Address:- Addis Ababa

Sub-City:- Arada
Woreda- 01
House No. 223/502
Tel.: +251 11156 1805 /0911 21 93 02

August, 2017
Addis Ababa

I. EXECUTIVE SUMMARY

The economic liberalization process being undertaken in the country and the strong commitment
of the government to create a supportive environment for the development of the private sector

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has positively affected the export sector. Enabling environment created by the government
resulted in improvement of the foreign trade, which is significantly due to the growth of the
private sector has encouraged the private sector to engage in international businesses. Looking
the export potential of the country and aiming to engage in different business activities, BELSTY
NEGESSA & HIS CHILDREN TRADING PLC is established in the year Meskerem 29, 2001
E.C (October 9, 2008 G.C). It started the export business with registered capital of birr 1,000,000
and by subsequent shareholders meeting the company’s registered capital had been grown to birr
8.3 million which final on May 17, 2016 the company’s capital has increased to ETB
12,000,000.

Currently, the company has great ambition to increase its import, export and transport capacity
so as to bring overall affirmative changes in its business performance and results. Considering,
the importance of business plan, as a management tool for the creation or expansion of the
business, company’s management has prepared a fuel trucks business plan, which is amounting
to be ETB 22,400,000 which is 70% of the value of 10 units of sino fuel trucks. The financial
impact of the plan is also reflected in the form of forecasted profit/loss/ and cash flow
projections.

II. BACKGROUND AND OBJECTIVES

2.1 PROFILE
 Name of Exporter: - BELSTY NEGESSA & HIS CHILDREN TRADING PLC.
 Address:- Addis Ababa, Sub city- Arada, Woreda 01, House No. 223/502/
 Registered Capital:- Birr 12,000,000
 Form of Business:- Private Limited Company
 Manager:- Ato Mezgebu Belsty Negessa
 Main Business Stream:- Export Agricultural Products and Import Trucks and
construction materials,
 Trade License No. MT/AA/2/0002873/2004 date issued 20/02/2004
 Tin No. 0004800986
 External Auditor: -Zemedhun & Company Chartered Certified Accountants (London).
2.2 COMPANY OWNERSHIP

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BELSTY NEGESSA & HIS CHILDREN TRADING PLC is locally viable venture that was
established by two Ethiopian nationals with total paid-up capital of birr 1,000,000 in the year
2001 E.C. In the year 2005 E.C, the shareholders increased the registered capital to birr 8.3
million. Lately, in Ginbot 9, 2008 E.C (May 17, 2016) shareholders have increased the
company’s capital to ETB 12,000,000.

The company is created by two entrepreneurs who envisioned an opportunity to engage in social
and economic development and financial reward. These visionaries started with solid ideas to
form the foundation of the import and export businesses with some skills necessary to transform
their ideas into reality. Amongst other factors of performance measurements, continuous growth
of the owners’ capital is an indication of the success of the company in the last 8 to 9 years. The
company’s growth in capital has also contributed to enhancement of performances both in type,
volume and value of traded commodities.

Table 1: Capital Contribution of the shareholders

No. Name of shareholder No. of share Par value Total % age holding
1 AtoMezgebuBelstyNegessa 720 10,000 7,200,000 60%
2 AtoMelakuBelstyNegessa 480 10,000 4,800,000 40%
Total 1200 20,000 12,000,000 100%
Currently, the company is operating in export, import, transport, distribution and service sectors.
The company is dedicated to providing marketing and trading for existing customers and
emerging businesses looking for opportunities to increase their potential for success. Unlike
traditional marketing firms that focus on short term benefits, this company works exclusively
with business clients that have long term business relationship ideas, which can develop concrete
and practical actions that will start moving their businesses in the right direction.

The management of the company is also undertaken through the two shareholders. One of the
shareholders, Ato Mezgebu Belsty, having 60% share is also the General Manager of the
company. He is assisted by the other shareholder and other qualified employees.

As shown in the table 2 below, the company management team has acquired a broad range of
industry experience in the sectors of import, export, transport rental and business representation
skills combined from both energetic and experienced industry leaders.

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The company management team has the capacity to discovering, developing and tapping
business opportunities so as to grow the business environment internationally. As the market for
the company is getting massive in the course of time, the two founding members are working
harder in diversified businesses maintaining full-time positions within the company. As we
determine how best to enlarge our businesses, we will consider expanding the business as
defined in our vision and mission. Table 2 shows Management and key employees’ profile of the
company.
2.3 COMPANY STRATEGY
2.3.1 PURPOSE

The purposes of the company is to be a leader in the import, export, service and processing
industry by providing enhanced services, relationship and profitability.

2.3.2 VISION: – Provide quality services that exceeds expectations to delighted customers
2.3.3 MISSION: – Create financial soundness and build long term relationships with
customers and provide exceptional customer services by pursuing business through
innovation and advanced quality.
2.3.4 Goals: -
 Increasing the number and volume of export items and destinations,
 enhance the level of import, representation business and service provision so as to reduce
market risk through diversification
 Regional expansion in the field of international business and develop a strong base of key
customers
 Increase the assets and investments of the company to support the development of
services
 Build good reputation in the field of international trading and became a key player in the
industry
2.3.5 CORE VALUES
 We believe in treating our customers with respect and faith,
 We grow through creativity, invention and innovation
 We integrate Honesty, integrity, Responsibility and business ethics into all aspects of our
business functioning

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III. BUSINESS ENVIRONMENT AND MARKET POTENTIALS
3.1 GENERAL

Apart from the conducive and continually improving free market oriented policy environment,
Ethiopia has various advantages for the development of its external trade sector. These include
the abundant and capable labor force, low wage levels, a wide-ranging weather and soil
conditions, preferential access to the European Union markets and proximity to the middle-East
markets. The preferential access to the Common Market for Eastern and Southern African State
(COMESA) with a total population of more than 260 million also offers substantial market
opportunities for several import and export items from Ethiopia.

3.2 EXPORTS

The country’s oil seeds, pulses and spices export volume and value have shown different
scenario in 2007 fiscal year. In the oil seeds sector the total exported volume was 315,450.08
tons whereas the value of these items was registered as USD 503,943,580 according to the data
sources obtained from EPOSPEA. The analysis of the data shows that the volume of exported
items in 2007 has increased by 8.6% and in the contrary the value of the export has decreased by
22%. In the same fiscal year the total volume of pulses export was 341,482.77 tons and its
equivalent value was USD 220,192,990. The same data source showed that spices placed third in volume
and values have contributed about 18,088.46 tons sold at USD 28,754,660.

When we assess the importing countries, in 2007 fiscal year, 43 countries have imported different
quantities of oilseeds from Ethiopia. China and Israel topped the table are followed by USA, Turkey and
Jordan. Japan is also placed sixth importer of oilseeds in Ethiopia. About 63 countries have participated in
importing pulses from Ethiopia in which India, Pakistan and Sudan have topped the table. Ethiopia spices
products are also exported to 47 countries. Sudan, Kenya, India, Pakistan, Yemen, Egypt and Indonesia
are top six importers of spices in Ethiopia in 2007 E.C.

In general the country’s oil seeds, pulses and spices sector export (2007 E.C) value has been summarized
as USD 752,891,230. According to the government’s data sources the performance of the oil seeds, pulses
and spices export sector was not satisfactory. It is mainly due to the decline of products’ selling prices
throughout the fiscal year which hits the country in whole year.

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The 2008 E.C oil seeds, pulses and spices export quantity and value has also been at similar trend to the
preceding year’s performance. The international selling prices has been constantly decreasing in months
from July to February and finally starting from March 2008 E.C the prices has increased to a little extent.

The information obtained from EPOSPEA showed that a total volume of 821,494.67 metric tons of
oilseeds, pulses and spices at a value of USD 727,235,620 has been exported to different countries in
2008 E.C. Among this total volume and value of exported items, oilseeds account for 433,056.9
metric tons in volume and USD 472,243,440 in value. Of this total quantity and value of oilseeds export
sesame seed accounts a total volume of 393,967.80 and a total value of USD 431,709,250. This means
the total share of yearly export of sesame seed accounts for 91.42 percent of oilseeds export.

When it comes to pulses sector, in 2008 E.C, a total volume of 376,158.60 metric tons at equivalent
value of USD 232,647,110 has been exported to different countries. The total export quantity of
spices was 12,279.17 metric tons at a value of USD 22,345,070.

