Investment Commission ANRS

Project Profile on the Establishment of

Galvanized Iron Sheet Products Fabrication
Plant

Development Studies Associates

(DSA)

Revised 2016
Bahir Dar
 Table of Contents

1. Executive Summary............................................................................................1
2. Product Description and Application..............................................................1
3. Market Study, Plant Capacity and Production Program..............................1
3.1 Market Study...................................................................................................................1
3.1.1 Present Demand and Supply....................................................................................1
3.1.2 Projected Demand....................................................................................................2
3.1.3 Pricing and Distribution...........................................................................................2
3.2 Plant Capacity..................................................................................................................2
3.3 Production Program.........................................................................................................2
4. Raw Materials and Utilities..............................................................................3
4.1 Availability and Source of Raw Materials.......................................................................3
4.2 Annual Requirement and Cost of Raw Materials and Utilities.......................................3
5. Location and Site...............................................................................................4
6. Technology and Engineering............................................................................4
6.1 Production Process...........................................................................................................4
6.2 Machinery and Equipment...............................................................................................4
6.3 Civil Engineering Cost....................................................................................................5
7. Human Resource and Training Requirement................................................5
7.1 Human Resource..............................................................................................................5
7.2 Training Requirement......................................................................................................6
8. Financial Analysis.............................................................................................6
8.1 Underlying Assumption...................................................................................................6
8.2 Investment........................................................................................................................7
8.3 Production Costs..............................................................................................................8
8.4 Financial evaluation.........................................................................................................8
9. Economic and Social Benefit and Justification...............................................9
ANNEXES...............................................................................................................11
 1. Executive Summary
This project envisages production of 27,500 different types of Galvanized Iron (GI) Sheet
Products per annum. The total investment requirement of the project including the working
capital is estimated at about Birr 1.16 million; of which nearly Birr 472 thousand is the cost of
the working capital and Birr 257 thousand is for machinery and equipments. Based on the cash
flow statement, the calculated internal rate of return (IRR) and simple rate of return (SRR) of the
project are 37.4 % and 29.1 %, respectively. The net present value (NPV) at 18 % discounting
rate is about Birr 688 thousand. The plant is expected to create employment opportunities for
about 17 persons.

2. Product Description and Application

A wide range of essential items can be fabricated from galvanized iron (GI) sheets in an
establishment equipped with more or less common and basic processing facilities. The
envisaged plant could produce dust bins for litter collection in streets and office compounds,
storage bins for grains and other items, buckets for carrying water and other liquids, bath tub,
gutter and etc from galvanized iron sheet.

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

The need for products produced from galvanized iron (GI) sheets is very high both in urban and
rural areas of Ethiopia. And, this is particularly true to ANRS. There is high demand for GI
products both in rural and urban areas of the region; the population uses them for different
purposes. These items are relatively bulky and can be transported to distant markets at high
transport cost. Presently, the regional demand for GI products is met from the suppliers located
in far places like Addis Ababa. Since there is no a separate recording of those products that
made from GI sheet, it is not possible to have reliable figures. However, given the above

1
mentioned facts, it is possible to conclude that there is a demand- supply gap regarding the
products. Thus, it is very important to manufacture these products in the region so that it is
possible to resolve the supply problem.

3.1.2 Projected Demand

Since there is no recording of those products made from GI sheet it is not possible to have
reliable figures. Besides, such items have very close substitutes. Thus, it is not possible to have a
reliable demand projection. However, it is possible to be certain that a small scale workshop
fabricating some tens of thousands of pieces of GI sheet products per annum faces unlimited
demand to its output.

3.1.3 Pricing and Distribution

The current market price of the items ranges from Birr 85 to Birr 154 per piece. The envisaged
plant plans to sell its products at an average factor gate price of Birr 110 per piece.

3.2 Plant Capacity

The envisaged plant capacity is estimated at 100 pieces of dust bin equivalent per a day (8 hrs) or
27,500 pieces per annum in a single shift basis. The plant is assumed to operate in a single shift
basis for 275 working days in a year; and this is set by deducting 52 Sundays, 13 public holidays,
15 days for annual maintenance and 10 days for unexpected work interruptions.

