Investment Office ANRS

Project Profile on the Establishment

of Burned Clay Producing plant

Development Studies
Associates (DSA)

October 2008
Addis Ababa

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....................................................................................................2
3.1.3
Pricing and Distribution...........................................................................................3
3.2
Plant Capacity..................................................................................................................3
3.3
Production Program.........................................................................................................3

4. Raw Materials and Utilities..............................................................................4

4.1
4.2

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

Annual Requirement and Cost of Raw Materials and Utilities.......................................4

Location and Site...............................................................................................5

Technology and Engineering............................................................................5

6.1
6.2
6.3

Human Resource and Training Requirement.................................................7

7.1
7.2

Human Resource..............................................................................................................7
Training Requirement......................................................................................................9

Financial Analysis..............................................................................................9
8.1
8.2
8.3
8.4

Production Process...........................................................................................................5
Machinery and Equipment...............................................................................................6
Civil Engineering Cost....................................................................................................7

Underlying Assumption...................................................................................................9
Investment......................................................................................................................10
Production Costs............................................................................................................11
Financial Evaluation......................................................................................................11

Economic and Social Benefit and Justification.............................................12

ANNEXES..............................................................................................................14

1. Executive Summary
This project profile deals with the establishment of burned clay producing plant in Amhara
National Regional State. The following presents the main findings of the study
Demand projection divulges that the domestic demand for burned clay is substantial and is
increasing with time. Accordingly, the planned plant is set to produce 20,000 ton annually. The
total investment cost of the project including working capital is estimated at Birr 73.45 million
and creates 95 jobs.
The financial result indicates that the project will generate profit beginning from the first year of
operation. Moreover, the project will break even at 10.20% of capacity utilization and it will payback fully the initial investment less working capital in three years. The result further shows that
the calculated IRR of the project is 41.6% and the net present value at 18 % discount is Birr
79.27 million.
In addition to this, the proposed project possesses wide range of economic and social benefits
such as increasing the level of investment, tax revenue, employment creation.
Generally the project is technically feasible, financially and commercially viable as well as
socially and economically acceptable. Hence the project is worth implementing.

2. Product Description and Application

Clay bricks are major inputs in the building industry. They are mainly used to construct outside
and inside (partition) walls of small and large buildings. Brick products are also used for roof
tiles. Common wall bricks have standard dimension of 25X12X6.5 cm. Most wall bricks are
solid, but there are also hollow bricks with different dimensions. Hollow bricks are relatively
light and have good insulating properties. In general buildings made of clay bricks are cool in

summer and warm in winter. Compared to building materials such as hollow blocks asbestos, and
other synthetic wall making products, clay bricks have long durability.

3. Market Study, Plant Capacity and Production Program

3.1

Market Study
3.1.1 Present Demand and Supply

Clay bricks are made from clay soil which can be found in many localities in the Amhara
Region. But there is not a single clay bricks making unit in the whole Region. Alls the
bricks requirement of the Region is transported form Addis Ababa. Clay bricks are one of
those construction materials which are expensive to transport long distances. They are
usually produced in location close to major construction sites such as main urban centers.
Building construction has been expanding during the last few years; and it seems this
trend will continue during the coming years.
Taking the size of new constructions in the regions the current regional demand for
burned clay is set at 100,000 tons. To be self-sufficient in this important building material
two or three clay bricks making factories should be established in the region.

3.1.2 Projected Demand

The demand is expected grow at average annual rate of 10%, the rate of growth of the
building construction in the region. The projected demand is depicted in Table 1.

Table 1: Projected Demand

Year

Regional
Demand
(ton)

2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

110,000
121,000
133,100
146,410
161,051
177,156
194,872
214,359
235,795
259,374

3.1.3 Pricing and Distribution

Since bricks are widely produced, especially in and around Addis Ababa, the pricing is based on
the exiting market prices. The existing average market price is Birr 10,000/ton. Based on the
market research result and the capacity of the envisaged plant, the selling price has been
estimated at Birr 8.000 per ton.
Major contractors will purchase at factory gate.

3.2

Plant Capacity

Thus, given the expected demand for burned clay presented earlier, and the planned technology,
the envisaged plant is set to produce 20,000 tons annually.

