PROJECT PROFILE ON THE ESTABLISHMENT OF JET

BRAND DIESEL GENERATOR AND CENTRIFUGAL

PUMPS ASSEMBLY PLANT IN NORTH SHOA ZONE OF
AMHARA REGION

Promoter
Henok Shiferaw
General manager of Hydro solution

Phone office +251118880699

Mobile Phone +251911655781
E-mail- hydrosolutionengineering@gmail.com

Addis Ababa
May 2019

DISCLAIMER
1
The purpose and scope of this project proposal is to introduce the subject matter and
provide a general idea and information on the said area. All the material included in this
document is based on data/information gathered from various sources and is based on
certain assumptions. Although, due care and diligence has been taken to compile this
document, the contained information may vary due to any change in any of the concerned
factors, and the actual results may differ substantially from the presented information.
The consultant does not assume any liability for any financial or other loss resulting from
this memorandum in consequence of undertaking this activity. Therefore, the content of
this proposal should be relied upon for making decision, investment or otherwise. The
prospective user of this proposal is encouraged to carry out his / her own due diligence
and gather any information he/she considers necessary for making an informed decision.

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 EXECUTIVE SUMMARY IN TABULAR FORM
THE BUSINESS PROFILE
PROPOSED NAME OF THE
BUSINESS
PROPOSED BUSINESS TYPE
PROJECT CAPACITY
PROPOSED TOTAL COST /Capital
Employment opportunity
Means of Finance
PROPOSED LOCATION OF THE
BUSINESS
MARKET SHARE
PRODUCTION PROGRAMME
LAND REQUIRMENT
POWER AND WATER REQUIREMENTS
PROPOSED STAFF REQUIREMENT
Environment protection
PROJECT ACTION PLAN
Assembly of Jet Diesel Generator and Centrifugal Pump
Assembly of diesel generator and centrifugal pumps to the local
market and neighbor countries
Plant capacityis
set to produce 200 different series diesel
generator and 340 centrifugal pumps annually.
Birr 29.1 million
104 permanent graduates and unskilled
75 % Debt and 25% Owen Equity, payback period of around 5years at 90%
capacity utilization at second year, after construction.
ANRS regional state, North Shoa zone, Angolelana Tera wereda.
100% for domestic market at initial production periods and export for other
countries
90% 1st year, 95% 2nd year, 100% 3rd year, etc
1.0 hectares/ 10,,000m2
110,000 kwh Electricity power & 6000 m3 per day water consumption
Production staff structures 1-2 teams/groups:
Production manager 1, production head 1, Technicians 6, Ass. Technicians
12, laborers 40, personnel head 1, secretary 1, Accountant 1, Marketing
officer 1, casher 1, security 5, clerks 4, genitor 5. Total of 79 workers.
There is no effluent but the project design Environmental protection plan
based on the guideline
Land acquisition and civil construction…1stsix months, Mobilization… 2ndsix
months, Production at full capacity…. 2rd year
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 Table of Contents

Executive Summary 5
1. INTRODUCTION 6
2. Product Description and Application 7
2.1. Diesel Generator...................................................................................................7
2.1.1. How does a Diesel Generator create Electricity?..........................................9
2.1.2. Jet Brand Diesel...........................................................................................12
2.1.3. Standard Specification of Assembled Generator.........................................14
2.2. Centrifugal Pumps...............................................................................................20
3. Market Study, Plant Capacity and Production Program 21
3.1. Market Study.......................................................................................................21
3.1.1. Present Demand and Supply........................................................................21
3.1.2. Projected Demand........................................................................................24
3.1.3. Pricing and Distribution...............................................................................25
3.2. Plant Capacity.....................................................................................................25
3.3. Production Program............................................................................................25
4. Raw Materials and Utilities 26
4.1 Availability and Source of Raw Materials..........................................................26
4.2 Annual Requirement and Cost of Raw Materials and Utilities...........................26
5 Location and Site 26
5. Technology and Engineering 27
a. Production Process..................................................................................................27
b. Machinery and Equipment......................................................................................30
c. Civil Engineering Cost...........................................................................................31
6. Human Resource and Training Requirement 32
a. Human Resource.....................................................................................................32
b. Training Requirement.............................................................................................33
7. Financial Analysis 33
a. Underlying Assumption..........................................................................................33
b. Investment...............................................................................................................34
c. Production Costs.....................................................................................................35
d. Financial Evaluation...............................................................................................35
8. Economic and Social Benefit and Justification 37
9. Environmental Impact Analysis and Corporate Social
responsibility 38

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ANNEXES 39

Executive Summary
This project profile deals with the establishment of a plant that assembles jet brand diesel
generator and centrifugal pumps in North Shoa zone of the Amhara National Regional
State. The following presents the main findings of the study

Demand projection divulges that the domestic demand for diesel generator and
centrifugal pumps is substantial and is increasing with time. Accordingly, the planned
plant is set to assemble 340 centrifugal pumps annually. The total investment cost of the
project including working capital is estimated at Birr 29 million and creates 104 jobs and
Birr 2,190,440 of income.

The financial result indicates that the project will generate profit beginning from the first
year of operation. Moreover, the project breaks even at 17.52% of capacity utilization and
payback fully the initial investment less working capital in second year of operation. The
result further shows that the calculated IRR of the project is 37.7%.

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,
diversification of the economy and import substitution.

The promoter of the project is experience in importing of assembled diesel generators in

Ethiopia for the last several years and he initiate to assemble in Ethiopia to transfer
technology and to create job opportunity.

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

5
 1. INTRODUCTION
Energy requirement is becoming prerequisite to enhance income, improve quality of the
people no matter where they live. Energy is one of the bases for economic growth and
social progress of the people and as well as any country. The global population mostly
resides in rural areas due to nature of settlement governments often cannot provide basic
energy facilities for this sparsely populated regions. International energy agency (IEA)
estimates that 1.5 billion people lived without access to electricity in 2008. More than
one-fifth of the world’s population experiences this situation. Some 85% of those without
electricity living in rural areas, mainly in sub- Saharan Africa and South Asia . The rapid
depletion of fossil fuels worldwide has made it necessary to reduce it dependency on
nonrenewable energy sources. One way of accomplishing this is to harness the enormous
potential of renewable energy sources to meet continually increasing demands for energy.
However, the periodic nature of renewable energy sources is the main issue hindering
their rapidly implementation. To improve the reliability and power quality of the system,
energy storage and conventional generator generally used as backup system. But
distributed generation using two or more renewable energy sources can also significantly
increase the reliability.

