CONFIDENTIAL INFORMATION

This business plan is the property of Universal plastics plc, is considered to

be strictly confidential. It contains information intended only for the person
to whom it is transmitted. With receipt of this plan, the recipient
acknowledges and agrees that:

1. In the event the recipient does not wish to pursue this matter, the
document will be returned, at the address listed above as soon as
possible,
2. The recipient will not copy, fax, reproduce, divulge, or distribute this
confidential plan, in whole or in part, without the expressed written
consent of Universal plastic plc., and
3. All of the information here in will be treated as confidential material
with no less care than afforded to the recipient’s own personal
confidential material.

This business plan has been constructed in order to inform potentially

interested parties of the opportunities presently available through an
investment in the production and distribution of platic products in Oromia,
Ethiopia and will explore the principal plans to pursue this opportunity. This
document does not constitute an offer to sell, or a solicitation of an offer
to purchase.

Proposal #: ____________________________

Provided To: ____________________________

Date: ____________________________

1
 EXECUTIVE SUMMARY

This Business Plan is designed for investment office,lending institutions and investors who will want to
participate in a profitable venture in Ethiopia. In doing so, they will help decrease the high level of
mortality and disease spread within this country’s general population, all because of the very poor quality
and less supply of plastic products now being delivered.

Universal plastic p.l.c will generate revenue through its production and delivery household’s plastic
products. The company’s initial operations, earmarked for the Finfine spacial zone of Oromia/ Ethiopia
(population of over 4.45 million), will steadily ramp for the production of these plastic products. Over
time, the company will expand its production capacity to serve a growing customer base across all of
Ethiopia, and beyond. The company will in time also begin adding other lines of other plastic products.

The firm’s production plant will employ the latest in plastic technology, using different Plastic Raw
materials such as HDPE blow and PP injections. Final product will then be delivered to customers
throughout the city to Shops, markets, restaurants, retail stores, institutions, businesses, and government
agencies. Delivery will be carried out using the firm’s own dedicated fleet of trucks and through agencies.

The lead proponent to this venture, Mr. Nuredin Detamo, a native Ethiopia, has experience in leading
different company as a manager and brings more than 15 years of management .

In total, the sum of 35.2 million (ETB) is required at this time to launch this venture. Which of 20% gained
from owners and 80% is covered by Bank Loan. This level of funding will permit the acquisition of all
equipment, facilities and related infrastructure, and will provide the necessary start-up working capital.

Development of the production facility and recruitment of all staff can be undertaken within a year. Once
operational, the projected revenue and profit generation will be very impressive, and will permit the
undertaking of future expansions.

ETHIOPIA HOUSE HOLDS PLASTIC PRODUCTS NEED.

COUNTRY OVERVIEW

The Democratic Republic of Ethiopia has a population of ~110 million people who live in an area of just
over 1.2 million Km2. Oromia is with an estimated population of 35 million with 286,612 km2 area.
Ethiopia is located on the Eastern coast of Africa, with Eretria to the north, Somalia and Djibouti to the
east, the Kenya to the south, and the South Sudan and Sudan the west.

As with many parts of Africa, this country has experienced its own share of internal wars and political
upheavals over the decades. Fortunately, over the past few years, the different factions have maintained a
peace accord, and the country is now on the road to social and economic renewal.

2
Ethiopia is the largest sub-Saharan Coffee, other agricultural products and Cattle producer in Africa. As
well as Coffee and agricultural products, Ethiopia produces high production and export and cattle
production.

Overall, Ethiopia is still rated as a poor, developing nation. However, there is a robust, growing and
competitive market now developing in the country, and increasing numbers of individuals and companies
have money to spend.

CURRENT Plastic SUPPLY ( NOT ENOUGH )

In Ethiopia, the style and supply of plastic product is very few especially in the region when compared to
the Demand. In Ethiopia since now, there is very little plastic supply.

For instance, according to ECSA Oromia is a busy district of Ethiopia that is home to nearly 35 million
people. Many of those living there came hoping for quality and high quantity plastic products. Many
people face the problem of luck of good quality and satisfying supply of plastics products.

COMPANY’S MAIN OBJECTIVE (Why does the company exist?):

To lead the Ethiopian plastic market by delivering a good and genuine quality
and enough Plastic products to Common people in Economic Price.
DESCRIPTION OF THE PRODUCT.