3.3

Production Program

The program is scheduled based on the consideration that the envisaged plant will work 275 days
in a year, where the remaining days will be holidays and for maintenance. During the first year of
operation the plant will operate at 40 percent capacity and then it grows to 50, 60, 70 and 80
percents in the 2nd, 3rd, 4th, 5th years. The capacity will grow to 100 percent starting from the 6 th
3

year. This consideration is developed based on the assumption that market and logistics barriers
would take place for the first five years of operation.
Mode of operation:
Table 2: Mode of Operation

Sections

No. Shifts

Preparation and
forming
Stacking and transport
Drying Section
Counter travel kiln
Loading and unloading

2
2
3
3
2

4. Raw Materials and Utilities

4.1

Availability and Source of Raw Materials

Sufficient clay soil is available in many parts of ANRS.

4.2

Annual Requirement and Cost of Raw Materials

and Utilities

The annual raw material and utility requirement and the associated cost for the envisaged plant is
listed in Table 3 & 4.
Table 3: Raw Material Requirements at Full Capacity

Price (Birr)
No. Material
Qty
Unit
Total
1 Clay (ton) 250,000 200 50,000,000
Total
250,000
50,000,000
Table 4: Utility Requirements at Full Capacity

Unit Unit Price Total Price

Electricity
Kwh
1000000
550,000
Fuel
ton
675
2,025,000
Compressed air Cum/hr
41120
20,560
3
Water
M
10,000
26,500
Total
2,622,060

5 Location and Site

The appropriate locations for the envisaged project in view of the availability of input,
infrastructure as well as market for the output are Bahir Dar, Dessie, Gondar, Debre Markos

6 Technology and Engineering

6.1

Production Process

According to the nature of the available clay, the incoming raw material must be ground down to
a maximum grain size of 1.5 mm, which is done by a roller crusher and a finishing mill. Then
water is added to the clay until the material has reached a humidity degree of 20-25%.
After an intermediate storage the treated clay is homogenized under vacuum in a de-airing
extrusion thus preventing air-inclusions in the product. The preformed mass is cut to proper size
and taken to a drier via a conveying system. The drying takes about 42 hours eventually resulting
in a loss of weight of approx. 7%. The dry product is taken from the conveying system and set
onto kiln cars by hand. Burning in the kiln is done at 1,000 C, which takes approx. 60 hours.
After the burning process, the final product is manually unloaded from the kiln cars and put on
palets or directly on trucks.
The reject material that results from the first steps up to the outlet of the drying stage, can be
completely re-conveyed to the process via the mill. Burnt material, too, can be added to the
process-flow again, at a portion of 10% of the quantity of raw material. Finally, reject material
may well be used for instance as an additive material for road construction.
There are two alternative technological processes promoted to revolutionaries the production
burned clay:

One utilizes a more energy efficient kiln to produce burnt clay bricks, and

the other replaces burnt clay brick with fly ash bricks which are manufactured without the
use of thermal energy.

Using automated machineries is an alternative technology that is more productive but costly.

6.2

Machinery and Equipment

The machineries and equipment required for producing burned clay is detailed in Table 5.
Table 5: Machineries and Equipments

Item
1
2
3
4
5
6
7
8
9
10
11
12

Description
Box feeder
Roller crusher
Finishing mill
Double-shaft mixer
Box feeder for intermediate storage
Circular feeder
De-airing extrusion machine
Cutter for bricks
Conveying and stacking system
Drier
Counter travel kiln
Loading and unloading system
FOB Price
Installation 20%

Total

Qty.

Total

1
1
1
1
1
1
1
1
1
1
1
1
43,500,000
8700000

52,200,000

The, total cost of machinery and equipment including freight insurance and bank cost is
estimated to be about Birr 52.2 million.
Supplier Address:
J.R.Trade Impex Pvt. Ltd.
Deals in clay brick, manufacturing machine
Address: 1Bh/35 Dum Dum Road , Kolkata ,
West Bangal - 700 002 India
Phone No.: 91 - 33 - 25577823
Fax : +91 - 33 - 25577823

6.3

Civil Engineering Cost

The total site area for the envisaged plant is estimated to be 5,980 m2 (raw material shelter 2,000
sq.m, workshop 800 sq.m, administration 180 sq.m). Total lease price is estimated at Birr
358,800 and the costs of Building and civil works at Birr 1,960,000.

7 Human Resource and Training Requirement

7.1

Human Resource

The list of required manpower for the envisaged plant is stated in Table 6.

