PROJECT PROPOSAL

FOR

TEXTILE AND GARMENT FACTORY

(Different Wearing Apparel and others related product)

PROJECT TO BE IMPLEMENTED IN SHAGER GELAN SUB-CITY

PROMOTER: - B.M.F MICRO ENTERPRISE

APPRIL,2023
SHAGER CITY, ETHIOPIA
 Table of contents

I. EXECUTIVE SUMMARY

1. INTRODUCTION………...................................................................................................…..5
I.1. Rational Behind and project………………………………………………………………6
I.2. Objective and Justification of the Project………………………………………………...7
I.3. The Socio-Economic Significance of the project...............................................................7
I.4. Location and Premises required……………………………………………………….….8
I.5. Location Map of the Area………………………………………………………………...8

2. MARKET STUDY AND PLANT CAPACITY

2.1. Market Study…………………………………………………………………………….10
2.2. Demand Analysis………………………………………………………………………..11
2.3. Supply Analysis………………………………………………………………………....11
2.4. Market Prospects…………………………………………………………………….….12
2.5. Competition……………………………………………………………………………...12
2.6. Marketing Strategy and Promotion………………………………………………….…..12
2.7. Target Customer and market Share……………………………………………………...12
2.8. Plant Capacity…………………………………………………………………………...13
2.9. Production Program and Prices………………………………………………………….13

3. TECHNICAL STUDY
3.1. Production nature and Description………………………………………………………14
3.2. Raw material and input……………………………………………………………….…14
3.3. Production Process………………………………………………………………………14

4. MANPOWER AND ORGANIZATIONAL MANAGEMENT

4.1. Manpower…………………………………………………………………………….…18
4.2. Organization Structure and Management…………………………………………….…20
4.3. Flow of job process of the departments…………………………………………………21

5. FINANCIAL REQUIREMENT AND ANALYSIS

5.1. Total Initial Investment Cost..................................................................................……..24

5.1.1. Fixed Investment......................................................................................................…..24
5.3. Financial Analysis and Statements...............................................................................…28

2
 5.3.1. Underlying Assumption....................................................................................……….28
5.3.2. Source of Fund.................................................................................................………..28
5.3.3. Loan Repayment Schedule.........................................................................................…29
5.3.4. Annual depreciation schedule..................................................................................…29
5.3.5. Revenue Projection..............................................................................................……..30
5.3.6. Balance Sheet (Beginning).................................................................................……..30
5.3.7. Income Loss Statement..............................................................................................…31
5.3.8. Cash Flow Analysis.............................................................................................……...31
5.3.9. Profitability.........................................................................................................……...32
5.3.10. Break-Even Analysis..........................................................................................……..32
5.3.11. Pay-Back Period................................................................................................……..32

6. FUTURE DEVELOPMENT ................................................................................................……..33

7. ENVIROMENTAL IMPACT OF THE PROJECT

7.1. Socio Economics Environments.......................................................................…….33
7.2 Environmental Impact Assessment of the Project...................................................…33

3
Executive Summary
Project
Project owner
Nationality
Project location
Premises required
Investment capital
and Financial sources
product mix
Production at full capacity
Marketing destination
Employment opportunity
created
The raw materials
required
Production process
Technology
4
Textile and Garment industry (Manufacture of wearing apparel)
B.M.F MICRO ENTERPRISE
Ethiopian
Gelan sub-city
5,000M2
10,000,000 of 30 % from promoter’s equity and 70 % from long term
bank loan.
Produces and trousers, jackets, coat, shirts, blouses, baby garments
and oromo traditional clothes are olso produced in our company by
traditional weavers
From the total products: Men's suits, jackets, trousers , shorts 105,754
pcs, Men's Shirts 528,766pcs, Women's blouses and shirts 493,517pcs
Women's suits, jackets, dresses skirts etc & shorts 118,444 pcs and
Babies Garments 1,493,241 pcs
The envisaged factory is intended to sale 85% of its products to the
international market and the rest 15% to the domestic market
The total manpower required for the plant will be 160 employees
Permanent workers 110 (Skilled 50, Unskilled 60), · Temporary
workers 40 (Skilled 20, Unskilled 20)
The raw materials required to produce garments include fabrics,
buttons, sewing threads, and accessories like zipper, shoulder pad,
labels etc
The major processes involved are receiving fabrics, Fabric Relaxing,
Spreading, Form Layout, and cutting, Embroidery and Screen Printing,
Sewing, Spot Cleaning and Laundry, Ironing, Packaging and Shipping
The project employs software designing, automatic cutting and modern
individual sewing machine which are labor intensive machineries and
equipment’s are selected.
1. INTRODUCTION
In dynamic economic environment like Ethiopia, industrialization has an immense force to sustain the
development particularly heavy and big industry like textile and garment has a paramount and multi
benefits on the overall development of the nation the Ethiopian economy had remained for a long time a
back ward agrarian economy. Industry was limited to traditional handcrafts and cottage industries like
weaving, blacksmith, pottery, carpentry and wood works.

Modern manufacturing industry started in the late 1950s. The government followed liberal economic
policies and a free market system, and thus created enabling environment to promote and encourage the
initiatives of the private sector. Both nationals and foreigners were allowed to freely participate in the
national development efforts. The institutional frame work of political economy was defined as
capitalism.

With such enabling environment, some foreigners who had technical, managerial and financial
capacities, skills and interest started to establish modern manufacturing enterprises such as oil and grain
mails, beverage factories and food complex industries, manufacture of cement blocks, leather and shoe
factories, textile, construction materials & metal products.

The modest industrialisation that was to take place subsequently was characterized by import substitution
and heavy reliance on foreign investment based on liberal investment policies. The Dreg regime which
came to power in 1974 introduced scientific socialism and carried out sweeping nationalization of
medium and large-scale industries, rural and urban lands, extra houses in urban areas, private banks and
insurances, major Hotels, trading houses &super markets. Most of the domestic and foreign trade and
transport organs came under monopolistic/ semi- monopolistic state companies. Private initiatives in
production, distribution & marketing of goods & services were discouraged.

Private sector investment in manufacturing was restricted to small scale industries and handcraft and
cottage industries with a maximum ceiling of birr 500,000.00 in investment Handcraft and cottage
industries were organized into producers co-operatives based on socialistic system with heavy subsides.
Thus development objectives

Were to satisfy the basic material needs of the mass and profit motivation ceased to be major criteria in
decision making.

5
Like the rest of other economic sectors, Industries, experienced great difficulties during the dreg regime.
These included shortage of foreign exchange to import raw materials, intermediate inputs, spare parts and
capital goods for replacement and modernization, lack of managerial and technological capabilities,
financial constraints absence of incentives to workers under wage and salary controls and lack of
appropriate economic and financial evaluation in investment. All these led to inefficiency and under
capacity utilization in the industrial sector. This had resulted in failure to satisfy the growing demand of
the population for industrial out puts from domestic production, compelling the country to rely on aid and
imports.

Recently the negative impact of the economic policy adopted by the last system has been well
acknowledged and therefore the economic policy that stimulated the role of private sector has been
advocated repeatedly at different level. A favourable investment climate has been created for private
investors as a result of the issuance of the new investment code of the country. Now a da y’s Ethiopia’s
investment climate is among the most in the continent.

In the national development plan, industry has been recognized as a driving force to achieve rapid
economic development. The government involvement took the form of actual investment in industry,
financing of industrial under takings through financial institutions and the formulation of policies
intended to promote industrial development.

It is with this back ground that, the promoter came up with this project study that aims to establish
garment factory in Shager Gelan sub city 5000 M2 of land to be provided by the government.

1.1. Rational Behind of the project

Textile and garment industry has enormous potential and opportunities for progress, however although
there is a high potential for the production of raw materials, such as textile and leather the garment
industry has not yet developed in the country. The demand for garment products in various parts of the
world is steadily growing. The basic garment factory process includes the spinning of fiber into yarn
which is then processed into fabric in a weaving or knitting mill. After the finishing process which
includes dyeing/printing, the woven or knitted fabric is delivered to a distributor – whole saler-retailer,
who wills sale it to individuals in the making of clothes or house hold articles.
6
The garment sector has the potential of employment generation and export earnings. For a populous
country like Ethiopia the contribution of a textile sector is indispensable particularly judged from the
current low level of development of the country.

