BUSINEES PLAN FOR IMPORT COSMETIC,

PERFUME AND TOILET SOAP PRODUCT

PROMOTER:-SOFA MOHAMMED IMPORT

AND EXPORT PLC

Fed,
2022
Addis Ababa
Ethiopia

1
 Table of Contents

1. Executive Summary....................................................... 1
2. Product Description and Application............................. 1
3. Market Study, Plant Capacity and Production Program 2
3.1 Market Study............................................................................. 2
3.1.1 Present Demand and Supply............................................... 2
3.1.2 Projected Demand............................................................... 3
3.1.3 Pricing and Distribution...................................................... 4
3.2 Plant Capacity........................................................................... 4
3.3 Production Program................................................................... 5
4. Raw Materials and Utilities............................................. 5
4.1 Availability and Source of Raw Materials................................... 5
4.2 Annual Requirement and Cost of Raw Materials and Utilities.... 6
5. Location and Site............................................................ 6
6. Technology and Engineering.......................................... 6
6.1 Production Process.................................................................... 6
6.2 Machinery and Equipment........................................................ 7
6.3 Civil Engineering Cost............................................................... 8
7. Human Resource and Training Requirement............... 8
7.1 Human Resource....................................................................... 8
7.2 Training Requirement................................................................ 9
8. Financial Analysis.......................................................... 10
8.1 Underlying Assumption............................................................ 10
8.2 Investment............................................................................... 11
8.3 Production Costs...................................................................... 11
8.4 Financial Evaluation................................................................. 12
9. Economic and Social Benefits and Justification............ 13
ANNEXES.............................................................................

2
1. EXCUTIVE SUMMARY

1. Project name Importing cosmetics include soap, shampoo and conditioner,

moisturiser, 'bath bombs', hair dye, perfume, lipstick, mascara, nail
polish, deodorant skin lotion, essence, skin milk, cleansing cream
and many other product

2. Project Sofa Mohammed import and Export Plc

Promoter
3. Nationality Ethiopian

4. -Project ADDIS ABABA CITY

Location
5. Project Importing cosmetics include soap, shampoo and conditioner,
Composition moisturiser, 'bath bombs', hair dye, perfume, lipstick, mascara, nail
polish, deodorant skin lotion, essence, skin milk, cleansing cream
and many other product

6. Total initial The total capital of the project cost is Birr 130,000,000(30%
Investment
equivalent to birr 30,000,000financed by the owner equity
Capital
and 70% equivalent to birr 100,000,000.00 from bank loan)

7. Employment The total manpower required for the plant will be 137
Opportunity
employees at full capacity. Permanent workers 94

 Skilled 56
 Unskilled 38
 Temporary workers 43
 Skilled 5
 Unskilled 38
8. Benefits of
the project
For The To ensure that imported and domestic cosmetics meet regulatory requirements
Region/ through inspection, sample collection and an preparations.
Country

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 1.1. BACKGROUND INFORMATION

1,2. The Promoter

Name: SOAL Mohammed Import and Export plc
Address
Region: Addis Ababa
Sub City: Kirkos
Woreda:

1.2. Brief History of the Promoter

The Sofa Mohhammed import and export PLC aiming to import cosmetics and
perfume, toilet soap products so as to enable import substitution and play its
own role in satisfying the domestic demand. Furthermore, the owner of Sofa
Mohammed import and import plc involved in different businesses such as oil
and construction industry which highly use metal products as inputs. To this
end, Sofa mohammed import and export plc.is established on a sustained
market intimacy to engage in Essential oil manufacturing considering the
strategic benefits of the industry. The last but not the least, he has a great
hope and motivation to establish this company and get in to work in view of
his relevant experience mentioned above.

1.3 The objective of the Project

The Enterprise is dedicated to achieving maximum customer satisfaction at

the lowest possible cost and therefore has the following objectives

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Different kind of Cosmetics, perfumes and toilet
product supply

 Perfumes
 Personal care
 Hair care
 Dental hygiene products
 Skin care
 lip scrubs
 Avocado face masks
 Bubble masks
 Eyes patches
 Shower gels
 Exfoliating bath scrubs
 Whitening sprays
 Deodorants
 Massage oils
 Sunscreens
 Tanning products
 Beard balms
 Hair waxes
 Aftershave toners

1.4. Product Description and Application

Cosmetics are substances used to enhance the appearance or odor of the
human body. Cosmetics include skin-care creams, lotions, powders, perfumes,
lipsticks, fingernail and toe nail polish, eye and facial makeup, permanent
waves, colored contact lenses, hair colors, hair sprays and gels, deodorants,
baby products, bath oils, bubble baths, bath salts, butters and many other
types of products.

