Investment Office ANRS

Project Profile on
BAKING POWDER PRODUCTION

Development Studies
Associates (DSA)

October 2008
Addis Ababa
 Table of Contents

1. 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...........................................................................................2
3.2. Plant Capacity..................................................................................................................3
3.3. Production Program.........................................................................................................3
4. Raw Materials and Utilities...............................................................................3
4.1 Availability and Source of Raw materials.......................................................................3
4.2 Annual Requirement and Cost of Raw Materials and Utilities........................................3
5 Location and Site................................................................................................4
6 Technology and Engineering.............................................................................4
6.1 Production Process...........................................................................................................4
6.2 Machinery and Equipment...............................................................................................5
6.3 Civil Engineering Cost.....................................................................................................5
7 Human Resource and Training Requirement..................................................6
7.1 Human Resource..............................................................................................................6
8 Financial Analysis...............................................................................................6
8.1 Underlying Assumption...................................................................................................6
8.2 Investment........................................................................................................................7
8.3 Production Costs..............................................................................................................8
8.4 Financial Evaluation........................................................................................................9
9 Economic and Social Benefit and Justification................................................9
ANNEXES...............................................................................................................11
1. Summary
This project profile deals with the establishment of baking powder producing plant in Amhara
National Regional State. The following presents the main findings of the study

Demand projection divulges that the domestic demand for baking powder is substantial and is
increasing with time. The planned plant is set to produce 60 tons on baking powder annually.

The total investment requirement is estimated at Birr 1 million, out of which Birr 132,275 is for
machinery and equipment.

The plant will create employment opportunities for 19 persons. The project is financially viable
with an internal rate of return (IRR) of 35.78% and a net present value (NPV) of Birr 597,142
discounted at 18%.

2. Product Description and Application

Baking powder is a mixture of sodium bicarbonate, one of more acid ingredients, and an inert
ingredient which serves to keep the reactive components physically separated and minimizes
premature reaction in the dry mixture. The inert ingredient is usually starch dried to 5-7%
moisture. Calcium sulphate and calcium carbonate are sometimes used instead of starch.

Of the household baking powder in general use, the type controlling sodium aluminum sulphate
(SAS) or soda alum is the most common one. A small amount of mono calcium phosphate mono
hydrate (MCP) is used in combination with SAS. The MCP serves to gas cells during the make
up of the dough or baking so that uniform and efficient expansion occurs in the oven. This is
necessary since SAS is almost completely uncreative until heat is applied which is known as
double-acting baking powder.

Commercial baking powders often contain sodium acid pyro phosphate (SAPP), which is
superior to SAS in stability and performance.

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3. Market Study, Plant Capacity and Production Program

3.1. Market Study

3.1.1. Present Demand and Supply

According to estimates from varies sources the countrywide demand for baking powder
amounted 116 and 122 tons in the years 2006 and 2007. The demand in the year 2008 is
estimated at 130 tons. More than half of this demand is satisfied by import.

3.1.2. Projected Demand

Taking the demand in the years 2006, 2007 and 2008 as basis the future demand is projected and
the outcome is depicted in Table 1 below.

Table 1: Projected Demand for Baking Powder

Projected Demand
Year for Baking Powder
(in tons)
3.1.3. Pricing 2009 138 and Distribution
2010 146
According to information 2011 collected from the retail
153
market, the present price 2012 161 per kg of baking powder is
Birr 30. Allowing a 25% 2013 169 profit margin for retailers,
2014 176
the ex-factory price per kg 2015 of baking powder is Birr
184
22.5. 2016 192
The product to be 2017 199 produced by the envisaged
2018 207
plant will be marketed through food and food
2019 215
additive distributors.

3.2. Plant Capacity

Given the expected demand for baking powder presented earlier, and the planned technology, the
envisaged plant is set to produce 60 tons per annum.

2
 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 85 percent capacity and then it grows to full capacity in the 2 nd
year. This consideration is developed based on the assumption that market and logistics barriers
would take place for the first year of operation.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw materials

The raw materials are partially imported and. Seventy percent of the raw material is expected to
be imported.

4.2 Annual Requirement and Cost of Raw Materials

and Utilities

The Major raw materials consist of sodium Acid pyro-phosphate, sodium bicarbonate, and starch
(filler). Auxiliary materials include packaging materials, which might include polyethylene
packages, tin and glass packages.

The list and costs of required raw materials are shown in Table 2 below.

