PROJECT PROPOSAL FOR ESTABLISHMENT OF

FIBER GLASS AND ALMUNIUM (WATER TANKER,

SHOWER TREE, DOOR AND WINDOW)

MANUFACTURING PLANT

PROJECT TO BE IMPLEMENTED IN ADDIS ABABA CITY

PROMOTER: - Mr. YOHANNES TESFA ERATI AND

SAMUEL TESFA ERATI

May, 2021

Addis Ababa, Ethiopia

TABLE OF CONTENT
TABLE OF CONTENT..................................................................................................1
EXECUTIVE SUMMARY..............................................................................................3
1. INTRODUCTION....................................................................................................4
1.1. Objective of the project...................................................................................5
1.2. The Economic Significance of the Project........................................................5
1.3. Location and Premises Required.....................................................................7
1.4. Location Map of the Area................................................................................9
2. MARKET STUDY AND PLANT CAPACITY.............................................................10
2.1. Market Study................................................................................................10
2.1.1. Demand and Supply Analysis.................................................................10
2.1.2. Market Prospects....................................................................................11
2.1.3. Marketing Strategy and Promotion.........................................................11
2.1.4. Target customers....................................................................................11
2.2. Plant Capacity and Production Program........................................................12
2.3. Pricing..........................................................................................................12
3. PRODUCTION AND TECHNOLOGY.....................................................................13
3.1. Product Nature and Description....................................................................13
3.2. Raw materials and Input..............................................................................13
3.3. Technology...................................................................................................13
3.4. Production Description.................................................................................13
3.4.1. Production Process.................................................................................13
3.5. Machinery and Equipments..........................................................................17
3.6. Project Design and Engineering....................................................................19
3.7. Building and Construction Works.................................................................19
3.8. Utilities.........................................................................................................19
4. MANPOWER AND ORANIZATIONAL MANAGEMENT............................................20
4.1. Manpower.....................................................................................................20
4.2. Organizational Structure and management...................................................20
4.3. Training Requirement...................................................................................23

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5. FINANCIAL REQUIRMENT and ANALYSIS...........................................................23
5.1. Total Initial Investment Cost.........................................................................23
5.1.1. Fixed Investment....................................................................................24
5.2. Annual Production Cost at Full Capacity......................................................27
5.3. Financial Analysis and Statements...............................................................29
5.3.1. Underlying Assumption..........................................................................29
5.3.2. Sources of Fund.....................................................................................30
5.3.3. Loan repayment Schedule......................................................................31
5.3.4. Depreciation Schedule............................................................................31
5.3.5. Revenue Projection.................................................................................31
5.3.6. Balance Sheet........................................................................................32
5.3.7. Income Loss Statement...........................................................................33
5.3.8. Cash Flow Statement..............................................................................34
5.3.9. Profitability.............................................................................................34
5.3.10. Break-Even Analysis...........................................................................35
5.3.11. Pay-Back Period..................................................................................35
6. FUTURE DEVELOPMENT...................................................................................35
7. ENVIRONMENTAL IMPACT OF THE PROJECT....................................................36
7.1. Socio-Economic Environment.......................................................................36
7.2. Environmental Impact Assessment of the Project..........................................36

2
EXECUTIVE SUMMARY

1. Project name FIBER GLASS AND ALMUNIUM

MANUFACTURING PLANT

2. Project Owners MR. YOHANNES TESFA ERATI AND Samuel

Tesfa Erati

3. Nationality Ethiopian

4. Project Location Addis Ababa city Administration

5. Project WATER TANKER, SHOWER TREE, DOOR AND

Composition WINDOW etc

6. Premises 10,000 M2
Required
7. Total Initial Br 120,000,000of which 30% equivalent to
Investment
36,000,000 financed by the owners’ equity and
Capital
the rest 70% equivalent to 84,000,000financed
through bank loan

8. Employment 450 peoples

Opportunity
9. Benefits of the Produce and supply of quality fiber product, add
factory For The
value to the economy, Source of Revenue,
Region/ Country
Employment opportunity, Save Foreign currency,
Benefit for the Local Community, Stimulate the
Local Economy and technology transfer

3
1. INTRODUCTION

Manufacturing Small and Medium Enterprises (SMEs) make up the largest and
the most important segment of the industrial sector in Ethiopia. In 2000, for
example, SMEs contributed to 68 per cent of gross value of production and
over 80 per cent of employment in the manufacturing sector. As will be shown
below, SMEs, especially the latter, are among the most dynamic and innovative
enterprises in the country. In reviewing the investment and technology policies
of Ethiopia, therefore, it is pertinent that special attention is paid to the pattern
of development and the strengths and weaknesses of SMEs in Ethiopia.

Besides, development of small and medium industries accelerates the fast

economic growth of Ethiopia and will help the nation lay its economy
foundation on strong industrial base. However, there exist constraints on the
transition of these industries to the heavy one.

The government of Ethiopia has developed a conducive investment policy

packages and other sectoral reforms at federal and regional level to attract a
huge private investment including in MSEs for the wellbeing of the nation and
its citizens as a whole. Besides, it is also currently implementing the five years
growth and transformation plan gave a special focus for manufacturing, small,
medium and large industries.