Herbal cosmetics have growing demand in the world market and are an
invaluable gift of nature. There are a wide range of herbal cosmetic products

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to satisfy beauty regime. Adding herbs in cosmetics is very safe for our skin.
Herbal cosmetics are in high demand due to the increasing interest of
mankind towards them because they are more effective with nil or less side
effects, easily available ingredient

1.5 . Produce the following products

Sofa Mohammed Import and Export will provide different kinds of cosmetic a
Surfactants, Cleaners, Cleaning Powder, Laundry Care, fabric care and wash,
Household and Industrial Detergents, Washing and others . This will be intended to
improve the general skin health as well as boosting the beauty skin of our
clients especially ladies. Among the fruits we will use to extract include
grapes, Chew cumber, palm fruits, avocadoes, lemons, oranges, among others
to produce body lotions that moisturizes and smoothens the skin for healthy
attractive look of the boy and hair.

Our business will also provide moisturizing creams, body lotions, hair lotions of
various types and varieties to our esteemed customers.

These are the features that a customer will be able to

customize:
 Custom scent
 Custom label
 A selection of jars
 The colour of their perfume
Here are the benefits to our customers if they buy our product:

 Their very own scent they can show off to their friends
 The feeling of being unique
 Resell their perfume to their friends

Here are the unique features of our service:

 Nowhere else will you find a website that makes it easy to create
perfume
 Our delivery across North America will be top notch
 You can order perfume at anytime from anywhere
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FUTURE PRODUCTS/SERVICES
Some potential future products might include custom made:

 Body Lotions
Body lotions available for label customization could be sold along with our perfume.

 Soap

Soaps available for label customization could be sold along with our perfume..

 Skin beauty.

1.6 Provide the following services

We will also offer the cosmetic products to our esteemed customers while
providing consultancy advise inform of skills for mixing and using the oils for
their own benefit

We will provide free consultancy services about lotion use, making and
maintenance and caring for the skin especially mostly by the ladies and young
girls who our major customers and advise them on maintaining a healthy
balanced diet which include fruits and vegetables.

1.7 The customers will be

Other businesses that deal in cosmetics, retail shops, supermarkets all over
the country, in Addis Ababa and other customers will be buying from our
company directly and from our mobile distributors and they will be both the
young children, men and mostly women.

1.8 Provide the following services

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We will also offer the cosmetic products to our esteemed customers while
providing consultancy advice inform of skills for mixing and using the oils for
their own benefit

We will provide free consultancy services about lotion use, making and
maintenance and caring for the skin especially mostly by the ladies and young
girls who our major customers and advise them on maintaining a healthy
balanced diet which include fruits and vegetables.

The business will sell in the following way

Distribute to our national and international distribution centers, supermarkets,

retail outlets, our agents all over the countries in East African regions and
some customers will buy directly from our company main outlet in Ethiopia

1.9. The business will satisfy the following needs of the

customers

Sofa Mohhammed import and export plc cosmetics supply will offer reliable
cosmetics, lotions, and jerrys intended to improve the general skin health as
well as boosting the beauty skin of our clients especially ladies, skin
treatment, cure skin rashes, and ensure all time beauty of our clients.

1.10 . SWOT ANALYSIS

The Cosmetics industry is one of the growing industry in the country with a
number of industries Unisex beauty cosmetics with many branches, and other
small businesses which have joined the industry. Despite the increase in the
Cosmetics industries, customer’s demands are not fully met due to the
increasingly growing population and poor delivery of the cosmetics to the
customers, Briox cosmetics Enterprise is therefore aiming at filling this gap.
6|Page
The industry has shown a great interest for investment. The industry has
earned great reputation due to the increased differences in customer
requirements like skin colors, hair styles by different hair cosmetics and
customer general beauty.

1.11. Strengths of the cosmetic enterprise

 Ability to make cosmetic products from local available fruits

 Strategic location in the Easy View Complex which has a high enough
space.
 High level of customer care that we shall portray

 We shall operate on a daily basis 24 hours to meet our customer needs
which will ensure constant supply.
 We shall do skin therapy to our special customers based on
appointments at an affordable price which will gain fame amongst
corporate women.
 High quality and exceptional packaging material which are
environmental friendly that we shall offer.
 Operating from the cleanest environment
 Offering free training and consultancy services to our customers.

1.12 Opportunities.

 Sofa Mohammed import and export is growing and new cosmetics

dealers are setting up which will increase the market base.

 The competitors of Sofa Mohammed import and export do not know

about the new emerging ideas in the global markets like new product
development techniques to suit customer demand.

 The competitors Sofa Mohammed import and export do not know how
to efficiently manage their supply chain and distribution channels like
Unisex group of companies.

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  Financial boost from banks for service expansion and facility
improvement.

1.13 Threat
Constant changes in customer demands which impact on our level of
satisfaction to our customers and changing economic environment.

1.10. VISION, MISSION, GOALS, AND OBJECTIVES

1.13. Vision statement

The vision of the cosmetic shop will be ‘To be the leading suppliers of quality,
fresh and health skin booting cosmetics product’

1.14. Mission statement

It will be, dedicated at improving the skin health and body look and
appearance of our client. "We seek to become the recognized leader in our
targeted local and international market for carrying a diverse line of in
demand cosmetics including perfumes, makeup, and other accessories that
will have a competitive edge towards customer satisfaction and retention at
attractive prices.

