Professional Documents
Culture Documents
Project Proposal: For Bakery Plant Project To Be Implemented in Addis Ababa Ciyt
Project Proposal: For Bakery Plant Project To Be Implemented in Addis Ababa Ciyt
PROJECT PROPOSAL
FOR BAKERY PLANT
PROJECT TO BE IMPLEMENTED IN ADDIS
ABABA CIYT
July 2022
Addis Ababa, Ethiopia
Table of contents
I. Executive Summary
1. Introduction
1.1 Background …………………………………….…………………………….……….5
1.2 Brief History of thee Promoters …………………………………………….……...
…..6
2. General Market Study and Plant Capacity
2.1 Past Supply and Present Demand…………………………………………….………..6
2.1.1 Object of the project ……………………………………………………………....7
2.1.2 The Economic Significance of the project……………………………………...….7
2.1.3 Source of Revenue………………………………………………………………….7
2.1.4 Employment Opportunity………………………………………………………….8
2.1.5 Save the country foreign Exchange………………………………………………..8
2.1.6 Benefit for the local Community …………………………………………..……...8
2.2 Technology and Engineering ………...………………………..………………..……..9
2.2.1 Project Location ,Infrastructure and Economic Activities……….…………….…10
2.2.2 Economic Activities ……………………………………………..…..………..
…..11
2.2.3 Land requirement and land use plan……………………………………….....…11
2.2.4 Price and Distribution……………………………………………………………12
2.3 Plant Capacity and Production Programmer…………..……………………….....….12
2.3.1 Plant Capacity…………………………………………………………………….12
2.3.2 Production Programmed…………………………………………………...…….13
2.3.3 Materials and Inputs…………………………………………………...…………13
3. Organization Structure, Management and Manpower
3.1 Organizational Management duties and Responsibilities………………...………14
3.2 Man power Requirement ………………………………………………….......…..15
3.3 Organizational Structure……………………………………………………….….15
3.4 Man power salary Expense………………………………..………………….......17
4. Financial Requirement and Analysis
4.2.1. Underlying
Assumption………………………..........................................................22
4.2.2. Source of Fund ………………………………………………………………….....23
4.2.3. Loan Repayment Schedule
…………………………………………………….......24
4.2.4. Annual depreciation schedule of the fixed asset ( birr)…………………..............25
4.2.5. Balance Sheet (Beginning)………………………………………………….……..25
4.2.6. Income/Loss ………………………………………………………….....................25
4.2.7. Pay-Back Period……………………………………………………….…………...25
5.1 Financial Evaluation …………………………………………………….…...……………..26
I. EXECUTIVE SUMMARY
4 Nationality Ethiopian
50 employees
Employment On Permanent Basic :- 20 employment
8 On Temporary Basic :- 30 employment
Opportunity
1. INTRODUCTION
Bakery products, due to high nutrient value and affordability, are an item of huge consumption.
Due to the rapid population rise, the rising foreign influence, the emergence of a female working
population and the fluctuating eating habits of people, they have gained popularity among
people, contributing significantly to the growth trajectory of the bakery industry. A number of
healthy products have been launched in the bakery segment and are gaining popularity at a high
rate.
Awareness of high quality baked goods is on the rise. Good bread is a rare combination of
nutrition, convenience, and luxury. Today's consumer has less time to create wholesome,
handmade bread, but increasingly appreciates the nutritional and sensory benefits it provides.
Good bread provides fiber and carbohydrates in a convenient, low fat form that is portable and
delicious. Good bread never goes out of style
In this regard, the envisaged project is a newly established Ethiopian owned business founded by
Mr. Getachew Legesse Segni , who has been engaged in hotel services business for more than a
decade. The new bakery project has intended to produce and sale bread and pastry products of
high quality ingredients using modern production techniques. In addition the company’s
objective is to generate income for the company by participating actively in the business
environment with creating employment opportunities for surrounding community.
