TABLE OF CONTENT

1. EXECUTIVE SUMMARY......................................................................................................1
1.1. Project Title.......................................................................................................................1
1.2. Promoter’s Profile.............................................................................................................1
1.3. Location of the Project......................................................................................................1
1.4. Project Goal and Purpose..................................................................................................1
1.5. Estimated Cost of the Project............................................................................................2
2. INTRODUCTION....................................................................................................................2
2.1. BACKGROUND OF THE PROJECT..............................................................................3
2.2. Support for the Project......................................................................................................4
3. THE SOLUTION OF THE PROJEC.......................................................................................5
4. OBJECTIVE OF THE PROJECT............................................................................................5
4.1. THE OVERALL OBJECTIVE.........................................................................................5
4.2. THE MAIN AND SPECIFIC OBJECTIVES...................................................................6
4.3. The Specific Objectives....................................................................................................6
5. PROJECT WORK PLAN.........................................................................................................6
5.1. Project Description............................................................................................................6
5.2. Products of the project......................................................................................................6
5.3. Production Process............................................................................................................7
5.4. Production Capacity..........................................................................................................7
5.5. Plant Capacity...................................................................................................................7
5.6. Milk Processing Equipment..............................................................................................8
5.7. Vehicles.............................................................................................................................8
5.8. Office Furniture and Equipment.......................................................................................8
5.9. Milking Cows....................................................................................................................8
5.10. Raw Milk......................................................................................................................8
5.11. Land /site development.................................................................................................8
5.12. Building........................................................................................................................9
5.13. Feed resources for dairy animals..................................................................................9
5.14. Availability of utilities, Infrastructures and Other service...........................................9
5.15. Credit Facilitation.......................................................................................................10

I
 5.16. Milk Market Linkage..................................................................................................10
5.17. Technology Transition................................................................................................10
5.18. Implementation Plan...................................................................................................11
6. PRODUCTION AND SALES PLAN....................................................................................11
7. Human Resources...................................................................................................................12
8. PROJECT SITE/ GEOGRAPHICAL LOCATION...............................................................13
9. PROPOSED BUDGET AND TIME FRAME OF THE PROJECT PROPOSAL.................13
9.1. INVESTMENT COST........................................................................................................13
9.2. Source of Finance................................................................................................................14
9.3. Project Duration...................................................................................................................14
9.4. Financial Analysis...............................................................................................................14
9.5. Key assumptions..................................................................................................................15
9.5.1. Production Related Assumptions........................................................................15
9.5.2. Cost Related Assumption.....................................................................................15
9.5.3. Revenue estimates.................................................................................................15
9.6. Proposed Sales Budget........................................................................................................16
9.7. Proposed Cost and Expense.................................................................................................16
10. PROJECT MONITORING AND EVALUATION............................................................16

II
 1. Executive Summary
1.Project Name Dairy farm and Milk Processing plant

2.Project Owners ARARSO DAGNE

3.Nationality Ethiopian

4.Address 251911270666

4.Project location Akaki woreda Town

5.Project Composition Different types agro-industry Dairy farm, and

Milk Processing and 0il seed processing product

6.Premises Required 20,000m2 (Own land)

7. Startup Capital For implementing this project, a total of

150,000,000.00Eth birr is required. From this 30%
45,000,000.000 birr will be covered by the promoter of
the project while the rest will be covered%70or
105,000,000.00 by financial institutions.

8.Employment Opportunity This project deemed to employ 320 permanent

employees of which 219 are unskilled while the rest are
skilled.
9. For The region/ Source of income for the regional government as
Country business income tax

2. INTRODUCTION
 2.1. Background of the project
The Ethiopian economy is highly dependent on agriculture. Despite being more
subsistence, agricultural production plays an important role in the economy. In the late
1980s, agriculture contributed about 45% of national GDP while the livestock sector,
despite large population size1, contributed about 12-16% of national GDP, 30-35% of
agricultural GDP, 15% of export earnings and 30% of agricultural employment.
Livestock contributes to the livelihoods of 60-70% of the Ethiopian population (Aklilu
2002; Ayele et al. 2003; Ejigu 2003) in one way or the other. Ethiopia holds large
potential for dairy development. In addition, the country enjoys diverse topographic
and climatic conditions favorable for dairying. These consist of a high central plateau
ranging from 1,800 to 3,000 meters above sea level, a rift valley that divides the
country from north to south with altitudes ranging from 1,000 to 1,800 meters above
sea level and lowland plain areas of less than 1,000 meters above sea level in altitude.
Depending on the altitude difference, temperature ranges from less than 100 C in alpine
areas to 350 C and more in lowland areas. Moreover, rainfall in most of the country is
adequate for crop and pasture production. The favorable climate throughout the country
supports use of improved, high-yielding animal breeds and offers a relatively disease-
free environment for livestock development.

