Project Proposal on Crown Cork production

TABLE OFCONTENT

1. Executive Summary
 
2. Product Description and Application

3. Market Study

4. Plant Capacity and Production Program

5 . R a w a n d   A u x i l i a r y Materials and Utilities

 
6. Location and Site

7 . T e c h n o l o g y an d E n g i n e e r i n g
 
 Technology
 Production Process
 Machinery and Equipment
 Environmental Impact
 Engineering
 Construction Process
 Civil Engineering Cost Plant Layout 

8. Human Resource and Training Requirement 

 Human Resource.
 Training Requirement 

9. Economic and Social Benefit and Justification

1. EXECUTIVE SUMMARY
CROWN CORK MANUFACTURING COMPANY

The sources of the fund is found from PLC owners and loan from bank. The total
amount of money required for the project is ETB 65,000,000 of which 70% of this
amount is from bank while the remaining 30% is owners’ contributions.

TIMRET CROWN CORK Manufacturing PLC is a new startup company that

produces METAL sheet cork caps for glass bottles of quality designs and
environment friendly products for our reputed customers.

The goal of the project is to establish cork manufacturing plant in Amhara region
where such products are as scarce as the region is vast enough to absorb and meet
the market demand for metal sheet cap products at competitive prices to be used by
different sectors that are immerged in the economy of the country to contribute
their best of their field of investment.

2. PRODUCT DESCRIPTIONS AND APPLICATIONS

This proposal envisages the establishment of the production of beverage
bottle caps (Crown Cork) with a capacity of 500- 800 million per
annum. Crown corks are items made from canned metal used to fit on top of
beverage bottles to seal and lock the contents of the bottle from being easily
opened and for preventing any item from escaping out or from entering into
the bottle. The demand for beverage bottle caps is met through both
local production and import. The present (2022/23) unsatisfied demand for crown
cork is estimated at 4,003 tons. The unsatisfied demand for beverage bottle caps
is projected to reach 4,284 tons and 5,615 tons by the year 2021 and
2025, respectively. The principal raw materials required are single size of canned
sheet metal, plastic disc and printing chemicals that have to be imported. The total
investment cost of the project including working capital is estimated at Birr 65.00
million. From the total investment cost the highest share (Birr 31.2325
million or 48.05%) is accounted by initial working capital followed by
fixed investment cost (Birr 28.0475 million or 43.15%) and pre-operation
cost (Birr 5.72 million or 8.8%).
From the total investment cost Birr 11.96 million or 18.40% is required for
foreign currency. The project is financially viable with an internal rate of
return (IRR) of 28.63% and a net present value (NPV) of Birr 26.85 million
discounted at 10%.The project can create employment for 19 persons. The
establishment of such factory will have a foreign exchange saving effect to the
country by substituting the current imports. The project will also create
forward linkage with the beverage sub sector and also generates income
for the Government in terms of tax revenue and payroll tax.
3. RAW AND AUXILIARY MATERIALS
The raw materials required for the production of crown cork are single size of
canned sheet metal, plastic disc and printing chemicals that have to be
imported. The required amount of raw materials and their cost at full capacity
operation is shown in Table 4.1. MARKET STUDY AND PLANT CAPACITY
4. Market Study
The local demand for crown cork of base metal is met through both local
production and import. Ethiopian Crown and Cork Sh. Co is the only local
producer while a large amount of the product is also imported from various
countries. For estimating the unsatisfied demand for local demand for crown cork
the demand which is met through import is considered. Accordingly, import of
crown cork during the period 2010 – 2020 is shown in Table 3.1. / Source:
Ethiopian Revenue & Customs Authority.
5. Plant Capacity
Based on the market study and available technology the selected
manufacturing capacity of the plant is 6,000 Pcs/ Min = 2,100 tons of crown
cork per annum.
6. Production Program
T h e p l a n t w i l l s t a r t pr o d u c t i o n a t 7 5% o f i t s i n s t a l l e d c a p a c i t y .
D u r i n g t h e s e c o n d y e a r i t w i l l increase to 85% and in the third year
and then after it will operate at full capacity (see Table 3.3).
7. Product Sales

Working with the proposed plant and machinery, shall enhance, the project will be
capable of producing 500 million and above of crown cork per year given the
number shall increase based on the strategy of good opportunities that comes out of
art of technology that can be captured by globalization & active management
groups with motivated work forces.

8. Financial Management & budget allocation

Total financial requirement =ETB 110,000,000

Capital investment =ETB 56,100,000

Operating cost = ETB 53,900,000

9. Company Name And Location

The Name of the Company is Timret Crown manufacturing Private Limited

Company (PLC) owned by Ethiopians, located in Bahirdar city where it is the
capital city of Amhara regional state of administration. It is established to produce
high quality Crown Cork glass caps in a way to satisfy the customers involved in
high demand of the products.