In Ethiopia, electricity supply is extremely antiquated. As compared to other African

countries experience, overall electric access in Ethiopia is very low. As in most Sub-
Saharan Africa countries, urban and rural access has a huge gap. Globally, Ethiopia
experienced the lowest consumption rate, and its electricity consumption is 37kwh per
capita per year. Only approximately 15% of populations have access to the power grid.
About 89.6% of electricity in the country is consumed in urban area where approximately
50% is consumed in Addis Ababa city and 20% consumed in Adama town, the second
largest town in energy consumption

Like most countries with good forest cover and low electricity penetration, most of the
Ethiopian populace relies on biomass for its energy needs. Only a little over 50% of the
population has access to electricity. its second generation Growth and Transformation

6
Plan, Ethiopia has pledged to spend 20 billion dollars from 2015 to 2020 for infrastructure
schemes as well as projects to develop its renewable energy resources like hydro, solar,
wind and geothermal resources. It is expected that these resources when fully established
will meet the country’s energy demands and have enough left over for exports to other
countries. Nevertheless, until the infrastructure develops, the country and all of its
industries and manufacturing units still have to rely on the generators.

The current electricity generation in Ethiopia is pegged at less than 1/4th of its
requirements. The existing infrastructure is also less than sufficient. Another area of
concern is the quality of service. At present, power outages occur frequently, especially
during peak hours. Even with one of the lowest electricity tariffs in the continent, the
insufficient electricity is an issue. Other problems also include poor customer service and
untrained labor. There is also an urgent need for the infusion of money into this sector.

The unreliability of electric supply requires successful businesses to use generators in

Ethiopia. Most businesses in Ethiopia import high-quality products like Kohler generators.
This is more cost effective than using locally produced generators. The growth in the
industry leads to an increase in demand for electricity and a resultant rise in sales of
generators in Ethiopia. Producers of high-quality generators, provide a range of generators
suitable for different needs and different specifications.

2. Product Description and Application

2.1. Diesel Generator

It remains a challenge for developed and developing countries to provide and distribute
electricity within their countries equally in rural and urban areas. There are over 1,5
billion people in the world without electricity in their households. Of these, 589 million
live in Africa alone. It is estimated that 80% of the people without access to electricity
live in rural areas. In most instances, rural communities are isolated and distant from

7
urban areas, increasing their chances of not having access to the main electrical grids. In
some countries it will take a number of years before the main electricity grids are
extended to rural areas. The government authorities in most of these countries
concentrate mainly on providing electricity to urban areas because it is expensive to
extend the electricity grid to rural areas. The other reason is that rural areas are inhabited
by small and dispersed populations making their electricity demand small. It is therefore
uneconomical to provide electricity immediately through the extension of the main grid
to rural areas (Rolland et al., 2013). As a result, households in the rural areas are left to
generate their own individual energy supplies, which are mainly obtained from traditional
fuels such as wood, crop residues and/or conventional fuels such as paraffin and candles.

The Diesel Generator set (diesel engine driven generating set) is a compact and robust
machine in which mechanical energy is converted into electrical energy. In this system,
the air is drawn into the cylinder and compressed to a high ratio (14:1 to 25:1). During
this compression, the air is heated to a temperature of 700 – 900 deg. C. A metered
quantity of diesel fuel is then injected into the cylinder, which ignites spontaneously
because of the high temperature of compressed air. The heat energy then converted to
rotational mechanical energy through the piston and crack shaft setup. An alternator is
coupled with the diesel engine and the kinetic energy of engine is transmitted to
alternator and converted into electrical energy. Alternator works on the Faraday’s law of
electromagnetic induction. This electrical energy is then fed to the load.

A diesel generator is a diesel engine coupled to an electrical and is just one of the prime
movers that is able to generate electric power. Others are water turbines or water wheels
connected to the electrical generator, a windmill’s blades are usually connected through a
transmission and a coal fired or nuclear powered utility usually does it through a steam
turbine connected to the electrical generator.

When diesels are used to generate power they are usually very large to as they are used to
supply primary power to small work sites or remote villages or installations or they
provide supplemental power utilities or large building complexes.

8
Diesels are used because they are very fuel efficient, especially when operated within a
narrow rpm range. Most of the large trucks in the world are diesels for this very reason

2.1.1. How does a Diesel Generator create

Electricity?
A diesel generator converts mechanical energy (movement) into electrical power, and
channels it through power cables. It can be helpful to imagine electricity flowing through
wires in much the same way water flows through pipes. A generator can be thought of as
a kind of ‘electrical pump’ which causes the electricity to flow through the wires. It
doesn’t actually create or destroy the electrons that flow through the wires any more than
a water pump creates new water. It just causes it to move in a useful fashion.

The Engine

This is typically a diesel engine, much like that in a large vehicle, the bigger the source of
mechanical energy, the more electrical power can come out ‘the other end’.

The Alternator

This is the part which turns the mechanical energy (the rotation of the shaft) into
electrical power through induction. The ‘how’ of the alternator is one of the most
fascinating parts of a generator. Faraday discovered (or at least described) the process of
‘electromagnetic induction’ in the early 1830s. This principle holds that if you move a
wire (or any electrical conductor) through a magnetic field, an electric current is
‘induced’ in the wire. The same is true if the wire is still and the magnetic field moves.
Simply moving through a magnetic field causes the electrons to flow through the wire. If
the wire moves north-south, the electrons flow one way, and if it moved back south-
north, they flow into the other. The stronger the field and the longer the wire, the greater
the amount of current induced. Modern generators work by placing several large,
powerful magnets in a cluster around a central, rotating shaft. This is called the ‘rotor’ or
‘armature’. The magnets might be permanent magnets or electromagnets, but the point is
that they produce a magnetic field, which the engine causes to turn. The other important
sub-component of the alternator is the ‘stator’, which is essentially a series of tightly

9
bundled coils of wire, all packed closely around the rotor. When an outside force (such as
a diesel engine) turns the central shaft, the rotor constantly moves the north and south
poles of its magnetic field(s) across the bundles of wire that surround them. This causes a
great deal of electrical current to flow back and forth through the wires – what we call
‘alternating current’ or ‘AC’ mains power.

The Fuel System

This is typically the diesel fuel supply for the engine. The most obvious part is a tank
holding enough fuel for at least 6-8 hours of operation. This tank may be inside the
generator housing for smaller or portable units, or it may be a separate external structure
for larger, permanently installed units. Other parts of the fuel system involve pipe-work
to get the fuel to the engine, a fuel pump similar to the one in most vehicles, a fuel filter,
and a ventilation pipe or valve for the fuel tank, preventing overpressure or vacuum
inside. There will also be an overflow connection ensuring that if the tank is overfilled,
the fuel is channeled away, and not simply splashed over the surface of the engine or
alternator.