Table 6: Human Resource Requirement

Salary/Wage (Birr)

Job Title
1 General Manager
2 Secretary
Production
1
2
3
4
5
6
7
8
9
10
11
1
2
3
4
5
6
7
8
9

Production Head
Preparation and forming - skilled workers
Preparation and forming - unskilled workers
Stacking and transport - skilled workers
Stacking and transport -unskilled workers
Drier - skilled workers
Drier - unskilled workers
Counter travel kiln - skilled workers
Counter travel kiln - unskilled workers
Loading and unloading - skilled workers
Loading and unloading - unskilled workers
Administration
Administration Head
Secretary
Accountant
Marketing Officer
Casher
Driver
Security /5th grade license/
Clerks
Genitor
Total
Employment Benefits 20% of Annual Salary

No.

Monthly
Annual
1
5,000
60,000
1
1,000
12,000
0
1
3,500
42,000
2
1,200
28,800
8
550
52,800
2
1,100
26,400
8
500
48,000
3
1,000
36,000
9
500
54,000
3
1,000
36,000
9
500
54,000
2
900
21,600
20
450
108,000
1
1
1
1
1
6
6
4
5
95

2,500
800
1,500
1,500
800
1,500
350
500
350

30,000
9,600
18,000
18,000
9,600
108,000
25,200
24,000
21,000
843,000
168,600
1,011,600

The envisaged plant, therefore, creates 95 jobs.

7.2

Training Requirement

Training of key personnel shall be conducted. The training should primarily focuses on the
production technology and machinery maintenance and trouble shooting. Birr 80,000 will be
allocated as training expense.

8 Financial Analysis
8.1

Underlying Assumption

The financial analysis of burnet clay producing plant is based on the data provided in the
preceding chapters and the following assumptions.
A. Construction and Finance

Construction period

2 years

Source of finance

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
Finished Products
Accounts Receivable
Cash in Hand
Accounts Payable

10
15
30
30
30

8.2

Investment

The total investment cost of the project including working capital is estimated at Birr 73.45
million as shown in Table 7. The Owner shall contribute 40% of the finance in the form of equity
while the remaining 60% is to be financed by bank loan.
Table 7: Total Initial Investment & Working Capital

Total Initial Investment

Item
Land
Building and civil works
Office equipment
Vehicles*

Cost
17,940.00
1,960,000.00
100,000.00
5,000,000.00

Plant machinery & equipment

Total Fixed Investment
Pre production capital expenditure**
Total Initial Investment
Working capital at full capacity

52,200,000.00
59,277,940.00
2,963,897.00
62,241,837.00
11,212,899.18

Total

73,454,736.18
* Five Heavy Trucks are important for the project
**Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy
fee during construction and expenses for companys establishment, project administration expenses,
commission expenses, preproduction marketing and interest expenses during construction.

10

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 67.5 million as detailed in
Table 8 below.
Table 8: Production Cost at Full Capacity

Items
1.
2.
3.
4.

Raw materials
Utilities
Wages and Salaries
Spares and Maintenance
Factory costs
5. Depreciation
6. Financial costs

Total Production Cost

8.4
I.

Cost
50,000,000.00
2,622,060.00
890,640.00
1,778,338.20
55,291,038.20
6,920,779.40
5,287,068.85
67,498,886.45

Financial Evaluation

Profitability

According to the projected income statement attached in the annex part (see annex 4) the project
will generate profit beginning from the first year of operation. Gross Profit/Sales, Net Profit after
Tax/Sales, Return on Investment and Return on Equity are 14.79%, 14.79%, 28.14%, 24.15% in
the first year and are gradually rising to 49.84%, 34.89%, 57.00%, and 142.50%, respectively.
Furthermore, the income statement and other profitability indicators show that the project is
viable.
II.

Breakeven Analysis

The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 10.20% of capacity utilization.

11

III.

Payback Period

Investment cost and income statement projection are used in estimating the project payback
period. The projects will payback fully the initial investment less working capital in the third
year of operation.
IV.

Simple Rate of Return

For the envisaged plant the simple rate of return equals to 44.0%.

V.

Internal Rate of Return and Net Present Value

Based on cash flow statement described in the annex part, the calculated IRR of the project is
41.6% and the net present value at 18 % discount is Birr 79.27 million.
VI.

Sensitivity Analysis

The envisaged plant is profitable even with considerable cost increment. That is the plant
maintains to be profitable starting from the first year when 10 % cost increment takes place in
the sector.

