3932.06142 3932.06142 3932.06142

Work in Progress 22849.17794 22849.17794 22849.17794 22849.17794 22849.17794 22849.17794

Finished Products 45698.33022 45698.33022 45698.33022 45698.33022 45698.33022 45698.33022

2. Accounts Receivable 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499

3. Cash in Hand 26593.10024 26593.10024 26593.10024 26593.10024 26593.10024 26593.10024

CURRENT ASSETS 361718.6277 361718.6277 361718.6277 361718.6277 361718.6277 361718.6277

4. Current Liabilities 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499

Accounts Payable 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499

TOTAL NET WORKING CAPITAL REQUIRMENTS 151773.1778 151773.1778 151773.1778 151773.1778 151773.1778 151773.1778

INCREASE IN NET WORKING CAPITAL 151773.1778 0 0 0 0 0

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 630769.3216 782542.4737 1600834.1 1656819.55 1955991.825 -209945.4499
1. Inflow Funds 630769.3216 782542.4737 157459.1002 20994.55012 31491.82518 -209945.4499
Total Equity 252307.7235 313016.9998 0 0 0 0
Total Long Term Loan 378461.5981 469525.4996 0 0 0 0
Total Short Term Finances 0 0 157459.1002 20994.55012 31491.82518 -209945.4499
2. Inflow Operation 0 0 1443375 1635825 1924500 0
Sales Revenue 0 0 1443375 1635825 1924500 0
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 630769.3216 630769.3216 1058579.257 912762.0214 1327084.855 -136877.2912
4. Increase In Fixed Assets 630769.3216 630769.3216 0 0 0 0
Fixed Investments 600732.675 600732.675 0 0 0 0
Pre-production Expenditures 30036.64658 30036.64658 0 0 0 0
5. Increase in Current Assets 0 0 271288.9644 36171.8756 54257.78774 -361718.6277
6. Operating Costs 0 0 560814.7217 633500.5207 742529.2448 15671.2035
7. Corporate Tax Paid 0 0 0 0 304167.9435 0
8. Interest Paid 0 0 226475.5706 101758.4507 84798.70464 67838.95858
9.Loan Repayments 0 0 0 141331.1744 141331.1744 141331.1744
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 0 151773.1778 542254.818 744057.5288 628906.9444 -73068.18432
Cumulative Cash Balance 0 151773.1778 694027.9958 1438085.525 2066992.495 1993924.31

3
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 2134445.45 1924500 1924500 1924500 1924500 1924500
1. Inflow Funds 209945.4499 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 209945.4499 0 0 0 0 0
2. Inflow Operation 1924500 1924500 1924500 1924500 1924500 1924500
Sales Revenue 1924500 1924500 1924500 1924500 1924500 1924500
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1610802.061 1240816.012 1228944.182 1075741.203 1075741.203 1075741.203
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 361718.6277 0 0 0 0 0
6. Operating Costs 742529.2448 742529.2448 742529.2448 742529.2448 742529.2448 742529.2448
7. Corporate Tax Paid 314343.8014 323036.1264 328124.0425 333211.9586 333211.9586 333211.9586
8. Interest Paid 50879.21252 33919.49212 16959.74606 0 0 0
9. Loan Repayments 141331.1744 141331.1744 141331.1744 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus(Deficit) 523643.3891 683683.9879 695555.8179 848758.7966 848758.7966 848758.7966
Cumulative Cash Balance 2517567.699 3201251.687 3896807.505 4745566.302 5594325.124 6443083.921

4
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 1443375 1635825 1924500 0

1. Inflow Operation 0 0 1443375 1635825 1924500 0

Sales Revenue 0 0 1443375 1635825 1924500 0

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 630769.3216 630769.3216 674644.6114 648677.8461 1069463.151 -136101.9743

3. Increase in Fixed Assets 630769.3216 630769.3216 0 0 0 0

Fixed Investments 600732.675 600732.675 0 0 0 0

Pre-production Expenditures 30036.64658 30036.64658 0 0 0 0

4. Increase in Net Working Capital 0 0 113829.8898 15177.32548 22765.98822 -151773.1778

5. Operating Costs 0 0 560814.7217 633500.5207 742529.2448 15671.2035

6. Corporate Tax Paid 0 0 0 0 304167.9435 0

NET CASH FLOW -630769.3216 -630769.3216 768730.3886 987147.1539 855036.8491 136101.9743

CUMMULATIVE NET CASH FLOW -630769.3216 -1261538.618 -492808.2289 494338.9249 1349375.774 1485477.748

Net Present Value (at 18%) -630769.3216 -534550.249 552090.1934 600808.2437 441018.497 59491.427