The Voltage Regulator

This is a fairly complex but important component. Without it, the voltage and amperage
of the AC current provided would vary according to the speed of the engine. As modern
electrical equipment relies on a very steady power supply, something is required to level
it out. The workings of a voltage regulator are quite ingenious and are beyond the scope
of this article. It is probably enough to know what it does, for now.

The Cooling System

Just like in a vehicle, the engine produces a great deal of waste heat in addition to
mechanical energy. The power flowing through the alternator also produces heat via the
electrical resistance of the wires themselves. Again, like in your car, this heat is soaked
up by a coolant fluid, often but not necessarily water, which then runs through a heat
exchanger, dumping its heat typically into the air, or sometimes into a secondary coolant
fluid.

The Exhaust System

10
All internal combustion engines produce exhaust gases. These are toxic and must be
directed away from the engine itself and any nearby people. Exhaust gases are typically
channeled through pipes, and vented into the outside air. There are typically health and
safety regulations about how and where exhaust systems must be channeled, so consult
these carefully before installing a new generator.

The Lubrication (oil) System

Any engine requires lubrication, and this is handled by an oil pump and reservoir
attached to the engine itself.

The Starter & Battery System

Again, just like in a car or lorry, the diesel motor relies on a small electrical motor to start
running. This electrical starter motor is powered by a battery, which is charged by either
a separate charger or the generator output itself.

The Control Panel

The control panel is where the generator is operated. Typical controls & outputs included
on most control panels are:

 Start / shutdown controls (manual, automatic, or both)

 Phase selector switch
 Frequency switch
 Engine mode switch
 Engine fuel
 Engine oil
 Engine speed
 Coolant temperature
 Battery charge
 Generator output voltage
 Generator output current (amperage)
 Generator Output in kVA
 AC power frequency

11
The frame/Housing

The gen set will either be contained in a weatherproof housing, an open structural frame,
or a transportable unit. All of these function to keep the components together and solidly
attached. It also ensures that all electrical components are safely grounded.

2.1.2. Jet Brand Diesel

Jet brand Diesel Generator Sets provide superior quality at reasonable cost, catering to
a wide range of Jubaili Bros’ clients all across the Globe. These Generator Sets are
Assembled in Lebanon and the United Arab Emirates (UAE)

As a diesel generator supplier, Jubaili Bros offers extensive range from 9 KVA up to
2500 KVA, to match the need and demand of the markets. We are honoured to power
the industries that drives the regional economy : construction, oil & gas, mining,
service sectors, businesses, industrial, power stations and many more…

JET Generators are powered by Perkins engines and coupled with Leroy-Somer
alternators, along with Deep Sea controllers and ABB components. Perkins is a well-
known and reputable product in the generators’ market, catering the power needs in
remote regions and extreme climates from Asia, Middle East, Africa and all over the
world

With an abundant stock of fast-moving spare parts and through our supply chain
partners, we ensure consistent supply of Genuine Spare Parts & Accessories and that
too with a minimal response time.

Backed with excellent After Sales Support and Service from Extensive Dealer
Network and fleet of well experienced engineers, Jubaili Bros is always ready to
support its customers anytime anywhere.

As a leading generator supplier, Jubaili Bros offers customized solutions. All you need
to do is select the best solution for your projects / businesses and we will do the rest.

12
This project promoter is a dealer in Ethiopia to distribute assembled generators still
now. So, to minimize the price of the generator and to transfer technology, the
promoter decide to invest in assembly rather than importing finished products.

Jet brand diesel generator sets are powered by Perkins 400, 1100, 1500, 2000 and 4000
series engines Perkins is a world leader in the innovation, design and production of a
wide range of state - of - the – art Engines, manufactured at various plants in the United
Kingdom. Perkins Engines are known the world over for their fuel - efficiency,
ruggedness and reliable operation under all conditions.

13
LEROY-SOMER is the world-leading specialist in industrial alternators. The low
voltage industrial alternators from the LSA series are built to meet the most stringent
conditions and specifications. They are also highly customizable to fit in any project
where reliable power generation is needed. The TAL low voltage industrial alternators
have been designed with simplicity in mind. As a result, they offer no compromise on
quality and deliver good performance for general commercial, industrial and telecom
applications.

Deep Sea Electronics is one of the world’s top manufacturers of generator control, auto
transfer switch and battery charger equipment. DSE Gen set® is an intelligent range of
single-set and multi-set generator control solutions, mains (utility) protection relays,
lighting tower control solutions, digital automatic voltage regulators (AVR's), remote
communications devices and expansion modules. Each range has been designed and
manufactured by DSE industry leading experts to deliver a range of features and benefits
that set new standards across the industry.
The DSE6110 and DSE7320 both provide

& shutdowns:

2.1.3. Standard Specification of Assembled

Generator

1. Output Ratings
Output ratings are listed on each Generator Set single page specification sheet. The
Generator Set is supplied as standard at 380 or 415 Volts, 3 Phase, 50 Hz and 480 Volts,
3 Phase, 60 Hz.
Alternative Voltages/Frequencies are available.

2. Engine
Perkins 4 stroke heavy-duty high performance industrial type diesel engine.

2.1 Governing
Complaint to ISO 8528-G2 Mechanical or electrical, ISO 8528-G3 Electronic

14
2.2 Electrical System
 12 & 24vDC Battery Charging Alternators
 External charger is available upon request
 Axial type starter motor
 High capacity maintenance free lead acid batteries
 Battery rack mounted

3. Cooling Radiator
Radiator and cooling fan, complete with safety Guards, designed to cool the engine at
high ambient temperatures.

4. Engine Filtration Systems

 Air filter
 Fuel filter
 Full flow lube oil filter
 All filters have replaceable elements.

5. Exhaust System
Heavy duty Industrial Exhaust Silencer. Residential and critical silencers available upon
request

6. Alternator
 Self-Excited
 Self-regulating brushless Alternator with fully interconnected damper windings
 ICO6 cooling system and sealed-for-life bearing
 12 and re-connectable windings, providing a wide range of 3 phase voltages
 PMG Excitation system is available upon request
Note: On models 650KVA and above, AREP. Excitation system is standard.

15
6.1 Insulation System
 The insulation system is Class H
 All windings are impregnated in a triple dip thermosetting liquid, oil and acid
resisting polyester varnish or vacuum pressure impregnated with a special
polyester resin.
 Heavy coat of anti-tracking varnish additional protection against moisture or
condensation
6.2 Automatic Voltage Regulator (AVR)

The fully sealed Automatic Voltage Regulator maintains the Voltage Regulation
at_+0.5%.= Nominal adjustment by means of a trim pot incorporated on the AVR.
Digital AVR is available upon request.

