1aquwa Document Title (Repaired)

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ADDIS ABEBA CITY GOVERNMENT INVESTMENT COMMISSION

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TABLE OF CONTENT
I. Executive summary..............................................................................................................................4
1. Background Information......................................................................................................................6
1.1. Introduction.................................................................................................................................6
1.2. Product Description.....................................................................................................................6
1.3. Project location and justification..................................................................................................7
1.3.1. Location of Addis Ababa.................................................................................................7
1.3.2. Demography of Addis Ababa..........................................................................................8
1.3.3. Economic activity of Addis Ababa.................................................................................8
1.4. Why is it beneficial to invest in Addis Ababa?...........................................................................10
1.4.1. The city benefit from the investment................................................................................12
2. Marketing study.................................................................................................................................13
2.1 Market analysis summary..........................................................................................................13
2.1. The Supply of Polyethylene products........................................................................................13
2.1.1. Local Polyethylene Products Supply..................................................................................13
2.1.2. Import................................................................................................................................14
2.2. Polyethylene products (plastics) Demand Projection.................................................................16
2.3. Demand-Supply Gap Analysis...................................................................................................18
3. Engineering and technology..............................................................................................................19
3.1. Engineering................................................................................................................................19
3.1.1. Land, buildings and civil works...........................................................................................19
3.1.2. Plant layout........................................................................................................................19
3.2. Technology................................................................................................................................22
3.2.1. PRODUCTION PROCESS......................................................................................................22
3.2.2. RAW MATERIALS AND INPUTS...........................................................................................23
3.2.3. Environmental and social impact assessment of the project.................................23
3.2.4. PLANT CAPACITY................................................................................................................23
3.2.5. SPECIFICATION | PVC CEILINGS..........................................................................................24
3.3. Machinery lists..........................................................................................................................24
4. PVC Ceiling manufacturing factory Organizational structure...........................................................27
CONSULTANT:- SHIBAG MANAGEMENT AND

DEVELOPMENT & EIA CONSULTING FIRM 1
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4.1. Manpower Requirement and Estimated Annual manpower costs..............................................27

5. Financial Analysis...............................................................................................................................28
5.1. General......................................................................................................................................28
5.2. Fixed capital investment costs...................................................................................................29
5.3. Working capital..........................................................................................................................30
5.4. Project Financing.......................................................................................................................30
5.5. Operating and Maintenance Costs............................................................................................31
5.6. Production costs........................................................................................................................31
5.7. PROJECT COSTS..........................................................................................................................37
5.8. Project benefits..........................................................................................................................38
5.9. Break Even point and ROI.........................................................................................................39
5.9.1. Break Even point (BEP).................................................................................................39
5.9.2. Return on investment....................................................................................................40
5.10. Project benefits..........................................................................................................................40

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LISTS OF TABLES
Table 1 Local supply of polyethylene products in tons..............................................................................14

Table 2 Volume of imported polyethylene products (plastics) from 2012 to 2021 in kg..........................14
Table 3 Future forecast of import of polyethylene products (plastics) by trend adjusted exponential
smoothing method.....................................................................................................................................15
Table 4 Projected Demand for polyethylene products (plastics) in Ethiopia for the coming ten years......17
Table 5 Demand supply gap Analysis.......................................................................................................18
Table 6 Estimated construction costs.........................................................................................................20
Table 7 Land lease period in Addis Abeba................................................................................................21
Table 8 Land lease floor price in Addis Abeba..........................................................................................21
Table 9 PVC ceiling panel extrusion line..................................................................................................25
Table 10 Annual manpower costs..............................................................................................................27
Table 11 Fixed capital investment costs....................................................................................................29
Table 12 Material input '000'.....................................................................................................................32
Table 13 Utilities of the projects................................................................................................................33
Table 14 Overhead costs............................................................................................................................35
Table 15 Depreciation costs.......................................................................................................................37
Table 16 Sales Revenue in quantity...........................................................................................................38
Table 17 Sales Revenue in Birr "000".......................................................................................................38
Table 18 Total annual production costs '000'.............................................................................................43
Table 19 Calculation of working capital....................................................................................................44
Table 20 projected sales revenue...............................................................................................................45
Table 21 Projected Net income statement "000".......................................................................................46
Table 22 Debt services schedule and computation....................................................................................47
Table 23 Projected Cash flow statement....................................................................................................48
Table 24 Total investment costs”000”.......................................................................................................49
Table 25 Total Assets................................................................................................................................49
Table 26 Sources of finance......................................................................................................................50
Table 27 Summary of financial efficiency tests.........................................................................................50
Table 28 Calculation of payback period”000”...........................................................................................51
Table 29 Calculation of NPV at 17% D.F.................................................................................................52

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I. Executive summary
This project is envisaged Aquwapure plastic manufacturing which has an annual production
capacity of 312,000 PET Bottle AND 312,00HDPE Jerican ton per annum. It is proposed to
produce Injection and blow molding products, PET and HDPE plastic container used for
beverage, food and chemical manufacturers to use as packaging for soft drinks, milk,
condiments, household and automotive chemicals, in Addis Ababa city administration. Hence
Market, Technical, Organizational and Financial study was made to investigate the viability of
the envisaged project.
This project profile on Injection and blow molding products factory has been developed to
support the decision –making process based on a cost benefit analysis of the actual project
viability. This profile includes marketing study, production and financial analysis, which are
utilized to assist the decision-makers when determining if the business concept is viable.
Ethiopia has a private sector driven Plastic bottle manufacturing. According to the latest data
sourced from Ethiopian investment commission (EIC) there are more than 59 companies
producing packaging in Ethiopia, focusing mainly on paper and plastics registered companies to
invest on plastic manufacturing and other related products.
The location of the plant will be decided on the basis of access to raw materials, infrastructure
namely power, water, transport and telecom to easy access to international market. HDPE,
LDPE, PET, PP, PE, PVC resin and master batch additive chemicals. Most of the raw materials
will be imported

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The factory at full capacity operation can manufacture 312,000 tones PET Bottle AND
312,00HDPE container per year based on 260 working days and two shifts of 16 hours per day.
The total investment capital including establishing the factory is Birr 201.86 million. Out of the
total investment capital, the owners will cover Birr 60,558,000 million (30 %) while the
remaining balances amounting to Birr 141,302 million (70 %) will be secured from bank in the
form of term loan.
As indicated in the financial study, the cash flow projection of the project shows surplus from the
first year on. The net cash flows of the project range from Birr 34.50Million in the first year to
Birr 53.30million at the end of the 10 th year of operation. At the end of the 10 th year of operation
period the cumulative cash balance reaches Birr 521.42 million. The Benefit-cost ratio and Net
present value (NPV) have been calculated at 17% discount factor (D.F) for 10 years of the
project activity. Accordingly, the project has NPV of 351 million Birr at 17%D.F. and the
benefit-cost ratio of 1.55 at 17% D.F.
Therefore, from the aforementioned overall market technical and financial analysis we can
conclude that the Plastic manufacturing factory business is a viable and worthwhile.

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1. Background Information
I.1. Introduction
Starting a plastic manufacturing business in Ethiopia can be a lucrative venture considering the
increasing demand for plastic bottles in various industries. However, it is important to have a
well-thought-out business plan to ensure success. In this response, we will provide an overview
of the key considerations for a plastic manufacturing business plan in Ethiopia.
This document was undertaken to show Injection and blow molding products sector investment
profile in Addis Ababa. In compiling the report, information from Addis Ababa investment
commission, Addis Ababa trade and industry development, Ethiopian custom commission and
published sources have been augmented.
The production of plastic products in Ethiopia is minimal compared to its raw materials
availability in the country. One of the main causes of this disparity is absence of potential
investor involved in the area.
The provision of adequate plastic product is of fundamental importance to Ethiopian’s present
and future demand of construction, furniture and household products, etc. In Ethiopia, the
demand for plastic product is expected to increase considerably in the next few decades as a
result of increased population growth, urbanization and increasing income levels. This profile
shows Injection and blow molding products manufacturing business.

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I.2. Objective of the study

I.2.1. General objectives
The general objective of this feasibility study is to provide adequate and basic information on
manufacturing of plastic products to enable decision makers whether to give permission on
privileges related to working area (shade).
I.2.2. Specific objectives

 Gathering, organizing, assessing and analyzing relevant data on raw Material, technical,
market and marketing arrangement of the commodity, and organization, management and
staffing Requirement and propose economic decision making variables.
 Identifying environmental issues related to the production.
I.3. Product Description
2.1 PRODUCT DESCRIPTION ANDRATIONALE FOR INVESTMENT
I.4. PRODUCT DESCRIPTION
A. PET BOTTLE
PET Bottles are used to packing of Edible oils, jams and sauces, Butter, syrups, drinking
water etc having the capacity from 500ml to 2 liters. PET resin is extruded and converted
to pre-forms and later molding is done to make the PET Bottles by using the pre-forms.
Major application areas of PET bottles are carbonated soft drinks, Mineral water packing,
Syrups, Edible oil packing, Butter and Mayonnaise, Wine, Liquor and spirit packing, Sauce,
jam and squashes packaging, Agro chemical packaging and house hold containers.
Pet bottles are replacing glass bottles because of the high rate of breakage and the
inconvenience of returning the empty bottle after consumption. As PET bottles provide
better packaging, and have a lower cost than the bottles made from glass and other
materials, different businesses in beverage, food and non-food industry are shifting
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The PET resin has superior properties, which are as follows:
o Attractive: Products look good, pure and healthy because of attractiveness of PET
bottles.
o Pure: Products taste good as PET complies with international food contact
regulations.
o Safe: PET bottles are tough and virtually unbreakable. If they do fail, they split, not
shatter. Their high impact and tensile strength makes them ideal for carbonated
products.
o Good barrier: The low permeability of PET to oxygen, carbon dioxide and water
means that it protects and maintains the integrity of products giving a good shelf
life. PET also has good chemical resistance.
o Lightweight: One tenth the weight of an equivalent glass pack, PET bottles reduce
shipping costs, and because the material in the wall is thinner, shelf utilization.
B. HDPE Bottle

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HIGH-DENSITY POLYETHYLENE (HDPE) resin is produced from the chemical compound

VIZ., ethylene. HDPE can be blow moulded into containers of different sizes and shapes. Some
of the common items that are produced include bottles and containers of different size. The light
weight, flexibility, corrosion and chemical resistance have made these plastic products versatile
for storage and handling of water, petroleum products etc. HDPE Bottles are used for detergents,
shampoos, motor oil, milk, drugs and cosmetic products. Milk bottles are the single biggest
HDPE packaging material. Most milk and water bottles use a natural colored HDPE resin.
Bottles used for detergents, shampoos and other products often have colorants added to the resin.
HDPE resin also can be used to make bottle and container caps, and flexible packaging such as
sacks and trash bags. HDPE bottles and containers have been displacing heavier metal, glass etc.
Ethiopia is one of the populous nations in Africa, while per capita income of the country is low
in which the peoples cannot afford to buy expensive building materials. Due to this, the plastic
industry has a number of benefits that is cost saving by supplying reasonable price of building
input product and generating employment opportunity. However the domestic industry is not as
such developed and the existing companies cannot meet the current demand and the technology
for plastic processing is recently introduced to our country. In addition the price of the raw
material is influenced by international scenario. The raw material of plastic industry is a by-
product of crude oil. The prices are directly related to crude oil prices as the raw material is made
from a by-product of crude oil.

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The plastic consumption volume in Ethiopia has been increasing over the years. From 2007 to
2020. IN Ethiopia the statistic depicts of plastic consumption from 2007 to 2015, and estimated
from 2016 to 2020. In 2015, the plastic consumption volume in Ethiopia reached around 172,000
tons. By 2020 It will be expected to increase to 308,000 tons of plastic.
The basic raw materials required for Injection and blow molding production are PVC, HDPE,
LDPE, PP, PET and PET

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2. THE COMPANY
2.1. The Applicant
Name: Aquwapure plastic manufacturing
Nationality: Ethiopian
Address:
 City- Addis Ababa

 Sub city- KIRKOSE KIFLE KETEMA
 Woreda- 02
 house number-
Type of the project or Economic Activity: - Injection and blow molding products Legal form a
Business: - Union
2.2. The Promoter: Tibebu Tefera Dessie

The promoter of the project Mr. Tibebu Tefera is an entrepreneur and has a successful
and versatile experience in the business for decade. The promoter is keen to take part on
the development activity of the country by involving in the manufacturing plastic and fiber
product for the growing demand of the country & export market in the particular.
The country rising demand of the plastic and fiber container products and the high
dependency of the sector on imported goods in the country forced Mr. Tibebu Tefera to
participate in the fiber container and plastic pet and crates business in Ethiopia.
The company will fabricate quality denim jeans using modern production techniques
through creation of employment and generating & saving the foreign currency reserve of
the country. The company is under process to acquire 12,000 M2 land in Debre Berhan City
of North Showa zone of Amhara Regional State.

