Betti

PROJECT PROPOSAL
FOR THE ESTABLISHMENT OF
NAILS BARBERED, WIRE AND WIRE MESH FACTORY
PROJECT TO BE IMPLEMENTED IN GALAN TOWN,
OROMIA REGION STATE
PROMOTER: -
DEGAMU BEKELE
KERGA
OCT, 2022
FINFINE, ETHIOPIA
TABLE OF CONTENT
TABLE OF CONTENT.......................................................................................................1
EXECUTIVE SUMMARY...................................................................................................3
1. INTRODUCTION.........................................................................................................4
1.1. Objective of the project.........................................................................................5
1.2. The Economic Significance of the Project............................................................5
1.3. Location and Premises Required.........................................................................6
1.4. Location Map of the Area.....................................................................................8
2. MARKET STUDY AND PLANT CAPACITY...............................................................9
2.1. Market Study........................................................................................................9
2.1.1. Demand and Supply Analysis........................................................................9
2.1.2. Market Prospects.........................................................................................11
2.1.3. Marketing Strategy and Promotion..............................................................11
2.1.4. Target customers.........................................................................................11
2.2. Plant Capacity and Production Program............................................................11
2.3. Pricing.................................................................................................................12
3. PRODUCTION AND TECHNOLOGY.......................................................................13
3.1. Product Nature and Description.........................................................................13
3.2. Raw materials and Input.....................................................................................13
3.3. Technology.........................................................................................................13
3.4. Production Description.......................................................................................14
3.4.1. Production Process......................................................................................14
3.5. Machinery and Equipments................................................................................17
3.6. Project Design and Engineering.........................................................................18
3.7. Building and Construction Works.......................................................................18
3.8. Utilities................................................................................................................18
4. MANPOWER AND ORANIZATIONAL MANAGEMENT...........................................19
4.1. Manpower...........................................................................................................19
4.2. Organizational Structure and management.......................................................19
4.3. Training Requirement.........................................................................................21
Promoters: - Degamu Bekele Kerga Page 1

5. FINANCIAL REQUIRMENT and ANALYSIS............................................................22
5.1. Total Initial Investment Cost...............................................................................22
5.1.1. Fixed Investment.........................................................................................22
5.2. Annual Production Cost at Full Capacity............................................................25
5.3. Financial Analysis and Statements....................................................................28
5.3.1. Underlying Assumption................................................................................28
5.3.2. Sources of Fund..........................................................................................29
5.3.3. Loan repayment Schedule...........................................................................29
5.3.4. Depreciation Schedule.................................................................................30
5.3.5. Revenue Projection.....................................................................................30
5.3.6. Balance Sheet.............................................................................................30
5.3.7. Income Loss Statement...............................................................................31
5.3.8. Cash Flow Statement..................................................................................32
5.3.9. Profitability...................................................................................................32
5.3.10. Break-Even Analysis................................................................................32
5.3.11. Pay-Back Period.......................................................................................33
6. FUTURE DEVELOPMENT.......................................................................................33
7. ENVIRONMENTAL IMPACT OF THE PROJECT....................................................33
7.1. Socio-Economic Environment............................................................................33
7.2. Environmental Impact Assessment of the Project.............................................33

EXECUTIVE SUMMARY
Project name Nails Barbered, Wire and Wire Mesh Factory
1. Project Owners DEGAMU BEKELE KERGA
2. Nationality Ethiopian
3. Project Location Galan Town,
4. Project Composition Different Nails Barbered, Wire and Wire Mesh and related
product
5. Premises Required 10,000 M2
6. Total Initial Br 83,000,000 of which 30% equivalent to 24,900,000

Investment Capital financed by the owners equity and the rest 70% equivalent
to 58,100,000 financed through bank loan
7. Employment Total Job opportunity Created 350 peoples

Opportunity
100 Permanent (skill 40 and unskilled 60)and
250 Temporary (skilled 100 and Unskilled 150).
8. Market Share It is Both for local 70 % and Export standard 30%
9. Benefits of the factory Produce and supply of quality metal Products, add value to
For The Region/ the economy, Source of Revenue, Employment opportunity,
Country Save Foreign currency, Benefit for the Local Community,
Stimulate the Local Economy and technology transfer

1. INTRODUCTION
A nail is pin shaped sharp object of hard metal typically steel used as fastener. Nails
are driven into the work piece by a hammer. A nail holds materials together by
friction. The common kind of nail is called “wire nail” to distinguish it from other
types of nails. Tack is a short nail with a wide, flat head used for fixing carpets to
floorboards and for stretching fabric on to wood. Capped nails are used mainly in
fixing corrugated iron sheet roofs, walls or fenced construction. The predominant
roofing material in urban Ethiopia is galvanized corrugated iron sheet and
capped nails are used in fixing the corrugated iron sheets. Nails are product made
from pieces of metal point edit one end and flat or umbrella headed at the other.
They join articles by being hammered through them. The flat headed nails are
consumed by construction workers for joining wooden structures and by
carpenters; while the umbrella shaped nails are consumed in every building
construction when galvanized sheets are used for roofing purpose. These products
can be produced as per the required sizes
Manufacturing Small and Medium Enterprises (SMEs) make up the largest and the
most important segment of the industrial sector in Ethiopia. In 2000, for example,
SMEs contributed to 68 per cent of gross value of production and over 80 per cent of
employment in the manufacturing sector. As will be shown below, SMEs, especially
the latter, are among the most dynamic and innovative enterprises in the country. In
reviewing the investment and technology policies of Ethiopia, therefore, it is
pertinent that special attention is paid to the pattern of development and the
strengths and weaknesses of SMEs in Ethiopia.
Besides, development of small and medium industries accelerates the fast economic
growth of Ethiopia and will help the nation lay its economy foundation on strong
industrial base. However, there exist constraints on the transition of these
industries to the heavy one.