The proposed project envisions the establishment of a new enterprise that will produce
high-quality; competitively-priced dairy products in Akaki woreda Town districting
East part of Ethiopia. The initiators have formed a separate legal entity called “Dairy
farm milk and Milk processing”. The dairy products will be sold under the stated brand
name. The initiators hope to attract an outside equity investor and use the invested
funds to purchase specialized, high-quality, imported processing equipment that will
enable them to produce and package world-class dairy products to be sold through both
wholesalers and retailers in the Ethiopia. The preparatory stage has been completed,
and practically all key aspects have been worked out by the initiators. The enterprise
requires a production site (building and land) and a specialized processing facility.
With the purchase and installation of processing equipment, and a complete renovation
of the production site, production can begin soon.
1. Location, Infrastructure and Premises

Among the highly growing Zones of Oromia regional state, Oromia Akaki
woreda Town are a famer association and found on nearly about 25kms from
Addis Ababa and the main road that runs from Addis Ababa to Adama, Harar
and Djibouti .
The project area has a well-developed infrastructure ei.e. it has road electricity
and water. Moreover, bank and other social services are in nearby area.
Therefore, for construction of this Dairy factory, a total of 20,000m 2of land is
required which is allocated for different purposes as follows.

No Description Land
Requirement
1 Production area 8,000
2 Raw material storage area 5000
3 Quality Control center 500
4 End product storage area 1,000
5 Office &Employees cafeteria 300
6 Waste accumulation area 1000
7 Water hole 1000
8 Free site land ,Parking and green area 3,200
Total 20000
3.1.3. PROFILE OF THE COMPANY
The country's huge untapped and unexploited resources along with investment friendly
environment mentioned above have resulted in attracting both domestic and Foreign Direct
Investment. Both Domestic and FDI (Foreign Direct Investment) has been increasing from
time to time. Foreign investors from different regions including Europe, the Middle East,
North America, Asia and Africa are investing in the country. The prompter of this project,
ARARSO DAGNE among these investors initiated by Stable political climate in the country
and decided to invest in dairy farm and milk processing production mainly for export market
at area mentioned above. Members of the company are currently resided in Ethiopia and they
have good educational back ground and fertile experiences in different business activities.

Generally, it is believed that with these good educational back ground and experiences in
different business activities, the company will achieve its stated objectives if proper
facilitation & after care services are provided by the concerned organs
3.1.4. Project objective

The primary objective of the proposed business venture is to produce and supply high quality
dairy farm and milk processing products which will meet national and international Standards
to satisfy ever increasing demand for pipes and fittings demand in Ethiopia.

Specifically:

 Produce and market dairy and milk products, that meets internationally accepted
standards
 Providing job opportunities at all levels of production and distribution,
 Provide excellent services with particular emphasis on quality and customer
satisfaction,
 Offer broad selections of dairy and milk processing products at competitive price and
capture key market share,
 Generate hard currency through exporting cattle and milk processing products to
neighboring countries
 Contribute for the improved health status of inhabitants of cities and towns by
providing product, which are the main component of food supply systems, with
reasonable cost,
 To be part of the revenue generation of the state in the form of taxation and other
forms
 To contribute in the growth of the country as a whole and the region in particular
 1.1.1. Value chain in the dairy industry
The main actors in the Ethiopian Dairy industry are per-urban, urban farmers,
cooperatives, unions ,individual collectors, processors, retailers, institutions and
cafe’s.
1.1.1.1. Direct Actors
a. Smallholders
b. .Urban and per-urban holders
c. Cooperatives
d. Unions
e. Individual collectors
f. Urban small holders
g. Commercial processors
h. Small scale processors
i. Cafe’s , Restaurants and shops
j. Household
 1.2. Market Demand Potential

EXPONENTIALLY SMOOTHED FORECAST OF THE DEMAND FOR

POWDERED MILK (BASED ON IMPORT DATA )
Levelyea Trend term
r

Import Term Forecast

2001 1,082.3 1,082.37 - -
7
2002 1,016.5 1023.11 -18 -
3
2003 1,631.1 1568.58 208 1005
6
2004 1,241.3 1294.82 15 1776
5
2005 1,149.4 1165.52 -43 1310
9
2006 1,215.3 1206.07 -9 1123
2
Source : Customs Authority, External Trade Statistics.
According to CSA 2005 report on house hold milk consumption, the total
consumption requirement of households for milk, butter, cheese, and yoghurt is
526761355 liters, 21357750 kg, 30093056 kg, and 15946658 kg per annum,
respectively. Given a total population of 55954227 at the time the survey was
conducted, the per capita consumption of milk, butter, cheese, and yoghurt is
computed to be 9.4 liters, 0.4 kg, 0.5 kg, and 0.3 kg, respectively.
1.2.1. Demand Projection
PROJECTED DEMAND FOR MILK AND MILK PRODUCTS
Year Milk (Liter) Butter (Kg) Cheese (Kg)