In this regard, the Addis Ababa city Administration has been exerting its
maximum effort to expand investment opportunities in the region, so as to
foster the economic development of the region and subduing the region’s big
enemy that is the trap of poverty. Therefore, the regional government has been
preparing a viable business environment to attract many domestic and foreign
investors so that the dream of making poverty history turns to be true.

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Therefore, the lucrative market potential and those viable investment policies
attracted the owners of this project to engage in production of fiber glass plant
Addis Ababa city.

Aluminum door window manufacturing fabrication with different types of

frames, fittings is a profitable manufacturing opportunity in India. Aluminum
fabricated items like doors, windows, staircase, handrails, and supports,
railings for verandas, corridors etc. have become the standard accepted feature
in most modern buildings. The use of aluminum in business and office
complexes, buildings, theaters, the auditorium is very extensive for functional
as well as decorative purposes. Similarly in residential buildings also
aluminum doors, windows, railings, grill works etc. are used extensively.
Textile shops and other trading shops in lighter materials too are going in for
shelves made of aluminum for stacking purposes.

The development and construction activities being interlinked. And there is the
good scope for aluminum fabrication units for meeting the growing demand of
new building for offices, business and shopping complexes theaters etc.
Aluminum fabricated and anodized items like doors, windows, railings,
staircases, shelves; ladders, etc. are essential items in the modern
constructions on considerations of durability and appearance. Nowadays
wooden materials are replacing fast with aluminum fabricated items.

The many advantages of aluminum such as lightweight, strength, corrosion

resistance, durability, ease in fabrication, attractive appearance and easy
maintenance make it a popular material for use in modern building. Aluminum
required for use in buildings are available from large scale manufacturers-such
as Balco, Jindal, Hindalco etc. as extruded sections in various shapes and
sizes for specific uses. These sections are also available through their local
dealers. The usual length of these sections is 12 ft. 24 meters. Fabricators
anodized these to desired colours and fabricate the items as per the customer’s
requirements. These items have good appearance and finish and the

5
maintenance expenses are almost nil while steel and wooden items require
regular painting and polishing periodically.

The owners of this envisaged plant have a good business experiences and need
to extend this asset to this plant. Therefore, the owner is very determined to
establish the plant and considers getting the required support from regional
government by considering the existing facts and the multi benefits of this
project.

1.1. Objective of the project

The main objective of the plant is to manufacture fiber glass products and to
sale with reasonable price for domestic and international market (in the
future).

1.2. The Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the

nation in general and the region in specific with following ways:

A. Supply of Quality fiber glass related Products

The project under discussion will establish fiber glass plant that will produce
quality and affordable fiber products for the country market. This will benefit
the users to get better product with better price and durability.

B. Value Add

The establishment of this factory will add a value to the manufacturing sector
in specific and in the economy in general.

C. Source of Revenue

As public policy of any nation, the government collects different forms of taxes
from different business organizations and individuals. Among the different

6
forms of taxes, business income taxes, VAT and payroll taxes are collected from
undertaking business activities. Therefore, the factory will serve as sources of
revenue for both the region and nation in general.

D. Employment Opportunity

One of the problems that our country faced is unemployment. Therefore, the
current objective of the government is working on tackling the problem of
unemployment and fostering the development process either through creating
self employment or employment in other organization. Hence, this factory will
hire around 300 persons.

E. Save the Country’s Foreign Exchange

By minimizing the market gab for fiber glass products demand and supply, the
factory will help to reduce the nation’s foreign exchange cost to import these
materials. This will save the foreign exchange resource of the nation.

F. Benefit for The Local Community

As a corporate responsibility the company will engage in different development

activities on the surrounding areas (sebeta district). This will better worse the
community and contribute for the development of the region.

G. Stimulate the Local and National Economy

This factory has positive externality in the zone that will encourage the
economic movement of local economy. Hence, there will be economic
relationship and transactions among different actors.

H. Technology Transfer

By producing fiber glass products, the project will train and develops the
capacity of the technical staffs. By doing this, the company will add value in
technology transfer for the nation.

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 1.3. Location and Premises Required

i. Location

The envisioned project is planned to be located in Addis Ababa. The main

justifications behind the selection of this location are:

 Strategically located to the central and largest market of the nation

(Addis Ababa)

 Relatively advanced development in infrastructure (Power, Water,

Telephone internet, road etc.

 All road to the nearest market outlets

 Accessibility of skilled labor force

 Conducive investment policy and governance

 Environmentally fit to manufacturing industry.

ii. Premises Required

The total land holding of the project is 10,000 M 2, the premises required
planned as follows in table 1

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 Table 1. Premises Required and Land Use Plan

No Description Land
Requirement
1 Production Hall 3,700M2
2 Warehouse
2.1 Raw Material & Input 1,700M2
2.2 Finished Products 1,600M2
  Total Warehouse 7000
3 Office Building 500M2
4 Shop and Showroom 500M2
5 Waste Accumulation area 100M2

6 Green area, Buffer zone and 10,00 M2

Parking
  Total 10,000M2

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 1.2.1.1. Location

The proposed project of Fiber glass and aluminum project will be

planned to be located in Addis Ababa. Addis Ababa is the capital and
largest city of Ethiopia. It is the seat of the Ethiopian federal government.
According to the 2007 population census, the city has a total population
of 5,739,551 inhabitants. The total land size the promoter requesting for
the implementation of the project is estimated at 3000 square meters,
which will be been obtained from investment commission of Addis Ababa
city administration Hence the owners select Addis Ababa for proposed
project by looking every aspects of business integrity tourist area.
As a chartered city (ras gez astedader), Addis Ababa has the status of
both a city and a state. It is where the African Union is and its
predecessor the OAU was based. It also hosts the headquarters of the
United Nations Economic Commission for Africa (ECA) and numerous
other continental and international organizations. Addis Ababa is
therefore often referred to as "the political capital of Africa" for its
historical, diplomatic and political significance for the continent