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The factory will be managed by a qualified engineers specialized in all aspects of

manufacturing work. The members of the company with their subordinates will have
considerable relevant work experience of many years particularly.
2.3. Businesses Objectives

The overall objective of this project is to meet the upward demand for fiber containers,
plastic pet and crates and allied products in the world and Ethiopia. Generally the project
targets fiber containers, plastic pet and crates line of production and offer potential
customers with affordable quality products.
With this objective the company has an extensive program of environmental and social
initiatives, which are improving the community and the environment. In addition, the
company would like to become the leading fiber containers, plastic pet and crates
manufacture in Ethiopia. The major business objectives of the company are:
2.4. General Manager: Tibebu Tefera Dessie
The General Manager of this project is dynamic young result- focused entrepreneur, with
strong leadership and communication skills, a reputation for instilling, and leading teams
to achieve shared goals. Strong believer in globalization and sustainable development.
The general manager has the following skills:
Financial management and analytical, fact based decision making

Strategic thinking and long term visioning
Creative development-ability to lead and develop successful business
Excellent planning and time management skill until the ability to balance multiple project
under tight time line and function effectively in a fast-paced environment

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2.5. Brief History of the promoter

Taking the advantage of this favorable condition this ongoing project called Addisu Kifle Kifelew
manufacturing in Addis Ababa city Administration. The project is to manufacture Injection and
blow molding products to meet the demand and supply gap of construction sub sector.
Despite the fact that, the significant role the private sector would play in promoting national
and regional development in the past few decades in Ethiopia, the prevailed policy environment
that has highly discouraged the participation of private investors both foreign and domestic was
made the potential to be far from realization. This had resulted in hindering national and
regional socio-economic progress in almost all sector of the economy revealing the existing low
productive capacity of the economy and significant socio-economic losses in various dimensions.
Recognizing the extent to which the past development of the national economy and the
necessity to promote private sector participation in various investment ventures that are
believed to be more rewarding and compatible with the current national and regional
development objectives and priorities the new investment policy in the country has open the
wider opportunity for private sector participation. Based on this, at present the private sector
has started to mobilize and invest their knowledge and financial resources in various investment
activities, which they assumed to be beneficial for them and the country. In addition on these,
the status growth of country is attracting more and more investment to the region. Moreover,
the huge development effects are expected to be undertaken indifferent sectors of the economy
both by the regional administration of the area and private sector as well. And all these
incoming investment and business activities should obviously have the necessary facilities for
the realization of their objectives. It is also clear that the development efforts to be under taken
in the various economic sector of surrounding area will inevitably involve infra structures
development activities. And all this infrastructure development process requires of the project
which this commercial activities demands. Therefore, in consideration of great advantage to the
surrounding area in particular and to the country as a whole.

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2.6. Location of Addis Ababa

Addis Ababa is the seat of the Ethiopian federal government. It is located on the central
highlands of Ethiopia in the middle of Oromia Region. The absolute location is around the
intersection point of 901’48’’N latitude and 38°44′24″E longitudes. This is very near to the
geographical center of the country. It is, therefore, equidistant to the peripheral areas or is
equally accessible to almost all parts of Ethiopia. Addis Ababa is located on a well-watered
plateau surrounded by hills and mountains. The city is in the highlands on the edge of the
Ethiopian rift valley or the eastern slopes of the Entoto Mountain ranges bordering the Great Rift
Valley. The total area of Addis Ababa is about 540 km 2 of which 18.2 km2 are rural. Addis
Ababa’s built-up urban area spans 474 km2. It is also the largest city in the world located in a
landlocked country.
2.6.1. Demography of Addis Ababa
According to the CSA (2013) population projection, Ethiopia’s total population reaches about
105 million people in 2022. Of the total population 22.9% (24 million people) live in urban
areas. Ethiopia’s urban population is expected to triple by 2037 (World Bank, 2015). Addis
Ababa hosts an estimated 3,859,638 people. Currently, Addis Ababa is experiencing an annual
growth rate of 3.8% and is estimated to reach 4,696,629 inhabitants by 2032 (CSA, 2015).
2.6.2. Economic activity of Addis Ababa

The transformation of Addis Ababa has especially been rapid since 1991. According to the data
from the city’s Bureau of Finance and Economic Development (2006), per capital income of
Addis Ababa has grown from USD 788.48 in 2010 to USD 1,359 in 2015. The city also achieved
a decline in the poverty index from a high of 29.6 in 2012 to 22.0 in 2014. Moreover, the current

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poverty headcount index for Addis Ababa is estimated at 18.9 while the poverty severity account
for 5 and 1.8 index points respectively. Even though, the poverty status of Addis Ababa has an
improvement over previous years, there is still much work to be done to curb both the incidence
and severity of poverty.
The major contributor to the economic growth of the city is the implementation of publicly
financed mega urban projects like condominium housing, the Light Rail Transit, the international
airport and industrial zone development (The state of Addis Ababa, 2017). The existence of
international large and medium-size enterprises in and around Addis Ababa have also significant
role in creating huge opportunity for employment and technology transfer. Furthermore, there are
strong demand for goods and services following the existence of many embassies and inter-
governmental organizations like the African Union, the United Nations Economic Commission
for Africa.
The manufacturing sector’s contribution to Addis Ababa’s GDP is high. Despite the fact that
86% of the industries in the city are micro and small scale (cottage and handicrafts, and small-
scale), the majority of the country’s large and medium scale industries are found in the city.
Noticeable increases are also registered currently in other aspects of industrial growth.
The service sector is both the largest contributor to the city’s economy and the largest employer.
It contributes to 76.4% of the city’s GDP while industry’s share makes up (almost all) the rest.
This sector is dominated by three major sub-sectors: Transport and communication; Real estate,
Renting and Business services; and Trade, Hotel and Restaurants. According to the state of
Ethiopian Cities 2015 report, the service sector has also been responsible for more than 50% of

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the growth in the estimated annual growth of the city’s GDP. Although 75% of employment in
the city is also generated in the service sector, a large proportion of the employed work in low
skill and low paying jobs as shop salespersons, petty and 'gullit' traders, sales workers in small
shops, domestic helpers or doorkeepers and restaurant service workers.
Analysis of the economic structure of Addis Ababa reveals that the services sectors (63%)
dominates with industry (36%) in second place indicating that these sectors account for almost
all of the Addis Ababa’s GDP (The State of Addis Ababa, 2017).
Addis Ababa has a great share in the economy of the country due to its attractiveness to
businesses, companies, individuals and foreign direct investment. Overall primacy index of the
city is 24.8 based on urban employment and unemployment survey (CSA 2015). According to
the State of Addis Ababa 2017 report, the simultaneous high rates of economic growth and
urbanization in Addis Ababa indicates a likely further rising dominance of the city in Ethiopia’s
economy as well as growing agglomeration of economic activities in and around the city.
2.7. Why is it beneficial to invest in Addis Ababa?

Addis Ababa is the largest and most economically significant city in the country. Ethiopia’s
urban population share is only 17 percent (as of 2012, World Bank 2015). The city is the only
urban area in Ethiopia capable of delivering scale economies in terms of concentrated demand,
specialization, diversity and depth of skills, innovation, and technology transfers. Thus, investors
will be benefited in getting capable human power from the market.
The capital is the country’s main industrial hub. The city dominates industrial capacity in almost
all the braches of light manufacturing that Ethiopia prioritizes. As a result Addis Ababa

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completely dominates production in various subsectors. This can be taken as the political and
social stability of the city.
Overall, the city has a beautiful environment, favorable location, and strong industrial base. Its
advantage as an economic powerhouse of the country and human resource center are the most
attractive features for local and overseas investors.
Moreover, investors will be getting a comprehensive set of incentives for priority sectors. These
include:
 Customs duty free privilege on capital goods and construction materials, and on spare
parts whose value is not greater than 15% of the imported capital goods’ total value.
 Investors have the right to redeem a refund of customs duty paid on inputs (raw materials
and components) when buying capital goods or construction materials from local
manufacturing industries.
 Income tax exemption of up to 6 years for manufacturing and agro-processing, and up to
9 years for agricultural investment.
 Additional 2-4 years income tax exemption for exporting investors located within
industrial parks and 10-15 years exemption for industrial park developers.
 Loss Cary forward for half of the tax holiday period. Several export incentives, including
Duty Draw-Back, Voucher, Bonded Factory, and Manufacturing Warehouse, and Export
Credit Guarantee schemes.

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2.7.1. The city benefit from the investment

The city will be benefited from investment. These are discussed below.
 Employment opportunity
Investment is expected to provide direct and indirect employment. These range from
unskilled causal workers, semi-skilled and skilled employees.
 Improving growth of the economy
Through the use of locally available materials and exporting products, the investment
contributes towards growth of the economy by contributing to the growth of domestic
product. These eventually attract taxes including VAT which will be payable to the
government hence increasing government revenue while the cost of local materials will
be payable directly to the producers. In addition, domestic products save foreign
exchange and exports also bring money to the country.

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3. Marketing study
3.1 Derived Demand For Plastic Pet-Perform And Caps
3.1.1. Domestic Demand for Bottled Water
Mineral/bottled water business is still at infant stage and is a newly growing business in
Ethiopia. Previously the market was dominated by the government owned Ambo mineral
water and the picture changed with the success of Highland natural spring water and many
joined the business with different brands. The market is dominated by locally produced
purified water and also small quantities of imports of different brands which is mostly
available in prominent supermarkets.
Demand for bottled water is driven by a variety of factors; the perception that bottled water
may be safer than local municipal water, a new clean bottle, taste preferences and size and
shape of the bottle. Even in areas where tap water is safe to drink, demand for bottled water
is increasing. For safety purpose and due to the acute shortage of water supply for
consumption in major cities, households are forced to purchase bottled water of different
size for drinking purpose.
The demand for bottled water can be estimated using various techniques but the most
reliable method is using consumption per capita of other countries with in developing
countries range. We consider the demography of population as a major determining factor
for the utilization of bottled water. Therefore, for this project, we segment the market as
urban and rural. And rural consumption of bottled water is 20% of urban demand which is
16.8 Liter per capita (Southern African consumption in 2013: SANBWA).
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TABLE 1: PROJECTED ANNUAL DEMAND (HECTOLITERS)

Urban Rural Total Country Demand in
Regions Urban Pop Demand Total Urban Rural Pop Demand Total Rural demand Hecto
(2014) per capita Demand (2014) per capita Demand (Litters) Litter
Tigray 1,200,000 16.8 20,160,000 3,760,000 3.36 12,633,600 32,793,600 327,936
Afar 289,000 16.8 4,855,200 1,389,000 3.36 4,667,040 9,522,240 95,222
Amhara 3,127,000 16.8 52,533,600 16,892,000 3.36 56,757,120 109,290,720 1,092,907
Oromia 4,647,000 16.8 78,069,600 28,169,000 3.36 94,647,840 172,717,440 1,727,174
Somalia 763,000 16.8 12,818,400 4,544,000 3.36 15,267,840 28,086,240 280,862
Ben. Gumz 189,000 16.8 3,175,200 787,000 3.36 2,644,320 5,819,520 58,195
SNNP 2,707,000 16.8 45,477,600 15,130,000 3.36 50,836,800 96,314,400 963,144
Gambela 124,000 16.8 2,083,200 272,000 3.36 913,920 2,997,120 29,971
Hareri 125,000 16.8 2,100,000 101,000 3.36 339,360 2,439,360 24,394
Addis 3,195,000 16.8 53,676,000 - 3.36 0 53,676,000 536,760
Ababa
Diredawa 268,000 16.8 4,502,400 159,000 3.36 534,240 5,036,640 50,366
Others 41,000 16.8 688,800 75,000 3.36 252,000 940,800 9,408
Total 16,675,000 280,140,000 71,278,000 239,494,080 519,634,080 5,196,341
SOURCES: CSA, BEVERAGE MARKET CORPORATION & OWN CALCULATION
It is very difficult to incorporate all the factors those could affect the demand for water in
the demand projection. Therefore; we projected demand based up on the major influential
factors; GDP growth and population growth. The average GDP growth rate for the last three
years is 8% and the population growth is estimated 2.1% per annum. Totally, 10.1% growth
rate is assumed for the next five years in the water industry. Accordingly, the demand for
water is estimated to reach 5.7 million hectoliters as shown in the following demand
projection in the year 2024.
TABLE 2: DEMAND PROJECTION

Year Bottled water demand (HL)
2015 5,721,171
2016 6,299,010
2017 6,935,209
2018 7,635,666
2019 8,406,868
2020 9,255,962
2021 10,190,814
2022 11,220,086
2023 12,353,314
SOURCE: CSA, MOFED AND OWN CALCULATION
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3.1.1.1 Domestic Supply For Bottled Water
In general terms, the size of urban population, national income level, climatic conditions, age
group and the availability of substitutes affect the demand for bottled water. Taking these
factors into account, the current effective demand for bottled water in the country, having
more than 88 million populations is estimated at 268 million half litter bottles.
Bottled water production (carbonated water) has such a long history in Ethiopia. ‘Ambo
Wuha’ is the oldest bottled carbonated water brand in Ethiopia. Currently, there are more
than 15 operational firms in the country, being distributed around major regions. The major
known brand names include: Aqua Safe, Aqua Addis, Abyssinia, Yes, Origin, etc.
Currently there are about twenty-four purified bottled water manufacturers in the country
all supplying water range of 0.5 liter to 2 liters. In some cases, it is supplied in jar of 20 liters
with dispenser and 5-liter bottle water.
Bottled water is the fastest-growing beverage category in the world: it has expanded from a
tap water substitute into the beverage arena. Bottled water business is still at infant stage
and is a newly growing business in Ethiopia. In the Ethiopia, there are about 50 brands of
bottled water produced. Most of these companies are located in the region Oromia, Tigray,
Amhara and Addis Ababa.
TABLE 2: LIST OF BOTTLE WATER IN ETHIOPIA

SR. NO BRAND NAME COMPANY NAME
1 Abyssinia Great Abyssinia plc
2 Aqua Addis Burayu Spring Water plc
3 Aqua Billen Ferej& Family Plc
4 Aqua Afric Seka Business group. Pvt.ltd
5 Ayann Dire dawa Ethiopia
6 Bebile
7 Classy Belaye bottled Company Plc
8 Cool MohaPlc
9 Dessie spring Dessiemededa spring industry
10 Guna
11 High land
12 Life Clean Plc
13 Mercy Mehari Fisseha bottling factory
14 My lommi Seka Business group. Pvt.ltd
15 Origin Electro commercial
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16 Prima Aqua Afman trading