Table 2: The 2008 E.C the country’s export performance (Ham 1, 2007 – Sene 30, 2008)
No Export item Quantity in MT Value in USD Average in % versus total
export value
1 Oilseeds 433,056.90 472,243,440 64.94
2 Pulses 376,158.60 232,647,110 31.99
3 Spices 12279.17 22,345,070 3.07
Total 821,494.67 727,235,620 100
Coffee and other export sectors are not assessed in this business plan. However, to view some
indication of the coffee export sector, the International Coffee Organization (October 2013)
report indicated that the monthly average ICO composite indicator price was standing at its
lowest level since March 2009. The global coffee price continued to show no sign of recovery
when compared to its dominant economy in the past many years. And as a result government
sources advocate that it has adversely affected Ethiopia’s coffee export. Generally, coffee export
has no promising performance in 2008 E.C.

3.3 IMPORT

Despite the export sector data which is relatively easily accessed to users, the country’s import
data is far from easy access yet. However, it is possible to imagine that the country’s potential to
consume variety of imported items with huge quantity for its constructions, manufacturing, food
processing and development activities are well known. It is known that different manufacturing

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plants, construction materials, services including transport, chemicals, industry raw materials,
tyres and tubes, and other similar items are largely required in the country.

3.4 BUSINESS REPRESENTATION

Business representation business has significant potentials to engage in distribution trading by

representing international and national manufacturing companies and representing international
traders. The country’s experience in business representation sector is limited to a large extent and
so there is huge opportunity to plan the sector as a potential business line.

3.5 SERVICE SECTOR

The country has also great potential of transport sector business. Every year significant quantity
of cargo is transported from one area to another. The country’s exported items, imported items
and over all agricultural and industrial products produced and consumed locally are increasing
every time. This is one of greatest opportunities for our company to increase our transport
capacity.

Particularly, to maintain greater benefits from our export and import business, increasing the
capacity of transport sector has paramount importance.

IV. MARKET ANALYSIS

To show the trend of Business Performance in the last 9 years, some sales volume and value data
has been drawn from company’s data sources. Consideration of the existing market analysis is
important as the basis of the marketing plan and to help justify the sales forecast. The market
period covering Hamle 1, 2003 – Sene 30, 2008 (in five years) of the company has shown that
the total exported quantity is 29,426.70 metric tons of different types of agricultural commodities
for total value of USD 42,916,070.40 which is equivalent to ETB 827,307,911.67.

As far as import achievements are concerned, in the last three years between 2006 and 2008, the
company has imported different commodities at a value of USD 4,582,566.84 which has equivalent
amount of ETB 95,615,896.9. Even though we lacked summarized date for transport sector earnings, the
company has good performance, which mainly supports its export and import businesses.

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Generally, the company, which has only eight years of business experience, this performance is
appreciable and it shows its significant contribution to the national foreign currency earnings,
support construction and boosting transport sectors. Now, below are some data that show detail
indications of business achievements of the company in the last planning years.

4.5.1 EXPORT ANALYSIS

Export is the major business line that the company has been engaging since 2007. The company
has been dealing with Oil seeds, Pulses and Spices business since its establishment. In the last
seven years the company’s contribution to the country’s foreign currency earning has been
appreciable. The company ranked among top ten best exporters list and to that effect it has got
awards from Commercial Bank of Ethiopia for years. In the last four years the export
performance in general would be rated as very good. In the years 2004, 2005 & 2006 the
increasing trends of export both in volume and values have been encouraging. However, in 2007
due to huge fall in demand & prices of agricultural commodities in the international market, the
company’s export volume & value were declined to a large extent. However, in 2008E.C the
total volume and value of export items has shown some positive performance again. In table 3
below it is clearly shown.

Table 3: - Summary of Export data (2004 – 2008 E.C)

Year Quantity in MT Value in USD Value in ETB
2004 4959 5,971,637.00 103,318,073.20
2005 5014.48 8,766,913.00 154,637,178.00
2006 8806 15,155,220.00 283,466,290.91
2007 3690 5,946,345.00 134,580,787.00
2008 6,959.50 7,075,955.00 151,305,582.47
Total 29,428.98 42,916,070.00 827,307,911.58

At section 3.6.1 above the export achievements of the last 5 years has been discussed in general.
The five years currency earnings from the export of all types of agricultural products’ sales have
been shown as USD 42,916,070.00. Now, the five years equivalent amount of commodities and the
detail earnings of each year are tabulated in the following six tables.

Table 4: - Export performance Hamle 1, 2003 - Sene 30, 2008

No. Commodity Quantity in MT Value in USD Value in ETB
1 Sesame seed 24,620.20 39,872,890.40 768,312,932.18

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 2 Rape cake 1,376.00 447,520.00 8,370,504.32
3 Light spekeled bean 96.00 124,800.00 2,334,284.37
4 Red Kidney bean 96.00 81,600.00 1,526,262.85
5 Castor seed 915.00 393,925.00 7,978,376.40
6 Sorghum 350.00 131,250.00 2,454,926.47
7 Peanut 760.00 1,134,300.00 20,438,890.56
8 Lupin seed 96.00 31,680.00 716,998.31
9 Soya bean 792.00 346,280.00 7,555,727.29
10 Niger seed 325.50 351,825.00 7,619,008.92
Total 29,426.70 42,916,070.40 827,307,911.67

As we can see from table 5 above, the company’s product portfolio is really appreciable. The company
has diversified its exportable products to 9 items. The export products mix in 2004, 2005, 2006 and 2007
were 2, 2, 7 and 4 respectively. Particularly in 2006 and 2007 the product mixes were encouraging for
future lessons to be learnt. The following four tables show that the quantity and portfolio of each year.

Table 5: Export performance in 2004 E.C.

No. Commodity Quantity in Value in USD Value in ETB
MT
1 Sesame seed 4576.72 5,464,337.30 94,384,032.69
2 Peanut 380 507,300 8,934,041
Total 4956.72 5971637.3 103318073.2

Table 6: Export performance in 2005 E.C.

No. Commodity Quantity in MT Value in USD Value in ETB

1 Sesame seed 4824.48 8557913.1 150950684.3

2 Peanut 190 209,000 3686493.734

Total 5014.48 8766913.1 154637178

Table 7: Export performance in 2006 E.C.

No. Commodity Quantity in MT Value in USD Value in ETB
1 Sesame seed 6042 13742130 257035570.6
2 Rape cake 1376 447520 8370504.322
3 Light spekeled bean 96 124800 2334284.366
4 Red Kidney bean 96 81600 1526262.855
5 Castor seed 656 209920 3926386.01
6 Sorghum 350 131250 2454926.467
7 Peanut 190 418,000 7818356.29

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 Total 8806 15,155,220 283466290.91

Table 8: Export performance in 2007 E.C.

No. Commodity Quantity in MT Value in USD Value in ETB

1 Sesame seed 3363 5,787,780 130992061.1

2 Castor seed 99 68805 1557230.711

3 Lupin seed 96 31,680 716998.3128

3 Soya bean 132 58,080 1314496.907

Total 3690 5946345 134580787

Table 9: Export performance in 2008 E.C.

No. Commodity Quantity in MT Value in USD Value in ETB
1 Humera Sesame 4,294.00 4,624,980.00 98,354,826.71
2 Wollega sesame 1,520.00 1,695,750.00 36,595,756.78
Sub total 5,814.00 6,320,730.00 134,950,583.49

3 Niger seed 325.50 351,825.00 7,619,008.92

4 Soya bean 660.00 288,200.00 6,241,230.38
5 Castor seed 160.00 115,200.00 2,494,759.68
Sub Total 1,145.50 755,225.00 16,354,998.98
Grand Total 6,959.50 7,075,955.00 151,305,582.47

4.5.2 IMPORT ANALYSIS

The company’s second major business line is Import sector. In the last seven years it has been
engaging in importing loaders, euro trackers, dump trucks and other construction materials to
supply for the clients in the country. Its contribution to facilitate the development activities of the
country was also encouraging.

Table 10: - Summary of Import data from 2006 – 2008 E.C.

Year Quantity in set Total Cost in ETB Equivalent Value in USD
2006 8 18,514,205.31 949,446.43
2007 848 20,713,144.44 1,010,397.29

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 2008 455 56,388,547.15 2,622,723.12
Total 1311 95,615,896.9 4,582,566.84

The company’s import performance in the last consecutive three years has been concluded as
encouraging. The results are visible both in product portfolio and quantity and value of imported
items. In 2006 E.C the product mixes were 3 items with a total quantity of 8 and total cost of
ETB 18,514,205.31 and by successive year the imported items mixes have increased to four and
the total cost values of imported items have increase to ETB 20,713,144.44 (table 10 above).