There is an opportunity to get skilled manpower for making the product as there is a textile and garment
industry support institute at technical and vocational schools and Bahir Dar University in advanced
training professional skilled manpower. Given the potential of the raw material and priority of the
government for the textile and garment sub sector, the garment industry has a major role to play in the
region’s economy in general and export trade in particular.

Product Description and Application

The garment work consists of the manufacturing of clothing by cutting and sewing fabrics. Garment is
one of the major activities that consume huge labor. The major input for garment production is different
types of textile fabrics. Important garment products include shirts, shorts, T-shirts, under wears, fur
apparel, pants, trousers, sport wears, work clothes and jackets, women dresses and children clothes.

Traditional clothes are also produced in our company by traditional weavers.

This project envisages making men’s, women’s and children’s dresses and traditional clothes.
Transporting the product is easy too; therefore, if the factory can produce quality products at a cost which
can compete internationally.

Different fabric types; such as cotton fabrics, polyester fabrics, nylon fabrics, polyester-cotton blended
fabrics, denim fabrics, and others, are used to manufacture these products tailored to customers’
requirement.

7
1.2. Objective and Justification of the Project
1.2.1. Objective of the Project

The main objective of the factory is to produce quality and affordable garment productions mainly T-shirt, men
shirt sport and school wears (uniform) for domestic and foreign market.

1.3. The Socio-Economic Significance of the Project

The envisaged project deemed to contribute to the economic development of the region in the following
ways:

A. Source of Employment

One of the problems that our country is faced is unemployment. Therefore, the current objective of our
government is working on tackling the problem of unemployment either through creating self-
employment or employment in other organization.

Hence, the envisaged deemed to contribute somewhat to solve the problem of unemployment. Upon
completion, the Garment assumed to generate employment Opportunities for about 100 persons during its
construction period and more than 473 persons in its functional life time.

B. Source of Government Revenue

To redistribute income, the government collects different forms of taxes from different business
undertakings and individuals as income tax. Among the different forms of taxes, business income taxes
are collected from undertaking business activities. Therefore, the factory will serve as sources of revenue
for the region.

C. Sources of Social Service

In addition to serving as a source of employment and income for the region, the factory renders social
services for different group of people. Hence, the Garment Factory deemed to provide the following
services:

 Regular subscriptions with local and foreign textile trade and fashion magazines.
 Supply new style, fashionable, and locally made textile to the households, retailers and
wholesalers.
8
  Makes to flow of latest marketing and trade information to the exporter.

D. Benefit for the Local community

As a corporate responsibility the company will engage in different development activities on the surrounding
areas (Gelan sub city ). This will better worse the community and contrite for the development of the region.

1.4. Location and Premises required .

1.3. Project Location

The envisioned project is planned located in Shager city. Shager city is located about20 Kilometer shager city
on the Main Road from Addis Ababa to East Shoa zone. While selecting location for such food complex
factory; availability of raw material, adequate storage and operation space, water and power supply, market
outlet for finished products and availability of labor are among the major factors to be considered. The town is
the host of other labor-intensive factories due to its preferable attribute and proximity to the capital Addis
Ababa.
Back Ground
Gelan sub-city has favorable climate, topography ad people with rich diversified cultural values creating high
potential for tourist attraction. Theses attraction can be clearly categorized and understood as natural science
environmental historical and man cultural and ethic.
The above mention facts are the strong basis to think that the town will developed being an attractive town for
investment and comerce.
However such center of block and other cement product is one of such facility intended to help the
development of Gelan sub-city as center of manufacturing interaction.

4. The project Area.

4.1 Location
 In project under consideration will be implemented in Gelan sub-city city administration. Gelan
sub-city is found at distance of about 20 kms a way from Addis Ababa on the main road to Adama.
The reason of selected the location for the proposed project is:
Its proximity to Addis Ababa city administration with good scenery and weather condition.
9
 Its proximity to serve as and facility like road, transport and utilities like electricity, water and telephone
line.
 The existing conductive social and investment situational and increase number of private investment in the
area.
 Its accessibility and easy of future development are some of the reasons behaved selecting the area for the
propose project.
 Attractive policy incentives and administrative procedures of the region.
 Proximity to new dry port around Mojo town.
 The existences of high demand for the envisaged service.
 Personal preference of the investor.

4.2 Physical Characteristics

Most part of the Gelan sub-city town is covered by manufacturing projects. The rest part is also covered by
different commercial centers, hotel & recreation, social services residential areas and so on.
The town has elevations that range from 1,500 – 2,300 with the exception part of Yarer Mountain (3,100m) as
far. The climate is woinadega (98%) and dega (2%).Government protected forests of Yerer and Addis Ababa
are partly found around Akaki and Galaan sub city .There are also community forests in different parts of
towns.
4.3 Soil type
Soil is the most important natural restore in the world for human beings. It also used for construction of houses
and its rocks parts is used of reconstruction of roads.
Gelan sub-city has two different kinds of soils. Red soils & black soils. The 1 st one is the very important for
constructions of houses & rods in town the black one is also used a especially for environmental formers in
their production.

For construction big villas building & ware houses in Gelan sub-city city is simply possible because the most
parts of soil in Gelan sub-city is red soil.

4.4. Population

10
The total population of the town was 201,956 in 2009.Out of the total population 133,351 were rural and
68,605 were urban populations. The economically active population (15-64) constituted 44.2% of the total
population. The average family sizes for rural and urban areas were 5.0 and 4.6 persons respectively. The9
crude population density was 235 persons/km2 in the mentioned year.

4.5 Economic Activity

Considering the overall developmental measures the country is request ring development. In addition to
mitigating poverty, efforts have been enhanced to make poverty a past history.

Considering the international market situations and the case of foreign currency the government is taking
various measures in respect these problems.

The majority of the populations of the town are engaged in different commercial activities including
agricultural activities. There are also peoples who are employed in
various governmental & non-governmental organizations. Currently private investment activities are also
widely undertaken in the town.

An Investor has the right to hold land either on lease or rental basis in Oromia. 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.
Urban Land in the remaining small towns of Oromia is administered on rental basis and the annual rental
charge ranges per square meter is depending on the location, the type of project and size of the land According
to the 1994 national census, the town had a population

A. Premises required

The total land holding of the project one hectare, which is equivalent to 10,000 M2, the premises required
planned as follows in the table below.

11
 Table premises required and land use plan.

SN Description Land requirements(M2)

1 Production Hall
1.1 Cutting Section 1,000
1.2 Sewing Section 1000
1.3 Finishing Section (Including Inspection and Packing) 300
Total 2300
2 Warehouse
2.1 Raw material (Fabrics) and Input 1,800
2.2 Finished Production(Garment) 500
Total 2300
3 Office Building 100
4 Shop and showroom 100
5 Waste Accumulation area 100
6 Green area, buffer zone and parking 100
Total
Grand Total 5,000

B. Floor Lay Out

12
The ring was a descendant of the Arkwright water Frame 1769. It was a continuous process; the yard was
coarser, had a greater twist and was stronger so was suited to be warp. Ring spinning is slow due to the
distance the thread must pass around the ring, other methods have been introduced. These are collectively
known as Break or Open-end spinning.

Sewing thread was made of several threads twisted together, or doubled.

 Checking

This is the process where each of the bobbins is rewound to give a tighter bobbin.

 Folding and twisting

Plying is done by pulling yarn from two or more bobbins and twisting it together, in the opposite
direction that in which it was spun. Depending on the weight desired, the cotton may or may not be
plied, and the number of strands twisted together varies.