2007 12577200 535200 669000

2008 13331832 567312 709140
2009 14131742 601351 751688
2010 14979646 637432 796790
2011 15878425 675678 844597
2012 16831131 716218 895273
2013 17840999 759191 948989
2014 18911458 804743 1005929
 2015 20046146 853027 1066284
2016 21248915 904209 1130261
2017 22523850 958462 1198077
2018 23875281 1015969 1269962
2019 25307797 1076928 1346159
2020 26826265 1141543 1426929
2021 28435841 1210036 1512545
2022 30141992 1282638 1603297

4. 2.2. Pricing, Distribution and Marketing Strategies

Milk, butter, cheese, and yoghurt are retailed in super markets at Birr 10per liter,
Birr 70 per kg, Birr 30 per kg and Birr 11 per liter, respectively. Allowing 30%
for retail margin, a price of Birr 5 per liter, Birr 53.10 per kg, Birr40.77 per kg,
and Birr 10.46 per liter, respectively, is recommended for milk, butter, cheese
and yoghurt to be produced by the envisaged plant. Distribution of the products
could be undertaken through small retail outlets as well as supermarkets and
catering establishments.

4.2.3. Production Technology and Process

4.2.3.1. Raw Materials

The average composition of cow's milk is 87.2% water, 3.7% milk fat, 3.5% protein,
4.9% lactose, and 0.7% ash. This composition varies from cow to cow and breed
to breed.

4.2.3.2. Production flow

a. Collecting
b. Separating
c. Fortifying;
d. Pasteurizing
e. Homogenizing;-
f. Packaging
g. Cleaning;-
4.2.3.3. Production Process

Processing of raw milk mainly involves heat treatment operation usually known as
pasteurization and sterilization.

The details of the production processes are stated as follows.

a) Butter Production
Whole milk is partially or totally separated to produce standardized whole milk
with 3.25% milk fat, low fat milks, 1-2% milk fat, and skim milk. After separation,

o
cream is held in stainless steel tanks and refrigerated at (4-7 C).

The separated cream is pasteurized in order to destroy bacteria. Following

pasteurization, rapid cooling is conducted to facilitate the formation of butter by
a churning process. By continuous churning, the entering will be pasteurized and
tempered cream is agitated vigorously by beater bars. This action causes stripping
of the fat globule membrane and aggregation of the fat into chunks. Finally, a
continuous ribbon of yellow butter streams from the end of the continuous churn.
Butter as a product drops into a hopper, where it is transferred to packing
machinery.
b) Cheese Production
Cheese is made from pasteurized skim milk, and in form of discrete particles
classified as small or large curd. A curd forms when the increasing lactic acid of
milk during fermentation attains the isoclectric point of casein at pH
4.6. This soft curd additionally contains lactose, salt and water. Latter, the
 o o
curd matrix is cut and cooked to about 126 F (52 C). Separation of whey from
the curd is rapid, and is followed by two or three water washings at warm to chill
temperatures. Washing removes whey from residues and acts as a cooking
medium. After drainage of the last wash water, the chilled curd is blended with a
viscous, salted cream dressing to give 4.2% fat and 1% salt, and is packaged.

1.3. Plant Capacity

Based on the market study, capital requirement and minimum economy of scale, the
milk processing plant will have a capacity of 500,000 liters of raw milk per annum
and producing 400,000 liters of pasteurized milk, 10,000 kg of butter, 15,000 kg
of cheese and 20,000 kg of yogurt at full operation capacity. The envisaged plant
is expected to operate in double shifts of 8 hours each a day for a total of 300
working days a year.
4.4. Production Programme
The annual production programmed is formulated based on the proposed plant
capacity. Considering the problem of market penetration and skill development of
production at the initial stage of the production period, it is planned that the plant
will start production at 75% and 85% of its rated capacity in the first and second
year of production, respectively. Full production shall be attained in the third
year and then after.
PRODUCTION PROGRAMME
S/ Description Unit Production year
no 2020 2021 2023-25
1 Milk Litter 320,00 360,000 420,000
0
2 Butter Kg 8,000 9,000 11,000
3 Cheese Kg 11,000 12,000 16,000
4 Yogurt Kg 645,00 903,000 1,083,60
0 0
5 Other by 5,000 6,000 7,000
Product
 Capacity 70 80 100

4.5. Sales Program

Year Description Unit Qty Unit Total cost
cost
2020 Milk Litter 320,000 10 13,200,000
Butter Kg 8,000 80 640,000
Cheese Kg 10,000 60 600,000
Yogurt Kg 645,000 .30 193,500
Other by 5,000 .40 2,000
product
2021 Total 14,635,500
Milk Litter 330,000 10 3,300,000
Butter Kg 9,000 80 640,000
Cheese Kg 12,000 50 600,000
Yogurt Kg 903,000 .65 586,950
Other by 6,000 .40 2,400
product
2023- Total 25,129,350
25
Milk Litter 360,000 12 4,320,000
Butter Kg 11,000 90 990,000
Cheese Kg 16,000 45 720,000
Yogurt Kg 1,083,600 .65 704,340
Other by 7,000 .40 2,800
product
Total 36,737,140
2. ORGANIZATIONAL STRUCTURE

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. 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.