6.3 Waveform distortion THF & TIF factors

The total distortion of the voltage waveform with an open circuit between phases or
phase and neutral in the order of 1.8 on a 3 phase balanced harmonic free load. The total
distortion is in the order of 3.5% Machines are designed to have a THF less than 2% and
a TIF less than 50. A 2/3 pitch factor is standard on all stator windings.

6.4 Radio Frequency Interference

Suppression is in line with the provisions of BS800 and VDE Class G and N.

6.5 Motor Starting

An overload capacity equivalent to 300% of the Full Load impedance at zero Power
Factor can be sustained for 10 seconds, When AREP option is fitted or by installing
PMG.

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7. Mounting Arrangement

7.1 Base frame

The complete Generating Set is mounted as a whole on a heavy duty fabricated steel Base
frame.
7.2 Coupling
The Engine and Alternator are directly coupled by means of an SAE flange, so that there
is no possibility of misalignment after prolonged use. The Engine flywheel is flexibly
coupled to the
Alternator rotor and a full torsional analysis has been carried out to guarantee no harmful
vibration will occur in the assembly.

7.3 Anti-vibration Mounting Pads

Anti-Vibration pads are affixed between the Engine/Alternator feet and the Base frame
thus ensuring complete vibration isolation of the rotating assembly.
7.4 Safety Guards
The Fan & Fan Drive along with the Battery Charging Alternator are Safety Guard
protected for personnel protection.

8. Fuel System
On all Generating Sets up to 650 KVA, the Base frame design is incorporated with an
integral fuel tank with a capacity of approx. 8 hours running at Full Load. The tank is
supplied complete with fill cap breather, fuel feed and return lines to the Engine and drain
plug.

9. Quality Standards

The equipment meets the following standards: BS4999, BS5000, ISO 3046, IEC 60034,
NEMA
MG - 122 and ISO 8528

17
10. Documentations
A full set of Operation and Maintenance manuals, Circuit wiring diagrams and
Commissioning/Fault Finding instruction leaflets accompany the Generator.

11. General Arrangement

The Generator Set is designed and constructed for installation in a weather protected
building.
Various types of sound attenuated enclosures are available.

12. Factory Tests

The Generating set is load tested by using resistive load banks before dispatch. All
protective devices control functions and site load conditions are simulated. The generator
and it’s systems are checked before dispatch.

13. Equipment Finishing

All mild steel components are fully degreased and painted with powder coated paint to
ensure maximum scuff resistance and durability. The same treatment is carried out on the
Alternator and Engine.

18
19
 2.2. Centrifugal Pumps

Pumps are used to deliver water, particularly when the water has to be lifted from a lower
level to a higher level, where energy is needed for shifting the water. The energy is
obtained from a motor which converts electrical energy into mechanical energy. They

20
are two types of pumps –the centrifugal type is the most versatile and broadly used in
agriculture and industry. This type of pump is compact, easy to maintain and low in
energy consumption

Among water pumps, the small-type centrifugal pumps enjoy a large demand being
extensively used, in the fields of agriculture, civil engineering, chemical industry,
waterworks, mining and air-conditioning, and for many other industrial purposes. From
the technical point of view, manufacture of pumps of the above type is comparatively
easy. Accordingly, centrifugal pumps may constitute one of the industrial fields most
suit-able for developing countries. Developed through many years of research, centrifugal
pumps feature complete standardization, a fact which makes possible a comparatively
cheap cost of making while offering high performances.

Features of Centrifugal Pump

(1) Keeping favourable efficiency over a wide range of volumes of water, without
causing overload.
(2) Small consumption of electric power and cost of fuels on account of high
efficiency.
(3) Less troubles on account of the simple mechanism.

3. Market Study, Plant Capacity and Production

Program
3.1. Market Study

3.1.1. Present Demand and Supply

More than half of the population of East Africa live in rural areas and are heavily dependent
on the diesel generator for a continuous supply of power mainly due to lack of access to the
national grid. In urban areas, the dependency on diesel generator has been driven by the
unreliable grid resulting in the frequent and long duration of power outages. Governments in
countries such as Ethiopia, Kenya, Madagascar, and Zimbabwe have planned for rural
electrification through off-grid including mini/micro-grid. Such steps are expected to reduce

21
the dependency on diesel generator in rural areas. However, the government is also planning
for a hybrid solution by integrating solar with the diesel generator, which is expected to
create significant demand for diesel generators.

                        

Rising Demand from Small and Medium Scale Enterprises (SMEs)

The Small and Medium Scale Enterprises (SMEs) in the East African region has developed
into one of the main components of national and regional economic structures. In the recent
years, due to supportive government policies explicitly for SMEs and rapid urbanization, the
countries in the region is witnessing a growing number of SMEs. Moreover, SMEs engaged
in the manufacturing business are among the highest end-users of generator sets have also
witnessed an increase in last decade. Frequent power outages hamper the productivity and
profitability of SMEs. Hence, an alternative or backup power by diesel generators becomes a
must for the industry to run smoothly. With rising number of SMEs in the region, diesel
generator market is also expected to witness a huge demand from the sector.

Significant Demand from Residential Sector

Residential sector accounts for almost one-third of the total diesel generator demand in the
region and hence, a growing number houses coupled with government’s inadequacy to
provide reliable electricity to the housing sector is likely to augment the demand for diesel
generators in the region. The increasing consumption of electricity from residential sector is
likely to be driven by the various housing schemes being implemented by the countries in the
region. The latest statistics from the National Housing Corporation - Kenya show that the
country has a cumulative housing deficit of 2 million housing units, which grows by 200,000
22
units annually. To foster the development of houses, the government intends to deliver 1
million homes in the next five years. Similarly, in June 2018, Ethiopia’s Federal Housing
Corporation announced plans to build 16,173 homes in Addis Ababa. As a result, the
government housing program is expected to create significant demand for diesel generators in
the market.

Ethiopia is one of the Largest Market

The demand for diesel generator in Ethiopia is driven by the high growth in industrial sector.
Special focus to textile and apparel as well as leather and leather products has been a bold
move. The construction of industrial parks, one of the priorities of the five-year Growth and
Transformation Plan I and II has received due attention. Further, implementation of the
export-led industrialization strategy is supporting the growth in the industry. Also, the
demand for diesel is further driven by rural electrification through solar-diesel hybrid micro-
grid. However, rural electrification is expected to be a barrier in the demand for low power
rating diesel generators which are used in residential sector.