3
 Table 2: Required Raw Materials
Cost (in Birr)
No. Material Qty Local Foreign
1 Sodium Acid Pyro-Phosphate 30 106871 249365
2 Sodium Bicarbonate 15 1731 4039
3 Starch (Filler) 15 27032 40548
4 Packaging materials Lump sum 45000 67500
Total 60 180633 361451

The inputs required by the plant are electricity and water. The annual energy consumption will be
60000 kwh, the cost of which is estimated at Birr 33,000. Annual water consumption is estimated
to be 1000 m3, the cost of which is estimated at Birr 2,650. Thus, the total annual expenditure on
utilities will be Birr 35,650.

5 Location and Site

All zonal cities of ANRS are appropriate sites for this plant.

6 Technology and Engineering

6.1 Production Process

The production of baking powder mainly involves the physical mixing of various components in
a long-scale batch mixer. Sodium acid pyro-phosphate sodium bicarbonate and starch are the
major ingredients to be mixed in certain proportions.

The characteristics of the various components have an influence on product uniformity. The
order in which mixing occurs may have influence on the stability of the product. Rigid
specifications for purity, granulation and moisture content of the components, must be adhered to
if a uniform, stable and reliable is to be obtained.

Variations in ingredient purity can later the proper balance of acids to soda. Granulation is very
critical, not only in terms of stability and uniformity of distribution of particles during blending,
but also in the appearance of baked products. The proper kind and speed of blending are essential

4
to attain and maintain proper distribution of particles. The baking powder is usually packaged in
air-tight metal or fibre cans.

Alternative technology
Proportioning the ingredients, mixing and granulating the mixed components can be automated;
but this will be capital intensive.

6.2 Machinery and Equipment

The list of machinery and equipment required by the plant is presented in Table 3. The total cost
of machinery and equipment is estimated at Birr 132,275.

Table 3: Required Machineries and Equipments

Item Description Qty.
1 Sifter 1

2 Micro-pulverizer complete with motors 1

and accessories
3 Mixer-double shaft with 3 H.P. motor 1
and other accessories
4 Cabinet-electrically operated oven with 1
48 trays, thermostatic control and their
accessories
5 Weighing machines (a) platform type: 2
cap.50 kg (b) Table model
6 Polyethylene bag sealing m/c 1
7 Miscellaneous equipment like trays, Many
bins, etc

Supplier Address
The machineries and equipments listed above are available in Addis Ababa Market.

6.3 Civil Engineering Cost

The total land required is 500 m2 while the built-up area for plant is 250 m 2. The cost of plant
building is estimated at Birr 500,000. The land lease is estimated at Birr 30,000.

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7 Human Resource and Training Requirement

7.1 Human Resource

The required human resource and associated costs are shown in Table 4.
Table 4: Human Resource Requirements

Salary/Wage (Birr)

Job Title No. Monthly Annual

1 General Manger 1 3500 42,000
2 Production Supervisor 1 2500 30,000
3 Personnel Head 1 1,500 18,000
4 Accountant 1 1,200 14,400
5 Secretary 1 850 10,200
6 Casher 1 850 10,200
7 Chemist 1 1200 14,400
9 Operators & technicians 3 1200 43,200
10 Ass. Oper. &technicians 3 700 25,200
11 Security 3 350 12,600
12 Genitors 3 350 12,600
Total 19 232,800
Employment Benefits 20% of Annual
Salary 46,560
279,360
B. Training Requirement
The production supervisor, the chemist and the skilled workers will receive short term training
on the operation of the plant for a total of four to six weeks. The cost of training is estimated at
Birr 30,000.

8 Financial Analysis
8.1 Underlying Assumption
The financial analysis of this plant is based on the data provided in the preceding sections and
the following assumptions.

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 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 days

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

8.2 Investment
The total investment cost of the project including working capital is estimated at Birr one million
as shown in Table 5 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.

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 Table 5: Total Initial Investment & Working Capital

Total Initial Investment

Item Cost
Land 1,500.00
Building and civil works 500,000.00
Office equipment 50,000.00
Plant machinery & equipment 132,275.00
Total Fixed Investment 683,775.00
Pre production capital expenditure 34,188.75
Total Initial Investment 717,963.75
Working capital at full capacity 290,944.61
Total 1,008,908.36
*Pre-production capital expenditure includes - all expenses for pre-
investment studies, consultancy fee during construction and expenses for
company‘s establishment, project administration expenses, commission
expenses, preproduction marketing and interest expenses during
construction.

