Businesses Proposal For Metal Welding in Ethiopia

Feasibility study on metal welding
PROJECT OWNER:-HABTOM KFLEMARYAM PAULOS
ADDRESS: - NIFAS SILK LAFTO
Wereda: WERDA 12
Phone: - 09-11-91-61-49
PROJECT AREA: - LAFTO INDUSTRY AREA
DATE: 3/11/2015
Contents
1. EXCUTIVE SUMMARY ......................................................................................................................... 4

1.1. Objective ............................................................................................................................................ 5
1.2. Mission and vision ............................................................................................................................. 5
2. Introduction ............................................................................................................................................... 6
2.1. Economic back ground and potential of the country in relation to investment .................................. 6
2.2. Industry Overview ............................................................................................................................. 7
2. Background of the project ......................................................................................................................... 8
3.1. Location ............................................................................................................................................. 8
3.2. Infrastructure ...................................................................................................................................... 8
3.3. SWOT Analysis ................................................................................................................................. 8
4. Production description .............................................................................................................................. 9
4.1. Production Program ......................................................................................................................... 10
5. MARKET ANALYSIS ........................................................................................................................... 10
5.1. Our Target Market ........................................................................................................................... 11
5.2. Our competitive advantage .............................................................................................................. 11
5.3. SALES AND MARKETING STRATEGY .................................................................................... 11
6. PLANT INPUTS AND UTILTIES......................................................................................................... 13
6.1. Plant Inputs ...................................................................................................................................... 13
7. ENGINEERING ..................................................................................................................................... 14
7.1. Machinery and Equipment ............................................................................................................... 14
8. MANPOWER AND TRAINING REQUIREMENT .............................................................................. 16
8.1. Manpower Requirement................................................................................................................... 16
8.2. Organization structure of the Project ............................................................................................... 16
9. Financial Feasibility ................................................................................................................................ 18
9.1. Basic Assumptions for Financial Analysis ...................................................................................... 18
9.2. Result of Financial Analysis ............................................................................................................ 21
1. EXCUTIVE SUMMARY
HABTOM KFLEMARYAM PAULOS Metal Welding PLC is owned by Ethiopian citizen

investor, who engaged in metal welding and fabrication investment in Addis Ababa, lafto
sub-city. Habtom Kflemariam metal welding plc. has developed sophisticated metal welding
fabricating and production spear parts unit solution for some of agriculture wheel spear parts,
hospital, wheel carts, bearings and Lathe work.
The development of industry and metal welding process industries in Ethiopia has given high
priority. Realizing the opportunity, HABTOM KFLEMARYAM PAULOS Metal Welding
PLC plan to establish full-fledged integrated metal welding and fabrication processing
industry, in focus to metal welding (Welding Forming, Rolling, Tube Steel, Flat Plate,
Angles, shaft, half bearing, counter wick, safety stand, hospital bed production, farming
wheel spare parts, Milling Sawing and shearing, Plasma cutting Lathe work Drilling and
punch in) and production/processing wheel cart.
To this end, the company will plan to planted new work shop in 64 m2 land for medium
machine planting processing in the sub-city of lafto Woreda 12 besides existing 64 m2 of
land already establish and start metal welding and fabrication lafto industry site. Selection of
metal welding and molding processing site was considering its suitability to welding and the
availability of the necessary utilities as well as due to accessibility to road and other basic
infrastructural facilities. The company over all stratagem will based on a continuous
improvement process of setting objective, measuring result, and providing feedback to
facilities farther growth and process
Regarding market access for the product of the company which is welded metal and
processed product were analyzed with the prevailing market situation and major players in
the market. In this regard, it has planned to produce quality products with low cost to be able
to penetrate the market and compete equally with competitors. The company will focus on
setting up a whole seller based distribution system.
The Habtom kflemariam welding plc. System adapted to almost any service/product
requirement that calls for forming. The company expert’s staff has the capability to design,
and manufacture any accessory item that may be requiring completing the welding and lathe.
The company plans to rapidly develop marketing alliance with industry leaders and peruse
new sellers of its products and service commercial. The company uses a direct sales force,
relationship sales, and sub sale to reach the market. Thus channel are most appropriate
because of time to market, reduce capital requirement, and fast access to establish
distribution channels.
The purpose of this plan is to attain grant funding in the amount of 8million birr in order to
purchase supplies and equipment, lathe machines, launch advertisement and pay for new
employee.
1.1. Objective
 Achieve sales revenue at an impressive increased year each year of operations.

 Expand opportunities to the surrounding nearby cities in order to render service more
to customers.
 To establish a well-equipped and run welding business.
Specific objectives
 To develop an integrated system, that is supplementary to imported goods.