CEO

Internal Auditing &

Inspection
General Manager
Advisor

Production
Department Marketing Departme nt General Administration
Department
 As clearly shown in the organizational structure, the integrated project center
has CEO three Departments under the general manager, Advisor and the
internal Auditing and Inspection. These departments are the Production
Department, The Marketing Department, and The General Service Department.
Under each Department there are different sections which are undertaking different
activities

Table’s manpower requirement

No. Description No. of Persons Qualification

1 General Manager 2 BA
2 Accountant 10 BA
3 Cashier 4 10 grade
th

4 Secretary 4 Dip
5 Storekeeper 14 10 grade
th

6 Salesperson/Purchaser 15 Dip
7 Cleaner and Messenger 25 8 grade
th

8 Guards 4 4th grade

9 Production Head 2 BA
10 Chemist 4 BSC
11 Operator technicians 8 BSC
12 Assistant Operators 4 BSC
13 Milk men 27 Unskilled
14 Temporary employee 100 -
Total 223
3. FINANCIAL ANAYSIS
The financial resource is a prime resource for undertaking any activities. Hence
for implementing this pervious project Capital total of150,000,000.00 Eth birr
required. From this 30% or 45,000,000.00birr will be covered by the promoter of
the project while the rest%70or 105,000,000.00birr will be covered by financial
institutions. Therefore, the said amount of finance is needed for undertaking the
following
3.1. Project Investment

The total cost of the project is 150,000,000 birr, out of which the capital cost of
the project is 72,182,930 birr for purchasing the animals and constructing the
building and the rest is used to meet the working capital requirement.

 Table 5-1 Project Costs (Birr)

Account Head Total Cost (birr)

Capital Cost
Land leaze 3,000,000
Building/Infrastructure 20,388,500
Animals 40,000,000
Machinery & equipment 7,573,680
Furniture and Fixtures 80,000
Office vehicles 615,000
Office equipment 75,750
Pre-operating costs 450,000
Total Capital Cost 72,182,930
Working Capital
Raw material Inventory 9,688,196
Land Lease For fodder 1,320,000
Cash in hand 80,000
Total Working Capital 11,088,196
 Total Project Cost 83,271,126

The proposed pre-feasibility is based on the assumption of 50:50 debt equity

ratio. However, this composition of debt and equity can be changed as per the
requirement of the investor.

Table 5-2 Project Financing

Debt 70% 105,000,000
Equity 30% 45,000,000
Total project Investment 75,671,126

Table 5-3 Project Economics

Viability Project
IRR (%) 53%
NPV 311,358,063
Pay Back Period (year) 3.26

Table 8-4 Farm Equipment Cost

Description Unit Cost Animals per Total Cost

equipment
Maize Cutter 450,000 300 450,000
Milking machine 3,823,680 300 3,823,680
Milk Cooling Unit - 2300 Ltr 700,000 150 1,400,000
Generator (25 KVA) 500,000 1 500,000
Submersible pump 350,000 1 350,000
Tractor 600,000 1,000 600,000
Heavy Duty Ventilation Fans 300,000 300 300,000
Trolly 150,000 500 150,000
Total Cost 7,573,680
8.4.1. Breeds of Cross bred and Exotic
The Holstein cow originated in Europe. The major historical development of this
breed occurred in Netherland and more specifically in the two northern provinces of
North Holland and Friesland. Holsteins are most quickly recognized by their
distinctive color markings and outstanding milk production. Holsteins are large,
stylish animals with color patterns of black and white or red and white. Holstein
heifers can be bred at 15 months of age, when they weigh about 325-400 kgs body
weight between 24 and 27 months of age. Holstein gestation is approximately nine
months. The normal productive life of a Holstein is Nineyears.
It has now been extensively tested in the tropical and sub-tropical areas of Australia.
Milk quality is good - protein level is 3.4 percent and butterfat is approximately four
percent.
These animals are available at an average price of $2,400 per animal HOSTEIN.
The photos of different breeds are given in annexure 4.