17 Real Access Capital
18 Soda water Coo lice food Complex
19 Spa Herbel Trade & industry plc
20 Tana Ashref
21 Top land Belaye bottled Company Plc
22 Utopia Apex bottling company
23 Viva
24 Aqua safe Debire behiran natural spring
25 Eden Eden business S.C
26 Oasis
27 Cheers Vaiolet General Trading PLC
28 Blu Almaz Eshet Kebede Mineral Water Factory
29 Agmas Agmas Manufacturing PLC
30 Dasany East Africa Bottling
31 Liban Aqua Dire Dawa Bottled water Abdulreshed Elemi Food Complex
32 Tiret
33 Sky
34 Diamond
35 one Abbahawa Trading PLC
36 arki SBG industry PLC
37 SPA water
38 Ayan Bottled Water Ayane Mineral Water PLC
39 Drinking Water Harbele Trade Industry
40 Promise Bottled water Pasfeke Industry
41 Vita Bottled Water Twin Cits Industry PLC
42 Right Bottled Water Maiaynee Business PLC
43 Nice Bottled Water Fresewat Trade work PLC
44 Bekoje Bottled Water Bekoje Spring Water PLC
45 Dera Bottled Water Dalole High Level PLC
46 Viva Bottled Water I T F PLC
47 Safi Bottled Water Safi Natural Water Fabric
48 Aqua Siliva Mineral Water Aqua Seliva Bottled Water
49 Bottled Water S H F Trading PLC
50 Classic Bottled Water Belay Industry
SOURCE: MARKET SURVEY
Bottled water is by far the most popular drink produced and consumed in Ethiopia.
According to Central Statistics Agency, bottled water (mineral water) accounts for about
56% by volume of beverages produced in the year 2014 with alcohol and wine being the
lowest.
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FIGURE 1: BEVERAGE PRODUCTION IN ETHIOPIA, 2014
Officially the Central Statistics Agency reported in its 2014 national abstract publication
that, for the year 2012/2013 about 4 million hectoliters of bottled water products were
produced. As shown in table and figure below, the total production of bottled water has
shown an increasing trend over the years.
With regard to domestic production the general trend has been increasing. Domestic
production during the year 2007/08 was 495,227 hectoliters but in 2012/13 the water
production in Ethiopia has been increased to 4,000,826 hectoliters. In general, the supply of
water to Ethiopian market in the past five years from domestic production was 74%.
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FIGURE 2: TRENDS FOR LOCAL WATER PRODUCTION
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13
SOURCE: CSA, LAGER AND MEDIUM
Hence, its demand will exist even if rivers are available whether in rural or urban areas. The
past supply trend also reveals that despite the expansion of water the consumption has
been increasing in the past few years. By associating with production growth, population
and the service sector, an annual average growth rate of 11.7% is taken to project the future
demand.
TABLE 3 PROJECTED WATER PRODUCTION IN HECTOLITER

WATER PROJECTION IN WATER PROJECTION IN
YEAR
HECTOLITER LITER
2013/14 4,468,923 446,892,264
2014/15 4,991,787 499,178,659
2015/16 5,575,826 557,582,562
2016/17 6,228,197 622,819,722
2017/18 6,956,896 695,689,629
2018/19 7,770,853 777,085,316
2019/20 8,680,043 868,004,298
2020/21 9,695,608 969,560,801
2021/22 10,829,994 1,082,999,415
2022/23 12,097,103 1,209,710,346
SOURCE: NOBEL TEAM COMPUTATION
In addition to local produce, mineral waters of various brands are currently imported from
different countries. But, due to their higher prices the total imported amount is insignificant
and their distribution is limited mainly to Addis Ababa market only. However, the major
cities host to an ever-increasing number of hotels, restaurants and foreign visitors thereby
increasing the demand for mineral water.
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3.1.1.2 DOMESTIC MARKET DEMAND AND SUPPLY GAP
The continuation of various demand driving factors in Ethiopia ascertain the significant
increase in bottled water consumption in urban and rural Ethiopia. Considering the water
bottling industry in Ethiopia is at early stage of development and small number of player are
existed in the market. The demand and supply is expected to increase as demand is
increasing up to 10.2% per annum and supply average increase is only 11.7% annum as
shown in the following chart.
TABLE 4: DEMAND AND SUPPLY GAP

Projected Bottled Projected Bottled
Year DD-SS Gap (HL)
Water DD (HL) Water SS (HL)
2015 5,721,171 4,991,787 729,384
2016 6,299,010 5,575,826 723,184
2017 6,935,209 6,228,197 707,012
2018 7,635,666 6,956,896 678,770
2019 8,406,868 7,770,853 636,015
2020 9,255,962 8,680,043 575,919
2021 10,190,814 9,695,608 495,206
2022 11,220,086 10,829,994 390,092
2023 12,353,314 12,097,103 256,211
SOURCE: OWN CALCULATION
3.1.2. EDIABLE OIL
A. DOMESTIC EDIBLE OIL PRODUCTION
In Ethiopia, edible oils are consumed both as industrially processed oil and in domestically
prepared forms. Oil seeds are also used for various other food preparations.
According to Central Statistics Authority’s report on large & medium scale manufacturing
and electricity industries survey published in August, 2012, there are about 36
establishments engaged in manufacture of vegetable and animal oils & fats. Out of this 2 are
under public ownership while the rest are privately owned. The production capacity of
some of the major edible oil processing plants is shown the table below.
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TABLE 5: EDIBLE OIL PROCESSING PLANTS

Factory Name Factory Capacity in Ton
Addis Mojo 14,000
Hamaressa 5,400
Bahir Dar 1,000
Gondar 3000
Dil 5445
Adama 1,452
Akaki 1365
Nazareth 1,500
Ediget 938
Dire Dawa 800
SOURCE: MINISTRY OF TRADE AND INDUSTRY
Among the existing edible oil producing factories edible oil, Addis-Mojo Oil complex
Hamaressa Edible Oil S.C` and Bahirdar Oil Mill are notable excelling others in production
capacity. The total production of edible oil in Ethiopia for the years 1999-2005 is given
below.
FIGURE 3: DOMESTIC PRODUCTION OF EDIBLE OIL
15,000.00
13,000.00
11,000.00
9,000.00
7,000.00
5,000.00
3,000.00
1,000.00
2008/09 2009/10 2010/11 2011/12 2012/13
Juice production 1159 1824 1097 15405 2048
(TON)
SOURCE: CSA, LARGE AND MEDIUM MANUFACTURING
Local oil production of edible oil was 5,704 ton in 2008/09 then decline to 4,319 ton in
2012/13. In 2009/10 was the highest production of edible oil which is 10,881 the gap
between supply and demand covered by imports were supplied by the private sector when
prices skyrocketed leading the government to successively introduce a price cap, and later,
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in May take over the import of palm-oil altogether, distributing it at a subsidized price for
consumers.
B. IMPORT OF EDIBLE OIL
Ethiopian domestic production was never being sufficient to meet the country’s demand till
today, the inability of domestic production to keep up with demand growth has led to
increased imports of edible oil. Ethiopian rural areas use animal fats as major meal oil in
1980-1990’s now their consumption pattern is being changed significantly and their
consumption of vegetable oil reaches 2.1 kg per person, the average consumption of oil seed
in urban region is 4.1 kg/person. However, The Government, with a view to avoiding
scarcity of this item and continuous rise in prices, allowed liberal import of edible oils.
Ethiopia has been importing edible oil from various countries to meet the demand. The
figure below indicates the total import of edible oil.
TABLE 6: IMPORT OF EDIBLE OIL

Average Average CIF
Year Net Wight CIF Value
Net Value Value
2010 1,142,392.31 21,429,960.40
2011 2,227,865.95 66,705,645.84 95% 211%
2012 1,453,084.27 43,561,237.49 -35% -35%
2013 1,266,198.95 28,659,196.22 -13% -34%
2014 3,199,218.16 106,380,145.01 153% 271%
2015 9,718,464.97 326,127,894.79 204% 207%
Average 81% 124%
SOURCE: ERCA
As can be observed, import of edible oil has a general trend of increase with fluctuations
from year to year. The value of imported edible oil has shown an increasing trend
throughout the years under consideration implying the huge volume of hard currency that
the country is paying to get the commodity.
C. TOTAL SUPPLY AND SUPPLY PROJECTIONS
It is apparent that the domestic supply of Edible Oil is the sum of total production by the
existing establishment in the country and import. In this regard, to know the supply of
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Edible Oil, we have summed the local production and import as presented in the figure
below.
FIGURE 4 : TOTAL SUPPLY OF EDIBLE OIL (IN LITERS)
11,000.00
9,000.00
7,000.00
5,000.00
3,000.00
1,000.00 Total supply
2010 2011 2012 2013
Total 7197.39231 8747.86594 5772.08427 10862.1989

sup- 999998 5
ply
Comparing the import and local production of edible oil, substantial amount of edible oil has
been imported outweighing the local production. The share of local production from total
edible oil accounted only an average of 2.94% in the years under consideration.
D. LOCAL EDIBLE OIL SUPPLY PROJECTION
The local supply of edible oil has been growing at an average of 7% during the years 2002 –
2005 E.C. (2008/09- 2012/13). For the projection of edible oil supply by local producers,
this average annual growth rate i.e. 7% is applied on the production recorded in year
2012/13. The table below presents the projected local supply of edible oil.
TABLE 7: PROJECTED LOCAL SUPPLY OF EDIBLE OIL

Projected Local Edible
Year
Oil Supply in Liter
2014 10,149,500.00
2015 10,951,360.00
2016 11,753,220.00
2017 12,555,080.00
2018 13,356,940.00
2019 14,158,800.00
2020 14,960,660.00
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3.1.3. CSD (CARBONATE SOFT DRINK)
A. CSD LOCAL PRODUCTION
The Ethiopian Soft Drink Market is dominated by two players; MOHA soft drink industry
(MOHA) and East African Bottling Share Company (East African). These two companies
respectively bottle and distribute their flagship products Pepsi Cola and Coca Cola along
with other sister brands. Between the two companies the Ethiopian soft drink market is
supplied about 40 million1 crates 2 annually.
Soft drinks in Ethiopia are marketed most of the time in 300ml glass bottles. Although the
market is dominated by 300ml size bottles, 500ml and 1000ml bottles are also in the
market.
Admittedly the oligopoly nature of the soft drink market in Ethiopia makes it difficult for a
new entrant to succeed in taking market share away from the established companies.
However, there is evidenced lack of sound management capability and experience as well as
inefficiency in utilizing available resources.
The future of the soft drink market is expected to be positive considering the following
factors:
Population urbanization and awareness of such products.

Continuous increase of the real GDP as evidenced by the double-digit growth over the last
decade which is creating a new market every year.
Government initiative to support the expansion of the manufacturing market with incentives
such as tax holidays.
Ease of reaching the rural population as result of expedient development of the country’s
infrastructures.
1
Source: Fortune Newspaper, February 22, 2009; Volume 9, Number 460.
2
One Crate equals 24 bottles of 300ml.
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Soft drinks are by far the most popular drink produced and consumed in Ethiopia.
According to Central Statistics Agency, soft drinks (lemonade) accounts for about 29% by
volume of beverages produced in the year 2014 with alcohol and wine being the lowest.
FIGURE 5: BEVERAGE PRODUCTION IN ETHIOPIA, 2014
28%
40% Mineral water

Beer
Wine
Liquours
Alchohol
Lemonade
0% 29%
2% 0%
Officially the Central Statistics Agency reported in its 2012 national abstract publication
that, for the year 2010/2011 about 3.7 million hectoliters of soft drink products were
produced. As shown in table and figure 39 below, the total production of soft drinks has
shown an increasing trend over the years.
FIGURE 6: SOFT DRINK PRODUCTION
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SOURCE: CENTRAL STATISTICS AUTHORITY
Currently the production of soft drinks is dominated by two companies, namely East African
Bottling and Moha Soft Drink Industries. Encouraging efforts was made by Great Abyssina
PLC, Asku PLC & Ambo Mineral Water S.C by introducing Tonic, orange & energy cola, etc.
The following table 11 presents the profile of major players in Ethiopia soft drink sub-
sector.
TABLE 8: PROFILES OF MAJOR ETHIOPIAN SOFT DRINKS INDUSTRY PLAYERS
1. East African Bottling Share Company (EABSC)