Annual supply of different types of diesel generator in the year 2016 is:-

Annual of import of all types of pumps is around 80,000 units of which 60000 units is
estimated to centrifugal pumps. Share of the Amhara Region is about 20000 units. This
will increase as more and more farmers turn to small scale irrigation activities to increase

23
their income. The current level of use of pumps and the expected increase of this use will
justify the establishment of a viable pump assembly plant in the Amhara Region.
Assembled pumps can also be exported to other parts of the country. The projected plant
will cover only 17% of the regional share of the import.

3.1.2. Projected Demand

Assuming that demand will increase at 4% per annum, the projected demand is depicted
in Table 1 below. Note that the proposed plant can cover a very small portion of the total
demand.

24
 Table 1: Projected Demand
Projected Demand of generator
(pcs) Projected Demand of pumps
Year (pcs)
2016 611 2,737
2017 636 2,847
2018 661 2,960
2019 691 3,078
2020 725 3,201
2021 740 3,329
2022 770 3,462
2023 800 3,600
2024 840 3,744
2025 880 3,894

3.1.3. Pricing and Distribution

The Price is set on competitive bases depending on their quality and the power of the
pump and generator. The envisaged plant’s product price is set well below the market
retail price to attract customer. Distribution will be directly to the customers as well as
through the exiting market channel.

3.2. Plant Capacity

Thus, given the expected demand for diesel generator and centrifugal pumps presented
earlier, and the planned technology, the envisaged plant is set to assemble and produce
200 generator and 340 pieces of centrifugal pumps annually.

3.3. Production Program

The program is scheduled based on the consideration that the envisaged plant will work
275 days in a year in 1 shift, where the remaining days will be holidays and for
maintenance. During the first year of operation the plant will operate at 75 percent
capacity and then it grows to 85 and 95 percents in the 2 nd and 3rd year, respectively. The
capacity will grow to 100 percent starting from the 4 th year. This consideration is
developed based on the assumption that market and logistics barriers would take place for
the first three years of operation. Annual production can be doubled by increasing the
number of shifts.

25
 4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials

The raw materials casts, steels, bolts, ball bearings should be imported, preferably from
the main company.

4.2 Annual Requirement and Cost of Raw

Materials and Utilities

A full capacity, 190 tons of casts, steels, bolts, ball bearings, etc are required. All this
materials should be imported. The total cost of these materials is estimated at Birr 4.8
million.

The utility requirements are shown in Table 2 below.

Table 2: Utilities Requirements at Full Capacity
Annual
Cost
 Item Qty (Birr)
Electricity 110000 kw 60,500
Water 6000 m3 15,900
Fuel 5000 lit 64,150
Total 140,550

5 Location and Site

The appropriate location for the envisaged project in view of the availability,
infrastructure, skilled labour as well as market for the output is North Shoa zone .

26
 5. Technology and Engineering
a. Production Process

The manufacturing process adopted is nothing but the assembly. The alternator I.C.
Engineers, couplings, control panels and fuel tanks are purchased from the primary producer.
The M.S. angles, channels and I sections are purchase from outside. The base plate is
fabricated by using M.S. angles, channels and plates by welding. Then excess welding is
removed by using portable electric grinder. The holes are then drilled to the base plate. The
alternator and I.C. Engine are mounted on the base plate and fixed with the nuts and bolts.
These two are than coupled with using couplings. The control penal and fuel tank are
produced mounted on the body. The satisfactory working of the set is checked and made
ready for dispatch.
The proposed unit is doing the assembly of diesel generator sets with necessary control panel
as per the requirement of the customer.

The load requirement of the customer is studied in consultation with the customer. Any
special requirements such as minimum startup period, fluctuations of load etc. are noted. A
suitable alternator to meet the load requirement is procured from an alternator manufacturer.
A diesel engine suitable for the alternator is also selected and procured from the diesel engine
manufacturer. The diesel engine and alternator are coupled and fixed on a frame. A control
panel for starting the engine using battery bank, isolating the mains while the alternator is
running, disconnecting the alternator when the mains supply is available etc. is designed and
assembled as stipulated by the customer. The assembly is tested for fuel efficiency, load
capacity of the alternator, operational sequences etc.

The Diesel Generator set is then dispatched to the premises of the customer in dismantled
condition on in assembled condition depending upon the size of the Diesel Generator set.

Quality Control and Standards

The alternator has to meet the requirements of the customer with regard to voltage,
frequency, power etc. and the diesel engine has to conform to IS 10001.

The performance of alternator and diesel engine may be tested at the manufacturers' works
before taking delivery.

27
The control panel requires contactors and relays. The contractors and relays shall conform to
relevant IS Specification and shall be from a reputed manufacturer.

Machining is followed by inspection, and, in accord with the materials, key-waying,

drilling, etc., after which work pieces are stored in a warehouse.

The operation up to the above stage centred on work by machine tools of centred on work
by machine tools of various kinds. Then, the assembly process takes over, with required
parts brought out of the warehouse for assembly.

The assembled pumps are subjected to performance tests, and they are shipped out after
painting and packing.

Alternative
Integrated manufacturing – from the manufacture of raw materials to pumps – is
alternative which requires heavy investment. In this project profile, therefore, it is
proposed that the plant makes pumps through machining and assembly of cast materials.

28
29
 b. Machinery and Equipment

The machineries and equipment required for producing centrifugal pumps is detailed in
Table 3 below.
Table 3: Required Machineries and Equipment’s
  Description Specification
No
1 Vertical lathe (with accessories) LV 600 mm x 4-400 rpm x 7.5 1
kw
2 Engine lathe (with accessories) LG 750 mm x 20-1,500 rpm x 2
3.7 kw
3 Coying lathe (with accessories) LC 500 mm x 20-1,500 rpm x 1
3.7 kw
4 Vertical milling m/c (with MV No.3, 5.4 kw 1
accessories)
5 Multiple drilling m/c (with TP DU 1,000 mm radial type 1
accessories)
6 Tapping and milling m/c (with PT stroke 150 mm, No. Stroke 1
accessories) 120/min
7 Slotter MK 300-2,000 rpm, 1kw 1
8 key miller GB 800 mm x 250 mm, 2.2 1
kw
9 Cylindrical and grinding m/c (with   1
accessories)
10 Testing equipment   1
11 Power receiving equipment   1

30
 12 Others    
The total cost of the above listed machineries and equipment’s is estimated at Birr
12,214,160

c. Civil Engineering Cost

The plant site will have an area of about 10,000 m 2 while the plant building will cover a
total area of 5500 m2. The plant building will incorporate production hall, storage area
products and raw materials, compounding unit, inspection unit, packing area, etc. and
offices. Assuming that the unit (per m2) cost of building will be Birr 2000, the total
expenditure on plant building will be Birr 7 million. The total expenditure on land will be
Birr 300,000 as per lease rate of ANRS. Thus, the total cost of land, building and civil
work will be Birr 3 million.