6.1
Animal Markets

Animal market, Government and private livestock farms are the main sources
for purchasing milk animals. There are different contractors available in the
markets that help locating the proper animals. These contractors work on
commission basis and the commission rate charged may vary from 1-2% of the
animal price.
 Feed
8.6.1. Ration for DairyAnimals

The ration is allowance of nutritionally balanced feed in 24 hours. It includes

dry matter and concentrate to increase animal productivity. Wheat straw2 is
also used as dry roughage along with green fodder. About 1 kg of Total mix
ration on dry matter is required for the production of 2 liters of milk. These feed
ingredients when mixed according to feed formula will provide adequate energy
according to energy and protein requirements of animal inproduction.

 Table 8-5 Dry matter for Cow Feed

Dry matter description % of Total Unit Cost birr
/Kg
Silage 65% 5
Concentrate* 35% 18

8.6.2. Mineral Mixture

This is used as a feed supplement. It includes a mix of minerals (magnesium,

iron, sodium and salts). Mineral mixtures are good source of energy and increase
the animal productivity to givemilk.

8.6.3. Fodder Crop

Fodder is grown at the land, which is acquired on lease or owned by the

entrepreneur. Due to increased demand, improved forage crops such as multi-
cut oats, berseem, lucerne, Sorghum- Sudan grass hybrids, mott grass,
sorghum, maize and millet have been developed. The fodder yield (except multi
cut Mott Grass which yield 100-150 tones/ acre in 4 to 6 cuttings per year)
varies between 10 tons to 40 tons per acre depending upon the fertility of land,
quality of seed and application of fertilizer.
  Table 8-6 Types of Dry & Green roughage

DryRoughage Green Roughage

Su mmerFodder Winter Fodder

WheatStraw Maize Bar seem

RiceStraw Sorghum Alfalfa (Lucerne)

OatStraw Millet Oats

Maize/SorghumStubble Mott Grass Rye Grass

2
A byproduct of wheat harvesting used as dry roughage for livestock and dairy animals
Sugarcane Baggass Sadabahar Sugarcane tops
Cotton Seed Hulls Guar
Corn Cobs
(Reference: Livestock & Dairy Development Department, Lahore)
(Reference: FAO Statistical Databases)

8.6.4. Daily Fodder Requirement

There is no fixed fodder requirement for the animals but a rule of thumb says
that an animal needs daily fodder equal to 9%-10% of its body weight (3% of live
body weight on Dry Matter Basis). According to estimates, consumes 50-55 kg
fodder daily while cow consumes about 40-45 kg.

8.6.5. Wheat Straw (

Wheat straw is major, typical, and very popular dry roughage. It is always chaffed,
and is the main or even only major dry roughage used on almost all the dairies.
Traditional threshing methods break the straw into short pieces, bhoosa, and
modern mechanical threshers have been designed to break the straw.
Table 8-7 Daily Feed Requirement of Cow & Calf
Animal Daily Requirement Cost/kg Amount
(kg)
Cow
Dry 11 5 55
Concentrate 6 18 108
Total 163
Calf older than 1
Year
Dry 7 5 35
Concentrate 2.5 18 45
Total 80
Calf younger than 1 year
Dry 3 5 15
Concentrate 2 18 36
Total 51

6.2 Medication

8.6.1. Vaccination &Medicine

Vaccination & medicine is required to prevent any disease outbreak in the

animal herd. Each new animal will be vaccinated before entering the farm. It
will cost birr. 2,000 for each cow per year. Vaccines are produced at Veterinary
Research Institute,
9.1. Milk Composition

Buffalo milk contains less water, more total solids, more fat, slightly more lactose,
and more protein than cow's milk. Cow's milk contains 12-14% total solids and
the butterfat content is usually between 3% and 5%. Phospholipids are lower but
cholesterol and saturated fatty acids are lower in cow’s milk. Normally the
protein in cow’s milk contains less casein and slightly less albumin and globulin.
The mineral content of cow's milk is nearly the same as that of buffalo
milk except for phosphorus, which
occurs in roughly twice the amount in buffalo milk.

Cow’s milk enriches the yellow pigment carotene, precursor for vitamin A, and
its yellowness is frequently used to differentiate it from buffalo’s milk in the
market. Despite the absence of carotene, the vitamin A content in buffalo milk
is almost as high as that of cow's milk. Apparently the buffalo converts the
carotene in it's diet directly to vitamin A. The two milks are similar in B
complex vitamins and vitamin C, but buffalo milk tends to be lower in
riboflavin.

9.2. Breeding Stock Development

The proposed farmer will raise breeding stock containing future dairy animals at
his own farm by selecting good off springs of high producers. Instead of breading
bull the Insemination will be done Artificial Insemination of imported Semen of
breeding bulls. The first generation (F 1) will be capable of giving milk after 2
years in cows.

9.3. Increase in Milk Yield

The milk yield will be improved as a result of appropriate breeding systems

discussed earlier. Low yielding animals are sold in the market. On an average,
cows are productive for 9 to 10 years.