Company profile Coca-Cola was first bottled in Ethiopia’s capital Addis Ababa in 1959 by the
Ethiopian Bottling Share Company, which later opened a second branch in Dire
Dawa in 1965. The two plants were nationalized in 1975 and ran as public
companies until 1996 when they were bought by Ethiopian entrepreneurs. Just
prior to this, in 1995, Coca-Cola Sabco bought shares in the business and, in 1999,
signed a joint venture agreement with the plants. Having invested around 500
million USD South African Beverage Company (SABCO) Coca-Cola currently holds
around 82pc share in the Ethiopian company, while the remaining 18pc is owned
by two of the original shareholders, Negussie and Munir, as well as Dereje
Yesuwork, and Abinet G. Meskel. In 2001 the company changed its name to the
East African Bottling Share Company (EABSC). East Africa Bottling or EABSC has
grown so much ever since the mid-1990s. Between 2001 to 2003 EASBC
performed the expansion work for the Dire Dawa Plant, which replaced the old
production line of the plant, at a capacity of two million cases a year, by a new
modern production line at a capacity of seven million cases. Overall EABSC's
expansion project, that cost 12 million dollars spent on procurement of two
plants and a bottle washing machine, helped it enhance its production capacity
from five million crates in 1995 to 21 million crates in 2010.
Products EABSC produces soft drinks under the following brands - Coca Cola, Fanta, Coca-
Light, Sprite, and the Schweppes group (i.e., Fanta Orange & Pineapple). In May
2012, EABSC officially added Fanta Strawberry to the already existing brands
listed above.
Annual Sales turnover The Annual Turn-over of the company was reported around USD100 million in
(USD/Birr) 2010/11 The company has employed around 1,000 permanent employees.
Location of EABSC currently operates across 2 plants, one in Addis Ababa and the other in
Filling/Bottling Plants Dire Dawa town (525 Km from Addis)
(in Addis & Regions)
Current Production 80,000 cases per day from its two plants; although EABSC has most recently
Capacity (per day) & upgraded by more than 2 folds both is plants production capacity by adding new
Market Share production lines
Addis Ababa:
New line: 42,000 lt/hr
Old line 1: 26,000lt/hr
Old line 2: 24,000lt/hr
Currently New line is operational
Dire Dawa:
New line: 36,000lt/hr
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Old line 12,000lt/hr

Currently new line is operational
(i.e., Addis Ababa: 42,000 liters/hour & Dire Dawa: 36,000 liters/hour). At
present, EASBC has a national industry market share of around 45 percent.
Most recently, East African Bottling Share Company (EABSC) announced an eight-
Expansion projects & year investment spree of nearly nine billion Birr, intended to make Ethiopia its
New Investments number one market in Africa by the year 2020. Already underway is the
construction of a five-storey production building in the company compound in
Addis Ababa at a cost close to 18.6 million dollars or 330 million Br. These
buildings are part of a 52 million-dollar or 923 million-Br expansions, intended
for the Addis Ababa Plant, including the installation of two additional production
lines, bringing the total to five. One of these lines will be dedicated to packaging
the company’s beverages in plastic bottles. The original expansion of the Dire
Dawa Plant, which saw production grow to seven million cases, cost 20 million
dollars. The new expansion, expected to cost the same amount of money as part of
Plan 2020, will see the installation of one more line in 2012/13. When the Addis
Ababa and Dire Dawa expansions are finalized, the company expects a total
annual production of 45 million cases. The plan includes three new plants in
Bahir Dar, Hawassa, and a third plant to be located in western Ethiopia in a city
yet to be identified.
2. MOHA Soft Drinks Industry Share Company
Company profile MOHA soft drinks Industry S.C was established on May 15, 1996 acquiring four
Pepsi plants (Nifas Silk Plant, Tekle Haimanot Plant, Gondar Plant, and Dessie
Plant) from the Ethiopian Privatization Agency with paid capital of Birr
108,654,000 and as part of MIDROC Ethiopia Group Companies.
In addition to the initial purchase price of the Soft Drinks factory, MOHA has
invested Birr 8 Million for the expansion of new projects, Birr 153 million for
refurbishment and replacement of existing plants and Birr 241 million for
marketing, infrastructure, excluding advertisement and sponsorship expenses.
Products Major products of MOHA Soft Drinks Industry S.C. are: Pepsi Cola, Mirinda
Orange, 7-Up, Mirinda Tonic, Mirinda Apple (all Pepsi Brands), and Kool (Bure
Kool and Tossa bottled water products). MOHA also plans to introduce new
products like Pepsi Max and Diet Pepsi brands.
Annual Sales turnover Annual turnover has reached around Birr 556 million and sales stands at an
(USD/Birr) average annual growth rate of 12%, providing 2,485 jobs for citizens out of
which 1,095 are new employment opportunities since acquisition.
Location of MOHA currently has 7 operating units including three found in Addis Ababa
Filling/Bottling Plants including the Nefas Silk Pepsi Plant, Teklehaimanot Pespsi Plant, and one
(in Addis & Regions) franchised Summit Beverage Plant; as well as across regions including three in
the Amhara Regional State (410 km Bure Pespsi & Kool Water Plant, 650 Km
Gondar Pepsi Plant, and the 385 km Dessie Pespsi & Tosa Ambo Water Plant),
and the recently inaugurated Hawassa Plant (270 Km) in the Southern Nations &
Nationalities People's Regional State (SNNPR).
Moreover, MOHA is marketing 20pc of its products in plastic bottles of in half,
one, 1.5 and 2.25-litre sizes.
Current Production 99,000 cases per day from all its operational plants across the country.
Capacity (per day) & Currently MOHA commands a 52 percent share of the market in soft drinks
Market Share industry in the country
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Expansion projects & MOHA envisages an average annual increase of 15% in sales volume and a
New Investments corresponding profit growth. The company has already set a new PET-line at ITS
Summit Plant: 12,000 bottles per hour with 1.5-liter bottle capacity (both for
soft drinks and bottled water) which went operational as of October 2010 with
total estimated investment cost of around Birr 130 million Birr. MOHA's
upcoming investment projects include: the Adigrat Pepsi Cola Bottling Plant in
Tigray Region (872 Km) with total estimated investment cost of Birr 208 million
& the Dessie Pepsi – Cola & Carbonated Water Plant (385 Km) in Amhara Region
with total estimated investment cost of around Birr 208 million
3. Great Abyssinia PLC
Company Profile Great Abyssinia has its roots back to the early 1990's when it was established as a
sole proprietorship company. The then Abyssinia coffee and tea processing
enterprise had started out with less than ten employees by roasting, grounding and
packaging Arabica coffee using an old dilapidated machine for exclusive domestic
market consumption.
Products Currently Abyssinia is producing Tonic and coffee cola carbonated drink bottled in
half and one liter bottles. The company has finalized to launch a range of new tastes
of carbonated drinks like cheers orange, fresh & lemon
Currently, Abyssinia is marketing Tonic and coffee cola in half and one liter PET
Sales/turnover bottles. The annual sales of Tonic & coffee cola are about 155 million Birr. Almost all
Tonic & coffee cola products are being sold in regions by agents. Only small
percentage of the product is being sold in the capital Addis Ababa.
Current Production Abyssinia installed machinery for its soft drink filling line. The capacity is 10,000
Capacity (per day bottles (half liter bottles) per hour.
Expansion projects Great Abyssinia planned to set a new PET-line at Legetafo Plant: 24,000 bottles per
& New Investments hour with 0.5-liter bottle capacity which went operational as of October 2015. This
will boast the company market share in the soft drink sub sector further to 13% in
2015 working at full capacity.
4. ASKU PLC
Company Profile Located in the vicinity of Burayou Spring water (Aqua Addis) in Burayou town, Asku
PLC started its soft drink production before Two years. The company bottles RC cola
International Brands with Non – Returnable PET bottles.
Products Royal Crown soft drink

 Cola
 Orange
 Lemon
5. AMBO MINERAL WATER S.C
Company Profile Ambo mineral water factory was established 80 years ago in Sekele locality near a
hot spring 130 km west of Addis Ababa. The factory had dominated 85 percent of
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the mineral water market. The factory was nationalized in 1974 and it was partially
privatized in 2008. An Ethiopian businessman, Tewodros Ashenafi, in partnership
with South African brewery company, SABMiller bought the factory from the
Ethiopian Privatization Agency two years ago. SABMiller and SouthWest
Development, a company established and managed by Tewodros forged a joint
venture company, Ambo Mineral Water S.C., with the Ethiopian government. The
share company has 3,607,000 shares with a total par value of 300,607,000 birr.
Products Ambo Original
 475 ML returnable glass
 330 ML non-returnable glass
 250 ML PET
Ambo Lite
 500 ML PET
 250 ML PET
 1 Lit PET
 2 Lit PET
Flavored Ambo - Orange, Apple, Pineapple and Lemon
 250 ML PET
 500 ML PET
 1 Lit PET
 2 Lit PET
Current Production The Ambo mineral water manufacturing plant had two lines which have a total
Capacity (per day production capacity of 14,000 per hour. The two old lines were renovated and
another new line was installed. The new line alone has a production capacity of
24,000 bottles per hour.
Expansion projects Ambo Mineral Water S.C., the bottler of the popular Ambo mineral water, on
& New Investments Thursday announced that it had undertaken a major expansion project on its
mineral water manufacturing plant near Ambo town at the cost of 21 million dollars.
SOURCE: SURVEY OF COMPANIES AND INDUSTRY EXPERTS; VARIOUS ARTICLES AND RESOURCES
B. CSD IMPORT
In addition to the local production of CSD, the country has been importing CSD products that
have been growing by 65% on average reaching Birr 29 million worth of CSD import.
Canned CSD products are the major type of CSD import due to the fact that the local
industries are not producing in canned form. Soft drinks are being imported mainly from
UAE in to the country with aluminum cans.
TABLE 9: IMORT OF CSD FROM 2009 TO 2015
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Average
Year Net Wight CIF Value Average CIF value
net value
2009 313403.75 3742361.25
2010 340,381.14 5,744,697.77 9% 54%
2011 505,895.32 8,408,008.84 49% 46%
2012 1,680,662.29 20,133,771.66 232% 139%
2013 1,266,198.95 28,659,196.22 -25% 42%
2014 813,373.26 21,256,584.80 -36% -26%
2015 2,136,297.43 29,828,566.77 163% 40%
Average 65% 49%
SOURCE: ERCA
C. CSD SUPPLY AND DEMAND GAP
The existing soft drink production companies have been established before 50 years
without undergone a major expansion relative to the population and urban development.
This slow development in a soft drink industry has cause stagnation in a consumption of
soft drink for the last half century and the price of the soft drink has increased led by strong
demand.
As shown below in following chart the demand and supply gap is estimated above five
hundred thousand hectoliters and is expected to stay in same figure for the next ten years.
Figure 7: CSD DEMAND SUPPLY GAP
A. JUICE LOCAL PRODUCTION
The untouched Ethiopian juice market doesn’t have many players; the major juice producer
in the local market would be Great Abyssinia PLC (Prigat), Piko Juice PLC (Snap), Yami Juice
(Yami), Africa Juice, Merti, which are producing natural fruit juices with flavors such as
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mixed fruit, mango, apple and others. All the local products are non-aseptic and mostly are
made from natural fruits packaged in plastic, Tetra Pack or paper. Generally, Local juice
production doesn’t have significant contribution to the local market for the last five years.
Figure 8: JUICE PRODUCTION

17,000.00
15,000.00
13,000.00
11,000.00
9,000.00
7,000.00
5,000.00
3,000.00
1,000.00
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Juice production (TON) 1159 1824 1097 15405 2048 1243
SOURCE: CSA
B. JUICE IMPORT
The imported juice products are more available in the local market than the local
productions. The imported products consist of natural juices, concentrates and nectars. The
unrestricted imports and growing local production don’t satisfy the demand for juice that
opens a door for the retailers and supermarkets to sale a juice product with high price.
As can be seen in Table 20, the import of packed juice has been declining from 3,346 ton to
891 ton through the period 2006 to 2013 while the import of Juice concentrate on the other
hand shown a tremendous growth from 230 ton to 12,742 ton from year 2009 to 2013
implying a change from importing packed juice to companies participating on packaging the
juice products while importing concentrate.
Juice manufacturing industry includes businesses that process, blend and package their own
products for the consumer market. They are also referred to as converters. Products made
by this industry may be labeled juice, nectar, fruit juice or freshly squeezed juice. Juice
processing industry is very important both for the internal and the external market.
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TABLE 10: ETHIOPIAN JUICE & CONCENTRATE IMPORT
CIF VALUE (IN GROWTH IN GROWTH IN

YEAR VOLUME (KG)
BIRR) KG VALUE
2009 9,429,936 80,548,749
2010 6,707,379 71,246,395 -29% -12%
2011 8,164,506 110,763,371 22% 55%
2012 12,990,996 177,632,648 59% 60%
2013 13,633,256 216,811,835 5% 22%
2014 13,812,449 234,516,231 1% 8%
2015 14,871,150 266,799,144 8% 14%
Average Growth 11% 25%
SOURCE: ETHIOPIAN REVENUE CUSTOMS AUTHORITY
The total projected packed juice supply expected to increase from 5,336 ton in 2015 to
37,633 in 2023. Likewise, projections are made based on the average growth rate of the
production and import for the last seven years.
TABLE 11: PROJECTED TOTAL JUICE SUPPLY
Year Demand Supply Total SS

2016 5,336.00 17,537.00 22,873.00
2017 5,776.00 19,205.70 24,981.70
2018 6,216.00 20,874.40 27,090.40
2019 6,656.00 22,543.10 29,199.10
2020 7,096.00 24,211.80 31,307.80
2021 7,536.00 25,880.50 33,416.50
2022 7,976.00 27,549.20 35,525.20
2023 8,416.00 29,217.90 37,633.90
C. JUICE SUPPLY AND DEMAND GAP
Though declining, as shown on juice import data from customs authority, Ethiopian juice
demand is mainly satisfied from imported products. Therefore, the expansion will have
plenty of opportunity to substitute the imported products and expand their opportunities to
meet the unsatisfied demand existing in the local market. The current production and
import trend shows by the end of 2014 the demand and supply gap will reach 348,531 tons.
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Figure 9: JUICE DEMAND SUPPLY GAP
17,000.00
15,000.00
13,000.00
11,000.00
9,000.00
7,000.00
5,000.00
3,000.00
1,000.00
2010 2011 2012 2013 2014 2015
De- 1159 1824 1097 15405 2048 1243
mand
Supply 6707.37921 8164.50629000 12990.99598 13633.25598 13812.44868 14871.14979
001
DD-SS 5548.37921 6340.50629000 11893.99598 1771.74402 11764.44868 13628.14979
001
A review of Ethiopian market shows that dramatic changes are occurring. Demand is rising.
The key factors, which are likely to cause demand to rise are growing income and changing
in demography. The propensity to consume juice products is rising.
As indicated, the domestic market is being supplied by local as well as imported products.
The size of the domestic market is considerable with the growing population and
demographic change.
3.2 PET-PREFORM BOTTLES AND CAPS