3.3 Production Program

The production program follows gradual capacity utilization due to technical reason. This refers
to the speed with which the operators assimilate the process know how. Accordingly, 85 %
capacity utilization is assumed for the first year of the operation while the second year onwards
100 % capacity utilization is assumed.

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 4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials

The major raw material required (GI sheet) can be obtained from Addis Ababa.

4.2 Annual Requirement and Cost of Raw Materials and Utilities

Raw material requirement for a full capacity single shift operation of the plant and the
corresponding cost estimates are given in Table 4.1.
TABLE 4.1
RAW MATERIALS REQUIREMENT

Qty. Cost In Birr

NO Material
Foreign Local Total
1 Galvanized Iron Sheets(for Bath
20,625M2
Tubs, Buckets, Storage Bins) 1,058,475 1,058,475
2 Mild Steel Sheets of different
Gauges(for Dust Bins and 13,750M2
Storage Bins) 705,650 705,650
3 Mild Steel Rods( for Bucket
Handles) 88,206 88,206
4 Mild Steel Angles( for Storage
Bins Bottom Rings) 35,283 35,283
5 Pipe Fittings and Taps( for Bath
Tubs) 17,641 17,641
6 Welding Materials 8,822 8,822
7 Rivets 4,411 4,411
8 Paints 4,619 4,619
Total 1,923,107 1,923,107

Annual electric consumption at 100 % capacity utilization in a single shift operation of the
plant shall be 110MWH. Total cost of electricity is estimated at Birr 60,500 per annum. The
plant does not need water for the purpose of production but it is normally needed for general
cleaning. Yearly water consumption is estimated to be 200 m3, and its cost amounts Birr 530.

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 TABLE 4.2
UTILITIES REQUIREMENT
No. Utility Requirement Unit Price Cost
(Annual) (Birr)
1. Electricity 110,000 KWH Birr 0.55 /KWH 60,500
2. Water 200 m3 Birr 2.65 /m3 530
Total 61,030

5. Location and Site

For its convenience for distribution to different parts of the region, Bahir-Dar is an appropriate
choice for the GI sheet products fabricating plant in Amhara region.

6. Technology and Engineering

6.1 Production Process

Production of the range of items made from GI sheet involves basically the process of shearing;
rolling; rounding or circle cutting; bottom forming; welding or riveting; assembling or fittings of
handles, lids, hinges and rings; finishing (polishing and painting) and inspection.
There is no alternative technology to produce GI sheet products.

6.2 Machinery and Equipment

The list of machinery and equipment required to produces GI sheet products is given below in
Table 6.1.
TABLE 6.1
MACHINERY & EQUIPMENT
Item
1. Shearing Machine
2. Circle Cutting Machine
3. Bar Bending Equipment
4. Bar Cutting Equipment
5. Sheet bending Roller
6. Press
7. Welding Set
8. Riveting Machine
9. Bench Drill
10. Other Hand Tools and Measuring Instruments

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The total cost of machinery and equipment is estimated at Birr 257 thousand all of which can be
procured from the local machinery market.
Machinery Suppliers’ Address:
All the necessary machinery and equipments are procured locally from local suppliers located at
Piassa in Addis.

6.3 Civil Engineering Cost

The total land area of the plant, including the open space is 500 m 2 , and its lease cost equals Birr
30,000. Required covered area (including storage, production and facilities) is 200 m 2 of which
100 m2 is assumed to be galvanized corrugated iron sheet walled and the rest is just a simple
shed. The construction cost of the covered area including cost of land clearing and fencing is
estimated to be Birr 385 thousand. The cost of the land lease is as per ANRS land lease rate for
Bahir-Dar which is equal to Birr 60 per sq m for industrial purpose. Of the total cost of the lease,
5% is paid in the beginning while the rest will be paid in 40years.

