PROJECT PROPOSAL FOR INVESTMENT ON

GARMENT FACTORY
PROJECT TO BE IMPLEMENTED IN ADDISE
ABEBA REGION, ADDIS ABABA CITY
ADMINISTRATION

PROMOTER: IFA JADA

Feb 2017
ADDIS
Oct, 2022
ABABA,
ADDISE ABEBA, ETHIOPIA
ETHIOPI
1 A
Contents

EXECUTIVE SUMMARY.........................................................................................................................4

1. Introduction.........................................................................................................................................5

2. The Project Area..................................................................................................................................6

2.1. Infrastructure....................................................................................................................................6

2.2. Communication and Power Services................................................................................................7

2.3. Power Services.................................................................................................................................7

2.4 Population and Economic Activities..................................................................................................7

3. Description of the Project....................................................................................................................8

4. Objectives of the Project......................................................................................................................9

5. Production Program and Plant Capacity............................................................................................10

5.1. Production Program........................................................................................................................10

5.2. Technology and Engineering..........................................................................................................11

6. Market Analysis.................................................................................................................................11

6.1. Global Overview Of Textile And Apparel Industry...................................................................11

6.2. The Structure of the Textile Industry.........................................................................................12

6.3. National Overview Of Textile And Apparel Industry................................................................13

6.4. Market Strategy.........................................................................................................................17

6.5. Price analysis.............................................................................................................................18

6.6. Market Operational Dimension..................................................................................................19

6.7. Marketing Information System..................................................................................................19

7. SWOT Analysis.................................................................................................................................20

A. Strength.........................................................................................................................................20

B. Weakness.......................................................................................................................................20

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 C. Opportunities.................................................................................................................................20

D. Threat............................................................................................................................................20

8. Raw Material and Inputs....................................................................................................................21

A. Raw Material Requirements..........................................................................................................21

B. Utilities..........................................................................................................................................21

9. ORGANIZATION AND MANAGEMENT......................................................................................22

9.1. Organizational Structure............................................................................................................22

9.2. Man Power Requirements With Qualifications..........................................................................25

9.3. Skilled and Unskilled Workers..................................................................................................27

9.4. Training Requirement...............................................................................................................27

10. Financial Analysis.........................................................................................................................28

10.1. Total Investment Costs..........................................................................................................28

10.2. Fixed Investment Cost...........................................................................................................30

10.3. Work Capital Requirements...................................................................................................33

10.4. Projected Financial Statements..............................................................................................35

10.5. Production Programed and Sales Forecast.............................................................................35

10.6. Revenue Projection................................................................................................................36

10.7. Projected Income Statements.................................................................................................38

10.8. Projected Cash flow Statements.............................................................................................39

10.9. Projected Balance Sheet of the Project...................................................................................40

11. Environmental Aspects..................................................................................................................41

12. Project Implementation Schedule and Land Use Plan....................................................................42

A. Project Implementation Schedule....................................................................................................42

B. Project Land Use Plan...................................................................................................................43

13. Risk Assessment............................................................................................................................44

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4
 EXECUTIVE SUMMARY

1. Project name GARMENT FACTORY

2. Project Owner IFA JADA

3. Nationality Ethiopian

4. Project Location ABEBA REGION, ADDIS ABABA CITY ADMINISTRATION

5. Project Garment factory specialized in the production of quality and affordable Men and
Composition Ladies suits, Trousers, T- shirt, Underwear etc.

6. Premises 1 hectare, which is equivalent to 4,000M2

Required
7. Total Capital Br. 10,000,000 of which 30% equivalent to Br. 3,000,000.00 financed by the
owner equity and the rest 70% equivalent to Br. 7,000,000.00 financed through
bank loan

8. Employment The total manpower required for the plant will be 510 employees
Opportunity
 Permanent workers 448
 Skilled 310
 Unskilled 138
 Temporary workers 62
 Skilled 2
 Unskilled 60
9. Market Share 30% for domestic market and 70% for export.

10. Technology Modern Garment Technology

11. Benefits of the Produce and supply of quality Garment Products, source of Revenue, Employment
factory For The opportunity, Save Foreign currency, Benefit for the Local Community and
Region/ Country Stimulate the Local Economy

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 1. Introduction
Ethiopia has in placed policies, strategies and related legal frameworks aiming to transform its
economy from that dominated by agriculture towards an industry with the ultimate goal of
achieving a middle income nation by 2025. To realize this structural economic transformation,
the Ministry of Industry as a center of driving force working towards the effective
implementation of such policies and strategies.

Based on the country’s export led industrialization policy, a great effort has been made in
revising and updating the legal frame works, working procedures and guidelines, supporting
institutional setups, and building industrial supporting infrastructure in general so as to achieve
the vision 2025 and the growth and transformation plan of the country. In this regard Ethiopia is
working to attract and encourage domestic investment and FDI with major focuses on export
ones. In addition to facilitating the necessary legal frame works, and incentive mechanisms,
there is an effort in developing cluster zones by sector to serve the basic infrastructure and
control the environmental impacts of the specific sectors. The Ethiopian Government has learnt
from the experience of other countries that cluster zonation has played a vital role in enhancing
the inflow of FDI.

The Industrial Development Strategy of Ethiopia has ranked some sectors as core sectors so that
to facilitate and provide prioritized and strategic support from the government. Accordingly, the
textile and apparel sub sector has ranked as the first core subsector due to certain reasons in the
Ethiopian context. The surplus labor force available in the country and being labor intensive
nature of textile and apparel sector, the availability of worldwide market for textile are some
reasons for the subsector to being ranked as first even from the prioritized sector. Moreover, the
textile sector utilizes cotton as its main inputs so that it can create conducive opportunity for
agricultural developments; it has high back-ward linkages.

Targeting the textile sector as a key economic activity towards harnessing the growth of the
national economy, the government of Ethiopia in its five years growth and Transformation plan
has set out to generate 1 billion us dollars and increasing total price of the end of the sector’s
product to 2.5 billion us dollars by the end of the plan period. The performance so far including
the year 2012/2013 (2005 Et. physical year) is very far from the plan target and needs much

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Effort to be done. The existing situations shows that to achieve the envisaged export target, in
addition to improving the productivity and product quality of the existing textile and apparel
industry through renovation and expansion, it seems to be an assignment to the government to
attract additional foreign and domestics textile and apparel investments.

On other hand worldwide market opportunities, and wide domestic market, the cheaper & easily
trainable work force, the conducive policy environment and government close support to the
sector, are no doubt that can be a good spring board to realize the inflow of FDI and domestic
investors. The government of Ethiopia is also trying to do the said assignment by allocating big
land area to the sector, segmenting the investment areas by sectorial cluster giving special
attention and building industrial infrastructure such as; industrial zones by its own, jointly with
private sector, and allowing the private sector to build and lease.

Encouraged by the incentives, the Promoter planned to commit his resources in the garment
industry establishment. Therefore, this project study is prepared to assess the feasibility of
investing on the garment factory.

2. The Project Area

The envisaged project is aimed to be established in Addis Ababa City Administration the
National Regional Sate of Addis Ababa Region where the Djibouti- Addis Ababa Region rail
way line ends. So, it will have a good advantage for logistical issues in relation to import and
export.

