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Investment Office ANRS

Project Profile on the


Establishment of Orange & Other
Citrus Fruits Plantation

DevelopmentStudiesAssociates
(DSA)

October 2008
Addis Ababa

Table of Contents
1.Executive Summary..............................................................................................3
2.Product Description and Application.................................................................3
3.Market Study, Plant Capacity and Production Program.................................3
3.1Market Study...........................................................................................................................3
3.1.1Present Demand and Supply............................................................................................3
3.1.2Projected Demand............................................................................................................4
3.1.3Pricing and Distribution...................................................................................................5
3.2Plant Capacity.........................................................................................................................5
3.3Production Program................................................................................................................5

4.Raw Materials and Utilities.................................................................................5


4.1Availability and Source of Raw Materials..............................................................................5
4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................5

5.Location and Site..................................................................................................6


6.Technology and Engineering ..............................................................................6
6.1Production Process..................................................................................................................6
6.2Machinery and Equipment......................................................................................................6
6.3Civil Engineering Cost............................................................................................................7

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


7.1Human Resource.....................................................................................................................7
7.2Training Requirement.............................................................................................................8

8.Financial Analysis.................................................................................................8
8.1Underlying Assumption .........................................................................................................8
8.2Investment...............................................................................................................................9
8.3Production Costs...................................................................................................................10
8.4Financial Evaluation.............................................................................................................10

9.Economic and Social Benefit and Justification................................................11


ANNEXES..............................................................................................................13

1. Executive Summary
This project envisages the production of 6000 quintal citrus fruits per annum. The total
investment requirement of the project including the working capital is estimated at about Birr
764 thousand; of which Birr 100,000 is for machinery and equipments and Birr 274 is pre
production cost while Birr 80 thousand is the cost of the working capital. Based on the cash flow
statement, the calculated internal rate of return (IRR) and simple rate of return (SRR) of the
project are 45.6 % and 67.2 %, respectively. The net present value (NPV) at 18 % discounting
rate is about Birr 1192 thousand. The plant is expected to create employment opportunities for
about 36 persons.

2. Product Description and Application


Citrus fruits can be useful both as home-produced sources of very important nutrients, and as a
valuable cash crop. Well-established trees grow satisfactorily in favorable environments even
when given little care. However, in most environments young trees die if neglected; and mature
trees grow and produce well only when cultivated carefully. With proper management the trees
grow and produce fruit indefinitely. Therefore, they should be treated as a lifetime investment
deserving constant care.

3. Market Study, Plant Capacity and Production Program


3.1

Market Study
3.1.1 Present Demand and Supply

At present banana is being produced by private peasant and some commercial holdings in many
suitable areas in the country. In this connection, the Agricultural Sample Survey of CSA (July,
2007-Vol I) report that in Ethiopia there are about 561,790 private peasants cultivating citrus on
3298.2 hectares of land. These farmers produced about 526,663 quintals of citrus in 1999 E.C.
The average yield, therefore, was 160 quintal per hectare (90 quintals for lemons and 180
quintals for orange). Such average production is very low and can be increased to at least to 600
quintals per hectare if cultivated in a standard manner.
3

At the same time there is a potential of high consumption of citrus fruits, particularly orange,
provided that the fruit is supplied to the market at affordable prices. According to CSA, Annual
Abstract (2008), the number of population in July 2007 has reached 77.1 million in the country
of which 12.7 million resides in the urban places while the remaining 64.4 million dwells in the
rural part of the country. If we assume that at least 25 % percent of the urban and 1% of the rural
residents can afford to consume 0.5 Kg of orange per head per week if it is sold at an affordable
price, the annual consumption of the fruit will amounts to 992,940 quintal (248,235 quintal for
Amhara region). This creates a demand gap of 527,109 quintals of which the share of Amhara
region is estimated to be 25 % (or 131,777 quintals). This excludes the use of orange for making
marmalade, jam and jelly.