7. Human Resource and Training Requirement

7.1 Human Resource
Details of the manpower requirement of the plant is shown in Table 7.1
Table 7.1
MANPOWER REQUIREMENT
Description No Monthly Annual
Salary Salary (Birr)
(Birr)
A. Administration
1. Manager/Supervisors/Store Keeper 1 3079.2 36,950
2.Seretary/Cashier 1 2052.8 24,634
3.Guards 2 769.8 18,475
Sub-total 4 0 80,059
B. Production 0 0
1. Skilled Workers (Operators and 5
2052.8 123,168
Welders)
2. Unskilled Workers (Assistants) 8 769.8 73,901
Benefits (20%)   55,426
17 332,554
The total annual wages and salary, including 20 % benefits, amount to Birr 332,554.

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 7.2 Training Requirement

Since fabricating GI sheet products is very common in Ethiopia, it is not necessary to have a
special training program.

8. Financial Analysis
8.1 Underlying Assumption

The financial analysis of GI Sheet Products fabricating plant is based on the data provided in the
preceding chapters and the following assumptions.

A. Construction and Finance

Construction Period 2 Years

Source Of Finance 30% Equity and 70% Loan
Tax Holidays 2 Years
Bank Interest Rate 12%
Discount For Cash Flow 18%
Value Of Land Based on Lease Rate of ANRS
Spare Parts, Repair & Maintenance 3% of the Fixed Investment

B. Depreciation

Building 5%
Machinery And Equipment 10%
Office Furniture 10%
Vehicles 20%
Pre-Production (Amortization) 20%

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 C. Working Capital (Minimum Days of Coverage)
Raw Material-Local 30 Days
Raw Material-Foreign 120 Days
Factory Supplies In Stock 30 Days
Spare Parts In Stock And Maintenance 30 Days
Work In Progress 10 Days
Finished Products 15 Days
Accounts Receivable 30 Days
Cash In Hand 30 Days
Accounts Payable 30 Days

8.2 Investment
The total investment cost of the project including working capital is estimated at Birr 1.16
million as shown in Table 8.1 below. The Owner shall contribute 30% of the finance in the form
of equity while the remaining 70% is to be financed by bank loan.
TABLE 8.1
TOTAL INITIAL INVESTMENT

Items L.C F.C Total

Land 3,849
1,500  
Building and Civil Works 384,900
150,000  
Office Equipment 12,830
5,000  
Vehicles 0
0  
Plant Machinery & Equipment 256,600
100,000 0
Total Fixed Investment Cost 658,179
256,500 0
Pre Production Capital 32,909
Expenditure* 12,825  
Total Initial Investment 691,088
269,325 0
Working Capital at Full Capacity 471,320
183,679 0
Total 453,004 0 1,162,408
*Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee during
construction and expenses for company‘s establishment, project administration expenses, commission expenses,
preproduction marketing and interest expenses during construction.
The foreign component of the project is zero.

7
 8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 1 million (See Table 8.2).
Raw materials and utilities account for 81 %.
Table 8.2
PRODUCTION COST AT FULL CAPACITY

Raw Material Requirement Cost

1.Local Raw Materials 1,923,106.66
2.Foreign raw Materials 0

Total Production Cost at full Capacity

Items Cost
1.      Raw Materials 1,923,106.66

2.      Utilities 156,602.98

3.      Wages and Salaries 332,553.60

4.      Spares and Maintenance 19,745.37

Factory costs 2,432,008.61

5.      Depreciation 52,769.79

6.      Financial costs 83,692.66

  Total Production Cost 2,568,471.06

8.4 Financial evaluation

I. Profitability
According to the projected income statement (See Annex 4) the project will generate profit
beginning from the first year of operation and increases on wards. The income statement and
other profitability indicators also show that the project is viable.
II. Breakeven Analysis
The breakeven point of the projects is given by the formula:

BEP = Fixed Cost

Sale –Variable Cost at full capacity.
The project will break even at 29.4 % of capacity utilization

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 III. Payback Period
Investment cost and income statement projection are used in estimating the project payback
period. The project will payback fully the initial investment less working capital in two years.

IV. Simple Rate of Return

The project’s simple rate of return (SRR) is given by the formula:

SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.

The SRR would be 29.1 % at full capacity utilization.

