EXPIATION FOR PLASTIC

SHEET FOR SHOES AND PLASTIC

SHOES
MANUFACTURING PLANT

PROJECT TO BE IMPLEMENTED IN BURAYU

TOWN, OROMIA REGIONAL STATE

PROMOTER:-ABEBE DINQU PLASTIC

MANUFACTURING

MAY, 2006 E.C.

BURAYU, ETHIOPIA

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 Table of Contents
1. EXECUTIVE SUMMARY............................................................................................................3
2. INTRODUCTION...................................................................................................................... 4
3. Objective of the project..........................................................................................................5
4. The Economic Significance of the project...............................................................................5
5. Location and premises Required............................................................................................7
6. MARKET STUDY AND PLANT CAPACITY.................................................................................. 8
 Market Study.......................................................................................................................... 8
 Demand and supply Analysis..................................................................................................8
 Market prospects................................................................................................................... 9
 Marketing Strategy and promotion........................................................................................9
 Target customers..................................................................................................................10
 Plant capacity and production program...............................................................................10
 Pricing................................................................................................................................... 10
7. Production and Technology..................................................................................................11
 Raw material and input........................................................................................................ 11
 Technology........................................................................................................................... 11
 Production Description.........................................................................................................11
 Production process...............................................................................................................12
 Machinery and Equipments..................................................................................................13
8. Manpower and Organizational management.......................................................................15
9. Financial Requirement and Analysis.....................................................................................18
 Total initial investment cost................................................................................................. 18
 Fixed investment.................................................................................................................. 19
 Financial analysis and statements........................................................................................21
10. FUTURE DEVEL OPMENT...................................................................................................26
11. ENVIRONMENTAL IMPACT OF THE PROJECT....................................................................26
 Socio- Economic Environment..............................................................................................26
 Environmental Impact Assessment of the Project................................................................26

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 1. EXECUTIVE SUMMARY

1 Project name Plastic product manufacturing plant

2 Project owners Abebe Dinqu, Plastic manufacturing
3 Nationality Ethiopian
4 Project location Burayu town, Oromya special zone surrounding
fin fine
5 Project composition Plastic product, plastic sheet for shoes and
plastic shoes
6 Market target 100 % for domestic market
7 Premises required 4,000 m2
8 Total initial Br 33,300,000.00 of which 30% equivalent to
investment capital 6,000,000.00 financed by the owners

9 Employment 60 permanent, skilled 25 and unskilled 35 and

opportunity 85 temporal, skilled 13 and unskilled 72 in all
145 people, skilled 38 and unskilled 107
10 Benefits of the factory By Giving good service, it adds value to the
for the region country economy source of revenue, employment
opportunity , save foreign currency benefit for
the local community Stimulate the local
economy and technology transfer

2. INTRODUCTION

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 insures to the heavy one.
The government of Ethiopia has developed a investment policy packages and other sect oral
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

3
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 exerting its maximum effort to expand investment opportunities in the
region, sso as to foster the economic development of the region and subduing the region 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 Plastic manufacturing plant in hebetation, Special Zone in
Oromia region.
The owners of this envisaged plant have a good business experiences and need to extend this
assets to this plant. Therefore the owner is very determined to establish the plant and considers
getting the required support from regional averment by considering the existing facts and the
multi benefits of this project.

BRIEF HISTORY OF THE PROMOTER

The owner of the project is Abebe Dinku have been living in Adis Abeba since 2000 E.C. The
owner of the project is the owner of plastic sheet for shoes and plastic shoes, he produce in his
company the above products. But know I have the land scarcity, so I will plan to expand land for
this project to upgrade the project capital and employment opportunity. Moreover, he under takes
business activities on import and export of goods. Abebe Dinku is now willing to engage in
huge manufacturing labor intensive investment project that solve many individual job
opportunity problems and demand gap of plastic sheet for shoes and plastic shoes manufacturing.
Production industry manufacturing, import machinery of the project and raw materials. The
marketing manager, who started his professional career as a business person in diverse areas
after completing his study, is now the right of the plant. In general, the General Managers are
assisted by qualified personnel to carry out the day to-day activities of the company operations.
As could be deduced from the above information Abebe Dinku Plastic products manufacturing.
Production manufacturing, import machinery of the project and raw materials management as
well as the finance and marketing operations are in the hands of technically capable and
dependable professionals with the necessary experience for the project.
As stated above, the company has an initial vision, readiness and deep assessment of the
situation to implement the project, As the company has not yet secured land, one of the purposes

4
of this feasibility study is to use it as a requirement to acquire the required land and to obtain the
land certificate for the realization of the project objective.