The government of Ethiopia has developed a conducive investment policy packages
and other sectoral reforms at federal and regional level to attract a huge private
investment including in MSEs for the wellbeing of the nation and its citizens as a
whole. Besides, it is also currently implementing the five years growth and
transformation plan gave a special focus for manufacturing, small, medium and
large industries.
In this regard, the Oromia regional state government has been exerting its maximum
effort to expand investment opportunities in the region, so as to foster the economic
development of the region and subduing the region’s big enemy that is the trap of
poverty. Therefore, the regional government has been preparing a viable business
environment to attract many domestic and foreign investors so that the dream of
making poverty history turns to be true.
Therefore, the lucrative market potential and those viable investment policies
attracted the owners of this project to engaged nail Plant in Galan town, Special
Zone in Oromia region.
The owners of this envisaged plant have a good business experiences and need to
extend this asset to this plant. Therefore, the owner is very determined to establish
the plant and considers getting the required support from regional government by
considering the existing facts and the multi benefits of this project.
1.1. Objective of the project
The main objective of the plant is to manufacture different Different Nails

Barbered, Wire and Wire Mesh and related product to sale with reasonable price for
international market.

1.2. The Economic Significance of the Project
The envisaged project deemed to contribute to the economic development of the

nation in general and the region in specific with following ways:
A. Quality Export Nail and Wire Products
The project under discussion will establish nail Plant that will produce quality and
affordable metallic and steel products for the country market. This will benefits the
users to get better product with better price and durability.
B. Value Add
The establishment of this factory will add a value to the manufacturing sector in
specific and in the economy in general.
C. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, VAT and payroll taxes are collected from undertaking
business activities. Therefore, the factory will serve as sources of revenue for both
the region and nation in general.
D. Employment Opportunity
One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment
and fostering the development process either through creating self employment or
employment in other organization. Hence, this factory will hire around 350 both
permanent and temporary persons.

E. Save the Country’s Foreign Exchange
By minimizing the market gab for nail demand and supply, the factory will help to
reduce the nation’s foreign exchange cost to import these materials. This will save
the foreign exchange resource of the nation.
F. Benefit for The Local Community
As a corporate responsibility the company will engage in different development

activities on the surrounding areas (Galan town). This will better worse the
community and contribute for the development of the region.
G. Stimulate the Local and National Economy
This factory has positive externality in the zone that will encourage the economic
movement of local economy. Hence, there will be economic relationship and
transactions among different actors.
H. Technology Transfer
By producing Nail Plant, the project will train and develops the capacity of the
technical staffs. By doing this, the company will add value in technology transfer for
the nation.

1.3. Location and Premises Required
i. Location
The envisioned project is planned to be located in Galan town (which is around

28km from the capital), The main justifications behind the selection of this location
are:
 Strategically located to the central and largest market of the nation (Addis
Ababa)
 Relatively advanced development in infrastructure (Power, Water, Telephone
internet, road etc.
 All road to the nearest market outlets
 Accessibility of skilled labor force
 Conducive investment policy and governance
 Environmentally fit to manufacturing industry.
1.4. Location Map of the Galan Town Area
According to the 1994 national census, the town had a population

i. Premises Required
The total land holding of the project is 10,000 M2, the premises required planned as follows in
table 1
Table 1. Premises Required and Land Use Plan
No Description Land Requirement
1 Production Hall 5,000M2
2 Warehouse
2.1 Raw Material & Input 1,000M2
2.2 Finished Products 1,000M2
Total Warehouse 7,000M2
3 Office Building 1,000M2
4 Shop and Showroom 1,000M2
5 Waste Accumulation area 500M2
6 Green area, Buffer zone and Parking 500M2
Total
10,000M2

2. MARKET STUDY AND PLANT CAPACITY
2.1. Market Study

Past Supply and Present Demand
The nail markets are supplied by import as well as domestic production. Supply of
nails is Presented while domestic production is in the increase, imported nails seem
to be decreasing indicating the successful substitution of domestic products.
Particularly in the last three years the domestic production shows a significant
growth of 70%. The linear trend equation fitted for 1997-2005 total supply of nails
reveals.
Y = 1,339.9 X + 3,802.3 R2= 71.2%
Applying this supply equation, the current effective demand for nails is estimated at
18,541 tons
2.1.1. Demand and Supply Analysis