 To produce and deliver high quality ready to use processed metal welded product
 To build an enterprise that balances quality, financial stability with Social and
Community sustainability.
 To transfer technology coincides with local potential.
 To create market access for local whole and retailer sealers.
 To create job opportunity for local community there-by the area.
1.2. Mission and vision
The mission of our company is to building reputable and well-respected welding and fabrication
brand. This will be achieved through attention to detail on every job we handle.
 Our mission at HABTOM KFLEMARYAM Metal Welding PLC is to build the best
quality product, supply over the top service at installation, and provide exceptional
customer service after the sale of the product.
The total investment cost of proposed project including working capital is estimated at Birr
5,681,698.The project can create 9 job opportunity of that 7 male and 2 females and the
estimated income is 6,575,772.17 birr. The financial result indicates that the project will
generate profit beginning from the first year of operation. The result shows that the NPV
discounted at 10% of Birr 6,084,455.24.
In addition to this, the proposed project possesses wide range of economic and social benefits
such as increasing the level of investment, imports substitution, tax revenue and employment
creation. Hence, the project is technically feasible, financially and commercially viable as well
as socially and economically acceptable and the project is worth implementing.
2. Introduction
2.1. Economic back ground and potential of the country in relation to investment
Ethiopia has achieved remarkable economic growth rate which is over 6.3% per annum in recent
years. This growth was broad based with industry growing 7.3% .The share of industry in GDP
increasing slightly to 29.3% from 29 % a year ago. According to Government projections, real
GDP growth is projected to remain above 10% per annum over the impetus to growth. This
reflects a shift in the structure of economy toward developing manufacturing sector and
promoting imports substitution.
2.2. Growth & Drivers
The Ethiopian economy continued to register growth in 2020/21 amid the instability in northern
part of the country and the impact of COVID-19 pandemic. During the review fiscal year, real
GDP showed a 6.3 percent growth, slightly higher than the 6.1 percent growth last year.
The growth of real GDP was 3.7 percentage point lower than the average growth rate target set in
the Ten Years Development Plan, but significantly higher than the 3.4 percent growth estimate of
the Sub - Saharan African countries (IMF and WEO Update, June 2020).
The growth of real GDP in 2020/21 was attributed to the growth of industry (7.3 percent),
services (6.3 percent) and agriculture (5.5 percent). Nominal GDP per capita stood at USD
1,092, depicting a 1.1 percent marginal improvement relative to the previous year.
The growth of the Ethiopian economy is projected at 8.7 percent in 2021/22 compared to 4.9
percent growth forecast for the world and 3.8 percent for Sub- Saharan Africa economies (IMF,
WEO, and October 2021).
Table1. Industry Items
Industry Items 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Absolute 22.2 20.3 12.2 12.6 9.6 7.3
Growth
Contributi 4.7 4.8 3.1 3.6 2.6 2.1