The 2008 E.C import performance has been unique and the number of products have increase to
five and the values of the imported items have also dramatically increase to ETB 56,388,546.84
(Table 10 above). This is actually performed as per the plans of the company and as a result, it
has resulted in substantial capacity build up in the internal capability of the company. To know
the company’s three years import performance by type and volume it is good to check tables 11,
12 & 13 below.

Table 11: Import performance of 2006 E.C

No. Item Unit Quantity Unit cost in Total value in ETB

ETB
1 Iveco trakkers Set 5 3,112,064.00 15,560,319.98
2 Sino Trucks Set 2 1,195,296.45 2,390,592.90
3 Toyota Hilux Set 1 563,292.43 563,292.43
Total 8 18,514,205.31

Table 12: Import performance of 2007 E.C

No. Item Unit Quantity Unit cost in ETB Total value in ETB
1 Iveco trakkers Set 6 2,353,418.76 14,120,512.58
2 Loader Set 1 1,360,614.48 1,360,614.48
3 Toyota Hilux Set 1 798,870.56 798,870.56
4 Tyres Set 840 5,277.56 4,433,146.82
Total 848 20,713,144.44

Table 13: Import performance of 2008 E.C

No. Item Unit Quantity Unit cost in Total value in ETB
ETB

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 1 Iveco trakkers Set 13 1,935,081.67 25,156,061.73
2 Cargo Loader Set 1 1,700,000.00 1,700,000.00
3 Toyota Hilux Set 1 706,000.00 706,000.00
4 Tyres Set 420 6,808.70 2,859,653.67
5 Sino Trucks Set 24 1,081,951.31 25,966,831.44

Total 459 56,388,546.84

4.5.3 BUSINESS REPRESENTATION

The company is also engaging in agent ship and business representation activities in order to
diversify its business sectors. Due to our company’s strong motivation and interest to engage in
business representation trading in 2015 it has represented Mesebo Cement Factory for three months in
Addis Ababa. Since our representation was just one government housing project site in Addis Ababa, the
duration was just three months i.e. between Sept 2014 and Nov 2014. In this time frame our company
has distributed about 10640 tons of Cement in the government’s housing construction Gelan project site
and significant lessons have been gained in the representation business .

To continue in distribution business sector currently, the company is in the process of negotiation
to sign contracts to distribute DANGOTE INDUSTRIES (ETHIOPIA) LTD cement products.
Starting from July 2015 our company has represented to distribute Dashen Beer Factory Share Company
products in significant areas of Addis Ababa. We are strongly performing Dashen beer distribution and in
the last 8 months (as of July 2016), the company’s Dashen Beer sales value is about birr 20 million.

4.5.4 SERVICE SECTOR

The company is engaging in transport service as well as rental service provision. To serve its
export, import and business representation businesses, the company has acquired 7 Iveco trucks
which have carrying capacity of 40 tons each and 2 dump trucks with carrying capacity of 20
tons each. One loader is also rented to the contractor in Addis Ababa on rental basis. In the transport
sector 7 trucks are already included as shareholders in the Tsehay Transport PLC. In addition to
the services provided to its businesses, the company is also providing services to construction
sector of the country on rental basis and therefore, it is contributing services to the national
economy as well.

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 Due to lack of statistical data the services provided and incomes earned in these business lines
are not organized yet. Apart from this business plan, efforts are progressing to get disaggregated
data of these sectors for future analysis and utilization. However, it is possible to imagine that the
financial successes in this sector are significant as there are strong business opportunities.
In general, the company’s Transport and Rental Services are evaluated as too minimum and this business
plan is mainly targeted to increase the capacity of the transport services capacity. It will be clearly defined
the number of additional trucks required in 2009 E.C since the business sector is too feasible.
4.5.5 MANAGEMENT AND ORGANIZATION
Because management problems are the leading cause of business failures, it is important to
discuss management qualifications and structure. The company has created structural
organization which can cope with the turbulent condition of the international business.
According to the structural organization, it has staffed a management team that can perform
the strategic targets of the organization. The company has also set salary and benefit packages
which can attract qualified personnel in the sector and therefore, the business will be
conducted professionally. The management team has a general manager, deputy general
manager and CEO. The team has the capacity to lead the company’s strategic objectives and
ultimately achieve its vision and mission.

In view of strengthening the capacity of its export and import businesses, the company has
established four warehouses in Humera, Metema and Addis Ababa, which have the carrying
capacity of 75,000 quintals of grain in total. The first three warehouses are equipped with
cleaning machines. To cope up the international quality and reliability standards the management
team has also planned to introduce ISO certification and BRC (British Retailers Certificate).
These international standard certificates are very important to promote the company’s export
business to Europe, Japan and the USA in particular.
Table 14: Management Members’ Profile
S/N Name Position Education Experience
1 Mezgebu Belsti Negessa G/Manager 12 Complete 16 years
2 Melaku Belsti Negessa D/General Manager 12 Complete 16 years
3 Anteneh Zegeye Mengistie CEO BSc Degree in Agricultural 16 years
Economics
4 Anteneh Abat Belay Import & Export Officer 1st Degree in Geography 8 years

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5 Yimegnushal Befekadu Jiregna Senior Accountant Diploma in Accounting 14 years
6 Solomon Mihretu Gashaye Finance Head 1st Degree in Accounting, 10 years
MBA in General Management

7 ZelalemYitaye Cleaning Unit 1st Degree in psychology 4 years

8 Hermon Berhe Accountant BA Degree in Accounting 6 years

Despite the turbulent trading situation of modern time business, the company has created
organized and skillful management team to cope up with the dynamic business orders. As a
result to strong management team and good relationships with employees across the structural
organization of the company, remarkable business successes have been registered in the past 9
years. To materialize the company’s growth mission the company is led by three higher level
management members namely: General Manager, Deputy General Manager and CEO. Under
this management team a total number of 74 employees including the management members have
been assigned to run the business operation of the company.

4.5.6 FINANCIAL ACHIEVEMENTS

4.5.6.1 SALES VALUE COMPARISON

As shown in the audited financial statements of the preceding 3 years ended July 7, 2013 and
July 7, 2014 the company’s sales has grown by more than 83% or by birr 128 million. However,
the July 7, 2015 performance shows some decline in sales when compared to the July 7, 2014
and July 7, 2013 sales values. Export items purchased at higher prices had been sold at loss and
therefore, imported items profits couldn’t bring significant profit difference.

When we evaluate the 2008 E.C profit performance, the trend of the business performance is a
little bit changed and it is generally rated to be good. The reason is the international agricultural
commodities demand and respective selling prices were extremely lower last year and in the
middle of the budget year 2008 E.C (2016 G.C), the demand and prices were revived in favor of
sellers. See below table of the absolute and relative change in sales amount during the year.

Table 15: - Financial performance comparison in years 2005, 2006, 2007 & 2008 E.C.
Year 2016/2008 2015/2007 2014/2006 2013/2005 2008 Absolute 2008 Relative
change change against
against 2007 2007
Status Audited Audited Audited Audited
Sales 315,864,979.10 180,222,831.90 283,466,291 154,637,177 135,642,147.20 43%

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Although the export sales level was substantially grown in the year ended July 7, 2014, the net
profit earned during that year from all sectors of businesses had been minimal. The export sales
value of the year ended in July 7, 2015 has been decreased by 57% as compared to the export
value in the year ended in July 7, 2014. However, the net profit level in all sectors in the year
ended July 7, 2015 (2007) is better than the net profit of the year ended in July 7, 2014 (2006).
This means despite the decline of the sales value in the year ended in July 7, 2015, the
company’s efficiency has increased to some level.

The performance level and efficiency of 2008 E.C has further shown a significant improvement
when compared to the preceding 3 years performances. The company has made significant sales
volume changes as shown in the above table 15. The absolute change of sales in the budget year
has shown positive sign and the relative change of sales is about 43% as compared to its
preceding year (July 7, 2015). The profit level has also shown some improvement.

4.5.6.2 PROFITABILITY

The key measurement of financial achievements of the company is said to be reasonable profitability and
building strong business relationships with different sorts of customers. In these key measurements our
company is evaluated to be good. The company’s 2008 E.C budget year net profit before tax is assumed
to be ETB 3,463,871.64. Against the company plan this profit is too low and when compared to the
preceding years’ company profits, this figure is encouraging. Despite low profit challenges, the
company has built strong relationships with buyers, sellers, financial institutions and other
stakeholders. It is testified by bankers that the company has transparent credit management scheme and
due to this fact the company is working with CBE and with other 5 privately owned banks.