3.3.1. Climate:
Addis Ababa has a subtropical highland climate. The city has a complex
mix of highland climate zones, with temperature differences of up to
10 °C (18 °F), depending on elevation and prevailing wind patterns. The
high elevation moderates’ temperatures year-round, and the city's
position near the equator means that temperatures are very
constant from month to month. As such the climate would be maritime
if its elevation was not taken into account, as no month is above 22 °C
(72 °F) in mean temperatures.

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Geography: Addis Ababa lies at an elevation of 2,200 metres (7,200 ft)
and is a grassland biome, located at 9°1′48″N 38°44′24″ECoordinates:
9°1′48″N 38°44′24″E.[14] The city lies at the foot of Mount Entoto and
forms part of the watershed for the Awash. From its lowest point,
around Bole International

Airport, at 2,326 metres (7,631 ft) above sea level in the southern
periphery, the city rises to over 3,000 metres (9,800 ft) in the Entoto
Mountains to the north

3.3.2. Demographics:
As of the latest 2007 population census conducted by the Ethiopian
national statistics authorities, Addis Ababa has a total population of
2,739,551 urban and rural inhabitants. For the capital city 662,728
households were counted living in 628,984 housing units, which results
in an average of 5.3 persons to a household. Although all Ethiopian
ethnic groups are represented in Addis Ababa because it is the capital of
the country, the largest groups include all nation nationality

3.3.3. Infrastructure and economic status

Economy: The economic activities in Addis Ababa are diverse. According

to official statistics from the federal government, some 119,197 people in
the city are engaged in trade and commerce; 113,977 in manufacturing
and industry; 80,391 Homemakers of different variety; 71,186 in civil
administration; 50,538 in transport and communication; 42,514 in
education, health and social services; 32,685 in hotel and catering
services; and 16,602 in agriculture. In addition to the residents of rural
parts of Addis Ababa, the city dwellers also participate in animal
husbandry and cultivation of gardens. 677 hectares (1,670 acres) of

11
land is irrigated annually, on which 129,880 quintals of vegetables are
cultivated. [citation needed] It is a relatively clean and safe city, with the most
common crimes being pickpocketing, scams and minor burglary. [37] The
city has recently been in a construction boom with tall buildings rising in
many places. Various luxury services have also become available and the
construction of shopping malls has recently increased. According to Tia
Goldenberg of IOL, area spa professionals said that some people have
labeled the city, "the spa capital of Africa."[38]

Ethiopian Airlines has its headquarters on the grounds of Bole

International Airport in Addis Ababa

Tourism: Tourism is a growing industry within Addis Ababa and

Ethiopia as a whole. The country has seen a 10% increase in tourism
over the last decade, subsequently bringing an influx of tourists to Addis
Ababa. In 2015, the European Council on Tourism and Trade named
Ethiopia the #1 tourist spot in the world

Development: The city hosts the We Are the Future center, a child care
center that provides children with a higher standard of living. The center
is managed under the direction of the mayor's office, and the
international NGO Glocal Forum serves as the fundraiser and program
planner and coordinator for the WAF child center in each city. Each WAF
city is linked to several peer cities and public and private partners to
create a unique international coalition.

Launched in 2004, the program is the result of a strategic partnership

between the Glocal Forum, the Quincy Jones Listen Up Foundation and
Mr. Hani Masri, with the support of the World Bank, UN agencies and
major companie
Education: Addis Ababa University was founded in 1950 and was
originally named "University College of Addis Ababa", then renamed in

12
1962 for the former Ethiopian emperor Haile Selassie I who had donated
his Genete Leul Palace to be the university's main campus in the
previous year. It is the home of the Institute of Ethiopian Studies and the
Ethnological Museum. The city also has numerous public universities
and private colleges including Addis Ababa Science and Technology
University, Ethiopian Civil Service University, Admas University College,
St. Mary's University, Unity University, Kotebe Metropolitan University
and Rift Valley University.
Transport: Public transport is through public buses from Anbessa City
Bus Service Enterprise, Light Rail or blue and white taxis. The taxis are
usually minibuses that can seat at most twelve people. Two people are
responsible for each taxi, the driver and a weyala who collects fares and
calls out the taxi's destination.

Road: The construction of the Addis Ababa Ring Road was initiated in
1998 to implement the city master plan and enhance peripheral
development. The Ring Road was divided into three major phases that
connect all the five main gates in and out of Addis Ababa with all other
regions (Jimma, Debre Zeit, Dessie, Gojjam and Ambo). For this project,
China Road and Bridge Corporation (CRBC) was the partner of Addis
Ababa City Roads Authority (AACRA). The Ring Road has greatly helped
to decongest and alleviate city traffic.