Plastic Products especially house holds (water container drums, Pipes for construction and
other plastic products) are common in rural and urban places to Store water and to
accommodate their water necessity other different uses and satisfy their construction need of
plastics. Hence it plays vital role to Save Water for Drinking and other Day to Day Activities.
Also there are variants in Quality, Quantity and Design.

IDENTIFICATION OF THE CUSTOMERS:

 Plastic product whole sellers

 Shops, hotels
 Government organizations
 Constructions
 And others

Needs to be satisfied by the product :

Satisfying common people’s needs by providing Genuine Plastics to finish construction, use as
house holds, and for other purposes.

3
IDENTIFICATION OF THE COMPETITION (Major competitors):

There are many factories in Ethiopia that produce house hold plastic products. Specially those
huge companies such as ever bright, Avon and Natran plastics

Strengths and Weakness: of the competition:

Not yet registered as a big organizations and

Strength Weakness

Cost Cutting Price, Not using Virgin Products.

Frequent Visits But Long Transportation increase the Cost

ADVANTAGES AND DISADVANTAGES OF THE PRODUCT

Price - Economic Price for good and quality products.

Quality - Our Products will come under Food Grade plastics Symbol and Certification

Terms of Delivery - If once order is Confirmed the product will be delivered in a Week

Payment Methods- 25 % Percentage advance and rest 75 % On Delivery

Customer Service – If any manufacturing Defected in our Product 100 % Replacement

guarantee is Insured

Others: Doing Quality Revolutionary in Plastic Products.

MESSAGE TO BE COMMUNICATED TO THECUSTOMERS:

Quality and Trust worthy is our Command

MARKETING AND MEANS OFCOMMERCIALIZATION:o

Present demand As per the Survey report there is a demand for huge products/Day and the

4
 & supply demand has been supplied by 3 Vendors.

Competition Due to high demand, they have not bothered about Quality.

Target clients Local vendors and Shop Keepers

Marketing Right choice for the right peoples.

strategy (USP) To save Health, Keep your food in Genuine Products.

Universal PLASTICS PLC. ; PRODUCTION, DELIVERY & SALE OF HOUSE HOLD PLASTIC
PRODUCTS IN ETHIOPIA

INTRODUCTION TO THE VENTURE

Upon development of a new, multi-million dollar production facility in Ethiopia, Universal plastics plc.’s
mission will be to deliver a good and genuine quality and enough Plastic products to Common peoples In
Economic Price.

Meanwhile, in Ethiopia, currently it is estimated that there is many plastic manufacturing companies
supplying and going to supply different types and quantity plastic products to the society. Even though the
companies are highly growing, majority of these companies were located near to Addis Ababa. So it is
more difficult to transport far and even meet the demand especially in the wide regions , like Oromia
region whose plastic demand is very high, especially that of pot and other water containers. Sometimes the
demand around Addis makes it scarce to Regions like Oromia. Admittedly, distribution of product will be
challenging due to the poor state of the area’s basic infrastructure. However, Universal Pastics plc.’s plan
will be to transport within its own fleet of dedicated, maintained trucks that are specifically designed for,
and sufficiently hardy to carry out the task and also through the volunteer and competent distributors.

Supported by its own local marketing network, our product will be delivered to residents, shops, hotels,
restaurants, institutions, businesses and government agencies in Oromia and in the outlying communities.

The introduction of Universal plastics plc, produce an increased supply of plastic products and will result
in a measurable reduction in cost of these products. Additionally, our product will be an important
economic boost to the local economy. A total workforce of about 40 individuals is projected; 26 persons
will be involved throughout the production and technique line and quality control, 4 persons for finance,
another 4 will provide delivery service, some 3 individuals will be involved in marketing and sales
activities, and 31 persons will provide management and administration under HR. Initially, Universal
plastics plc will operate three (8-hour) shifts per day.

PRODUCTION METHODOLOGY

5
E-D Plastics plc will produce house holds plastic products especially 1-300 L drums and Jars, pots, baskets,
buckets, chairs, and other different equipment made of plastics, from PP( Polypropylene) and HDPE High
Density Poly Ethelene) raw materials in addition with coloring master batch which will be imported from
different known plastic Raw material manufacturer such as Saudi Arabia , Japan, Oman, etc.