3. Objective of the project

The main objective of the plant is to produce Plastic sheet for shoes and
plastic shoes and sale with reasonable price for domestic and international
market {in the future}.

4. 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. Supply of Quality plastic sheet, plastics shoes and related

products
The prouder discussion will establish Plastic product manufacturing
plant that will produce quality and affordable Plastic 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 source 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 64persons.

E. save the Country Foreign Exchange

By minimizing the market gab for Plastic manufacturing plant demand nd
supply, the factory will help to reduce the nation’s foreign exchange cost to
import these materials his will save the origin exchange resources of the
nation.
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F. Benefit for The Local community
As a corporate responsibility the company will engage in different
development activates on the surrounding areas {sedate Town}. This will
better worse the community and contribute or 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 Plastic product manufacturing 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.

5. Location and premises Required

i. Location
The envisioned project is planned to be located in Burayu town {Which is
around 25Km from the capital}. Oromia Special Zone surrounding Finfine,
Oromia Regional State. 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.
i. Premises Required
The total land expansion holding of the project is 4,000 M 2, the premises
required planned as follows in table 1.
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No Description Land requirement (m2) Total cost in birr
1 Production hall 1,550 m2 583,026
2 Warehouse 1,750 423,000
3 Office building , shops & 290 472,500
showrooms’
4 Waste Accumulation area 80 272,500
5 Green area, buffer and parking 100 40,000

6 Fences 100 63,000

7 Road infrastructure 130 55,000
Total 4,000m2 2,072,000,00

6. MARKET STUDY AND PLANT CAPACITY

 Market Study

 Demand and supply Analysis

The market potential is great because the manufacturing industry is
amending the fastest growing sectors of our economy. There is a lot of
demand for 56 plants etc. This sector is still informal as there are very many
small scale firms spread in major towns and tracing centers in the country.

Besides, the demand for Plastic product manufacturing is increasing with the
growth in investment in different sectors. Consumer demand in the country
is growing for plastic products. Increase in purchasing power and changes in
designs tend to increase the demand still further. In addition, demand for
Plastic manufacturing in exports market has gone up considerably in recent.
This aspect is relevant for the Plastic manufacturing industry.

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At present most of the plastic factories are involved in manufacturing plastic
product etc. The main target market of these workshops is government and
next the private individuals.

Manufacturing is different Plastic manufacturing 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 manufacturing is also involved in processing materials. In this regard,
the establishments of this foods products plant will be helpful in terms of
increasing the countries supply – demand gap by substituting exported items
of the sector.

The country in general has been importing plastic items from china, turkey,
Malaysia and Indonesia. The imported foods item that produces and its price
in comparison to the local products seem similar and reasonable. However,
china and Malaysia plastic is the most imported product to the country.

 Market prospects
From the above market demand and supply analysis Plastic manufacturing,
there exists huge market gab in Ethiopian market. Hence, the envisioned
factory will be successful by entering in to this market.

 Marketing Strategy and promotion

The company will follow the following promotional methods:

 Electronic medias
 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.

 Target customers
The local market, the requirement for plastic product can be categorized as
follows

 Rural peoples
 Urban peoples
 And others

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 The majority of customers in the domestic market belong to first and second
category. These customers require Products for their and usually buy range
of products with other material for their entire customers.

 Plant capacity and production program

Considering the gradual growth of demand and the time 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.

Description/Year Year-0 Year-1 Year-2 Year-3 Year-4 Year-5-10

Plastic sheet for shoes 55,000 65,000 70,000 75,000 80,000 85,000
Plastic shoes 50,000 55,000 65,000 70,000 75,000 80,000
Total 105,000 120,000 135,000 145,000 155,000 165,000

 Pricing
If 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
other plastic in Addis Ababa were assessed for the benefit of comparison.

7. Production and Technology

Product nature and description

The factory will produce different plastic product 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 plastic product based on the
customer desire and order. Besides, it will undertake different maintenance
of demand base.