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2. MARKET STUDY AND PLANT CAPACITY

2.1. Market Study

2.1.1. Demand and Supply Analysis

The market potential is great because the construction industry is among the
fastest growing sectors of our economy. There is a lot of demand for doors,
gates, windows and burglar proofing etc. This sector is still informal as there
are very many small-scale firms spread in major towns and trading centres in
the country.

Besides, the demand for Fiber glass goods is increasing with the growth in
investment in different sectors. Consumer demand in the country is growing
for fiber glass products. Increase in purchasing power and changes in designs
tend to increase the demand still further. In addition, demand for Ethiopian
nails products is exports market has gone up considerably in recent years.
This aspect is relevant for the Fiber glass manufacturing industry.

At present most of the fiber glass and aluminum factories are involved in
manufacturing household equipments, office, construction materials,
modification of simple molds etc. The main target market of these workshops is
government and next the private individuals.

Manufacturing of modern fiber glass is being introduced to substitute import

products. A few of the workshops are also involved in mold modification works
and use as import substitution. Even though under and over design of
modifying machines occur during their start time they have proved that
nothing is impossible if financial strength is kept. Most of the workshops are
14
also involved in producing construction materials. In this regard, the
establishments of this plant will be helpful in terms of increasing the countries
supply- demand gap by substituting exported items of the sector. The major
products which will be produced by the cluster are described in the table
below: -

2.1.2. Market Prospects

From the above market demand and supply analysis for fiber and aluminum
products, there exist huge market gab in Ethiopian market. Hence, the
envisioned factory will be successful by entering in to this market.

2.1.3. Marketing Strategy and Promotion

The company will follow the following promotional methods:

 Electronic Medias

 Advertising (Media, flayer and newspaper)

 Public Relations

 Branding

The marketing strategy mainly focus on the satisfying the needs, orders and
the requirement of the customers.

2.1.4. Target customers

The In local market, the requirement for fiber glass and aluminums products
can be categorized into four namely:
 Construction sector
 Newly built house
 For dowry;
 For renovation;
 For Institutional buyer.

15
  For offices (public & private sector)

The majority of customers in the domestic market belong to first and second
category. These customers require fiber glass and other home products for
their newly built houses and usually buy range of products like water tanker
shower tree, dining sets and with other materials (door and window) for their

entire house.

2.2. Plant Capacity and Production Program

Considering the gradual growth of demand and the time required to develop
the required skill the rate of capacity utilization during the first, second and
third year of production will be 70%, 85% and 100% respectively. Full capacity
utilization will be reached during the third year of operation. The plant will
operate 290 days per year.

2.3.  Pricing

It would be important to examine the possible level of price based on the

competitor’s action. In this connection, the existing average prices of similar
metal workshop in Addis Ababa were assessed for the benefit of comparison.
Based on the existing price in the market the firm stetted the price as follows;

16
3. PRODUCTION AND TECHNOLOGY

3.1. Product Nature and Description

The factory will produce different products based on the customer desire and
request. In general, the following products are designed by the plant to be
produced

The envisioned plant will produce different fiber glass work products based on
the customer desire and order. Besides, it will undertake different maintenance
on demand base.

3.2. Raw materials and Input

The major raw materials required for the production of the nail’s products
include iron, RHS, aluminum sheet, rectangular bar, round pip, flat bar,
(includes galvanized iron) etc. The required raw materials will be imported or
purchased in the local market.

Different inputs and supplies are necessary to finalize those products.

3.3. Technology
Technologies used in this engineering plant use sophisticated and latest
machineries for a quality and branded product which are export standard. In
different stage of manufacturing- extreme care is required to ensure smooth
polishing and proper platting.

17
 3.4. Production Description

In general aluminum work will have four production parts after the product
idea are generated. i.e., Design, Prototype, Develop and production.

3.4.1. Production Process

Activities performed to change a raw material into output product are called
production process. Production process, which is practiced by most of the
workshops, is similar. In broad, production process comprises pre-production,
on-production and postproduction.

A. Pre- production
Preparation and arrangement of resources are under this stage. The question
what to do? Where to do it? When to do it? Who to do it? All are answered at
this phase of production process.

A well prepared and arranged resources results in production cost reduction

and meeting due time.

Some of the activities involved at this stage are:

 Making a design
 Material selection
 Purchasing of raw material
 Adopting flexibility of production places
 Hiring of skilled workers
 Inspection of raw-material

B. On-production
The already prepared and arranged materials, machineries and human
resources are organized to start the real production process. The strength of

18
this stage depends on the pre-production stage. It needs a managerial skill to
coordinate the resources to achieve desire product.

Some of the activities involved in this stage are:

 Cutting of raw materials according to the specified dimension with

tolerance
 Joining the raw materials according to the design
 Quality control of the welding joints
 Checking up functionality of product

C. Postproduction
Postproduction is the final stage where preparation of product for shipment
under taken. Now the product has got the required design but needs polishing
to give good appearance.

Some of the activities involved in this stage are:

 Grinding
 Sanding
 Painting
 Assembly etc.

Note: Quality inspection activity is practical in all stages to keep the quality of
the product and to decrease scraps and reworks.

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Fig 1 Production Process Flow Chart:

Aluminum Works

The Aluminum work and fabrication industry is primarily concerned essentially

heating/welding and shearing/forming operations. In view of the high cost of
most new equipment and the relatively long lead-time necessary to bring new
equipment into operation, changes in production methods and products are
made only gradually; even new process technologies that fundamentally change
the industry are only adopted over long periods of time.