The overall production processes to be employed by E-D plastics PLC will feature the following attributes:

extrusion blow

 Raw materials (HDPE/PP) color mixer injection molding end product

Extrusion

PLANT & EQUIPMENT

 Plant

The proposed production facility to be constructed in Finfine special zone of Oromia will encompass
approximately 5000 m2, and will have a large exterior areafoparkingWithin the plant, a number of
workstation areas and cafeteria will feature the principal aspects of this venture; plastic injection molding
and extrusion blowing, delivery, and mini store.

S/N Building Type Area m2 Remarks

1 Mnufacturing work shop, mini mantainance room, mini 2000
tools andp spare parts store, superbisors office inside
the shop, G+1 Office building adjacent to the shop.Raw
materials and finished goods store , store man office,
rest Room and Shower near to the store.
2
3 Parking and green area. 120
4 Electric power room and transfer 20
5 Ways in the compound 40

 Machinery and equipment

6
The predominant function of the plant, namely the production house hold plastic injection will surprisingly
not require too much physical space. All of the required components, injection, along with its accessories,
mixer auto loader, granulating crusher, etc. all fit together within an overall modular design that is
compact and efficient. Operators working this area of the plant floor will monitor and adjust every internal
operation from a control room to the side. The overall system will be highly automated, and will typically
function without the need for regular or significant human interaction. While being advanced, the system
nevertheless is simple to operate and maintain, and requires only modest levels of advance training.

Process
taking
up
about
two-
thirds
of the
total
plant

7
area will be the various injection and blowing. The joint venture partner associated with the proponent
manufactures completely integrated modular –

 different inches of plastic pipes fitting

 Buckets , Jugs ,
 Basins and different baskets
 Plastic Chairs etc.

The company’s machinery configuration will be able to produce 762,000

kg different value added products (assuming that there will be 300 working days per year ) and Delivery
For all individual, commercial, industrial, government, and retail customers, delivery will be by different
trucks. Initially, Universal plastic plc will acquire and operate 2 Isuzu NPR trucks featuring designed gfor

8
the transportation of the products . Over time, as the company’s customer base and delivery requirements
expand, additional trucks will be acquired.

Quality Contro:l operations will be dedicated to maintaining the highest standards of product excellence.
This will be achieved through high quality follow up. The goal will be to meet the requirements and needs
of all customers, as well as to ensure that our entire product is consistent, reliable, and above all else, safe.

The company’s quality control person will monitor and audit every stage of production and delivery. The
quality checker will regularly take and analyze samples, and the QC person will be tasked with the
responsibility to identify any deficiencies or inadequacies. Indeed, this person will be fully authorized to
enforce whatever corrective measures may be necessary so as to maintain the company’s reputation for
excellence.

PLANT LOCATION AND SITE

The location of Universal plastic plc will be proposed to be at Oromia region, Finfine special zone

Map of the location

PLANT SETUP

Over a projected time frame of 12-months (From licensed date), a 3-phase process will be required to fully
plan out, construct, and launch this venture. Whereas the project risk is highest during phase I, the amount
of required expenditure only becomes large by phase III. These three phases are described below.

Phase I; Site Engineering (months 1 to 2).

 Develop full engineering specs for the plant

Phase II; Infrastructure Acquisition (months 2 to 4)

Place a deposit on the target land site. Arrange for building construction / renovation. Order all
production equipment. Recruit senior production personnel.

9
Phase III; Construction & Plant Set-up (months 5 to 12)

Construction / renovation of the plant Production equipment received and assembled. Delivery equipment
received. Marketing materials prepared and promotion begins. All personnel are recruited.

FUTURE EXPANSION

Even if the firm chose to limit itself to production house holds plastic products, enormous expansion
opportunities exist. For starters, just too adequately serve the vast need for plastic products across
Ethiopia; the plant would need to boost its output capacity at least threefold by planting additional
Machine

COMPANY INFORMATION

COMPANY DESCRIPTION

E-D palstic plc is Wholly Private owned company in Ethiopia. Mr Nuredin Detamo, the owner and
manager of Universal plastic plc , is a native Ethiopian, and as the lead proponent behind this venture,
is firmly dedicated towards the improvement of the daily lives of his fellow countrymen. Of particular
significance, due to his approach to Ethiopian government entities and reputable business groups, the
undertaking of this project has been greatly facilitated (for example, he has many companies which he
was leading the have good relationship better performance).