The area is set by the regional government as an industrial area which industrial establishments
are being directed towards it and it is clustered by different sectors and economic activities.
Different domestic and foreign investors already took land and started investment in the area and
the area is developing very well.

2.1. Infrastructure
Infrastructure development is crucial for attracting investors who would like to commit their
resources and lifetime savings. To this end, it can be witnessed that the infrastructure
development in the area is well developed.

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  Road and Transport
The project area is located in the outskirts of Addis Ababa with the South western parts of Ethiopia
passes through the area. This main high way takes this road is mainly used as the main road for
transporting the forest coffee products of Unlike the Nefase Silek Lafeto K/k /Lebu/

 Bus station
The Project area is not yet well developed as a town and it doesn’t have bus station. However, with the
establishment of big industries and the consequential urbanization, it is expected that the moment of
people to and from this area will increase which demands the establishment of bus station in the area.

2.2. Communication and Power Services

 Telecommunication: It is expected that the Ethio-Telecom is considering to set-up
telecom service infrastructure in the area to support the industrialization.
 Postal Service: it is found that there is no postal service around The Project Area.
Thus, there is a need for having standardized postal offices in the town.

2.3. Power Services

The national power grid line of Ethiopian Electric Power Corporation passes through near the project
area and it is near to the Nefase Selek Lafeto K/k /Lebu/ Sub-station. Due to its proximity to the nearby
EEPCo sub-station, it is expected that the power supply for the project to be sourced from this
substation in a 33kv direct power line. This will enable the proposed project to get un-interrupted
electric power.

2.4 Population and Economic Activities

The proposed project area is a rural area where the population is leaving in a scattered and
dispersed settlement. There is no official figure to show the population estimate. The population
is mainly engaged in the farming activities mainly commercial and cereal crops through rain-fed
agriculture. However, with the industrialization of the area and the consequential urbanization,
the population of the area and the economic activity is expected to grow.

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 3. Description of the Project
This project study is for the establishment of garment and textile assortment in the National
Regional Sate of Addis Ababa Region, Nefase Silek Lafeto K/k /Lebu/.

The garment assembly process will start with cutting to size as per different design and patterns
as the fashion and style of the pieces. The assembling (sewing) process involves among others
stitching, buttoning and label attaching while finishing operation includes trimming, ironing and
packing.

In cutting section, the knitted fabric will be spread on the spreading table and then cut as per the
specified design mark. The fabric that is cut in specific pattern will be handled in respective
stitching lines to produces items like T-shirts, polo shirts, trousers, over coats, gown etc. The
major production process flow chart involves the following.

Cutting Sewing Finishing Packing

The detailed production process of the major three lines is as shown below:

A) Process Flow of the Cutting Section

Determining the Quantity of spreading cloth

Fabric from warehouse

Cloth spreading

Pattern Making

Cutting

Head cutting with knife

Numbering

Classifying

Sorting and certifying

Sewing

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B) Process Flow of the Sewing Section
Receiving from cutting section

Sewing each part and decoration making

Assembly

Button making

Inspection

Supply to finishing section

C) Process Flow of the Finishing Section

Receiving from sewing section

Ironing

Folding

Inspection

Assorting

Packing

Finished goods store

4. Objectives of the Project

The main objective of the project is manufacturing of quality and standardized garment and
textile stitching for earning sustainable income that assures company’s growth. The other
related objectives are stated herein below:

 Maximize profits to the owners who have committed their

financial resources in anticipation of better opportunities,
 Stimulate large scale production of good quality garment
and textile stitching in Ethiopia

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  To substitute the present imports and to export part of its
outputs to foreign markets thereby generating foreign earnings for our country,
 Generate employment opportunity to the local peoples and
thereby contribute to poverty reduction effort of the country,
 To provide useful technical and quality control skills to the
employees,
 To create dependable market to local firms that have
capacity to supply raw materials,

5. Production Program and Plant Capacity

5.1. Production Program

The production building will be a one floor and it will be built on the 4,000 M 2 area of land. Part
of the ground floor will be used as cutting and accessories area and/or warehouse and the
remaining part will be used as partially sewing, inspection, ironing and packing area. The 1st
floor will be used for the sewing, inspection, ironing and packing purpose too.

A total of 500 sets of sewing machines will be procured for the above products production.
Cutting machines and spreading tables will also be manufacturing.

The plant will start its production with 70% in the first year, 80% in the second year and 90% in
the 3rd year and afterwards. The product items that will be produced by the project are detailed as
follow with their share.

Sr. No. Items Share (%) Unit of Measure Qty.

1 Suiting’s   pcs 3,000
  Sub total      
1 Garment   pcs 2,100,000
1.1 Jogging Pant 20% pcs 420,000
1.2 Pajama/home wear 25% pcs 525,000
1.3 Polo Shirt 20% pcs 420,000
1.4 T-shirts 10% pcs 210,000
1.5 Sweat shirt 10% pcs 210,000
1.6 Waist 5% pcs 105,000
1.7 Top 5% pcs 105,000

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 1.8 Ladies materials 5% pcs 105,000

5.2. Technology and Engineering

The company planned to purchase the best and well known world brands from different countries
that have been used by major garment producers. The machines will be user friendly and can be
easily adaptable to the workers.

Most of the technologies used will both from abroad. It will be sourced from Yamato, Brother,
Kansai special, Juki, etc. brands.

6. Market Analysis

6.1. Global Overview Of Textile And Apparel Industry

The textile and apparel industry was the first manufacturing industry to have a global dimension.
This sector is the most geographically dispersed of all industries across both developed and
developing countries. In the first industrial revolution of the 18th and 19th centuries in Britain,
U.S., Germany, France, and the Netherlands, the textile and apparel industry was a base. Textile
and apparel could be manufactured using relatively simple technology and low-skill labor. The
traditional craft skills of hand spinning, weaving and sewing were served as basis for larger-
scale textile and apparel industrial application. The geographical trends in the production of
textile and apparel industry shows a clear pattern of continues decline in the developed countries
producers and a geographical shift of production to developing countries. Currently China by far
distant leads the global textile and apparel production, employment, investment and trade.
Besides factors endowment, mainly cheap labor and cotton costs, the existence of Multi Fiber
Agreements (complex system of National quotas), rapid technological innovations in production
and distribution process significantly contribute to continual geographical shift of this sector.

The global textile and apparel industry trade has faced major structural changes and complexities
due to regulations set by the importing countries. The world trade in textile and apparel was
governed by short term agreement (STA) during 1961, which was replaced by long term
agreement (LTA) in 1962. To protect domestic industry, the developed countries (United State of
America, Canada and Europe) came up with a more comprehensive trade restriction proposal
known as Multi Fiber Agreement (MFA) in 1973 which became effective in 1974. Under the

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MFA regime, the trade in textile and apparel set quotas with bilateral negotiation for the amount
that other countries could export to these countries and the developing countries were allowed to
protect the domestic industry against the competitive imports.