Shearing operations cut materials into a desired shape and size and include
punching, piercing, blanking, cutoff, parting, shearing, and trimming activities.

20
Basically, these produce holes or openings, or produce blanks or parts, the
most common hole-making operation being punching. Cutoff, parting, and
shearing are similar operations with different applications.

Forming operations bend or conform materials into specific shapes by turning,

twisting, drawing, rolling, spinning, coining, and forging metal into a specific
configuration. Bending is the simplest forming operation; the part is simply
bent to a specific angle or shape. Other types of forming operations produce
both two- and three-dimensional shapes.

Machining refines the shape of a work piece when shearing and forming are
complete, by removing material from pieces of raw stock with machine tools.
The main processes involved are drilling, milling, and turning,
shaping/planning, broaching, sawing, and grinding.

Holding the different pieces together is achieved either by riveting, bolting or

more permanently by welding. Welding is the process primarily used to join
metals, most welds being achieved by fusion in which the materials being
joined are melted at, and around, the joint between them. Most of the welds are
done with a rod of filler material with the resultant weld being composed
primarily of the filler. Increasingly though autogenously welding is catching on,
in which no added material is used. There are also forms of pressure welding
rather than fusion and combinations of the two. Welding is an integral part of
fabricating Fiber glass parts so as to form spheroids, boxes and cylinders. The
essential feature of a fusion welding process is a heat source either in the form
of a flame from a gas torch (most often oxyacetylene or propane) or an electric
arc.

3.5. Machinery and Equipments

The following are the list of necessary machineries and equipments for the
envisioned metal and iron workshop plant;
21
 Sheet aluminum shear

 (Rolling machine)

 Arc Welding machine

 MIG Welding machine

 Portable electric hand grinder

 Portable drill machine

 Circular cutting of machine

 Centre

 Universal milling machine

 Air compressor

 Hydraulic press

 molds

 Pipe bender

 Bedding borderer

 Work bench

 Shaping machine

 Welding stand

 Active reactive

 Generator

 Drum machine

22
  Hydraulic puncher

 Ban saw machine

 Puncher hand operated

 Founder fun

 power hack saw

 Bed starching machine

 Electrical saw

 Electrical hydraulic press

 Steel cutter( round)

 Electrical and manual press

 Portable rotary machine

 Worker Safety kit

3.6. Project Design and Engineering

The proposed project comprises stock of different components to be executed at

different phases of the project life. These activities include: Design and
Construction of various buildings (workshops), importing of machineries,
additive chemicals and other raw materials, import of product transporting
medium vehicle

23
 3.7. Building and Construction Works

A very simple building may suffice for an initial startup, the main consideration
being the security of the equipment and secure connections to electrical
supply. The building will have to be designed along factory production lines
allowing for smooth transitioning of the raw materials into completed products
and optimized for maximum efficiencies.

3.8. Utilities

A number of utilities would be put in place in order to ensure smooth

functioning of the factory. These utilities include:

 Water Supply,

 Supplementary Electricity supply,

 Telephone line

 Paved Road Transportation,

 Drainage Facility

4. MANPOWER AND ORANIZATIONAL MANAGEMENT

4.1. Manpower

At the top of the organizational structure, there will be a general manager with
the responsibility of supervising the overall activity of the factory. Depending
up on the nature of the center and the amount of work to be performs; there
will be auxiliary units under the general manager. Employees under each unit
will be supervised by the unit head that is accountable for the general
manager.

24
The company will use efficient trained staffs in the area of marketing to be
competitive in the market. The opportunities of being serviced by well skilled
professionals well enable the company to evaluate the internal weakness and
strength of the company as well as to assess the global opportunity and risks
in the world market so that the company can cope up with the dynamics of the
market situation. The company will hire 300 employees.

The detail human power requirement, monthly and yearly salary is indicated in
part 5 financial part.

4.2. Organizational Structure and management

The organizational structure of the project is designed by including all the

necessary personnel under the right division. At the top of the organizational
structure, there will be a general manager with the responsibility of supervising
the overall activity of the plant. Employees under each unit will be supervised
by the department head that is accountable for the general manager. General
Manager is accountable to the owner of the factory as indicated in figure 3

Fig 3 Organizational Structure

Owner/s

General
Secretary
Manager

Production Admin. & Marketing &

Dept. Finance Dept. Sales Dept.

25
Hence the following section deals with the duties and responsibilities of some
departments.

1. Manager
Duties and responsibilities

 She/he will plan, organize, direct and control the overall activities of the
plant
 She/he will devise policies and strategies that will enable the plant to be
profitable.
 She/he will incorporate modern technological innovation that will
facilitate the service delivery of the project center and increase
customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human
resources of the factory so as to achieve the short and long run objectives
of the organization.

2. The Production Department

Duties and responsibilities: -

It is the core department of the project center and it has the following
responsibilities.

 Design and prepared prototype aluminum based products based on the

plant standard and customer preferences
 Use modern manufacture, processing technologies that will enhance the
quality of those products.
 Produce quality aluminum products that will enable the factory
competent both in the domestic and international market.
 Control on the quality of raw materials, inputs, quality of the product
and also the overall production process.