9 Economic and Social Benefit and Justification

The envisaged project possesses wide range of benefits where it promotes the socio-economic
goals and objectives stated in the strategic plan of the Amhara National Regional State. These
benefits are listed as follows.
A. Profit Generation
The project is found to be financially viable and earns Birr 308 million within the project life.
Such result induces the project promoters to reinvest the profit which, therefore, increases the
investment magnitude in the region.
12

B. Tax Revenue
In the project life under consideration, the region will collect about Birr 120 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region

C. Employment and Income Generation

The proposed project is expected to create employment opportunity to 95 citizens of the region.
This would be one of the commendable accomplishments of the project.
D. Diversification/ Integration
The plant contributes to industrialization of the economy and enhances intersectional linkages.

13

ANNEXES

14

Annex 1: Total Net Working Capital Requirements (in Birr)

CONSTRUCTION

Capacity Utilization (%)

1. Total Inventory

PRODUCTION

Year 1

Year 2

40%

50%

60%

70%

6,508,418

8,135,523

9,762,627

11,389,732

2,181,818

2,727,273

3,272,727

3,818,182

Raw Material-Local

2,181,818

2,727,273

3,272,727

3,818,182

Raw Material-Foreign

Factory Supplies in Stock

27,200

34,000

40,800

47,600

Spare Parts in Stock and Maintenance

77,600

97,000

116,400

135,800

Work in Progress

679,994

849,992

1,019,991

1,189,989

Finished Products

1,359,988

1,699,985

2,039,982

2,379,979

2. Accounts Receivable

4,189,091

5,236,364

6,283,636

7,330,909

3. Cash in Hand

158,560

198,200

237,840

277,479

8,674,251

10,842,813

13,011,376

15,179,939

4. Current Liabilities

4,189,091

5,236,364

6,283,636

7,330,909

Accounts Payable

4,189,091

5,236,364

6,283,636

7,330,909

TOTAL NET WORKING CAPITAL REQUIREMENTS

4,485,160

5,606,450

6,727,740

7,849,029

INCREASE IN NET WORKING CAPITAL

4,485,160

1,121,290

1,121,290

1,121,290

Raw Materials in Stock- Total

CURRENT ASSETS

Annex 1: Total Net Working Capital Requirements (in Birr)

(continued)

PRODUCTION
5

10

80%

100%

100%

100%

100%

100%

13,016,836

16,271,045

16,271,045

16,271,045

16,271,045

16,271,045

4,363,636

5,454,545

5,454,545

5,454,545

5,454,545

5,454,545

4,363,636

5,454,545

5,454,545

5,454,545

5,454,545

5,454,545

54,400

67,999

67,999

67,999

67,999

67,999

155,200

194,001

194,001

194,001

194,001

194,001

Work in Progress

1,359,988

1,699,985

1,699,985

1,699,985

1,699,985

1,699,985

Finished Products

2,719,976

3,399,970

3,399,970

3,399,970

3,399,970

3,399,970

2. Accounts Receivable

8,378,182

8,378,182

8,378,182

8,378,182

8,378,182

8,378,182

317,119

396,399

396,399

396,399

396,399

396,399

17,348,501

19,591,081

19,591,081

19,591,081

19,591,081

19,591,081

4. Current Liabilities

8,378,182

8,378,182

8,378,182

8,378,182

8,378,182

8,378,182

Accounts Payable

8,378,182

8,378,182

8,378,182

8,378,182

8,378,182

8,378,182

TOTAL NET WORKING CAPITAL REQUIREMENTS

8,970,319

11,212,899

11,212,899

11,212,899

11,212,899

11,212,899

INCREASE IN NET WORKING CAPITAL

1,121,290

2,242,580

Capacity Utilization (%)

1. Total Inventory
Raw Materials in Stock-Total
Raw Material-Local
Raw Material-Foreign
Factory Supplies in Stock
Spare Parts in Stock and Maintenance