9.4. Sale Price

In this feasibility study, it is assumed that all the milk will be sold to milk
processing companies, households& milk shops etc.

9.5. Evening Milk

Milk can be stored in a milk chiller on 14.5% TS at the farm if milk collection
is not possible in the evening.

9.6. Farm Revenues

Farm revenue will increase with the passage of time, as the milk
production will increase with the growth in herd size as well as its quality.

9.7. Male Calves

Male calves will be sold at the farm sooner after birth for birr 10,000 per
animal. They can also be reared in separately for beef production.
 FINANCIAL
ANALYSIS
6.3 IncomeStatement

Statement Summaries SMEDA

Income Statement

birr in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenue 42,507,520 56,594,1 82,061,0 105,760, 134,530, 173,770, 226,301, 297,867, 395,025, 527,219,
20 08 628 849 599 735 615 021 074
Cost of goods sold 21,057,6 22,457,0 25,879,9 31,444,2 39,545,6 50,554,8 64,795,6 83,584,5 107,828,
15 76 66 31 33 91 00 17 428
21,002,390
GrossP rofit 35,536,5 59,603,9 79,880,6 103,086, 134,224, 175,746, 233,072, 311,440, 419,390,
05 32 62 618 966 844 015 504 645
21,505,130

General administration & selling

expenses 1,356,000 1,488,02 1,734,05 2,013,88 2,453,57 3,761,80 4,421,42 5,334,78 6,560,72 9,331,64
Administration expense 2 1 2 4 2 0 6 9 7
Rental expense - - - - - - - - - -
Office expenses (stationary, etc.) 27,120 29,760 34,681 40,278 49,071 75,236 88,428 106,696 131,215 186,633
Professional fees (legal, audit, 208,138 273,181 389,217 503,693 641,789 830,401 1,083,83 1,428,82 1,899,56 2,539,40
etc.) 8 3 6 2

2
Depreciation expense 1,604,658 1,604,65 1,604,65 2,676,91 2,676,91 2,676,91 5,088,46 5,098,73 5,098,73 7,065,13
8 8 0 0 0 4 0 0 4
Amortization expense 90,000 90,000 90,000 90,000 90,000 - - - - -
Miscellaneous expense - - - - - - - - - -
Subtotal 3,285,916 3,485,62 3,852,60 5,324,76 5,911,34 7,344,34 10,682,1 11,969,0 13,690,2 19,122,8
2 8 3 4 9 51 35 40 16
Operating Income 18,219,214 32,050,8 55,751,3 74,555,9 97,175,2 126,880, 165,064, 221,102, 297,750, 400,267,
83 24 00 74 618 693 980 264 829

Earnings Before Interest & 18,536,450 33,202,4 59,110,8 81,810,3 110,042, 148,161, 165,102, 270,930, 369,865, 517,903,
Taxes 13 15 79 257 014 568 162 946 048

Interest expense 6,317,085 5,308,57 4,128,74 2,748,52 1,133,85 - - - - -

0 9 6 9
Earnings Before Tax 12,219,364 27,893,8 54,982,0 79,061,8 108,908, 148,161, 165,102, 270,930, 369,865, 517,903,
43 66 53 398 014 568 162 946 048

Taxable earnings for the year 10,912,564 25,882,8 52,711,1 76,084,0 105,133, 143,268, 192,128, 262,546, 358,753, 503,031,
23 67 50 040 529 109 539 787 635
Tax 2,728,141 6,470,70 13,177,7 19,021,0 26,283,2 35,817,1 48,032,0 65,636,6 89,688,4 125,757,
6 92 12 60 32 27 35 47 909
NET PROFIT/(LOSS) AFTER 9,491,223 21,423,1 41,804,2 60,040,8 82,625,1 112,343, 117,070, 205,293, 280,177, 392,145,
TAX 38 74 41 38 882 541 528 499 139

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 6.4 Balance Sheet Statement

Statement SMED
A
Summaries
Balance Sheet

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Assets
Current assets
Cash & Bank 1,400,00 4,944,713 18,085,8 49,103, 95,985, 161,354 264,253 403,805 592,737, 849,575 1,302,937
0 79 934 655 ,022 ,904 ,823 821 ,812 ,580
Raw material inventory 9,688,195 10,100, 11,135,6 13,235,2 16,692,9 21,836,0 29,049,0 38,666,3 51,727,5 69,038,2 -
Pre-paid annual land - 554 38 71 27 14 64 16 78 83 -
lease - - - - - - - - -
Total Current Assets 11,088,1 15,045,26 29,221,5 62,339, 112,678 183,190 293,302 442,472 644,465, 918,614 1,302,937
95 7 17 204 ,582 ,036 ,968 ,139 399 ,095 ,580