3.2.1. SUPPLY OF PET-PREFORM BOTTLES AND CAPS
The local market demand for PET- preforms bottles and caps is met through local
production and import. Accordingly, the trend in local production, import and total
supply/apparent consumption of the product is discussed hereunder.
A. LOCAL SUPPLY
PET- preforms bottles and caps manufacturing is driven by the demands of the local
beverage factories engaged in the production and supply of bottled water, Soft Drinks, soda
mineral water, edible oil and pharmaceutical factories. Manufacturers consider several
aspects related to the customer (annual production capacities and actual production of
products), raw material (type, quantity and availability) and internal ability (expertise and
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availability of labor, production process complexity and delivery time) for manufacturing
and delivering PET- preforms bottles and caps products.
Currently, there are three companies engaged production of PET- preforms bottles and caps
namely, Hagere Roha PLC, Burayu spring water bottling company and ITF PLC (producing
the bottled water called VIVA brand). These three companies all together have a production
capacity of xx million PET bottles and xx million pcs of Capps per year. Except Hagere Roha
PLC, the other two are producing for themselves and supply other local bottlers. The table
below presents the annual installed production capacities of these companies.
TABLE 12: SUPPLIERS OF PET BOTTLE

Installed Production Capacity Supply To Other Bottlers in
S. N Name of Company In PCS PCS
PET-Bottles Capps PET-Bottles Capps
1 Hagere Roha PLC 6,000,000 11,000,000
2 Burayu Spring Water 9,265,512
Bottling Company
3 ITF PLC
TOTAL
Since local production of PET- preforms bottles and caps is a recent phenomenon, there is no time
series data available on the local production of PET- preforms bottles and caps. On the other hand, a
research paper prepared by Ethiopian Development Bank’s Research Process Unit (Plastic Pipes,
Conduits, Fittings and Hose Manufacturing Commodity Study) indicates that local production of
plastic pipe fittings has commenced in 2010, with an estimated annual production of 264 tons.
B. IMPORT
At present the major source of supply to the local market for PET- preforms is mainly import. The
product is imported by the local bottled water factories as well as distributors. The data source for
import statistics i.e. Ethiopian Revenue and Customs Authority classifies import of PET- preforms as
Bottle Performs of Plastics and plastic cap in H.S code heading of 39233010 and 39235000.
Accordingly, summary of total import of PET- preforms bottles during the period 2009 – 2015 is
shown in the table below.
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TABLE13: Glass Bottle Import For The Years 2009-2015

CIF Value in Average growth Average growth of
Year Net Wight
Million ETB of the net Wight CIF value
2009 1,287,244.89 1,213,319.33
2010 2,139,045.40 62,177,968.84 66% 5025%
2011 3,187,088.01 140,790,598.90 49% 126%
2012 3,833,129.11 172,054,860.47 20% 22%
2013 5,769,683.34 250,472,550.87 51% 46%
2014 9,910,675.68 481,581,927.50 72% 92%
2015 12,087,790.21 576,749,344.98 22% 20%
Average 47% 888%
SOURCE: ERCA
As can be seen from the above table, import of PET- preforms bottles during the period under
consideration has shown a noticeable increasing trend except a decline in the year 2009. The
imported quantity which was 1.2 Million Kg during year 2009 has increased to 12 Million Kg in
2015. During the period 2006 – 2013 import of PET- preforms bottles has exhibited an average
annual growth rate of 47%.
Generally, the country spends a significant amount of hard currency for importing of PET- preforms
bottles. During the years under consideration (2009 -2015) the average CIF value of imported PET-
preforms bottles was Birr 240 Million. The CIF value of imported PET- preforms bottles on average
grew by 64.6% over the years under consideration. The highest and lowest import CIF value of Birr
576 Million and Birr 1 Million were recorded in the years 2013 and 2015, respectively. The figure
below shows the growth trend of imported quantity and CIF value for the years 2009 – 2015.
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Figure 10: Imported Quantity and CIF Value Growth Rate Trends 2008– 2013
130%
90%
50%
10%
2011 2012 2013 2014 2015
Aver- 0.6617237455104 0.4899580953260 0.2027057608616 0.5052149756573 0.7177157039609
age 6 75 21 15 75
growth
of the
net
Wight
Aver- 1.2643164697497 0.2220621391930 0.4557714335171 0.9226934281910 0.1976141795312
age 7 16 21 62 67
growth
of the
CIF
value
C. TOTAL SUPPLY
The apparent consumption or total supply of PET- preforms bottles,since there is no record
of export or re-export, is composed of domestic production plus import. Accordingly, the
structure of supply and apparent consumption of the product is summarized in the table
below.
Table 14: Total Supply Of Pet- Performs Bottles. (IN KG)
Growth Rate of
Domestic
Year Import Total Supply Total Supply
Production
(%)
2009 - 1,287,245 1,287,245
2010 - 2,139,045 2,139,045 66%
2011 - 3,187,088 3,187,088 49%
2012 - 3,833,129 3,833,129 20%
2013 - 5,769,683 5,769,683 51%
2014 - 9,910,676 9,910,676 72%
2015 - 12,087,790 12,087,790 22%
SOURCE: DBE & ERCA
As can be seen from the above table, during the period 2009 – 2015 the maximum total supply of
PET- performs bottles was 12 million Kg in year 2015. During the time under consideration (2009 –
2015) total supply of PET- performs bottles shows an increasing trend registering an annual average
growth rate of 47%.
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3.3 HDPE (High-Density Polyethylene)

HDPE (High-Density Polyethylene) is a type of plastic commonly used for packaging due to its
durability and versatility It is widely used for various applications, including bottles, containers,
bags, and films. HDPE packaging is known for its strength, resistance to chemicals, and ability to
protect products from moisture and contaminants.
In Ethiopia, the demand for plastic packaging, including HDPE, is influenced by factors such as
population growth, urbanization, and the expansion of industries and retail sectors. The packaging
industry in Ethiopia is experiencing growth, driven by increasing consumer demand and the need
for efficient and sustainable packaging solutions 1.
However, it is important to note that the use of plastic packaging, including HDPE, has
environmental implications. Plastic waste management and recycling are significant challenges
globally, including in Ethiopia. Efforts are being made to address these challenges and promote
sustainable packaging practices.
While specific information about a market study on HDPE plastic packaging in Ethiopia is not
readily available, it is advisable to consult industry reports, market research firms, or local trade
associations for more detailed and up-to-date information on the market dynamics and
opportunities in the HDPE plastic packaging sector in Ethiopia
Ethiopian plastic packaging exports are expected to reach around $650 million by 2026, growing
at a rate of 1.6% annually from 2021's $594 million. Since 2004, Ethiopia's supply of plastic
packaging has dropped 2.3% each year. In 2021, the country ranked 115th, with Albania
overtaking it at $594 million. The US, Germany, and France were numbers 2, 3, and 4 in this
ranking. Imports of plastic packaging into Ethiopia are predicted to reach $109 million by 2026,
with a year-on-year growth rate of 3.1%. Since 2000, demand for plastic packaging in Ethiopia
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has increased 11.8% annually. In 2021, Ethiopia ranked 64th, with Egypt overtaking it at $91
million. Germany, France, and Mexico were numbers 2, 3, and 4 in this ranking
The market for plastic caps and closures exhibits a robust dynamism, driven by factors such as
burgeoning demand in the food and beverage industry and ever-evolving packaging technology.
The pervasive use of plastic products in everyday items, including personal care products and
pharmaceutical goods, underpins the industry’s growth. Notably, escalating demand in emerging
markets, as well as the global trend towards health-consciousness leading to a high consumption
of packaged beverages, acts as significant growth propellers.
Figure 10: plastic consumption volume
3.4 PRICE ANALYSIS
The pricing approach to be used by the project when operational will be cost plus pricing
approaching. The project will monitor the market and competitors’ pricing in order at best
possible way to offer its products at a lower price.
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The company’s operation will revolve around utilizing technology and machinery in efficient
manner where wastage is limited. This strategy will enable the company to have a
competitive advantage over competitors’ when it comes to pricing.
For this project study purpose the lowest market selling price of Birr 165 per pcs
considered for revenue projection.
3.5 MARKETING STRATEGY

The company understands the key success factor in the plastic crates industry depends up
on Price, quality, Marketing and promotion, and delivery time. The following strategies are
given priorities to ensure the sales forecasts are achieved.
Pricing strategy
o Affordable pricing.
o continuously monitoring competitors’ price
o Price revision is performed when the need arises
Brand Equity Strategies
o Brand will be developed to create independent identity and image.
o Brand positioning statements will also be developed
Distribution Strategy
o Product availability survey will be conducted regularly to know penetration level.

o Effective timely delivery as per clients order
o Intimate relationship with the beverage, cosmetics and pharmaceutical industries.
Promotion Strategies
o Intensive advertisements on various multi Medias
o Promotion will be conducted on the regional export markets
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4. Engineering and technology

4.1 Engineering
4.1.1 Land, buildings and civil works
The required area (10,000m2) and construction cost for the production facilities essential for the
successful operation of the processing plant is shown in Table 5. A total area ready for the
processing plant is 10,000m2 out of which 6,910m2 is to be covered by building while uncovered
area of 3,090 m2 is left storage of waste materials and future expansions. In order to estimate the
land lease cost of the project profiles it is assumed that all the project will be located in different
land level from level 1/1 to level 4/3, their current market lease price is from 39,073.31 birr per M
2
to 2,800.71 birr per M 2respectively. Therefore, for the profile a land lease rate of birr 3,885 per
M 2 have been taken, which is between the ranges.
The cost of construction of building should be appropriate to the size and expected profitability of
business, costs of building generally differs by the type of construction materials used, the type of
foundation, wall height and location. The current building cost for simple storage and processing
room is from 10,000.00 Birr per m 2 to 25,000.00 Birr per m 2. The total construction cost of
buildings and civil works, at a rate of Birr 20,000per m2 is estimated at Birr 114.565 million.
Therefore, the total cost of land lease and construction of buildings and civil works is estimated at
Birr 153.41million.
4.1.2 Plant layout

Plant layout is the plan of optimum arrangement of an industrial facility. It embraces the physical
arrangement of various departments, machines, equipment and services for economical, efficient
and effective functioning while planning the production of any goods.
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S/No Estimated cost per Total estimated

Descriptions Total area square meter cost
in M2 (in Birr) ( in Birr)
1 Raw materials receiving and store 1,000 20,000.00 20,000,000.00
2 Raw materials preparation room 1,000 20,000.00 20,000,000.00
3 Laboratory building 50 20,000.00 1,000,000.00
4 Processing room 1,000 20,000.00 20,000,000.00
5 Finished product store 500 20,000.00 10,000,000.00
6 Packing materials store 10 20,000.00 200,000.00
7 Boiler room 50 20,000.00 1,000,000.00
8 Workshop room 300 20,000.00 6,000,000.00
9 Generator room 20 20,000.00 400,000.00
10 Power station room 20 20,000.00 400,000.00
11 Septic Tank 150 20,000.00 3,000,000.00
12 Administration office 100 20,000.00 2,000,000.00
13 Production and technical office 50 20,000.00 1,000,000.00
14 Toilet and shower for female 40 20,000.00 800,000.00
15 Room for cloth changing for female 40 20,000.00 800,000.00
16 Toilet and shower for male 40 20,000.00 800,000.00
17 Room for cloth changing for male 40 20,000.00 800,000.00
18 parking 1,000 5,000.00 5,000,000.00
19 For green area 1,500 2,500 3,750,000.00
20 For expansion 3,090 0.00 -
21 Fence 1,200 M*2 3,000.00 7,200,000.00
Sub total 104,150,000.00
Contingence 10% 10,415,000.00
GRAND TOTAL 114,565,000.00
Table 15: Estimated construction costs
Table 16: Land lease period in Addis Ababa
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Sector of development Period of Down

activity lease payment
Education, health, 90 10%
culture and sports
Industry 70 10%
(manufacturing )
commerce 60 10%
For urban agriculture 15 10%
For others 60 10%
Sources: - city government of Addis Ababa land development and management bureau
Table :17 Land lease floor price in Addis Ababa