The market potential is great because the construction industry is among the fastest
growing sectors of our economy especially in Africa. There is a lot of demand for
doors, gates, windows and burglar proofing etc. This sector is still informal as there
are very many small scale firms spread in major towns and trading centres in the
country.
Besides, the demand for nails goods is increasing with the growth in investment in
different sectors. Consumer demand in the country is growing for metal products.
Increase in purchasing power and changes in designs tend to increase the demand
still further. In addition, demand for Ethiopian nails products are exports market
has gone up considerably in recent years. This aspect is relevant for the nails
manufacturing industry.
At present most of the metal factories are involved in manufacturing household

equipments, office furniture, construction materials, modification of simple
machines etc. The main target market of these workshops is government and next
the private individuals.
Manufacturing of modern office furniture is being introduced to substitute import

products .A few of the workshops are also involved in machine modification works
and use as import substitution. Even though under and over design of modifying
machines occur during their start time they have proved that nothing is impossible

if financial strength is kept. Most of the workshops are also involved in producing
construction materials.
In this regard, the establishments of this plant will be helpful in terms of increasing
the countries supply- demand gap by substituting exported items of the sector.
2.1.2. Supply Of Nails and Racks Of Iron Or Steel

Ton
Year Local Import Total
1997 3494 375 3869
1998 2702 5810 8512
1999 2454 6449 8903
2000 2773 5325 8098
2001 3817 7950 11767
2002 5190 6582 11772
2003 5330 3282 8612
2004 8664 4961 13625
2005 15335 4025 19360
 The table shows the demand for nail has increased rapidly in recent years.
The same is true for the domestic production as well as the import.
2.1.3. Demand Projection

The demand for nails is related with construction and building sectors. New as well
as renovation of buildings and other constructions are the main end users of nails.
The growing construction sector development as evidenced in the successive
increase of nail supplies is expected to consume more.

2.1.4. PROJECTED DEMAND FOR NAILS
Year Tons
2008 19881
2009 21221
2010 22561
2011 23900
2012 25241
2013 26580
2014 27920
2015 29260
2016 30600
2017 31940
2.1.5. Market Prospects
From the above market demand and supply analysis for nails and metal products,
there exist huge market gab in different Africa country market. Hence, the
envisioned factory will be successful by entering in to this market.
2.1.6. Marketing Strategy and Promotion
The company will follow the following promotional methods:

 Electronic Medias (TV, Radio, Website and others related )
 Advertising(Media, flayer and news paper)
 Public Relations
 Branding
The marketing strategy mainly focus on the satisfying the needs, orders and the
requirement of the customers.
2.1.7. Target customers
The In international market, the requirement for different metals products for
Corrugated iron sheet and Cookware can be categorized into four namely:
 Construction sector(Corrugated iron sheet)
 Newly built house

 For dowry;
 For renovation;
 For Institutional buyer.
 For offices (public & private sector)
 Kitchen materials(cookware, kittle, stainless steel and other related materials)
The majority of customers in the domestic market belong to first and second
category. These customers require metal and other kitchen materials products.
2.2. Plant Capacity and Production Program
The selected plant can produce 200 tons of nails in 60 working days of a year, at its
full capacity level. The working days have been estimated based on market demand
and discounting planned maintenance from the calendar days of the years.
Production Program
The production program is based on the time required for the adjustment of
feedstock, labor and equipment to the technology selected.
 75% of plant capacity during the 1st year
 85% of plant capacity during the 2nd year
 100% of plant capacity during the 3rd year
Considering the gradual growth of demand and the time required to develop the
required skill the rate of capacity utilization during the first, second and third year
of production will be 70%, 85% and 100% respectively. Full capacity utilization will
be reached during the third year of operation. The plant will operate 290 days per
year.

2.3. Pricing
It would be important to examine the possible level of price based on the

competitor’s action. In this connection, the existing average prices of similar metal
workshop in Addis Ababa and some Africa country’s were assessed for the benefit of
comparison. Based on the existing price in the market the firm stetted the price as
follows;
3. PRODUCTION AND TECHNOLOGY
3.1. Product Nature and Description
The factory will produce different nails products based on the customer desire and
request. In general the following products are designed by the plant to be produced
The envisioned plant will produce different metal work products based on the
customer desire and order. Besides, it will undertake different maintenance on
demand base.
3.2. Raw materials and Input
The major raw materials required for the production of the nails products include
Wire Coil is available in Ethiopia. In the year 1998, for instance 3,156 tons of wires
were produced.
. Annual Requirement and Cost of Raw Materials and Utilities

Raw materials required for production of nails are:-
1. Low carbon steel wire for both types, and
2. Cold rolled steel sheet for roof nails. Assuming that 12.5% of the total product
will be roofing nails
Table 4: Annual Raw Material Requirements
Estimated Cost (in ‘000)

Item Annual Requirement FC LC Total
(ton)
Low Carbon steel wire 212 2000 200 2200
Cold-rolled steel sheet 11 100 25 125
Sawdust 1 10 10
Zinc 105 30 5 35
HC1 0.5 5 1 3
Ammonium Chloride 19 30 2 32
Packing Material 10 10
Total 2162 253 2415
Technology
Nail making does not require highly advanced knowledge or technique, and it’s making
capacity Can freely be fixed according to the demand in the locality. The plant can be built at
any place without environmental restraint. The nail making plant can easily be expanded,
rationalized, automated or can adopt a labour saving device. Manufacturing of nails passes
through the following steps.
 Feeding of wire coil to nail making machine