26
  Produce products in least cost so that the profitability of the center is
guaranteed.
 Moreover control over the quality of the final metal and iron products

3. Administration and Finance Department

Duties and responsibilities:-

 Will plan, organize direct and control the financial transaction of the
factory by using the entire necessary document.
 Will develop sound financial control system by developing modern
financial control systems.
 Will prepare the annual financial statements and prepare condensed
reports for the general manager, owner and other concerned government
body.
 Will control the human and non human resources of the plant, which
include: effective handling of the different inventories of the machineries,
equipments, raw materials, finished products, and devise strategies of
controlling against fraud and damage.
 Manage and execute the company national and international
procurement procedure
 Administer and control the company logistic resource
 Provide and manage general supportive service to the factory.

4. Marketing and Sales Department

Duties and responsibilities: -

 Will handle the overall marketing activities of the organization which

include planning, organizing, directing, and controlling.
 Gather information on new products, designs, fashions, profiles etc
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
27
  Will develop the marketing strategies for future project center’s
development.
 Conduct both foreign and domestic market research for expanding the
sales of the company

4.3. Training Requirement

The production employees of the plant expected to take basic aluminum work
production skill training for 7 days. In addition, training could be given to the
mechanic and to the supervisor will also take skill training from one of TVET
Colleges or similar undertaking factories in Addis Ababa.

5. FINANCIAL REQUIRMENT and ANALYSIS

5.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged plant is
estimated to be birr 120,000,000

Table Total Initial Investment Capital

The total amount of money that is required to establish the envisaged plant is estimated
to be birr 120,000,000

Table Total Initial Investment Capital

No Description Cost  
1 Fixed Investment    

1.1 Land, Building and Construction 33,600,000 0.00

1.2 Machines and Equipment’s 26,400,000 0.00

1.3 Vehicles and Motors 3,600,000 0.00

28
1.4 Office Furniture and Equipment 2,400,000 0.00

Total Fixed Investment Cost 66,000,000 0.00

2 Operating Expense   0.00

2.1 Raw Materials Purchase and Products 24,000,000 0.00

2.2 Salary Expense 12,000,000 0.00

2.3 Other Operating Expense 3,600,000 0.00

2.4 Pre-operating Expense 2,400,000 0.00

Total Operating Expense 112,000,000 0.00

  12,000,000  
Contingency (Lump sum) 10%
Total Investment Cost 120,000,000 0.00

5.1.1.Fixed Investment
A. Building & Construction
N Description Land Unit cost in Total cost in br.
o Requirement(M2) br.
1 Production Hall 4, 1, 6,720,0
000 680 00
2 Warehouse, raw material and 2, 2, 4,480,0
input 000 240 00
3 Office Building, and finished 1, 2,986,0
product 2000 493 00
4 Waste Accumulation area 2, 2,240
1000 240 ,000
5 Green area, buffer and parking 336,0
500 448 00
6 Shops & Showrooms 1, 560,0
500 120 00
7 Site Development   1,120, 1,120,0
000 00
8 Design and supervision   1,120, 1,120,0

29
 000 00
9 Land lease initial   1,120, 1,120,0
000 00
  Total 1 3,369, 33,600,0
0,000 221 00

B. Machineries And Equipments

The list of required machinery and equipment is indicated in Table below. The
total cost of machinery and equipment is estimated at Birr 30,052,150.0

Qty.
Type of Machineries and
Equipments Specification UOM
Sheet aluminum shear Up to 3mm thickness/ hand operated Unit 2
Sheet aluminum roller (Rolling up to 1.5 mm thickness / hand operated / 1.5 Unit 1
machine) - 2.2 m shaft length
Arc Welding machine Min 45 A. max 250A Unit 2
MIG Welding machine Max. 240A Unit 2
Portable electric hand grinder 180mm disc size Unit 2
Portable drill machine Max 13mm chuck size Unit 2

Circular cutting of machine 450mm disc size Unit 2

Centre Three sided jaw , diameter 200mm , center to Unit  3

center 2000mm
Universal milling machine Table size 1500X300mm, table swivel in both Unit 1
directions 450 , distance from spindle to over
arm 155mm
Air compressor 300 liter Unit 1
Hydraulic press Min. 5 tons Unit 1 
Oxy-Acetylene welding   Unit 2
equipment
Pipe bender Max. 1 1/2 diameter Unit 2
Bedding borderer   Unit 2
Work bench 150cm length Unit 2
Shaping machine   Unit 1

Welding stand Pair Unit 3

Active reactive   Unit 1

30
Generator   Unit 1
  Unit 2
Drum machine
  Unit 2
Hydraulic puncher
  Unit 2
Ban saw machine
  Unit 2
Puncher hand operated
  Unit 3
Founder fun
  Unit 1
power hack saw
Bed starching machine   Unit 2

Electrical saw   Unit 2

Electrical hydraulic press   Unit 1

Steel cutter( round)   Unit 1

Bench type grinder   Unit 2

Electrical and manual press   Unit 2
  Unit 2
Band saw
  Unit 2
Portable rotary machine
  Set 1
Worker Safety kit

C. Vehicles
No Description Qty Unit Price in Total Price in Remark
br. br.
1 Pick 6 4,800,000 4,800,000
up,Isuzu
truck and
service Duty free
Total     4,800,000  