3.1.2 Projected Demand


The future demand for orange is promising due to two main factors. First, an increase in
population in general and urbanization in particular is expected to amplify the domestic
consumption of the output. At the same time, an increase in income inevitably improves the per
capita consumption of orange in the future. Consequently, with a conservative growth rate of 3%
per annum, the future demand for orange is forecasted as shown in Table 3.1 below.
TABLE 3.1
DEMAND PROJECTION FOR ORANGE
IN (QUINTALS)
Year E.C
At National Level
At ANRS Level
1999
992940
248235
2000
1042587
260647
2001
1094716
273679
2002
1149452
287363
2003
1206925
301731
2004
1267271
316818
2005
1330635
332659
2006
1397166
349292
2007
1467025
366756
2008
1540376
385094
2009
1617395
404349
Table 3.1 shows that there is substantial and growing demand for orange in the coming years. At
the same time, it suggests the relevance of establishing an orange plantation plant so as to meet
the future demand.
4

3.1.3 Pricing and Distribution


Based on the market research result and the cost of the envisaged plantation, the selling price of a
quintal of orange is set to be Birr 200. In distributing the output the envisaged plant shall make
use of the available sales network.

3.2

Plant Capacity

Thus, given the expected demand for orange as presented earlier, and the planned technology,
the envisaged plantation plans to produce 6,000 quintal of orange per annum on 10 hectares of
land.

3.3

Production Program

The production during the first three years is 0 % of the plantation capacity. In the fourth year,
there will be production at 75 % of the plantation capacity. Starting from the fifth year, 100 % of
capacity utilization is assumed. The capacity build up is established by considering the time
required for maturity the tree.

4. Raw Materials and Utilities


4.1

Availability and Source of Raw Materials

In the production of orange the main inputs are fertilizer, chemicals for killing insects, water as
well as semi-skilled and unskilled labor. While fertilizer and chemicals can be purchased from
domestic suppliers operating in the region, the firm shall make use of water pump equipments to
pump water from the nearby river or other source.

4.2

Annual Requirement and Cost of Raw Materials and Utilities

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

TABLE 4.1
RAW MATERIALS REQUIREMENT

Material and Input


Fertilizer (Urea)
Chemicals
Total Material Cost

Quantity

L.C.

7,500 kg
625 kg

22,500
6,250
28,750

20,000kwh
8,000 lit
1000m3

11,000
56,000
2,650
69,650

Total Cost
F.C.

Utility
Electricity
Furnace Oil
Water
Total Utility Cost

According to the above table the annual cost of input and utility is estimated to be Birr 98,400.

5. Location and Site


For its good environment to produce orange, Shewa-Robit is an appropriate choice for the
establishment of citrus fruit plantation in the Amhara region.

6. Technology and Engineering


6.1

Production Process

The main stages of producing orange are preparing and producing seedlings, planting the
seedlings on the plantation, watering, seeding and in general nurturing the stands of orange trees,
harvesting and packing the orange for distribution. The cultivation process of the orange tree
involves the following: keeping the soil clean; applying fertilizers; pruning the plants; preventing
the plants from falling; looking after the fruit; and protecting the plants from diseases and insects

6.2

Machinery and Equipment

Basically, the planting and harvesting of orange do not require much machinery and equipment.
Tractor is used while preparing the land for the first planting period and therefore, the envisaged
plantation shall use hired tractor while preparing the land. The plant however, needs to acquire
10 medium capacity water pumps and the associated equipments for irrigation purpose. In
6

addition various hand tools are also demanded. The cost of the machinery and equipment is
estimated to be Birr 100,000. The water pumps and equipments can be purchased from local
suppliers.

6.3

Civil Engineering Cost

The envisaged orange plantation requires 10 hectares of land only. And this can be obtained by
renting land from the local government at a rate of Birr 48 per hectare per year. This rate is the
average rent for rural land of North Shewa. Except a small house for guards and for storage of
raw materials, it does not require any office. This is estimated to cost Birr 50,000.