10.Project Description
Cork Production industry is an important industrial sector in the economy of the
country as beverage, soft drinks, cosmetics…etc. industries which are already at
work in different regions of the country are in need of high quality packing
materials but still scarce.
Over the last few years, the manufacturing and financial sectors including
construction sector have registered strong growth rates. Especially, beverage
industries have emerged in the economy as government was committed to support
the sector Industry, because, the sector is interlinked with agricultural products,
which triggers the agriculture to integrated production process, hopping more than
80% of the population of the country based on agriculture shall improve back ward
way of production to modern and conventional way of production. In this way
unemployment rate will decrease significantly.

11.Project Objectives

The goal of the project is to establish crown cork manufacturing plant in Amhara
region surrounding Bahirdar, west Gojjam, Merawi woreda which is located 40
k.m away from Bahirdar.
11.1 The specific objectives of this project are;
 To fill the gap between demand and supply of cork glass & plastic
caps in the region in particular and in the country in general.
 To produce environmental friendly product and support the value
chain process in the field of beverage, soft drink & related cork cap
user products.
 To create job opportunity for the community and to contribute its
part to minimize the problem of unemployment in line with the
development objectives of the country.
  To produce high quality and exportable crown cork metal sheet
closures that can attract at least the neighboring countries to get
foreign / hard currency/.
 To create vertical and horizontal relations with different sectors so
that to make sure this project guarantees for further investment.

12.Products & Services

TIMRET Crown Cork Production Company is planning to manufacture high

quality cork products. Crown cork Production is an important industry that
supports the various sectors in the country towards the enhancement of growth and
transformation plan implementation. The products the company to produce are
500-800 million of Crown cork, 200-400 million of canned tin for beverages.

FORMULATION OF PROJECT

A project report is like a road map. It is an operating document. What information

and how much information it contain depends upon the size of the enterprise, as
well as nature of production. For example small-scale enterprises do not include
technology which is used for preparing project reports of large-scale enterprises.
Within small-scale enterprises too, all information may not be homogeneous for all
units.
According to AB-KTR, project formulation divides the process of project
development into eight distinct and sequential stages as below:
 General information
 Project description
 Market potential
 Capital costs and sources of finance
 Assessment of working capital requirements
 Economical and social variables
 Project implementation

RISK ASSESSMENT AND ENVIRONMENTAL MANAGEMENT PLAN

While there are many manufacturing processes, most use heat to soften the plastic
and pressure to force the molten material into a mold cavity or through a dye. An
effective process safety management program should establish procedures for
routinely documented machinery inspection and service to monitor excess heat,
friction, leakage, malfunction, and control potential ignition of flammable or
combustible materials.
Remotely located emergency shutoff or automatic shut off switches should be
provided for hydraulic equipment.

A large quantity of easily ignitable dust may be generated in plastic production

areas. Plastic dust only requires a small ignition source to create a severe
explosion. If not controlled, the presence of ignitable dust and static can lead to
total losses. Due to plastic’s natural insulating ability, static electricity build up
occurs in:

 The manufacturing process

 Pneumatic conveying systems used in transferring and blending plastic
pellets
 Finishing activities such as shaping, trimming and sanding
 Grinding activities
 Rolling or calendaring process that forms plastic films and sheets

Machinery that produces dust should be properly fitted for a dust collection
system.
The type of collection system and safeguards required will depend largely on the
volume of dust being generated and the size of the particles.
Most plastics manufacturing operations regrind plastic scrap and poor quality
parts/products. The small self-contained regrind units typically do not generate
quantities of dust to be considered hazardous. Large re-grinders, normally found in
bag manufacturing plants do generate significant quantities of airborne dust which
require controls to prevent dust explosion. Plastic regrind dust is a combustible
dust comparable to wood or grain from an explosion standpoint.
Portions of system-handling powdered materials from which dust can escape
should have permanent dust collection systems. Production machinery such as
hoppers, storage bins, conveyors, conveyor ducts and grinders that come into
contact with plastic dust should be constructed with dust-tight seals and explosion
venting. Controls for static generation are variable and depend on the process
involved.
Anti-static coatings, additives and sprays, and grounded metal static combs may be
used to reduce the surface resistance of plastic material. The use of conductive
belting, low conveyor belt speeds and short center drives is advisable.
Pneumatic dust conveying systems should be restricted to handle only dust and no
other waste.

Dust collection typically involves placement of local exhaust ventilation systems

close to the source of dust emissions.
The systems may be integrated with machine guards. They should have an efficient
air cleaning device and be properly maintained at regular intervals. The dust
collection duct should be galvanized metal provided with explosion venting, and
should be properly bonded and grounded.
The collected dust should be properly disposed outside and away from any ignition
sources. The areas in which combustible dusts are processed or handled should be
segregated, separated or detached to minimize damage and to avoid pollution of
the environment. Dust collection and venting equipment are typically located
outside the production building. Access to dust collection areas should be
restricted. The duct from the central collector to the storage bin should have a
flashback prevention to keep explosions from blowing back through the conveying
ductwork into the building or into other equipment. Dust bins should have an
audible or visual warning system with smoke, heat or light detectors that shut
down fuel and oxygen supply in event of a fire.