Metal on to GDP
Industry growth
Contributi 58.8 47.3 40.8 39.5 42.4 33.6

on in %
2.3. Industry Overview
This ever blooming industry seems to be growing the fastest with recent years showing
maximum growth. The welding industry has been approximately stated to grow at the very least
6% per year. Conventional electric arc welding equipment and filler metals represent over two-
thirds of this total.
Habtom kflemariam metal welding plc Plans to become the leading provider of metal wilding
product and service in the area. This means always having the best and most efficient facilities,
processes, and people. To achieve this plan Habtom kflemariam metal welding plc is investing in
many ways that will pay off in competitive advantage for its customer.
The company over all stratagem will based on a continuous improvement process of setting
objective, measuring result, and providing feedback to facilities farther growth and process.
Habtom kflemariam metal welding plc is located in Addis Ababa, lafto sub city wereda. Habtom
kflemariam is highly experienced and qualified manager for over 15 years.
2. Background of the project
3.1. Location
Habtom kflemariam metal welding plc is located in Addis Ababa, lafto sub city wereda12
industry area. This strategically situated workshop make the company easy communicate with
customers and whole sales. Habtom kflemariam is highly experienced and qualified manager for
over 15 years. The company will plan to planted new work shop in 64 m2 land for medium
machine planting processing in own expense. Besides existing 64 m2 of land already establish
and start metal welding and fabrication in lafto industry site. Selection of metal welding and
molding processing site was considering its suitability to welding, market area and the
availability of the necessary utilities as well as due to accessibility to road and other basic
infrastructural facilities.
3.2. Infrastructure
The project area is the direct beneficiary of infrastructure like road and electric power, telephone,
and health center with near distance. Thus infrastructure and government policy support for
manufacturing industry the company aims to improve its production, by re-planting machineries.
3.3. SWOT Analysis
HABTOM KFLEMARYAM Metal Welding PLC believe will have the plan and capabilities to
take over the welding industry. We hope to build and maintain an extensive shop which can
handle all welding and fabrication issues. We have adequate plans to make our business the best
in the industry.
Strengths
 Outstanding reputation
 Quality well guarantees all of our work, using the highest quality materials available
and the most experienced fabricator available.
 Customer Care –will go extra time to make sure the customer is satisfied with the
service provided.
 Experience – Over 15 years in the metal welding business, HABTOM
KFLEMARYAM is a talented, experienced fabricator, with a strong work ethic.
 Investment in metal welding {industry sector} is increasing day by day and quality
production is a pre requisite in profitable livestock farming
Weaknesses
 Our weaknesses come from the lack of funding to grow the business. Grant money will
be used to purchase equipment, company expansion, create website, advertise, and hire
an employee.
Opportunities
 Growing market with a significant percentage of our target market still not knowing we
exist.
 Strategic alliances, offering sources for referrals and joint marketing activities to extend
our reach.
 Increasing sales opportunities beyond our “lake area” to include the many other lakes in
the city and nearby cities area.
Threats
 The only obstacle to our success at our company would be further downswings in the
economy of the country and world.
4. Production description
HABTOM KFLEMARYAM Metal Welding PLC primarily wield, fabricate and sell aluminum,
bronze and metal {Forming, Rolling, Tube Steel, Flat Plate, Angles, shaft, half bearing, counter
wick, safety stand, hospital bed production, farming wheel spare parts, Milling Sawing and
shearing, Plasma cutting Lathe work Drilling} in the lafto industry ,kera, saris area. We also plan
to fabricate and repair truck bodies, and perform aluminum and bronze repair, modify and
manufacturing jobs. All unused scrap metals will also be recycled by HABTOM
KFLEMARYAM Metal Welding PLC.
HABTOM KFLEMARYAM Metal Welding PLC provide service in (Tube Steel, Flat Plate,
Angles) Milling Sawing and shearing Plasma, cutting Lathe work, Drilling and punching. The
company has 15 years of experience working with the following materials: aluminum, bronze,
steel, brass, copper, and iron. As well as solid pieces, we are experienced in working with both
square and round tubing. We’ve assembled combinations of metal, aluminum, and bronze as
well.
HABTOM KFLEMARYAM Metal Welding PLC also plan to raise revenues through the
distribution of welding supplies, new wheel cart, hospital beds, tractor spears, and related items
that will be bought primarily by local contractors (and also individuals that do their own
welding). HABTOM KFLEMARYAM Metal Welding PLC expects gross margins of 50% on all
welding products sold in our company.
4.1. Production Program
The plant will work about 300 days per annul and double shifts of 16 hours per day. The welding
and fabrication plant will start its operation with 80% and minimum welding and innovation
production capacity in the first year and full capacity in the fourth year indicated in table 10.
5. MARKET ANALYSIS
Market Trend
Metal manufacturing industry statics
Estimated numbers of Ethiopian establishment 651

Number of people employed in the industry 197,719
Average employee for establishment 37
Average sale for establishment 1,081,982 birr
Source: National Bank of Ethiopia annual report
Metal market in Ethiopia is very expensive. Despite having a number of manufacturing

industries government still exporting metal and spears. For the next years there is continuing
need to reduce manufacturing costs and to improve productivity. The company also aims to
substitute imported spears and metal welding products. Via producing and using technology the
company will penetrate the market.
5.1. Our Target Market
HABTOM KFLEMARYAM Metal Welding PLC market segmentation scheme is fairly