More than 30 years, export of textile and apparel product between developed and developing
countries have been tightly regulated by quotas. In the history of textile and apparel industry
development, no country has ever tried to develop its textile and apparel sector without applying
some protection for its infant industries before opening up to competition. No industry was able
to survive in open competition for domestic or foreign markets before it had a chance to mature
within a protected environment. Customs duties and other protective measures were always
intended to equalize productivity differences among competitors. Quota has also permitted many
smaller, less competitive countries to participate in international trade providing them with
economic and social benefits such as FDI, construction of infrastructure, employment and
foreign exchange earnings. U.S. International Trade Commission estimated that one direct job in
textile and apparel industry can lead in to two supporting (or indirect) jobs in service and
supplier industry.

6.2. The Structure of the Textile Industry

The structure of the textile industry has changed significantly. While a hundred years ago the
majority of textile production was concentrated in Europe and North America, most textiles and
clothing are now manufactured in Asia, particularly in China and India. According to Textile
Exchange, many international textile and clothing firms have moved production to Asia to take
advantage of the rich supply of raw material and cheaper labor. China produces around 45
percent of the world's textiles and garments, and India makes approximately 20 percent.
Pakistan, Vietnam, Cambodia and Bangladesh are also becoming increasingly influential within
the structure of the textile industry, but yet contribution of Ethiopia is insignificant compared to
other countries.

The global textile and apparel market attracts revenues of approximately $500 billion per year
and is expected to grow to around $800 billion by 2014, reports Textile Exchange. In terms of
the textile industry's structure, figures from the EU suggest the U.S. continues to be the biggest
consumer of textiles and apparel, with a 9.6 percent share. Other major consumers include
Turkey, Tunisia, Switzerland, Morocco, China, Russia, Hong Kong, Ukraine and Japan.

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The global textile and clothing industry comprises a reasonably long chain. It starts with the
polymer, which is used to make the textile fiber. This textile fiber becomes a yarn; either by
being spun with other fibers of the same type or with one or more different fiber types to give it a
wider range of properties. The yarn can then be used alone or combined with other yarns to make
a fabric, which then becomes a garment, home furnishing or other textile item. Some textile
companies cover all of these phases, but the majority work with other industry partners within
the textile supply chain.

The future global textile and apparel trade would depend on the current investment on this sector.
There has been a clear shift in the investment patterns in the global textile and apparel industry
towards Asian countries over the last 10 years. The largest investments in textile machinery have
been made in China, India, Pakistan and Bangladesh.

6.3. National Overview Of Textile And Apparel Industry

Ethiopian traditional apparel (cottage industry) produced by hand loom has a long history in
providing the needs of the people. These traditional apparels are made of woven cotton thread.
Some of these products are “kuta”, “Netela”, “Gabi”, “Ejetebabe”, “Tibeb”, etc. The activities
were traditionally held by small artisans called “shemane” (weavers). This traditional cottage
industry is inherited and continued up to now, making an important contribution to satisfy
people’s requirement. The modern textile and apparel industry was initiated in 1939 with the
establishment of Dire Dawa Textile mill by foreign capital. Then before 1975, 5 large-scale
integrated textile mills and 2 apparel enterprises were established mainly by private capital. In
1975 all private textile and apparel industries were nationalized. From 1975 to 1992, in order to
satisfy the increasing domestic demand, additional 4 large-scale integrated textile mills and 2
apparel industries were established with foreign aid and played pivotal roles in substituting
imported products.

In the last financial year 2012/2013, Ethiopia’s textile and clothing exports grew 28% to
US$84.6m. The government has set ambitious goals for the industry, aiming to increase earnings
to US$1bn by 2016. It also hopes to attract foreign direct investment worth US$1.6bn to build
nearly two hundred new textile and clothing plants in the same period. With a growing number
of manufacturers from overseas, particularly Turkey, India and China, investing as well as an
increasing number of local companies. 

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There are currently 110 Textile and Garment factories are available. These include Ginning,
Spinning, Weaving and knitting, Integrated and Traditional clothing making companies. 15
Ginning, 3 spinning mill, 18 weaving and knitting mill, 13 integrated mills, 54 Garment and 7
Traditional handloom companies are found in different parts of Ethiopia. The factories are
located in Tigray, Afar, Amhara, Addis Ababa, SNNP, Addis Ababa and Dire Dawa. 72 mills in
Addis Ababa, 19 mills in Addis Ababa, 9 mills in Amhara, 3 mills in Afar, 3 mills in SNNP, 2
mills in Tigray and 2 mills Dire Dawa are located in producing cotton fiber, yarn, fabrics and
garment.

The country textile and garment investment is growing from time to time. This increases the
installed capacity of the sector. The installed capacity of each section of the sector in the current
year is 72 million Kg yarn, 122 million meter woven fabric, 30 million kg of knitted fabric, 18
million kg of processed knitted fabric; 49 million meter finished woven fabric, 62 million pcs of
knitted garment and 18 million pcs of woven garment respectively. The attained capacity of each
section is depicted in the table below. The capacity utilization ranges from 45% to 70% and the
average utilization of the industry becomes 58%. The number of establishments known in 2005
budget year was 54 garment and 56 textile companies.

A total number of textile and Apparel sector employees were estimated to reach 37,000 including
both the public and private sector. From this figure the garment manufacturing sub sector
consists 15,000 employees which is 40% of the total textile and Apparel sector’s working force.

Ethiopian textile and garment sector must grow tremendously its current size to reach the
2014/15 GTP Targets of 1bn used export upgrading existing factories to 90% will be helpful, but
not sufficient, even at 90% capacity utilization, nine times greater export earnings will be
required to achieve the GTP Targets significantly new investment increasing FDI will be
required to establish new factories and expanding capacity. The current state of industry and
markets opportunity suggests that the initial wave of investment should be directed in to
production of Garment, where Ethiopia can compete globally with significant new investment.

The textile industry is the largest manufacturing industry in Ethiopia. The sector comprises a
large number of state owned enterprises and a growing number of private sector participants at

15
all levels .The textile sector can be categorized into broadly into mills, yarn, garments and
fabrics.

The garment activities that incur more than 20 % value addition at present have 54 garment
producers that categorized in the middle and large industries. The sector has given an
employment opportunity for about more than 15,000 Ethiopian citizens.

At present, Ethiopia has annual producing capacities 62 million pcs of knitted garment and 18
million pcs of woven garment, such as Bed-sheets, Shirts, Carpets, Bags, Hosieries, Wearing
apparels, sweater, etc of which export in volumes & value are also increasing. Many of state
owned garment enterprises and a good number of private enterprises are working integrated
product types.

According to 2011 trade report, by International Trade Center (ITC), the total apparel products
imported by the world was about 196,786,089,000 USD in value, from which about
83,324,000.00 USD was imported by Ethiopia. Taking these values as a base line and average
growth rate of 2% and 4% respectively, the present (2013’s) world import demand for apparel
products is estimated to be 204,736,247,000.00 USD, which is approximately about 50 billion
pieces/year, and the amount to be imported by Ethiopia is estimated to reach 89,123,238.00
USD, which is approximately about 22million pieces/year. There is a total production capacity of
about 73 million woven and knitted garments existing currently in the country, from which only
about 75% (56.25 million pieces) is utilized yet. In the previous year, about 27.5% (15.48 million
pieces) of total production was exported by the country. Based on the above assumptions, there
exists about 25% (18.25 million pieces) unutilized capacity, currently, which would cover about
13 million pieces of local demand proportionately. Hence, deducting 13 million from 22 million,
we get 9 million capacity gaps to meet only the local extra demands for various garment
products. The import demand is likely to reach at 60 billion pieces/year globally, and 31.5
million pieces/year for Ethiopia by the year 2022.