 Gassing

Gassing is the process of passing yarn, as distinct from fabric very rapidly through a series of Bunsen
gas flames in a gassing frame, in order to burn off the projecting fibers and make the thread round and
smooth and also brighter. Only the better qualities of yarn are gassed, such as that used for voiles,
poplins, venetians, gabardines, many Egyptian qualities, etc. There is a loss of weight in gassing,
which varies' about 5 to 8 per cent., so that if a 2/60's yarn is required 2/56's would be used. The gassed
yarn is darker in shade afterwards, but should not be scorched

2. MARKET STUDY AND PLANT CAPACITY

13
2.1 Market Study

In view of the fact that the textile and garment industry are related on the some value chain they have
similar demand (positive relationship), therefore this study tried to study the market from broad view of
textile and garment industry.

The textile industry is the largest manufacturing industry in Ethiopia. The sector comprises a large
number of state owned enterprises’ and a growth number of private sector participants at all levels.

2.2. Demand Analysis

There exist many factories that boost the demand for garment and textile industry in Ethiopia a part from
its basic need like huge population, increase in income. As the time series data there exist paramount
demand for these productions.

Table 2: Ethiopian Import and Export of textile

Years CIF Value in US$ (Million) Import CIF Value in US$ (Million) Export
2003 141.3 10.1
2004 142.6 12.1
2005 239.8 13.4
2006 279.2 8.3
2007 291 15
2.3. Supply Analysis

The most recent statistical abstract indicates that there were 23 factories producing garment of which 6
were public. In addition, there are large numbers of artesian enterprises producing traditional Ethiopian
style clothes. The state owned garment enterprises are inextricably linked with the nine state owned
enterprises, six of which producing textile, two yarns and sewing thread, and one blanket. As clearly
indicated in the introductory part of this proposal, Shager city is the growing of Oromia region. Above
all it found on the road to Addis – Adama where moderate traffic flow is recorded due to different
commodities flow to capital cities.

14
Thus, it has a big market opportunity for the Garment project. Moreover, since this project encompasses
different supplementary and complementary projects, it deemed to help the customers have a stop
services. Therefore, the target customers of this envisaged project include:

 The residents of the city of Shager Gelan sub city and the surroundings
 Individuals all over the country and
 For export trade.
Hence to reach customers different marketing vehicles will be used. Among the different marketing
strategies and tools for promoting and controlling the market the factory will use:

 Sponsorship of key government activities and public support mechanism.

 Using different marketing segmentation strategies and tactics.
 Utilizing effective and customer centric marketing strategies, that is the marketing strategies that
focuses on different groups of customers based on different segmentation tools; for example,
Age , Sex, income level, and the like.
2.4. Market Prospects
From the above marketing demand and supply analysis for the garment production there exist huge
market gab in Ethiopian market. Hence, the envisioned factory will be successful y entering in to this
market.
Besides, the demand for garment in the world marketing is increasing. Garment productions of Ethiopia
have high market demand in many parts of the world, particularly in the united state of American,
Western Europe and Japan. Therefore, there will be sufficient demand for the production in the
international markets.
2.5. Competition

There are different forms of competition that may face the factory. These are price and non price based
competition. Moreover, there are different competitors that will compete with the project either directly
or indirectly. But the factory under discussion has diversified marketing strategies that could enable it
cope-up with the different competitors in the market. Moreover it will frequently conduct competitors
research which focuses on, the strength and the weaknesses, the different competitor’s strategies, the
techniques they use in rendering the product, their customer handling methods, and others.

15
2.6. Marketing Strategy and Promotion

The company will follow promotional methods:

 Electronic Medias
 Advertising (Media, Flayer and news paper)
 Public relations
 Branding,

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

2.7. Target Customer and Market Share

The project target is upper and lower level of the people because our strategy is the provide standard
quality of the product at cheaper prices and to capture the market.

The project will distribute 50% of its product for domestic market and 50%for Export

2.8. Plant Capacity and Production Progress

2.8.1. Plant Capacity

Based on plant capacity and progress this plant assumed to produce 2,500,000 T-shirt 1,600,000 Jacket,
Dresses and 750,000 school wears(uniform) at full capacity utilization operating 310 days per year and 8
hours per day.

Based on sales plan and the average sales price, we can get that the annual production capacity of the plant
will be 740,275 Kg of garments totally. From the total products: - 25% (185,068Kg) will be: Men's suits,
jackets, trousers etc& shorts; 25% (185,068Kg) will be: Men's Shirts; 20% (156,058Kg) will be: Women's
blouses and shirt; 20% (148,055) will be: Women's suits, jackets, dresses skirts etc& shorts; and 10% (74,027Kg)
will be: Babies Garments.

The following Table presents summary of the production capacity of the plant, converting the measuring units
from Kg to pieces. Total of 320 working days per annum, 8 hour per day in one shift is assumed to set the
plant capacity.

16
Accordingly, a total of 1,826,562 pieces of different garments will be produced on 100% capacity utilization,
and a total of Birr 479,404,074, with average exchange rate of 1 USD = 30 Birr) sales is planned to be
achieved.

Table 13: Annual Sales plan for the envisaged plant

Annual Production Average Selling Price
Product Mix Capacity Unit Price
Quantity Quantity /piece (USD) (Birr ’000)
(Kg) (Piece) (USD)
Men's suits, jackets, trousers, 185,069 246,759 13.50 3,331,246.50 93,274,902.00
jeansetc& shorts (1 pc = 750 gm)
Men's Shirts (1 pc = 350gm) 185,068 528,768 5.88 3,109,155.84 87,056,363.52
Women's blouses and shirts 148,055 493,517 4.88 2,408,362.96 67,434,162.88
(1 pc = 300gm)
Women's suits, jackets, dresses 148,055 246,758 9.90 2,442,904.20 68,401,317.60
skirts, etc& shorts (1 pc = 600 gm)
74,028 246,760 5.10 1,258,476.00 35,237,328.00
Babies Garments (1 pc = 300gm)
740,275 1,762,562 7.12 12,549,441.44 351,404,074.00
Total
Traditional clothes 64,000 71.43 128,000,000
Grand total 1,826,562 479,404,074.00

Note that the average weight for unit product categories is taken by estimation, taking the size
(small – extra-large) and material variations (cotton, polyester, nylon, etc...) in to considerations.
3.1.1 Production program
The planned capacity will be achieved in the fourth year of the establishment year of the factory. In a
period of 12 months project time, the project will be realized. It is estimated that production starts at
85% plant capacity in the first year, 95% in the second year, and 100% in the third year and will
continue to work with this capacity for the coming 10 years. Since production capacity of garment
factory is highly dependent on operator’s performance, here the average attainable Ethiopian machine
operator’s performance is taken in to consideration to determine the overall capacity of the envisaged
plant. The factory is assumed to work 320 days in a year and 8 hours per day in a single shift.
17
 Table 14: Production Program
Product Categories U/M Plant Capacity Utilization
1st year 2nd year 3rd year and
(85%) (95%) above (100%)
Men's suits, jackets, trousers Pcs
246,759
etc& shorts 209,745 234,421
Men's Shirts >> 449,453 502,330 528,768
Women's blouses and shirts >> 419,489 468,841 493,517
Women's suits, jackets, dresses
246,758
skirts etc& shorts >> 209,744 234,420
Babies Garments >> 209,746 234,422 246,760
Traditional garments >> 54,400 60,800 64,000
Total >> 1,552,578 1,735,234 1,826,562

The factory will have a set up to accommodate production facilities for both knitted and woven garment products.
Based on assumptions stated above the plant will have a total capacity of manufacturing 5,508 pieces of varies
woven and knitted garments and 200 complete traditional clothes on average per day in one shift. Depending on
the simplicity of the product type and improvement in operators’

2.2.2. Production Program and Prices

Considering the gradual growth of demand and the time required to develop the required skill the rate of
capacity utilization during the 1st, 2nd and 3rd year of production will be 70%, 90% and 100% respectively.
Full capacity utilization will be reach during the third year of operation.