Currently, the project promoter has finalized researching the market and has concluded that the
intended business is an attractive investment. The planned production capacity of the project is
assumed initially based on two shifts with capacity utilization rate at 70%, 80%, 90%, and 100%
during 1st , 2nd , 3rd , and 4th-10th years respectively. Accordingly, it will have a total
production capacity for each item per annum as follow
Although there are many established competitors with in the vicinity where the underlying
project has planned to be located; it will possess an advantage that lies with the high quality of its
products due to specialization and artisan manufacturing. The main marketing focus will be of all
community inclusive and having an eye catching sign, the scent of fresh bread wafting out of the
storefront, and periodic printed advertisements
After establishing the operation, the company will explore the possibility of making takeout and
delivering wholesale bread and baked goods to area restaurants and specialty retailers will also
be considered. Hence, the market for the products under consideration is projected to grow
rapidly in the coming years. The products will be supplied to high demanding domestic market
and also will improve the supply of breads to and improve the lives of local community through
employment creation.
The Shawa bakery and Sheger bakery industry is one of the biggest sections in the country’s
processed bakery. Bakery products, which include bread and biscuits, form the major baked
foods accounting for over 82 per cent of the total bakery products produced in the country. It
enjoys a comparative advantage in manufacturing, with an abundant supply of primary
ingredients required by the industry, and is the third-largest biscuit manufacturing country (after
the United States and China). The bakery segment in India can be classified into the three broad
segments of bread, biscuits and cakes. India’s organized bakery sector produces about 1.3
million tonne of bakery products out of 3 million tonnes while the balance is produced by
unorganized, small-scale local manufacturers.
Despite the fact that there are many automatic and semi-automatic bread and biscuit
manufacturing units in India, many people still prefer fresh bread and other products from the
local bakery. The popular biscuit variants in India are glucose biscuits, Marie, cream biscuits,
crackers, digestive biscuits, cookies and milk biscuits.
As far as the Shawa bakery and Sheger bakery market is concerned, the shares of the branded
and organized sector and the unbranded and unorganized sectors are 60 per cent and 40 per cent
respectively. Shawa bakery and Sheger bakery products, especially biscuits, are in great demand
in developing countries.
Baked goods are expected to grow by constant value at a compound annual growth rate (CAGR)
of two per cent over the forecast period. The bakery industry in India has witnessed an annual
growth rate of more than 15 per cent during the past years. As the business and the industry
thrives, the challenges accruing out of it are also growing expediently. Like many industries,
retail bakeries see rising costs in fuel, healthcare and other expenditures cut into their bottom
lines and increase the costs of doing business. Driven by the evolving perception of bakery
products in India and the changing consumer preferences, the Shawa bakery and Sheger bakery
industry would touch levels of Rs. 500 billion in the next five years.
1.1 Background
The bakery industry plays an important role in industrial activities of food processing industry in
the country. In the modern times, it provides nutritious food to go large number of households in
cities. The Shawa bakery and Sheger Bakery sector consists of some of the foods like cakes,
breads, biscuits and chips etc. Since the development of new food technology, a variety of
products are prepared in the Bakery.. Based on its baking quality and other quality indices such
as gluten quality and content, color, moisture content, granular size of particles and others, flour
is divided into different grades. The basic application of flour is for bread making, cakes and
biscuits, and porridge at household level. Semolina, a product obtained by milling extra hard
(durum) wheat, is also used in pasta and macaroni making. The byproduct bran is used as animal
feed preparation. Biscuits are oven – baked food items with greater nutritive value than plain
bread of equal weight. They are classified as hard, soft and “batter” biscuits. They can be savory,
sweet, plain – baked, filled or coated (or a mixture of several of these options).
Biscuits satisfy special dietary needs, such as those for high fiber, protein or extra vitamins (as in
infant rusks). Biscuits also contain fat and often sugar, and are cut or molded into thin layers and
ked rapidly and thoroughly. If packed in a moisture proof material, biscuits can have a long shelf
life. Biscuit are largely consumed by children and teenagers.
Now a days, Bakery products are an item of mass consumption. In view of its low price and with
rapid growth and changing eating habits of people, bakery products have gained popularity
among masses of the sector overall. The growth rate of bakery products has been tremendous in
both urban and rural areas. Increased number of working women, Change in Shawa bakery and
Sheger bakery meal pattern, increased income, urbanization etc., has increased the demand for
bakery products In Ethiopia, the rural population used to consume flour made from cereals by
traditional means at home. Grain mills, however, are expanding deep into rural areas reducing
labour and time for women, replacing home-made flour consumption of industrially processed
flour, however, is still insignificant in rural Ethiopia.
Urban dwellers, on the other hand, consume more and more flour produced by flour mills thus
shifting to manufactured flour. Urban house-holds also consume food items like bread, biscuits
and cakes prepared at home or in bakeries and pastries from industrially processed flour.