31
 6. Human Resource and Training Requirement
a. Human Resource
The human resource requirement at full capacity is shown in Table 4 below.
Table 4: Human Resource Requirement

No. Monthly Salary Total Annual Salary

Position Required (in Birr) (Birr)
General Manager 1 8,981 107,772
Mechanical Engineer 1 5,645 67,742
Personnel & Finance Head 1 5,132 61,584
Accountant 2 2,566 61,584
Secretary 1 2,181 26,173
Sales Clerk 5 1,796 107,772
Store Keeper 3 1,796 64,663
Mechanic and Electrician 3 1,925 69,282
Supervisor 3 3,849 138,564
Operators 40 2,566 1,231,680
Daily Laborers 6 1,026 73,901
Cleaners 5 770 46,188
Messengers 2 898 21,554
Driver 2 2,053 49,267
Guards 5 1,026 61,584
Total   - 2,189,311
Benefit (20%)   - 437,862
 Total 104 - 2,627,173

32
 b. Training Requirement

Both induction and periodic trainings are indispensable. Annual training budget that
amounts to Birr 1,553,764 is included in the working capital.

7. Financial Analysis
a. Underlying Assumption

The financial analysis of centrifugal pumps assembly plant is based on the data provided
in the preceding chapters and the following assumptions.

A. Construction and Finance

Construction period 2 year

Source of finance 40% equity and 60% loan
Tax holidays 2 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%

33
 C. Working Capital (Minimum Days of Coverage)

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

b. Investment
The total investment cost of the project including working capital is estimated at Birr
29.07 million as shown in Table 4 below. The Owner shall contribute 40% of the finance
in the form of equity while the remaining 60% is to be financed by bank loan.

Table 5: Initial Investment and Working Capital

Total Initial Investment

Item Cost
Land 15,000
Building and civil works 17,962,000
Office equipment 307,920
Vehicles 1,283,000
Plant machinery & equipment 1,295,830
Total Fixed Investment 20,863,750
Pre-production capital expenditure 1,044,362
Total Initial Investment 21,908,112
Working capital at full capacity 7,167,252
Total 29,075,364

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

consultancy fee during construction and expenses for company‘s establishment, project

34
administration expenses, commission expenses, preproduction marketing and interest
expenses during construction.

The foreign component of the project accounts for Birr 1,295,830 or 4.45% of the total
investment cost.

c. Production Costs

The total production cost at full capacity operation is estimated at Birr 9.88 million as
detailed in table 6 below.

Table 6: Production Cost at Full Capacity

Total Production Cost at Full Capacity

Items Cost
1.      Raw materials
32,798,612
2.      Utilities 240,690.00
3.      Wages and Salaries
2,628,528
4.      Spares and Maintenance
626,617
Factory costs
36,294,447
5.      Depreciation
1,523,947
6.      Financial costs
2,095,117
  Total Production Cost 39,913,512

d. Financial Evaluation

I. Profitability

II. Profitability

According to the projected income statement attached in the annex part the project will
generate profit beginning from the first year of operation. Ratios such as the percentage
of net profit to total sales, return on equity and return on total investment are 14.66%,

35
39.08% and 55% in the first year and are gradually rising. Furthermore, the income
statement and other profitability indicators show that the project is viable.

III. Breakeven Analysis

The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 17.52% of capacity utilization.
IV. Payback Period

Investment cost and income statement projection are used in estimating the project
payback period. The projects will payback fully the initial investment less working
capital in second year.

V. Simple Rate of Return

For the envisaged plant the simple rate of return equals to 32.8%

VI. Internal Rate of Return and Net Present Value

Based on cash flow statement described in the annex part, the calculated IRR of the
project is 37.7% and the net present value at 18 % discount is Birr 19.76 million.

VII. Sensitivity Analysis

The envisaged plant is profitable even with considerable cost increment. That is the plant
maintains to be profitable starting from the first year when 10 % cost increment takes
place in the sector. This result is accompanied by IRR value of 39.9% with payback
period of same year.

36
 8. Economic and Social Benefit and Justification

The envisaged project possesses wide range of benefits where it 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 8.93
million per year and Birr 89.29 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 30.79 million
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. Import Substitution and Foreign Exchange Saving

Based on the projected figure we learn that in the project life an estimated amount of US
Dollar 50.55 million will be saved as a result of the proposed project. This will create
room for the saved hard currency to be allocated on other vital and strategic sectors

D. Employment and Income Generation

The proposed project is expected to create employment opportunity to several citizens of

the region. That is, it will provide permanent employment to 104 professionals as well as
support stuffs. Consequently the project creates income of Birr 1,677,240 per year. This
would be one of the commendable accomplishments of the project.

E. Diversification and Inter Sectorial Linkage.

37
The proposed project helps to diversify ANRS’ and Ethiopian economy. It contributes to
industrialization of the ANRS as well as the country as a whole. It also has a potential to
strengthen the linkage between the manufacturing and the trade sub-sectors.

F. Modernization, diversification and integration

The proposed modernizes the economy in general and the agricultural sector in particular.
It also plays great role in diversification and integration of the various sectors.

9. Environmental Impact Analysis and Corporate

Social responsibility
In general in Ethiopia as well as the Amhara national regional state has strong
environment protection proclamations and regulation. So, as based on this, the project
hires a consultant to prepare the environmental impact assessment reports. Based on the
report starting from the construction phase to the production year the factory will
implement every recommendation such as solid and liquid waste management, and other
pollution even if the plant has no any effluent.
Besides this the in collaboration with the concerned government offices will train the
workers of the factory as well as the community about the environmental protection.
Generally the project:-
 Create safe environment around the factory by creating green area and plantation
of trees.
 The factory will not use any types of chemical, because it is only assembly of
generators and pumps.
 Support community institution such as schools.
 In collaboration of concerned government bodies, organize youths to train and
creation of jobs’