1.15. Goals

 To be leading supplier of quality, fresh and health skin beautifying

cosmetics
 To expand to the other markets across East Africa.
 To exploit opportunities in the market including the gaps left out by
already established firms

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  To obtain maximum customer satisfaction through continued quality production
 To obtain continuous production and supply of our products to the customers
 To create customer loyalty to our products such that they become well
pronounced in the customer minds.
 To efficiently publicize our products to create awareness among the customers
 To provide high quality products to the clients through use of quality and
standard in puts that is natural inputs.
 To use our experience to operate at lowest costs possible.
 To establish a strong and reputable relationship with the stakeholders of the
Enterprise.
 To come up with new products in the Cosmetics industry.

2. BUSINESS STRATEGY

This will include the communication strategy, marketing strategy, supplier

relationship strategy, promotion strategy, Human resource management strategy and
competitive strategy.

2.1Communication strategy

One of the most important aspects of a successful launch is a positive publicity for our
cosmetics products. We will develop awareness campaigns to promote our product
through several avenues. Our management team will fiercely have pursued positive
perception through societal endorsement promoting the benefits of our product by
actively seeking local news and media coverage to help on awareness.

2.2 Competitive strategy

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Position of the business in the heart of Addis Ababa and the whole of Ethiopia and
also being near the high market area makes the product easily accessible by our
customers. An aggressive advertising campaign will be undertaken so that we create
much awareness of our product than our competitors through our highly skilled
management team and employees that will be highly in contact with our customers.

2. 3/Marketing strategy
Sofa Mohammed Export and Import plc plans to communicate through outdoor
advertising and television advertising to generate sales. This will be spearheaded by
our marketing team to manage the marketing campaign. The key message associated
with our products is high quality beautifying cosmetics and skin care.

2.4 . Human resource management strategy.

Sofa Mohammed export and Import plc will start up with its experienced members in
various fields that are useful in the business to form competent team of trustworthy
staff for efficiency and effective operations and goal oriented. Provision of favorable
working conditions to maintain a high degree of personal development and
satisfaction of both employees and employers and ensuring that our employees are
constantly trained where need arises.

2.5 Supplier relationship strategy.

Sofa mohammed export and import plc will ensure a close working relationship
with our suppliers and where necessary undertake supplier development
programmes that is providing improved varieties of agricultural inputs for example
grapes, Chew cumber, palm fruits, avocadoes and lemons and tools that will
ensure constant supply of our core inputs.

10 | P a g e
 Production Program

We will specialize majorly in supply or a import cosmetic, perfume and toilet sop
products to treat the skin illness such as fungal diseases using locally produced
vegetables and fruits as ingredients in the manufacture of these cosmetics .We will
offer free consultancy services to our clients, free cold water, and warm water for
washing our hands. We will employ people who are easily accessible, customer
oriented, efficient and effective. We will provide customized services like skin therapy
and hair dressing to our most esteemed customers during the weekends when we
are not very busy so as to meet their demands and needs by being agile.

 PRICE
The different sizes of our products will be charged different prices and
my basis of pricing will be based on the total costs incurred,
competitors’ prices and how much my customers are willing to pay.

I have studied the prices of Baby Face Organic who are my major
competitor and I think that selling at lower prices will be one of the most
important ways of competing them. A low price is important especially
for students, market vendors and retailers.

 PROMOTION

We intend to invest heavily in advertisement of our products through the

use of signposts, face book, use of radios such as; Galaxy, Vision radio,
which have a wider coverage. We also intend to use a highly skilled
marketing manager to market our products; for example; in Kampala
town universities, offices and other local areas around. We intend to also
visit personally our general stores and major wholesalers of our products
and use other few methods of promotion.

 The objectives of promotion are;

To create awareness of our products to our customers

 To persuade the customers to prefer our products to those of our
competitors

Communicate to the potential customers about where our products can

be found.

Create a good initial image of our products in the society and our
potential customers.

promotion section of this business plan (form)

Type of
advertising Details

A sign on the The sign will say “sofa Mohamed export and import
building plc Cosmetics
showing the product that we

offer such that customers can know that there

is a cosmetics in the building

Personal
letters We will send personal letters to our vendors,
wholesalers and selected retailors. We will

introduce the letter that “Sofa mohhamed

Cosmetics

Import

Direct selling We shall sell our product directly to our

customers and share with them information

about our products and why they should use

them.

5
 7. Human Resource and Training Requirement

7.1 Human Resource

The list of required manpower for the envisaged plant is stated in table 5 below.
Table 5: Human Resource Requirement

No. Monthly Total Annual

Position Required Salary Salary
Manager 1 4500 54000
Production Manager 1 4000 48000
Administrator/Finance Head 1 3000 36000
Accountant 1 1500 18000
Secretary 2 1000 24000
Marketing Officer 1 1500 18000
Chemist 1 1500 18000
Store Keeper 1 800 9600
Technician 1 1200 14400
Supervisor 2 1500 36000
Operators 30 800 96000
Daily Laborers 100 400 96000
Cleaners 1 400 4800
Driver 2 800 19200
Guards 6 400 28800
Benefit (20%) 104160
Total 151 624,960

The envisaged plant therefore, creates 51 jobs and aboutBirr 624,960

thousand of
income. The professionals and support staff for the envisaged plant
shall be recruited from Addis Ababa and oromia region.