 Forming the bottom and top portion of nail and cutting on the nail making machine
 manufacturing of flat head nails ends here
 Manufacturing of the nail head on a washer making machine
 polishing of head part
 Feeding the head to the nail making machine
 Punching of the head to the nail and pressing to umbrella shape
 Galvanizing
Technologies used in this engineering plant use sophisticated and latest machineries for a
quality and branded products which are export standard. In different stage of manufacturing-
extreme care is required to ensure smooth polishing and proper platting.
3.3. Production Description
In general metal and steel work will have four production parts after the product idea are
generated. i.e.,
Design Prototyp Develop Producti

e on
3.3.1. Production Process
Activities performed to change a raw material into output product are called production
process. Production process, which is practiced by most of the workshops, is similar. In
broad, production process comprises pre-production, on-production and postproduction.
A. Pre- production
Preparation and arrangement of resources are under this stage. The question what to do?
Where to do it? When to do it? Who to do it? All are answered at this phase of production
process.
A well prepared and arranged resources results in production cost reduction and meeting due
time.
Some of the activities involved at this stage are:
 Making a design
 Material selection
 Purchasing of raw material

 Adopting flexibility of production places
 Hiring of skilled workers
 Inspection of raw-material
B. On-production
The already prepared and arranged materials, machineries and human resources are
organized to start the real production process. The strength of this stage depends on the pre-
production stage. It needs a managerial skill to coordinate the resources to achieve desire
product.
Some of the activities involved in this stage are:
 Cutting of raw materials according to the specified dimension with tolerance

 Joining the raw materials according to the design
 Quality control of the welding joints
 Checking up functionality of product
C. Postproduction
Postproduction is the final stage where preparation of product for shipment under taken. Now
the product has got the required design but needs polishing to give good appearance.
Some of the activities involved in this stage are:
 Grinding
 Sanding
 Painting
 Assembly etc.
Note: Quality inspection activity is practical in all stages to keep the quality of the product and
to decrease scraps and reworks.
Fig 1 Production Process Flow Chart:
Production nails works

The nail industry is primarily concerned essentially heating/welding and
shearing/forming operations. In view of the high cost of most new equipment and
the relatively long lead-time necessary to bring new equipment into operation,
changes in production methods and products are made only gradually; even new
process technologies that fundamentally change the industry are only adopted over
long periods of time.
Shearing operations cut materials into a desired shape and size and include
punching, piercing, blanking, cutoff, parting, shearing, and trimming activities.
Basically, these produce holes or openings, or produce blanks or parts, the most
common hole-making operation being punching. Cutoff, parting, and shearing are
similar operations with different applications.
Forming operations bend or conform materials into specific shapes by turning,

twisting, , drawing, rolling, spinning, coining, and forging metal into a specific
configuration. Bending is the simplest forming operation; the part is simply bent to a
specific angle or shape. Other types of forming operations produce both two and
three dimensional shapes.

Machining refines the shape of a work piece when shearing and forming are
complete, by removing material from pieces of raw stock with machine tools. The
main processes involved are drilling, milling, and turning, shaping/planning,
broaching, sawing, and grinding.
Holding the different pieces together is achieved either by riveting, bolting or more
permanently by welding. Welding is the process primarily used to join metals, most
welds being achieved by fusion in which the materials being joined are melted at,
and around, the joint between them. Most of the welds are done with a rod of filler
material with the resultant weld being composed primarily of the filler. Increasingly
though autogenously welding is catching on, in which no added material is used.
There are also forms of pressure welding rather than fusion and combinations of the
two. Welding is an integral part of fabricating metal parts so as to form spheroids,
boxes and cylinders. The essential feature of a fusion welding process is a heat
source either in the form of a flame from a gas torch (most often oxyacetylene or
propane) or an electric arc.
3.4. Machinery and Equipments

The following are the list of necessary machineries and equipments for the envisioned nail
workshop plant;
Machines with Motors No. Unit Total

Of set motor kw
A Nail making Machine 5 1.5 kw 7.5 kw

B Nail making Machine 3 2.2 kw 6.6 kw
C Nail making Machine 2 3.7 kw 7.4 kw
D Nail making Machine 1 5.5 kw 5.5 kw
Nail polishing machine 1 7.5 kw 7.5 kw
Shaking type nail packer 1 1.5 kw 1.5 kw
Nail cutter grinder 1 0.4 kw 0.4 kw

Other 35.0 kw
Total 71.4 kw
3.5. Project Design and Engineering
The proposed project comprises stock of different components to be executed at

different phases of the project life. These activities include: Design and Construction
of various buildings (workshops), importing of machineries, additive chemicals and
other raw materials, import of product transporting medium vehicle.
3.6. Building and Construction Works
A very simple building may suffice for an initial startup, the main consideration
being the security of the equipment and secure connections to electrical supply. The
building will have to be designed along factory production lines allowing for smooth
transitioning of the raw materials into completed products and optimized for
maximum efficiencies.