V. Internal Rate of Return and Net Present Value

Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR) of the
project is 37.4 % and the net present value (NPV) at 18 % discount is Birr 686 thousands.

VI. Sensitivity Analysis

The sensitivity test result which undertaken by increasing the cost of production by 10 % still
indicates that the project would be viable.

9. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained earlier. In
general, the envisaged project promotes the socio-economic goals and objectives stated in the
strategic plan of the Amhara National Regional State. These benefits are listed as follows:

A. Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 308 thousand
per year and Birr 3.1 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.

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 B. Tax Revenue

In the project life under consideration, the region will collect about Birr 1.1 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region

C. Employment and Income Generation

The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide permanent employment to 17 skilled labor as well as support
stuffs. Consequently the project creates income of Birr 334 thousands per year. This would be
one of the commendable accomplishments of the project.

D. Pro Environment Project

The proposed production process is environment friendly.

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ANNEXES

11
Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
Capacity Utilization (%) - - 533,589 627,752 627,752 627,752
1. Total Inventory - - 178,324 209,793 209,793 209,793
Raw Materials in Stock- Total - - 178,324 209,793 209,793 209,793
Raw Material-Local - - - - - -
Raw Material-Foreign - - 2,304 2,711 2,711 2,711
Factory Supplies in Stock - - 1,831 2,154 2,154 2,154
Spare Parts in Stock and Maintenance - - 57,602 67,767 67,767 67,767
Work in Progress - - 115,203 135,533 135,533 135,533
Finished Products - - 274,819 323,316 323,316 323,316
2. Accounts Receivable - - 45,358 53,363 53,363 53,363
3. Cash in Hand - - 675,441 794,637 794,637 794,637
CURRENT ASSETS - - 274,819 323,316 323,316 323,316
4. Current Liabilities - - 274,819 323,316 323,316 323,316
Accounts Payable - - 400,623 471,321 471,321 471,321
TOTAL NET WORKING CAPITAL
REQUIRMENTS - - 400,623 70,698 - -
INCREASE IN NET WORKING CAPITAL - - 533,589 627,752 627,752 627,752

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 Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
PRODUCTION
  5 6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100% 100%
1. Total Inventory 627,752 627,752 627,752 627,752 627,752 627,752
Raw Materials in Stock-Total 209,793 209,793 209,793 209,793 209,793 209,793
Raw Material-Local 209,793 209,793 209,793 209,793 209,793 209,793
Raw Material-Foreign - - - - - -
Factory Supplies in Stock 2,711 2,711 2,711 2,711 2,711 2,711
Spare Parts in Stock and Maintenance 2,154 2,154 2,154 2,154 2,154 2,154
Work in Progress 67,767 67,767 67,767 67,767 67,767 67,767
Finished Products 135,533 135,533 135,533 135,533 135,533 135,533
2. Accounts Receivable 323,316 323,316 323,316 323,316 323,316 323,316
3. Cash in Hand 53,363 53,363 53,363 53,363 53,363 53,363
CURRENT ASSETS 794,637 794,637 794,637 794,637 794,637 794,637
4. Current Liabilities 323,316 323,316 323,316 323,316 323,316 323,316
Accounts Payable 323,316 323,316 323,316 323,316 323,316 323,316
TOTAL NET WORKING CAPITAL
REQUIRMENTS 471,321 471,321 471,321 471,321 471,321 471,321
INCREASE IN NET WORKING CAPITAL - - - - - -