Ethiopia has been entertaining easy access to international market through, Starting august
2001 ,Ethiopia was entitled AGOA qualifications owns the title to export textile and garments to
the united states free of duty and without quota restrictions, everything but not arms Acts of
exporting goods to European union markets free of duty and without quota. The other market

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opportunity is also the common market for eastern and southern Africa [COMESSA] embracing
20 countries trading among themselves with preferential tariff rates, bilateral trade agreements
with many countries such as Russia, Turkey, Yemen, etc. which provide legal frame work for
enjoying most favored nation treatment and removing tariff barriers and Generalized System of
Preference [ GSP] most of the products made in Ethiopia enjoy tariff treatment in Canada,
Switzerland, Norway Sweden etc.

The United States and EU were the two largest textile and clothing importers occupying EU [27
countries] is the largest importers of textiles and clothing with imports of about 121 billion USD
[27 Billion USD for textiles and 3.1 billion USD for clothing], followed by US with imports of
105.6 billion USD [23.1 billion USD for textiles and 82.5 USD for clothing].

Though Ethiopia has an ample opportunity for global market as shown above fierce competition
is awaiting in every export opportunity. Globally the Chinese, the Indians and other similar
African countries are the most competitors especially in the garment industry.

Despite the fierce export competition the export s are expanding its market destination. The
destination is mainly concentrated to the European countries and regional penetration is also
increasing .In the last five years destination countries reached more than 35.

In the same way the Ethiopian government planned to earn 1 billion USD from exports in both
textiles and garments at the end the GTP period, 500 million USD is planned to be earned in
2014/15 out of which the share of the garments is around 325 million USD.

Generally the textile and garment technology is moving from developed countries to developing
countries since the sector highly requires labor input which is expensive in developed countries.
However the garment sector couldn’t be successful as expected due to different problems. The
problems relating with marketing are failing to utilize quality raw materials to obtain quality
products that compete with the imported products, inability to compete through increased
capacity in trendy designs and fashions, lack of availability of quality accessories & trims
domestically and promoters’ lack of adequate knowledge in the field.

17
Ethiopia to meet the target set in growth and transformation plan working to boost the volume of
exports enhancing the efforts and curbing the problems encountered devising the appropriate
policy and operational measures.

6.4. Market Strategy

The main strategy of the project shall be offensive to introduce its products for target customers
and gradually increase its market share by providing quality products at a lower cost compared to
similar rival products for the segmented market in the following ways:

 A low-cost provider strategy- it is the best position to win the business of price sensitive
buyers.
 Support and encourage whole-sellers and retailers in order to increase market share.
 Increase customer service by trained sales personnel /front line personnel/.
 Strategic supplier partnership especially with chemical and fabric suppliers and
manufacturers.

Increase working capital / financial strength/ to overcome raw materials price increment and
fluctuation in the international market.

 Constantly follow-up the price of the main raw materials and adjust selling price
accordingly.
 Diversify products to related businesses
 Handling of key personnel.
 Selection- Capability to produce superior quality.
 Brand – this is a critical issue and one of the competition variables. So the company
products should be encoded with the factory name, logo, and product name.
 Accessibility- the factory should establish maximum outlets in all direction of the
country with collaboration of wholesalers and retailers.
 Service – The Company should provide transport service at reasonable price for whole
sellers. This strategy will depend on the market condition and customer requirement
 Advertising by television , FM radio and newspapers
 Participating on bazaar and exhibitions

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  Consignment and credit sales to wholesalers
 Discount sales to customers who buy more products in cash at a time

Marketing Mix

The market mix strategy for the factory will depend on market condition. It may re-assess to
achieve the financial and marketing objectives. The factory marketing mix should comprise
product positioning and brand, pricing, distribution channels and promotion.

6.5. Price analysis

To introduce the products and maximize market share, the factory shall follow offensive strategy
by lowering its price relative to the rivals by using mass production and setting floor price. On
top of that, most customers are price sensitive. Because of this the factory strategy should be at a
lower price as compared to main competitors by using mass production using European
machines.

Promotion strategy

The promotion strategy will be based on making the right information available to the right
target customers. Its promotion strategy shall be pull strategy; i.e. in a pull strategy, the factory
encourages end users and business customers to ask intermediaries for the product building
demand to pull the product through the channel.

These activities will be done through active presence at bazaars, exhibitions, sport and societal
events and Advertising on television, radio in different languages, billboards and company
brochures, table and wall calendars.

Channels of Distribution

The fourth components of the marketing mix is distribution/place/ strategy, covering decisions
about how, when and where to make foam products available to customers.

Geographic distribution: - the factory outlet will cover almost all main towns of the country by
collaboration with wholesale and retail enterprise.

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Value-Chain: - the factory products reach to the end users with a maximum of two level
channels. The channel members will be supported by factory, transport facility, consignment
sales, setting of factory outlet price with their price. In addition, order processing and fulfilment,
inventory reports, transportation, storage and returning of damaged and unsold products will be
agreed on written agreement.

6.6. Market Operational Dimension

The marketing tools of this product will be a marketing mix of the 4 P’s product, promotion,
price reduction and product distribution basically maintaining the quality of the product. The
product promotion will be starting the supplying of few and simple to extensive supply of
product.

The investor has marketing strategy and operational dimension for implementing the project
strategy. Free sample distribution, conducting key persons at the target region, town and a
promoter will also be used. The investor will make price reduction for until it enters into the
market well and attract many costumers. The project promoter will have different channel of
distributions at different region.

After the completion of the project, it will sell 70% of the produces to the local market and the
remaining 30% for the foreign markets.

6.7. Marketing Information System

The phenomenal growth in information technology represents both a challenged and opportunity
of any business organization. Therefore, marketing information system of this project, in order to
be benefited from opportunities, uses the following sub-system for collecting analysis and
utilization of data.

1. Internal Accounting system

2. Marketing intelligence system

3. Market research

2. General Accounting Manual

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This manual enables the company to employ, as much as possible uniform accounting
terminology, effective control procedures, efficient budgeting, recording and reporting system.

7. SWOT Analysis

A. Strength
The promoter has ample experience in running other businesses. The audited report of
other businesses of the company reveals that the firms are financially performing well.
This, success indicates that the promoter is capable and the proposed project will follow
similar footstep. Moreover, the project will employ production manager who has
extensive working experience in textile industry.

B. Weakness
Lack of industry experience – the promoter has been working in the trading activities of
textiles and other imported items for several years. But he doesn’t have manufacturing
experience though he is familiar with the trading of textile products for many years. His
trading experience is expected to be used in the marketing of the products. To solve his
manufacturing experience deficiencies, the project planned to employ well experienced
expertise in the textile manufacturing sector.