Cumulative Net present Value -630769.3216 -1165319.571 -613229.3773 -12421.13356 428597.3634 488088.7904

5
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 1924500 1924500 1924500 1924500 1924500 1924500

1. Inflow Operation 1924500 1924500 1924500 1924500 1924500 1924500

Sales Revenue 1924500 1924500 1924500 1924500 1924500 1924500

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 1208646.198 1065565.346 1070653.262 1075741.203 1075741.203 1075741.203

3. Increase in Fixed Assets 0 0 0 0 0 0

Fixed Investments 0 0 0 0 0 0

Pre-production Expenditures 0 0 0 0 0 0

4. Increase in Net Working Capital 151773.1778 0 0 0 0 0

5. Operating Costs 742529.2448 742529.2448 742529.2448 742529.2448 742529.2448 742529.2448

6. Corporate Tax Paid 314343.8014 323036.1264 328124.0425 333211.9586 333211.9586 333211.9586

NET CASH FLOW 715853.8016 858934.6545 853846.7383 848758.7966 848758.7966 848758.7966

CUMMULATIVE NET CASH FLOW 2201331.524 3060266.179 3914112.917 4762871.739 5611630.536 6460389.333

Net Present Value (at 18%) 265174.8279 269641.0792 227155.8172 191357.8334 162167.6589 137430.2129

Cumulative Net present Value 753263.5926 1022904.697 1250060.515 1441418.322 1603585.981 1741016.194

Net Present Value (at 18%) 1741016.194

Internal Rate of Return 48.4%

6
 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
  1 2 3 4 5
Capacity Utilization (%) 75% 85% 100% 0% 100%

1. Total Income 1443375 1635825 1924500 0 1924500

Sales Revenue 1443375 1635825 1924500 0 1924500
Other Income 0 0 0 0 0
2. Less Variable Cost 475861.5182 539309.7172 634482.0413 0 634482.0413
VARIABLE MARGIN 967513.4818 1096515.283 1290017.984 0 1290017.984
(In % of Total Income) 171.99898 171.99898 171.99898 #DIV/0! 171.99898
3. Less Fixed Costs 168232.092 177469.692 191326.092 98950.092 191326.092
OPERATIONAL MARGIN 799281.3898 919045.5908 1098691.892 -98950.092 1098691.892
(In % of Total Income) 141.13 143.696 146.262 #DIV/0! 146.262
4. Less Cost of Finance 226475.5706 101758.4507 84798.70464 67838.95858 50879.21252
5. GROSS PROFIT 572805.8193 817287.1401 1013893.162 -166789.0506 1047812.654
6. Income (Corporate) Tax 0 0 304167.9435 0 314343.8014
7. NET PROFIT 572805.8193 817287.1401 709725.2186 -166789.0506 733468.8528
RATIOS (%)  
Gross Profit/Sales 40% 50% 53% #DIV/0! 54%
Net Profit After Tax/Sales 40% 50% 37% #DIV/0! 38%
Return on Investment 58% 66% 56% -8% 55%
Return on Equity 101% 145% 126% -30% 130%

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 Annex 4: NET INCOME STATEMENT (in Birr):Continued
PRODUCTION
  6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 1924500 1924500 1924500 1924500 1924500

Sales Revenue 1924500 1924500 1924500 1924500 1924500
Other Income 0 0 0 0 0
2. Less Variable Cost 634482.0413 634482.0413 634482.0413 634482.0413 634482.0413
VARIABLE MARGIN 1290017.984 1290017.984 1290017.984 1290017.984 1290017.984
(In % of Total Income) 171.922 171.922 171.922 171.922 171.922
3. Less Fixed Costs 179311.4385 179311.4385 179311.4385 179311.4385 179311.4385
OPERATIONAL MARGIN 1110706.546 1110706.546 1110706.546 1110706.546 1110706.546
(In % of Total Income) 148.828 148.828 148.828 148.828 148.828
4. Less Cost of Finance 33919.49212 16959.74606 0 0 0
5. GROSS PROFIT 1076787.054 1093746.8 1110706.546 1110706.546 1110706.546
6. Income (Corporate) Tax 323036.1264 328124.0425 333211.9586 333211.9586 333211.9586
7. NET PROFIT 753750.9273 765622.7573 777494.5616 777494.5616 777494.5616
RATIOS (%)  
Gross Profit/Sales 56% 57% 58% 58% 58%
Net Profit After Tax/Sales 39% 40% 40% 40% 40%
Return on Investment 56% 55% 55% 55% 55%
Return on Equity 133% 135% 138% 138% 138%