straight forward, and focuses on the target markets of the kera , saris, lafto industry , adama city,
agricultural entities, and commercial and residential customers.
5.2. Our competitive advantage
It is a known fact that our Welding Company will continue to maintain a strong reputation for
producing reliable and cost-effective and efficient economical method. This makes our client to
trust our product and company. To achieve this, we have to invest in many ways that will pay off
in competitive advantages for our customers, by pre-job conferencing upon request and assisting
in the technical or conceptual design.
5.3. SALES AND MARKETING STRATEGY
Sources of Income
It is very important to note that the Ethiopian fabricated metal parts manufacturing industry
about 651 companies with about 1,081,982 billion in combined annual revenue. In Ethiopia
industry as a whole is fragmented: the largest 50 companies account for about 20 percent of
revenue.
Our company plans to maximize its revenues by wielding, fabricating and selling aluminum
works, Welding Forming, Rolling, Tube Steel, Flat Plate, Angles, shaft, half bearing, counter
wick, safety stand, hospital bed production, farming wheel spare parts, Milling Sawing and
shearing, Plasma cutting Lathe work Drilling and punch in) and production/processing wheel
cart around kera, saris and nearby cities.
Our company plan to raise gross margins of 50% revenues through the distribution of welding
supplies, gasses, and related items that will be bought primarily by local farmers, whole sellers
and retailers (and also individuals that do their own welding).
6. PLANT INPUTS AND UTILTIES
6.1. Plant Inputs
Addis Ababa city, where metal, aluminum and bronze is often in large supply there are a number
of sources of input. METC, akaki metal engineering, and privet metal supply industries allocate
near to our plant. Despite the existing of metal manufacturing industry, metal is still remaining
expensive. The required plant machinery and equipment are listed in Table 2. We hope DBE will
connect as with METC and akaki metal engineering.
Materials and inputs
A. Materials
Table2: The proposed Raw material required for the production is 2,100,000
Sr.no. Description Quantity kg Price(kg) Cost in Birr
First year Full First year Full capacity
capacity Full
1 Metal Normal 8,000kg 10,000kg 80 birr 640,000 1,100,000Birr
Hard 2,000kg 2,500kg 80 birr 160,000
Soft 1,000kg 1,250kg 80 birr 160,000
2 Aluminum 1,000 kg 1,250 kg 400 birr 400,000 500,000 Birr
3 Bronze 266.4 kg 333 kg 1,500 birr 399,600 500,000 Birr
Total 1,759,600 2,100,000
Birr
B. UTILITIES
Utilities required by the plant are electricity, fuel (for generator) and water for cooling melted
metal and sanitation. Annual utilities requirement of the plant and corresponding cost are
indicated in the below table
Table3: Annual Utilities Requirement and Cost
No No Description Qty Cost Birr No Description Qty No Description Qty

Description Cost Birr Cost Birr
Qty Cost Birr
1 Electricity (Kwh) 1.30 birr per 1,000 12,000
wh
2 Fuel 1,000 12,000
3 Regular telephone 1,560
4 Internet 1,000
Total 25,600
7. ENGINEERING
7.1. Machinery and Equipment
The required plant machinery and equipment are listed in Table 4. Total cost is estimated at
3,069,330 birr.
Table 4: Machinery and Equipment Requirement{ 15% for transport and initialization is add}
No Resource Unit Quantity Unit price Total price by birr

1 Machineries number
Medium size milling number 1 7,500 dollar 412,500 birr
machine
Shaper horizontal or number 1 16,675 dollar 917,125 birr
vertical machine
Lath machine number 1 31,631 dollar 1,739,705 birr
Total 55,806 dollar 3,069,330 birr
Contacts for Sales department for lath Machine:
https://m.alibaba.com
Tangzu hou Datong machine tool.co.ltd.
https://m.cncturningmachines.com
https://www.tsinfa.com
+8615318444939
8. MANPOWER AND TRAINING REQUIREMENT
8.1. Manpower Requirement
The total manpower required is 9 persons. Details of manpower and annual estimated labor cost
including the fringe benefits are given in Table 5. The total annual man power cost is estimated
at Birr 448,000.
Table 5: Manpower Requirement and Estimated Labor Cost
Sr.no. Job Title No. Education experience Salary/Wage (Birr)

month Annual
1 Project Manager 1 Metal engineering, 9 9,000 108,000
auto
2 Operational leader 1 Auto, mechanical 9 8,000 96,000
3 Guard 2 grade 10 2 3,400 40,800
4 Sales Person 1 Marketing(BA} 4 6,000 72,000
5 Machine Operators 3 Mechanics(Dip ,and 6 5,000 60,000
above
6 accountant 1 Accounting(BA) 2 6,000 72,000
7 total 9 37,400 448,000
8.2. Organization structure of the Project
In the diagram, there is finance and administration manager next to the general manager (the
owner) who is responsible to lead all the financial transaction and human resource of the farm.
The promotion and sales of products will be facilitated by the marketing unit. The production
unit leads the regular operation.
Owner {general manager}
Operational manager
Administrative Marketing Production Technical

department department department department
8.3. Business Implementation Schedule
Generally, it takes about 14 month’s period for obtaining loan, finalizing the suppliers and
construction of various civil structures and installation of plant and machinery. Educated and
skilled manpower will be recruited before machinery installation and commissioning to provide
first hand training to newly employed workers by the engineers installing the machineries and
make trial production together. Proper planning needs to be done so as to take up various
activities without any break. The activity wise schedule of implementation is to be given in the
project.
The project is expected to start commercial production in June 2025 while the remaining months
in 2023 and part of the months in 2024 are assumed to be the project's implementation period.
Detail planned schedule of the company is kept in the following here under.
Table 6: Implementation Plan
Item 2023 2024