MANAGEMENT

The following individuals comprise the management team and personnel envisioned for Universal
plastics’s proposed production and delivery operations in Ethiopia.

Nuredin Detamo, Manager

Mr Nuredin Detamo is the very rich and many years experienced in different companies that he owned.

Also different experts will be included

 Finance head
 Marketing and sales head
 Production and technique head
 Human resource head and others will be involved.

STAFF CONSIDERATIONS

Universal plastics plc will require a substantial workforce to adequately carry out the range of activities
envisioned. Some of the highlights for these staff members are highlighted below.

Production and technique Personnel

Some 19 persons in total will be required for this essential operation, consisting of 13 production line staff
and a 6 member maintenances crew. Preferably, the production and technique staff members to be

10
recruited should have some pertinent engineering and / or technical backgrounds, and must be very
responsible individuals. Specific training for each of the positions will be provided in the months during
the plant’s development and at the point the various technical components are being assembled.

The individuals selected to serve as part of the production and technique team will likely have some sort of
mechanical and electrical backgriund and / or manufacturing factory experience to begin with, although
additional training will be provided.

Delivery Personnel

Delivery people will spend most of their workdays on the move. These staff members must be excellent
drivers with specialized skills in troubleshooting, defensive driving, collision avoidance, threshold
braking, map reading, security, and organizing their daily routine. They must enjoy working with little
direction and should exhibit superior customer service skills.

Before leaving the manufacturing plant, the truck drivers will check the fuel level and oil in their trucks.
They will also regularly inspect their trucks to make sure that everything is in fine working condition.
Drivers must make sure that their cargo is secure and report improperly positioned loads to the dispatcher.

Once on the road, they will travel their routes to deliver product to customers, and they will collect empty
containers. The drivers will keep track of the items they deliver and pickup. The intent will be to arrange
for delivery drivers to maintain contact with the main office during the day. This will not only serve as a
security measure, it will also permit the dispatch staff to notify them as to any required changes to their
delivery schedule.

In addition to the drivers, the company will also maintain a number of dispatch individuals within the
office. Their responsibility will be to plan the daily delivery routes for each of the truck crews, and to deal
with any sudden problems or disruptions that are bound to occur (e.g. switching priority tasks from one
crew to another should a truck break down).

Marketing & Sales Personnel

Ideally, the persons recruited for this function will come to the job with a proven track record in
marketing and sales activity. Mostly he/she will work from the company’s head office, but sometimes
he/she will be out on the road every day meeting with prospective target customers.

Human resource structure

11
 General
Manager

Factory
Manager

Production and
Human resourse Marketing
Finance Manager Technique Secratory
manager Manager
manager

Production Techinque Qulity cotrollers

Cost and budget Clerk Sales
division head Division Head

Seniour
General
Supervisors Electrician and General service Purchasor
accountant
Mechanics

Junior Elctricians
Cashier Oprators Drivrs
and amechnics

Labours secrities

Cleaners

KEY SUPPLIER ARRANGEMENTS

To launch and sustain this venture, there will be the need for essential infrastructure, material, expertise,
and capital. Logically, one good place to start looking for all of these resources would be one or more of
the large organizations already involved in the plastic producing business (production, marketing, and / or
transport segments), as well as those entities with a presence in Ethiopia. For the next few months, the lead
proponent will be approaching these organizations / entities to gauge their interest in participating in this
venture. As details concerning the participation of these key suppliers become known, they will likely be
appended to this document.

MARKETING PLAN

STRATEGIES FOR SUCCESS

The main Objective of Universal plastics plc is to produce deliver a good and genuine quality and
enough Plastic products to Common market peoples In Economic Price.

The best way to achieve this, and the basis of the company’s initial marketing focus, therefore, is to
promote the benefits for the home and office of buying our products. In large measure, the use of our name

12
that we are going to have within the brand name will help establish the necessary imagery of a product that
is both clean, valuable.

Secondarily, promotional messaging should also play up the fact that our products under Universal plastic
pls are an Ethiopian-based company. Other Plastic producers may appear from time-to-time, but why not
take advantage of nationalistic sentiment? So we will have An Including name & logo on each of our
products that would help achieve this.