D. Office Equipments
No Description Qty Unit cost Total cost

31
 in br. in Br.
1 Managerial Tables 3 2300 6,900
2 Secretarial chairs with 1 750 750
table
3 Managerial Chairs 4 1550 12,200
3 Computer and Printer 3 8500 45,500
4 Shelf 2 2500 10,000
5 Filing Cabinets 3 1100 3,300
6 Assembly chair and     40,000
table(set)
Total     117,650

E. Initial Working Capital

The initial working capital is estimated to be birr. 15,000,000

F. Pre-Service Expense
No Description Cost in br.
1 Project proposal 10,000
2 Licensing fee and 1,500
others
3 Staff Capacity 50,000
Building
  Total 61,500

5.2. Annual Production Cost at Full Capacity

i. Raw Materials and Inputs

Sr. Description UOM Qty Unit Total

No Cost Cost in
in Br Br.
1 Cubic 900 400 360,000
aluminum sheet ft
2 Mild aluminum plate Pcs 800 1100 880,000
3 Tube Pipe Pcs 900 20 18,000
4 Angles lines Pcs 400 450 180,000
5 Grilling Disc Pcs 1950 60 117,000
6 Filler paste Pkt 600 1000 600,000

32
7 Hinges pair 4640 20 92,800
8 U channel Pcs 140 850 119,000
9 Other Inputs(locks, glue, nails, screw Tapestry LS     185,000
dressing, matters,
10 Other Machine supplies LS Lump   25,000
sum
  Grand Total       2,656,800

ii. Salary Expense

No. Description No. Qualification Monthly Annual

Salary in Salary in
br br
1 General manager 1 BA in Business Management 2500 30000
2 Production Head 1 BSC in Industrial Engineering 2000 24000
3 Production Advanced Diploma in
supervisor 2 production technology 1300 31200
4 Draftsman /
Designer 2 Diploma in draft technology 1100 26400
5 Machine man 2 10+2 in general mechanics 900 21600
6 Carpenter 8 10+2 in wood work technology 1200 115200
7 Sales 10+2 in salesmanship and
2 marketing 900 21600
8 Personnel 3 Diploma in HRM 900 10800
9 Finance head 1 BA in Accounting 1300 15600
10 Polish man 3 10+1 in fiber technology 1000 36000
11 Carving 2 10+1 in wood work technology 1000 24000
12 Marketing Head 1 BA in marketing management 1300 15600
13 Metal Worker 10+2 in Metal work
8 technology 1200 115200
14 Helper/laborer 12 10 completed 700  
15 Mechanic 2 10+2 in General mechanics 1000 24000
16 Admin and BA in
Finance Head 1 Management/Accounting 1300 15600
17 Accountant 3 Diploma in accounting 1050 12600
18 Electrician 1 10+2 in general electricity 900 10800
19 Secretary 2 Diploma in secretariat science 800 9600
20 Clerk 1 10 completed 700 8400
21 Store keeper 10+2 in store and logistics
2 management 800 9600
22 Driver 6 10 completed 800 9600

33
 23 Cashier 1 10+2 in Bookkeeping 800 9600
24 Office boy/girl 1 10 completed 700 8400
25 General service 1 Diploma in management 900 10800
26 Security 3 Unskilled 600 21600
27 Gardener 3 Unskilled 600 21600
28 Cleaner 3 Unskilled 600 21600
 29 Others works 200     1681000
 30 temp  120     68100
  Grand Total  450     1,749,100

iii. Other Operating Expenses

Sr
. Annual Cost in
Description Assumption Used
N br
o
0.032% of fixed Investment
1 Property Insurance 500,000
Cost
2 Audit & Legal Fee 100,000 350 per month
3 Uniforms 200,000 1,000*200br
4 Telephone, fax and postal 100,000 450 per month
5 Cleaning goods supplies 500,000 500 per month
2 % of the Fixed Investment
6 Repair and maintenance 1,000,000
Cost
7 Advertisement 1,100,000 % of sales
Stationery and other office
6 100,000 400 per month
supplies
8 Electricity 1,000,000 0.335*225,000KW per year
9 Water 500,000 1.5*3,000m3 per year
10 Fuel 1,000,000 3000 lit*20 per year
11 Oil and lubricant 3,600,000 10% of fuel cost

34
12 Miscellaneous Expense 500,000 3000 per month
  Total 7,2,400,000  

A. Pre-Service Expense

No Description Cost in br.

1 Project proposal 10,000
2 EIA 80,000
3 Licensing fee and others 10,000
 4 Staff Capacity Building 1,500,000
5 For Adverting 500,000
6 Lease 3,000,000
  Total 5,100,000

a. Financial Analysis and Statements

i. Underlying Assumption

The financial analysis of the envisioned factory is based on the data provided in the
preceding sections and the following assumptions.