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 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 630769.3216 1413311.795 2143576.715 2840527.205 3440413.074 3089136.424
1. Total Current Assets 0 151773.1778 965316.9858 1745546.365 2428711.122 1993924.31
Inventory on Materials and Supplies 0 0 42474.43348 48137.69812 56632.56942 0
Work in Progress 0 0 17136.87704 19421.7974 22849.17794 0
Finished Products in Stock 0 0 34273.75408 38843.5948 45698.33022 0
Accounts Receivable 0 0 157459.1002 178453.6247 209945.4499 0
Cash in Hand 0 0 19944.82518 22604.12494 26593.10024 0
Cash Surplus, Finance Available 0 151773.1778 694027.9958 1438085.525 2066992.495 1993924.31
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 630769.3216 1261538.618 1178259.729 1094980.841 1011701.952 928423.0635
Fixed Investment 0 600732.675 1201465.35 1201465.35 1201465.35 1201465.35
Construction in Progress 600732.675 600732.675 0 0 0 0
Pre-Production Expenditure 30036.64658 60073.2675 60073.2675 60073.2675 60073.2675 60073.2675
Less Accumulated Depreciation 0 0 83278.8885 166557.777 249836.6655 333115.554
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 166789.0506
TOTAL LIABILITIES 630769.3216 1413311.795 2143576.715 2840527.205 3440413.074 3089136.424
5. Total Current Liabilities 0 0 157459.1002 178453.6247 209945.4499 0
Accounts Payable 0 0 157459.1002 178453.6247 209945.4499 0
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 378461.5981 847987.0721 847987.0721 706655.8977 565324.7233 423993.5489
Loan A 378461.5981 847987.0721 847987.0721 706655.8977 565324.7233 423993.5489
Loan B 0 0 0 0 0 0
7. Total Equity Capital 252307.7235 565324.7233 565324.7233 565324.7233 565324.7233 565324.7233
Ordinary Capital 252307.7235 565324.7233 565324.7233 565324.7233 565324.7233 565324.7233
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 572805.8193 1390092.959 2099818.178
9. Net Profit After Tax 0 0 572805.8193 817287.1401 709725.2186 0
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 572805.8193 817287.1401 709725.2186 0

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 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
3,724,430.
TOTAL ASSETS 50 4336850.255 4961141.838 5738636.425 6516130.987 7293625.548
1. Total Current Assets 2879286.327 3562970.315 4258526.133 5107284.955 5956043.752 6804802.548
Inventory on Materials and Supplies 56632.56942 56632.56942 56632.56942 56632.56942 56632.56942 56632.56942
Work in Progress 22849.17794 22849.17794 22849.17794 22849.17794 22849.17794 22849.17794
Finished Products in Stock 45698.33022 45698.33022 45698.33022 45698.33022 45698.33022 45698.33022
Accounts Receivable 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499
Cash in Hand 26593.10024 26593.10024 26593.10024 26593.10024 26593.10024 26593.10024
Cash Surplus, Finance Available 2517567.699 3201251.687 3896807.505 4745566.302 5594325.124 6443083.921
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 845144.175 773879.94 702615.705 631351.47 560087.235 488823
Fixed Investment 1201465.35 1201465.35 1201465.35 1201465.35 1201465.35 1201465.35
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 60073.2675 60073.2675 60073.2675 60073.2675 60073.2675 60073.2675
Less Accumulated Depreciation 416394.4425 487658.6775 558922.9125 630187.1475 701451.3825 772715.6175
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 3724430.502 4336850.255 4961141.838 5738636.425 6516130.987 7293625.548
5. Total Current Liabilities 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499
Accounts Payable 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499 209945.4499
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 282662.3488 141331.1744 0 0 0 0
Loan A 282662.3488 141331.1744 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 565324.7233 565324.7233 565324.7233 565324.7233 565324.7233 565324.7233
Ordinary Capital 565324.7233 565324.7233 565324.7233 565324.7233 565324.7233 565324.7233
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 1933029.127 2666497.98 3420248.908 4185871.665 4963366.252 5740860.814
9. Net Profit After Tax 733468.8528 753750.9273 765622.7573 777494.5616 777494.5616 777494.5616
Dividends Payable 0 0 0 0 0 0
Retained Profits 733468.8528 753750.9273 765622.7573 777494.5616 777494.5616 777494.5616

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