Jul Aug Sep Oct Nov De Ju F M A M JU Jul Aug Sep Oct Nov
c an e
Project
Execution
Loan
processing
Machinery
purchasing
Machinery
Transportation
Plant
installation &
Commissionin
g
Recruitment
and training
Commercial
production &
marketing
9. Financial Feasibility
9.1. Basic Assumptions for Financial Analysis
9.1.1. Project Life
According to the implementation plan of the project, the implementation period allocated for the
entire project from the start to the final commissioning is one year and six monthes {18 months}.
With regard to operational life of the project, 10 Years is considered.
9.1.2. Repair and Maintenance Cost
The annual repair and maintenance cost of the plant is estimated based on the following rates.
Table 7: Repair and Maintenance Cost
Item 1-3 years 4-10 years Rate

Machinery and 1% 21,200 3% 63,600 of the total cost or Book value
equipment birr birr
Utilities 1% 256 3% 768 of the total cost or Book value
Total 21,256 64,368 1,024 birr
9.1.3. Depreciation
The following depreciation rates are applied to depreciate the assets of the project:
 Machinery and Equipment’s depreciation is 10%, linear to scrap Value
9.1.4. Working Capital
The working capital requirement of the project during operation is calculated on the basis of the
minimum days of coverage needed for the different elements of the working capital. Hence, the
minimum days are specified as follows:-
Table 8: Initial Working capital amount
Items Per /Years

Raw Material Consumption 1,759,600 Birr
Utilities 25,600 Birr
Wage and Salary 448,000 Birr
Repair & Maintenance 21,256 birr
Total Working Capital 2,254,456 Birr
9.1.5. Financing Considerations
The project planned to produce primarily wield metal products such as Forming, Rolling, Tube
Steel, Flat Plate, Angles, shaft, half bearing, counter wick, safety stand, hospital bed production,
farming wheel spare parts, Milling Sawing and shearing, Plasma cutting Lathe work Drilling by
mobilizing fund from equity and bank loan. The bank loan is proposed to cover 80% of the total
project establishment cost while the rest 20% will be covered from equity.
The following factors are taken into considerations with regard loan to be borrowed from
domestic banks
 Interest rate on loan borrowed is assumed to 13% which is line with the lending interest
rate of the investment bank in the country for prioritized projects.
 Grace period is assumed to be at least for 6 month period which is assumed during the
implementation period until the company enters the market
 The total loan is expected to be repaid in period of seven years
9.1.6. Credit Information
Based on the several assessments of the project, the project requires a loan of Birr 5,681,698Birr
Million from external sources. As the detail assessment results shows the loan will be settled
without any problem. The loan will be obtained from development bank of Ethiopia. The
principal repayment shall be made based on the amortization loan repayment system. An interest
rate of 13 % will be paid for the loan per annum on the outstanding balance payable on yearly
basis together with the principal repayment amount.
9.1.7. Revenue
After assessing the current market situation and period required to fully adopting the technology,
the project is proposed to start at 80% of its capacity in the initial year, 85% 2nd year, 95% third
year and 100% capacity is expected to be attained in the fourth.
9.2. Result of Financial Analysis
9.2.1. Total Investment Cost and Share of Each Investment Components
The total investment cost of the project is estimated at Birr 5,681,698 Birr million. From the total
investment cost the highest share 57% machine required is allocated to buy leas followed by
36%, Raw material 7% working capital.
Table 9: Proposed Financing Arrangement
Description Total Cost US Dollar Bank Loan US Dollar Owners’ US Dollar

in Birr (80) Equity(20)
Raw Material 2,100,000 38,182 1,680,000 30,546 420,000 7,636

Consumption Birr
Machines and 3,069,330 55,806 2,455,464 44,645 613,866 11,161
equipment’s birr dollar
Working capital 512,368 9,316 409,894 7,453 102,474 1,863
Total initial 5,681,698 103,304 4,545,358 82,644 1,136,340 20,660
investment capital
Percentage shares 100% 80% 20%
(%
9.2.2. Revenue Generation
Projected revenues based on assumptions inflation 10 % are given in the table below. However,
the actual situation may vary slightly.
Table 2:- Forecasted Annual Sales Revenue