7.2 Training Requirement

Training of key personnel shall be conducted in collaboration with the

suppliers of the
plant machineries. The training should primarily focus on the production
technology and
machinery maintenance and trouble shooting. Birr 40,000 will be
allocated for training
expense.
9
 3. Financial Analysis
3.1 Underlying Assumption
The financial analysis of essential oil producing plant is based on the
data provided in the preceding sections and the following assumptions.
A. Construction and Finance

Construction period 2 years

Source of finance 40% equity and 60% 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 fixed investment
B. Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
Pre-production (amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30
Raw Material-Foreign 120
Factory Supplies in Stock 30
Spare Parts in Stock and Maintenance 30
Work in Progress 10
Finished Products 15
Accounts Receivable 30
Cash in Hand 30
Accounts Payable 30

10
3.2.Financial Analysis and Statements
Underlying Assumption

The financial analysis of the envisioned project is based on the data

provided in the preceding sections and the following assumptions.
Construction and Finance
Construction period 16 months
Source of finance 30% equity and 70% loan
Bank interest rate 14 %
Duration of loan 10 Years
Operating Costs increase by 3% after year 3

Raw materials and inputs increase by 3% after year 3

Salary and wages increase by 2 % after year 3
Sales revenue increased by 3 % after year 3
Depreciation
Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
Working Capital
Accounts receivable 30 days
Raw material local 30days
Work in progress 5 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days
Mortality of Chicken 5%
 Sources of Fund
SN Description % Amount(in
share birr)
1 Owners Share(Equity) 30 30,000,000
2 Bank Loan 70 100,000,000.00
Total 100 130,000,000

Loan repayment Schedule

Yea Interest
Principal Total Paid Balance
r (@14%)
202 $2,421,071.0 $3,260,595.1 $29,160,475.8
$839,524.13
2 4 7 7
202 $3,981,898.0 $5,589,591.7 $27,552,782.1
$1,607,693.71
3 1 2 6
202 $3,741,801.7 $5,589,591.7 $25,704,992.2
$1,847,789.95
4 7 2 1
202 $3,465,849.0 $5,589,591.7 $23,581,249.5
$2,123,742.64
5 8 2 7
202 $3,148,685.0 $5,589,591.7 $21,140,342.8
$2,440,906.70
6 2 2 7
202 $2,784,155.0 $5,589,591.7 $18,334,906.2
$2,805,436.66
7 6 2 1
202 $2,365,185.4 $5,589,591.7 $15,110,499.9
$3,224,406.26
8 6 2 5
202 $1,883,646.0 $5,589,591.7 $11,404,554.3
$3,705,945.64
9 8 2 1
203 $1,330,192.6 $5,589,591.7
$4,259,399.07 $7,145,155.24
0 5 2
203 $5,589,591.7
$4,895,506.39 $694,085.33 $2,249,648.85
1 2
203 $2,328,995.3
$2,249,648.85 $79,346.50 $0.00
2 5
Tot $30,000,000. $25,895,916 $55,895,91
als 00 .00 6.00

Depreciation Schedule
Original Depreciat
S Depreciation
Description Value In ion rate
N Per year
Birr in %
Land, Building & 16,666,945.
1 5% 833,347.25
Construction 08
10,280,032.
2 Machines & Equipment 10% 1,028,003.24
40
8,682,200.0
3 Vehicle 20% 1,736,440.02
9
4 Office Equipment 482,358.00 10% 48,235.77
36,111,535
Total 3,646,026.28
.28
 Revenue Projection

S Year 1 Year 2 Year 3-10

N
1 5,724,000. 7,632,000.00 9,540,000.00
00 Balance Sheet
2 1,260,000. 1,680,000.00 2,100,000.00 (Beginning)
00
Income/Loss Statement
3 5,040,000. 6,720,000.00 8,400,000.00
00
4 5,382,000. 7,176,000.00 8,970,000.00
00
17,406,00 23,208,000.0 29,010,000.0
0.00 0 0
Revenue Year 1 Year 2 Year 3-10
Total Sales Revenue 23,208,000.0
17,406,000.00 0 29,010,000.00
Sales Before VAT 20,180,869.5
15,135,652.17 7 25,226,086.96
VAT 2,270,347.83 3,027,130.43 3,783,913.04
Purchase of Raw Materials and 5,678,992
Inputs 4,259,244 7,098,740
Gross Profit 10,876,408 14,501,878 18,127,347
Expenses
Salary Expense 2,482,560 2,792,880 3,103,200
Other Operating Expenses 1,778,993 2,001,368 2,223,742
.60
Deprecation Building 698,145.00 698,145 698,145
Deprecation Machineries & 861,220 861,220
Equipments 861,220.00
Deprecation of Vehicle 1,520,000.00 1,520,000 1,520,000
Deprecation Office Equipments 40,410.00 40,410 40,410
Interest Expense 2,513,280.00 2,261,952.00 1,130,976.00
Total Expense 9,894,608.60 10,175,974.8 9,577,693.00
0
Profit Before Tax 981,799.57 4,325,902.7 8,549,653.96
7