Finally, the company will adopt creative and aggressive tactics to exclusively position its product into key
target markets. For instance, by offering low pricing and / or promotional supports to a particular high
profile retailer will ensure that only our Plastic products appears in every individuals and organizations
home rather than some other brands. Often, taking less revenue (or incurring a higher cost) when dealing
with a certain customer will incite that customer to agree to some sort of preferential agreement, when that
customer just happens to be important (in terms of his location, large market share, reputation, etc.), then
the revenue sacrifice or extra cost incurred may be very worthwhile in terms of the big picture.

TARGET MARKETS

A number of prospective customer groups will comprise Univetsal plastics plc.’s principal target markets.
The type of marketing required to effectively connect to the various groups will vary, and these differences
will be noted.

• Individuals; this group will be comprised of the population at large, and can only be effectively
approached through mass media marketing.
• Retailers; a very important target market in so far as this represents the best way to sell product to
most members of the general population. Potentially, this target market group could represent the
largest sales volumes. Establishing agreements with retailers will require direct sales approaches,
coupled to the offering of sales commissions.
• Hospitals; this sector represents an excellent public relations opportunity, since the placement of
product into hospitals will prove the assertion that our bottled Water brand represents quality and
safety. Establishing agreements with hospitals will require direct sales approaches, coupled to the
offering of pricing discounts.
• Hotels; this is a very prestigious customer group that would lend excellent credibility to Universal
plastics plc.’s product. Establishing supply agreements with hotels will require direct sales
approaches, coupled to the offering of pricing discounts.
• Restaurants; a potentially lucrative target market in the long-term when Universal plastics plc
eventually produces and distributes. Large Businesses, Commercial Complexes, Government
Offices; this will quickly become the largest target market group in terms of sales volumes. It is
important to highlight the fact that these are establishments with money, they have a lot of
workers, and they have a vested interest in protecting / preserving the health of their workforces.
Establishing supply agreements with these customers will require direct sales approaches to key
decision makers.

PROMOTIONAL STRATEGIES

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As a general statement, the principal objective behind Universal plastic’s .plc ongoing promotional
activities will be to introduce and reinforce our Plastic products brand name to the Ethiopian population.
Promotional activity builds familiarity, reduces inhibitions, and often discourages the entry into the
marketplace of new, would-be competitors. Some of the promotional activity / tactics to be employed are
rather straightforward, including:

• Large signage along major roadways (e.g. billboards).

• Free sample giveaways in markets and other shopping places.

• Radio and newspaper ads.

• Arrange for celebrity endorsements.

• Create a “buzz” in the local press during the lead-up to the establishment of the plant, and
especially at the point of its “Grand Opening”. Arrange for prominent dignitaries (e.g. the
President of the region and Zone administrator) to show up for a ribbon cutting ceremony.
• Public relations initiatives to build an image of Universal plastics plc as a good corporate citizen
(e.g. support of some new disease prevention facility / activity).
• Maintaining a sizable marketing & sales budget over the long-term. Promotion activity is an
ongoing process, whose results may not show in the very immediate term. After all, Universal
plastic plc not only wishes to induce Ethiopians to try the product in the near-term, the intent is for
these people to become longstanding, repeat customers on a continuous basis.
• Offer free trial offers, such as providing a platic dispenser and initial supply of products at no
charge. This tactic is best suited for large commercial buildings, government offices, or other
potentially large volume buyers. Such free trials can entice certain prospective consumers to sign
up for long-term supply deals.
• Offer a discount on products for those customers who agree to commit to longer-term, minimum
volume, supply contracts.
• Pay competitive commissions to retailers, wholesalers, and brokers so that they remain motivated
to sell Universal plastics product.

PRICING STRATEGY

Universal plastics plc will maintain pricing on its products that will always tend to be at, or below the
prices charged by other producers serving the Ethiopian market place. Other elements of the company’s
pricing strategy will include:

1. Maintain pricing consistency over the year so as to tell customers that Universal Plastics is a
stable entity that is fully committed to its products.
2. Offer pricing discounts for those customers willing to commit to taking delivery of large volumes
on a continuing, long-term basis. This will translate into a major cost savings for large volume
customers, and will induce them to stay loyal.
3. By maintaining an ultra-competitive pricing regimen, potential newcomers to the Ethiopian
marketplace will be dissuaded from selling their plastic products (if they are foreign-based
producers, they will likely pay more attention to some other nation where the pricing levels and
profit potential is higher).