ENVIRONMENTAL MONITORING
To assess the prevailing quality of air, water, noise, land etc., regular monitoring of
these parameters is necessary. This data will help to arrive at improvement in
protection measures. The project proponent has set up a permanent cell, which
shall take care of effective implementation of Environment Management Plan
which is very much necessary to preserve/protect the surrounding environment.
The functions of the environmental cell are as follows:
 Implementation of the planned mitigating measures
 Monitoring the programme of implementation
 To estimate the efficiency of the measures taken
 Environmental monitoring and maintaining the test reports in a file for each
of the monitoring parameters like air, water, soil etc.
 To bring out any other unforeseen effect on the environment not covered
under this study

MARKET PLAN
As clearly stated in the country’s development industrial strategy, valued adding
private sector is considered as the engine of sector growth. Because of this, the
Ethiopian government has been providing facilities and enabling investment
environment for the realization of the country’s GTP objectives. As a result, the
need of construction raw materials supply and the processing of plastic products
are increasing from time to time since the enhancement of industrial sector in the
country has been given more attention.

The current increasing trends on both the demand and supply side of plastic
products market make plastic production to initiate the industry
The Rising input prices are of other commodities cause manufacturers to seek new
efficiencies, in particular in low value added items such as packaging using plastic
products. Nationwide demand for green packaging is projected to increase
annually with food service and transport packaging growing the fastest. The
currently observed fast growing banking and financial institutions demand for
various plastic cards to be used by their clients/customers. Also the currently
growing construction and transport sectors in the country have the propensity to
consume more and more plastic products

MARKET RESEARCH METHOD AND IMPLEMENTATION

The Target Market is the groupings of consumers or businesses most likely to

purchase your products or services. The first group you plan to target is your
Primary Target Market; the second is your Secondary Target Market. It is very
important that you understand your target markets

The goal of the project is to establish plastic processing plant in Addis Ababa to
produce plastic products and meet the market demand for plastic products to be
used by different sectors to contribute to the development endeavors of the
country.
The specific objectives of this project are
i) To fill the gap between demand and supply of plastic products in Addis
Ababa
ii) To exploit untapped resources usable for the production of plastic goods.
iii) To create job opportunity for the community and to curb the problem of
unemployment in line with the development objectives of the country
iv) To produce high quality and exportable plastic goods ex to get
foreign/hard currency
v)
PRODUCT FEATURES AND BENEFIT

The expected beneficiaries of this project are:

 The surrounding community in obtaining job opportunity
 The various sectors that use plastic products as inputs for their activities
 Individuals who are who are trading and using plastic products.
  Government and non-government organizations will also be the
expected beneficiaries of this project.
For instance, with regard to job opportunity, the expected beneficiaries of the
project will be 15 permanent and 50 temporarily employees will be recruited as
labor forces which will reduces poverty and unemployment in Bole sub city in
particular and in the country in general.

CUSTOMERS

Start by reviewing customer complaints, questions, and comments. If you don't

have a systematic way of collecting and compiling this input, develop one. Don't
just dwell on complaints; studies show that only 2 to 4 percent of dissatisfied
customers ever complain

In modern business philosophy business should be customer oriented and the

implementation of the main principles of continuous improvement, justifies the
importance of evaluating and analyzing customer satisfaction. In short, customer
satisfaction is considered as baseline of standardize and excellence of performance
for many business. It also helps to identify the potential market opportunities.

COMPETITION

Three important points to keep in mind when thinking about the objectives of
competition are: x underlying variable of competition (price, quantity, quality etc.);
x aimed level of achievement; and x competitive process that is at least partly
determined by the strategic objectives of agents.
Each firm within a particular industry faces a different competitive context. This is
because an industry typically consists of multiple product segments operated by
different but overlapping sets of industry members. Two industry members can be
regarded as direct competitors to each other when they operate in at least one
common product segment

NICHE

Marketer has long advocated the use of ecology or biological theory in marketing
in order to study markets. A relationship may be drawn between the

ecological niche and the market niche. This refers to ecological niche and market
niche similarities. In both cases, organisms and organizations live in their
immediate physical environment and are able to continue their life forms in a
changing environment.

 Strategic Planning

 Define Mission and Objectives

 Strategies and Action

 Monitoring Key Projects/Objectives

 Organizational Realignment

MARKET STRATEGY

In the manufacturing industry, marketing is considered to be of significant

importance. In the Plastic Production, marketing parameters are very limited and
usually in some degree associated with the various sectors of the economy of the
country.
PRICING
The term pricing method in the context of compiling price indices would probably
be regarded by most price statisticians as a common concept. However when one
attempts to find a definition for this concept, or indeed a definition for various
types of pricing methods, the inadequacy of the current literature becomes
apparent. This is particularly true in the case of producer price indices for service
industries (SPPI), where defining pricing methods is crucial in many respects.