A. Construction and Finance

Construction period 16 months

Source of finance 30% equity and 70% loan

Tax holidays 2 years

Bank interest rate 10 %

Operating Costs increase by 5% after year 3

Raw materials and wages increase by 5% after year 3

Salary and wages increase by 3 % after year 3

35
 B. Depreciation

Building 5%

Machinery and equipment 10%

Office furniture 10%

Vehicles 20%

C. Working Capital

Accounts receivable 30 days

Raw material local 30days

Work in progress 5 days

Finished products 30 days

Cash in hand 5 days

Accounts payable 30 days

ii. Sources of Fund

No Description % share Amount(in birr)

1 Owners Share 30 36,000,000

2 Bank Loan 70 84,000,000

Total   100 120,000,000

36
 iii. Loan repayment Schedule
Principal Interest Total Annual Remaining
Year
Payment (10%) Payment Balance
0 0 0 0 84,000,000
1 8,400,000 8,400,000 16,800,000 25,200,000
2 8,400,000 8,520,000 15,320,000 22,400,000
3 8,400,000 8,240,000 15,040,000 19,600,000
4 8,400,000 7,960,000 14,760,000 16,2,400,000
5 8,400,000 7,680,000 14,480,000 112,000,000
6 8,400,000 7,400,000 14,200,000 33,600,000
7 8,400,000 7,120,000 13,920,000 18,400,000
8 8,400,000 840,000 23,640,000 15,600,000
9 8,400,000 560,000 23,360,000 8,400,000
10 8,400,000 280,000 23,080,000 0

iv. Depreciation Schedule

S Original Value Depreciation Depreciation Per
Description
N In Birr rate in % year
Construction and
1 33,600,000 5 3,560,000
Civil Work
Machines &
2 26,400,000 15 2,640,000
Equipment’s
3 Vehicles 3,600,000 20 240,000
4 Office Equipment 2,400,000 15 120,000
  Total 66,000,000   6,600,000

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 v. Revenue Projection

Based on the price and the capacity program of the factory indicated in previous chapter
(chapter 2), the revenue of the factory projected as indicated in the table below;

vi. Balance Sheet

Balance Sheet

Asset

Current Asset  
Cash 6,000,000
Inventory of raw materials and inputs 212,000,000

Total Current Asset 112,000,000

Fixed Asset  
Land, Building and Construction 33,600,000
Machineries and Equipment’s 26,400,000
Office Equipment 2,400,000
Vehicles 3,600,000

Total fixed Asset 66,000,000

Total Asset  
Liability  
Account payable 84,000,000
Owners Equity 36,000,000
Capital  

Total Liability & Owners’ Equity 120,000,000

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 vii. Income Loss Statement

Revenue Year 1 Year 2 Year 3-10

Sales 4,500,000 4,725,000 4,961,250
Sales expenses (5%)* 225,000 236,250 248,063
265,075,09
Purchase of Raw Material 212,000,000 265,075,095
5
-
Gross profit -3,500,000 -260,350,095 260,113,84
5
Expenses    
Salary Expense 12,000,000 4,200,000 4,410,000
Operating Expenses 3,600,000 1,260,000 1,323,000
Pre-operating Expense 2,400,000 840,000 882,000
Deprecation Building 560,000 560,000 560,000
Deprecation machine 1,320,000 1,320,000 1,320,000
Deprecation Vehicles 240,000 240,000 240,000
Deprecation office Equip 120,000 120,000 120,000
Lease Expense 3,000,000 3,000,000 3,000,000
Interest Expense 8,400,000 2,520,000 280,000
Total Expense  14,040,000 14,060,000 12,135,000
Profit Before Tax 4,500,000 4,725,000 4,961,250
Tax(30% ) 1,350,000 1,417,500 1,488,375
Net Profit 3,150,000 3,307,500 3,472,875

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 viii. Cash Flow Statement
Cash Flow Statement
       

         

Particulars Year0 Year I Year II Year III-XI

A. Cash Inflow 0      

·  Own equity 36,000,000      

·  Bank loan 84,000,000      

·  Depreciation 0 2,240,000 2,240,000 2,240,000

·  Net profit 0 3,150,000 3,307,500 3,472,875

Total inflow
120,000,000 5,390,000 5,547,500 5,712,875
B.  Cash outflow    
0  
·   Fixed capital    
66,000,000  
·  Working capital    
28,000,000  
. Contingency (Lump sum) 12,000,000    
10%  
·  Loan repayment
  8,400,000 2,520,000 280,000
Total outflow
120,000,000 8,400,000 2,520,000 280,000
Net inflow (A-B)
0 2,590,000 3,027,500 5,432,875
Cumulative balance
0 2,590,000 3,027,500 5,432,875

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 ix. Profitability
According to the projected income statement, the project will start generating profit in
the 1st year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is
viable.

x. Break-Even Analysis
The break-even point of the project including cost of finance when it starts to operates
at full capacity (year 3) is estimated by using income statement projection.

BE = Fixed Cost / Sales – Variable cost = 57%

xi. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back
period. The project's initial investment will be fully recovered with in 9 year of operation.

6. FUTURE DEVELOPMENT

Every business undertakings be it large or small should have future development plan.
It is a plain fact that business activities are undertook in a dynamic business nature and
different environment. Therefore, the factory will have an expansion phase depending
on the condition of the industry character particularly in producing the Profile itself by
installing the plant. In this regard, the Factory will expand its capacity and production
varieties.

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7. ENVIRONMENTAL IMPACT OF THE PROJECT

7.1. Socio-Economic Environment

The owner will provide the land on lease bases, and all required compensation will be
paid for the project. The Livelihood of the local peoples around the project area is rural
dwellers of various occupation and economic background.

7.2. Environmental Impact Assessment of the Project

Environmental aspects are fundamental for the sustainability assessment of the current
and novel designs of any new project. In this regard the plant will undertake a separate
and detail Environmental impact Assessment.

To assess the impacts and design mitigation measure if any adverse impacts are there
so as to make the project benefited

42