However, the net profit earning of the total performance is still not to expected level due to the
big decline of agricultural commodities demand and prices in the international market in the last
two years. And the import business has not been strongly dealt as a result of currency shortage in
the country. In June and July 2008 E.C, one of these two challenges, export business has been
changing its course into profitable business due to some global decline of production in oil seeds
and pulses. This situation has brought selling prices rise for oil seeds and pulses in the
international market for few months. Currently, the international selling prices of sesame seed
and pulses are almost stable though the demand situation is extremely low.

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In conclusion, the company’s financial performance is sound provided that the future
performances will increase the profit level in all business areas. To increase this efficiency it is
mandatory to increase volume of all businesses, which in turn does require additional working
capital. In addition to the gain in the form of profit the company’s import and export
diversification in different commodities is also considered as a profit.

4.5.6.3 CREDIT SERVICE

In the last many years the company’s relationship with your good office was too minimal and to
this effect, there were little credit services between us. Thanks to our discussions in 2015 the
barriers which have been laid in our way are solved. Our business relationships in getting credit
services and Import and Export volumes have significantly growing.
V. MARKETING PLAN
5.1 ASSUMPTIONS EMPLOYED FOR PLANNING

The basis of all plans including this business plan is derived from its strategic objectives. The
company has clearly defined its vision, mission and general objectives. Achievement of the set
strategic objectives is not as simple as planning stage. Implementation stage or action phase
seeks commitment; persistence, responsibility, and getting ready to cope with up and downs. As
part of the action stage, specific plans are required to this business plan and this is also assumed
as a component of action stage. The following assumptions are considered in the planning stage
of this business plan in particular and the previous business plans in general.

 Foregoing business experience of the company itself and current market information.
 A working capital of birr 150million is available from the bank in the form of Pre-shipment
loan limit which has a significant impact to diversify import items and increase the volume.
 Revenue and costs are assumed to increase by 10% from preceding year.
 Average reject is estimated to be 2% for export items
 Export is assumed to be made evenly throughout the year.
 The company planned to export 18,240 tons of different export items for birr 475,794,000
 Export price is taken to be average of the foregoing prices.
 All cargo which require container stuffing are on 40HQ
 Purchase cost for Sino truck is USD 48500 CFR Djibouti
 Purchase cost for Iveco trakker is EURO 66500 Fob suppliers' port
 One 40HC contains about 210 sets of tyres
 One set of tyre price is USD 215 on average
 One Euro is equivalent to 1.0952 USD
 Freight cost for 1x40HC is USD --- OR BIRR 124546 and for 1

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 Water pump (3") purchasing price at Fob China will be USD 250/set and delivery hose and
suction hose prices are USD 0.7/M and 2.5/M respectively
 Insurance cost for one motor Sino truck and one motor Iveco Trakker are ETB 1202 and ETB
861 respectively
 Insurance cost for other commodities loaded in a container is ETB 405 per 1HC container
 Complete price of one unit of Fuel Sino Fuel truck is ETB 3,200,000 at our warehouse

5.2 SWOT ANALYSIS

The Company has identified a real business opportunity that has vital role for the success of the
export business. Below, we have identified the opportunities and threats in the environment, as
well as our particular strengths and weaknesses that will enable us to succeed. The following
factors define the environment in which the company hopes to succeed.

5.2.1 OPPORTUNITY
 Recent advances in technology have greatly enhanced the ability of business communication
in import and export market. The proliferation of the Internet facilities, skype, WhatsApp and
viber technologies will reduce the cost of conversation and communications among importers
and exporters working across the country as well as international customers.
 Export focused policies of the government as well as the banks have also paramount
importance that can facilitate our export businesses. This will also create an opportunity to
boost the country’s currency earnings which in turn facilitates for its import items.
 Different trade fairs, B2B forums and exhibitions which are conducted in different countries
such as UAE, Israel, China, Turkey, Canada and Japan are also among opportunities which
can help us to concentrate on building clients in the UAE, Jordan, Israel, Turley, China,
India, Japan and Europe.
 And also Embassies of different countries are giving the number of new businesses starting
each year and this will create a sizeable market.
 The country’s huge potential for imported items has paramount opportunity to conduct
profitable business and sizeable volume of imports.
 As the company is engaging in distribution of Dashen beer in the major parts of Addis Ababa
city, it is gaining lessons that can help for future business representation trades. The financial
benefits which will be obtained from the annual turnover of the Dashen beer distribution has
also paramount importance to the liquidity of the company’s finances.

5.2.2 THREAT
 Shortage of currency earnings may hinder the company’s import plans
 Current economic conditions are continuing to challenge our views and plans regarding the
potential for return. The export market has not been rewarding for years. To curb or mitigate
the impact of this challenge, we have built the potential to bring innovative ideas and
possibly leadership qualities to the organization.

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 Many competing companies are not demonstrating profitable business models in order to
maintain profitability in the export sector.
 There are high barriers to entry in the pulses and spices market as it has been tightly occupied
by few exporters for years.
 There is high procurement cost locally and low selling price internationally for oil seeds,
pulses and spices products.

5.2.3 STRENGTH:
 The company management members are repeatedly making business visits to countries
which have major business attachments with Ethiopian market.
 To promote profitability of import and export business, the company has established its own
transit and logistics service provider which has brought significant reduction of transaction
costs.
 Currently, the company is introducing significant quantity of educated manpower so as to
bring efficiency and effectiveness in the business.
 The company has planned to start export businesses with a solid entrepreneurship idea. One
of which is increased the quality of export products after introducing high level cleaning
machine in Addis Ababa warehouse. This will continue in the future to Humera and Metema
facilities
 Experience is well gained in creating the formal business strategies or marketing deliverables
necessary to turn idea into a successful business.
 We are focused on strengthening business relationship with existing importers and
prospecting for other potential buyers in Israel.
 We have developed experience in sales and marketing to tap market opportunities.
 We have developed trustworthy relationship with creditor banks in order to increase the
liquidity of the company’s finance for business operations.
 We have our own facilities such as warehouses, cleaning machines and transport services for
our export business.

5.2.4 WEAKNESS
 Low capacity of cleaning machines for processing export items
 The company information flow among the branches and warehouse with headquarter is still
at lower stage due to information technology infrastructure limitation.

5.3 BUSINESS TARGETS IN 2009/10 E.C

The company’s targets are very well designed on yearly basis. In order to have an overview on the
income and costs required in the budget year it will be good to review below sited general targets. Detail
plans of all business plans are also mentioned next to the below general targets.
Table 16: Overall income targets of 2009/10 budget year in value

No. Type of business Value in ETB Remark

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 1 Export sales income 530,795,100
2 Import sales income 424,197,000
3 Transport service income 18,896,430
4 Machinery Rental service income 5,731,600
5 Local commodity sales income 35,400,000
Total 1,015,020,130

Table 17: Overall purchase targets of 2009/10 budget year in volume and value

No. Type of business Value in ETB Remark

1 Export items purchase 390,906,228
2 Import items purchase 247,260,940
3 10 Units of Sino Fuel Trucks purchase 32,000,000 New business
4 Excavator purchase 7,070,000 New business
5 Local commodity purchase 29,710,000
Total 706,947,168

5.3.1 EXPORT PLAN

We took the information gained in our analyses and create an effective marketing mix encompassing all
of the elements of product or services. Our export products are clearly defined based on product
specification and packaging, set prices strategies depending on the nature of the product, promote the
right nature of products to specific customers and channel products as per the agreements and terms
reached with customers. The Company portfolio is designed to provide marketing to foreign importers
who need agricultural commodities at large. The company works with understanding the demand and
helping importers to get standard agricultural commodities with concrete marketing deliverables. Our
export products and services fall into four major categories.

1. Oil Seeds;
2. Pulses;
3. Spices;
4. Natural Gum

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In the last seven years the company has exported about 9 different types of commodities and as
part of diversification of product portfolio, the company has planned to export about 14 types of
agricultural commodities which are in general listed as follows.