Fixed
assets 3,000,00 3,000,000 3,000,0 3,000,0 3,000,0 3,000,0 3,000,0 3,000,0 3,000,00 3,000,0 3,000,000
Land 0 00 00 00 00 00 00 0 00
Building/
20,388,5 19,369,07 18,349,6 28,173, 26,612, 25,050, 57,255, 54,005, 50,755,770,253, 65,866,42
Infrastructure 00 5 50 965 353 741 578 644 09 760 6
Animals 40,000,0 40,000,00 40,000,0 40,000, 40,000, 40,000, 40,000, 40,000, 40,000,0 40,000, 40,000,00
00 0 00 000 000 000 000 000 00 000 0
Revaluation Surplus/ - 1,600,000 9,848,0 16,799, 26,585, 38,274, 53,121, 71,711, 95,175,5 124,593 (39,200,0

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 (loss) 00 000 000 000 000 850 00 ,604 00)
Net value of animals 40,000,0 41,600,00 49,848,0 56,799, 66,585, 78,274, 93,121, 111,711 135,175, 164,593 800,000
00 0 00 000 000 000 000 ,850 500 ,604
Machinery & 7,573,68 7,068,768 6,563,8 14,009, 12,974, 11,939, 21,753, 19,995, 18,237,0 28,913, 26,326,68
equipment 0 56 912 936 959 455 247 39 893 0
Total Fixed Assets 71,732,9 71,728,27 78,371,6 102,512 109,621 118,633 175,418 189,068 207,433, 266,936 96,077,45
30 2 13 ,663 ,753 ,843 ,855 ,856 776 ,195 8

Intangible assets
Pre-operation costs 450,000 360,000 270,000 180,000 90,000 - - - - - -
Training costs - - - - - - - - - - -
Total Intangible Assets 450,000 360,000 270,000 180,000 90,000 - - - - - -
TOTAL ASSETS 83,271,125 87,133,538 107,863,130 165,031,868 222,390,335 301,823,880
468,721,823 631,540,995 851,899,175 1,185,550,2901,399,015,038

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable - - - - - - - - - - -

Total Curren tLiabilities - - - - - - - - - - -

Other liabilities
Long term debt 35,698, 28,752,2 20,626,5 11,120,6 - - - - - -
177 77 55 11
105,000,000
Total Long Term Liabilities
35,713, 28,783,0 20,672,6 11,182,1 76,875 61,500 46,125 30,750 15,375 -
552 27 80 11
105,000,000

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Shareholder
s' equity 105,000, 105,000 105,000, 60,430,2 60,430,2 60,430, 105,045 105,192 105,192 140,375, 140,375,8
Paid-up 000 ,000 000 71 71 271 ,193 ,808 ,808 854 54
Capital
Gain/ (Loss) on - 1,600,00 9,848,00 16,799,0 26,585,0 38,274, 53,121, 71,711, 95,175, 124,593, (39,200,0
revaluation of anim 0 0 00 00 000 000 850 500 604 00)
Retained earnings - 8,184,42 27,596,5 67,129,9 124,192 203,042 310,494 454,590 651,500 920,565, 1,297,839
3 41 16 ,953 ,734 ,131 ,212 ,117 457 ,184
Total Equity 105,000, 51,419, 79,080,1 144,359 211,208 301,747 468,660 631,494 851,868 1,185,53 1,399,015
000 986 03 ,187 ,224 ,005 ,323 ,870 ,425 4,915 ,038
TOTAL CAPITAL AND 83,271,1 87,133, 107,863, 165,031 222,390 301,823 468,721 631,540 851,899 1,185,55 1,399,015
LIABILITI 25 538 130 ,868 ,335 ,880 ,823 ,995 ,175 0,290 ,038

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 6.5 Cash Flow Statement

Statement Summaries SMEDA

Cash Flow Statement

Birr in actuals Year0 Year1 Year2 Year 3 Year 4 Year5 Year6 Year7 Year 8 Year9 Year10

Operating activities
Net profit - 8,184,42 19,412,1 39,533, 57,063, 78,849, 107,451 144,096, 196,909, 269,065,3 377,273,
3 18 375 037 780 ,397 082 905 40 726
Add: depreciation - 1,604,65 1,604,65 1,604,6 2,676,9 2,676,9 2,676,9 5,088,46 5,098,73 5,098,730 7,065,13
Expense 8 8 58 10 10 10 4 0 4
amortization expense - 90,000 90,000 90,000 90,000 90,000 - - - - -
Raw material inventory (9,688,195 (412,359) (1,035,08 (2,099,6 (3,457,6 (5,143,0 (7,213,0 (9,617,2 (13,061, (17,310,7 69,038,2
) 5) 32) 56) 87) 50) 52) 262) 05) 83
Cash provided by (9,688,195 9,482,09 20,087,0 39,143, 56,387, 76,488, 102,899 139,551, 188,931, 256,837,9 453,361,
operations ) 8 66 776 666 978 ,882 919 998 90 768