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 Raw material and input
The major raw materials required for the production of the plastic
manufacturing include other plastic product, etc. The required raw materials
will be imported or purchased in the foreign market.

Different inputs and supplies are necessary to finalize those products.

 Technology
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 quality
products.

 Production Description
In general plastic manufacturing will have four production parts after the
product idea is generated. i.e., Design prototype, Develop and production.

 Production process
Activities performed to change a raw material in to output production are
called production process. Production process, which is practiced by most of
the workshops, is similar. In broad, production process comprises per-
production, on- production and postproduction.

A. Pre-production

Preparation and arrangement of resource 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 resource result in production cost reduction

and meeting due time.

Some of these activates 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

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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 per-production stage. It needs a managerial skill
to coordinate the resource to achieve desire product.

Some of the activities involved in the stage are

 Clearing raw materials according to the specified dimensions with

tolerance
 Joining the raw materials according to the design
 Quality control of the welding joints.
 Checking up functionality of product
C. Post production

Post production in 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
 Milling
 Assembly etc.

Note: Quality inspection activity in practical in all stages to keep the quality
of the product and to decrease scrap and reworks.

 Machinery and Equipments

The following are the list of necessary machineries and equipments for the
envisioned medical equipment manufacturing plant.

 Rolling machine
 Weighting scale
 Generator
 Hydraulic puncher
 Power hack saw
 Bed starching machine
 Electrical saw
 Electrical hydraulic press
 Band saw
 Portable rotary machine

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 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 building (workshops) , importing of
machineries , additive chemicals and other raw material , import of product
transporting medium vehicle.

 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 in to
completed products and optimized for maximum efficiencies.

 Utilities
A number of utilities would be put in place in order to insurance smooth
functioning of the factory. These utilities include:

 Water supply
 Supplementary Electricity supply
 Telephone line
 Paved road transportation,
 Drainage facility

8. Manpower and Organizational management

 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 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 dynamic of
the market situation. The company will hire 145 employees.
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The detail human power requirement, monthly and yearly salary is indicated
in part 5 financial part.

 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 manger 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

Owners
General
Secretary
manager

Marketing

Production Admin. & sales

Hence the following section deals with the duties and responsibility of some
departments.Dept. finance Dept.

1. Manager
Duties and responsibilities
 She/he will plan , organize, direct and control the overall activates 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 services delivery of the project center and increase
customer’s satisfaction.

13
  She/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 responsibility
It is the core department of the project center and it has the following
responsibilities.
 Plastic product has on standard and customer preferences
 Use modern manufacture, processing technologies that will enhance the
quality of those products.
 Producing quality Plastic product manufacturing that will enable the
factory competent both in the domestic and international market.
 Control on the quality of the 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 product.
3. Administration and finance department
Duties and responsibilities:-
 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 resource 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 intentional procurement
procedure.
 Administer and control the company logistic resource.
 Provide and manage general supportive service to the factory.
4. Marketing and Sales Department
Duties and responsibilities
 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

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 Will develop the marketing strategies for future project center’s
development.
 Conduct both foreign and domestic market research for expanding the
sale of the company.

 Training Requirement
The production employees of the plant expected to take basic 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.

9. Financial Requirement and Analysis

 Total initial investment cost

The total amount of money that is required to establish the envisaged plant
is estimated to be birr 33,300,000.00 Table Total investments Capital
No Description Cost in birr
Fixed investment cost 1900000
1 Land, Building & construction 7,972,000.00
2 Machines & Equipments 6,530,080.00
3 Vehicles 5,200,000.00
4 Office Equipment 2,370,000.00
Total working investment cost 22,072,080.00
5 Pre service expense 3,042,00.00
6 Initial working capital 3,818,300.00
Other expense 4,667,120.00
Total 11,527,420.00
Total investment capital 33,300,000.00

 Fixed investment
A. Building & construction

No Description Land requirement (m2) Total cost in

birr
1 Production hall 1,550 m2 583,026
2 Warehouse 1,750 423,000
3 Office building , shops & showrooms’ 290 472,500
4 Waste Accumulation area 80 272,500

15
5 Green area, buffer and parking 100 40,000
6 Fences 100 63,000
7 Site development 55,000
8 Design and supervision 103,000
9 Land lease initial 59,974
2
Total 4,000m 7,972,000

B. Vehicles

No Description Qty Unit price Total price Remark

in br. in br.
1Isuzu truck and pick 3 5,200,000.00 Duty free
up
Total 5,200,000.00
C. Office Equipment

No Description Qty Unit price in br. Total price in br.