Description Year 1 Year 2 Year 3 Year 4
product price per total sale production price per total sale produ price total sale prod price per total sale
ion in unit in unit unit ction per unit uctio unit
unit in n in
unit unit
Car teeth 1077 1000 1,,077,000 1145 1100 1,259,500 1,212 1210 1,466,520 1346 1331 1,791,526
Trust bearing 180 3,000 540,000 192 3,300 633,600 203 3,630 736,890 225 3993 898,425
Half bearings {3,
496 ,1500 744,000 527 1,650 869,550 558 1,815 1,012,770 620 2000 1,240,000
5…}
Shaft 240 3,000 720,000 255 3,300 841,500 270 3,630 980,100 300 3993 1,197,900
Counter wick 71 6,500 461,500 75 7,150 536,250 80 7,865 629,200 88 8652 761,376
Safety stand 322 1,500 483,000 342 1,650 564,300 362 1,815 657,030 402 2000 804,000
Wheel cart 111 9000 999,000 118 9,900 1,168,200 125 10,890 1,361,250 138 11,979 1,653,102
Hospital beds 130 15,000 1,950,000 138 16,500 2,277,000 146 18,150 2,649,900 162 19965 3,234,330
Agricultural
217 5,000 108,5000 231 5,500 1,270,500 244 6,050 1,476,200 271 6655 1,803,505
equipment
Connector 180 500 90000 192 550 105600 203 605 122815 225 670 150,750
bulon 300 600 180000 319 660 210540 338 726 245388 375 799 299,625
Sugarcane
15 13,000 195,000 16 14,300 228,800 17 15,730 267410 18 17,303 311,454
squeezing machine
Total 8,524,500 9,965,340 11,605,473 14,1459,933
ANNEXES
Annex 1. Production Plan

Table 1:- Estimated Yearly Production/per Unit
Description Yearly Estimated Production Levels( Unit)
Year 1 Year 2 Year 3 Year 4

Car teeth 1077 1144 1,212 1346
Trust bearing 180 192 203 225
Half bearings {3, 5…} 496 527 558 620
Shaft 240 255 270 300
Counter wick 70 75 80 88
Safety stand 153 249 362 402
Wheel cart 110 117 125 138
Hospital beds 130 138 146 162
Agricultural equipment 216 230 244 271
Connector 180 191 203 225
bulon 300 319 338 375
Sugarcane squeezing machine 14 15 17 18
Total
Table 2:- Forecasted Annual Sales Revenue

Description Year 1 Year 2 Year 3 Year 4
producti price per total sale produ price per total sale producti price per total sale produc price total sale
on in unit ction unit on in unit tion in per unit
unit in unit unit
unit
Car teeth 1077 1000 1,,077,000 1145 1100 1,259,500 1,212 1210 1,466,520 1346 1331 1,791,526
Trust bearing 180 3,000 540,000 192 3,300 633,600 203 3,630 736,890 225 3993 898,425
Half bearings {3,
496 ,1500 744,000 527 1,650 869,550 558 1,815 1,012,770 620 2000 1,240,000
5…}
shaft 240 3,000 720,000 255 3,300 841,500 270 3,630 980,100 300 3993 1,197,900
Counter wick 71 6,500 461,500 75 7,150 536,250 80 7,865 629,200 88 8652 761,376
Safety stand 322 1,500 483,000 342 1,650 564,300 362 1,815 657,030 402 2000 804,000
Wheel cart 111 9000 999,000 118 9,900 1,168,200 125 10,890 1,361,250 138 11,979 1,653,102
Hospital beds 130 15,000 1,950,000 138 16,500 2,277,000 146 18,150 2,649,900 162 19965 3,234,330
Agricultural
217 5,000 108,5000 231 5,500 1,270,500 244 6,050 1,476,200 271 6655 1,803,505
equipment
Connector 180 500 90000 192 550 105600 203 605 122815 225 670 150,750
bulon 300 600 180000 319 660 210540 338 726 245388 375 799 299,625
Sugarcane
15 13,000 195,000 16 14,300 228,800 17 15,730 267410 18 17,303 311,454
squeezing machine
Total 8,524.500 9.965.340 11.605,473 14,145993
Annex 2:- Operation cost