3.7. Utilities
A number of utilities would be put in place in order to ensure smooth functioning

of the factory. These utilities include:
 Water Supply,
 Supplementary Electricity supply,
 Telephone line
 Paved Road Transportation,
 Drainage Facility
4. MANPOWER AND ORANIZATIONAL MANAGEMENT
4.1. Manpower
At the top of the organizational structure, there will be a general manager with the
responsibility of supervising the overall activity of the factory. Depending up on the
nature of the center and the amount of work to be performs; there will be auxiliary
units under the general manager. Employees under each unit will be supervised by
the unit head that is accountable for the general manager.
The company will use efficient trained staffs in the area of marketing to be
competitive in the market. The opportunities of being serviced by well skilled
professionals well enable the company to evaluate the internal weakness and
strength of the company as well as to assess the global opportunity and risks in the
world market so that the company can cope up with the dynamics of the market
situation. The company will hire 350 employees.
The detail human power requirement, monthly and yearly salary is indicated in part
5 financial part.
4.2. Organizational Structure and management
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there
will be a general manager with the responsibility of supervising the overall activity of
the plant. Employees under each unit will be supervised by the department head

that is accountable for the general manager. General Manager is accountable to the
owner of the factory as indicated in figure 3
Fig 3 Organizational Structure
Owner/s
General
Secretary
Manager
Production Admin. & Marketing &

Dept. Finance Dept. Sales Dept.
Hence the following section deals with the duties and responsibilities of some
departments.
1. Manager
Duties and responsibilities
 She/he will plan, organize, direct and control the overall activities of the plant
 She/he will devise policies and strategies that will enable the plant to be
profitable.
 She/he will incorporate modern technological innovation that will facilitate the
service delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human
resources of the factory so as to achieve the short and long run objectives of
the organization.
2. The Production Department

Duties and responsibilities:-
It is the core department of the project center and it has the following
responsibilities.
 Design and prepared prototype metal and steel based products based on the
plant standard and customer preferences

 Use modern manufacture, processing technologies that will enhance the
quality of those products.
 Produce quality metal and steel products that will enable the factory
competent both in the domestic and international market.
 Control on the quality of raw materials, inputs, quality of the product and also
the overall production process.
 Produce products in least cost so that the profitability of the center is
guaranteed.
 Moreover control over the quality of the final metal and iron products
3. Administration and Finance Department

 Will plan, organize direct and control the financial transaction of the factory
by using the entire necessary document.
 Will develop sound financial control system by developing modern financial
control systems.
 Will prepare the annual financial statements and prepare condensed reports
for the general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include:
effective handling of the different inventories of the machineries, equipments,
raw materials, finished products, and devise strategies of controlling against
fraud and damage.
 Manage and execute the company national and international procurement
procedure
 Administer and control the company logistic resource
 Provide and manage general supportive service to the factory.
4. Marketing and Sales Department

 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Gather information on new products, designs, fashions, profiles etc
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales
of the company
4.3. Training Requirement
The production employees of the plant expected to take basic iron work production
skill training for 7 days. In addition, training could be given to the mechanic and to
the supervisor will also take skill training from one of TVET Colleges or similar
undertaking factories in Addis Ababa.
1. FINANCIAL REQUIRMENT and ANALYSIS
5.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged plant is estimated to be
birr 83,000,000
Table Total Initial Investment Capital

No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 23,240,000 0.00
1.2 Machines and Equipment’s 18,260,000 0.00
1.3 Vehicles and Motors 2,490,000 0.00
1.4 Office Furniture and Equipment 1,660,000 0.00
Total Fixed Investment Cost 45,650,000 0.00
2 Operating Expense 0.00
2.1 Raw Materials Purchase and Products 16,600,000 0.00
2.2 Salary Expense 8,300,000 0.00
2.3 Other Operating Expense 2,490,000 0.00
2.4 Pre-operating Expense 1,660,000 0.00
Total Operating Expense 29,050,000 0.00
8,300,000
Contingency (Lump sum) 10%
Total Investment Cost 83,000,000 0.00
5.1.1.Fixed Investment
A. Building & Construction
N Description Land Unit cost in Total cost in br.

o Requirement(M2) br.
1 Production Hall 5,0 1,3 6,972,0
00 94 00
2 Warehouse, raw material and 2,0 2,3 4,648,0

input 00 24 00
3 Office Building, and finished 1,0 2,3 2,324,0
product 00 24 00
4 Waste Accumulation area 5 9 464,8
00 30 00
5 Green area, buffer and parking 5 1,3 697,2
00 94 00
6 Shops & Showrooms 1,0 1,1 1,162,0
00 62 00
7 Site Development 2,324,0 2,324,0
00 00
8 Design and supervision 2,324,0 2,324,0
00 00
9 Land lease initial 2,324,0 2,324,0
00 00
Total 10,0 6,981,5 23,240,0
00 28 00
B. Machineries and Equipment’s
The list of required machinery and equipment is indicated in Table below. The total cost of
machinery and equipment is estimated at Birr 18,260,000
Qty.
Type of Machineries and
Equipment’s Specification UOM
Nail Making Machine Up to 3mm thickness/ hand operated Unit 2
Nail Polishing Machine up to 1.5 mm thickness / hand operated / Unit 1
1.5 - 2.2 m shaft length
Shaking Type nail packer Min 45 A. max 250A Unit 2
Nail cutter grinder Max. 240A Unit 2
Nail Polishing Machine 180mm disc size Unit 2
Portable drill machine Max 13mm chuck size Unit 2
Circular cutting of machine 450mm disc size Unit 2
Centre Three sided jaw , diameter 200mm , Unit 3
center to center 2000mm
Universal milling machine Table size 1500X300mm, table swivel in Unit 1
both directions 450 , distance from spindle
to over arm 155mm
Air compressor 300 liter Unit 1
Hydraulic press Min. 5 tons Unit 1