The demand for wheat flour is met through both local production and imports. The apparent
consumption of flour, comprising both domestic production and Biscuits are very popular food
items. They are pleasant in taste and do not require cocking and hence ready to be served.
The local demand for biscuits is met both by domestic production and imports.
The main objective of this factory is to manufacture, cost effective, market oriented, client based
and quality baker and Others related for local market.
To utilize idle land resources of the PACS and make them business generation
entity.
The envisaged project deemed to contribute to the economic development of the nation in
general and the region in specific with following ways:
As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income
taxes, payroll tax and VAT are collected from undertaking business activities. Therefore, the
project will serve as sources of revenue for both the region and nation as a whole.
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 project will hire 50 (20 permanent and 30 on temporarily basis)
citizens.
All types of the envisioned products (Produced by the project) are mostly imported from abroad.
By producing in Ethiopia, the factory will save the foreign currency of the nation.
By minimizing the market demand and supply gab for these products, the factory will help to
reduce the nation’s foreign exchange cost to import these products. This will save the foreign
exchange resource of the nation.
This factory has positive externality in the country that will encourage the economic movement
of local economy. There will be economic relationship and transactions among different factors.
Wheat Intake and Pre-cleaning:- The major unit operations are dumping, conveying, weighing,
pre-cleaning and conveying to storage silos or transferring to the working bins of the cleaning
room.
Wheat Cleaning and Preparation: - The main unit operations involved are weighing,
screening, destining, impurity separation, ferromagnetic separation, scouring, aspiration,
dampening, tempering and ventilating.
Milling: - Major operations involved are weighing, breaking open, scalping, scratching,
detaching, sifting, purifying, milling (grounding), resifting and entoleting.
Packing and Dispatching: - The major operations involved are collection of flour streams and
bran, mixing and aerating, resifting, entoleting, packing, sewing, loading and dispatching. The
process does not release any pollutant to the environment.
An Investor has the right to hold land either on lease or rental basis in Addis Ababa. The
investment Board of the region with priority given to approve investments delivers land to an
investor within a short period of time through its channels. Urban land in these cities and towns
can also be given with the maximum price within a short period based on the interest and
capacity of the investor. The maximum and minimum annual lease charge ranges will largely
depends on the type of project location of the land and the size of land requested.
Most of the residents of the Country earn its living means from business activity, even though
the number of civil servants can’t be under mined. The location of the town on a get way to
many zonal towns facilitated by types, quantity of transactions being under taken, & different
types of private industries are allocated in the town. Bars, restaurants, hotels, pastry, recreation
centers and Industrialization area are flourishing as well as response to demand from the business
community. This is further facilitated by the number of daily arrivals from different enroot to
Addis Ababa.
The Promoter acquired a total of 5000 M2 areas of land the promoter had been using the land and
planned to use it as indicated in table below.
Table: Land Use Plan for bakery and related product Factory
SN Description Land Requirement (M2)
1 Baking Ovens 1000
2 Dough Mixers 1000
3 Cutter, Divider, Sheeter 1000
4 Rusk Making Machine 500
5 Flour Sifter, Sugar Pulverize, Biscuit Grinder 500
6 Trays, Scoops, SS Bins, Pellets, 150
7 Miscellaneous Equips: Small RO Plant, small
150
flour mill
8 Shopping area 200
Total 5000
annum. This capacity is proposed on the basis of a single shift of 8 hours per day and 320
working days per annum
Production capacity
The project starts supply the product after the establishment of the factory.
After the factory construction is completed the company will produce standard bakery,
chocolate, candy and chewing gum products. with regard to market potential, there is a wide
domestic and international market.
Sales Plan
The Revenue of the Project is assumed to be generated from the sales of the company’s products
as follows:
No Description Unit Yearly Unit Total Price
price/pieces
production
1 Bakery Pieces 1,080,000 2.50 birr 2,7,000,000
2 Chewing gum , “ 3,600,000 2.00 birr 7,200,000
Chocolate and
others
B. 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, Paved Road
Transportation, Drainage Facility.
Use modern manufacture, processing and technologies that will enhance the quality
of those products.
Produce quality product that will enable the center competent both in the domestic
and international market.
Use appropriate technology to manage its products.
Control on the quality of raw materials, inputs, quality of the product and also the
overall production process.