Operating years of the project
Description Year 1 Year 2 Year 3 Year4 Year5 Year6 Year7 Year8 Year9 Year10
A. Direct cost
Raw Material 1,679,600Bir 1,847,560 2,032,3 2,100,000 2,100,00 2,100,00 2,100,00 2,100,00 2,100,00 2,100,00
Cost
r Birr 16 Birr 0 Birr 0 Birr 0 Birr 0 Birr 0 Birr 0 Birr
Sub-total direct 1,679,600 1,847,560 2,032,3 2,100,000 2,100,00 2,100,00 2,100,00 2,100,00 2,100,00 2,100,00
cost
Birr Birr 16 Birr 0 Birr 0 Birr 0 Birr 0 Birr 0 Birr 0 Birr
Total Direct cost 1,679,600Bir 1,847,560 2,032,3 2,100,000 2,100,00 2,100,00 2,100,00 2,100,00 2,100,00 2,100,00
r Birr 16 Birr 0 Birr 0 Birr 0 Birr 0 Birr 0 Birr 0 Birr
B. Indirect
Wage and Salary 448,000 Birr 448,000 448,00 448,000 448,000 448,000 448,000 448,000 448,000 448,000
Birr 0 Birr Birr Birr Birr Birr Birr Birr Birr
Repair and 21,200 Birr 21,200 21,200 64,368 birr 64,368 64,368 64,368 64,368 64,368 64,368
Maintenance
Birr Birr birr birr birr birr birr birr
Insurance(5% of 15,347Birr 15,347Bir 15,347 15,347Birr 15,347Bi 15,347Bi 15,347Bi 15,347Bi 15,347Bi 15,347Bi
Machinery Cost)
r Birr rr rr rr rr rr rr
Utility 25,600 Birr 25,600 25,600 25,600 Birr 25,600 25,600 25,600 25,600 25,600 25,600
Birr Birr Birr Birr Birr Birr Birr Birr
Sub-total indirect 553315 553315 553315 553315 553315 553315
cost 510,147 510147 510147 553315
Total 2,542,4 2,653,31 2,653,31 2,653,31 2,653,31 2,653,31 2,653,31
Operating cost 2,189,747 2,357,707 63 2,653,315 5 5 5 5 5 5
Annex 3:- Income statement

Operating years of the project
Description
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Sales 7,828,855. 9,746,215.0 12,855,105.0 13,883,513.0 14,855,359.0 15,746,680.0 16,691,480. 17,526,054 18,402,356. 19,322,473.
Revenue 00 0 0 0 0 0 00 .00 00 00
Less:-
2,189,747. 2,357,707.0 2,653,315.0 2,653,315. 2,653,315.0 2,653,315.0
Operating 2,542,463.00 2,653,315.00 2,653,315.00 2,653,315.00
00 0 0 00 0 0
cost
5,639,108. 7,388,508.0 10,312,642.0 11,230,198.0 12,202,044.0 13,093,365.0 14,038,165. 14,872,739 15,749,041. 16,669,158.
Income
00 0 0 0 0 0 00 .00 00 00
Less:-
330,892.53 330,892.53 330,892.53 330,892.53 330,892.53 330,892.53 330,892.53
interest
Income
5,308,215. 7,057,615.4 10,899,305.4 11,871,151.4 12,762,472.4 13,707,272. 14,872,739 15,749,041. 16,669,158.
before 9,981,749.47
47 7 7 7 7 47 .00 00 00
Depreciation
Less:-
306,933.00 306,933.00 306,933.00 306,933.00 306,933.00 306,933.00 306,933.00 306,933.00 306,933.00 306,933.00
Depreciation
Profit /Loss 5,001,282. 6,750,682.4 10,592,372.4 11,564,218.4 12,455,539.4 13,400,339. 14,565,806 15,442,108. 16,362,225.
9,674,816.47
Before Tax 47 7 7 7 7 47 .00 00 00
Less: - Tax 1,732,448. 2,344,738.8 4,672,118.8 5,080,032. 5,386,737.8 5,708,778.7
3,368,185.76 3,689,330.36 4,029,476.46 4,341,438.81
(35%) 86 6 1 10 0 5
Net Profit or
3,268,833. 4,405,943.6 8,728,220.6 9,485,773. 10,055,370. 10,653,446.
Loss After 6,306,630.71 6,903,042.11 7,534,742.01 8,114,100.66
61 1 6 90 20 25
Tax
Annex 4 undiscounted cash flow