Description Years 1 Years 2 Years 3-10

Capacity Utilization (%) 70 90 100
T-Shirt in pcs 1,750,000 2,250,000 2,500,000
Jacket and Dresses in pcs 1,120,000 1,440,000 1,600,000
School wear(Uniform) in Unit 525,000 675,000 750,000
2.3Production Pricing

It would be important to examine the possible level of pricing based on the competitor action. In this
regard the existing average pricing of similar company were assessed for the benefit of comparison.
Based on the existing retail price in the market the firm stetted the price as follows.
18
Product Price of company
T-Shirt in pcs 38
Men Shirt in pcs 105
School wear in Unit 170
Total 313
2.3.1 Total Price and Sales projects

Description Years 1 Years 2 Years 3-10

66,500,00 85,500,00 910,000,00
T-Shirt in pcs
0 0 0
Jacket and Dresses in pcs 117,600,000 151,200,000 168,000,000
89,250,00
School wear(Uniform) in Unit
0 114,750,000 127,500,000
Total 273,700,000 351,450,000 390,500,000
Increase by 5 % per annum after 2nd year 19,525,000
Grand Total 410,025,000

3. TECHNICAL STUDY
3.1. Product Process and Technology

The production process includes designing, measuring and cutting of the fabric. Then sewing machine,
machine designed to join pieces of fabric or leather by means of either a lockstitch or a chain stitch is used
for the process (tailoring). The lockstitch which is used in modern sewing is formed form two threads and
the chain stitch from a single thread. Other machines, such as shuttle, loop and needle are used in the
process.

3.2. Raw Materials and Input

The main raw materials for the plant will be the textiles factories such as Akaki Textile Factory, Bahir Dar
Textile Factory, Kombolcha Textile Factory and Awassa Textile Factory; and sometimes raw materials are
imported from countries such Italy ,Turkish, India.

3.1 Raw Materials and utilities

3.1.1 Raw Materials

19
 The raw materials required to produce Garment s include embroidery treads, mag, fabrics,
buttons, sewing threads, and accessories like zipper, shoulder pad, labels etc. Except some
materials and accessories which are not produced locally, for a short run, all the raw materials
will be purchased locally. However, in the near future all the raw materials will be expected to be
available locally as there are a number of projects in the pipeline and also some bonded

warehouses to be opened locally by foreign manufacturers. Table 16 below presents annual

requirements and corresponding costs of raw materials at full production capacity.
Table 15: Raw materials requirement and Cost at full capacity

S/N material type U/M Qty unit Price Total Cost

1 Fabric Kg 822,289.00 320 263,132,480.00
2 Buttons Kg 22554 162 3,653,748.00
3 Sewing thread Kg 9789 245 2,398,305.00
4 Embroidery treads 128,000.00 120 15,360,000.00
5 Yarn 12,800.00 1,000.00 12,800,000.00
6 Mag 64,000.00 180 11,520,000.00
7 Accessories - Lump sum - 6,440,263.00
8 Packing material - >>>> - 8,064,158.00
Grand Total 323,368,954.00
3.1.1 Utilities
Electricity and water are the two major utilities required by the envisaged plant. Total annual
cost of major utility items at full operation capacity of the plant is Birr 4,528,000.00. Details are
shown in the table below:
Table 16: Utilities Requirement and Cost at full capacity
No. Description Unit Qty. Unit price (Birr) Cost ( Birr)
1 Electricity kWh 500,000 0.59 295,000.00
2 Water m3 65,000 8.2 533,000.00
4 fuel oil Lt 200,000 18 3,600,000.00
6 Telephone and internet Birr 100,000.00
Total 4,528,000.00

20
 3.2 Technology and Engineering
3.2.1 Production process
Generally, apparel manufacturing process involves Product Design, Fabric Selection and
Inspection, Patternmaking, Grading, Marking, Spreading, Cutting, Bundling, Sewing, Pressing or
Folding, Finishing and Detailing, Dyeing and Washing, QC etc.

The major processes involved in the production processes of apparel products of the envisaged
factory are discussed as under.
Receiving fabrics
Under this process step the fabric to be used in production process of apparels will be received
from the supplier. Depending on the type of procurement and type of products, the supplier could
be either the manufacturer, or whole seller or retailer. The fabrics received from the supplier are
preserved in the raw material stores temporarily before they are issued for next step.
Fabric Relaxing
“Relaxing” refers to the process that allows material to relax and contract prior to being
manufactured. This step is necessary because the material is continually under tension
throughout the various stages of the textile manufacturing process, including weaving, dyeing,
and other finishing processes. The relaxing process allows fabrics to shrink so that further
shrinkage during customer use is minimized.
Fabric relaxing could be done either manually or mechanically. Manual fabric relaxing typically
entails loading the bolt of fabric on a spinner and manually feeding the material through a piece
of equipment that relieves tension in the fabric as it is pulled through. Mechanical fabric relaxing
performs this same process in an automated manner.
Quality assurance process is integrated into this process to ensure that the quality of the fabric
meets customer standards. This step is performed by manually spot-checking each bolt of fabric
using a backlit surface to identify manufacturing defects such as color inconsistency or flaws in
the material. Fabrics that fail to meet customer standards are returned to the supplier
(manufacturer or whole seller of retailer).
Spreading, Form Layout, and cutting
After fabric has been relaxed, it is transferred to the spreading and cutting area of the garment

21
 manufacturing facility. The fabric is first cut into uniform plies and then spread either manually
or using a computer-controlled system in preparation for the cutting process. Fabric is spread to:
 allow operators to identify fabric defects;
 control the tension and slack of the fabric during cutting; and
 Ensure each ply is accurately aligned on top of the others.
The number of plies in each spread is dependent on the fabric type, spreading method, cutting
equipment, and size of the garment order.

Next, garment forms or patterns are laid out on top of the spread, either manually or programmed
into an automated cutting system. Lastly, the fabric is cut to the shape of the garment forms
using either manually operated cutting equipment or a computerized cutting system.
Embroidery and Screen Printing
Embroidery and screen printing are two processes that occur only if directly specified by the
customer; therefore, these processes are commonly subcontracted to off-site facilities.
Embroidery is performed using automated equipment, often with many machines concurrently
embroidering the same pattern on multiple garments. Each production line may include between
10 and 20 embroidery stations. Customers may request embroidery to put logos or other
embellishments on garments.
Screen printing is the process of applying paint-based graphics to fabric using presses and textile
dryers. Specifically, screen printing involves sweeping a rubber blade across a porous screen,
transferring ink through a stencil and onto the fabric. The screen printed pieces of fabric are then
dried to set the ink. This process may have varying levels of automation or may largely be
completed at manually operated stations. Like embroidery, screen printing is wholly determined
by the customer and may be requested to put logos or other graphics on garments or to print
brand and size information in place of affixing tags.
Sewing
Garments are sewn in an assembly line, with the garment becoming more complete as it
progresses down the sewing line. Sewing machine operators receive a bundle of cut fabric and
repeatedly sew the same portion of the garment, passing that completed portion to the next
operator. For example, the first operator may sew the collar to the body of the garment and the
next operator may sew a sleeve to the body. Quality assurance is performed at the end of the

22
 sewing line to ensure that the garment has been properly assembled and that no manufacturing
defects exist. When needed, the garment will be reworked or mended at designated sewing
stations. This labor-intensive process progressively transforms pieces of fabric into designer
garments.
Spot Cleaning and Laundry
In addition to identifying manufacturing defects, employees tasked with performing quality
assurance are also looking for cosmetic flaws, stains, or other spots on the garment that may have
occurred during the cutting and sewing processes. Spots are often marked with a sticker and
taken to a spot-cleaning area where the garment is cleaned using steam, hot water, or chemical
stain removers.
Some customers request that a garment be fully laundered after it is sewn and assembled;
therefore, garment factories often have an on-site laundry or have subcontract agreements with
off-site laundry operations. Commercial laundry facilities are equipped with at least three types
of machines: washers, spinners, and dryers. Some facilities also have the capability to perform
special treatments, such as stone- or acid-washing.
Ironing
After a garment is fully sewn and assembled, it is transferred to the ironing section of the facility
for final pressing. Each ironing station consists of an iron and an ironing platform. The irons are
similar looking to residential models, but have steam supplied by an on-site boiler. Workers
control the steam with foot pedals and the steam is delivered via overhead hoses directly to the
iron. In most facilities, the ironing platforms are equipped with a ventilation system that draws
steam through the ironing table and exhausts it outside the factory.
Packaging and Shipping
In the last steps of making a product retail-ready, garments are folded, tagged, sized, and
packaged according to customer specifications. Also, garments may be placed in protective
plastic bags, either manually or using an automated system, to ensure that the material stays
clean and pressed during shipping. Lastly, garments are placed in cardboard boxes or pp bags
and shipped to client distribution centers to eventually be sold in retail stores, or to customers, if
they are produced on orders.