3. Cash in Hand
CURRENT ASSETS

Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION

PRODUCTION

Year 1

Year 2

31,120,919

42,333,818

52,189,091

61,047,273

73,047,273

85,047,273

31,120,919

42,333,818

4,189,091

1,047,273

1,047,273

1,047,273

Total Equity

12,448,367

16,933,527

Total Long Term Loan

18,672,551

25,400,291

4,189,091

1,047,273

1,047,273

1,047,273

2. Inflow Operation

48,000,000

60,000,000

72,000,000

84,000,000

Sales Revenue

48,000,000

60,000,000

72,000,000

84,000,000

Interest on Securities

TOTAL CASH OUTFLOW

31,120,919

31,120,919

42,656,383

42,532,572

55,331,747

62,112,716

4. Increase In Fixed Assets

31,120,919

31,120,919

29,638,970

29,638,970

1,481,949

1,481,949

5. Increase in Current Assets

8,674,251

2,168,563

2,168,563

2,168,563

6. Operating Costs

22,304,096

27,729,795

33,155,494

38,581,192

7. Corporate Tax Paid

8,254,933

10,491,660

8. Interest Paid

11,678,036

5,288,741

4,407,284

3,525,827

9.Loan Repayments

7,345,474

7,345,474

7,345,474

10.Dividends Paid

Surplus (Deficit)

11,212,899

9,532,708

18,514,701

17,715,526

22,934,557

Cumulative Cash Balance

11,212,899

20,745,608

39,260,308

56,975,834

79,910,391

TOTAL CASH INFLOW

1. Inflow Funds

Total Short Term Finances

3. Other Income

Fixed Investments
Pre-production Expenditures

Annex 2: Cash Flow Statement (in Birr): Continued

PRODUCTION
5
97,047,273

6
120,000,000

7
120,000,000

8
120,000,000

9
120,000,000

10
120,000,000

1,047,273

Total Equity

Total Long Term Loan

1,047,273

2. Inflow Operation

96,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

Sales Revenue

96,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

TOTAL CASH OUTFLOW

68,893,686

83,624,495

80,764,895

72,802,402

72,802,402

72,802,402

4. Increase In Fixed Assets

Fixed Investments
Pre-production
Expenditures

2,168,563

2,242,580

6. Operating Costs

44,006,891

54,858,289

54,858,289

54,858,289

54,858,289

54,858,289

7. Corporate Tax Paid

12,728,388

17,415,239

17,679,676

17,944,113

17,944,113

17,944,113

8. Interest Paid

2,644,371

1,762,914

881,457

9. Loan Repayments

7,345,474

7,345,474

7,345,474

28,153,587

36,375,505

39,235,105

47,197,598

47,197,598

47,197,598

108,063,978

144,439,483

183,674,587

230,872,185

278,069,783

325,267,381

TOTAL CASH INFLOW

1. Inflow Funds

Total Short Term Finances

Interest on Securities
3. Other Income

5. Increase in Current Assets

10.Dividends Paid
Surplus (Deficit)
Cumulative Cash Balance

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

CONSTRUCTION
Year 1

PRODUCTION

Year 2

TOTAL CASH INFLOW

48,000,000

60,000,000

72,000,000

84,000,000

1. Inflow Operation

48,000,000

60,000,000

72,000,000

84,000,000

Sales Revenue

48,000,000

60,000,000

72,000,000

84,000,000

Interest on Securities

TOTAL CASH OUTFLOW

31,120,919

31,120,919

26,789,256

28,851,085

34,276,783

50,194,143

3. Increase in Fixed Assets

31,120,919

31,120,919

Fixed Investments

29,638,970

29,638,970

1,481,949

1,481,949

4. Increase in Net Working Capital

4,485,160

1,121,290

1,121,290

1,121,290

5. Operating Costs

22,304,096

27,729,795

33,155,494

38,581,192

6. Corporate Tax Paid

10,491,660

NET CASH FLOW

-31,120,919

-31,120,919

21,210,744

31,148,915

37,723,217

33,805,857

CUMULATIVE NET CASH FLOW

-31,120,919

-62,241,837

-41,031,093

-9,882,177

27,841,039

61,646,897

Net Present Value (at 18%)

-31,120,919

-26,373,660

15,233,226

18,958,191

19,457,215

14,776,852

Cumulative Net present Value

-31,120,919

-57,494,578

-42,261,352

-23,303,160

-3,845,945

10,930,907

2. Other Income

Pre-production Expenditures

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

10

TOTAL CASH INFLOW

96,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

1. Inflow Operation

96,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

Sales Revenue

96,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

57,856,569

74,516,108

72,537,965

72,802,402

72,802,402

72,802,402

3. Increase in Fixed Assets

Fixed Investments

Pre-production Expenditures

1,121,290

2,242,580

5. Operating Costs

44,006,891

54,858,289

54,858,289

54,858,289

54,858,289

54,858,289

6. Corporate Tax Paid

12,728,388

17,415,239

17,679,676

17,944,113

17,944,113

17,944,113

NET CASH FLOW

38,143,431

45,483,892

47,462,035

47,197,598

47,197,598

47,197,598

CUMULATIVE NET CASH FLOW

99,790,328

145,274,220

192,736,255

239,933,853

287,131,451

334,329,049

Net Present Value (at 18%)