Project Years
Investment
Description Operating years of the project
year
0 1 2 3 4 5 6 7 8 9 10
INFLFOWS
Inflow Funds
Own Equity 1,136,340
Long-term Loan 4,545,358
Inflow Operation 7,828,855 9,746,215 12,855,105 13,883,513 14,855,359 15,746,680 16,691,480 17,526,054 18,402,356 19,322,473
TOTAL INFLOWS 5,681,698 7,828,855 9,746,215 12,855,105 13,883,513 14,855,359 15,746,680 16,691,480 17,526,054 18,402,356 19,322,473
OUTFLOWS
Investment cost 5,681,698 - - - - - - - - - -
Operating cost - 2,189,747 2,357,707 2,542,463 2,653,315 2,653,315 2,653,315 2,653,315 2,653,315 2,653,315 2,653,315
Financing Cost
Principal 457,513.22 510,127.24 568,791.87 634,202.94 707,136.28 788,456.95 778,029.61
Interest 330,892.53 330,892.53 330,892.53 330,892.53 330,892.53 330,892.53 330,892.53
1,732,448.8 2,344,738.8 3,368,185.7 3,689,330.3 4,029,476.4 4,341,438.8 5,080,032.1 5,386,737.8
Income Tax 4,672,118.81 5,708,778.75
6 6 6 6 6 1 0 0
TOTAL 4,710,601.6 5,543,465.6 6,810,333.1 7,307,740.8 7,720,820.2 8,114,103.2 7,733,347.1 8,040,052.8
5,681,698 8,434,355.95 8,362,093.75
OUTFLOWS 1 3 6 3 7 9 0 0
3,118,253.3 4,202,749.3 6,044,771.8 6,575,772.1 7,134,538.7 7,632,576.7 9,792,706.9 10,362,303. 10,960,379.2
NET CASH FLOW - 8,257,124.05
9 7 4 7 3 1 0 20 5
BEGINNING CASH 3,118,253.3 4,202,749.3 6,044,771.8 6,575,772.1 7,134,538.7 8,257,124.0 9,792,706.9 10,362,303.2
7,632,576.71
BALANCE 9 7 4 7 3 5 0 0
19,941,546.
ENDING CASH 3,118,253.3 7,321,002.7 13,365,774. 27,076,085. 34,708,662. 42,965,786.2 52,758,493. 63,120,796. 74,081,175.6
77
BALANCE 9 6 60 50 21 6 16 36 1

Businesses Proposal For Metal Welding in Ethiopia

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Businesses Proposal For Metal Welding in Ethiopia

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Feasibility study on metal welding

PROJECT OWNER:-HABTOM KFLEMARYAM PAULOS

ADDRESS: - NIFAS SILK LAFTO

PROJECT AREA: - LAFTO INDUSTRY AREA

1. EXCUTIVE SUMMARY ......................................................................................................................... 4

HABTOM KFLEMARYAM PAULOS Metal Welding PLC is owned by Ethiopian citizen

 Achieve sales revenue at an impressive increased year each year of operations.

 To develop an integrated system, that is supplementary to imported goods.

1.2. Mission and vision

2.2. Growth & Drivers

Table1. Industry Items

Industry Items 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

Contributi 4.7 4.8 3.1 3.6 2.6 2.1

Contributi 58.8 47.3 40.8 39.5 42.4 33.6

2.3. Industry Overview

2. Background of the project

3.3. SWOT Analysis

4.1. Production Program

Metal manufacturing industry statics

Estimated numbers of Ethiopian establishment 651

Metal market in Ethiopia is very expensive. Despite having a number of manufacturing

5.1. Our Target Market

HABTOM KFLEMARYAM Metal Welding PLC market segmentation scheme is fairly

5.2. Our competitive advantage

5.3. SALES AND MARKETING STRATEGY

6. PLANT INPUTS AND UTILTIES

6.1. Plant Inputs

Materials and inputs

Table3: Annual Utilities Requirement and Cost

No No Description Qty Cost Birr No Description Qty No Description Qty

7.1. Machinery and Equipment

No Resource Unit Quantity Unit price Total price by birr

Contacts for Sales department for lath Machine:

Tangzu hou Datong machine tool.co.ltd.

8. MANPOWER AND TRAINING REQUIREMENT

8.1. Manpower Requirement

Table 5: Manpower Requirement and Estimated Labor Cost

Sr.no. Job Title No. Education experience Salary/Wage (Birr)

8.2. Organization structure of the Project

Owner {general manager}

Administrative Marketing Production Technical

8.3. Business Implementation Schedule

Table 6: Implementation Plan

Item 2023 2024

9.1. Basic Assumptions for Financial Analysis

9.1.1. Project Life

9.1.2. Repair and Maintenance Cost

Table 7: Repair and Maintenance Cost

Item 1-3 years 4-10 years Rate

Total 21,256 64,368 1,024 birr

 Machinery and Equipment’s depreciation is 10%, linear to scrap Value

9.1.4. Working Capital

Table 8: Initial Working capital amount

Items Per /Years

9.1.5. Financing Considerations

9.1.6. Credit Information

9.2. Result of Financial Analysis

9.2.1. Total Investment Cost and Share of Each Investment Components

Table 9: Proposed Financing Arrangement

Description Total Cost US Dollar Bank Loan US Dollar Owners’ US Dollar

Raw Material 2,100,000 38,182 1,680,000 30,546 420,000 7,636

9.2.2. Revenue Generation

Table 2:- Forecasted Annual Sales Revenue