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Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 344,197 813,681 2,783,101 3,000,488 2,952,180 2,952,180
1. Inflow Funds 344,197 813,681 273,748 48,308 - -
Total Equity 137,679 325,473 - - - -
Total Long Term Loan 206,518 488,209 - - - -
48,30
Total Short Term Finances - - 273,748 8 - -
2. Inflow Operation - - 2,509,353 2,952,180 2,952,180 2,952,180
Sales Revenue - - 2,509,353 2,952,180 2,952,180 2,952,180
Interest on Securities - - - - - -
3. Other Income - - - - - -
TOTAL CASH OUTFLOW 344,197 344,197 2,920,579 2,753,877 2,739,497 2,729,771
4. Increase In Fixed Assets 344,197 344,197 - - - -
Fixed Investments 327,807 327,807 - - - -
Pre-production Expenditures 16,390 16,390 - - - -
5. Increase in Current Assets - - 672,809 118,731 - -
6. Operating Costs - - 2,071,849 2,435,991 2,435,991 2,435,991
7. Corporate Tax Paid - - - - 118,246 122,414
8. Interest Paid - - 175,922 83,367 69,473 55,578
9.Loan Repayments - - - 115,788 115,788 115,788
10.Dividends Paid - - - - - -
Surplus(Deficit) - 469,484 (137,479) 246,612 212,683 222,409
Cumulative Cash Balance - 469,484 332,005 578,617 791,300 1,013,709

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 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 2,952,180 2,952,180 2,952,180 2,952,180 2,952,180 2,952,180
1. Inflow Funds - - - - - -
Total Equity - - - - - -
Total Long Term Loan - - - - - -
Total Short Term Finances - - - - - -
2. Inflow Operation 2,952,180 2,952,180 2,952,180 2,952,180 2,952,180 2,952,180
Sales Revenue 2,952,180 2,952,180 2,952,180 2,952,180 2,952,180 2,952,180
Interest on Securities - - - - - -
3. Other Income - - - - - -
TOTAL CASH OUTFLOW 2,720,045 2,712,285 2,702,559 2,577,045 2,577,045 2,577,045
4. Increase In Fixed Assets - - - - - -
Fixed Investments - - - - - -
Pre-production
Expenditures - - - - - -
5. Increase in Current Assets - - - - - -
6. Operating Costs 2,435,991 2,435,991 2,435,991 2,435,991 2,435,991 2,435,991
7. Corporate Tax Paid 126,582 132,718 136,886 141,054 141,054 141,054

8. Interest Paid 41,684 27,789 13,895 - - -

9. Loan Repayments 115,788 115,788 115,788 - - -
10.Dividends Paid - - - - - -
Surplus(Deficit) 232,135 239,895 249,621 375,135 375,135 375,135
Cumulative Cash Balance 1,245,845 1,485,739 1,735,360 2,110,495 2,485,630 2,860,765

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Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW - - 2,509,353 2,952,180 2,952,180 2,952,180

1. Inflow Operation - - 2,509,353 2,952,180 2,952,180 2,952,180

Sales Revenue - - 2,509,353 2,952,180 2,952,180 2,952,180

Interest on Securities - - - - - -

2. Other Income - - - - - -

TOTAL CASH OUTFLOW 344,197 344,197 2,470,910 2,506,413 2,435,991 2,558,405

3. Increase in Fixed Assets 344,197 344,197 - - - -

Fixed Investments 327,807 327,807 - - - -

Pre-production Expenditures 16,390 16,390 - - - -

4. Increase in Net Working Capital - - 399,061 70,423 - -

5. Operating Costs - - 2,071,849 2,435,991 2,435,991 2,435,991

6. Corporate Tax Paid - - - - - 122,414

NET CASH FLOW (344,197) (344,197) 38,443 445,767 516,189 393,775

CUMMULATIVE NET CASH FLOW (344,197) (688,395) (649,952) (204,185) 312,005 705,780

Net Present Value (at 18%) (344,197) (291,693) 27,609 271,307 266,245 172,123

Cumulative Net present Value (344,197) (635,890) (608,281) (336,973) (70,729) 101,394

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 2,963,730 2,963,730 2,963,730 2,963,730 2,963,730 2,963,730

1. Inflow Operation 2,963,730 2,963,730 2,963,730 2,963,730 2,963,730 2,963,730

Sales Revenue 2,963,730 2,963,730 2,963,730 2,963,730 2,963,730 2,963,730

Interest on Securities - - - - - -

2. Other Income - - - - - -

TOTAL CASH OUTFLOW 2,572,599 2,578,758 2,582,943 2,587,127 2,587,127 2,587,127

3. Increase in Fixed Assets - - - - - -

Fixed Investments - - - - - -

Pre-production Expenditures - - - - - -
4. Increase in Net Working Capital - - - - - -