23
 3.3. Production Process

 Ginning

The seed cotton goes in to a Cotton gin. The cotton gin separates seeds and removes the "trash" (dirt, stems and
leaves) from the fiber. In a saw gin, circular saws grab the fiber and pull it through a grating that is too narrow
for the seeds to pass. A roller gin is used with longer staple cotton. Here a leather roller captures the cotton. A
knife blade, set close to the roller, detaches the seeds by drawing them through teeth in circular saws and
revolving brushes which clean them away.

The ginned cotton fiber, known as lint, is then compressed into bales which are about 1.5m tall and weigh
almost 220 kg. Only 33% of the crop is usable lint. Commercial cotton is priced by quality, and that broadly
relates to the average length of the staple, and the variety of the plant. Longer staple cotton (2½ in to 1¼ in) is
called Egyptian, medium staple (1¼ in to ¾ in) is called American upland and short staple (less than ¾ in) is
called Indian.

The cotton seed is pressed into cooking oil. The husks and meal are processed into animal feed, and the stems
into paper.

Issues

Cotton is farmed intensively and uses large amounts of fertilizer and 25% of the world’s insecticide.
Native Indian variety was rainwater fed, but modern hybrids used for the mills need irrigation, which
spreads pests. The 5% of cotton-bearing land in India uses 55% of all pesticides used in India. Before
mechanization, cotton was harvested manually and this unpleasant task was done by the lower castes and
in the United States by slaves of African origin.

Preparatory processes- preparation of yarn

 Ginning, bale-making and transportation is done in the country of origin.

 Opening and cleaning

24
Platt Bros. Picker

Cotton mills get the cotton shipped to them in large, 500 pound bales. When the cotton comes out of a
bale, it is all packed together and still contains vegetable matter. The bale is broken open using a machine
with large spikes. It is called an Opener. In order to fluff up the cotton and remove the vegetable matter,
the cotton is sent through a picker, or similar machines. A picker looks similar to the carding machine
and the cotton gin, but is slightly different.

The cotton is fed into the machine and gets beaten with a beater bar, to loosen it up. It is fed through
various rollers, which serve to remove the vegetable matter. The cotton, aided by fans, then collects on a
screen and gets fed through more rollers till it emerges as a continuous soft fleecy sheet, known as a lap.

 Blending,

Mixing &Scotching

Scotching refers to the process of cleaning cotton of its seeds and other impurities. A scotching machine for
cotton was first invented in 1797, but didn't get much attention until it was introduced in Manchester in 1808 or
1809. By 1816 it had been generally adopted.

The scotching machine worked by passing the cotton through a pair of rollers, and then striking it with
iron or steel bars called beaters. The beaters, which turn very quickly, strike the cotton hard and knock
the seeds out. This process is done over a series of parallel bars so as to allow the seeds to fall through.
At the same time a breeze is blown across the bars, which carries the cotton into a cotton chamber

 Carding

Carding: the fibers are separated and then assembled into a loose strand (sliver or tow) at the conclusion
of this stage.

The cotton comes off of the picking machine in laps, and is then taken to carding machines. The carders
line up the fibers nicely to make them easier to spin. The carding machine consists mainly of one big
roller with smaller ones surrounding it.

25
All of the rollers are covered in small teeth, and as the cotton progresses further on the teeth get finer (i.e.
closer together). The cotton leaves the carding machine in the form of a sliver; a large rope of fibers.

Note: In a wider sense Carding can refer to these four processes: Willowing- loosening the fibers;
Lapping- removing the dust to create a flat sheet or lap of cotton; Carding- combing the tangled lap into a
thick rope of 1/2 in diameter, a sliver; and Drawing- where a drawing frame combines 4 slivers into one-
repeated for increased quality.

 Combing is optional, but is used to remove the shorter fibers, creating a stronger yarn and Drawing
the fibers are straightened

Several slivers are combined. Each sliver will have thin and thick spots, and by combining several
slivers together a more consistent size can be reached. Since combining several slivers produces a very
thick rope of cotton fibers, directly after being combined the slivers are separated into roving. These
roving’s (or subbing) are then what are used in the spinning process. Generally speaking, for machine
processing, a roving is about the width of a pencil.

 Drawing frame: Draws the strand out

 Subbing Frame: adds twist, and winds on to bobbins
 Intermediate Frames: are used to repeat the subbing process to produce a finer yarn.
 Roving frames: reduces to a finer thread, gives more twist, makes more regular and even in
thickness, and winds on to a smaller tube.

Spinning- yarn manufacture

 Spinning

The spinning machines take the roving thins it and twists it, creating yarn which it winds onto a bobbin.
In mule spinning the roving is pulled off a bobbin and fed through some rollers, which are feeding at
several different speeds.

This thins the roving at a consistent rate. If the roving was not a consistent size, then this step could cause
a break in the yarn, or could jam the machine. The yarn is twisted through the spinning of the bobbin as

26
the carriage moves out, and is rolled onto a cop as the carriage returns. Mule spinning produces a finer
thread than the less skilled ring spinning. The mule was an intermittent process, as the frame advanced
and returned a distance of 5ft.It was the descendant of 1779 Crompton device. It produces a softer less
twisted thread that was favored for fines and for weft.

distribution centers to eventually be sold in retail stores, or to customers, if they are produced on orders.

27
 Fabric Reception

Fabric Relaxing

Fabric Spreading, Form

Layout, and Cutting

Sewing

Inspection

Spot cleaning and

Laundry

Ironing

Packing
Apparel Shipping

Figure 1: Apparel production process flow chart

3.2.2 Source of Technology

The machinery and equipment required to manufacture apparel products are conventional and available in
different technological levels, in general. Selection among alternatives was made based on the competitive
advantages it provides to the stakeholder in the context of the country. The major criterions taken in to
consideration are: resource utilization (especially labor), job opportunity, operability, and maintainability.
Therefore; the labor intensive machineries and equipment’s are selected for the envisaged plant. Suppliers of
labor intensive technologies are available in Europe, Asia and Far East.

28
 3.2.3 Machinery and Equipment
The envisaged plant is planned to produce knitted and woven garments, traditional clothes and jeans
products and therefore the machineries and equipment’s to be purchased will be in such a way as to
accommodate all required facilities. The list of machinery and equipment, quantity and associated costs
are presented in Table 17. As shown in the table, the total cost of machinery and equipment is estimated
Birr 2,100,000.
Table 17: Machinery and Equipment Requirement and Cost