7. Human Resource and Training Requirement


7.1

Human Resource

Details of the manpower requirement of the plant is shown in Table 7.1


TABLE 7.1
MANPOWER REQUIREMENT

Position
Manager/Agronomist
Personnel Officer
Accountant/Casher
Store Keeper
Supervisor
Driver
Laborers
Guards
Benefit (20%)
Total

No.
Require
d
1
1
1
1
2
1
25
4
36

Monthly
Salary
3000
2000
1200
600
750
600
300
300

Total Annual
Salary
36000
24000
14400
7200
18000
7200
90000
14400
42,240
253,440

The total annual wages and salary, including 20 % benefits, amount to Birr 253,440.

7.2

Training Requirement

On job training of personnel shall be conducted with the aim of production technology
machinery maintenance and trouble shooting.

8. Financial Analysis
8.1

Underlying Assumption

The financial analysis of Orange Plantation is based on the data provided in the preceding
chapters and the following assumptions.
A. Construction and Finance
Land Preparation Period

6 months

Source of Finance

40 % Equity and 60 % Loan

Tax Holidays

2 Years

Bank Interest Rate

12 %

Discount for Cash Flow


Value of Land

18 %
Based on Land Rent Rate of
ANRS

Spare Parts, Repair & Maintenance

3 % of the Fixed Investment

B. Depreciation
Building

5%

Machinery and Equipment

10%

Office Furniture

10%

Vehicles

20%

Pre-Production (Amortization)

20%

C. Working Capital (Minimum Days of Coverage)


Spare Parts In Stock and Maintenance
Accounts Receivable
Cash In Hand
Accounts Payable

8.2

30 Days
30 Days
30 Days
30 Days

Investment

The total investment cost of the project including working capital is estimated at Birr 764
thousand as shown in Table 8.1 below. 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 8.1
TOTAL INITIAL INVESTMENT
Items
Land
Building And Civil Works
Office Equipment
Vehicles
Plant Machinery & Equipment
Total Fixed Investment Cost
Pre Production Capital
Expenditure*
Total Initial Investment
Working Capital at Full Capacity
Total

L.C

F.C

Total

50,000

50,000

10,000

10,000

250,000

250,000

100,000

100,000

410,000

410,000

273,940

273,940

683,940

683,940

79,722
763,662

0
0

79,722
763,662

*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.

The foreign component of the project amounts zero.

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 537 thousand (See Table
8.2). Raw materials and utilities account for 18.3 %.

TABLE 8.2
PRODUCTION COST AT FULL CAPACITY
Raw Material Requirement
1. Local Raw Materials
2. Foreign Raw Materials

Cost
28,750
0

Total Production Cost at full Capacity


Items
Cost
1. Raw Materials

28,750

2. Utilities

69,650

3. Wages and Salaries


4. Spares and Maintenance
Factory Costs
5. Depreciation
6. Financial Costs

Total Production Cost


8.4

253,440
12,300
364,140
118,288
54,984
537,412

Financial Evaluation
I.

Profitability

According to the projected income statement (See Annex 4) the project will generate profit
beginning from the fourth year after plantation (the first year of production) and increases on
wards. The income statement and other profitability indicators also show that the project is
viable.
II.

Breakeven Analysis

The breakeven point of the projects is given by the formula:


BEP =

Fixed Cost
Sale Variable Cost

at full capacity.

The project will break even at 23.7 % of capacity utilization


III.
Payback Period
10

Investment cost and income statement projection are used in estimating the project payback
period. The project will payback fully the initial investment less working capital in fith years
after plantation.
IV.

Simple Rate of Return

The projects simple rate of return (SRR) is given by the formula:


SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 67.2 % at full capacity utilization.
V.

Internal Rate of Return and Net Present Value

Based on cash flow statement (See Annex 2) the calculated internal rate of return (IRR) of the
project is 45.6 % and the net present value (NPV) at 18 % discount is Birr 1192 thousands.
VI.

Sensitivity Analysis

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

9. Economic and Social Benefit and Justification


Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained earlier. In
general, the envisaged project promotes the socio-economic goals and objectives stated in the
strategic plan of the Amhara National Regional State. These benefits are listed as follows:
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 430 thousand
per year and Birr 4.3 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.