Oxy-Acetylene welding Unit 2
equipment
Pipe bender Max. 1 1/2 diameter Unit 2
Bedding borderer Unit 2
Work bench 150cm length Unit 2
Shaping machine Unit 1
Welding stand Pair Unit 3
Active reactive Unit 1
Generator Unit 1
Drum machine Unit 2
Unit 2
Hydraulic puncher
Unit 2
Ban saw machine
Unit 2
Puncher hand operated
Founder fun Unit 3
power hack saw Unit 1
Bed starching machine Unit 2
Electrical saw Unit 2
Electrical hydraulic press Unit 1
Steel cutter( round) Unit 1
Bench type grinder Unit 2
Electrical and manual press Unit 2
Unit 2
Band saw
Portable rotary machine Unit 2
Worker Safety kit Set 1
C. Vehicles
SN Description
Qty Unit Price Total Price(Birr) Remark
1 Pick Up model
1
20/21 2,500,000 1,000,000 Duty Free

2 Isuzu
1
1,300,000 990,000 Duty Free
3 Mini Bus 500,000 500,000
1
Duty Free
Total
2,490,000
D. Office Equipment’s
Unit cost Total cost

No Description Qty
in Br. in Br.
1 Managerial Tables 50 8,973 448,649

2 Secretarial chairs with table 50 4,486 224,324
3 Managerial Chairs 50 2,692 134,595
3 Computer and Printer 150 1,795 269,189
4 Shelf 200 897 179,459
5 Filing Cabinets 300 449 134,595
6 Customer Chair 100 224 22,432
7 Television 15 1,346 20,189
8 Waiting Room with sofa 1,000,000 44,865
9 others related service 3,550,000 159,270
500
10 Assembly chair and table(set) 22,432
,000
Total 1,660,000
E. Initial Working Capital
The initial working capital is established to be 29,050,000.00 birr

i. Material and Inputs
A. Raw and Auxiliary Materials

The major raw materials and auxiliaries required for the production of modern construction
materials shown in Table 4.1 below. All the raw and auxiliary materials are to be imported.
Sr. No Description UOM Qty Unit Total Cost
Cost in in Br.
Br
1 Cubic 11,397 1100 12,537,200
aluminum sheet ft
2 Mild aluminum plate Pcs 800 1100 880,000
3 Tube Pipe Pcs 900 20 18,000
4 Angles lines Pcs 400 450 180,000
5 Grilling Disc Pcs 1950 60 117,000
6 Filler paste Pkt 600 1000 600,000
7 Hinges pair 4640 20 92,800
8 U channel Pcs 140 850 119,000
9 Other Inputs(locks, glue, nails, screw Tapestry LS 185,000
dressing, matters,
10 Other Machine supplies LS Lump 2,025,000
sum
Grand Total 16,600,000
i. Salary Expense
No. Description No. Qualification Monthly Annual

Salary in Salary in
br br
1 General manager 1 BA in Business Management 2500 30000
2 Production Head 1 BSC in Industrial Engineering 2000 24000
3 Production Advanced Diploma in
supervisor 2 production technology 1300 31200
4 Draftsman /
Designer 2 Diploma in draft technology 1100 26400
5 Machine man 2 10+2 in general mechanics 900 21600
6 Carpenter 8 10+2 in wood work technology 1200 115200
7 Sales 10+2 in salesmanship and
2 marketing 900 21600
8 Personnel 3 Diploma in HRM 900 10800
9 Finance head 1 BA in Accounting 1300 15600
10 Polish man 3 10+1 in fiber technology 1000 36000
11 Carving 2 10+1 in wood work technology 1000 24000
12 Marketing Head 1 BA in marketing management 1300 15600
13 Metal Worker 8 10+2 in Metal work technology 1200 115200
14 Helper/laborer 12 10 completed 700
15 Mechanic 2 10+2 in General mechanics 1000 24000
16 Admin and Finance 1 BA in 1300 15600
Head Management/Accounting
17 Accountant 3 Diploma in accounting 1050 12600
18 Electrician 1 10+2 in general electricity 900 10800
19 Secretary 2 Diploma in secretariat science 800 9600
20 Clerk 1 10 completed 700 8400
21 Store keeper 10+2 in store and logistics
2 management 800 9600
22 Driver 6 10 completed 800 9600
23 Cashier 1 10+2 in Bookkeeping 800 9600
24 Office boy/girl 1 10 completed 700 8400
25 General service 1 Diploma in management 900 10800
26 Security 3 Unskilled 600 21600
27 Gardener 3 Unskilled 600 21600
28 Cleaner 3 Unskilled 600 21600
29 Others works 200 1681000
30 temp 20 68100
Bonus 3,300,00
Grand Total 350 8,300,000
ii. Other Operating Expenses
SN Description Annual Cost in Br. Assumption Used
1 Property Insurance 30,091.95 10% of Fixed investment

cost
2 Audit and Legal Fee 10,000 10% of Salary
3 Uniforms 1,600 1% of FC
4 Telephone, Fax and 1,000 1000per month