9. Economic and Social Benefits and Justification

The envisaged project possesses wide range of benefits that help

promote the socio-
economic goals and objectives stated in the strategic plan of the
Amhara National Regional State. It also boosts inter sectoral linkage
between the agricultural and industrial sectors. At the same time,
therefore, it helps diversify the economic activity of the region. The
other major benefits are listed as follows:

A. Profit Generation
The project is found to be financially viable and earns on average a
profit of Birr 2.58 million per year and Birr 25.82 million within the
project life. Such result induces the project promoters to reinvest the
profit which, therefore, increases the investment magnitude in the
region.

B. Tax Revenue

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

13
 C. Import Substitution and Foreign Exchange Saving

Based on the projected figure we learn that in the project life an

estimated amount of US Dollar 7.9 million will be saved as a result of
the proposed project. This will create room for the saved hard currency
to be allocated to other vital and strategic sectors.

D. Employment and Income Generation

The proposed project is expected to create employment opportunity to

several citizens of the region. That is, it will provide permanent
employment to 51 professionals as well as support staff. Consequently
the project creates income of Birr 624,960 per year. This would be one
of the commendable accomplishments of the project.

E. Environmental Impact
The proposed production process of essential oil does not pose any
environmental
problem. However, the use of eucalyptus tree has got its own
limitation. This is because
planting eucalyptus tree can cause ecological problems since the
trees absorb huge
quantities of water and prevent the growth of native plants. To mitigate
this problem the
plantation shall be conducted in areas where native plants are rarely
found. At the same
time, however, the use of eucalyptus tree can be beneficial for drying
up marshy areas
and so reducing the risk of malaria.
F. Diversification and InterSectoral linkage.

The proposed project helps to diversify ANRS’ and Ethiopian economy. It

contributes to industrialization of the region as well as the county’s
economy.
14
ANNEXES

15
 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0 0 40% 60% 80% 100%

1. Total Inventory 0.00 0.00 188450.7 282676.19 376901.58 471126.98

Raw Materials in Stock- Total 0.00 0.00 13090.91 19636.36 26181.82 32727.27

Raw Material-Local 0.00 0.00 13090.91 19636.36 26181.82 32727.27

Raw Material-Foreign 0.00 0.00 0.00 0.00 0.00 0.00

Factory Supplies in Stock 0.00 0.00 2080.07 3120.10 4160.13 5200.17

Spare Parts in Stock and Maintenance 0.00 0.00 4183.85 6275.78 8367.71 10459.64

Work in Progress 0.00 0.00 52001.68 78002.53 104003.37 130004.21

Finished Products 0.00 0.00 104003.3 156005.05 208006.73 260008.42

2. Accounts Receivable 0.00 0.00 392727.2 589090.91 785454.55 981818.18

3. Cash in Hand 0.00 0.00 170573.7 255860.57 341147.43 426434.29

CURRENT ASSETS 0.00 0.00 738660.8 1107991.3 1477321.7 1846652.1

4. Current Liabilities 0.00 0.00 392727.2 589090.91 785454.55 981818.18

Accounts Payable 0.00 0.00 392727.2 589090.91 785454.55 981818.18

TOTAL NET WORKING CAPITAL REQUIRMENTS 0.00 0.00 345933.6 518900.40 691867.20 864834.00

INCREASE IN NET WORKING CAPITAL 0.00 0.00 345933.6 172966.80 172966.80 172966.80

1
 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 471126.98 471126.98 471126.98 471126.98 471126.98 471126.98

Raw Materials in Stock-Total 32727.27 32727.27 32727.27 32727.27 32727.27 32727.27

Raw Material-Local 32727.27 32727.27 32727.27 32727.27 32727.27 32727.27

Raw Material-Foreign 0.00 0.00 0.00 0.00 0.00 0.00

Factory Supplies in Stock 5200.17 5200.17 5200.17 5200.17 5200.17 5200.17

Spare Parts in Stock and Maintenance 10459.64 10459.64 10459.64 10459.64 10459.64 10459.64