1 Management tables 3 3000.00 9,000.00
2 Secretarial chairs with table 1 2000.00 2000.00
3 Managerial chairs 3 2000.00 6,000.00
4 Computer and printer 3 14,500.00 43,500.00
5 Shelf 2 4,000.00 8,000.00
6 Fling cabinets 2 1100.00 2,200.00
7 Assembly chair and table (set) 99,000.00
Total 2,370,000.00

D. Initial working capital

The initial working capital is established to be birr. 1,827,920.00
E. Pre –service expense

No Description Cost in br.

1 Project proposal 10,000
2 Licensing fee and others 2,500
3 Staff capacity Building 130,000
Total 3,042,00

a. Salary Expense
No Description No Qualification Monthly Annual salary
salary in birr in birr

1 General manager 1 BA in business management 300.00 36,000.00

2 Production head 1 BSC in industrial engineering 2500.00 30,000.00

3 Production supervisor 2 Advanced Diploma in production 1400.00 33,600.00
technology
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 4 Drafts man /designer/ 2 Diploma in draft technology 1100.00 26,400.00
5 Machine man 2 10+2 in general mechanics 900.00 21,600,00
6 Carpenter 7 10+2 in wood work technology 1100.00 104,500.00
7 Sales 2 10+2 in salesmanship and marketing 900.00 21,600.00
8 Personnel 1 Diploma in HRM 900.00 10,800.00
9 Finance head 1 BA in accounting 1500.00 18,000,00
10 Polish man 3 10+1 in wood work technology 900.00 32,000.00
11 Carving 2 10+1 in wood work technology 900.00 21,600.00
12 Marketing head 1 BA in marketing management 1500.00 18,000.00
13 Plastic works 8 10+2 in metal work technology 1100.00 105,600.00
14 Helper /laborer 11 10 completed 600.00 85,800.00
15 Mechanic 2 10+2 in general mechanics 1000.00 24,000.00
16 Admin and finance head 1 BAin management/ accounting 1500.00 18,000.00
17 Accountant 1 Diploma in accounting 1050.00 12,600.00
18 Electrician 1 10+2 in general electricity 900.00 10,800.00
19 Secretary 1 Diploma in sectary Science 800.00 9,600.00
20 Clerk 1 10 completed 700.00 8,400.00
21 Store keeper 1 10+2 in store and logistics management 800.00 9,600.00
22 Driver 1 10 completed 700.00 8,400.00
23 Cashier 1 10+2 in book keeping 800.00 9,600.00
24 Office boy/girl 1 10 completed 700.00 8,400.00
25 General service 1 Diploma in management 900.00 10,800.00
26 Security 2 An skilled 600.00 14,000.00
27 Gardener 2 An skilled 600.00 14,000.00
28 Cleaner 2 An skilled 600.00 14,000.00
Total 64 653,000.00
65,300.00
Benefits (10%)
Grand total 3,818,300.
00

b. Other Operating Expenses

Sr. Description Annual Cost in birr Assumption hsed
No
1 Property insurance 38,818 1 % of fixed investment cost
2 Audit& legal Fee 4200 350 per month
3 Uniforms 14,000 70*200br
4 Telephone, fax and postal 5,400 450 per month
5 Cleaning goods supplies 6,000 500 per month
6 Repair and maintenance 77,636 2 % of the fixed investment
cost
7 Advertisement 155,000 % of sales
8 Stationery and other office Supplies 4,800 400 per month
9 Electricity 75,375 0.335*225,000kw per year
10 Water 4,500 1.5*3,000m3 per year
11 Fuel 60,000 3000 lit *20per year
12 Oil and lubricant 6,000 10% of fuel cost
13 Miscellaneous expense 36,000 3000 per month
Total 4,667,120.00

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  Financial analysis and statements

 Underlying assumption
The finical analysis of the envisioned factory is based on the data proved 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 holiday 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 2%

Machinery and equipment 48%

Office furniture 3%

Vehicles 11%

C. Working Capital

Accounts receivable 30 days

Raw material local 30 days

Work in progress 5days

Finished products 30 days

Cash in hand 5days

Accounts payable 30days

 Sources of Fund
No Description % share Amount{in birr}
1 Owners Share 30 6,000,000.00
2 Bank Loan 70 14,000,000.00
Total 100 20,000,000.00