Postal
5 Cleaning Gods Supplies 2,000.00 70*60br
6 Repair and Maintenance 50,229.88 900 per month
7 Advertisement 2,000.00 1000 per month
9 Stationery and other office 1,000.00 700 per month

supplies
10 Electricity 1,000.00 0.45*150,000W per year
11 Water 5,00.00 2*1000 m3 per year
12 Fuel 90,000.00 6500 lit*20 per year
13 Oil and lubricant 1,000.00 10% of fuel cost
14 Miscellaneous Expense 1,000.00 3,000 br month
15 Other related reserved 1,200,000
Total 2,490,000
4.1.1. Pre -Service Expense

SN Description Cost in br.
1 Project proposal 10,000.00
2 Licensing fee and others lizi payment 1,450,000
3 Promotion and adverting 65,000
4 Workers capacity Building 50,000
5 EIA 40,000
Total 1,660,000
5.2. Financial Analysis and Statements
5.2.1.Underlying Assumption
The financial analysis of the envisioned factory is based on the data provided in the preceding
sections and the following assumptions.

A. Construction and Finance
Construction period 16 months
Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 10 %
Operating Costs increase by 5% after year 3
Raw materials and wages increase by 5% after year 3
Salary and wages increase by 3 % after year 3
B. Depreciation
Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
C. Working Capital
Accounts receivable 30 days
Raw material local 30days

Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days
5.2.2.Sources of Fund
No Description % share Amount(in birr)
1 Owners Share 30 24,900,000
2 Bank Loan 70 58,100,000
Total 100 83,000,000
5.2.3.Loan repayment Schedule

Yea Principal Interest Total Annual Remaining
r Payment (10%) Payment Balance
0 0 0 0 58,100,000
1 5,810,000 5,810,000 11,620,000 52,290,000
2 5,810,000 5,229,000 11,039,000 46,480,000
3 5,810,000 4,648,000 10,458,000 40,670,000

4 5,810,000 4,067,000 9,877,000 34,860,000
5 5,810,000 3,486,000 9,296,000 29,050,000
6 5,810,000 2,905,000 8,715,000 23,240,000
7 5,810,000 2,324,000 8,134,000 17,430,000
8 5,810,000 1,743,000 7,553,000 11,620,000
9 5,810,000 1,162,000 6,972,000 5,810,000
10 5,810,000 581,000 6,391,000 0
5.2.4.Depreciation Schedule
S Original Value In Depreciation rate Depreciation Per
Description
N Birr in % year
Construction and Civil

1 23,240,000 5 1,162,000
Work
Machines &
2 18,260,000 15 2,739,000
Equipment’s
3 Vehicles 2,490,000 20 498,000

4 Office Equipment 1,660,000 15 249,000
Total 45,650,000 4,648,000
5.2.5.Revenue Projection
Based on the price and the capacity program of the factory indicated in previous chapter
(chapter 2), the revenue of the factory projected as indicated in the table below;
5.2.6.Balance Sheet
Balance Sheet

Asset
Current Asset
Cash 12,450,000
Inventory of raw materials and inputs 16,600,000
Total Current Asset 29,050,000
Fixed Asset
Land, Building and Construction 23,240,000
Machineries and Equipment’s 18,260,000
Office Equipment 1,660,000
Vehicles 2,490,000
Total fixed Asset 45,650,000
Total Asset
Liability
Account payable 58,100,000
Owners Equity 24,900,000
Capital
Total Liability & Owners’ Equity 83,000,000
5.2.7.Income Loss Statement
Revenue Year 1 Year 2 Year 3-10

Sales 80,185,000 84,194,250 88,403,963
Sales expenses (5%)* 4,009,250 4,209,713 4,420,198
Purchase of Raw Material 16,600,000 265,075,095 265,075,095
-
Gross profit 63,585,000 -180,880,845
176,671,133
Expenses
Salary Expense 8,300,000 8,715,000 9,150,750
Operating Expenses 2,490,000 2,614,500 2,745,225
Pre-operating Expense 1,660,000 1,743,000 1,830,150
Deprecation Building 1,162,000 1,162,000 1,162,000
Deprecation machine 2,739,000 2,739,000 2,739,000
Deprecation Vehicles 498,000 498,000 498,000
Deprecation office Equip 249,000 249,000 249,000
Lease Expense 3,000,000 3,000,000 3,000,000
Interest Expense 5,810,000 5,229,000 581,000
Total Expense 25,908,000 25,949,500 21,955,125
Profit Before Tax 80,185,000 84,194,250 88,403,963
Tax(30% ) 24,055,500 25,258,275 26,521,189
Net Profit 56,129,500 58,935,975 61,882,774