11

B. Tax Revenue
In the project life under consideration, the region will collect about Birr 1.8 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region
C. Employment and Income Generation
The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide permanent employment to 36 professionals as well as support
stuffs. Consequently the project creates income of Birr 253 thousands per year. This would be
one of the commendable accomplishments of the project.
D. Pro Environment Project
The proposed production process is environment friendly.

12

ANNEXES

13

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


CONSTRUCTION

PRODUCTION

Year 1

Year 2

0%

60%

85%

100%

0.00

0.00

0.00

28567.33

40470.38

47612.21

0.00

0.00

0.00

1881.82

2665.91

3136.36

Raw Material-Local

0.00

0.00

0.00

1881.82

2665.91

3136.36

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

0.00

0.00

0.00

315.77

447.34

526.29

Spare Parts in Stock and Maintenance

0.00

0.00

0.00

805.09

1140.55

1341.82

Work in Progress

0.00

0.00

0.00

7894.28

11183.56

13157.13

Finished Products

0.00

0.00

0.00

15788.55

22367.12

26314.25

2. Accounts Receivable

0.00

0.00

0.00

78545.45

111272.73

130909.09

3. Cash in Hand

0.00

0.00

0.00

21147.71

29959.25

35246.18

0.00

0.00

0.00

126378.67

179036.45

210631.12

4. Current Liabilities

0.00

0.00

0.00

78545.45

111272.73

130909.09

Accounts Payable

0.00

0.00

0.00

78545.45

111272.73

130909.09

TOTAL NET WORKING CAPITAL REQUIRMENTS

0.00

0.00

0.00

47833.22

67763.73

79722.03

INCREASE IN NET WORKING CAPITAL

0.00

0.00

0.00

47833.22

19930.51

11958.30

Capacity Utilization (%)


1. Total Inventory
Raw Materials in Stock- Total

CURRENT ASSETS

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

(continued)

PRODUCTION
5

10

100%

100%

100%

100%

100%

100%

47612.21

47612.21

47612.21

47612.21

47612.21

47612.21

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

3136.36

Raw Material-Foreign

0.00

0.00

0.00

0.00

0.00

0.00

Factory Supplies in Stock

526.29

526.29

526.29

526.29

526.29

526.29

Spare Parts in Stock and Maintenance

1341.82

1341.82

1341.82

1341.82

1341.82

1341.82

Work in Progress

13157.13

13157.13

13157.13

13157.13

13157.13

13157.13

Finished Products

26314.25

26314.25

26314.25

26314.25

26314.25

26314.25

2. Accounts Receivable

130909.09

130909.09

130909.09

130909.09

130909.09

130909.09

3. Cash in Hand

35246.18

35246.18

35246.18

35246.18

35246.18

35246.18

210631.12

210631.12

210631.12

210631.12

210631.12

210631.12

4. Current Liabilities

130909.09

130909.09

130909.09

130909.09

130909.09

130909.09

Accounts Payable

130909.09

130909.09

130909.09

130909.09

130909.09

130909.09

TOTAL NET WORKING CAPITAL REQUIRMENTS

79722.03

79722.03

79722.03

79722.03

79722.03

79722.03

0.00

0.00

0.00

0.00

0.00

0.00

Capacity Utilization (%)


1. Total Inventory
Raw Materials in Stock-Total
Raw Material-Local

CURRENT ASSETS

INCREASE IN NET WORKING CAPITAL

Annex 2: Cash Flow Statement (in Birr)