Work in Progress 130004.21 130004.21 130004.21 130004.21 130004.21 130004.21

Finished Products 260008.42 260008.42 260008.42 260008.42 260008.42 260008.42

2. Accounts Receivable 981818.18 981818.18 981818.18 981818.18 981818.18 981818.18

3. Cash in Hand 426434.29 426434.29 426434.29 426434.29 426434.29 426434.29

CURRENT ASSETS 1846652.1 1846652.1 1846652.1 1846652.1 1846652.1 1846652.1

4. Current Liabilities 981818.18 981818.18 981818.18 981818.18 981818.18 981818.18

Accounts Payable 981818.18 981818.18 981818.18 981818.18 981818.18 981818.18

TOTAL NET WORKING CAPITAL REQUIRMENTS 864834.00 864834.00 864834.00 864834.00 864834.00 864834.00

INCREASE IN NET WORKING CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 1677900.0 2542734.0 3992727.2 5596363.6 7396363.6 9196363.6
1. Inflow Funds 1677900.0 2542734.0 392727.27 196363.64 196363.64 196363.64
Total Equity 671160.00 1017093.6 0.00 0.00 0.00 0.00
Total Long Term Loan 1006740.0 1525640.4 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 392727.27 196363.64 196363.64 196363.64
2. Inflow Operation 0.00 0.00 3600000.0 5400000.0 7200000.0 9000000.0
Sales Revenue 0.00 0.00 3600000.0 5400000.0 7200000.0 9000000.0
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 1677900.0 1677900.0 3234139.9 3777229.0 5463368.0 6563845.5
4. Increase In Fixed Assets 1677900.0 1677900.0 0.00 0.00 0.00 0.00
Fixed Investments 1598000.0 1598000.0 0.00 0.00 0.00 0.00
Pre-production 79900.00 79900.00 0.00 0.00 0.00 0.00
5. Increase in Current Assets 0.00 0.00 738660.87 369330.44 369330.44 369330.44
6. Operating Costs 0.00 0.00 1830619.6 2681949.5 3533279.3 4384609.2
7. Corporate Tax Paid 0.00 0.00 0.00 0.00 885456.78 1185252.1
8. Interest Paid 0.00 0.00 664859.35 303885.65 253238.04 202590.43
9.Loan Repayments 0.00 0.00 0.00 422063.40 422063.40 422063.40
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 0.00 864834.00 758587.37 1819134.6 1932995.6 2632518.0
Cumulative Cash Balance 0.00 864834.00 1623421.3 3442555.9 5375551.6 8008069.6

3
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 9000000.00 9000000.0 9000000.0 9000000.0 9000000.0 9000000.00
1. Inflow Funds 0.00 0.00 0.00 0.00 0.00 0.00
Total Equity 0.00 0.00 0.00 0.00 0.00 0.00
Total Long Term Loan 0.00 0.00 0.00 0.00 0.00 0.00
Total Short Term Finances 0.00 0.00 0.00 0.00 0.00 0.00
2. Inflow Operation 9000000.00 9000000.0 9000000.0 9000000.0 9000000.0 9000000.00
Sales Revenue 9000000.00 9000000.0 9000000.0 9000000.0 9000000.0 9000000.00
Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00
3. Other Income 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL CASH OUTFLOW 6159061.82 6223196.5 6187743.1 5730226.4 5730226.4 5730226.45
4. Increase In Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00
Fixed Investments 0.00 0.00 0.00 0.00 0.00 0.00
Pre-production
Expenditures 0.00 0.00 0.00 0.00 0.00 0.00
5. Increase in Current 0.00 0.00 0.00 0.00 0.00 0.00
6. Operating Costs 4384609.21 4384609.2 4384609.2 4384609.2 4384609.2 4384609.21
7. Corporate Tax Paid 1200446.39 1315228.6 1330422.9 1345617.2 1345617.2 1345617.24
8. Interest Paid 151942.82 101295.22 50647.61 0.00 0.00 0.00
9. Loan Repayments 422063.40 422063.40 422063.40 0.00 0.00 0.00
10.Dividends Paid 0.00 0.00 0.00 0.00 0.00 0.00
Surplus(Deficit) 2840938.18 2776803.5 2812256.8 3269773.5 3269773.5 3269773.55
Cumulative Cash Balance 10849007.8 13625811.3 16438068.1 19707841.7 22977615.2 26247388.8

4
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0.00 0.00 3600000.00 5400000.0 7200000.0 9000000.0

1. Inflow Operation 0.00 0.00 3600000.00 5400000.0 7200000.0 9000000.0

Sales Revenue 0.00 0.00 3600000.00 5400000.0 7200000.0 9000000.0

Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00

2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 1677900.00 1677900.0 2176553.28 2854916.3 4591702.9 5742828.1

3. Increase in Fixed Assets 1677900.00 1677900.0 0.00 0.00 0.00 0.00

Fixed Investments 1598000.00 1598000.0 0.00 0.00 0.00 0.00

Pre-production Expenditures 79900.00 79900.00 0.00 0.00 0.00 0.00

4. Increase in Net Working Capital 0.00 0.00 345933.60 172966.80 172966.80 172966.80

5. Operating Costs 0.00 0.00 1830619.68 2681949.5 3533279.3 4384609.2

6. Corporate Tax Paid 0.00 0.00 0.00 0.00 885456.78 1185252.1

NET CASH FLOW - - 1423446.72 2545083.6 2608297.0 3257171.8

CUMMULATIVE NET CASH FLOW - - - 612730.39 3221027.4 6478199.3

Net Present Value (at 18%) - - 1022297.27 1549016.5 1345330.6 1423739.8

Cumulative Net present Value - - - - 816795.22 2240535.0

5
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 9000000.0 9000000.0 9000000.0 9000000.0 9000000.00 9000000.0