38
ANNEXES

39
 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4

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

1. Total Inventory 0 0 8832565 10391251 10391251 10391251

Raw Materials in Stock- Total 0 0 3041326 3578030 3578030 3578030
Raw Material-Local 0 0 3041326 3578030 3578030 3578030
Raw Material-Foreign 0 0 0 0 0 0
Factory Supplies in Stock 0 0 35418.5 41669.27 41669.27 41669.27
Spare Parts in Stock and Maintenance 0 0 58104.5 68358.24 68358.24 68358.24
Work in Progress 0 0 885462.5 1041722 1041722 1041722
Finished Products 0 0 1770925 2083443 2083443 2083443
2. Accounts Receivable 0 0 4763522 5604144 5604144 5604144
3. Cash in Hand 0 0 301109.8 354246.6 354246.6 354246.6
CURRENT ASSETS 0 0 10855871 12771613 12771613 12771613
4. Current Liabilities 0 0 4763522 5604144 5604144 5604144
Accounts Payable 0 0 4763522 5604144 5604144 5604144
TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 6092349 7167469 7167469 7167469
INCREASE IN NET WORKING CAPITAL 0 0 6092349 1075121 0 0

40
 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 10391251 10391251 10391251 10391251 10391251 10391251

Raw Materials in Stock-Total 3578030 3578030 3578030 3578030 3578030 3578030
Raw Material-Local 3578030 3578030 3578030 3578030 3578030 3578030
Raw Material-Foreign 0 0 0 0 0 0
Factory Supplies in Stock 41669.27 41669.27 41669.27 41669.27 41669.27 41669.27
Spare Parts in Stock and Maintenance 68358.24 68358.24 68358.24 68358.24 68358.24 68358.24
Work in Progress 1041722 1041722 1041722 1041722 1041722 1041722
Finished Products 2083443 2083443 2083443 2083443 2083443 2083443
2. Accounts Receivable 5604144 5604144 5604144 5604144 5604144 5604144
3. Cash in Hand 354246.6 354246.6 354246.6 354246.6 354246.6 354246.6
CURRENT ASSETS 12771613 12771613 12771613 12771613 12771613 12771613
4. Current Liabilities 5604144 5604144 5604144 5604144 5604144 5604144
Accounts Payable 5604144 5604144 5604144 5604144 5604144 5604144
TOTAL NET WORKING CAPITAL REQUIREMENTS 7167469 7167469 7167469 7167469 7167469 7167469
INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0
Annex 2: Annex 2: Cash Flow Statement (in Birr
  CONSTRUCTION PRODUCTION

41
 Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 10965801 18133270 48429144 52211942 51371320 51371320
1. Inflow Funds 10965801 18133270 4763522 840621.6 0 0
Total Equity 4386320 7253307 0 0 0 0
Total Long Term Loan 6579481 10879961 0 0 0 0
Total Short Term Finances 0 0 4763522 840621.6 0 0
2. Inflow Operation 0 0 43665622 51371320 51371320 51371320
Sales Revenue 0 0 43665622 51371320 51371320 51371320
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 10965801 10965801 46596961 43575781 44744779 44500347
4. Increase In Fixed Assets 10965801 10965801 0 0 0 0
Fixed Investments 10443620 10443620 0 0 0 0
Pre-production Expenditures 522181 522181 0 0 0 0
5. Increase in Current Assets 0 0 10855871 1915742 0 0
6. Operating Costs 0 0 31190823 36655000 36655000 36655000
7. Corporate Tax Paid 0 0 0 0 3433929 3538686
8. Interest Paid 0 0 4550267 2095134 1745945 1396756
9.Loan Repayments 0 0 0 2909908 2909908 2909908
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 0 7167469 1832183 8636160 6626541 6870973
Cumulative Cash Balance 0 7167469 8999652 17635813 24262351 31133324

42
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 51371320 51371320 51371320 51371320 51371320 51371320
1. Inflow Funds 0 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 0 0 0 0 0 0
2. Inflow Operation 51371320 51371320 51371320 51371320 51371320 51371320
Sales Revenue 51371320 51371320 51371320 51371320 51371320 51371320
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 44151125 43906693 40752352 40752352 40752352 44151125
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 0 0 0 0 0 0
6. Operating Costs 36655000 36655000 36655000 36655000 36655000 36655000
7. Corporate Tax Paid 3887842 3992596 4097353 4097353 4097353 3887842
8. Interest Paid 698378 349189 0 0 0 698378
9. Loan Repayments 2909908 2909908 0 0 0 2909908
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 7220195 7464627 10618968 10618968 10618968 7220195
Cumulative Cash Balance 45468925 52933552 63552520 74171487 84790452 45468925

43
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 43665622 51371320 51371320 51371320
1. Inflow Operation 0 0 43665622 51371320 51371320 51371320
Sales Revenue 0 0 43665622 51371320 51371320 51371320
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 10965801 10965801 37283172 37730120 40088928 40193685
3. Increase in Fixed Assets 10965801 10965801 0 0 0 0
Fixed Investments 10443620 10443620 0 0 0 0
Pre-production Expenditures 522181 522181 0 0 0 0
4. Increase in Net Working Capital 0 0 6092348.6 1075121 0 0
5. Operating Costs 0 0 31190823 36655000 36655000 36655000
6. Corporate Tax Paid 0 0 0 0 3433929 3538686
NET CASH FLOW -10965801 -10965801 6382450.3 13641200 11282392 11177635
CUMULATIVE NET CASH FLOW -10965801 -21931602 -15549152 -1907952 9374442 20552077
Net Present Value (at 18%) -10965801 -9293051 4583776.7 8302455 5819331 4885846
Cumulative Net present Value -10965801 -20258852 -15675076 -7372621 -1553287 3332559

44
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)

45
 PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 51371320 51371320 51371320 51371320 51371320 51371320
1. Inflow Operation 51371320 51371320 51371320 51371320 51371320 51371320
Sales Revenue 51371320 51371320 51371320 51371320 51371320 51371320
Interest on Securities 0 0 0 0 0 0
2. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 40298442 40542841 40647595 40752352 40752352 40752352
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 0 0 0 0 0 0
5. Operating Costs 36655000 36655000 36655000 36655000 36655000 36655000
6. Corporate Tax Paid 3643443 3887842 3992596 4097353 4097353 4097353
NET CASH FLOW 11072878 10828479 10723725 10618968 10618968 10618968
CUMULATIVE NET CASH FLOW 31624954 42453436 53177158 63796126 74415093 85034058
Net Present Value (at 18%) 4101743 3399332 2852920 2394111 2028908 1719412
Cumulative Net present Value 7434302 10833634 13686554 16080665 18109571 19828983
Net Present Value (at 18%) 19,828,983.11

Internal Rate of Return 37.7%

Annex 4: NET INCOME STATEMENT ( in Birr)
  PRODUCTION

46
 1 2 3 4 5
Capacity Utilization (%) 85% 100% 100% 100% 100%

1. Total Income
43665622 51371320 51371320 51371320 51371320

Sales Revenue
43665622 51371320 51371320 51371320 51371320

Other Income
0 0 0 0 0

2. Less Variable Cost

30069583.76 35375981.95 35375981.95 35375981.95 35375982

VARIABLE MARGIN
13596038.24 15995338.05 15995338.05 15995338.05 15995338

(In % of Total Income)