CONSTRUCTION

PRODUCTION

Year 1

Year 2

341970.00

421692.03

0.00

798545.45

1052727.27

1219636.36

341970.00

421692.03

0.00

78545.45

32727.27

19636.36

Total Equity

136788.00

168676.81

0.00

0.00

0.00

0.00

Total Long Term Loan

205182.00

253015.22

0.00

0.00

0.00

0.00

0.00

0.00

0.00

78545.45

32727.27

19636.36

2. Inflow Operation

0.00

0.00

0.00

720000.00

1020000.00

1200000.00

Sales Revenue

0.00

0.00

0.00

720000.00

1020000.00

1200000.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

341970.00

341970.00

126536.45

475827.11

646696.64

710668.51

4. Increase In Fixed Assets

341970.00

341970.00

0.00

0.00

0.00

0.00

Fixed Investments

205000.00

205000.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

136970.00

136970.00

0.00

0.00

0.00

0.00

5. Increase in Current Assets

0.00

0.00

0.00

126378.67

52657.78

31594.67

6. Operating Costs

0.00

0.00

4100.00

218098.57

307264.64

360764.28

7. Corporate Tax Paid

0.00

0.00

0.00

0.00

164588.29

205287.58

8. Interest Paid

0.00

0.00

122436.45

54983.67

45819.72

36655.78

9. Loan Repayments

0.00

0.00

0.00

76366.20

76366.20

76366.20

10. Dividends Paid

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

0.00

79722.03

0.00
126536.45

322718.34

406030.64

508967.85

Cumulative Cash Balance

0.00

79722.03

-46814.41

275903.93

681934.57

1190902.42

TOTAL CASH INFLOW


1. Inflow Funds

Total Short Term Finances

3. Other Income

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


PRODUCTION
5
1200000.00

6
1200000.00

7
1200000.00

8
1200000.00

9
1200000.00

10
1200000.00

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

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

Sales Revenue

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

672659.08

697680.72

691265.96

608485.00

608485.00

608485.00

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

0.00

0.00

0.00

0.00

0.00

0.00

6. Operating Costs

360764.28

360764.28

360764.28

360764.28

360764.28

360764.28

7. Corporate Tax Paid

208036.77

242222.35

244971.53

247720.72

247720.72

247720.72

8. Interest Paid

27491.83

18327.89

9163.94

0.00

0.00

0.00

9. Loan Repayments

76366.20

76366.20

76366.20

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

527340.92

502319.28

508734.04

591515.00

591515.00

591515.00

Cumulative Cash Balance

1718243.34

2220562.62

2729296.66

3320811.66

3912326.66

4503841.67

TOTAL CASH INFLOW


1. Inflow Funds

Interest on Securities
3. Other Income
TOTAL CASH OUTFLOW
4. Increase In Fixed Assets

5. Increase in Current Assets

10. Dividends Paid

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED


CONSTRUCTION

PRODUCTION

Year 1

Year 2

TOTAL CASH INFLOW

0.00

0.00

0.00

720000.00

1020000.00

1200000.00

1. Inflow Operation

0.00

0.00

0.00

720000.00

1020000.00

1200000.00

Sales Revenue

0.00

0.00

0.00

720000.00

1020000.00

1200000.00

Interest on Securities

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

TOTAL CASH OUTFLOW

341970.00

341970.00

4100.00

265931.79

327195.15

578010.17

3. Increase in Fixed Assets

341970.00

341970.00

0.00

0.00

0.00

0.00

Fixed Investments

205000.00

205000.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

136970.00

136970.00

0.00

0.00

0.00

0.00

4. Increase in Net Working Capital

0.00

0.00

0.00

47833.22

19930.51

11958.30

5. Operating Costs

0.00

0.00

4100.00

218098.57

307264.64

360764.28

6. Corporate Tax Paid

0.00

0.00

0.00

0.00

0.00

205287.58

NET CASH FLOW

-341970.00

-341970.00

-4100.00

454068.21

692804.85

621989.83

CUMMULATIVE NET CASH FLOW

-341970.00

-683940.00

-688040.00

-233971.79

458833.07

1080822.90

Net Present Value (at 18%)