The use of a specific type of information on prices to represent the evolution of

price in price index compilation. The specific type of information specifies the
method.

Pricing method is a key issue for services price statisticians because theoretical or
practical problems cause transaction pricing to be unfeasible. The main causes,
which are interrelated, are:

 Unique product transactions are not periodically pricable and have to be

reduced to a standardized replicable unit;

 Complex products have to be reduced to manageable units (e.g. telephony);

 There is limited knowledge about complex products whereby the issue of

pricing to constant quality becomes (too) difficult;

 Classifications and information for a weighting scheme are not available

down to the product level, while the goal is often only the estimation of top
aggregates;

 Limited human resources;

 Representativeness of a small product panel is problematic.

SALES AND FORECAST

Sales revenues are the function of projected production output and projected
selling price per plastic products. Taking the projected production the output from
the above table, we know we calculate the revenue using selling price of output.
Accordingly, the selling price of each product is expected to increase each year by
proportionately for each product item by a minimum of 15%, given the trends of
the past five year in Ethiopia, in particular and world in general, this projection
wouldn’t be far from the reality under the normal macroeconomic conditions.

In order to determine the forecasted sales revenues, we need to multiply the

forecasted selling price by the number of each plastic products.. The following
table shows this procedure.

OPERATION PLAN

The purpose of the Operations section is to indicate how you plan to operate the
business. This means how you will produce the services or provide the products.

RAW MATERIAL

This Strategic Implementation Plan (SIP) has been developed on the basis of input
from a wide range of European stakeholders dealing with raw materials
(governments, industries, academia, NGOs), which are involved in the European
Innovation Partnership (EIP) on Raw Materials. To steer the work on the Plan, a
High-Level Steering Group was formed in 2012. To collect input to the Plan, the
European Commission established five operational groups with experts on raw
materials and various aspects of raw materials policy. From May to July 2013, four
draft versions of the Plan were issued by the services of the European Commission
and commented on by the members of the HighLevel Steering Group or their
representatives (“Sherpas”) prior to this final version.

The EU is self-sufficient in the production of construction minerals, including

aggregates (sand, gravel, and crushed natural stone), various brick clays, gypsum
and natural ornamental or dimension stone. Europe’s production of aggregates is
approximately 3 billion tons per year. Around 91% of all aggregates produced are
from natural resources, 5% are recycled aggregates, and 2% are of marine origin or
manufactured. The EU also has a large production of industrial minerals supplying
a very wide range of industries. For some minerals, such as magnesite, fluorspar,
bentonite, kaolin and potash, Europe is an important global producer. The EU
however is a net importer for many of these industrial minerals. Due to large
quantities of construction and industrial minerals produced and consumed, there is
a need to improve the overall sustainability performance, the materials range of the
primary production and to ensure a higher proportion of recycling.

There are many types of inventory that can be held throughout the supply chain.
They include raw material, work in process (WIP), finished goods inventory and
spare parts. In this thesis, we are more concerned with managing the inventory of
raw material. Hopp and Spearman (2000) define raw material as the components,
subassemblies, or materials that are purchased from outside the plant and used in
the fabrication/assembly process inside the plant. The idea of managing the raw
material is to have it available when it is needed by the production system. Since
most of the time we cannot receive the raw material immediately (in a just-in-time
fashion), carrying inventory stock of raw material seems appropriate. The size of
the stock can be influenced by several factors; quantity discount received from the
supplier, variability in either the supply or demand, or the materials can become
obsolete.
TECHNOLOGY UTILIZATION

The key factors that underpin enterprise growth are labor, land, capital,
entrepreneurial spirit and innovation. In particular, it was innovation and
entrepreneurial drive that provided the motivating power for Taiwan’s economic
miracle. Today, new business development continues to depend on the flexibility
and vigor of Taiwan’s SMEs. In more concrete terms, innovation can take one of
five forms: the development of new products or the improvement of existing
products, the introduction of new methods of production, the development of new
markets, the identification of new sources of raw materials or semi-finished
products, and the establishment of new forms of industrial organization.

There are also relevant national and local institutions around the district with
which we will work in collaborations.
 Bole Sub City and Woreda Investment Office
 Bole Sub City and Woreda Land Use and Administrative Authorities
 University and collages.
 Bole Sub City and Woreda l Enterprises.
 Financial Institution and Banks.
 Civil society organizations including cooperatives and kebele organization
etc.
The role of these institutions and their expected synergy will be utilized for the
successful implementation of the project.
PRODUCTION PROCESS

The project area is located in Bole Sub city which has got convenient and
accessible road throughout the year. There is also access road from different areas
and towns to the project area. Thus, there will be no transportation problem to and
from the project area to its branches or stores located in suitable places.
LOCATION

Addis Ababa is the federal capital of Ethiopia, the seat of the African Union (AU),
the United Nation Economic Commission for Africa (UNECA) and a chartered
city; having three layers of government: The city government at the top, 10 sub
city administrations in the middle in which Bole Sub City is one of the 10 sub city
in Addis Ababa.