C. Opportunities
 Favorable investment incentives given by the government,
 Favorable opportunities are also cropping at international and regional level that
nourish market access to manufactured products from developing countries, which
include AGOA by USA, everything but Arms by EU, and other regional and bilateral
agreement that Ethiopia has signed.
 Availability of cheap labor force
 Various Incentives given by the government

D. Threat
The existence of Stiff international competition from major suppliers such as Chain and
India particularly due to the lifting of quota and trade restrictions is the main issue to be
keenly looked so as to be competitive in the garment industry.

21
The marketing strategy will be by sharing the existing consumer and searching for the substitute
consumer. The promoter will have a capacity to supply a quality product and compete at local
market. In addition to this, the investor will make price reduction and product differentiation,
increasing quality and quantity of the product in order to attract more customers.

8. Raw Material and Inputs

A. Raw Material Requirements

The raw materials required to produce garments include fabrics, buttons, sewing threads, and
accessories like zipper, shoulder pad, labels etc. The main raw materials supplier for the plant
will be the textiles from national and International factories and Sometimes raw materials are
imported from countries such China, India and Pakistan.

Necessary inputs are buttons, sewing threads, and accessories like zipper, shoulder pad, labels
etc. Except sewing thread all the raw materials will be imported in the short run. However, in
the medium term most of the raw materials will be acquired from local sources as there are a
number of projects in the pipeline.

B. Utilities

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

 Water Supply,

 Electricity power supply,

 Telephone line

 Fuel and lubricants gas (petrol

 Paved Road Transportation,

 Drainage Facility

 Others

22
 9. ORGANIZATION AND MANAGEMENT

9.1. Organizational Structure

The plant is organized in such a way that the plant could successfully be evaluated on daily basis.
The plant has General Manager, Legal and Auditor, Production Department, Administration and
Finance, marketing and Sales Department. All the department managers’ report to the general
manager while, the working units to the Production Department Head. Details of the
organizational structure are described below.

Fig 9.1. Organizational Structure

Owner/s

General
Secretary
Manager

Production Admin. & Marketing &

Dept. Finance Dept. Sales Dept.

Cutting Sewing Finishing

Section Section section

23
Hence the following section deals with the duties and responsibilities of some departments.
1. Manager
Duties and responsibilities

 She/he will plan, organize, direct and control the overall activities of the factory
 She/he will devise policies and strategies that will enable the factory to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
plant so as to achieve the short and long run objectives of the organization.
2. The Manufacturing Department
Duties and responsibilities:-

It is the core department of the project center and has three sections (Cutting, Sewing and
Finishing) the following responsibilities.

 Design and prepared prototype garments based on the plant standard and customer
preferences
 Use modern manufacture, processing technologies that will enhance the quality of
garments.
 Produce quality garment mix that will enable the factory competent both in the domestic
and international market.
 Control on the quality of raw materials, inputs, quality of the product and also the overall
production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Moreover control over the quality of the final garment products
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.

24
  Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 Will control the human and non human resources of the plant, which include: effective
handling of the different inventories of the machineries, equipments, raw materials,
finished products, and devise strategies of controlling against fraud and damage.
 Manage and execute the company national and international procurement procedure
 Administer and control the company logistic resource
 Provide and manage general supportive service to the factory.

4. Marketing and Sales Department

Duties and responsibilities:-

 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide cost estimates in preparation for securing ...
 Gather information on new product design, fashion, profile
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales.
 Will develop effective customer handling strategies
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of the
company
5. Legal and Auditing Adviser

The legal and auditing advisor are accountable to the general manager and they advise on all
legal, Financial, Production and any other matters of the company to the General manger or
owner of the project.

25
 9.2. Man Power Requirements With Qualifications
The plant requires both direct and indirect manpower. The direct manpower consists of
designers, cutters, sewers, embroidery machine operators, printer machine operators, ironing
machines operators, trimmers, packing workers and other laborers. The direct man powers are
engaged in manufacturing of the products executed by production & technical departments. The
administrative activities are executed by indirect workers that include plant manager, executive
secretary, heads of finance and administrations, and personnel officer, accountant and other
support giving personnel.

The manpower list and the corresponding monthly and annual salaries including fringe benefits
are given in Table below.

Table 9. 1: MANPOWER REQUIREMENT AND ANNUAL SALARY

SN Description No Qualification Monthly Annual Salary

Salary in Birr in Birr
I Permanent Worker        
1 General manager 1 MSC in Garment & Textile 16,000.00 192,000.00
2 Production Head 1 BSC in Textile and Garment 10,000.00 120,000.00
Engineering
3 Production supervisor 3 Advanced Diploma in textile 8,000.00 288,000.00
technology
4 Designer 5 BSC in garment and fashion 7,000.00 420,000.00
design
5 Pressing man 6 10+2 in general mechanics 5,000.00 360,000.00
6 Cutter master 2 10+2 in tailor & garment 2,000.00 48,000.0
Technology 0
7 Sales 8 Diploma in salesmanship and 2,000.00 192,000.0
marketing 0
8 Personnel 1 BA in HRM 3,000.00 36,000.0
0
9 Finance head 1 BA in Accounting 7,000.00 84,000.0
0
10 Tailor 200 10+2 in tailor and garment 1,800.00 4,320,000.0
technology 0
11 Assistant tailor 145 10+1 in tailor and garment 1,200.00 2,088,000.0
technology 0
12 Marketing Head 1 BA in Accounting 7,000.00 84,000.0
0
13 Mechanic 2 10+2 in general mechanics 2,000.00 48,000.0
0
14 Admin and Finance 1 BA in Management/Accounting 7,000.00 84,000.0
Head 0

26
 15 Accountant 3 BA in accounting 3,000.00 108,000.0
0
16 Electrician 2 10+2 in general electricity 2,000.00 48,000.0
0
17 Secretary 3 Diploma in secretariat science 1,800.00 64,800.0
0
18 Clerk 2 10 completed 1,100.00 26,400.0
0
19 Store keeper 4 10+2 in store and logistics 1,800.00 86,400.0
management 0
20 Driver 4 10 completed 1,300.00 62,400.0
0
21 Assistant driver 3 Public Driving License/3rd Grade 900.00 32,400.0
0
22 Cashier 4 10+2 in Bookkeeping 1,200.00 57,600.0
0
23 Office boy/girl 2 10 completed 1,000.00 24,000.0
0
24 General service 1 BA in management 5,000.00 60,000.0
0
25 Security 6 Basic 850.00 61,200.0
0
26 Gardner 2 Unskilled 750.00 18,000.0
0
27 Cleaner & Laundry 35 Unskilled 850.00 357,000.0
0
  Sub total 448   100,550.00 9,370,200.0
0
II Temporary Worker        
1 Daily Laborer 60 Unskilled 700.00 504,000.0
0
2 Auto mechanic 2 10+2 automotive 7,000.00 168,000.0
0
  Sub total 62   7,700.00 672,000.0
0
  Total 510   108,250.00 10,042,200.00
  Benefit (20%)       2,008,440.0
0
  Grand Total 510     12,050,640.00

27
 9.3. Skilled and Unskilled Workers
The total manpower required for the plant will be 510 employees

 Permanent workers 448

 Skilled 310
 Unskilled 138
 Temporary workers 62
 Skilled 2
 Unskilled 6

9.4. Training Requirement

Employees have to acquire the requisite skill and knowledge to properly operate the production
machinery and equipment and get the required skills & through short-term training. The
designers, cutters, sewers, embroidery machine operators, printer machine operators, ironing
machines operators, trimmers, packing workers and other laborers including the supervisors will
have to participate in the training program that will be conducted for a period of 2 to 3 weeks.
The manufacturing supervisor is expected to have long years work experience in similar
production activities.