S/No Land level Current land lease Current lease price per M2
floor price per M2 (Market price )
1 1/1 2,213.25 39,073.31
2 1/2 2,165.47 36,825.73
3 1/3 1,900.19 34,578.15
4 ¼ 1,552.93 31,119.21
5 1/5 1,531.91 29,096.45
6 2/1 1327.39 27,073.71
7 2/2 1,221.18 25,050.96
8 2/3 1,191.17 23,028.21
9 2/4 1,074.39 21,005.46
10 2/5 1,027.84 18,982.71
11 3/1 994.71 16,959.96
12 3/2 960.21 14,937.21
13 3/3 927.84 12,914.46
14 ¾ 904.77 10,891.71
15 3/5 873.74 8,868.96
16 4/1 814.06 6,846.21
17 4/2 786.45 4,823.46
18 4/3 748.80 2,800.71
Sources: - city government of Addis Ababa land development and management bureau
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4.2 Technology
4.2.1 Production Process
Injection molding is a method to obtain molded products by injecting plastic materials

molten by heat into a mold, and then cooling and solidifying them. The method is suitable
for the mass production of products with complicated shapes, and takes a large part in the
area of plastic processing.
A typical injection molding machine is divided into 2 units i.e. a clamping unit and an
injection unit.
Clamping Unit: The functions of the clamping unit are opening and closing the die,
and the ejection of products. There are 2 types of clamping methods, namely the
toggle type shown in the figure below and the straight-hydraulic type in which a
mold is directly opened and closed with a hydraulic cylinder .
Injection Unit: The functions of the injection unit are to melt plastic by heat and then
to inject molten plastic into a mould. The screw is rotated to melt plastic introduced
from the hopper and to accumulate molten plastic in front of the screw (called
metering). After the required amount of molten plastic is accumulated, injection
process is started. While molten plastic is flowing in a mold, the machine controls the
moving speed of the screw, or injection speed. On the other hand, it controls dwell
pressure after molten plastic fills out cavities. The position of change from speed
control to pressure control is set at the point where either screws position or
injection pressure reaches a certain fixed value.
It is however important to note that all flow speeds, injection speed, shot lead time,
screw rotation speed and other particulars need to be controlled by the machinery
operator. The entrepreneur may also appreciate that the time allowed for the plastic
to cool down also has an effect on the end product properties which requires
considerable know-how and skilled handling of production line processes.
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The diagram on the following page gives a cross-sectional view of the injection
molding machine (note: this is just a theoretical representative diagram for the
injection molding machine, as machines may vary according to their makes, brands,
products produced etc.).
FIGURE11: INJECTION MOULDING MACHINES
4.2.2 RAW MATERIALS AND INPUTS
The principal raw material required for the production of Plastic bottle is resin HDPE, LDPE, PP,
PET and PET. Most of the raw materials will be imported.
4.2.3 Environmental and social impact assessment of the project

Typically, any developmental projects also trigger a set of environmental and social impacts.
These environmental and social due to development projects occur in different forms. An
Environmental and Social Impact Assessment (ESIA) has to be carried out to study the potential
environmental and social impacts due to the production plastic products. Potential environmental
and social impacts due to the production of plastic based products on attributes like air quality,
noise, water quality, soil, flora, socio-economic, etc. have to be assessed as part of the ESIA
study. Appropriate mitigation measures to help minimize/avoid impacts from the development
have to be recommended in the study. The measures include avoidance measures, mitigation
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measures and environmental enhancement measures. For the purpose of including environmental
costs, the costs of wastewater treatment plant and solid waste incineration systems are included in
the cost of machinery and equipment. Social responsibility cost estimated to be 1% of fixed investment
costs.
4.2.4 Plant Capacity

Raw materials to produces a number of products such as, plastic packaging by PET and HDPE
plastic bottle with a capacity of 2,400 kg per day and we assume 260 working days per year The
processing plant will start production at 70% of, which will grow to 80% in the second year and
90% capacity will be attained in the third year. Full capacity production will be attained in the
fourth year and onwards.
4.2.5 Specification
Plastic Bottle is manufactured from PET and HDP auxiliary materials.
HDPE (high-density polyethylene) and PET (polyethylene terephthalate) are two commonly used
plastics in the manufacturing of bottles and packaging materials. While they may appear similar
on the surface, there are several differences that set them apart from each other.
HDPE Plastic Bottles:
 HDPE is known for its strength and durability.

 It can withstand temperatures ranging from -110 to 165°F.
 HDPE bottles are not transparent but can be made semi-opaque, allowing consumers to
see the products inside.
 HDPE is popular in white and can be color matched.
 It is commonly used for manufacturing bottles for pharmaceutical products.
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PET Plastic Bottles:
 PET is clear and comparable to glass in terms of clarity.

 It is commonly used for packaging in various industries, especially for beverages and
other liquids.
 PET has lower temperature resilience compared to HDPE, with a temperature range of
around -40°F1.
 PET is FDA-approved for use in food and beverage containers.
 It offers better stress crack resistance and easier recyclability compared to HDPE.
Both HDPE and PET plastics have a wide range of applications:
 Liquid packaging: Both HDPE and PET display high resistance to chemical attack and
low tainting of contents, making them suitable for packaging liquids.
 Electrical insulators: HDPE and PET have high breakdown voltages, making them useful
as electrical insulators.
 Pharmaceutical packaging: HDPE is commonly used for manufacturing bottles for
pharmaceutical products. PET is also used in the pharmaceutical industry, especially for
liquid medications.
 Food and beverage packaging: PET is FDA-approved for use in food and beverage
containers, making it suitable for packaging perishable items.
 Shipping and hazardous goods: HDPE is recommended for shipping chemicals and
hazardous goods, while PET packaging is ideal for perishable items.
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4.3 Machinery lists
Different machinery is required for the processing plant based on the type of raw materials
received and products proposed. The section-wise equipment required, their specifications and
quantity for 2,400 kg per day capacity processing plant are given below:
Table 18 Plastic Bottle extrusion line
S/No Description Quantity Unit price Total amount

(USD) (USD)
1 Injection Molding M/C With 1set 100,000.00 100,000.00
Chiller, Dehumidifying Dryer &
Other Accessories
2 Blow Molding Auto M/C With 4 1 set 100,000.00 70,000.00
Nos. Compressor With Air
Receiver, Dryer, Booster, Cooling
Tower & Other Accessories
3 Injection Molding M/C With 1 set 92,000.00 92,000.00
Chiller, Dehumidifying Dryer,
Loader & Other Accessories
4 Injection Moulding M/C With 1 set 30,000.00 30,000.00
Chiiler, Dehumidifying Dryer,
Blower & Other Accessories
5 scrap washing machine 1 set 11,800.00 11,800.00
6 Air compressor and air tank 1 set 11,500.00 11,500.00
7 Cooling tower with delivery pump 1 set 12,000.00 12,000.00

8 Freight 12,000.00
327,300.00 USD
TOTAL(IN USD )
49,095.00 USD
Contingency (15%)
376,395.00 USD
TOTAL
TOTAL IN ETHIOPIAN BIRR 19,948,935.00ETB
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4.3.1 Lists of machinery suppliers
Company Name
PLAMAC ENGINEERING
Contact Person
MR.SADAF SAYED - C.E.O.
Tel No.
022 - 28488127 / 9819829014 / 8355889902
Fax No.
22 - 28488127
Address
Shop no. 3 near Corporation Bank beside Reliance Fresh
Shakti Nagar, Dahisar (E), Mumbai - 400068, Maharashtra,
INDIA.
Activities
Last 25 Yrs. Leading Mfgr. & Exporters Of Plastic Extrusion
Machinery And PVC Pipe Dies. (Also Rigid PVC Pipe Unit, PVC
Braided Hose Pipe Unit, Extrusion Dies, Tub Traction, PVC
Compounding Unit Manufacturer, High Speed Mixer
Manufacturer, Acrylic Extrude
4.4 Plastic packaging Organizational structure

The selection of structure of the envisaged project is made based on the existing structure of
manufacturing plants operating in the country, the capacity, complexity and technology mix of the
plant. Organizational structure principles such as specialization, coordination, and
departmentalization are also considered for design of structure that best suits the envisaged
project
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Board of Directors
General Manger
Technical Human Resource

Administration
Commercial Finance
Department Department Department Department
Mechanical Personnel Marketing & General
Administration & Distribution accountants
Maintenance training Division Division
Electrical &
Electronics
General Service Purchasing Cost and
maintenance division Division Division Budget Division
Stores & Material

Management
Addis Ababa
Liaison Office
FIGURE11: Organizational structure
4.4.1. Manpower Requirement and Estimated Annual manpower costs

Table 19 Annual manpower costs
S/No Description Salary in birr

Number of
persons annually
monthly
1 General manager 1 30,000.00 360,000.00
2 executive secretary 3 4,600.00 165,600.00
3 Manager- admin. and finance 1 13,000.00 156,000.00
4 accountant 4 5,000.00 240,000.00
5 cashier 3 2,500.00 90,000.00
6 guards 5 2,000.00 120,000.00
7 messenger and cleaner 4 2,000.00 96,000.00
8 driver ii 4 2,500.00 120,000.00
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9 production and technical head 1 11,000.00 132,000.00

10 operator 7 4,200.00 352,800.00
11 assistant machine operator 7 5,000.00 420,000.00
12 senior mechanics 7 7,000.00 588,000.00
13 senior electrician 7 7,000.00 588,000.00
14 shift electrician 4 7,000.00 336,000.00
15 shift mechanic 4 6,000.00 288,000.00
16 store keeper 3 3,500.00 126,000.00
17 manager- commercial 1 11,000.00 132,000.00
18 purchaser 6 3,500.00 252,000.00
19 sales- manager 1 7,000.00 84,000.00
20 Unskilled labour 21 870.00 219,240.00
21 sales clerk 8 2,500.00 240,000.00
Total 102 137,170.00 5,105,640
4.4.2. Employee Benefits
As part of its initiatives to have a motivated and capable work force at all times, the
company extends to its employees the following employee benefits package starting from
the implementation phase:
Provident fund,
Medical service,
Insurance,
Uniform and safety devices,
Loan facilities depending up on the financial position of the company,
Canteen subsidy, etc.
On top of this, there is a plan to introduce Performance Incentive Scheme for core staff of
the company that undoubtedly benefits both parties in terms of uniting their objectives
towards meeting organizational goals and objectives.
4.5 RECRUITING AND TRAINING PLAN
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Once the task of implementation of the expansion project is completed, hiring of technical
personnel shall follow suit based on its pre-designed staffing plan. In the training
dimension, an arrangement is to be made with the supplier of the required machineries and
equipment to train the farm Technical Personnel on the process as well as on machine
utilization during the commissioning process. With respect to other staff, the company shall
allot adequate budget for Capacity Building Programs at the start of operation.
5. Financial Analysis
5.1. General
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The financial analysis evaluation of PET Bottle AND HDPE Jerican manufacturing project, cost
estimates of the envisaged project are mainly consisted of capital investment as well as operating
and maintenance costs. The capital investment costs include fixed investment costs (initial fixed
investment and replacement costs), pre-operation capital expenditures and working capital, while
operating and maintenance costs comprise current expenses related to material inputs, labour,
utility, repair and maintenance costs, spare parts, Overheads, Sales and distribution, interest and
depreciation expenses.
The financial analysis and evaluation has been conducted taking assumptions:
1. It is assumed that about 70% of the total capital investment costs including the working
capital requirement could be covered through development bank loans of short and long-
term credits. The remaining balance 30% will be covered by equity capital contribution of
the project owner.
2. Even though the project might secure loans under different term and conditions as well as
from different financial sources, for the purpose of calculation of debt service scheduling,
the current Development bank of Ethiopia credit terms and conditions have been used.
Consequently. It is assumed that the project will secure loan facility on the basis of 11.5 %
annual interest rate, 10 years or 20 semiannual equal installments.
3. Even though the estimated project production life is more 10 years, the financial analysis
has been undertaken for a period interval covering the first 10 years only, during which
time most of the capital assets are assumed to be deprecated, debts recovered and pay-
back period accomplished
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4. It is assumed that the project will be implemented within two years. In year 1 the project is
expected to undertake construction works. Purchase machinery and vehicles to start up
production activity. Production activity will be started with the capacity of 70% and
years2, 3 & 4 the projects is anticipated to gradually increase capacity utilization to reach
100% in year 4. Therefore, starting from year 4 the project will be operational at full
capacity.
5.2. Fixed capital investment costs

Table 3 Fixed capital investment costs
S/No Fixed investment Unit of Quantity Unit price Total Amount Remarks
type measurement
1 Land Square meter 10,000 3,885 38,850,000.00 The period of land
lease will be 70
birr/M2 years and 10%
2 Buildings and civil Square meter 6,910 lump sum 114,565,000.00 of the total lease
works amount will be
paid in the first
year
Sub total 153,415,000.00
3 Machineries set 2 Lump sum 19,948,935.00
4 Transformer set 1 Lump sum 2,000,000.00
5 Weighbridge Set 1 Lump sum 4,000,000.00
6 Truck and vehicles Pcs 2 Lump sum 6,000,000.00
7 Furniture and Pcs 500,000.00
fixture
SUB TOTAL 32,448,935.00
Fixed capital 185,863,935.00
investment costs
8 pre-operational 2,000,000.00
expenses
Working capital 13,999,000.00
TOTAL INVESTMENT COSTS 201,862,935.00
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5.3. Working capital
Working capital is the financial means required for smooth operation and maintenance of a
project mathematically, it is a difference between current assets and current liabilities
In the particular case of the project under consideration, the current assets comprise receivables,
inventories (local and imported material inputs, spare parts, work in progress, and products ready
for delivery) and cash in hand, while current liabilities comprise accounts payable to creditors,
and are free of interest payment.
5.4. Project Financing
Fixed capital investment costs, pre-operation capital expenditures and working capital
requirements are assumed to be financed by equity capital of the project promoter and through
loans of short and long-term credits.
As stated earlier even through the project might obtain loans under different terms are condition
as well as from different sources, for the purpose of calculation of debt service scheduling the
current development bank of Ethiopia credit terms and conditions have been used. Accordingly,
it is assumed that the project will be able to obtain about 70% of the total investment costs
through bank loans that will have to be repaid back within 10 years, during which time interest
will be paid on the loan. The remaining balance, 30% of the total investment costs are expected to
be covered by equity contribution of the project promoter.
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5.5. Operating and Maintenance Costs
It is deemed essential to make realistic forecasts of the plant costs, operating costs and the total
production costs in order to establish the amount of working capital requirements and compute
project benefits. The costs have been calculated as total costs and all cost elements required for
computation have been estimated and scheduled in line with the envisaged capacity build-up
program of the project. The total production costs are divided in to four major categories, namely
direct costs, operating costs, financial costs and depreciation costs. The direct costs include
material inputs, utility, manpower plant overheads as well as repair and maintenance expenses,
while operating costs include factory costs, administrative over heads, and advertisement, Sales
and distributions costs.
5.6. Production costs
As it is depicted in Table 18 major categories of the total production costs are assembled into the
following cost elements.
5.6.1. Material inputs
In the project under study the basic material inputs are pvc resin, Calcium carbonate, Stabilizers,
Tio2, paraffin, whitener, CPE, Stearic acid etc. Therefore, the current prevailing local and
international market prices have been used for estimation of material inputs costs.
At full capacity operation the material inputs costs are estimated at Birr 61.30 million per
annum.Because of the specific nature of the given project which is based predominantly on
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imported raw material utilization almost 100 % of the material inputs is attributed to purchase
raw materials.
Table 4 Material input '000'
Capacity 70% 80% 90% 100%