The city has grown from sparse and scattered settlement Addis Ababa to an
expansive and highly populated city. Addis Ababa lies in the center of the country
on the western escarpment of the main rift. The altitude of the city varies from
1500. to 2400 m a.s.l. there is high topography in the north and west, relatively flat
in the south east, which is cut by a deep George and rivers crossing the city from
north to south (ORRAMP, 2002). The city covers an area of about 54,000 hectare
(CSA, 2008).

Bole sub-city, which is one of the sub city in which this plastic card production
PLC is established has distinct characteristics and, relatively standardized part of
Addis Ababa, constituting modern and high standard residential localities as well
as very poor people who live with income of less than $1 per day, commercial
buildings, public offices, different social and economic over heads, industrial
areas, foreign embassies etc. Bole international air port and Ethiopian Civil
Aviation Authority are also found in this sub city..

Administratively it is bounded in the North by Yeka sub-city, in the West Kirkos

sub-city, in the South Akaki sub-city and in the East Oromia Regional State. Bole
Sub City occupies 11,711 hectares which is the second largest sub city in Addis
Ababa and 308,714 (145,057 male and 163,657 female) people live here. In
addition, Bole sub city has 11 kebele administration of two kebeles are rural; this
sub city is expanding fast. These situations trigger population increase and squatter
settlements.

The project is located in Addis Ababa Bole sub-city, which is one of the sub city in
which this plastic card production PLC is established has distinct characteristics
and, relatively standardized part of Addis Ababa, constituting modern and high
standard residential localities as well as very poor people who live with income of
less than $1 per day, commercial buildings, public offices, different social and
economic over heads, industrial areas, foreign embassies etc. Bole International
Air Port and Ethiopian Civil Aviation Authority are also found in this sub city. In
addition, the availabilities of facilities like road, utilities and easy access to the
target markets are other factors for the selection of the site.

MACHINERY AND EQUIPMENT

Machinery and equipment have moving parts. The action of moving parts may
have sufficient force in motion to cause injury to people. When assessing
machinery and equipment for possible mechanical hazards, consider:

• machinery and equipment with moving parts that can be reached by people

• machinery and equipment that can eject objects (parts, components, products or
waste items) that may strike a person with sufficient force to cause harm

• machinery and equipment with moving parts that can reach people, such as
booms or mechanical appendages (arms)
LEGAL ENVIRONMENT

Legal & Administrative  Legal Form (proprietorship, partnership, corporation,

cooperative).  Share Distribution (Corporation Only)  Directors & Officers
(Corporation Only)  Buy Sell Agreement (Corporation and Partnerships Only) 
List of key legal agreements such as contracts, leases, agreements, franchise
agreements, personal loan guarantees etc. The actual documentation is often put
into the appendix of the business plan.  Insurance/Risk management

PERSONAL

A personal marketing plan is a strategic marketing plan that can help you ensure
the efficiency and effectiveness of your personal brand or image and how it is
perceived by different entities like potential employers, businesses, engineering
lawyer, technical and professionals.

MANAGEMENT AND ORGANIZATION STRUCTURES

Addis Ababa, the capital of Ethiopia, is the industrial, commercial and cultural
centre of the country. Being the seat of various regional and international
institutions, it is an important political and diplomatic hub of Africa. With a
population of more than 2.7 million (CSA 2008), Addis Ababa is the largest city in
Ethiopia. According to the 2007 population and housing census of the Central
Statistical Agency, the city accounts for 30% of the nation’s urban population and
is ethnically diverse. 52.4% of the population is female, a slightly higher rate than
the national ratio (51%). Addis Ababa also has the highest number of female-
headed households (38.5%) in Ethiopia.
PROFESSIONAL AND ADVISOR SUPPORT
  Accountant, Lawyer, Engineering and Technician, human resource is use in
project of plastic production in Addis Ababa.

 Bank Services, Business Advisors and Mentors (it can be helpful to provide
single-paragraph biographies on key business advisors.)

ORGANIZATIONAL STRUCTURE AND CHART

Business form: this business is going to be established in the form of sole

proprietorship.
 General Manager

Legal Advisor

Human Resource
Finance Manager Marketing Manager
Manager

Accountant Marketing Officer Personnel officer General Services Officer

Cashier

EFFECTIVE MANAGEMENT STYLE

Management style is a managerial parlance often used to describe the how of

management. It is a function of behavior associated with personality.

Management style can be understood as a way to manage an organization.

According to AB-KTR, management style is “the adhesive that binds diverse
operations and functions together”. It is the philosophy or set of principles by
which the manager capitalizes on the abilities of the workforce. Management style
is not a procedure on how to do but it is the management framework for doing. A
management style is a way of life operating throughout the enterprise and permits
an executive to rely on the initiative of the personnel of an entity.