The training program can be conducted in enterprises (either private or public) having wide
experience in production of similar products. Other possibility is to make special arrangements
with machinery suppliers.

Accordingly, the training of personnel can be part of the agreement such that all the employees
involved in production activities can be trained before they start working. Thus, a total of Birr
100,000 is allotted for this purpose.

28
 10. Financial Analysis

10.1. Total Investment Costs

Total capital requirement, also known as total project cost or total investment requirement, is
composed of three items: fixed assets, pre-operating expenses and working capital. Fixed assets
is the sum total of all costs of land and improvements, building, machinery, furniture and
fixtures, vehicle, etc.

Pre-operating expenses are those necessary expenses which are incurred before the business
starts operating. These include registration fees and licenses, training costs, cost of preparing
business plan, trips to raw material and equipment suppliers, etc.

Working capital is the amount of money permanently needed in cash or in kind to keep the
business operating while it is awaiting full payment for goods sold to customers.

Working capital can be calculated by adding five factors:

1. The cost of maximum raw material stocks that will have to be stored to ensure continuous
production. In some cases this may be three to six months’ worth, if the raw material is
difficult to obtain or has to be imported, whereas in other cases (where raw materials are
readily available) only one or two weeks’ worth may be needed;

2. The cost of finished goods which will be kept in stock awaiting distribution to the
customers;

3. The cost of work-in-process which are on the project floor but has not yet been converted
into a final product or finished goods;

4. The cost of goods already distributed to customers but which have not yet been paid for
(accounts receivable);

5. The amount of ready cash needed to pay workers and overheads.

 To determine the cost of raw material stocks, simply multiply the quantity needed by
its purchase price;

29
  To determine the cost of finished goods stock, multiply the number of units to be kept
by the unit production cost;

 To determine the cost of work-in-process, first estimate the number of days it takes to
convert the raw material into finished goods, then multiply this by the daily production
level, then multiply the figure obtained by the unit production cost determined in.
Finally divide this figure by two.

 To determine the cost of goods already distributed but not yet paid for, estimate the
quantity that will be given on credit and multiply this number by the unit production
cost.

 To determine the amount of cash needed in the business, add the monthly labour cost
and overheads to the monthly marketing expenses and the administrative expenses.

Add these five cost elements together to arrive at the total capital requirement of this project.
To calculate the total capital requirement, add the following:
+ Fixed Assets
+ Pre-Operating Expenses
+ Working capital
= Total Capital Requirement
Table 10.1 Total Capital Requirements
No Total capital required Total cost
1 Land Building and Construction 2,370,000.00
2 Machinery and Equipment 2,800,783.93
3 Vehicles 1,840,000.00
4 Office Furniture 53,500.00
  Sub Total 5,085,520.00
II Working Capital Requirements 5,935,716.07
  Total Initial Investment 10,00,000.00

30
 10.2. Fixed Investment Cost
This includes every cost of capital investment including civil works and basic assets for the
project to run its activities. It includes, cost of construction, machineries, furniture, computers
with their accessories, vehicles, and the like which are tangible asset of the project any time.
Majority of these assets will be are imported for which the promoter will enjoy advantage of duty
free import privilege.

Building and construction

The total cost of machineries and utilities estimated for these project is shown in the following
tables.

Table 10.2: Machineries and the Utilities Cost

   
Qty/Set Cost (Birr)
Total
S.N Description  
Unit Cost
   
FC LC

A. Industrial Swing
           
Machine
Power Operated Cutting 69,230.0 346,150.0
1 Machine
Unit
0
1,384,600.00
0
1,730,750.00

Power Operated Double needle 25,200.0 203,200.0

2 stitching machine
Unit
0
812,800.00
0
1,016,000.00

Power operated Single Needle 12,000.0 144,000.0

3 stitching machine
Unit
0
576,000.00
0
720,000.00

143,210.0
4 Industrial sewing machine Unit
11,050.00
572,840.00
0
716,050.00
193,200.0
5 Button hole machine Unit
80,500.00
772,800.00
0
966,000.00

Over lock stitching machine 34,400.0

6 with motor and accessories
Unit
17,200.00
137,600.00
0
172,000.00

Garment washing machine 26,000.0

7 25kg capacity
Set
710,000.00
104,000.00
0
130,000.00

Hydro-extractor 25 kg. 153,000.0

8 Capacity
set
255,000.00
612,000.00
0
765,000.00

85,200.0 119,280.0
9 Bar Tacking machine Unit
0
477,120.00
0
596,400.00
25,000.0 10,000.0
10 Cloth Drilling M/S Unit
0
40,000.00
0
50,000.00
165,000.0 66,000.0
11 Automatic fixing Machine 2
0
264,000.00
0
330,000.00
123,000.0
12 Tumbler dryer 25 kg Capacity 3
205,000.00
492,000.00
0
615,000.00
48,300.0
13 Potable steam press 15
16,100.00
193,200.00
0
241,500.00

   Sub Total     6,438,960.00 1,609,740.00 8,048,700.00

31
  B. Production Line I          

1 Washing room trolleys 20 16,100.00 154,800.00 17,200.00 172,000.00

2 Work benches 4 8,600.00 229,860.00 25,540.00 255,400.00

3 Electrical cloth cutter 4   361,800.00 40,200.00 402,000.00

4 Electrical iron 20 100,500.00 99,000.00 11,000.00 110,000.00

5 Scissors & various tools 6 5,500.00 450,000.00 50,000.00 500,000.00

6 Generator 500 KVA 1   450,000.00 50,000.00 500,000.00

Single Needle lock stitch
7 machine with thread trimmer 200 15,660 1,018,800.00 113,200.00 1,132,000
(Semi Dry)
8 Electronic buttonhole machine 15 66,000 531,000.00 59,000.00 590,000
Electronic lockstitch button
9 attaching machine
15 74,000 459,000.00 51,000.00 510,000

10 4 thread over lock machine 160 31,080 4,475,520.00 497,280.00 4,972,800

   Sub Total     8,229,780.00 914,420.00 9,144,200.00

  C. Production Line II          
4 thread over lock machine
45,200.0 452,000.
1 with full automatic back- 8 119,000.00 406,800.00
0 00
tracker
cylinder bed shape, over lock
55,000.0 550,000.
2 machine with variable top 5 110,000.00 495,000.00
0 00
feeder for attaching collar
5 thread top feed safety stitch 72,856.0 728,560.
3 machine
6 104,760.00 655,704.00
0 00