14,129,530

14,278,532

12,626,713

10,640,985

9,017,784

7,642,190

Cumulative Net present Value

25,060,437

39,338,969

51,965,682

62,606,667

71,624,451

79,266,640

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

Net Present Value (at 18%)

Internal Rate of Return

79,266,640.40

41.6%

Annex 4: NET INCOME STATEMENT ( in Birr)

PRODUCTION
Capacity Utilization (%)
1. Total Income
Sales Revenue

40%

50%

60%

70%

80%

48,000,000

60,000,000

72,000,000

84,000,000

96,000,000

48,000,000

60,000,000

72,000,000

84,000,000

96,000,000

21,540,939

26,926,174

32,311,409

37,696,643

43,081,878

26,459,061

33,073,826

39,688,591

46,303,357

52,918,122

55.12

55.12

7,683,936

Other Income
2. Less Variable Cost
VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

55.12

55.12

55.12

7,724,400

7,764,864

7,805,328

7,845,792

18,775,125

25,349,426

31,923,727

38,498,028

45,072,329

39.11

42.25

11,678,036

44.34

45.83

46.95

5,288,741

4,407,284

3,525,827

2,644,371

7,097,089

20,060,685

27,516,443

34,972,201

42,427,959

0.00

0.00

8,254,932.86

10,491,660.28

12,728,387.69

7,097,089

20,060,685

19,261,510

24,480,541

29,699,571

Gross Profit/Sales

14.79%

33.43%

38.22%

41.63%

44.20%

Net Profit After Tax/Sales

14.79%

33.43%

26.75%

29.14%

30.94%

Return on Investment

28.14%

37.36%

34.32%

39.96%

45.42%

Return on Equity

24.15%

68.28%

65.56%

83.32%

101.08%

4. Less Cost of Finance

5. GROSS PROFIT
6. Income (Corporate) Tax
7. NET PROFIT
RATIOS (%)

Annex 4: NET INCOME STATEMENT (in Birr): Continued

PRODUCTION
Capacity Utilization (%)
1. Total Income
Sales Revenue

10

100%

100%

100%

100%

100%

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

120,000,000

53,852,348

53,852,348

53,852,348

53,852,348

53,852,348

66,147,652

66,147,652

66,147,652

66,147,652

66,147,652

Other Income
2. Less Variable Cost
VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

55.12

55.12

55.12

55.12

55.12

6,333,941

6,333,941

6,333,941

6,333,941

6,333,941

59,813,711

59,813,711

59,813,711

59,813,711

59,813,711

49.84

49.84

49.84

49.84

49.84

4. Less Cost of Finance

1,762,914

881,457

5. GROSS PROFIT

58,050,798

58,932,254

59,813,711

59,813,711

59,813,711

6. Income (Corporate) Tax

17,415,239

17,679,676

17,944,113

17,944,113

17,944,113

7. NET PROFIT

40,635,558

41,252,578

41,869,598

41,869,598

41,869,598

Gross Profit/Sales

48.38%

49.11%

49.84%

49.84%

49.84%

Net Profit After Tax/Sales

33.86%

34.38%

34.89%

34.89%

34.89%

Return on Investment

57.72%

57.36%

57.00%

57.00%

57.00%

Return on Equity

138.30%

140.40%

142.50%

142.50%

142.50%

RATIOS (%)

Annex 5: Projected Balance Sheet (in Birr)

CONSTRUCTION
TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9.Net Profit After Tax
Dividends Payable
Retained Profits

Year 1
31,120,919
0
0
0
0
0
0
0
0
31,120,919
0
29,638,970
1,481,949
0
0
0
31,120,919
0
0
0
18,672,551
18,672,551
0
12,448,367
12,448,367
0
0
0
0
0
0

Year 2
73,454,736
11,212,899
0
0
0
0
0
11,212,899
0
62,241,837
29,638,970
29,638,970
2,963,897
0
0
0
73,454,736
0
0
0
44,072,842
44,072,842
0
29,381,894
29,381,894
0
0
0
0
0
0