1. Inflow Operation 9000000.0 9000000.0 9000000.0 9000000.0 9000000.00 9000000.0

Sales Revenue 9000000.0 9000000.0 9000000.0 9000000.0 9000000.00 9000000.0

Interest on Securities 0.00 0.00 0.00 0.00 0.00 0.00

2. Other Income 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL CASH OUTFLOW 5585055.6 5699837.8 5715032.1 5730226.4 5730226.45 5730226.4

3. Increase in Fixed Assets 0.00 0.00 0.00 0.00 0.00 0.00

Fixed Investments 0.00 0.00 0.00 0.00 0.00 0.00

Pre-production Expenditures 0.00 0.00 0.00 0.00 0.00 0.00

4. Increase in Net Working Capital 0.00 0.00 0.00 0.00 0.00 0.00

5. Operating Costs 4384609.2 4384609.2 4384609.2 4384609.2 4384609.21 4384609.2

6. Corporate Tax Paid 1200446.3 1315228.6 1330422.9 1345617.2 1345617.24 1345617.2

NET CASH FLOW 3414944.4 3300162.1 3284967.8 3269773.5 3269773.55 3269773.5

CUMMULATIVE NET CASH FLOW 9893143.7 13193305.8 16478273.6 19748047.2 23017820.7 26287594.3

Net Present Value (at 18%) 1265003.1 1036003.5 873926.81 737190.30 624737.54 529438.59

Cumulative Net present Value 3505538.1 4541541.6 5415468.4 6152658.7 6777396.33 7306834.9

Net Present Value (at 18%) 7,306,834.92

Internal Rate of Return 54.42%

6
 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 40% 60% 80% 100% 100%

1. Total Income 3600000.0 5400000.0 7200000.0 9000000.0 9000000.0

Sales Revenue 3600000.0 5400000.0 7200000.0 9000000.0 9000000.0
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 1602666.0 2403999.1 3205332.1 4006665.2 4006665.2
VARIABLE MARGIN 1997333.9 2996000.8 3994667.8 4993334.7 4993334.7
(In % of Total Income) 55.48 55.48 55.48 55.48 55.48
3. Less Fixed Costs 689913.60 739910.40 789907.20 839904.00 839904.00
OPERATIONAL MARGIN 1307420.3 2256090.4 3204760.6 4153430.7 4153430.7
(In % of Total Income) 36.32 41.78 44.51 46.15 46.15
4. Less Cost of Finance 664859.35 303885.65 253238.04 202590.43 151942.82
5. GROSS PROFIT 642560.96 1952204.8 2951522.5 3950840.3 4001487.9
6. Income (Corporate) Tax 0.00 0.00 885456.78 1185252.1 1200446.3
7. NET PROFIT 642560.96 1952204.8 2066065.8 2765588.2 2801041.5
RATIOS (%)

Gross Profit/Sales 17.85% 36.15% 40.99% 43.90% 44.46%

Net Profit After Tax/Sales 17.85% 36.15% 28.70% 30.73% 31.12%
Return on Investment 35.32% 58.23% 57.30% 70.33% 69.97%
Return on Equity 38.06% 115.63% 122.38% 163.81% 165.91%

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

1. Total Income 9000000.0 9000000.0 9000000.0 9000000.0 9000000.0

Sales Revenue 9000000.0 9000000.0 9000000.0 9000000.0 9000000.0
Other Income 0.00 0.00 0.00 0.00 0.00
2. Less Variable Cost 4006665.2 4006665.2 4006665.2 4006665.2 4006665.2
VARIABLE MARGIN 4993334.7 4993334.7 4993334.7 4993334.7 4993334.7
(In % of Total Income) 55.48 55.48 55.48 55.48 55.48
3. Less Fixed Costs 507944.00 507944.00 507944.00 507944.00 507944.00
OPERATIONAL MARGIN 4485390.7 4485390.7 4485390.7 4485390.7 4485390.7
(In % of Total Income) 49.84 49.84 49.84 49.84 49.84
4. Less Cost of Finance 101295.22 50647.61 0.00 0.00 0.00
5. GROSS PROFIT 4384095.5 4434743.1 4485390.7 4485390.7 4485390.7
6. Income (Corporate) Tax 1315228.6 1330422.9 1345617.2 1345617.2 1345617.2
7. NET PROFIT 3068866.9 3104320.2 3139773.5 3139773.5 3139773.5
RATIOS (%)