14
 FINANCIAL CONSIDERATIONS

STARTUP BUDGET

Three start-up phases of activity will be required to launch this venture that, in total, will require ~21.2
million (ETB). Then, an additional ~ 14 million (ETB) will be positioned for the company’s initial
working capital. These cash requirements are described below:

Universal PLASTICS PLC.

START-UP COST DETAILS

Phase I; Site Engineering (months 1 to 2)

Identify best plant site from several candidates, and then develop

Full engineering specs for the plant 5,000,000 ETB

Phase II; Infrastructure Acquisition (months 2 to 10)

Place a deposit towards acquiring the land. Order all production

Equipment, and begin recruitment of senior production personnel. 12,197,900 ETB

Phase III; Construction & Plant Set-up (months 10 to 12)

The complete facility is erected; all equipment is received and assembled. 4,000,000 ETB

Working Capital

Coverage of marketing budgets, production raw materials , Staff wages,

License fees, supplies, etc. 14,004,900. ETB

Total 35,202,800.00 ETB

15
REQUIREMENT FOR FUNDS

The lead proponent to this venture has been seeking to raise a total of 35.2million (ETB) to launch this
venture, and has made tremendous progress to-date in discussions with Ethiopian Development Bank of
Ethiopia and/or Other Banks in Ethiopia. The overall financing mechanism under consideration would
involve various debt instruments through the various above noted parties. In the particular projection
shown, repayment of the debt begins once the plant is operational, and loan shows equal payments
towards, 80% loan of total of 35.2 million in financing, based on a Banks law.

Also a possibility (but not specifically projected in this document) would be a blended financing approach
involving a combination of debt and equity. Over the upcoming number of months, the precise financing
mechanism to be undertaken will be clarified as discussions are completed with prospective lenders and
investors.

PROJECTED REVENUES & EXPENSES

Within the debt financing scenario a 5-year projection of operational revenues and expenses is provided
for Universal plastic plc. These projections have been developed in accordance to conservative principles
whereby the plant’s optimum production output and sales volumes are constrained to levels far below 85
percent capacity. Meanwhile, the company’s various expenses are shown coming in at high-value ranges.

Once operational, the total projected revenue for the firm during each year is forecast to greatly exceed all
anticipated direct and general expenses. Even under these rather conservative projections, Universal
plastics plc is shown to exhibit very significant profitability.

CASH FLOW & BALANCE SHEET PROJECTIONS

A set of corresponding cash flow projections are also provided. These projections adhere to the same
conservative assumptions. The cash flow projections verify that the company will have ample capital on
hand to meet all of its spending obligations.

Also provided are sets of projected balance sheets for the company, indicating opening and year-end
amounts for the firm’s assets, liabilities, and equity positions. These projections confirm that Universal
plastics plc.’s net worth and retained earnings will grow substantially over time.

BREAKEVEN & SENSITIVITY ANALYSES

Breakeven Analysis

A breakeven analysis has been conducted to evaluate the approximate 177,698.4 Kg of plastic end
products that need to be sold in order for the company’s Year 1 operations to reach the breakeven point.
Such an analysis assumes the same relative balance is maintained between the different product types, and
that the various cost and price assumptions remain unchanged.

Under these conditions, Universal plastic plc will reach the breakeven point once it sells
177,698.4kg/year end product or the breakeven point shows the company should sale at least more than

16
177,698.4 kg/Year Finished goods. This equates to a monthly average of only approximately 14,808.2
kg/month finished products. This breakeven point represents a sales success rate of only 23.32 percent of
that being predicted. Consequently, management remains extremely confident that the company will be
profitable. The detail calculation has been done under financial result break even.

Sensitivity Analysis

A sensitivity analysis has also been carried out to identify and measure those variables that could
significantly and negatively alter the outcome of this venture if their values were changed. In other words,
this evaluation helps to determine how vulnerable or robust this venture will be in the event one particular
revenue stream, expense item, or other factor suddenly change by a significant amount (a 25 percent
impact to Year 1 is used). The scenarios chosen for sensitivity analysis are listed below, and the resulting
gross income figures for each scenario are highlighted in the subsequent table. (For obvious reasons, this
analysis focuses only on the prices and costs associated with the water bottles, and not on the coolers,
which is a relatively minor side operation.)