 Sesame seed
 White pea bean
 Rape cake
 Red Kidney beans
 Chick peas
 Castor
 Soya bean
 Niger seed
 Green Mung Bean

5.3.1.1 EXPORT SALES PLAN

Table 18: Hamle 1, 2009- Sene 30, 2010 E.C Export Sales Plan
No Items Unit Sales plan Cost of Gross Unit Total sales value
Goods Sold profit sales
Volume Unit Total value in price In USD In ETB
price in ETB in USD
ETB
1 Sesame seed QT 141,200 3,080 434,896,000 367,419,909 67,476,091 1,400 19,768,000 434,896,000

2 Rape cake " 2,294 1,650 3,785,100 3,090,236 694,864 750 172,050 3,785,100

3 Niger seed " 10,000 2,420 24,200,000 19,715,660 4,484,340 1,100 1,100,000 24,200,000

4 Castor seed " 4,000 1,540 6,160,000 5,804,408 355,592 700 280,000 6,160,000

5 White Pea Bean " 10,000 1,309 13,090,000 12,200,027 889,973 595 595,000 13,090,000

6 Red Kidney " 4,800 1,540 7,392,000 5,966,506 1,425,494 700 336,000 7,392,000
Bean
7 Green Mung " 4,800 2,640 12,672,000 9,713,530 2,958,470 1,200 576,000 12,672,000
Bean
8 Soya Bean " 10,000 990 9,900,000 8,547,878 1,352,122 450 450,000 9,900,000

9 Chick peas " 10,000 1,870 18,700,000 16,488,770 2,211,230 850 850,000 18,700,000

Total 197,094 530,795,100 448,946,923 81,848,177 24,127,050 530,795,100

5.3.1.2 EXPORT PURCHASE PLAN

To achieve the above sales target the following gross purchase must be made during planning period. The
company will purchase 20,103.6 MT of commodities for birr 390,906,228.00. The Cost break down
including transaction cost is also presented in annex 1. The quantity & amount of money required to
procure export products is described at table 18 below.

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Table 19: Hamle 1, 2009- Sene 30, 2010 E.C Commodity Purchase Plan
No Items Unit Purchase plan
Volume Unit price in ETB Total value in ETB
1 Sesame seed Quintal 144,024 2,240.00 322,613,760.00

2 Rape cake " 2,340 1,100.00 2,573,868.00

3 Niger seed " 10,200 1,700.00 17,340,000.00

4 Castor seed " 4,080 1,200.00 4,896,000.00

5 White Pea Bean " 10,200 950.00 9,690,000.00

6 Red Kidney Bean " 4,896 1,000.00 4,896,000.00

7 Green Mung Bean " 4,896 1,700.00 8,323,200.00

8 Soya Bean " 10,200 627.00 6,395,400.00

9 Chick peas " 10,200 1,390.00 14,178,000.00

Total 201,036 390,906,228.00

Table 20: - Hamle 1, 2009- Sene 30, 2010 E.C Export Items Purchase costs & Operating expenses
No Cost elements Purchase costs & Operating expenses
1 Purchase cost 390,906,228.00
2 Salary 8,000,000.00
3 Perdiem 2,500,000.00
4 Cargo logistics & Transport cost 10,600,000.00
5 Tyres and tubes 2,970,000.00
6 Maintenance 1,240,000.00
7 Annual truck inspection and service 10,000.00
8 Spare parts 2,240,000.00
9 Depreciation cost 9,600,000.00
10 Bank interest 15,012,000.00
11 Insurance 360,000.00
12 Export documentation & Port Charges 4,596,000.00
13 Spillage cost 500,000.00
14 Overhead costs 800,000.00
Total Expense 449,334,228.00
Depreciation is calculated by Pulling method
NB

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5.3.2 IMPORT PLAN
Currently, our imported items are categorized in construction materials, tyres, trakkers and Sino
trucks. Specifically our company has been importing items such as Iveco trakkers, Cargo
Loaders, Loaders, Toyota Hilux, Tyres, and Sino Trucks from different countries. The company
has planned to include items such as RICE, WATER PUMPS AND HOSES, DEFORMED
BARS, and GENERATORS.

5.3.2.1 IMPORT SALES PLAN

Table 21: Hamle 1, 2009- Sene 30, 2010 E.C imported items Sales Plan
No. Item Unit Plan

Quantit Unit selling price Total Value

y
1 Cargo & Dump Sino Set 100 1,500,000 150,000,000
Trucks
2 Tyres and tubes " 5,040 9,300 46,872,000

3 3" water pum " 450 8,500 3,825,000

4 3" (100Meter/1Roll) M 10,000 30 300,000

Delivery hose
5 3" (8Meter/1PCs) Suction M 6,000 120 720,000
hose
6 Generator Set 400 10,000 4,000,000

7 Iron Bar Kg 900,000 16 14,400,000

8 Iveco Trakker Set 50 3,800,000 190,000,000

9 Rice Ton 880 1,600 14,080,000

Total 424,197,000

5.3.2.2 IMPORT PURCHASE PLAN

Table 22: Hamle 1, 2009- Sene 30, 2010 E.C imported items Purc hase Plan
No. Item Unit Plan
Quantity Unit purchase Total Value
price
1 Cargo & Dump Sino Trucks Set 100 1139750.00 113,975,000.00
2 Tyres and tubes " 5040 5052.50 25,464,600.00
3 3" water pum " 450 5875.00 2,643,750.00
4 3" (100Meter/1Roll) Delivery M 10000 16.45 164,500.00
hose
5 3" (8Meter/1PCs) Suction hose M 6000 58.75 352,500.00

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 6 Generator Set 400 6580.00 2,632,000.00
7 Iron Bar Kg 900000 8.40 7,560,000.00
8 Iveco Trakker Set 50 1711523.80 85,576,190.00
9 Rice Ton 880 10105.00 8,892,400.00
Total 247,260,940.00

Table 23: Imported Items 2009/10 E.C budget year profit plan
No. Item Unit Plan
Quantity Unit selling Total Sales Total Cost Gross profit
price Value
1 Cargo & Dump Sino Set 100 1,500,000 150,000,000 127,995,308 22,004,692
Trucks
2 Tyres and tubes " 5,040 9,300 46,872,000 7,911,293 38,960,707
3 3" water pum " 450 8,500 3,825,000 3,746,377 78,623
4 3" (100Meter/1Roll) M 10,000 30 300,000 196,624 103,376
Delivery hose
5 3" (8Meter/1PCs) M 6,000 120 720,000 421,338 298,662
Suction hose
6 Generator Set 400 10,000 4,000,000 3,936,796 63,204
7 Iron Bar Kg 900,000 16 14,400,000 13,272,774 1,127,226
8 Iveco Trakker Set 50 3,800,000 190,000,000 136,427,467 53,572,533
9 Rice Ton 880 1,600 14,080,000 13,663,451 416,549
Total 424,197,000 307,571,428 116,625,572
5.3.3 TRANSPORT PLAN
The company has owned 10 trucks which have 40 tons of carrying capacity each and 2 trucks
with carrying capacity of 20 tons each. The yearly capacity of cargo transported by these trucks
is 102,000 tons. As the company’s cargoes both from export and import are increasing in the
course of time, it is expected to strengthen transport services further. The total value of the trucks
involved in the company’s transport service is ETB 39,502,060.
Generally, our total numbers of trucks fully deployed to transport export and import cargoes are
tabulated below.

Table 24: - Summary of total trucks

No. Plate No. Trailer plate No. Value in ETB
1 3-55212 17146 3,800,000
2 3-50449 16825 3,800,000
3 3-65903 19894 3,800,000
4 3-65902 19889 3,800,000
5 63777 - 1,030,00

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 6 63776 - 1,030,00
7 3-55211 17145 3,800,000
8 3-65901 19880 3,800,000
9 3-50450 16826 3,800,000
10 3-81306 24776 4,300,000
11 3-81307 24777 4,300,000
12 3-81308 24778 4,300,000
Total value 39,502,060

As it is clearly mentioned above, the company’s engagement in the transport service will not stop right
here. In addition to introduction of other cargo transport trackers, it has also envisioned to participate in
the transportation of fuels. Currently, the Federal Democratic Government of Ethiopia is encouraging
investors to participate in supply of fuels.

5.4 FUEL TRANSPORT SERVICE PLAN

In this budget year our company has planned to purchase and fully introduce 10 units of Sino fuel trucks
at total value of ETB 32,000,000. There two key general merits of the additional company plan to deploy
10 units of fuel trucks. Firstly the company has big vision to diversify the company business lines for
further development. Secondly, the current fuel supply situation of the country is seeking additional fuel
transporters and so our company needs to be part of the solution to the supply of fuel in the country at
large.

These fuel trucks will transport 24,000,000 liters of fuel from Djibouti port and Sudan the 5 years
average yearly revenue will be ETB 65,962,700.80. In order to earn this amount of revenue the
company’s Investment cost to deploy fuel trucks will be as follows.