Gross Profit/Sales 48.71 49.27% 49.84% 49.84 49.84%

Net Profit After Tax/Sales 34.10 34.49% 34.89% 34.89 34.89%
Return on Investment 75.11 74.75% 74.39% 74.39 74.39%
Return on Equity 181.78 183.88 185.98 185.98 185.98
8
 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 1677900.0 4220634.0 5255922.2 6982427.3 8822793.3 11362681.8
1. Total Current Assets 0.00 864834.00 2362082.2 4550547.3 6852873.3 9854721.83
Inventory on Materials and Supplies 0.00 0.00 19354.83 29032.25 38709.66 48387.08
Work in Progress 0.00 0.00 52001.68 78002.53 104003.37 130004.21
Finished Products in Stock 0.00 0.00 104003.37 156005.05 208006.73 260008.42
Accounts Receivable 0.00 0.00 392727.27 589090.91 785454.55 981818.18
Cash in Hand 0.00 0.00 170573.72 255860.57 341147.43 426434.29
Cash Surplus, Finance Available 0.00 864834.00 1623421.3 3442555.9 5375551.6 8008069.66
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 1677900.0 3355800.0 2893840.0 2431880.0 1969920.0 1507960.00
Fixed Investment 0.00 1598000.0 3196000.0 3196000.0 3196000.0 3196000.00
Construction in Progress 1598000.0 1598000.0 0.00 0.00 0.00 0.00
Pre-Production Expenditure 79900.00 159800.00 159800.00 159800.00 159800.00 159800.00
Less Accumulated Depreciation 0.00 0.00 461960.00 923920.00 1385880.0 1847840.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 1677900.0 4220634.0 5255922.2 6982427.3 8822793.3 11362681.8
5. Total Current Liabilities 0.00 0.00 392727.27 589090.91 785454.55 981818.18
Accounts Payable 0.00 0.00 392727.27 589090.91 785454.55 981818.18
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 1006740.0 2532380.4 2532380.4 2110317.0 1688253.6 1266190.20
Loan A 1006740.0 2532380.4 2532380.4 2110317.0 1688253.6 1266190.20
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 671160.00 1688253.6 1688253.6 1688253.6 1688253.6 1688253.60
Ordinary Capital 671160.00 1688253.6 1688253.6 1688253.6 1688253.6 1688253.60
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought 0.00 0.00 0.00 642560.96 2594765.7 4660831.60
9.Net Profit After Tax 0.00 0.00 642560.96 1952204.8 2066065.8 2765588.25
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 0.00 0.00 642560.96 1952204.8 2066065.8 2765588.25

9
 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 13741660.0 16388463.5 19070720.3 22210493.8 25350267.4 28490041.0
1. Total Current Assets 12695660.0 15472463.5 18284720.3 21554493.8 24824267.4 28094041.0
Inventory on Materials and Supplies 48387.08 48387.08 48387.08 48387.08 48387.08 48387.08
Work in Progress 130004.21 130004.21 130004.21 130004.21 130004.21 130004.21
Finished Products in Stock 260008.42 260008.42 260008.42 260008.42 260008.42 260008.42
Accounts Receivable 981818.18 981818.18 981818.18 981818.18 981818.18 981818.18
Cash in Hand 426434.29 426434.29 426434.29 426434.29 426434.29 426434.29
Cash Surplus, Finance Available 10849007.8 13625811.3 16438068.1 19707841.7 22977615.2 26247388.8
Securities 0.00 0.00 0.00 0.00 0.00 0.00
2. Total Fixed Assets, Net of Depreciation 1046000.0 916000.00 786000.00 656000.00 526000.00 396000.00
Fixed Investment 3196000.0 3196000.0 3196000.0 3196000.0 3196000.00 3196000.00
Construction in Progress 0.00 0.00 0.00 0.00 0.00 0.00
Pre-Production Expenditure 159800.00 159800.00 159800.00 159800.00 159800.00 159800.00
Less Accumulated Depreciation 2309800.0 2439800.0 2569800.0 2699800.0 2829800.00 2959800.00
3. Accumulated Losses Brought Forward 0.00 0.00 0.00 0.00 0.00 0.00
4. Loss in Current Year 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 13741660.0 16388463.5 19070720.3 22210493.8 25350267.4 28490041.0
5. Total Current Liabilities 981818.18 981818.18 981818.18 981818.18 981818.18 981818.18
Accounts Payable 981818.18 981818.18 981818.18 981818.18 981818.18 981818.18
Bank Overdraft 0.00 0.00 0.00 0.00 0.00 0.00
6. Total Long-term Debt 844126.80 422063.40 0.00 0.00 0.00 0.00
Loan A 844126.80 422063.40 0.00 0.00 0.00 0.00
Loan B 0.00 0.00 0.00 0.00 0.00 0.00
7. Total Equity Capital 1688253.6 1688253.6 1688253.6 1688253.6 1688253.60 1688253.60
Ordinary Capital 1688253.6 1688253.6 1688253.6 1688253.6 1688253.60 1688253.60
Preference Capital 0.00 0.00 0.00 0.00 0.00 0.00
Subsidies 0.00 0.00 0.00 0.00 0.00 0.00
8. Reserves, Retained Profits Brought
Forward 7426419.8 10227461.4 13296328.3 16400648.5 19540422.1 22680195.6
9. Net Profit After Tax 6
2801041.5 33068866.9 33104320.2 63139773.5 13139773.55 73139773.55
Dividends Payable 0.00 0.00 0.00 0.00 0.00 0.00
Retained Profits 2801041.5 3068866.9 3104320.2 3139773.5 3139773.55 3139773.55

10