PRODUCTION
1
84,740,916
29,419,858
2,286,618
679,994
1,359,988
4,189,091
158,560
20,745,608
0
55,321,058
59,277,940
0
2,963,897
6,920,779
0
0
84,740,916
4,189,091
4,189,091
0
44,072,842
44,072,842
0
29,381,894
29,381,894
0
0
0
7,097,089
0
7,097,089

2
98,503,400
50,103,121
2,858,273
849,992
1,699,985
5,236,364
198,200
39,260,308
0
48,400,278
59,277,940
0
2,963,897
13,841,559
0
0
98,503,400
5,236,364
5,236,364
0
36,727,368
36,727,368
0
29,381,894
29,381,894
0
0
7,097,089
20,060,685
0
20,060,685

3
111,466,709
69,987,210
3,429,927
1,019,991
2,039,982
6,283,636
237,840
56,975,834
0
41,479,499
59,277,940
0
2,963,897
20,762,338
0
0
111,466,709
6,283,636
6,283,636
0
29,381,894
29,381,894
0
29,381,894
29,381,894
0
0
27,157,773
19,261,510
0
19,261,510

4
129,649,049
95,090,329
4,001,582
1,189,989
2,379,979
7,330,909
277,479
79,910,391
0
34,558,719
59,277,940
0
2,963,897
27,683,118
0
0
129,649,049
7,330,909
7,330,909
0
22,036,421
22,036,421
0
29,381,894
29,381,894
0
0
46,419,283
24,480,541
0
24,480,541

Annex 5: Projected Balance Sheet (in Birr):

Continued

PRODUCTION
TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
Work in Progress
Finished Products in Stock
Accounts Receivable
Cash in Hand
Cash Surplus, Finance Available
Securities
2. Total Fixed Assets, Net of Depreciation
Fixed Investment
Construction in Progress
Pre-Production Expenditure
Less Accumulated Depreciation
3. Accumulated Losses Brought Forward
4. Loss in Current Year
TOTAL LIABILITIES
5. Total Current Liabilities
Accounts Payable
Bank Overdraft
6. Total Long-term Debt
Loan A
Loan B
7. Total Equity Capital
Ordinary Capital
Preference Capital
Subsidies
8. Reserves, Retained Profits Brought Forward
9. Net Profit After Tax
Dividends Payable
Retained Profits

5
153,050,419
125,412,479
4,573,236
1,359,988
2,719,976
8,378,182
317,119
108,063,978
0
27,637,940
59,277,940
0
2,963,897
34,603,897
0
0
153,050,419
8,378,182
8,378,182
0
14,690,947
14,690,947
0
29,381,894
29,381,894
0
0
70,899,824
29,699,571
0
29,699,571

6
186,340,504
164,030,564
5,716,545
1,699,985
3,399,970
8,378,182
396,399
144,439,483
0
22,309,940
59,277,940
0
2,963,897
39,931,897
0
0
186,340,504
8,378,182
8,378,182
0
7,345,474
7,345,474
0
29,381,894
29,381,894
0
0
100,599,395
40,635,558
0
40,635,558

7
220,247,608
203,265,668
5,716,545
1,699,985
3,399,970
8,378,182
396,399
183,674,587
0
16,981,940
59,277,940
0
2,963,897
45,259,897
0
0
220,247,608
8,378,182
8,378,182
0
0
0
0
29,381,894
29,381,894
0
0
141,234,954
41,252,578
0
41,252,578

8
262,117,206
250,463,266
5,716,545
1,699,985
3,399,970
8,378,182
396,399
230,872,185
0
11,653,940
59,277,940
0
2,963,897
50,587,897
0
0
262,117,206
8,378,182
8,378,182
0
0
0
0
29,381,894
29,381,894
0
0
182,487,532
41,869,598
0
41,869,598

9
303,986,804
297,660,864
5,716,545
1,699,985
3,399,970
8,378,182
396,399
278,069,783
0
6,325,940
59,277,940
0
2,963,897
55,915,897
0
0
303,986,804
8,378,182
8,378,182
0
0
0
0
29,381,894
29,381,894
0
0
224,357,130
41,869,598
0
41,869,598

10
345,856,402
344,858,462
5,716,545
1,699,985
3,399,970
8,378,182
396,399
325,267,381
0
997,940
59,277,940
0
2,963,897
61,243,897
0
0
345,856,402
8,378,182
8,378,182
0
0
0
0
29,381,894
29,381,894
0
0
266,226,728
41,869,598
0
41,869,598

10