Table 25: INVESTMENT COST FOR SINO FULE TRUCKS

No Cost elements Unit Quantity Unit price Total value
1 Sino Fuel Truck Set 10 2,200,000 22,000,000.00
2 Trailer Fuel Truck Set 10 1,000,000 10,000,000.00
Total Expense 32,000,000.00

5.5 FINANCE REQUIREMENT

The company has limited working capital when compared to the capital requirements needed to
transform aforementioned plans into reality. As summarized in table 18, the company has
planned to export 19,709.4 tons of agricultural commodities and make sales at USD 24,127,050
or equivalent amount of ETB 530,795,100. The company has planned to earn a total gross profit

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23
of ETB 81,848,177 that makes the profitability 15.42% which is said to be very good when
measured against the current international market challenges’ perspective. The Company has
also planned to purchase 14 items to accomplish aforementioned revenue from export. Table 19
shows the cost required to perform planned export plan, which is ETB 390,904,800.00. The
finance to be obtained from your esteemed bank is proposed at table 22 below which can help
the company to accomplish its export and import plans of the 2009/10 budget year..

Tables 21 and 22 show that the company’s yearly plan of sales for imported items is ETB
424,197,000 and the amount of cost of Goods Sold is ETB 247,260,940. This means the gross
profit of the annual performance of imported items is estimated to be ETB 116,578,322, which is
remarkable profit earning when compared to the previous years’ performance. The gain has been
boosted in such level because of the fact that the company’s own transport services have
increased effectiveness and efficiency of the cargo movement from one source to another end.

Apart from export and import plans, we have planned to purchase and deploy 10 units of Sino
fuel trucks at a total value of ETB 32,000,000 (see table 25 above). Your esteemed bank will
finance a total truck loan of ETB 22,400,000 to purchase 10 units of Fuel trucks, which is 70%
of the total trucks value for duration of 5 years and to be paid every three months.

In the 2009/10 budget year our company’s plan is a bit ambitious and in addition to export and
import business sectors of the company, financing the fuel transport sector have really crucial
importance to strengthen ongoing business engagements. To this effect, Belsty Negessa & His
Children Trading PLC, keenly requests your esteemed bank to increase type and amount of
credit in terms of Truck loan facility. To evaluate the other three facilities we tabulated below
by type and amount of credit services which we have in place with your good office (see table 26
below).

Table 26: Approved Credit Services in 2009/10 budget year

No. Bank name Credit services

Overdraft Term Loan Pre-shipment Loan Total

1 Bunna International Bank S.C. 2,000,000 0 40,000,000 42,000,000

Total 2,000,000 0 40,000,000 42,000,000

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24
When we increase our plan to deploy 10 units of Sino fuel trucks, our business relationship will
increase to a large extent. There are four key purposes of this particular truck loan facility.

1. The Federal Democratic Republic Government of Ethiopia has keen interest for investors to
involve in fuel transport service provision. This means government’s policy support is an
opportunity to engage in this business sector
2. Currently, we have dealt with NOC oil station to provide fuel transport services from Port
Sudan and Djibouti. And also our company has planned to establish oil station at an initial
capital of about ETB 40,000,000.
3. The country’s fuel supply has significant gaps with current demand situation and therefore,
it is possible to tap this market potential.
4. The company has targeted to maximize the opportunities of fuel transport service so that
company’s profitability is expected to increase to a large extent from the diversification of
income sources.

5.6 PROFITABILITY, CASHFLOW AND SOCIO-ECONOMIC BENEFITS

5.6.1 ASSUMPTIONS EMPLOYED

To know the feasibility of the additional business of the company cost summary and total
revenue summary has been tabulated as annex and respective profit or loss statement is also
prepared accordingly. The profit or loss projection of the fuel transport service is displayed as
table 29 in section 5.8.2 below. As the process of creating financial projections for business
revenue and expenses, cash flow and financial position require the examination of all other key
components of the plan. Projected Profit or loss statement takes the following assumptions:-
 Revenue and cost determination as well as the volume of trade for all planned businesses
have considered national, international and internal capability of the company. In this regards
key assumptions have been employed for planning purpose.
 Administration and general expenses are computed from the previous year statement with 5%
increment except interest, depreciation and profit tax. Import business takes lion’s share 60%
of the administration and general expenses followed by export business which is assumed to
be 25% of the total administration and general expense. The remaining 15% goes to fuel
transport service.
 Depreciation expense is assumed fixed.

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 Interest on existing loans is based on agreed up on contract from respective bank. And the
total interest is assumed to be 10.5% maximum.
 Interest on fresh loan is computed to be 14% per annum.
 Profit tax is 30% on the taxable profit,
 From new business (Fuel transport service), it is assumed to get gross profit of 29% or above.
 Revenues from export, import and fuel transport service are well computed and included in
this business plan preparation. And all three tables are displayed below.

5.6.2 PROFITABILITY

The projected profit or loss statement has been prepared based on the above assumptions and
facts for three major business lines of the company, namely: export, import and Fuel transport
plans. Separate tables are presented below in order to evaluate the feasibility of each business
based on its cost centre.

Therefore tables 27 and 28 show our projected profits earned in 2009/10 budget year from export
and import respectively. Whereas table 29 shows next 5 years profit projection from fuel transport
service.

Table 27: Hamle 1, 2009 - Sene 30, 2010 E.C Export Projected Profit or loss
No Elements 2009/10 budget year projection on quarterly basis
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Export Income 132,698,775 132,698,775 132,698,775 132,698,775 530,795,100
Purchase cost 97,726,557 97,726,557 97,726,557 97,726,557 390,906,228
Operation Expense
Salary 2,000,000 2,000,000 2,000,000 2,000,000 8,000,000
Perdiem 625,000 625,000 625,000 625,000 2,500,000
Logistics & 2,650,000 2,650,000 2,650,000 2,650,000 10,600,000
Transport cost
Tyres and tubes 742,500 742,500 742,500 742,500 2,970,000
Maintenance 310,000 310,000 310,000 310,000 1,240,000
Annual truck 10,000 - - - 10,000
inspection and
service
Spare parts 560,000 560,000 560,000 560,000 2,240,000
Depreciation cost 2,400,000 2,400,000 2,400,000 2,400,000 9,600,000
Bank interest 3,753,000 3,753,000 3,753,000 3,753,000 15,012,000
Insurance 90,000 90,000 90,000 90,000 360,000

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26
 Export 1,149,000 1,149,000 1,149,000 1,149,000 4,596,000
documentation &
Port Charges
Spillage cost 125,000 125,000 125,000 125,000 500,000
Overhead costs 200,000 200,000 200,000 200,000 800,000
Total Expense 14,614,500 14,604,500 14,604,500 14,604,500 58,428,000
Total Costs & Expenses 112,341,057 112,331,057 112,331,057 112,331,057 449,334,228
Gross Profit 20,357,718 20,367,718 20,367,718 20,367,718 81,460,872
Profit Tax 30% 6,107,315 6,110,315 6,110,315 6,110,315 24,438,262
Net Profit 14,250,403 14,257,403 14,257,403 14,257,403 57,022,610

Table 28:- Import Profit or loss projection for the year ended Hamle 30, 2010 (July 7, 2018)
No Description Value in ETB
1 Import sales revenue 424,197,000
2 Less cost of goods sold 307,618,678
3 Gross profit 116,578,322
4 Less - Expense 38,340,032
Import Administration and general expenses 1,749,512
Bank Interest 9,656,363
Bank service charge 1,657,168
Depreciation 1,836,973
Salary 1,200,000
Perdiem 800,000
Tyres and tubes 460,000
Maintenance 310,000
Spare parts 500,000
Insurance 500,000
Miscellaneous 200,000
5 Profit Before Tax 78,238,290
Less provision of profit tax 23,471,487
6 Net profit for the year ended Sene 30, 2010 (July 7, 2018) 54,766,803

Table 29: Projected Profit or loss of fuel transport service in 5 years (2017 - 2021)