-341970.00

-289805.08

-2944.56

276359.93

357341.04

271877.49

Cumulative Net present Value

-341970.00

-631775.08

-634719.64

-358359.71

-1018.67

270858.82

2. Other Income

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

10

TOTAL CASH INFLOW

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1. Inflow Operation

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

Sales Revenue

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

568801.05

602986.63

605735.81

608485.00

608485.00

608485.00

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

0.00

0.00

0.00

0.00

0.00

0.00

5. Operating Costs

360764.28

360764.28

360764.28

360764.28

360764.28

360764.28

6. Corporate Tax Paid

208036.77

242222.35

244971.53

247720.72

247720.72

247720.72

NET CASH FLOW

631198.95

597013.37

594264.19

591515.00

591515.00

591515.00

CUMMULATIVE NET CASH FLOW

1712021.85

2309035.23

2903299.41

3494814.42

4086329.42

4677844.42

Net Present Value (at 18%)

233816.00

187417.44

158096.95

133360.65

113017.50

95777.54

Cumulative Net present Value

504674.82

692092.26

850189.21

983549.86

1096567.36

1192344.90

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

Net Present Value (at 18%)


Internal Rate of Return

1,192,344.90

45.6%

Annex 4: NET INCOME STATEMENT ( in Birr)


PRODUCTION
1

0%

60%

85%

100%

100%

0.00

720000.00

1020000.00

1200000.00

1200000.00

Sales Revenue

0.00

720000.00

1020000.00

1200000.00

1200000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

0.00

153172.97

216995.04

255288.28

255288.28

0.00

566827.03

803004.96

944711.72

944711.72

#DIV/0!

78.73

78.73

78.73

78.73

122388.00

183213.60

208557.60

223764.00

223764.00

-122388.00

383613.43

594447.36

720947.72

720947.72

#DIV/0!

53.28

58.28

60.08

60.08

4. Less Cost of Finance

122436.45

54983.67

45819.72

36655.78

27491.83

5. GROSS PROFIT

-244824.45

328629.77

548627.64

684291.94

693455.89

0.00

0.00

164588.29

205287.58

208036.77

-244824.45

328629.77

384039.35

479004.36

485419.12

Gross Profit/Sales

#DIV/0!

45.64%

53.79%

57.02%

57.79%

Net Profit After Tax/Sales

#DIV/0!

45.64%

37.65%

39.92%

40.45%

Return on Investment

-17.89%

52.42%

57.18%

67.52%

67.16%

Return on Equity

-80.15%

107.58%

125.72%

156.81%

158.91%

Capacity Utilization (%)


1. Total Income

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

6. Income (Corporate) Tax


7. NET PROFIT
RATIOS (%)

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


PRODUCTION
6

10

100%

100%

100%

100%

100%

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

1200000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

255288.28

255288.28

255288.28

255288.28

255288.28

944711.72

944711.72

944711.72

944711.72

944711.72

78.73

78.73

78.73

78.73

78.73

118976.00

118976.00

118976.00

118976.00

118976.00

825735.72

825735.72

825735.72

825735.72

825735.72

68.81

68.81

68.81

68.81

68.81

4. Less Cost of Finance

18327.89

9163.94

0.00

0.00

0.00

5. GROSS PROFIT

807407.83

816571.78

825735.72

825735.72

825735.72

6. Income (Corporate) Tax

242222.35

244971.53

247720.72

247720.72

247720.72

7. NET PROFIT

565185.48

571600.24

578015.00

578015.00

578015.00

Gross Profit/Sales

67.28%

68.05%

68.81%

68.81%

68.81%

Net Profit After Tax/Sales

47.10%

47.63%

48.17%

48.17%

48.17%

Return on Investment

76.41%

76.05%

75.69%

75.69%

75.69%

Return on Equity

185.02%

187.12%

189.22%

189.22%

189.22%

Capacity Utilization (%)


1. Total Income
Sales Revenue

VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)

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
341970.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
341970.00
0.00
205000.00
136970.00
0.00
0.00
0.00
341970.00
0.00
0.00
0.00
205182.00
205182.00
0.00
136788.00
136788.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 2
763662.03
79722.03
0.00
0.00
0.00
0.00
0.00
79722.03
0.00
683940.00
205000.00
205000.00
273940.00
0.00
0.00
0.00
763662.03
0.00
0.00
0.00
458197.22
458197.22
0.00
305464.81
305464.81
0.00
0.00
0.00
0.00
0.00
0.00