8.3 Production Costs

The total production cost at full capacity is estimated at Birr one million. The details are shown
in Table 6.
Table 6: Total Production Cost at Full Capacity

Total Production Cost at Full Capacity

Items Cost
1. Raw materials 542,084.38
2. Utilities 35,650.00
3. Wages and Salaries 279,360.00
4. Spares and Maintenance 20,513.25
Factory costs 877,607.63
5. Depreciation 50,065.25
6. Financial costs
72,641.40
Total Production Cost 1,000,314.28

8.4 Financial Evaluation

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 I. Profitability
The income statement shows that the proposed project generates profit starting from the first year
of operation. Profit starts at undiscounted Birr 196,888 in first year and reaches about Birr
302,996 in the eight year of the project life. Gross Profit to Sales ratio starts at 17.16% and
reaches 32.06% at eight year. The total profit earned during the whole ten years of operation
amounts Birr to 2.83 million. These and other indicators prove that the project is profitable.

II. Breakeven Analysis

The breakeven analysis shows that the Total Revenue equals the Total Cost at 28.45% of capacity
which is achieved in the first year of operation.

III. Payback Period

The project pays back its initial investment in the second year of operation.

IV. Simple Rate of Return

The simple rate of return is 30.6%.

V. Internal Rate of Return and Net Present Value

The Internal Rate of Return is 28.45% and the Net Present Value at 18% discount rate per annum
is Birr 597,142.

VI. Sensitivity Analysis

A 10% reduction in sales reduces the total profit to Birr 1.83; it still remains viable. A 10%
increase in price of raw materials reduces the total profit to Birr 2.27; the impact is not serious.

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:

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 A. Profit Generation

The project is found to be financially viable and earns a total profit of Birr 2.83 million within
the project life.

B. Tax Revenue
In the project life under consideration, the government will collect about Birr 978,207 from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT).

C. Import Substitution and Foreign Exchange Saving

The project has strong import substitution effect. Furthermore, there is a possibility to engage in
international market as well.

D. Employment and Income Generation

The proposed project is expected to create employment opportunity to 19 persons. Consequently

the project creates Birr 279,360 annual household income from employment. This would be one
of the commendable accomplishments of the project.

E. Diversification and InterSectoral linkage

The proposed project helps to diversify ANRS and Ethiopian economy. It contributes to
industrialization of the region’s as well as the county’s economy.

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ANNEXES

11
 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0 0 85% 100% 100% 100%

1. Total Inventory 0 0 368,908 434,009 434,009 434,009

Raw Materials in Stock- Total 0 0 150,815 177,430 177,430 177,430

Raw Material-Local 0 0 16,750 19,705 19,705 19,705

Raw Material-Foreign 0 0 134,065 157,724 157,724 157,724

Factory Supplies in Stock 0 0 860 1,012 1,012 1,012

Spare Parts in Stock and Maintenance 0 0 1,902 2,238 2,238 2,238

Work in Progress 0 0 21,505 25,300 25,300 25,300

Finished Products 0 0 43,010 50,600 50,600 50,600

2. Accounts Receivable 0 0 125,182 147,273 147,273 147,273

3. Cash in Hand 0 0 29,210 34,365 34,365 34,365

CURRENT ASSETS 0 0 372,485 438,217 438,217 438,217

4. Current Liabilities 0 0 125,182 147,273 147,273 147,273

Accounts Payable 0 0 125,182 147,273 147,273 147,273

TOTAL NET WORKING CAPITAL REQUIREMENTS 0 0 247,303 290,945 290,945 290,945

INCREASE IN NET WORKING CAPITAL 0 0 247,303 43,642 0 0

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 434,009 434,009 434,009 434,009 434,009 434,009