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 5 years projection
5 years
No Elements 2017 2018 2019 2020 2021 total
Transport Income
44,320,241 53,184,289 63,821,147 76,585,376 91,902,451 329,813,504
Operation Expense
Salary for drivers 924,000 1,016,400 1,123,122 1,235,434 1,297,206 5,596,162
and Co-drivers
Perdiem for drivers 315,360 346,896 383,320 421,652 442,735 1,909,963
and Co-drivers
Fuel and Lubricant 5,636,160 6,199,776 6,850,752 7,535,828 7,912,619 34,135,135
Tyres and tubes 2,970,000 3,267,000 3,610,035 3,971,039 4,169,590 17,987,664
Maintenance 240,000 264,000 291,720 320,892 336,937 1,453,549
Annual truck 10,000 11,000 12,155 13,371 14,039 60,565
inspection and
service
Spare parts 240,000 264,000 291,720 320,892 336,937 1,453,549
Depreciation cost 9,600,000 7,680,000 6,144,000 4,915,200 3,932,160 32,271,360
Bank interest 3,556,954 2,924,682 3,231,774 3,554,951 1,445,452 582,589
Insurance 60,000 66,000 72,930 80,223 84,234 363,387
Port Charges 96,000 105,600 116,688 128,357 134,775 581,419
Spillage cost - - - - - -
Overhead costs 120,860 132,946 146,905 161,596 169,676 731,983
Total Expense 23,769,334 26,146,267 28,891,625 31,780,788 33,369,827 143,957,842
Gross Profit 20,550,907 27,038,022 34,929,521 44,804,588 58,532,624 185,855,662
Profit Tax 30% 6,165,272 8,111,406 10,478,856 13,441,376 17,559,787 55,756,699
Net Profit 14,385,635 18,926,615 24,450,665 31,363,212 40,972,837 130,098,963
5.6.3 CASHFLOW
The company has 5 years strategic plan in which all business plans are designed to implement
the objectives set in the strategic plan. The business relationship between your esteemed bank
and our company is also included in the 5 years strategic plan. In view of that fact, we have
requested pre-shipment loan and term loan facility which are prorated to be paid every year. Pre-
shipment loan is repaid every year and term loan is repaid at every three months for the duration
of 5 years. Accordingly these facilities have got approval from your esteemed bank and the
repayment is in progress as per plan.

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Detail payment history of each facility has been prepared on monthly and quarterly basis in
another worksheet. Pre-shipment loans will be repaid in every shipment of cargoes and the total
amount of loan has to be paid within a budget year. The next year’s pre-shipment loan facility
will be renewed depending on the requirements of the borrower and creditor.

Now, we have studied the fuel transport service business and it is found to be profitable as it is
well displayed at table 29 above. The projected cash flow of the envisaged project shows that the
project would generate more cash inflows than cash outflows throughout the operation years.
The NPV and IRR indicated at table 30 shows positive response of cash flows of the project and
hence, repayment of the truck loan will be possible scenario. In addition to the NPV and IRR the
cash flow projection at annex 5 clearly indicates that the project has sufficient cash inflows
which can cover all costs and expenses throughout the project years. For further information see
annex 5 below.

The repayment schedule of the total approved amount of truck loan will be prorated on 5 years
break down basis and interest is also distributed in the same manner throughout the project years.
In every three months (quarterly basis) the company has designed to repay the principal and
interest based on the designated amount of money. At the end of 2012/13 budget year the total
amount (principal and interest) will be totally repaid to your esteemed bank. To make credit
management easy we have prepared summarized repayment schedule of the truck loan on 5 years
repayment basis. Therefore, summarized tabulation has been shown as table 27 below.

Table 30: NET PRESENT VALUE & INTERNAL RATE OF RETURN OF

THE FUEL TRANSPORT BUSINESS IN 5 YEARS
No. Interest Rate 10.5%
0 Initial Investment (32,000,000.00)
1 Cash flow 2017 23,966,251.52
2 Cash flow 2018 27,545,293.53
3 Cash flow 2019 32,412,704.57
4 Cash flow 2020 38,892,655.29
5 Cash flow 2021 47,273,120.55
NPV $82,400,521.87
IRR 84.0%

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Please note that Depreciation Expense is excluded when calculating cashflow

Table 31: Truck loan repayment schedule for duration of 2009/10 and 2013/14 E.C.
Year Number of Payment, Birr Principal, Birr Interest, Birr Balance, Birr
payments
Year 1 1 1,453,916.73 865,916.73 588,000.00 21,534,083.27
2 1,453,916.73 888,647.05 565,269.69 20,645,436.22
3 1,453,916.73 911,974.03 541,942.70 19,733,462.18
4 1,453,916.73 935,913.35 518,003.38 18,797,548.83
5,815,666.92 3,602,451.16 2,213,215.77
Year 2 5 1,453,916.73 960,481.08 493,435.66 17,837,067.75
6 1,453,916.73 985,693.71 468,223.03 16,851,374.05
7 1,453,916.73 1,011,568.17 442,348.57 15,839,805.88
8 1,453,916.73 1,038,121.83 415,794.90 14,801,684.05
5,815,666.92 3,995,864.79 1,819,802.16
Year 3 9 1,453,916.73 1,065,372.53 388,544.21 13,736,311.53
10 1,453,916.73 1,093,338.56 360,578.18 12,642,972.97
11 1,453,916.73 1,122,038.69 331,878.04 11,520,934.28
12 1,453,916.73 1,151,492.21 302,424.52 10,369,442.07
5,815,666.92 4,432,241.99 1,383,424.95
Year 4 13 1,453,916.73 1,181,718.88 272,197.85 9,187,723.19
14 1,453,916.73 1,212,739.00 241,177.73 7,974,984.19
15 1,453,916.73 1,244,573.40 209,343.33 6,730,410.79
16 1,453,916.73 1,277,243.45 176,673.28 5,453,167.34
5,815,666.92 4,916,274.73 899,392.19
Year 5 17 1,453,916.73 1,310,771.09 143,145.64 4,142,396.24
18 1,453,916.73 1,345,178.83 108,737.90 2,797,217.41
19 1,453,916.73 1,380,489.78 73,426.96 1,416,727.63
20 1,453,916.73 1,416,727.63 37,189.10 -
5,815,666.92 5,453,167.33 362,499.60
5 years Total 29,078,334.60 22,400,000.00 6,678,334.67 -

Loan amount, Birr: 22,400,000.00

Amortization Period, years: 5

Payment frequency: quarterly

Interest rate (APR)(%): 10.5

Total payable, Birr: 29,078,334.68

Interest, Birr: 6,678,334.68

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30
Finally, the company has also set depreciation schedule in order to replace the wear and
tear of the trucks in 5 years. At the end of 5 years all fuel trucks book value in total will be
ETB 10,485,760.00. For further information check table 28 below.
Table 32: Depreciation Schedule
Year Purchase cost of Truck Dep Acc. Dep Book Value
2017 32,000,000.00 6,400,000.00 6,400,000.00 25,600,000.00
2018 - 5,120,000.00 11,520,000.00 20,480,000.00
2019 - 4,096,000.00 15,616,000.00 16,384,000.00
2020 - 3,276,800.00 18,892,800.00 13,107,200.00
2021 - 2,621,440.00 21,514,240.00 10,485,760.00

5.6.4 SOCIO-ECONOMIC BENEFITS

At section 5.6 above to justify the purpose of the business plan it has been clearly mentioned why this
business plan has to be financed. Apart from the economic benefits of the company, which is already
mentioned above in terms of profit, the business has other related social as well as economic benefits.

Firstly, among top benefits of the society, job creation receives greater attention. Currently, the company
has 72 permanent employees and related to its export and import business there are also significant
numbers of temporary laborers who are occasionally hired for cleaning export items and un-stuffing
imported items. On top of that the new business has also brought new employment opportunities and
therefore, 23 new employees will be hired permanently. To run fuel transport service 10 drivers, 10 co-
drivers and 3 supervision and support staffs will be employed.

Secondly, the new business will contribute to sustainable supply of fuel to the national
economy in which the Democratic Republic Government of Ethiopia has given special attention
to solve the current fuel supply inconsistency. This shows that the company is engaging in areas
of which the government has given priority.

Thirdly, the government will have different TAX benefits. Apart from other taxes, the
government will collect 30% of the gross profit of 185,855,662 which is Equivalent to ETB
55,756,699 in five years business operation.

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31
VI. KEYS TO SUCCESS
6.1 UNIQUENESS OF SERVICES

The company is focused specifically on helping existing and emerging business clients and
maximizes their potentials for success. We combine business experience and local presence. We
differentiate ourselves in realizing maximum customer satisfaction in meeting key customers’
interests such as STANDARD QUALITY, COMPETITIVE PRICES, PERFORMING
COMMITMENTS, and TIMELY DELIVERY.