SOCIO ECONOMIC STUDY

The major beneficial impacts of this project are change in employment and income
opportunity, infrastructure, community development, communication, transport,
educational, commercial, recreational and medical facilities. In addition this
project will accommodate many labor forces. As a result, the income theses labor
forces will increase and enable them support their households and fulfill their basic
needs (food, health, shelter and social necessities)

ECONOMIC BENEFIT FOR THE COMMUNITY: As the matter of fact, any

organization has social responsibility in creating job opportunity and involving in
different social affairs. The economic benefit of this project is not far from this
truth.

ECONOMIC CONTRIBUTION TO THE COUNTRY: This project has

paramount importance in reducing unemployment rate and helping industry sector
in providing raw materials and thereby supplementing the country’s GTP of
industrial objectives. Furthermore, the linkage between various sectors of the
economy will be increased.

FINANCIAL PLAN
The Company will earn a large amount of revenue from the sales of products of
plastic production of high quality. The details of the financial status of the
company and its profitability are indicated in section------------ under financial
plan.
PROPOSED RATE OF PRODUCTION
The proposed rate of production of the project are 25,000 cards of various types,
2,7600 meters of wire and cable coverings, 5,000 bags of different sizes, 40,000
packs of packaging plastic products, 25,000 kitchenware goods and 10,000 rain
cover and sun shadings in the first year and increase this amount yearly.

FINANCIAL BUDGET OF THE INVESTMENT

10.1 Total financial requirement =ETB 67,879,139.00

10.2 Capital investment =ETB 34,674,000
10.3 Operating cost = ETB 33,205,139
Here, operating costs refer to those costs which are not included in the project
capital costs and hence are not subjected to periodical depreciation. These costs
include such costs as labor costs; costs for equipment operations and maintenance
such as fuel cost and repair and maintenance cost, depreciation cost, utility
expenses such as telephone charges, employee salaries, and other miscellaneous
expenses.

Repair and Maintenance cost: operating cost for operation and maintenance of
machineries and equipment is taken to be 5% of initial investment costs beginning
after the acquisition i.e., 67,879,139 *.05= ETB 3,393,956.95

 Utility expenses: this includes such periodical costs as incurrence of liabilities

(payments of cash) for fuel consumptions and telephone expenses. Although
such types of expenses changing with the volume of operations, it is forecasted
that a minimum of ETB 10,027,100.00 forecasted for the first year of project
operation.
 Supplies cost: such costs include the cost of stationary materials needed for
office use. It is forecasted for first year as Br.20, 000.00 and increase at least
by 5% as the activities of the project increases.

 Miscellaneous expenses: Expenses for which it is neither economical nor

convenient to specific account code and hence, should be merged together
under miscellaneous expenses. These include entertainment expenses,
employee benefits, litigation expenses and others. As a result, such expenses
estimated to be Br. 25,000.00 and increase at least by 5% as the activities of
the project increases.

Source of fund: the sources of fund for this project are the owner itself and banks.

Market opportunity

The current increasing trends on both the demand and supply side of plastic
products market make plastic production very important. The current rising input
prices are causing manufacturers to seek new efficiencies, in particular in low
value added items such as packaging goods, preferably plastic products. In
addition, nationwide, demand for green packaging is projected to increase annually
with foodservice and transport packaging growing the fastest’ It is observed that
the fast growing banking and financial institutions demand for various plastic cards
The currently growing construction and transport sectors in the country have the
propensity to consume more and more amount of plastic products. In a recent
survey completed by the promoter, most of consumers responded that they would
choose environmentally-friendly various types of quality plastic products.

2.0. Budget Breakdown

1. Summaries of the project construction costs (in ETB)

No Construction Quantity Unit Cost Total Cost
 items in ETB in ETB
1 Production 1 8,500,000 8,500,000
Building
2 Dust Dumping 1 2,500,000 2,500,000
Building
2 Guardian houses 1 30,000 30,000.00
3 Store 3 100,000 300,000
4 Fence with wire 1 100,000 100,000
around
production Plant
5 Generator 1 100,000 100,000
(medium)
Subtotal Cost 11,530,000
Physical and relative price change contingency (10%) 1,153,000
Total cost 12,683,000

2. Summaries of the Office Equipment Cost (in ETB)

No Item Unit Units Unit cost Total
needed
1 Desk top computer Pcs 1 10,000.00 10,000
with printer
2 Laptop computer Pcs 1 12,000.00 12,000
4 Shelves Pcs 2 2000.00 4000.00
6 Managerial chairs Pcs 1 7000.00 7000.00
7 Secretarial chair Pcs 1 4000.00 4000.00
8 Guest chair Pcs 5 1000.00 5000.00
9 Guest table Pcs 5 1000.00 5000.00
10 Computer table Pcs 1 1000.00 1000.00
11 Leather bag Pcs 5 800.00 4000.00
Estimated cost 52,000
Contingency due to price fluctuation (10%) 5,200.
Total estimated office equipment cost 57,200

3.0. PROJECT FINANCIAL STATEMENT

OPERATIONAL DATA
The plant is to start production at 70% of capacity thereby increased by 10% in the
next three years till the plant operates at 100% which is to be maintained for the
next twenty five years.
13.1 FIXED COSTS
Land and Building (Note)………………………………. 12,683,000
Plant & Machinery………………………………………. 15,500,000
Direct material & labor Cost -------------------------------- --8,174,000
Furniture & Fixtures & Office Equipment ……………….650,000
Other utilities ---------------------------------------------------28,372,139
Vehicles ………………………………………………….. 2,500,000
Total Project Investment ………………………………….67,879,139

Note: Land for setting up the proposed stone crushing unit would be acquired on
lease for a period of 25 years. Lease concession would be granted by the Mineral
Development Authority of the concerned Area.
13.2 WORKING CAPITAL
Following are the initial working capital requirements for the Plastic Production
for first year.