5. Operating Costs 2,445,521 2,445,521 2,445,521 2,445,521 2,445,521 2,445,521

6. Corporate Tax Paid 127,078 133,237 137,422 141,606 141,606 141,606

NET CASH FLOW 391,131 384,972 380,787 376,603 376,603 376,603

CUMMULATIVE NET CASH FLOW 1,099,672 1,484,644 1,865,432 2,242,034 2,618,637 2,995,239

Net Present Value (at 18%) 144,887 120,852 101,304 84,907 71,955 60,979

Cumulative Net present Value 246,678 367,530 468,834 553,742 625,697 686,676
Net Present Value (at 18%) 686,676
Internal Rate of Return 37.4%

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Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
  1 2 3 4 5
Capacity Utilization (%) 85% 100% 100% 100% 100%

1. Total Income 981,750 1,155,000 1,155,000 1,155,000 1,155,000

Sales Revenue 981,750 1,155,000 1,155,000 1,155,000 1,155,000
Other Income - - - - -
2. Less Variable Cost 763,241 897,930 897,930 897,930 897,930
VARIABLE MARGIN 218,509 257,070 257,070 257,070 257,070
(In % of Total Income) 22.26% 22.26% 22.26% 22.26% 22.26%
3. Less Fixed Costs 67,907 75,683 75,683 75,683 75,683
OPERATIONAL MARGIN 150,603 181,387 181,387 181,387 181,387
(In % of Total Income) 15.34% 15.70% 15.70% 15.70% 15.70%
4. Less Cost of Finance 68,827 32,616 27,180 21,744 16,308
5. GROSS PROFIT 81,776 148,771 154,207 159,643 165,079
6. Income (Corporate) Tax - - 46,262 47,893 49,524
7. NET PROFIT 81,776 148,771 107,945 111,750 115,555
RATIOS (%)  
Gross Profit/Sales 8.33% 12.88% 13.35% 13.82% 14.29%
Net Profit After Tax/Sales 8.33% 12.88% 9.35% 9.68% 10.00%
Return on Investment 35.40% 40.04% 29.83% 29.47% 29.11%
Return on Equity 45.13% 82.10% 59.57% 61.67% 63.77%

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 Annex 4: NET INCOME STATEMENT (in Birr):Continued
PRODUCTION
  6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 1,155,000 1,155,000 1,155,000 1,155,000 1,155,000

Sales Revenue 1,155,000 1,155,000 1,155,000 1,155,000 1,155,000
Other Income - - - - -
2. Less Variable Cost 897,930 897,930 897,930 897,930 897,930
VARIABLE MARGIN 257,070 257,070 257,070 257,070 257,070
(In % of Total Income) 22.26% 22.26% 22.26% 22.26% 22.26%
3. Less Fixed Costs 73,118 73,118 73,118 73,118 73,118
OPERATIONAL MARGIN 183,952 183,952 183,952 183,952 183,952
(In % of Total Income) 15.93% 15.93% 15.93% 15.93% 15.93%
4. Less Cost of Finance 10,872 5,436 - - -
5. GROSS PROFIT 173,080 178,516 183,952 183,952 183,952
6. Income (Corporate) Tax 51,924 53,555 55,186 55,186 55,186
7. NET PROFIT 121,156 124,961 128,766 128,766 128,766
RATIOS (%)  
Gross Profit/Sales 14.99% 15.46% 15.93% 15.93% 15.93%
Net Profit After Tax/Sales 10.49% 10.82% 11.15% 11.15% 11.15%
Return on Investment 29.14% 28.78% 28.42% 28.42% 28.42%
Return on Equity 66.86% 68.96% 71.06% 71.06% 71.06%