6.2 FOCUS ON HUMAN RESOURCES

We place our best people for business customers’ services. We are building shared vision and
mission among our work force and as a result our staff will attempt to own the vision in the
minds of our management and employees. This will be transferred to our existing business
clients and potential clients.

The company has also planned to upgrade educational and skill level of the employees to
enhance the performance level and increase effectiveness and efficiency. It is not only focused to
enhance the competency of people in the company, it also focuses on to enable people apply
these competencies in to growth of the company performances. Manpower planning, recruitment
and selection, performance appraisal, and coaching will receive highest attention. In this area we
are much more focused on stability of staff, diversification of skills and knowledge, growth and
renewing overall company achievements.

6.3 COST-EFFECTIVE BUSINESS INTERACTION

Cost effective systems and means of communications are highly valued to make business
communications with customers. Well programmed and arranged local presence and personal
interaction will also be conducted with business customers and financial institutions such as
banks and insurances. The company will introduce and use cost effective technologies for its
businesses. We work with a motto called OUR CLIENTS DESERVE QUALITY PRODUCTS AT
COMPETITIVE PRICES.

6.4 A DIVERSE NETWORK OF PARTNERS

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32
To solving the unique problems that face export, import and transport service businesses, today
conditions demand a wide range of skills and experiences. To this effect, the company has
created a diverse network with different partners which can contribute in solving business
problems when encountered. Banks, transit organizations, customs offices, quality and weight
inspectors, shipping agents and pertinent stakeholders are always managed responsibly. We are
striving to be recalled first in the customers’ mind to do business. As a result of solution focused
principles, we have developed significant potential to do business with full responsibility in the
international market.

Through our past experience in export, import and transport service businesses are relatively
short period, the company has developed swift and transparent communication capability with its
business customers and others. Furthermore, with our understanding of how important company
name recognition is to the success of businesses, we always take actions that can boost the image
and reputation through proven transparent communication of our products and the system to our
clients. We always are ready to provide brochures, business cards, websites and other business
materials to all our clients.

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33
VII. ANNEXES

Annex 1: Export Cost of Goods Sold (2009 E.C)

N Export Purchase 2% reject ECX Bag costs Loading - 0.1% 0.2% Cleaning Forwarding Transport Total Cost
unloading Commission Export
o Items cost costs cost cost
documents

1 Sesame 306,000,000 6,120,000 9,180,000 1,680,000 979,200 36,960 73,920 2,400,000 4,800,000 14,400,000 345,670,080
seed
2 Rape 5,875,200 117,504 - 67,200 39,168 792 1,584 96,000 192,000 576,000 6,965,448
cake
3 Niger 21,420,000 428,400 - 140,000 81,600 2,420 4,840 200,000 400,000 1,200,000 23,877,260
seed
4 Castor 9,792,000 195,840 - 112,000 65,280 1,232 2,464 160,000 320,000 960,000 11,608,816
seed
5 White 10,200,000 204,000 306,000 140,000 81,600 1,309 2,618 200,000 400,000 1,200,000 12,735,527
Pea Bean
6 Red 5,875,200 117,504 - 67,200 39,168 739 1,478 96,000 192,000 576,000 6,965,289
Kidney
Bean
7 Green 9,302,400 186,048 279,072 67,200 39,168 1,267 2,534 96,000 192,000 576,000 10,741,689
Mung
Bean
8 Soya 7,140,000 142,800 - 140,000 81,600 990 1,980 200,000 400,000 1,200,000 9,307,370
Bean
9 Chick 15,300,000 306,000 - 140,000 81,600 1,870 3,740 200,000 400,000 1,200,000 17,633,210
peas
Total 390,904,800 7,818,096 9,765,072 2,553,600 1,488,384 47,579 95,158 3,648,000 7,296,000 21,888,000 445,504,690

Business Plan 34
 Annex 2: Import Cost of Goods Sold (2009 E.C)
No. Export unit Quantity Purchase FRIGHT INSURA Transit cost Forclift Taxes Contain Transport Bank Interest Contingen Total
Item Cost COST NCE cost/Load er cost Charges cy
COST ing or
unloading

1 Sino Set 50 53,350,000 - 60,100 40,000 - - - 3,000,000 2,400,750 15,205 2,667,500 61,533,555
Trucks

2 Tyres and Set 840 3,973,200 498,184 340,200 35,000 12,000 397,320 12,000 240,000 178,794 1,132 198,660 5,886,490
tubes

3 Water Set 450 2,475,000 249,092 182,250 17,000 12,000 247,500 6,000 120,000 111,375 705 123,750 3,544,672
pumps (3"
Air Cooled
Water
pump set)

4 3" M 10,000 154,000 - - - - 15,400 - - 6,930 44 7,700 184,074

(100Mete
r/1Roll)
Delivery
hose

5 3" M 6,000 330,000 - - - - 33,000 - - 14,850 94 16,500 394,444

(8Meter/1
PCs)
Suction
hose

6 Generator Set 400 2,640,000 249,092 162,000 17,000 12,000 264,000 6,000 120,000 118,800 752 132,000 3,721,644

7 Iron Bar Kg 2,000,000 19,800,000 2,310,000 55,440 160,000 1,980,000 - 3,600,000 891,000 5,643 990,000 29,792,083

8 Iveco Set 50 80,113,880 6,040,500 43,050 40,000 5,000,000 25,573,600 - 6,000,000 3,605,125 22,832 4,005,694 130,444,681
Trakker

9 Rice MT 3,200 30,272,000 2,464,000 84,762 1,280,000 2,400,000 3,027,200 600,000 4,800,000 1,362,240 8,628 1,513,600 47,812,429

Total 193,108,080 11,810,868 927,802 1,429,000 7,596,000 31,538,020 624,000 17,880,000 8,689,864 55,036 9,655,404 283,314,073

Business Plan 35
Annex 3: -Annual Income from fuel transport
No Cost elements Number Monthly Income per Total Income in a year
of trucks truck
1 Fuel transport income 10 369,335.34 44,320,240.80
Total Income 10 369,335.34 44,320,240.80

Annex 4:: - Operating expenses of fuel transport service

No Cost elements Number of trucks Annual operating expenses
1 Salary for drivers and Co-drivers 10 924,000.00
2 Perdiem for drivers and Co-drivers 10 315,360.00
3 Fuel and Lubricant 10 5,636,160.00
4 Tyres and tubes 10 2,970,000.00
5 Maintenance 10 240,000.00
6 Annual truck inspection and service 10 10,000.00
7 Spare parts 10 240,000.00
8 Depreciation cost 10 9,600,000.00
9 Bank interest 10 1,012,000.00
10 Insurance 10 60,000.00
11 Port Charges 10 96,000.00
12 Spillage cost 10 -
13 Overhead costs 10 120,860.00
Total Expense 21,224,380.00

Business Plan 36
 Annex 5: Fuel Transport Business
5-Year Projected Cash Flow
For the Year Ending 2017 2018 2019 2020 2021
Cash at Beginning of Year 35,097,096 68,720,701 108,090,538 155,027,676
Cash at End of Year 35,097,096 68,720,701 108,090,538 155,027,676 212,749,934
Operations 2017 2018 2019 2020 2021
Cash receipts from
Sales 44,320,241 53,184,289 63,821,147 76,585,376 91,902,451
Credit Collections
Cash paid for
General operating and administrative expenses (10,612,380) (14,208,353) (17,889,287) (21,529,391) (24,006,922)
Interest (2,213,216) (1,819,802) (1,383,425) (899,392) (362,500)
Profit tax - (7,528,394) (9,610,840) (12,135,731) (15,263,938)
Net Cash Flow from Operations 31,494,645 29,627,740 34,937,595 42,020,863 52,269,091
Investing Activities
Cash receipts from
Owners Investment 9,600,000 - - - -
Bank Loan 22,400,000 - - - -
Cash paid for - - - - -
Purchase of property and equipment (32,000,000) - - - -
Making loans to other entities - - - - -
Purchase of Bond - - - - -
Net Cash Flow from Investing Activities - - - - -
Financing Activities
Cash receipts from
Issuance of stock - - - - -
Borrowing - - - - -

Business Plan 37
Cash paid for - - - - -
Repurchase of stock (treasury stock) - - - - -
Repayment of loans 3,602,451.16 3,995,865 4,432,242 4,916,275 5,453,167
Net Cash Flow from Financing Activities 3,602,451 3,995,865 4,432,242 4,916,275 5,453,167
Net Cash Flow 35,097,096 33,623,605 39,369,837 46,937,137 57,722,259

Business Plan 38