Description Amount in Rs.

First year Salaries (Production staff) ……………………………650,000
First year Utilities Charges (Other then fuel/diesel)\.....................13,057,000
First year Fuel Inventories (Diesel) ……………………….. 7,524,000
First year Misc. Expenses………………………………………. 10,027,000
Cash balance required ………………………………………….. 1,775,000
Total …………………………………………………………… 23,006,000

OVERHEAD COST
Following Overheads are assumed to occur in the first year of production.

Expense Year
amount (Br)
Utilities……………………………………………………………………
13,057,000
Depreciation………………………………………………………………. 30,000
Maintenance………………………………………………………………... 10,000
Selling and Distribution……………………………………………………. 55,000
Miscellaneous……………………………………………………………….
10,027,000
Total………………………………………………………………………..
23,829,000
HUMAN RESOURCE REQUIREMENT AND ASSOCIATED EXPENSES

Man power is decisive factor for the successful implementation and operation of a
project. Hence, careful identification and qualification of the man power
requirement of the project is indispensable. Accordingly, although the details of
responsibility and accountability relationship will be determined latter, the
following table shows the manpower requirement with qualifications:

Salary of Staff
1 Year
Minimum
N Quantit Monthl (12 Total Remar
Staff Qualificatio
o y y salary months Salary k
n
)
General BA in  
Manager/ Mgt/Econor
Director related & 8 102,00
1 1 8,500 12
years of 0
related
experience
Deputy BA in  
Manager Mgt/Econor
related & 5
2 1 7,500 12 90,000
years of
related
experience
3 Sale BA in 1 6,500 12 78,000  
Manager marketing
related & 5
years of
related
Salary of Staff
1 Year
Minimum
N Quantit Monthl (12 Total Remar
Staff Qualificatio
o y y salary months Salary k
n
)
experience
accountant BA in  
s accounting
4 1 6,000 12 72,000
& 4 years
experience
Cashier Diploma in  
Accounting
5 1 2,500 12 30,000
& 2 years
exp
Secretary Diploma in  
Office
6 management 1 2000 12 24,000
or related &
2 years exp
Purchaser Diploma in  
Accounting
7 1 2,000 12 24,000
& 2 years
exp
Drivers 3rd Grade  
8 Driving 2 2,000 12 48,000
License
Productio license 144,00  
9 10 1,200 12
n workers 0
Store Diploma in  
  1 1,200 12 14,400
keeper the field
Guard 6th grade &  
work
10 1 980 12 11,760
experience 2
years
Total   638,16  
  21    
Salary 0
 NB: For cost calculation, take 15% of the total cost as contingency and sum up
with the total cost so as to get the grand cost.

Forecasted production

In order to estimate the production of plastic products, we have utilized opinions of

experts in the field of geology. Accordingly, the following tables shows the
projected/expected yearly outputs

Projected Plastic Items production in G.C

No Product Items 2019 2020 2021 2022 2023 2024 2025 2026 202
Plastic cards of 25, 25 2 2 3 48 55
1
different types 000 ,625 6,266 6,922 3,653 42,066 ,376 ,632 977
Plastic
2 Packaging 40, 41 4 4 4 46 47
products 000 ,000 2,025 3,076 4,153 45,256 ,388 ,547 736
kitchenware,
toys, sporting
goods, medical
3
products and
footwear, boxes, 25, 25 2 2 2 28 29
bags 000 ,625 6,266 6,922 7,595 28,285 ,992 ,717 460
Production of
4 plastic bags of 5 5 11 13
different sizes ,000 ,750 6,613 7,604 8,745 10,057 ,565 ,300 295
home and
industrial
5 appliances, wire
and cable 2 2 2
coverings ,500 ,563 2,627 2,692 2,760 2,829 2,899 ,972 046

Note that: then the above projections are based on the expert’s opinions in the field
as well as the existing experiences. In essence, if the project is to be implemented
and run in accordance with the recommendation of the expertise and experiences,
these projections are supposed to be achievable.