No Item Name QTY Unit price Total cost

1 Single needle LOCK STITCH MACHINE 20 14,767.70 286,062.00
2 2 needle 4thread over lock 12 14,767.70 77,212.40
3 Blind stitch 2 33,010.15 36,020.30
4 2 Needle flatbed Bottom cover stitch Belt –loop making 1 42,888.38 22,888.38
5 12 Needle flatbed Double chain stitch 1 47,380.74 236,903.70
6 Double needle lock stitch machine 1 3,985.77 3,914.62
7 Basis –Cutting &winding machine 1 33,915.42 33,915.42
8 Flatbed top bottom cover stich machine univ. type 3 40,898.01 122,694.03
9 Cylinder-bed top&bottm cover stitch machine 3 53,366.91 160,100.73
10 2 Needle 5thread over lock machine 8 15,960.20 127,681.60
11 SNLSmachine with vertical EDGETRIMMER 6 22,240.69 133,444.14
12 Single needle flatbed double chain stitch machine 2 42,144.90 84,289.80
13 Feed of the arm2-needle double chain stitch machine 1 69,470.91 47,354.55
14 Computer control button sewing machine 2 74,315.65 148,631.30
15 Computer control BARTACKING Machine 2 51,045.09 102,090.18
16 Computer control bottomholing machine 1 72,569.02 17,707.06
17 Fusing press machine 2 50,623.75 101,247.50
18 Trade terminal machine 1 20,698.38 20,698.38
19 Vacuum table with standard buck 18 10,473.88 188,529.84
20 Stain removing machine 1 27,930.34 27,930.34
21 Full steam Iron 1 1,918.92 4,540.56
22 Steam generating Boiler 6 27,600.89 165,605.34
23 Spreader machine 2 47,841.54 25,683.08
24 Spreader Table 73,602.38 47,204.76
25 Pneumatic collar Turing machine 1 20,199.62 20,199.62
26 Air compressor 1 57,053.82 57,053.82
Sub total 2,095,919.25 2,049,603.45

29
 1 Finishing machinery
2 Steam boiler 120 kw 1 50,400.00 50,400.00
3 Steam boiler 75 kw 1 32,500.00 32,500.00
4 Iron 50 11,684.00 584,200.00
5 Full steam iron 100 5,800.00 580,000.00
6 Steam iron hose 300 1,760.00 528,000.00
7 Shirt iron press (box plate) 5 3,500.00 17,500.00
8 “ “ “ (back) 5 3,500.00 17,500.00
9 “ “ “ (said) 5 3,500.00 17,500.00
10 “ “ “(collar) 3 3,500.00 10,500.00
11 Court “ “( solder ) 2 3,500.00 7,000.00
12 “ “ “ (front master ) 2 3,500.00 7,000.00
13 “ “ “ (back) 1 3,500.00 3,500.00
14 “ “ “ (front) 1 3,500.00 3,500.00
15 “ “ “ (solder) 1 3,500.00 3,500.00
16 “ “ “ (side) 1 3,500.00 3,500.00
17 “ “ “ (collar) 1 3,500.00 3,500.00
18 Thread sacker 2 2,500.00 5,000.00
19 Shirt folding machine 3 17,500.00 52,500.00
21 Sacker for court 1 24,500.00 24,500.00
22 Compressor (350 kg) 1 54,200.00 54,200.00
23 Catron banding machine 2 16,500.00 33,000.00
24 Snap button machine (panama tic) 15 13,545.00 203,175.00
25 needle detector (metal caking )machine 1 21,000.00 21,000.00
26 stane removing (sport cleaning ) 3 12,500.00 37,500.00
Sub total 2,300,475.00
1 Complete Jeans Machine 1 set 2,300,000.00 300,000.00
2 Traditional weaving machine 500 10,000.00 1,000,000.00
Knitting machine
1 Circular knitting machine
2 Tubular circular knitting machine three thread
1 1,312,000.00 1,560,000.00
fleece 30” g
3 Single jersey Tubular circular knitting machine 1 268,000.00 144,000.00
Sub total 8,704,000.00
Grand total 4,854,078.45

30
Table 18: Furniture and office equipment and vehicles
Item Quantity Unit cost Total cost
Computer 10 10,000 100,000
Printer 4 10,000 40,000
Photocopy machine 1 30,000 30,000
Telephone sets 6 500 3,000
Table 50 3,000 150,000
Chair 50 2,000 100,000
Shelf 12 4,000 48,000
Miscellaneous 30,000
Total 501,000
Vehicles
Toyota hilux-4wd double 1 3,000,000.00 3,000,000.00
Total 3,000,000.00

3.3 Project implementation schedule

The major activities to be carried during the project implementation period are grouped under the
following four major categories. These are:
1. Activation and organization activities
2. Operation activates
3. Construction and erection
4. Performance testing
Activation and organization activities
These are activities that need to be carried as a pre-requisite for the project to become operational or
they are preliminary activities. The tentative list of activities under this category is: Necessary document
collection, such as preliminary designs, plant layout, technological drawing of plant and machinery,
architectural drawing of the plant building and civil works and specification of building, process
machinery, auxiliary equipment’s and utility equipment,0btain investment license and trade registration
and ownership of project area submitting feasibility study and other legal documents to the bank for
financial arrangement.
Operational activities:
The project operational activities will actually start after securing the land from the municipality. And
the next activity will be organizing the project management and undertaking steps to get the required
fund from lending banks and concluding financial agreement.

31
 Project proposal for Textile and Garment Factory

Establishing project criteria early before starting design, is critical to the success of the
optimized project. The team entity must develop a clear, mutually held understanding
of all project and team entity goals, values, and objective. A concise description of
project scope and program, along with a preliminary budget aligned with the scope is
vital to setting a project up for success.
Construction and Erection
The development of a construction plan is very much analogous to the development of a
good facility design. The time schedule for construction and erection has been
standardized through identification of the following requirements.
Performance testing activities
Performance testing will be carried right after completion of plan Erection and the normal
production operation of the plan starts after 12 months of project implementation.
Training of the recruited personnel is carried out within a period a month.
Table 19: Project implementation schedule
No Activity First year quarters of 2023
1. Activation and organization activities 1 2 3 4
Preparing necessary documentation
Procuring consultant for detailed project design
Plan check approvals secured
Procuring construction consultants
2. Operational activates
Recruiting project implementing staff
Completing financial arrangements
Arrangement for acquisition of machinery & equipment
3 Construction Erection
Site facility establishing & material mobilization
Site preparation and foundation work
Finishing the civil work
Erection of machinery
4 Performance testing & production activities
Training of recruited personal
Performance testing
Actual production starts

Page 32
 Project proposal for Textile and Garment Factory

4. MANPOWER AND ORGANIZATIONAL MANAGEMENT

4.1. Manpower
At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the plant. It is always true that Organization and Management
of the project plays a key role and bear direct impact on the success and profitability of the
project. The opportunities of being serviced by well skilled professionals well enable the
company to evaluate the internal weakness and strength of the company as well as to assess the
global opportunity and risks in the world market so that the company can cope up with the
dynamics of the market situation.

The company will use efficient trained staffs in the area of marketing to be competitive supplier
o finished clothes in the market .Therefore, it must particularly to the project under
consideration, to give especial affection to select and recruit the appropriate total manpower
requirement for the plant will be employees at full capacity.

The total manpower required for the plant will be 160 employees

1. Permanent Workers :- 110

 Skilled :-80
 Unskilled:-30
2. Temporary Workers:-50
 Skilled :-30
 Unskilled:-20

Page 33
 Project proposal for Textile and Garment Factory

The total number of manpower, manpower list, qualification, and salary and sex composition
are listed in the table below.
No Position No. Qualification Monthly Total annual
require salary pay roll
I Permanents Worker
1 General manager 1 MSc in Garment and Textile Eng.
11,400 136,800
2 Production Head 1 MSc in Garment and Textile
7,600 91,200
3 Production Supervisor 5 Diploma Textile Technology
5,320 319,200
4 Designer 5 Garment and Finishing Design
3,800 228,000
5 Pressing Man 6 Diploma general Mechanics
2,280 164,160
6 Cutter Master 2 Tailor and Garment Technology
2,432 58,368
7 Sales 8 Dip. salesman and marketing
2,660 255,360
8 Personnel 1 BA in HRM
5,320 63,840
9 Tailor 20 Dip. Tailor and Garment Techn.
1,520 283,200
10 Assistant Tailor 10 Level Tailor and Garment Techn.
1,368 134,080
11 Marketing Head 1 BA in Accounting
5,367 64,405
12 Mechanic 2 10+2 in general mechanics
3,800 91,200
13 Administrator & 1 BA in management/Accounting
Finance manager 5,320 63,840
14 Accountant 3 BA in Accounting
3,800 36,800
15 Electrician 2 10+2 in general Electrics
3,800 24,200
16 Secretary 1 Dip. In secretariat science
1,368 12,248
17 Clerk 2 10 completed
1,520 36,480
18 Store Keeper 4 10+2 in store and logistic mngt.
1,368 65,664
19 Drivers 4 10 completed
1,140 54,720

Page 34
 Project proposal for Textile and Garment Factory

20 Assistant Drivers 3 Basic

988 35,568
21 Cashier 4 10+3 in accounting
1,140 54,720
22 General Service 1 10 completed
3,040 36,480
23 Purchaser 3 BA in Purchaser
2,280 82,080
24 Guards 3 Unskilled
1,140 41,040
25 Cleaner and Laundry 5 Unskilled
1,140 478,800
Total 98
8,116,453
II Temporary Worker
1 Daily Laborer 60 Unskilled
1,026 339,280
Total
160 10,455,733
Benefit (10%)
100000
Grand Total 701,306

4.2. Organization Structure and Management

The organization 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 activities of the plant. Employees
under each unit will be supervised by the department head that is accountable for the general
manager. General Manager is accountable to the owner to the factory as indicated in figure
below.