PRODUCTION
1
763662.03
-46814.41
0.00
0.00
0.00
0.00
0.00
-46814.41
0.00
565652.00
410000.00
0.00
273940.00
118288.00
0.00
244824.45
763662.03
0.00
0.00
0.00
458197.22
458197.22
0.00
305464.81
305464.81
0.00
0.00
0.00
0.00
0.00
0.00

2
849646.60
402282.60
3002.68
7894.28
15788.55
78545.45
21147.71
275903.93
0.00
447364.00
410000.00
0.00
273940.00
236576.00
0.00
0.00
849646.60
78545.45
78545.45
0.00
381831.02
381831.02
0.00
305464.81
305464.81
0.00
0.00
-244824.45
328629.77
0.00
328629.77

3
1190047.02
860971.02
4253.80
11183.56
22367.12
111272.73
29959.25
681934.57
0.00
329076.00
410000.00
0.00
273940.00
354864.00
0.00
0.00
1190047.02
111272.73
111272.73
0.00
305464.81
305464.81
0.00
305464.81
305464.81
0.00
0.00
83805.32
384039.35
0.00
384039.35

4
1612321.54
1401533.54
5004.47
13157.13
26314.25
130909.09
35246.18
1190902.42
0.00
210788.00
410000.00
0.00
273940.00
473152.00
0.00
0.00
1612321.54
130909.09
130909.09
0.00
229098.61
229098.61
0.00
305464.81
305464.81
0.00
0.00
467844.67
479004.36
0.00
479004.36

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
2021374.46
1928874.46
5004.47
13157.13
26314.25
130909.09
35246.18
1718243.34
0.00
92500.00
410000.00
0.00
273940.00
591440.00
0.00
0.00
2021374.46
130909.09
130909.09
0.00
152732.41
152732.41
0.00
305464.81
305464.81
0.00
0.00
946849.03
485419.12
0.00
485419.12

6
2510193.74
2431193.74
5004.47
13157.13
26314.25
130909.09
35246.18
2220562.62
0.00
79000.00
410000.00
0.00
273940.00
604940.00
0.00
0.00
2510193.74
130909.09
130909.09
0.00
76366.20
76366.20
0.00
305464.81
305464.81
0.00
0.00
1432268.15
565185.48
0.00
565185.48

7
3005427.78
2939927.78
5004.47
13157.13
26314.25
130909.09
35246.18
2729296.66
0.00
65500.00
410000.00
0.00
273940.00
618440.00
0.00
0.00
3005427.78
130909.09
130909.09
0.00
0.00
0.00
0.00
305464.81
305464.81
0.00
0.00
1997453.63
571600.24
0.00
571600.24

8
3583442.78
3531442.78
5004.47
13157.13
26314.25
130909.09
35246.18
3320811.66
0.00
52000.00
410000.00
0.00
273940.00
631940.00
0.00
0.00
3583442.78
130909.09
130909.09
0.00
0.00
0.00
0.00
305464.81
305464.81
0.00
0.00
2569053.87
578015.00
0.00
578015.00

9
4161457.79
4122957.79
5004.47
13157.13
26314.25
130909.09
35246.18
3912326.66
0.00
38500.00
410000.00
0.00
273940.00
645440.00
0.00
0.00
4161457.79
130909.09
130909.09
0.00
0.00
0.00
0.00
305464.81
305464.81
0.00
0.00
3147068.88
578015.00
0.00
578015.00

10
4739472.79
4714472.79
5004.47
13157.13
26314.25
130909.09
35246.18
4503841.67
0.00
25000.00
410000.00
0.00
273940.00
658940.00
0.00
0.00
4739472.79
130909.09
130909.09
0.00
0.00
0.00
0.00
305464.81
305464.81
0.00
0.00
3725083.88
578015.00
0.00
578015.00

10