Financing activities
Change in long term debt
Change in short term
debt
Add: land lease expense
Land leasepayment
Issuance of shares
105,000,000 (5,937,385) (6,945,901) (8,125,721) (9,505,945)
(11,120,611) - - - - -
- - - - - - - - - - -
- - - - - - - - - - -
- - - - - - - - - - -
105,000 - - 18,794, - - 44,614, 147,615 - 35,183,04 -

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 ,000 709 922 6
Cash provided by / (used 83,271, (5,937,385 (6,945,90 10,668, (9,505,94 (11,120, 44,614, 147,615 - 35,183,04 -
for) financing 125 ) 1) 987 5) 611) 922 6

Investing activities
Capital expenditure (72,182, - - (18,794, - - (44,614, (147,615) - (35,183,04 -
930) 709) 922) 6)
Cash (used for) / (72,182, - - (18,794, - - (44,614, (147,615) - (35,183,04 -
provided by investing 930) 709) 922) 6)

NET CASH 1,400,0 3,544,713 13,141,16 31,018, 46,881,7 65,368, 102,899 139,551, 188,931,9 256,837,9 453,361,
00 6 055 21 367 ,882 919 98 90 768

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 Year 1 Yea Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year Year 11
r2 10
1 2 3 4 5 6 7 8 9 10 11
Animals
Average # of cows 198 18 2 24 27 32 38 46 56 68 83
9 0 0 8 7 8 5 2 3 6
4
# of lactating cows 158 15 1 19 22 26 31 37 45 54 66
1 6 2 2 2 0 2 0 6 9
3
# of calve 176 16 1 12 14 17 21 26 32 38 47
4 4 7 0 0 5 4 3 8 2
3
Calve older than one year 0 88 8 99 11 13 15 18 22 27 33
(Cows)/Heifer 0 3 3 6 7 3 3 1
Total animals older then 198 27 2 33 39 46 54 65 78 95 11
one year 7 8 9 1 0 4 2 5 6 67
4
Total Animals 374 44 4 46 53 63 75 91 11 13 16
1 2 6 1 1 9 6 09 43 40
8

Animals Sold During the

Year
# of Cow Progeny sold 0 0 0 0 0 0 0 0 0 0 0
# of culled cows sold - - 2 30 3 3 3 36 3 3 4
6 2 4 5 6 8 1
# of low yielders (cows) - 10 1 13 1 1 2 27 3 4 4

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 2 6 9 2 2 0 8
# of Male Calve sold 88 82 7 63 70 85 10 13 16 19 23
2 7 2 2 4 6
Total Animals Sold 88 92 1 10 11 13 16 19 23 28 33
1 7 8 8 7 8 7 1 6
0

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Production of milk (ltrs) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Cows 3,168 3,780 4,896 5,760 6,672 7,848 9,312 11,160 13,488 16,392 20,064
Milk for calve 704 656 573 507 561 682 859 1,056 1,294 1,551 1,889

Net Annual milk 899,360 1,140, 1,577 1,917,2 2,230,3 2,615,692 3,085,4 3,688,0 4,450,9 5,416,8 6,633,8
production 260 ,800 36 84 03 11 74 70 46

Revenue from Sale of

Milk 114,048 136,08 176,2 207,360 240,192 282,528 335,232 401,760 485,568 590,112 722,304
Daily 0 56
Annual 41,627, 49,669 64,33 75,686, 87,670, 103,122,7 122,359 146,642 177,232 215,390 263,640
520 ,200 3,440 400 080 20 ,680 ,400 ,320 ,880 ,960

Other Revenue
Sale ofCulledCows - - 1,794,0 1,929,6 2,058,000 2,083,2 2,145,9 2,189,5 2,277,5 2,437,1
1,584,000 00 00 00 60 80 61 61
Sale of Low Yielder Cow - 960,00 1,185, 1,345,0 1,585,0 1,865,000 2,225,0 2,745,0 3,243,2 3,984,8 4,830,0
0 000 00 00 00 00 50 38 00
Sale of Calves 880,000 820,00 716,5 634,125 701,700 852,150 1,073,5 1,319,8 1,616,9 1,939,0 2,361,3
0 75 50 25 38 75 50
880,000 1,780, 3,485, 3,773,1 4,216,3 4,775,150 5,381,7 6,210,7 7,049,7 8,201,4 9,628,5
000 575 25 00 50 85 68 74 11
Total Annual Revenue 42,507, 51,449 67,81 79,459, 91,886, 107,897,8 127,741 152,853 184,282 223,592 273,269
520 ,200 9,015 525 380 70 ,430 ,185 ,088 ,354 ,471

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