Produce products in least cost so that the profitability of the center is guaranteed.
Moreover, control over the quality of the final products
4. Commercial Department
Employees under each unit will be supervised by the department head that is accountable for the
general manager. General Manager is appointed by the owners.
Owner
General Manager
Executive
Secretary
Manufacturing
Department Admin & Finance
Commercial
Department
Department
The total number of manpower, manpower list, qualification, and salary and sex composition are
listed in the table below.
Description of Required qualification Unit Required Monthly Annual
manpower Number salary (Br.)
salary (Br.)
Project Manager Management No 1 3,000 36,000
Cashier Dip. Accounting “ 2 1500 36,000
Administration BA.in mgt “ 2 2,500 60,000
Store keeper Accounting “ 1 1500 18,000
Mechanics Technique “ 2 2000 48,000
Production Control Food and Niuterion “ 2 2500 60,000
Driver 3rdlevel license “ 2 1200 28,800
Total 50 88,200,000
The total cost of money that is required to estimated the envisaged Bakery Plant Factory is to be
birr 100,000,000.
Table Total Initial Investment Capital
No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 18,052,000 0.00
1.2 Machines and Equipment’s 22,000,000 0.00
1.3 Vehicles and Motors 130,000,000 0.00
1.4 Office Furniture and Equipment 0.00
5,000,000
Total Fixed Investment Cost 58,052,000 0.00
2 Operating Expense
2.1 Raw Materials Purchase and Products 23,128,000 0.00
2.2 Salary Expense 88,200,000 0.00
Total 22,000,000
4.1.3. Vehicles
SN Description
Qty Unit Price Total Price(Birr)
1 Pick Up
1
2,750,000 2,750,000
3 Mini Bus Service
1
1,550,000 1,550,000
Total
4,300,000 4,300,000
B. Depreciation
Building…………………………………………………………………………….5%
Machinery and Equipment ………………………………………………………..10%
Office Furniture……………………………………………………………………10%
Vehicles ………………………………………………………………………..…..20%
C. Working Capital
Accounts Receivable…………………………………………………………….30 days
Raw material Local …………………………………………………………..…..30 days
Work in progress…………………………………………………………………5 days
0 0 0 0 70,000,000
1 7,000,000 7,000,000 1,400,000 6,300,000
2 7,000,000 630,000 1,330,000 5,600,000
3 7,000,000 560,000 1,260,000 4,900,000
4 7,000,000 490,000 1,190,000 4,200,000
5 7,000,000 420,000 1,120,000 3,5,000,000
6 7,000,000 350,000 1,050,000 2,800,000
7 7,000,000 280,000 980,000 2,100,000
8 7,000,000 210,000 910,000 1,400,000
9 7,000,000 140,000 840,000 7,000,000
10 7,000,000 70,000 770,000 0
Amount of
Rate of
values of Capital Depreciation
No Capital Assets depreciation
assets (Br.) estimated
(%)
(Br.)
1 Land, Building and Construction 3,805,200 5 190,260
2 Machines and Equipments 4,200,000 15 630,000
3 Vehicles and Motors 130,000,000 15 195,000
4 Office Equipment 5,000,000 20 100,000
Total 9,805,200 1,115,260
Asset
Current Asset Value in Br
Cash 30,000,000
Inventory of raw material and input 70,000,000
Total Current Asset 100,000,000
Fixed Asset
Land, Building and Construction 18,052,000
Machineries and Equipment 22,000,000
Office Equipment 130,000,000
Vehicles 5,000,000
Total Fixed Asset 5,805,000
Total Asset 100,000,000
Liability
Account Payable 4,194,800
Owner Equity
Capital 30,000,000
Total Liability and Owners Equity 100,000,000
5. FINANCIAL EVALUATION
1. Profitability
According to the projected income statement, the project will start generating profit in the first
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 life-time of the project.
The income statement and the other indicators of profitability show that the project is viable.
2. Break-even Analysis
The break-even point of the project including cost of finance when it starts to operate at full
capacity ( year 3) is estimated by using income statement projection.
BE = Fixed Cost = 30%
Sales – Variable Cost 48-16
C. ECONOMIC BENEFITS
The project can create employment for 35 persons. In addition to supply of the domestic needs,
the project will generate Birr 18.38 million in terms of tax revenue. The establishment of such
factory will have a foreign exchange saving effect to the country by substituting the current
imports.