  Sub Total     1,557,504.00 173,056.00 1,730,560.00

D. Other Production Line

           
III
Cover stitch sewing machine 482,760.
1 with puller
6 80,460 386,208.00 48,276.00
00
Semi cylinder bed top feed 357,600.
2 interlock machine
4 89,400 286,080.00 35,760.00
00
594,200.
3 cover stitch sewing machine 10 59,420 475,360.00 59,420.00
00
Cover stitch sewing machine 794,200.
4 with fabric trimmer
60 84,500 635,360.00 79,420.00
00

   Sub Total     1,147,648.00 143,456.00 1,434,560.00

  E. Others          

  Straight knives for cutting          

10,400.0 104,000.
  CNC cutter 4 93,600.00 93,600.00
0 00
50,000.0 500,000.
  Cutting table 2 2,000,000.00 450,000.00
0 00
Ironing, quality control and 20,000.0 200,000.
  packing table
2 200,000.00 180,000.00
0 00
30,000.0 300,000.
  Transformers 50 16,000.00 270,000.00
0 00
36,000.0 360,000.
  back-up generator 1 1,860,000.00 324,000.00
0 00

32
 146,400.0
  Sub Total     1,317,600.00
0
1,464,000.00

  Grand Total 1   18,691,492.00 2,987,072.00 21,800,783.93

Table 10.3 Vehicles Required

S.N Description Quantity Unit Price Total Price

800,000
  4X4 Pick up car 2 1,600,000.00
.00
900,000
  Service Mini bus 2 1,800,000.00
.00
40,000
  Motor cycle 1 40,000.00
.00
400,000
  Others(Vehicle) 1 400,000.00
.00
Total 3,840,000.00

Table 10.4 office Furniture

S.N Description QTY Unit Price Total Price

7 7,00
  Table 10
00.00 0.00
2 3,00
  Chair 15
00.00 0.00
1,5 7,50
  Shelf 5
00.00 0.00
13,0 26,00
  Computer with printer 2
00.00 0.00
2,5 10,00
  Filing cabinet 4
00.00 0.00
Sub total 53,500.00

33
 10.3. Work Capital Requirements
Table 10.5. Working Capital Requirements
S.N Description Local Cost Foreign cost Total
1 Raw Materials and Inputs (3 month) 10,666,666.67 10,66 1,333,33
6,666.67 3.33

2 Utilities (3 months) 500,000.00 1,

500,000.00 000,000.00
3 Wage and Salaries (2 month) 2,008,440.00 1,
1.00 008,441.00
4 Others Operating Expense (3months) 2,872,513.00   8
72,513.00
  Sub total 16,047,619.67 11,1 1,21
66,667.67 4,287.33
5 Contingences (10%) 1,604,761.97 1,1 721
16,666.77 ,428.73
Ground Total
  17,652,381.63 12,283,334.43 6,935,716.07

Table 10.6. Annual Operating Costs of the Project

S.N Description Total cost

1 Raw Materials 4,000,000.00
 2 Utilities 1,000,000.00
 3 Wage and Salaries 1,050,640.00
 4 Spare and Maintenance 1,500,000.00
  Sub Total 7,550,640.00
 5 Depreciation 1,790,052.00
 6 Financial Cost 1,200,000.00
  Sub Total 3,091,332.00

34
Table: 10.7. Source of Finance
SN Description % share Amount(in birr)
1 Owners Share 30 3,000,000.00
2 Bank Loan 70 7,000,000.00
10,000,00
Total 100
0.00

Table 10.8. Loan Repayment Schedule

Total Annual
Year Principal Payment Interest (10%) Remaining Balance
Payment
0 - 70,000,000
- -
1 7,000,000 7,000,000 14,000,000 63,000,000
2 7,000,000 6,300,000 13,300,000 56,000,000
3 7,000,000 5,600,000 12,600,000 49,000,000
4 7,000,000 4,900,000 11,900,000 42,000,000
5 7,000,000 4,200,000 11,200,000 35,000,000
6 7,000,000 3,500,000 10,500,000 28,000,000
7 7,000,000 2,800,000 9,800,000 21,000,000
8 7,000,000 2,100,000 9,100,000 14,000,000
9 7,000,000 1,400,000 8,400,000 7,000,000
10 7,000,000 700,000 7,700,000 0

Table10.9. Annual Depreciation

No Description Initial value Deep rate (%) Deep cost

2,218
1 Construction and Building 5
44,370,000.00 ,500.00
2,182
2 Machinery and Equipment 10
21,822,020.00 ,202.00
384
3 Vehicles 10
3,840,000.00 ,000.00
5
4 Office furniture and Equipment 10
53,500.00 ,350.00
4,790
Total  
8,774,673.00 ,052.00

35
 10.4. Projected Financial Statements
The proposed project shall enter in to its activity with reasonable return as planned to perform.
Accordingly, it shall start providing its service after 1 and half year of contraction work which is
used as the time for preparation period, capital good purchase and man power recruitment
(generally considered as after implementation period).

S.N Description Qty Unit Price Total sales

75,000.0 1,158.3 86,875,000.0
1 Men Garment Products
0 3 0
22,500.0 1,000.0 26,062,500.0
1.1
Men's suits 0 0 0
15,000.0 700.0 7,818,750.0
1.2 T- shirts
0 0 0
15,000.0 1,300.0 2,345,625.0
1.3 Trousers etc & shorts
0 0 0
7,500.0 450.0 703,687.5
1.4 Men Under wear
0 0 0
7,500.0 2,000.0 211,106.2
1.5 Jacket and Coats
0 0 5
7,500.0 1,500.0 63,331.8
1.6 Others (Babies Garments )
0 0 8
85,000.0 1,440.0 122,400,000.0
2 Lades Garment Products
0 0 0
25,500.0 1,500.0 38,250,000.0
2.1
Women's suits, blouses and shirts 0 0 0
25,500.0 2,000.0 51,000,000.0
2.2 Ladies Fashion
0 0 0
8,500.0 2,500.0 21,250,000.0
2.3
jackets, dresses skirts etc & shorts 0 0 0
8,500.0 750.0 6,375,000.0
2.4 Ladies under Wear
0 0 0
17,000.0 450.0 7,650,000.0
2.5 Others (Babies Garments )
0 0 0
160,000.0 2,598.3 209,275,000.0
  Total
0 3 0

10.5. Production Programmed and Sales Forecast

36
The business project shall start its activity with some few workers in the 1 st phase and extend its
activity as it plans to perform by increasing the number of its employees on two shifts starting
from its 2nd phase and 3rd years & afterwards with the remaining planned services. In line with
this, the amount of raw materials shall increase with the increase of the service that also
increases other expenses at which the project starts to provide its services in its full potential.

The target market of the project is both local and export markets. Of the total products, 30% of it
will be sold in the local market and while 70% will be for the international markets.

10.6. Revenue Projection

The total revenue expected from this project is assumed to derive from the planned activities to
perform. The products that will be sold by the project are expected to generate revenue are
garment and textile produces. The project will start production at 70% of its installed production
capacity and will attain 80% in the 2nd year and 90% in the 3rd year and afterwards. The revenue
projection is made based on this schedule assumption.