31.14 31.14 31.14 31.14 31.14

3. Less Fixed Costs

2645186.76 2802964.968 2802964.968 2802964.968 2802965

OPERATIONAL MARGIN
10950851.48 13192373.09 13192373.09 13192373.09 13192373

(In % of Total Income)

25.08 25.68 25.68 25.68 25.68

4. Less Cost of Finance

4550268.17 2095133.073 1745944.223 1396755.373 1047567

5. GROSS PROFIT
6400583.622 11097240.06 11446428.91 11795617.76 12144807

6. Income (Corporate) Tax

0 0 3433928.664 3538685.332 3643442

7. NET PROFIT
6400583.622 11097240.06 8012500.225 8256932.432 8501365

RATIOS (%)  
Gross Profit/Sales 14.66% 21.60% 22.28% 22.96% 23.64%
Net Profit After Tax/Sales 14.66% 21.60% 15.60% 16.07% 16.55%
Return on Investment 39.08% 45.34% 33.54% 33.18% 32.82%
Return on Equity 54.99% 95.34% 68.84% 70.94% 73.04%
Annex 4: NET INCOME STATEMENT (in Birr): Continued
  PRODUCTION

47
 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 51371320 51371320 51371320 51371320 51371320

Sales Revenue 51371320 51371320 51371320 51371320 51371320
Other Income 0 0 0 0 0
2. Less Variable Cost 35375982 35375982 35375982 35375982 35375982
Annex 5: Projected Balance Sheet (in Birr)
VARIABLE MARGIN 15995338 15995338 15995338 15995338 15995338
CONSTRUCTION PRODUCTION
(In % of Total Income) 31.14 31.14 31.14 31.14 31.14
  Year 1 Year 2 1 2 3 4
3. Less
TOTAL Fixed Costs
ASSETS 233749310965801 2337493
29099071 2337493
40263175 2337493
49291131 2337493
54393724 59740750
1. Total Current Assets 0 7167469 19855521 30407423 37033964 43904937
OPERATIONAL MARGIN
Inventory on Materials and Supplies
13657845 0
13657845 0 13657845
3134849
13657845
3688058
13657845
3688058 3688058
Work (Inin%
Progress
of Total Income) 26.59 0 26.59 0 885462.5
26.59 1041722
26.59 104172226.59 1041722
Finished Products in Stock 0 0 1770925 2083443 2083443 2083443
4. Less Cost
Accounts of Finance
Receivable 349189 0 0 0 0
4763522 5604144 0 349189
5604144 5604144
Cash in Hand 0 0 301109.8 354246.6 354247 354247
5. GROSS
Cash PROFIT
Surplus, Finance Available 13308657 013657845
7167469 13657845
8999652 13657845
17635813 13308657
24262351 31133324
Securities 3992596 0 4097353 0 40973530 0
4097353 0
3992596 0
6. Income (Corporate) Tax
2. Total Fixed Assets, Net of Depreciation 10965801 21931602 20407655 18883707 17359760 15835812
7. NET PROFIT
Fixed Investment 9316061 0 9560493
10443620 9560493
20887240 9560493
20887240 9316061
20887240 20887240
Construction
RATIOS (%) in Progress 10443620 10443620   0 0 0 0
Pre-Production Expenditure 522181 1044362 1044362 1044362 1044362 1044362
LessGross Profit/Sales
Accumulated Depreciation 25.23% 25.91%
0 0 26.59%1523947 26.59%
3047895 26.59%
4571842 6095790
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. LossNet Profit After
in Current Year Tax/Sales 17.66% 18.13%
0 0 18.61% 0 18.61% 0 18.61%
0 0
TOTAL LIABILITIES 10965801 29099071 40263175 49291131 54393724 59740750
Return on Investment 33.57% 33.21% 32.85% 32.85% 32.85%
5. Total Current Liabilities 0 0 4763522 5604144 5604144 5604144
Accounts Payable
Return on Equity 77.94% 0
80.04% 0 82.14%4763522 5604144
82.14% 5604144
82.14% 5604144
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 6579481 17459441 17459441 14549536 11639627 8729722
Loan A 6579481 17459441 17459441 14549536 11639627 8729722
Loan B 0 0 0 0 0 0
7. Total Equity Capital 4386320 11639627 11639627 11639627 11639627 11639627
Ordinary Capital 4386320 11639627 11639627 11639627 11639627 11639627
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0 48
8. Reserves, Retained Profits Brought Forward 0 0 0 6400584 17497823 25510323
9.Net Profit After Tax 0 0 6400584 11097239 8012499 8256931
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 6400584 11097239 8012499 8256931
 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 65332208 71493928 77900080 87460573 97021063.01 106581555.6
1. Total Current Assets 51020343 58240538 65705165 76324133 86943098.01 97562065.62
Inventory on Materials and Supplies 3688058 3688058 3688058 3688058 3688057.914 3688057.914
Work in Progress 1041722 1041722 1041722 1041722 1041721.586 1041721.586
Finished Products in Stock 2083443 2083443 2083443 2083443 2083443.172 2083443.172
Accounts Receivable 5604144 5604144 5604144 5604144 5604144 5604144
Cash in Hand 354246.6 354246.6 354246.6 354246.6 354246.564 354246.564
Cash Surplus, Finance Available 38248729 45468925 52933552 63552520 74171487.34 84790452.38
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 14311865 13253390 12194915 11136440 10077965 9019490
Fixed Investment 20887240 20887240 20887240 20887240 20887240 20887240
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 1044362 1044362 1044362 1044362 1044362 1044362
Less Accumulated Depreciation 7619737 8678212 9736687 10795162 11853637 12912112
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 65332208 71493928 77900080 87460573 97021063.01 106581555.6
5. Total Current Liabilities 5604144 5604144 5604144 5604144 5604144 5604144
Accounts Payable 5604144 5604144 5604144 5604144 5604144 5604144
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 5819814 2909908 0 0 0 0
Loan A 5819814 2909908 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 11639627 11639627 11639627 11639627 11639627.47 11639627.47
Ordinary Capital 11639627 11639627 11639627 11639627 11639627.47 11639627.47
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 33767256 42268620 51340248 60656309 70216798.93 79777291.54
9. Net Profit After Tax 8501366 9071629 9316061 9560493 9560492.61 9560492.61
Dividends Payable 0 0 0 0 0 0
Retained Profits 8501366 9071629 9316061 9560493 9560492.61 9560492.61

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