Page 35
 Project proposal for Textile and Garment Factory

Organizational Structure

General Manager

Production Dept. Administration and

Marketing Department
Finance

Administration and
Purchase Finance
Secretary General service
Waiter Department
department

Cutting Sewing Finishing Driver Clerk

Section Section Section Customer

Fig: Organizational Structure

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

Page 36
 Project proposal for Textile and Garment Factory

4.3. Flow of job process of the departments

Page 37
 Project proposal for Textile and Garment Factory

1. General Manager
Duties and responsibilities

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

2. The Manufacturing Department

Duties and responsibilities:-

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

 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

3. Administration and Finance Department

Duties and responsibilities:-

 Will plan, organize direct and control the financial transaction of the plant by using the
entire necessary document.

Page 38
 Project proposal for Textile and Garment Factory

 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include: effective
handling of the different inventories of the machineries, equipment, raw materials,
finished products, and devise strategies of controlling against fraud and damage.
 Manage and execute The promoter national and international procurement procedure
 Administer and control The promoter logistic resource
 Effectively administer the promoter Procurement process domestically as well as
internationally.
 Manage the public relation of The promoter/factory with external parties/stakeholders
 Provide and manage general supportive service to the plant.

4. Commercial Department
Duties and responsibilities:-

 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing
 Gather information on new product design, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will design and implement effective advertisement and promotion schemes
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of The
promoter

Page 39
 Project proposal for Textile and Garment Factory

5. FINANCIAL REQUIREMENT AND ANALYSIS

5.1 Total Initial Investment Cost

Cost estimates of the envisaged project consist of capital investment cost and working capital
requirement. Total investment capital required to establish and run the envisaged project is
estimated at birr 10,000,000Million, the project will be financed Owner equity contribution 30%
that means 3,000,000 and Bank loan 70% (7,000,000)Detail financial analysis of the project is
depicted in the table blow.

SUMMARY OF FINANCIAL REQUIREMENT

No Description Cost

1 Fixed Investment

1.1 Land, Building and Construction 3,643,528 00

1.2 Machines and Equipments 3,422,095 00

1.3 Office Equipment 98800 00

1.4 Other equipment 77717 00

1.5 Vehicles and Motors 1,300,000 00

Total Fixed Investment Cost 0

2 Operating Expense

2.1 Raw Materials Purchase and Input 1, 000,000 00

2.2 Salary Expense 501,306 00

2.3 Other Operating Expense 45,701 00

2.4 Pre-operating Expense 874,760 00

Total Operating Expense 0 00

Total Cost 00

Contingency (10%) 39000 00

Page 40
 Project proposal for Textile and Garment Factory

Total Investment Cost 10,000,000 00

5.1.1. FIXED INVESTMENT COST ESTIMATION OF THE PROJECT

A) LAND, BUILDING CONSTRUCTION & CIVIL WORK

No Description Unit Build area Unit cost Total cost

in Birr in Birr
1 Production Hall (from weaving 4250 2,300
to finishing process) M2 1,429,000
2 Warehouse M2 3,250 2,250 557,500
3 Office Building, Shops & show M2 700 2,000
rooms 164,000
4 Waste Accumulation area M2 200 1,700
258,400
5 Green area & parking M 2
1,600 500
208,000
6 Fences
180,000
7 Site Development
125,108
8 Design and Supervision
180,000
9 Land Lease initial
33,520
Total Estimated cost 8750

B) MACHINERY AND EQUIPMENTS

No. Description Unit Quantity Unit cost Total cost in

(Birr)
1 Weaving machine with No. 4 2,375,000 7,220,000
accessories
2 Single needle stitching No. 2 1,620,000 2,462,400
machine
3 Double needle stitching No. 2 4,652,692 7,072,092
machine
4 Sewing machinery No 15 5,000 57,000
5 Lay Cutting Machines No 10 2,000 15,200

6 Needle Detectors No 2 1,000 1,520

7 Glass Cutter No 6 2,000 9,120

Page 41
 Project proposal for Textile and Garment Factory

8 Steam Iron Boxes, No 6 35,000 159,600

9 Oil Stain Removers, No 5 50,000 190,000

10 Fabric Cutting Tables No 5 3,000 11,400

11 Vacuum Press Tables No 5 15,000 57,000

12 Line Product Tables No 10 30,000 228,000

13 Wooden Platforms No 15 1,800 20,520

14 Stitching Machine No 4 150,000 456,000

15 Garment washing machine No 2 829,671 1,261,100

25Kg Capacity
Total Estimated Cost 3,19220,95

C) OFFICE FURNITURE & EQUIPMENT

No Description Unit Qty Unit cost, in (Birr) Total cost, in (Birr)

.
1 Managerial Tables No. 6 20,000
with Chair 91,200
2 Secretarial Chairs No. 5 10,000 38,000
3 Computer with printer No. 20 15,000 228,000
4 Office Chairs with No 50 5,000
tables 190,000
5 Shelf No. 50 5,000 190,000
6 Telephone and Fax No. 5 10,000
machine 38,000
7 Filing Cabinets No. 5 10,000 38,000
8 Decoration and Other No. 76,000
9 Other Miscellaneous No.
Off. Equ 98,800
Total Estimated Cost 988,000

Page 42
 Project proposal for Textile and Garment Factory

D) OTHER EQUIPMENT

No Description Measure Qty Total Price

1 Factory fixture (wooden tables, stools, “ 1

boxes etc) 380,000

2 Machine Installation & Electric wiring “ 1

cost 397,178

Total 777,178

E) VEHICLES AND MOTORS

No. Description Unit Amount required Unit cost, in Total cost, in Eth
(Birr) (Birr)

1 Pick up No. 1 1,300,000

1,300,000
Total estimated cost 1,300,000

Page 43
 Project proposal for Textile and Garment Factory

5.1.2. INITIAL WORKING CAPITAL ESTIMATION OF THE PROJECT

The initial working capital is estimated to be birr 160,220.00

A. RAW MATERIAL PURCHASE AND INPUT

No Description Measure Qty Per/ Qty Per Unit Total price

ment price
Month Year

1 Colored Cotton poplin M2 6,757 81,084 93

/Polyester Fabrics/Other 131,008

2 Buttons ,Hooks Kg 2,000 24,000 60 194,400

3 Sewing Threads “ 2,400 28,800 45 184,960

4 Labels Kg 4,800 57,600 55 107,680

5 Zippers Kg 1,280 15,360 70 317,152

6 Packing material No 1,000 12,000 40 364,800

Total 18237

B. SALARY EXPENSE

As indicated in part 4.1 (manpower) of this study, the total cost of salary and wages is estimated
to be Br.1, 301,306.00