19
Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 344,197 1,157,879 1,640,645 1,953,423 2,113,542 2,283,387
1. Total Current Assets - 469,484 1,004,814 1,370,157 1,582,840 1,805,249
Inventory on Materials and Supplies - - 181,748 213,822 213,822 213,822
Work in Progress - - 57,377 67,503 67,503 67,503
Finished Products in Stock - - 114,754 135,005 135,005 135,005
Accounts Receivable - - 273,748 322,056 322,056 322,056
Cash in Hand - - 45,181 53,155 53,155 53,155
Cash Surplus, Finance Available - 469,484 332,005 578,617 791,300 1,013,709
Securities - - - - - -
2. Total Fixed Assets, Net of Depreciation 344,197 688,395 635,831 583,266 530,702 478,138
Fixed Investment - 327,807 655,614 655,614 655,614 655,614
Construction in Progress 327,807 327,807 - - - -
Pre-Production Expenditure 16,390 32,781 32,781 32,781 32,781 32,781
Less Accumulated Depreciation - - 52,564 105,128 157,692 210,257
3. Accumulated Losses Brought Forward - - - - - -
4. Loss in Current Year - - - - - -
TOTAL LIABILITIES 344,197 1,157,879 1,640,645 1,953,423 2,113,542 2,283,387
5. Total Current Liabilities - - 273,748 322,056 322,056 322,056
Accounts Payable - - 273,748 322,056 322,056 322,056
Bank Overdraft - - - - - -
6. Total Long-term Debt 206,518 694,727 694,727 578,939 463,151 347,364
Loan A 206,518 694,727 694,727 578,939 463,151 347,364
Loan B - - - - - -
7. Total Equity Capital 137,679 463,151 463,151 463,151 463,151 463,151
Ordinary Capital 137,679 463,151 463,151 463,151 463,151 463,151
Preference Capital - - - - - -
Subsidies - - - - - -
8. Reserves, Retained Profits Brought Forward - - - 209,018 589,276 865,183
9.Net Profit After Tax - - 209,018 380,258 275,907 285,633
Dividends Payable - - - - - -
Retained Profits - - 209,018 380,258 275,907 285,633

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Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 2,656,845 2,860,458 3,189,585 3,518,712 3,847,839 2,656,845
1. Total Current Assets 2,277,279 2,526,900 2,902,035 3,277,170 3,652,305 2,277,279
Inventory on Materials and Supplies 213,822 213,822 213,822 213,822 213,822 213,822
Work in Progress 67,503 67,503 67,503 67,503 67,503 67,503
Finished Products in Stock 135,005 135,005 135,005 135,005 135,005 135,005
Accounts Receivable 322,056 322,056 322,056 322,056 322,056 322,056
Cash in Hand 53,155 53,155 53,155 53,155 53,155 53,155
Cash Surplus, Finance Available 1,485,739 1,735,360 2,110,495 2,485,630 2,860,765 1,485,739
Securities - - - - - -
2. Total Fixed Assets, Net of Depreciation 379,566 333,558 287,550 241,542 195,534 379,566
Fixed Investment 655,614 655,614 655,614 655,614 655,614 655,614
Construction in Progress - - - - - -
Pre-Production Expenditure 32,781 32,781 32,781 32,781 32,781 32,781
Less Accumulated Depreciation 308,829 354,837 400,845 446,853 492,861 308,829
3. Accumulated Losses Brought Forward - - - - - -
4. Loss in Current Year - - - - - -
TOTAL LIABILITIES 2,656,845 2,860,458 3,189,585 3,518,712 3,847,839 2,656,845
5. Total Current Liabilities 322,056 322,056 322,056 322,056 322,056 322,056
Accounts Payable 322,056 322,056 322,056 322,056 322,056 322,056
Bank Overdraft - - - - - -
6. Total Long-term Debt 115,788 - - - - 115,788
Loan A 115,788 - - - - 115,788
Loan B - - - - - -
7. Total Equity Capital 463,151 463,151 463,151 463,151 463,151 463,151
Ordinary Capital 463,151 463,151 463,151 463,151 463,151 463,151
Preference Capital - - - - - -
Subsidies - - - - - -
8. Reserves, Retained Profits Brought Forward 1,446,175 1,755,850 2,075,251 2,404,378 2,733,505 1,446,175
9. Net Profit After Tax 309,675 319,401 329,127 329,127 329,127 309,675
Dividends Payable - - - - - -
Retained Profits 309,675 319,401 329,127 329,127 329,127 309,675

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