5.2.8.Cash Flow Statement
Cash Flow Statement

Particulars Year0 Year I Year II Year III-XI
A. Cash Inflow 0
· Own equity 24,900,000
· Bank loan 58,100,000
· Depreciation 0 4,648,000 4,648,000 4,648,000
· Net profit 0 56,129,500 58,935,975 61,882,774
Total inflow 83,000,000 60,777,500 63,583,975 66,530,774
B. Cash outflow 0
· Fixed capital 45,650,000
· Working capital 29,050,000
. Contingency (Lump sum) 8,300,000
10%
· Loan repayment 5,810,000 5,229,000 581,000
Total outflow 83,000,000 5,810,000 5,229,000 581,000
Net inflow (A-B) 0 54,967,500 58,354,975 65,949,774
Cumulative balance 0 54,967,500 58,354,975 65,949,774
5.2.9.Profitability
According to the projected income statement, the project will start generating profit in the 1st
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.
The income statement and the other indicators of profitability show that the project is viable.

5.2.10. Break-Even Analysis
The break-even point of the project including cost of finance when it starts to operates at full
capacity (year 3) is estimated by using income statement projection.
BE = Fixed Cost / Sales – Variable cost = 57%
5.2.11. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered with in 9 year of operation.
2. FUTURE DEVELOPMENT
Every business undertakings be it large or small should have future development plan. It is a
plain fact that business activities are undertook in a dynamic business nature and different
environment. Therefore, the factory will have an expansion phase depending on the condition
of the industry character particularly in producing the Profile itself by installing the plant. In this
regard, the Factory will expand its capacity and production varieties.

3. ENVIRONMENTAL IMPACT OF THE PROJECT
7.1. Socio-Economic Environment
The owner will provide the land on lease bases, and all required compensation will be paid for
the project. The Livelihood of the local peoples around the project area is rural dwellers of
various occupation and economic background.
7.2. Environmental Impact Assessment of the Project
Environmental aspects are fundamental for the sustainability assessment of the current and
novel designs of any new project. In this regard the plant will undertake a separate and detail
Environmental impact Assessment.
To assess the impacts and design mitigation measure if any adverse impacts are there so as
to make the project benefited more society and nation.

Betti

Uploaded by

Copyright:

Available Formats

Betti

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Betti

Uploaded by

Copyright:

Available Formats

PROJECT PROPOSAL

FOR THE ESTABLISHMENT OF

NAILS BARBERED, WIRE AND WIRE MESH FACTORY

PROJECT TO BE IMPLEMENTED IN GALAN TOWN,

OROMIA REGION STATE

Promoters: - Degamu Bekele Kerga Page 1

Promoters: - Degamu Bekele Kerga Page 2

1. Project Owners DEGAMU BEKELE KERGA

3. Project Location Galan Town,

5. Premises Required 10,000 M2

6. Total Initial Br 83,000,000 of which 30% equivalent to 24,900,000

7. Employment Total Job opportunity Created 350 peoples

250 Temporary (skilled 100 and Unskilled 150).

8. Market Share It is Both for local 70 % and Export standard 30%

Promoters: - Degamu Bekele Kerga Page 3

Promoters: - Degamu Bekele Kerga Page 4

1.1. Objective of the project

The main objective of the plant is to manufacture different Different Nails

Promoters: - Degamu Bekele Kerga Page 5

The envisaged project deemed to contribute to the economic development of the

A. Quality Export Nail and Wire Products

Promoters: - Degamu Bekele Kerga Page 6

F. Benefit for The Local Community

As a corporate responsibility the company will engage in different development

G. Stimulate the Local and National Economy

Promoters: - Degamu Bekele Kerga Page 7

The envisioned project is planned to be located in Galan town (which is around

1.4. Location Map of the Galan Town Area

According to the 1994 national census, the town had a population

Promoters: - Degamu Bekele Kerga Page 8

Table 1. Premises Required and Land Use Plan

No Description Land Requirement

1 Production Hall 5,000M2

2.1 Raw Material & Input 1,000M2

2.2 Finished Products 1,000M2

Total Warehouse 7,000M2

3 Office Building 1,000M2

4 Shop and Showroom 1,000M2

5 Waste Accumulation area 500M2

6 Green area, Buffer zone and Parking 500M2

Promoters: - Degamu Bekele Kerga Page 10

2.1. Market Study

2.1.1. Demand and Supply Analysis

At present most of the metal factories are involved in manufacturing household

Manufacturing of modern office furniture is being introduced to substitute import

Promoters: - Degamu Bekele Kerga Page 11

2.1.2. Supply Of Nails and Racks Of Iron Or Steel

2.1.3. Demand Projection

Promoters: - Degamu Bekele Kerga Page 12

2.1.5. Market Prospects

2.1.6. Marketing Strategy and Promotion

The company will follow the following promotional methods:

2.1.7. Target customers

Promoters: - Degamu Bekele Kerga Page 13

2.2. Plant Capacity and Production Program

Promoters: - Degamu Bekele Kerga Page 14

It would be important to examine the possible level of price based on the

3. PRODUCTION AND TECHNOLOGY

3.1. Product Nature and Description