• SCENARIO 1; Price charged per kg decreases by 25 percent

• SCENARIO 2: Cost of Raw materials and inputs increases by 25 percent.
• SCENARIO 3: Cost of production increases by 25 percent.
• SCENARIO 4: Cost of product delivery increases by 25 percent.
• SCENARIO 5: Cost of sales commissions increases by 25 percent.
• SCENARIO 6: General and Administrative costs increase by 25 percent.

Sensitivity Analysis Results

SCENARIO FACTOR NEGATIVELY CHANGED

RESULTING NET INCOME

SCENARIO FACTOR NEGATIVLEY RESULTING NET INCOME

CHANGED (ETB)
Original None 76,200,000.00
1 Price per kg product 57,150,000.00
2 Cost of Raw materials and other 130,500,000.00
inputs, etc.
3 Cost of production 149,200,400.00
4 Cost of product delivery 149,490,999.00
5 Cost of sales commissions 149,899,000.00
6 G&A costs 149,500,000.00

The largest impact to the business venture’s profitability occurs if the selling price of final product drops
by 25 percent. As for the other chosen negative impacts, their influence is less (an increase to the cost of
Raw materials &other inputs, the cost of production , or to G&A expenses will diminish Universal
plastics plc.’s bottom line, but not nearly to the same extent as a drop in prices). Clearly, the only real

17
 vulnerability this venture would have is if management chose to significantly reduce the price to be
charged for plasic products.

Since the marketplace is currently charging a higher price for this product, the introduction of Universal
plastics plc.’s products should result in all of the company’s output being readily purchased. In other
words, the target pricing to be charged for this product appears secure from negative marketplace factors,
and management should therefore be able to maintain price stability. Consequently, there is little reason to
be concerned. As long as management adheres to its stated pricing strategy, this venture’s overall
economic model will remain very robust

FINANCIAL ANALYSIS

Construction period 1 year

Source of finance 20% equity and 80% loan
Tax holdings 2 years
Bank interest rate 12%
Discount for cash flow 18%
Value of land Based on lease rate of ONRG
A. Depreciation

Building 5%
Machinery and equipment plant 10%
Office furniture 10%
Vehicles 20%

B. Fixed Asset
i. Land and Building

S/N Descriptions Area m2 Cost (ETB)

1 Land (5000 M2) 5000 1,000,000.00
2 Building Built up area Required productiin shop, raw material & 2180 4,000,000.00
finished goods store, Machinery spare parts store, Office , mink
maintenance room, mini work shop, Toilets , Electrical switch rooms,
Cafeteria, parking, Green area, ways and compound.
3 Future's expansion area 2820 0.00
Total 5,000,000.00

ii. Plant and machinery

18
S/N Description Specifications Origin Nos. Total
required value(Birr)
2 Injection molding machines 380 and 780 China 2 5,360,000
tonn
3 Scrap granulator /crusher 22 kw China 1 88,000
4 Color Mixer China 1 44,000
Preheating Hopper China 2 46,800
5 Auto loader Chian 2 45,000
6 Moulds (Arm less chair, Chian 23 7,314,900
stool, basins, Buckets , jugs
drawers and pipe fittings)

7 Chiller China 2 600,000.00

TOTAL 12,897,900

iii. Other Fixed assets

S/N Descriptions Cost (ETB)

1 Furniture 50,000.00
3 Security deposit to electricity Department 100,000.00
4 Preliminary and pre-operative expense 150,000.00
5 Delivery Tracks 4,000,000.00
TOTAL 4,300,000.00
Total Fixed Asset

S/N Descriptions Cost (ETB)

1 Land and Building 5,000,000.00
2 Plant and Machinery 12,897,900.00
3 Other fixed Asset 4,300,000.00
TOTAL 22,197,900.00

C. Working Capital
i. Raw materials

S/N Descriptions Cost (ETB)

1 PP and HDPE( injections grade) 49,530,000.00
2 Master Batch 200,000.00
3 O-ring seal and other packing materials 100,000.00
TOTAL 49,830,000.00

ii. Utilities

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S/N Descriptions Cost (ETB)
1 Electricity 60,000.00
2 Fuel or other 30,000.00
3 Water 10,000.00
TOTAL 100,000.00

iii. Other contingent Expense

S/N Descriptions Cost (ETB)