Table 9.9: Projected Annual Revenue of the Project

37
38
 Years
Description
1 2 3 4 5 6 7 8 9 10

Revenue 209,275,000.00 232,527,777.78 261,593,750.00 298,964,285.71 332,182,539.68 369,091,710.76 410,101,900.84 455,668,778.71 506,298,643.02 562,554,047.80

Less operating
172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00 172,091,332.00
cost

Gross Profit 37,183,668.00 60,436,445.78 89,502,418.00 126,872,953.71 160,091,207.68 197,000,378.76 238,010,568.84 283,577,446.71 334,207,311.02 390,462,715.80

Less
4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00 4,790,052.00
depreciation

Less interest
7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00 7,000,000.00

Profit Befor
25,393,616.00 48,646,393.78 77,712,366.00 115,082,901.71 148,301,155.68 185,210,326.76 226,220,516.84 271,787,394.71 322,417,259.02 378,672,663.80
Tax

Tax (35%)
8,887,765.60 17,026,237.82 27,199,328.10 40,279,015.60 51,905,404.49 64,823,614.37 79,177,180.89 95,125,588.15 112,846,040.66 132,535,432.33

Net Profit 16,505,850.40 31,620,155.96 50,513,037.90 74,803,886.11 96,395,751.19 120,386,712.39 147,043,335.95 176,661,806.56 209,571,218.36 246,137,231.47

10.1. Projected Income Statements

39
 10.2. Projected Cash flow Statements
Description Project Years
0 1 2 3 4 5 6 7 8
Cash                  
inflows
Equity 30,000, - - - - - - - -
000.00
Bank loan 70,000, - - - - - - - -
000.00
Net profit - 16,505,850.4 31,620,155. 50,513,037. 74,803,886.1 96,395,751.1 120,386,71 147,043,335. 176,661,806.
0 96 90 1 9 2.39 95 56 2
Depreciation - 4,790,052.0 4,790,052. 4,790,052. 4,790,052.0 4,790,052.0 4,790,05 4,790,052. 4,790,052.
0 00 00 0 0 2.00 00 00 0
Total 100,000, 21,295,902.4 36,410,207. 55,303,089. 79,593,938.1 101,185,803.1 125,176,76 151,833,387. 181,451,858.
000.00 0 96 90 1 9 4.39 95 56 2
Cash                  
outflow
Fixed 70,085, - - - - - - - -
investment 000.00
Working 29,925, - - - - - - - -
capital 000.00
Pre-op.   - - - - - - - -
Expenditure
Loan - - - - - - - -
Repayment -
Total 100,00, - - - - - - -
000.00 -
Net inflow 21,295,902.4 57,706,110. 78,965,203. 105,885,175.6 130,398,289.3 157,635,08 187,898,185. 221,523,856.
- 0 36 68 5 4 2.33 66 02 7
Cumulative 0 21,295,902.4 23,662,113. 26,291,237. 29,212,486.1 32,458,317.9 36,064,79 40,071,997. 44,524,441.
0 78 53 5 4 7.71 46 62 6

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 10.3. Projected Balance Sheet of the Project

Asset
Current Asset Value in Br.
2,955,001.2
Cash
5
Initial inventory of raw materials and 7,980,714.
inputs 82
Total Current Asset 3,935,716.07
Fixed Asset  
4,370,000.0
Land, Building and Construction
0
2,822,020.0
Machineries and Equipment’s
0
53,500.
Office Equipment
00
3,840,000.0
Vehicles
0
Total fixed Asset 7,085,520.00
Total Asset 10,00,000.00
Liability  
3,006,363.5
Account payable
5
Owners’ Equity  
7,014,848.2
Capital
9
Total Liability & Owners’ Equity 10,00,000.00

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 11. Environmental Aspects
The project will seriously involve itself in protecting, conserving and developing the natural and
flora of the project area in line with the Millennium development goal. To this end it will play a
vital role in participating in various organizations and the community around the project area to
form an environmental committee in charge of all environmental issues to be handled in
accordance to various environmental and water policies of 1997/1999. The owner of the project
believes to undertake several environmental issues for the conservation, development and
creation of sustainable environment around the project area like resource conservation.

The promoters of the project will participate in any forum that might be organized by concerned
authorities and the community to promote environmental issue and concept for sustainable
development in the area. In addition to this, it will introduce and use environmental friendly
technologies such as tree planting and conserving the existing tree species in the compound.

In line with this, the company is willing and more interested in protecting and even planting
natural forest of indigenous trees to make its compound attractive by creating conducive cool
climatic condition. The company as clearly described above is critically based on satisfying the
needs of the locality to be exemplary for others on nature conserving activities that contributes to
nature conservation activities for locality, national and/or Global environment in its contribution
far from the project area. It is also ready to perform EIA for the proposed project to make it
environmentally friendly and competitive industry in National wide.

Wastes of the garment factories will be:

 Fabric leftovers: These leftovers have a market in Addis Ababa and are sold based on
their sizes.
 Nylon: These wastes are sold in Addis Ababa based on weight basis.
 Other solid wastes: these will be kept somewhere in the compound and will be later
collected by the municipality’s garbage trucks.
 All wastewater of the factory will be discharged through the central sewerage systems.
 Ironing tables will use electric boilers to generate steam and will not have any waste.

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 12. Project Implementation Schedule and Land Use Plan

A. Project Implementation Schedule

2017 2018
N Activities 2019
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July

Acquisition of Land                                    
Securing loan from Bank                                    
Site Clearance                                    
Undertaking building &
                             
construction      
Machinery procurement                                    
Machinery installation                                    
Procurement of raw materials                                    
Recruitment of workers and
                             
training      
Commencement of operation                                    

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 B. Project Land Use Plan
Apart from other requirements and inputs, land is primarily used to realize the proposed project.
The total area of land required to realize the proposed project is 10,000 m2 of land in the area of
existing industries performing their activities. Land utilization plan of the project is proposed to
be 87% to be built for the objective of the company and the remaining 13% of land will be left
for green development in the compound for the purpose of its environmental benefits,
beautification as well as air condensation. In general, to implement the project an ample land is
required based on the activities incorporated in the project.

Table 11.1: Land Budgeting for the Proposed Project

S.N Description Area in M2

Production building (Garment and textile fabrics cutting, sorting,

1 4,500
stitching/sewing, trimming, ironing and packing ) – one floor building

2 Warehouse (raw and finished products store) 1,000

3 Compound road, car parking and fountain 600
4 Project office Building 1,000
5 Canteen Building 500
6 Free space for Loading/un loading 500
7 Guard house 135
8 Septic tank 35
9 Concrete mixing plant installation area and pre cast production area 600
10 Workshop and spare parts store 180
11 Space for greenery, open space & aeration 950
Total 10,000

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 13. Risk Assessment
A. Threats
Local products are considered as inferior by the local customers. But through intensive
promotion and quality production and other options shall be applied to penetrate the local market
with less profit margin.

B. Competition
Development of competition strategy shall bring change. Thus, the change in design, technology,
quality service and others shall be addressed through local and international communication.

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