utilization
S/N Period (in years) Year 1 Year 2 Year 3 Year 4
Item description Unit price In Birr In Birr In Birr In Birr
1 Pvc resin 70 25,480 29,120 32,760 36,400.00
2 Calcium 8.4 4,586 5,242 5,897 6,552.00
carbonate
3 Stabilizer 140 1,835 2,097 2,359 2,620.80
4 Tio2 136 693 792 891 990.08
5 Paraffin 104 288 329 370 411
6 Whitener 1,542 561 641 722 801.84
7 CPE 96 559 639 719 798.72
8 Stearic acid 90 328 374 421 468
Sub total 34,330 39,234 44,138 49,042.44
For Lamination 8,582 9,808 11,035 12,260.60
Grand total 42,912 49,042 55,173 61,303.04
5.6.2. Utilities
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In estimating costs of utility expenses for operation and maintenance of the project, Costs of fuel,
oil and lubricant, electricity and water consumptions have been taken in to consideration, the rates
of which have been estimated on the basis of the proposed capacity utilization program of the
project and at the current official charging rates. At full capacity operation the project will have
the following utility expense per annum which amounts to Birr 6.09 million.
Table 5 Utilities of the projects
Utility”000”Birr Full
Start-up
Capacity
Capacity 70% 80% 90% 100%
utilization
Project year 1 2 3 4
Item description Unit of measurement
Fuel
Gasoline for 100km*260days*32Birr/LIT*8km/Li 104 104 104 104
service vehicle
Gasoline for (200km*300days*32Birr/LIT*5km/Li)*3 1,152 1,152 1,152 1,152
transport truck
Sub-Total 1,256 1,256 1,256 1,256
Change of oil and 10% of the fuel consumption
lubricant 126 126 126 126
Sub-Total 1,382 1,382 1,382 1,382
Electricity 260days*24 hrs*650kwh* 1.00Birr/kwh 2,839 3,245 3,650 4,056
Sub- Total 2,839 3,245 3,650 4,056
Water 365days*100m3/day*15 Birr/m3 384 438 493 548
Sub -Total 384 438 493 548
Telecommunication
Telephone 5 lines* 31.08 31.08 31.08 31.08
1,500Birr/month/line+18Birr/line/month
Mobile 5 lines*1,500 Birr/month/line 30 30 30 30
Fax 2line*1,000Birr/month + 17 12.4 12.4 12.4 12.4
Birr/line/month
Internet 2,500 Birr/month 30 30 30 30
Sub-Total 103.48 103.48 103.48 103.48
Repair and maintenance
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In the expenses under this title have been considered cost estimates required for annual repair and
maintenance works including spare parts expenses. These costs include the annual repair expenses
of structures and civil works as well as repair and maintenance expenses of machinery and
equipment including accessory and general service facilities. The repair and maintenance costs
have been assumed to rise in the range of (0.5-2) % and (0.5-2) % respectively, depending on the
service life of the fixed assets
5.6.3. Salaries and wages
The costs of salaries have been calculated in accordance with the manning list proposed under the
“organization and Management” section of this study. In the estimation of salaries and wages, the
official minimum wage has been taken in to account. At full capacity operation the costs of
salaries and wages will amount to Birr 5.106 Million. To motivate employees with financial
incentives, other costs related to salaries and wages such as fringe benefits (life insurance,
medication, travel and per-diem and sundry expenses) have been added to the costs salaries and
wages at the following rates:
5.6.4. Over heads
In the expenses under this title have been included land and building taxes, buildings, vehicles
as well as machinery and equipment insurance, vehicles annual inspection; postage, telephone
and e. mail, stationery and office supplies; printing and copying; audit fee; cash indemnity etc.
The overhead costs and divided in to direct overheads and administration overheads.
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Table 6 Overhead costs
Direct Year 1 Year 2 Year 3 Year 4

Overhead”000”Birr
Annual land lease 5,550 5,550 5,550 5,550
Payment
Insurance
Building and Civil 0.10% 113.1 113.1 113.1 113.1
works
Machinery and 0.20% 94.5 94.5 94.5 94.5
Equipment
Motor vehicle and 1% 60 60 60 60
Truck
Vehicles annual 25,000 Birr 50 50 50 50
inspection and per annum
registration per vehicle
Work cloth Two times 140 140 140 140
per annum
per workers
at 1,000
Birr
Cleaning and An estimate 78 78 78 78
sanitation of 300
Birr/day
Sub Total 6085.6 6085.6 6085.6 6085.6
Audit fee 40,000 Birr 40 40 40 40
per annum
Office cleaning and 2,000 Birr 24 24 24 24
sanitation per month
Stationery and office 2,000 Birr 20 20 20 20
supplies per month
Printing and Copy 2,000 Birr 24 24 24 24
per month
Sub Total 108 108 108 108
GRAND TOTAL 6,193.60 6,193.60 6,193.6 6,193.60
0
5.6.5. Financial costs
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As it has been outlined earlier under” project Financing” the current Development Bank of
Ethiopia credit terms and conditions for newly establishing projects have been used to compute
the financial costs, estimated to be incurred in connection with that portion of the total investment
costs assumed to be covered through loan financing. The amount of the loan capital to be obtained
and the financial costs to be incurred thereof have been determined depending on the fixed capital
and the working capital requirements and the project implementation schedule.
5.6.6. Depreciation
Depreciation charges should be taken in to account as part of the total production costs in order to
calculate the total production costs, the net working capital and the gross or net-profit. For the
given project under reference, the fixed assets and the pre-production capital expenditures have
been depreciated and amortized respectively on “a straight line” depreciation method basis using
the following rates of the original acquisition costs of the assets:
The rationale uses for the estimation of the depreciation and the amortization rates is based on the
expected service life of the assets and repayment capacity of the project under consideration.
Based on the above charging rates and consideration of the above facts, the total annual
depreciation cost at full capacity operation have been estimated at Birr 11.12 million.
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Table 7 Depreciation costs
Period Start-up
Capacity utilization 70% 80% 90% 100%
Project year 1 2 3 4
Item description Original Value
Structure and civil 114,565,000.00 5% of original 5,728 5,728 5,728 5,728
works value
Machinery and 19,948,935.00 15 % of original 2,992 2,992 2,992 2,992
equipment value
Transformer 2,000,000.00 15 % of original 300 300 300 300
value
Motor vehicles and 6,000,000.00 15% of original 900 900 900 900
trucks value
Weighbridge 4,000,000.00 15 % of original 600 600 600 600
value
Office equipment and 500,000.00 20 % of original 100 100 100 100
furniture value
Pre-production expenses 2,000,000.00 25% of original 500 500 500 500
value
Total 11,120 11,120 11,120 11,120
5.7. PROJECT COSTS
Project capital investment costs are the sum of fixed capital investment (fixed investment plus
pre-production capital expenses) and net working capital at full capacity, with fixed capital
constituting the resources required for land acquisition, construction of structures and civil works,
purchase, import and installation of production machinery and equipment and general service
facilities, whereas the working capital corresponding to the resources needed for operation of the
project totally or partially.
In the assumptions used to compute the working capital, basically care has been taken to cover of
consumable materials inventory (material inputs, spare parts stock, work-in progress and products
ready for delivery) delivered products.
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5.8. Project benefits
For financial analysis and evaluation of the given project the current raw materials buying price
and PVC ceiling panel selling price at the project gate has been taken as a basis. Consequently,
based on the recent market survey, raw materials buying price per kg at the nearby market points
is shown in Table 14 and delivery price of the PVC ceiling panel per square meter at the project
gate is also shown in Table 19. As it has been stated earlier the project is envisaged to reach full
capacity operation four years after commencement of production activities which are assumed to
begin with 70% of the estimated total capacity.
Table 8 Sales Revenue in quantity

S/No Period (in years) Year 1 Year 2 Year 3 Year 4
Item description Unit /
M
1 Pet perform Bottle and ton 218,40 249,600 280,800 312,000
Can 0
2 HDPE Jerican ton 218,40 249,600 280,800 312,000
0
Table 9 Sales Revenue in Birr "000"
Capacity 70% 80% 90% 100%

utilization
S/No Period (in years) Year 1 Year 2 Year 3 Year 4
Item description Unit /M Unit
Price
1 Pet perform ton 25 54,600 62,400 70,200 78,000
Bottle and Can
2 HDPE Jerican ton 40 87,360 99,840 112,320 124,800
TOTAL 141,960 162,240 182,520 202,800
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5.9. Break Even point and ROI
5.9.1. Break Even point (BEP)

Three kinds of break-even point
A. BEP Sales Revenue(BR)
B. BEP production (Volume)
C. BEP Percentage (%)
A. Break-even point(BEP) Sales
To determine BEP Annual Sales, multiply annual sales found in income statement by the
annual fixed cost, and divided by Annual sales less Annual variable cost.
¿
BEP (sales) = Annual sales x Annual ¿ costs Annual sales− Annual variables costs
Annual sales = 141,960,000 Birr

Average Unit selling price = 32.5 Birr/pis
¿ Annual sales x Annual ¿ costs ¿

BEP (sales) = Annual sales− Annual variables costs =
141,960,000 x 38,670 , ,000

¿
141,960,000−54,688,000
BEP (Sales) = 62,902,113 Birr
B. BEP production
To determine BEP production volume, divided BEP sales by the unit selling price (USP)
BEP production = 62,902,113/325= 193,545pis
¿
C. BEP percentage ¿ Annual ¿ costs x 100 % Annual sales−Annual variables costs
38,670,000 x 100 %
¿
141,960,000−54,688,000
= 44.30%
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5.9.2. Return on investment

Return on investment = Net profit /Total capital requirement
= 59,183,000/201,862,935
= 29.32%
The return on owners’ investment (ROOI)
= Annual net profit /owners’ investment
= 59,183,000/60,558,881
= 97.72%
5.10. Project benefits
For financial analysis and evaluation of the given project, the current raw price, and packing
materials buying price and final product price at the project gate has been taken as a basis.
Consequently, based on the recent market survey, price has been indicated in table 12 and 20.
As it has been stated earlier the project is envisaged to reach full capacity operation four years
after commencement of production activities which are assumed to begin with 70% of the
estimated total capacity.
Thus, according to the computation in Annex Table 21 and Annex Table 23, the net income and
cash flow statements analysis revealed that at full capacity operation the project will generate a
total income (gross revenue) amounting to 202 million Birr per annum. The Net Income
Statement shows a steady growth of gross profit starting from 48.6 million Birr in year 1 reaching
the peak of 106.98 million Birr in year 10. In its 10 years of manufacturing activities, the project
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is expected to generate a total net profit of 570.99 Birr and contribute 307.46 million Birr to the
government treasury in form of 35% income tax.
According to the current investment Law, machinery and equipment are anticipated to be
imported duty- free. The liquidity position of the project is very strong. The corresponding Annex
Table 23 of “Cash Flow Statement” shows the positive cumulative cash balance of Birr
521.41million and the project will not face any cash shortage throughout its production life.
The computation of the pay-back period as depicted in Annex table 28 indicates that the project
will be able to reimburse itself from its net cash-income within four years after commencement of
production activities, the period which is considered to be very good for the project of this nature.
In Annex Table 29 of the Benefit-cost ratio and Net present value (NPV) have been calculated at
17% discount factor (D.F) for 10 years of the project activity. Accordingly, the project has NPV
of 301 million Birr at 17%D.F. and the benefit-cost ratio of 1.55 at 17% D.F. These results are
most appreciable, especially, when related to the external capital borrowing interest rate which
ranges from 8.50% to 18.5 % for newly establishing projects.
Break-even point (BEP) have been undertaken the project under study when implemented will
have BEP at about 44.30% operation of the estimated full capacity
In addition to this, finally, summary of financial efficiency tests have been conducted in Annex
table 27, Accordingly, all efficiency ratios indicated positive trends and consequently, it can be
inferred that the project can operate in the frame work of free market mechanism on commercially
and financially viable basis and is remunerative.
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ANNEXES
A 71
PROJECT PROFILE ON PVC CELING MANUFACTURING
PERIOD START FULL CAPACITY
Capacity utilization 60 % 75 % 90 % 100%
Project Year 1 2 3 4 5 6 7 8 9 10
Cost category
I. Material inputs 42,912 49,042 55,173 61,303 61,303 61,303 61,303 61,303 61,303 61,303
II. Labor 5,106 5,106 5,106 5,106 5,106 5,106 5,106 5,106 5,106 5,106
III. Utility 4,709 5,169 5,629 6,090 6,090 6,090 6,090 6,090 6,090 6,090
IV. Repair and maintenance costs 2,788 2,788 2,788 2,788 2,788 2,788 2,788 2,788 2,788 2,788
VI Direct overheads 6,086 6,086 6,086 6,086 6,086 6,086 6,086 6,086 6,086 6,086
A. Direct Production costs 61,601 68,191 74,782 81,373 81,373 81,373 81,373 81,373 81,373 81,373
VII. Administration over head 108 108 108 108 108 108 108 108 108 108
IX. Sales expense and promotion 4,259 4,867 5,476 6,084 6,084 6,084 6,084 6,084 6,084 6,084
expenses 3 % of sales revenue
B. Operating costs 65,967 73,166 80,365 87,565 87,565 87,565 87,565 87,565 87,565 87,565
Interest 16,250 15,301 14,244 13,065 11,749 10,283 8,648 6,825 4,793 2,527
Depreciation 11,120 11,120 11,120 11,120 10,620 10,520 8,924 5,728 5,728 5,728
C. Total production costs 93,337 99,587 105,729 111,750 109,934 108,368 105,137 100,118 98,086 95,820
Table 10 Total annual production costs '000'
ANNEX IV
CALCULATION OF WORKING CAPITAL REQUIREMENTS
CONSULTANT :- SHIBAG MANAGEMNT AND DEVELOPMENT & EIA CONSULTING FIRM 72