1 Postage and stationery 5,000.00
2 Telephone, internet fax Charges 5,000.00
3 Consumable stores 1,000.00
4 Repairing and maintenance 50,000.00
5 Transport charge 20,000.00
6 Advertisement and publicity 100,000.00
7 Insurance and Taxes 5,000.00
8 Other expense 10,000.00
9 Tranisformer and sanitary facility 600,000.00
TOTAL 796,000.00

iv. Wage and salary

  Job Title No. unit salary Monthly Annual

1 Factory Manager 1 20,000.00 20,000.00 240,000.00
1.2 Secretary 1 4,000.00 4,000.00 48,000.00
1.3 Accoumtant and Finance head 1 10,000.00 10,000.00 120,000.00
1.3.1 Casher and purchaser 1 4,000.00 4,000.00 48,000.00
1.4 Marketing Sales person 1 7,000.00 7,000.00 84,000.00
1.5 Human Resource head 1 7,000.00 7,000.00 84,000.00
1.5.1 Security or Guards 3 1,500.00 4,500.00 54,000.00
1.5.2 Drivers 2 2,000.00 4,000.00 48,000.00
1.5.3 Cleaners 4 1,200.00 4,800.00 57,600.00
1.6 Production and technique head 1 10,000.00 10,000.00 120,000.00
Production supervisor and quality
1.6.1 3 7,000.00 21,000.00 252,000.00
controller
1.6.1.1 Operators 6 5,000.00 30,000.00 540,000.00
1.6.1.2 Labor 3 1,500.00 4,500.00 54,000.00
1.6.1.3 Helper 6 1,500.00 9,000.00 108,000.00
1.6.1.4 Junior Electrician 3 3,000.00 9,000.00 108,000.00
1.6.1.5 Junior Mechanics 3 3,000.00 9,000.00 108,000.00
Total 40   157,800.00 2,073,000.00

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 Working capital/month

S/N Descriptions Cost (ETB)

1 Raw material 4,152,500.00
2 Salaries and wages 157,800.00
3 Utilities 8,333.33
4 Other Contingent Expense 16,333.33
TOTAL 4,334,966.67

Total Capital Investment

S/N Descriptions Costs (ETB)

1 Fixed cost 22,197,900.00
2 Working Capital (for three months) 13,004,900.00
TOTAL 35,202,800.00

FINANCIAL RESULTS and Profitability

A. Cost of Production per annual

S/N Descriptions Cost (ETB)

1 Working capital of 1 year 52,019,600.00
2 Depreciation on building @ 5% 200,000.00
3 Depreciation on plant and machinery @10% 1,289,790.00
4 Depreciation on Furniture @10% 5,000.00
5 Depreciation on Vehicles 800,000.00
6 Interest on TCI @12% 3,379,468.80
TOTAL 57,693,858.80

B. Turn Over

S/N Descriptions Costs in (ETB)

1 Turnover is amount obtained multiplying the total production Thus it will be
of products in kg * price per kg of product 76,200,000.00
Thus in 1kg production (105kg/hr.)*24hr* 300 days=762,000
kg/year *100 birr

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C. Profit Per Year

S/N Descriptions Value in (ETB)

1 Profit = Turnover –cost of production 18,506,141.20
Profit = 76,200,000.00-57,693,858.80

D. Net Profit Ratio

S/N Descriptions Value in %

1 Net Profit =Profit *100/ turnover 24.28%
Net profit= 18,506,141.20*100 /76,200,000.00

E. Rate Of Return

S/N Descriptions Value in %

1 Rate of return = Profit *100/Total capital investment 52.57
Rate of return= 18,506,141.20*100/35,202,800.00

F. Fixed Coast

S/N Descriptions Cost (ETB)

1 Depreciation on building @ 5% 200,000.00
2 Depreciation on plant and machinery @10% 1,289,970.00
3 Depreciation on Furniture 10% 5,000.00
4 40% of salary and wage 829,200.00
5 40% of utility and other expense 118,400.00
6 Total interest 3,379,468.80
7 Tax and insurance per year 6,000.00
TOTAL 5,628,038.80

G. Break Even point

S/N Descriptions Value in %

1 Break Even point= Fixed cost time*100 /Fixed cost 23.32%
+Profit
BEP=5,628,038.80*100/5,628,038.80+18,506,141.20

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