Annual Revenue of Plastic Production in ETB

The total Revenue from the above plastic production over the next 9 years is
indicated on the following table. The projected unit selling price of the plastic
product items are indicated in the following 5 table or five product items

Product 1

Unit
Total
Selling
Year Product Item Quantity sales in
Price in
ETB
ETB
2019 Plastic cards of 2,500
different types 25,000 100 ,000
2020 Plastic cards of 2,946
different types 25,625 115 ,875
2021 Plastic cards of 3,414
different types 26,266 130 ,531
2022 Plastic cards of 3,903
different types 26,922 145 ,729
2023 Plastic cards of 5,384
different types 33,653 160 ,453
2024 Plastic cards of 7,361
different types 42,066 175 ,557
2025 Plastic cards of 9,191
different types 48,376 190 ,430
2026 Plastic cards of 11,404,
different types 55,632 205 629
2026 Plastic cards of 14,074,
different types 63,977 220 982
Product 2
Unit
Total sales in
Year Product Item Quantity Selling
Price in ETB
ETB
2019 40,00
Plastic Packaging 0 80 3,200,000
products
2020 41,00
Plastic Packaging 0 92 3,772,000
products
2021 42,02
Plastic Packaging 5 104 4,370,600
products
2022 43,07
Plastic Packaging 6 116 4,996,773
products
2023 44,15
Plastic Packaging 3 128 5,651,522
products
2024 45,25
Plastic Packaging 6 140 6,335,886
products
2025 46,38
Plastic Packaging 8 152 7,050,936
products
2026 47,54
Plastic Packaging 7 164 7,797,779
products
2027 48,73
Plastic Packaging 6 176 8,577,556
products
Product 3

Unit
Total sales
Year Product Item Quantity Selling
Price in in ETB
ETB
2015 kitchenware, toys, sporting 1,00
goods, medical products and 25,000 0 25,000,000
footwear, boxes, bags
2019 kitchenware, toys, sporting 1,15
goods, medical products and 25,625 0 29,468,750
footwear, boxes, bags
2020 kitchenware, toys, sporting 1,30
goods, medical products and 26,266 0 34,145,313
footwear, boxes, bags
2021 kitchenware, toys, sporting 1,45
goods, medical products and 26,922 0 39,037,285
footwear, boxes, bags
2022 kitchenware, toys, sporting 1,60
goods, medical products and 27,595 0 44,152,516
footwear, boxes, bags
2023 kitchenware, toys, sporting 1,75
goods, medical products and 28,285 0 49,499,109
footwear, boxes, bags
2024 kitchenware, toys, sporting 1,90
goods, medical products and 28,992 0 55,085,437
footwear, boxes, bags
2025 kitchenware, toys, sporting 2,05
goods, medical products and 29,717 0 60,920,145
footwear, boxes, bags
2026 kitchenware, toys, sporting 2,20
goods, medical products and 30,460 0 8,577,556
footwear, boxes, bags
2027
Product 4

Unit
Total sales
Year Product Item Quantity Selling
Price in in ETB
ETB
2019 5,0 30 1,500,00
Production of plastic bags of 00 0 0
different sizes
2020 5,7 34 1,983,75
Production of plastic bags of 50 5 0
different sizes
2021 6,6 39 2,578,87
Production of plastic bags of 13 0 5
different sizes
2022 7,6 43 3,307,90
Production of plastic bags of 04 5 3
different sizes
2023 8,7 48 4,197,61
Production of plastic bags of 45 0 5
different sizes
2024 10,0 52 5,279,81
Production of plastic bags of 57 5 3
different sizes
2025 11,5 57 6,592,22
Production of plastic bags of 65 0 3
different sizes
2026 13,3 61 8,179,56
Production of plastic bags of 00 5 1
different sizes
2027 15,2 66
Production of plastic bags of 95 0 10,094,775
different sizes

Product 5
 Unit Total
Year Product Item Quantity Selling sales in
Price in
ETB ETB
2019 home and industrial 2,5 375,0
appliances, wire and cable 00 150 00
coverings
2020 home and industrial 2,5 442,0
appliances, wire and cable 63 173 31
coverings
2021 home and industrial 2,6 512,1
appliances, wire and cable 27 195 80
coverings
2022 home and industrial 2,6 585,5
appliances, wire and cable 92 218 59
coverings
2023 home and industrial 2,7 662,2
appliances, wire and cable 60 240 88
coverings
2024 home and industrial 2,8 742,4
appliances, wire and cable 29 263 87
coverings
2025 home and industrial 2,8 826,2
appliances, wire and cable 99 285 82
coverings
2026 home and industrial 2,9 913,8
appliances, wire and cable 72 308 02
coverings
2027 home and industrial 3,0 1,005,18
appliances, wire and cable 46 330 2
coverings

.
 5. Project Schedule
Table-5: Action plan

Activity First quarter Second quarter Third quarter Fourth quarter

April May Jun. Jul. Aug. Sep. Oct Nov Dec Jan Feb. Mar.
Prepare project
proposal
Submit the proposal
and process license
Purchase machines and
other related
equipment
Installation of the plant

Construction of office
and store
Purchase of Office
furniture
Man power
Recruitment
Start the work

The civil works and installation of plant is estimated to complete in 3 months