I. Minimum requirement of current assets and liabilities

A. Accounts receivable: 26 days at total production costs minus depreciation and interest
B. Inventory
1. Material inputs: 26 days
2. Spare parts : 90 days
3. Work under process: two days at direct costs
4. Product ready for delivery: 8 days at direct costs plus administration overheads
C. Cash on hand : 360 days
D. Accounts payable 26 days for material inputs and utilities
ii. Working capital requirement
Project year
Minimum Coeff-
Cost category Days of icient of Start up Full capacity
coverage turnover 1 2 3 4 5 6 7 8 9 10
I. Current asset
A. A/R 26 10 6,597 7,317 8,037 8,757 8,757 8,757 8,757 8,757 8,757 8,757
B. Inventory
1. Material inputs 26 10 4,291 4,904 5,517 6,130 6,130 6,130 6,130 6,130 6,130 6,130
2. Spare parts 90 4 697 697 697 697 697 697 697 697 697 697
3.Work under process 2 130 474 525 575 626 626 626 626 626 626 626
4.Product ready for 8 32.5 2,003 2,206 2,409 2,612 2,612 2,612 2,612 2,612 2,612 2,612
delivery
C. Cash on hand 90 4 4,699 4,814 4,929 5,045 5,045 5,045 5,045 5,045 5,045 5,045
D. Current assets 18,761 20,463 22,164 23,866 23,866 23,866 23,866 23,866 23,866 23,866
II. Current liabilities
A. A/p 26 10 4,762 5,421 6,080 6,739 6,739 6,739 6,739 6,739 6,739 6,739
III. Working capital
A.Net working capital 13,999 15,042 16,084 17,127 17,127 17,127 17,127 17,127 17,127 17,127
B. Increasing in working 13,999 1,042 1,042 1,043 0 0 0 0 0 0
capital
Table 11 Calculation of working capital

ANNEX V
PROJECTED SALES REVENUE
Period Start up Full capacity
Capacity U/m Quantity at Unit price 70% 80% 90% 100%

utilization full
capacity
Item description Product mix
Project year 1 2 3 4 5 6 7 8 9 10
Pet perform ton 312,000 250 54,600 62,400 70,200 78,000 78,000 78,000 78,000 78,000 78,000 78,000
Bottle and
Can
HDPE Jerican ton 312,000 400 87,360 99,840 112,320 124,800 124,800 124,800 124,800 124,800 124,800 124,800
GRAND TOTAL 141,960 162,240 182,520 202,800 202,800 202,800 202,800 202,800 202,800 202,800
Table 12 projected sales revenue

ANNEX VI
PROJECTED NET INCOME STATMENT
Table 13 Projected Net income statement "000"
Capacity utilization 70 % 80 % 90 % 100 %
Project year 1 2 3 4 5 6 7 8 9 10
Item description
141,960 162,240 182,520 202,800 202,800 202,800 202,800 202,800 202,800 202,800
Product sales revenue
93,337 99,587 105,729 111,750 109,934 108,368 105,137 100,118 98,086 95,820
Less total production costs
48,623 62,653 76,791 91,050 92,866 94,432 97,663 102,682 104,714 106,980
Gross profit
17,018 21,929 26,877 31,868 32,503 33,051 34,182 35,939 36,650 37,443
Tax
31,605 40,724 49,914 59,183 60,363 61,381 63,481 66,743 68,064 69,537
Net profit
Accumulated undistributed 31,605 72,329 122,244 181,426 241,789 303,170 366,651 433,394 501,458 570,995
profit

ANNEX VII
DEBT SERVICE SCHEDULE AND COMPUTATION
PAYMENT OF EQUAL ANNUAL INSTALLMENTS
Table 14 Debt services schedule and computation

Item description Project year
1 2 3 4 5 6 7 8 9 10
A. Investment and working capital
1. Investment
2. Increment working capital
Total
B. Loan receipts and balances
1. Loan receipts 141,304 133,055 123,858 113,602 102,168 89,418 75,202 59,351 41,678 21,972
2. Outstanding balance at
end of year 141,304 133,055 123,858 113,602 102,168 89,418 75,202 59,351 41,678 21,972
a. First year loan
Total
A. Debt service
1. First year Loan
a. Interest 16,250 15,301 14,244 13,065 11,749 10,283 8,648 6,825 4,793 2,527
b. Repayment of principal 8,249 9,198 10,255 11,435 12,750 14,216 15,851 17,673 19,706 21,972

ANNEX VIII
CASH-FLOW STATEMENT
FOR
FINANCIAL PLANING
Table 15 Projected Cash flow statement
Project year 1 2 3 4 5 6 7 8 9 10
Item description
A. Cash - inflow 348,585 163,942 184,222 204,502 202,800 202,800 202,800 202,800 202,800 202,800
1. Financial resource 206,625 1,702 1,702 1,702
(total)
2. Sales revenue 141,960 162,240 182,520 202,800 202,800 202,800 202,800 202,800 202,800 202,800
B. Cash – outflow 314,109 121,296 133,443 145,635 144,567 145,115 146,246 148,002 148,714 149,507
1. Total assets schedule 206,625 1,702 1,702 1,702
including replacement
2. Operating costs 65,967 73,166 80,365 87,565 87,565 87,565 87,565 87,565 87,565 87,565
3. Debt service (total)
a. Interest 16,250 15,301 14,244 13,065 11,749 10,283 8,648 6,825 4,793 2,527
b. Repayment 8,249 9,198 10,255 11,435 12,750 14,216 15,851 17,673 19,706 21,972
4. Tax 17,018 21,929 26,877 31,868 32,503 33,051 34,182 35,939 36,650 37,443
C. Surplus (Deficit) 34,476 42,646 50,779 58,867 58,233 57,685 56,554 54,798 54,086 53,293
D. Cumulative cash balance 34,476 77,122 127,901 186,768 245,001 302,686 359,240 414,038 468,124 521,417

ANNEX XII
TOTAL INVESTMENT COSTS
Project year 1 2 3 4 5 6 7 8 9 10 11
Investment Category
1. Fixed investment costs
a. Initial fixed investment costs 185,864
b. Replacement
2. Pre-operational capital expenditure 2,000
3. Working capital increase 13,999 1,042 1,042 1,043
Total investment costs 201,863
Table 16 Total investment costs”000”
ANNEX XIII
TOTAL ASSETS

Project year 1 2 3 4 5 6 7 8 9 10 11 12
Investment Category
1. Fixed investment costs
c. Initial fixed investment costs 185,864
 Cost of land
d. Replacement
2. Pre-operational capital expenditure 2,000
3. Current assets increase 18,761 1,702 1,702 1,702
Total assets 206,625 1,702 1,702 1,702
Table 17 Total Assets
ANNEX XIV

SOURCES OF FINANCE
Project year 1 2 3 4 5 6 7 8 9 10 Total
Sources of finance
1. Equity capital 60,559 1,042 1,042 1,043
2. Loan capital 141,304
3. Current liabilities 4,762 659 659 659
Total finance 206,625 1,701 1,701 1,702
Table 18 Sources of finance
ANNEX XI
SUMMARY OF FINANCIAL EFFECIENCY TESTS
Table 19 Summary of financial efficiency tests
Project year
Project year 1 2 3 4 5 6 7 8 9 10
Financial ratio in %
1. Gross profit : Revenue 34% 39% 42% 45% 46% 47% 48% 51% 52% 53%
2. Net profit : Revenue 22% 25% 27% 29% 30% 30% 31% 33% 34% 34%
3. Net profit : initial investment 22% 29% 35% 41% 42% 42% 44% 46% 47% 48%
4. Net profit : Equity 52% 66% 80% 93% 95% 96% 100% 105% 107% 109%
5. Gross profit : Initial investment 34% 44% 54% 63% 64% 65% 68% 71% 73% 74%
6. Operating costs : Revenue 46% 45% 44% 43% 43% 43% 43% 43% 43% 43%

ANNEX XV
CALCULATIONS OF PAYBACK PERIOD
Table 20 Calculation of payback period”000”
Amount Paid Back Total

Year Net Profit Depreciation Total investment End of year
1 31,605 11,120 42,725 201,863 -159,138
2 40,724 11,120 51,844 1,042 -108,336
3 49,914 11,120 61,034 1,042 -48,344
4 59,183 11,120 70,303 1,043 +20,916
ANNEX XVI
CALCULATIONS OF NET PRESENT VALUE AT 17% D.F.

Table 21 Calculation of NPV at 17% D.F.
Project Gross Present value Project costs

n
year Revenue 1/(1+i) At at 17% Total Operating Total Present value
17% investment costs at 17%
1 141,960 0.854701 201,863 65,967
121,333 267,830 228,915
2 162,240 0.730514 1,042 73,166
118,519 74,208 54,210
3 182,520 0.624371 1,042 80,365
113,960 81,407 50,828
4 202,800 0.53365 1,043 87,565
108,224 88,608 47,286
5 202,800 0.456111 87,565
92,499 87,565 39,939
6 202,800 0.389839 87,565
79,059 87,565 34,136
7 202,800 0.333195 87,565
67,572 87,565 29,176
8 202,800 0.284782 87,565
57,754 87,565 24,937
9 202,800 0.243404 87,565
49,362 87,565 21,314
10 202,800 0.208037 87,565
42,190 87,565 18,217
Total
850,473 548,958
A. Benefit- cost ratio At 17% D.F. = 1.55
B. NPV At 17% D.F. = 301,515,000 Birr

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[Document title]

ADDIS ABEBA CITY GOVERNMENT INVESTMENT COMMISSION

CONSULTANT:- SHIBAG MANAGEMENT AND

4.1. Manpower Requirement and Estimated Annual manpower costs..............................................27

CONSULTANT:- SHIBAG MANAGEMENT AND

Table 1 Local supply of polyethylene products in tons..............................................................................14

CONSULTANT:- SHIBAG MANAGEMENT AND

the envisaged project.

invest on plastic manufacturing and other related products.

CONSULTANT:- SHIBAG MANAGEMENT AND

form of term loan.

benefit-cost ratio of 1.55 at 17% D.F.

CONSULTANT:- SHIBAG MANAGEMENT AND

of the key considerations for a plastic manufacturing business plan in Ethiopia.

published sources have been augmented.

investor involved in the area.

The provision of adequate plastic product is of fundamental importance to Ethiopian’s present

shows Injection and blow molding products manufacturing business.

CONSULTANT:- SHIBAG MANAGEMENT AND

I.2. Objective of the study

manufacturing of plastic products to enable decision makers whether to give permission on

privileges related to working area (shade).

I.2.2. Specific objectives

2.1 PRODUCT DESCRIPTION ANDRATIONALE FOR INVESTMENT

I.4. PRODUCT DESCRIPTION

CONSULTANT:- SHIBAG MANAGEMENT AND

The PET resin has superior properties, which are as follows:

CONSULTANT:- SHIBAG MANAGEMENT AND

HIGH-DENSITY POLYETHYLENE (HDPE) resin is produced from the chemical compound

CONSULTANT:- SHIBAG MANAGEMENT AND

LDPE, PP, PET and PET

CONSULTANT:- SHIBAG MANAGEMENT AND

 City- Addis Ababa

2.2. The Promoter: Tibebu Tefera Dessie

CONSULTANT:- SHIBAG MANAGEMENT AND

The factory will be managed by a qualified engineers specialized in all aspects of

2.3. Businesses Objectives

2.4. General Manager: Tibebu Tefera Dessie

The general manager has the following skills:

Financial management and analytical, fact based decision making

CONSULTANT:- SHIBAG MANAGEMENT AND

2.5. Brief History of the promoter

CONSULTANT:- SHIBAG MANAGEMENT AND

2.6. Location of Addis Ababa

2.6.1. Demography of Addis Ababa

2.6.2. Economic activity of Addis Ababa

CONSULTANT:- SHIBAG MANAGEMENT AND

and severity of poverty.

CONSULTANT:- SHIBAG MANAGEMENT AND

shops, domestic helpers or doorkeepers and restaurant service workers.

2.7. Why is it beneficial to invest in Addis Ababa?

will be benefited in getting capable human power from the market.

CONSULTANT:- SHIBAG MANAGEMENT AND

social stability of the city.

attractive features for local and overseas investors.

 Income tax exemption of up to 6 years for manufacturing and agro-processing, and up to

9 years for agricultural investment.

Credit Guarantee schemes.

CONSULTANT:- SHIBAG MANAGEMENT AND

2.7.1. The city benefit from the investment

unskilled causal workers, semi-skilled and skilled employees.

 Improving growth of the economy

contributes towards growth of the economy by contributing to the growth of domestic