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  Loan repayment Schedule
Year Principal payment Remaining balance
0 0 14,000,000
1 1,400,000 12600000
2 1,400,000 11,200,000
3 1,400,000 9,800,000
4 1,400,000 8,400,000
5 1,400,000 14,000,000
6 1,400,000 11,200,000
7 1,400,000 4,200,000
8 1,400,000 2,800,000
9 1,400,000 1,400,000
10 1,400,000 0.00

 Depreciation schedule
S Description Original Depreciation rate Depreciation
N Value in Birr in % per year
1 Construction and Civil 2,072,000.0 5 103,600.00
Work 0
2 Machines & 3,630,080.0 10 363,008.00
Equipments 0
3 Vehicles 1,300,000.0 20 260,000.00
0
4 Office Equipment 170,000.00 10 17,000.00
Total 7,172,080.0 743,608.00
0

 Revenue projection
Based on the price and the capacity program of the factory indicated in
previous chapter {chapter2}, the revenue of the factory projected as
indicated in the table below.

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  Balance Sheet
Asset
Current asset
Cash 1,685420.00
Total Current Asset 1,685420.00
Fixed Asset
Land, Building and Construction 2,072,000.00
Machineries and Equipments 3,630,080.00
Office Equipment 1,300,000.00
Vehicles 170,000.00
Total fixed Asset 7,172,080.00
Total Asset 8,857,500.00
Liability
Account payable 5,029,580.00
Owners Equity
Capital 3,827,920.00
Total Liability & Owners’ Equity 8,857,500.00

 profit loss statement

Revenue Year 1 Year 2 Year 3
Sales Revenue 4,874,500.00 5,704,750.00 6,535,000.00
Purchase of Raw Material & Inputs 2,859,760 3,258,280 3,656,800
Gross profit 2,014,740.00 2,446,470 2,878,200
Expenses
Salary Expenses 493,570.00 605,935.00 718,300.00
Other operating Expenses 1,188,211.09 1,44,038.40 1,767120.00
Deprecation Building 103,600.00 103,600.00 103,600.00
Deprecation Machineries 363,008.00 363,008.00 363,008.00
Deprecation vehicles 260,000.00 260,000.00 260,000.00
Deprecation office Equip 17,000.00 17,000.00 17,000.00
Interest Expense 462,202.12 425,981.908 389,761.696
Lease payment 75,000 75,000 75,000
Total Expense 2,569,062.42 1,853,151.56 2,002,455.70
Profit Before Tax 545,677.58 693,318.44 1,258,170.16
Tax {30%} 0 0 377,451.05
Net profit 545,677.58 693,318.44 880,719.11

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  Cash Flow Statement
Year Year 0 Year 1 Year2 Year 3
Equity Capital 2,552,294.80
Loan principal 4,622,021.20
Net sale 0 4,874,500.00 5,704,750.00 6,535,000.00
Total cash in flow 7,174,316.00 4,874,500 5,704,750 7,535,000
Cash payment
Purchase of raw materials 0 2,859,760 3,258,280 3,656,800
Salary expense 0 493,570.00 605,935.00 718,300.00
Pre operating expense 142,500.00 0 0 0
Investment 3,881,800 0 0 0
Other operating cost 0 1,188,211.09 1,449,038.40 1,767120.00
Loan repayment 0 3,600,000.00 2,400,000.00 1,200,000.00
Lease payment 489,948 108,357 108,357 108,357
Tax payment 0 0 0 377,450.05
Total payment 4,433,248 3,494,944 4,042,769 4,590,593
Cash surplus/ Deficit 1,036,016.00 379,555.76 661,980.97 944,407.18

 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.

 Break- Even Analysis

The break- even point of the project including cost of fiancé when it starts to
operates at full capacity {year 3} is estimated by using income statement
projection.

BE=Fixed Cost/sales- Variable cost+57%

 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.

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10. FUTURE DEVEL OPMENT

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 proving the profile itself by installing the plant .in
this regard; the factory will expand its capacity and production varieties.

11. ENVIRONMENTAL IMPACT OF THE PROJECT

 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.

 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 ill
undertake a separate and detail Environmental impact Assessment.

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

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