Page 44
 Project proposal for Textile and Garment Factory

C. OTHER OPERATING EXPENSES

SN Description Annual Cost in Br. Assumption Used

1 Property Insurance 304,069 10% of Fixed investment cost

2 Audit and Legal Fee 91,200 10% of Salary

3 Uniforms 126,493 1% of FC

4 Telephone, Fax and Postal 65,360 3000per month

5 Cleaning Gods Supplies 74,480 80*60br

6 Repair and Maintenance 1,026,000 83333 per month

7 Advertisement 585,200 64167 per month

9 Stationery and other office 3500 per month

supplies 69,920

10 Electricity 190,000 0.45*150,000W per year

11 Water 22,800 2*1000 m3 per year

12 Fuel 288,800 1900 lit*20 per year

13 Oil and lubricant 26,139 10% of fuel cost

14 Miscellaneous Expense 75,240 8,250 per month

Total 2,945,701

D. PRE -SERVICE EXPENSE

No Description Cost

1 Project proposal and EIA 38,000

2 Licensing fee and others 38,000

3 Promotion and Advertisement 760,000

Page 45
 Project proposal for Textile and Garment Factory

4 Staff Capacity Building/Trainers/ 38,760

Total 874,760

5.3. FINANCIAL ANALYSIS AND STATEMENTS

5.3.1. Underlying Assumption

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

A. Construction and Finance

 Construction Period ……………………………………………………….…24 Months

 Source of finance………………………………………………30% equity and 70% loan
 Bank interest rate ……………………………………………………………………10 %
 Tax holidays ……………………………………………………………………2 years
 Operating costs increase by…………………………………………………………2%
 Operating costs and raw material increased by……………………………………5%
 Utilities and operation expense …………………increase 3% per annum after 2ndyear
 Wages and Salary increase……………………Increase 3% Per annum after 2 nd year

 Sales …………………………………………..increase by 5 % per annum after 2nd year

B. Depreciation
 Building…………………………………………………………………………….5%
 Machinery and Equipment ………………………………………………………..10%
 Office Furniture……………………………………………………………………10%

 Vehicles ………………………………………………………………………..…..20%

C. Working Capital

Page 46
 Project proposal for Textile and Garment Factory

 Accounts Receivable…………………………………………………………….30 days

 Raw material Local …………………………………………………………..…..30 days
 Work in progress…………………………………………………………………5 days

 Finished Production ……………………………………………………………..30 days

 Cash in hand ……………………………………………………………………...5 days
 Accounts payable …………………………………………………………….…..30 days

5.3.2. Source of Fund

SN Description % share Amount(in birr)
1 Owners Share 30 3,000,000
2 Bank Loan 70 7,000,000
Total 100 10,000,000

5.3.3. Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Payment Remaining Balance
0 0 0 0 7,000,000
1 700,000 700,000 80,000 2,880,000
2 700,000 788,000 608,000 2,560,000
3 700,000 256,000 576,000 1,240,000
4 700,000 724,000 444,000 1,920,000
5 700,000 192,000 312,000 600,000
6 700,000 560,000 280,000 280,000
7 700,000 128,000 248,000 60,000
8 700,000 596,000 216,000 40,000
9 700,000 64,000 20,000 700,000
10 700,000 532,000 3,852,000 0
5.3.4. Annual depreciation schedule of the fixed Asset ( birr)

SN Description Initial value Annual depreciation

Rate Value

Page 47
 Project proposal for Textile and Garment Factory

1 Building & construction 2,625,695 5% 1,081,285

2 Machinery& Equipment 3,290,727 10% 2,529,073

3 Office furniture & equipment 300,000 10% 130,000

4 Vehicles 800,756 20% 1,120,151

Total 1100756 - 1250151

5.3.5. Revenue Projection

Based on the production capacity and program of the envisioned garment factory indicated in
previous (chapter 2), the revenue of the factory at full capacity projected as indicated in the table
below.

SN Description Year 1 Year2 Year 3

1 T-Shirt 66,500,000 85,500,000 910,000,000

2 Men Shirt 117,600,000 151,200,000 168,000,000

3 School Wears 89,250,000 114,750,000 127,500,000

Total 273,700,000 351,450,000 390,500,000

4.2.1. Balance Sheet (Beginning)

Asset
Current Asset Value in Br
Cash
1,921,767
Inventory of raw material and input
3,400,000
Total Current Asset 4,321,767
Fixed Asset
Land, Building and Construction
3,435,528
Machineries and Equipment
3,220,953
Office Equipment
988,000
Other equipment 777,178
Vehicles
800,005
Total Fixed Asset 4,178,233

Page 48
 Project proposal for Textile and Garment Factory

Total Asset 10,000,000

Liability
Account Payable 7,000,000
Owner Equity
Capital 3,000,000
Total Liability and Owners Equity 10,000,000
5.3.6. INCOME LOSS STATEMENT

Revenue Year 1 Year 2 Year 3-10

Sales 273,700,000 351,450,000 390,500,000
Sales expenses (5%)* 410,025,000
Purchase of Raw Material 110,000,000 110,000,000 110,000,000
Gross profit 258,700,000 336,450,000 375,500,000
Expenses
Salary Expense 15,133,298 15,133,298 15,133,298
Operating Expenses 3,875,922 3,875,922 3,875,922
Pre-operating Expense 1,151,000 1,151,000 1,151,000
Total Deprecation 4,860,509 4,860,509 4,860,509
Interest Expense 7,000,000 6,300,000 5,600,000
Total Expense 32,020,729 31,320,729 30,620,729
Profit Before Tax 226,329,271 305,129,271 344,879,271
Tax(30% ) 67,898,781 91,538,781 103,463,781
Net Profit 158,430,489.70 213,590,489.70 241,415,489.70

*sales expenses not include all costs pertinent to sales that include: promotional costs,
transportation of products, commissions and other sales discounts.

5.3.7 CASH FLOW STATEMENT

Page 49
 Project proposal for Textile and Garment Factory

Year Year 0 Year 1 Year 2 Year 3-10

Equity Capital 3,000,000

Loan principal 7,000,000

Net sale 273,700,000 351,450,000 390,500,000 410,025,000

Total cash in flow 273,700,000 351,450,000 390,500,000 410,025,000
cash payment
Purchase of raw materials 0 110,000,000 110,000,000 110,000,000

Salary expense 0 15,133,298 15,133,298 15,133,298

Investment 41,000,000 0 0 0

Operating cost 0 3,875,922 3,875,922 3,875,922

loan repayment 0 7,000,000 7,000,000 7,000,000

Lease payment 0 702,000 702,000 702,000

Tax payment 0 210,600 210,600 210,600
Total payment 41,000,000 11,788,522 11,788,522 11,788,522
5,793,323.3
Cash surplus / Deficit 0 7,990,254.63 13,952,278
3
5,793,323.3
Cumulative Balance 0 13,783,577.96 27,735,855.96
3
5,793,323.3
Return to equity 0 7,990,254.63 13,952,278
3

5.3.9. Profitability

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

Page 50
 Project proposal for Textile and Garment Factory

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

5.3.10. Break-Even Analysis

The break-even point of the project including cost of financial when it starts to operates a t full
capacity (year 3) is estimated by using income statement projection.

5.3.11. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered at the 3 years of operation.

6. FUTURE DEVELOPMENT

Every business undertaking be it large or small should have future development plan. It is a plan
fact that business activities are undertook in a dynamic business nature and different
environment. Therefore, the factory will have an expansion phase depending on the condition of
the industry character particularly in producing the profile itself by installing the plant. In this
regard, envisioned garment factory will expand its capacity as well as the product mix a part
from T-shirt, Men shirt and Uniforms

7. ENVIRONMENTAL IMPACT ASSESSMENT OF THE PROJECT

7.1. Socio Economics Environments

The owner will provide the land on bases and all required compensation will be paid for the
project. The livelihood of the local people around the project area is rural dweller of various
occupation and economic background.

7.2. Environmental Impact Assessment of the Project

Environmental aspects are fundamental for the sustainability assessment of the current and novel
designs of this project garment Industry. In this regard the factory will undertake a separated and
detailed Environmental impact assessment.

Page 51
 Project proposal for Textile and Garment Factory

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

Page 52