ANRS INVESTMENT COMMISSIN

www.investamhara.gov.et

Project Profile on the Establishment of Injection

molded plastic Educational material
manufacturing plant

Development Studies Associates

(DSA)

October 2008
Addis Ababa
 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..............................................................................................................................3
3.1.3 Pricing and Distribution.....................................................................................................................4
3.2 Plant Capacity..............................................................................................................................................5
3.3 Production Program.....................................................................................................................................5
4. Raw Materials and Utilities.................................................................................................................................5
4.1 Availability and Source of Raw Materials...................................................................................................5
4.2 Annual Requirement and Cost of Raw Materials and Utilities....................................................................5
5 Location and Site..................................................................................................................................................6
6 Technology and Engineering...............................................................................................................................6
6.1 Production Process.......................................................................................................................................6
6.2 Machinery and Equipment...........................................................................................................................7
6.3 Civil Engineering Cost.................................................................................................................................8
7 Human Resource and Training Requirement...................................................................................................9
7.1 Human Resource..........................................................................................................................................9
7.2 Training Requirement..................................................................................................................................9
8 Financial Analysis..............................................................................................................................................10
8.1 Underlying Assumption.............................................................................................................................10
8.2 Investment..................................................................................................................................................11
8.3 Production Costs........................................................................................................................................11
8.4 Financial Evaluation..................................................................................................................................12
9 Economic and Social Benefit and Justification................................................................................................13
ANNEXES....................................................................................................................................................................15
 1. Executive Summary

This project profile deals with the establishment of injection molded plastic educational material manufacturing
plant in Amhara National Regional State. The following presents the main findings of the study

Demand projection divulges that the domestic demand for plastic educational materials such as rulers and set
squares is substantial and is increasing with time. Accordingly, the planned plant is set to produce 600 thousand
pieces of ruler (different size) and 100 thousand set squares annually. The total investment cost of the project
including working capital is estimated at Birr 7.1 million and creates 28 jobs opportunity and Birr 799.9 thousand of
income.

The financial result indicates that the project will generate profit beginning from the first year of operation.
Moreover, the project will break even at 35.3% of capacity utilization and it will payback fully the initial investment
less working capital in 3 years and 7 months. The result further shows that the calculated IRR of the project is
20.4% and NPV at 18% discount rate of Birr 617,871.86

In addition to this, the proposed project possesses wide range of economic and social benefits such as increasing the
level of investment, tax revenue, employment creation and import substitution.

Generally, the project is technically feasible, financially and commercially viable as well as socially and
economically acceptable. Hence the project is worth implementing.

2. Product Description and Application

Injection molding is a method to obtain molded products by injecting plastic materials molten by heat into a mold,
and then cooling and solidifying them. The method is suitable for the mass production of products with complicated
shapes, and takes a large part in the area of plastic processing. One of the products produced in this process is
educational materials. These educational materials include set-squares, small rulers, etc. All are made from plastics
and are known among students as “mathematical instruments” and are mostly used in geometry and trigonometry
classes. They are used to measure angles, length and to construct different geometric figures.

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

1
According to CSA survey (2007) there are 59 firms engaged in the production of various plastic products where the
raw material is totally imported from abroad. Available information further shows that there is no domestic firm
engaged in the production of plastic educational materials. Thus, the whole demand for such educational products is
met through import. However, the report of Customs Authority aggregates various plastic materials under the
section of “office or school supplies of plastics” so that accurate data on annual import could not be established for
this study.

But, we can estimate the current demand for the plastic educational materials under investigation using the student
population size as a proxy. In this regard, CSA, Annual Abstract (2006), divulges that the number of students
attending regular classes has increased substantially in the recent years as shown in Table 1 below.

2
 Projected 9,276,975 10,210,247 12,272,430
Student
SizeProjec
ted
Demand
for RulerTable 1: Number of Regular Students in Schools by Grade
(20%)Proj
7,494,4368,124,9649,8 Average
ected
49,7129,973,45510.3% Growth
Demand 2002/03
School Grade 2003/04 2004/05 2005/06 Rate
for Set
Primary (7-8)Primary (1-
6) Square 1,077,879 1,223,619 1,375,599 1,403,504 9.3%
(5%)Source
Secondary (9-10) : CSA, 548,073 632,095 801,659 822,718 14.9%
Statistical
Senior Secondary (11-12)
Abstracts 78,641 93,395 90,759 95,168 6.9%
Senior Secondary (2006)
(10 + 1 + 2 + 3) NA NA 58,447 63,046 96,279 30.3%
=
University Not 77,946 77,727 91,655 91,655 5.9%
Avai
lable

According to
table 1 the
total number
of students in
2005/06 has
reached
about 12.5
million
showing an
average
growth of
12.9% in the
period under
investigation.
The same
positive
pattern has
been
registered in
all school
grades
indicating Total Cost
Material and Input
the presence Quantity L.C. F.C.
PVCofResin
expansion 5.5 ton 90,000
Machinery
Coloring Pigment and Equipment100 kg Quantity15,000
in all levels.
 Injection
Total Material Cost Molding Machine
  105,000
If ( Clamping
we and Injection Unit) 2
Utility     3
 Metal Mold
reasonably
Electricity 370,000 kwh 203,500 12  
 Resin
assume
Water thatColoring Machine
6,500 m3 17,225 1 
Total
20%Utility
 Water Cost
of the Chiller   220,725 1