Raw Materials in Stock-Total 177,430 177,430 177,430 177,430 177,430 177,430

Raw Material-Local 19,705 19,705 19,705 19,705 19,705 19,705

Raw Material-Foreign 157,724 157,724 157,724 157,724 157,724 157,724

Factory Supplies in Stock 1,012 1,012 1,012 1,012 1,012 1,012

Spare Parts in Stock and Maintenance 2,238 2,238 2,238 2,238 2,238 2,238

Work in Progress 25,300 25,300 25,300 25,300 25,300 25,300

Finished Products 50,600 50,600 50,600 50,600 50,600 50,600

2. Accounts Receivable 147,273 147,273 147,273 147,273 147,273 147,273

3. Cash in Hand 34,365 34,365 34,365 34,365 34,365 34,365

CURRENT ASSETS 438,217 438,217 438,217 438,217 438,217 438,217

4. Current Liabilities 147,273 147,273 147,273 147,273 147,273 147,273

Accounts Payable 147,273 147,273 147,273 147,273 147,273 147,273

TOTAL NET WORKING CAPITAL REQUIREMENTS 290,945 290,945 290,945 290,945 290,945 290,945

INCREASE IN NET WORKING CAPITAL 0 0 0 0 0 0

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 358,982 649,926 1,272,682 1,372,091 1,350,000 1,350,000
1. Inflow Funds 358,982 649,926 125,182 22,091 0 0
Total Equity 143,593 259,971 0 0 0 0
Total Long Term Loan 215,389 389,956 0 0 0 0
Total Short Term Finances 0 0 125,182 22,091 0 0
2. Inflow Operation 0 0 1,147,500 1,350,000 1,350,000 1,350,000
Sales Revenue 0 0 1,147,500 1,350,000 1,350,000 1,350,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 358,982 358,982 1,273,032 1,113,186 1,144,990 1,136,516
4. Increase In Fixed Assets 358,982 358,982 0 0 0 0
Fixed Investments 341,888 341,888 0 0 0 0
Pre-production Expenditures 17,094 17,094 0 0 0 0
5. Increase in Current Assets 0 0 372,485 65,733 0 0
6. Operating Costs 0 0 743,966 873,921 873,921 873,921
7. Corporate Tax Paid 0 0 0 0 109,644 113,276
8. Interest Paid 0 0 156,582 72,641 60,535 48,428
9.Loan Repayments 0 0 0 100,891 100,891 100,891
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 0 290,945 -350 258,905 205,010 213,484
Cumulative Cash Balance 0 290,945 290,594 549,499 754,509 967,993

3
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000
1. Inflow Funds 0 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0
2. Inflow Operation 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000
Sales Revenue 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 1,128,041 1,121,617 1,113,142 1,003,777 1,003,777 1,003,777
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0
6. Operating Costs 873,921 873,921 873,921 873,921 873,921 873,921
7. Corporate Tax Paid 116,908 122,591 126,223 129,855 129,855 129,855
8. Interest Paid 36,321 24,214 12,107 0 0 0
9. Loan Repayments 100,891 100,891 100,891 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 221,959 228,383 236,858 346,223 346,223 346,223
Cumulative Cash Balance 1,189,953 1,418,335 1,655,193 2,001,416 2,347,640 2,693,863

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 1,147,500 1,350,000 1,350,000 1,350,000

1. Inflow Operation 0 0 1,147,500 1,350,000 1,350,000 1,350,000

Sales Revenue 0 0 1,147,500 1,350,000 1,350,000 1,350,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 358,982 358,982 991,269 917,563 983,565 987,197

3. Increase in Fixed Assets 358,982 358,982 0 0 0 0

Fixed Investments 341,888 341,888 0 0 0 0

Pre-production Expenditures 17,094 17,094 0 0 0 0

4. Increase in Net Working Capital 0 0 247,303 43,642 0 0

5. Operating Costs 0 0 743,966 873,921 873,921 873,921

6. Corporate Tax Paid 0 0 0 0 109,644 113,276

NET CASH FLOW -358,982 -358,982 156,231 432,437 366,435 362,803

CUMULATIVE NET CASH FLOW -358,982 -717,964 -561,732 -129,295 237,140 599,942

Net Present Value (at 18%) -358,982 -304,222 112,203 263,194 189,003 158,584

Cumulative Net present Value -358,982 -663,204 -551,001 -287,806 -98,803 59,781

5
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)
PRODUCTION
5 6 7 8 9 10
TOTAL CASH INFLOW 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000

1. Inflow Operation 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000

Sales Revenue 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 990,829 996,513 1,000,145 1,003,777 1,003,777 1,003,777

3. Increase in Fixed Assets 0 0 0 0 0 0

Fixed Investments 0 0 0 0 0 0

Pre-production Expenditures 0 0 0 0 0 0

4. Increase in Net Working Capital 0 0 0 0 0 0

5. Operating Costs 873,921 873,921 873,921 873,921 873,921 873,921

6. Corporate Tax Paid 116,908 122,591 126,223 129,855 129,855 129,855

NET CASH FLOW 359,171 353,487 349,855 346,223 346,223 346,223

CUMULATIVE NET CASH FLOW 959,113 1,312,601 1,662,456 2,008,679 2,354,903 2,701,126

Net Present Value (at 18%) 133,048 110,969 93,075 78,058 66,151 56,060

Cumulative Net present Value 192,829 303,798 396,873 474,931 541,082 597,142

Net Present Value (at 18%) 597,142.12

Internal Rate of Return 35.8%

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

1. Total Income 1,147,500 1,350,000 1,350,000 1,350,000 1,350,000

Sales Revenue 1,147,500 1,350,000 1,350,000 1,350,000 1,350,000
Other Income 0 0 0 0 0
2. Less Variable Cost 641,433 754,627 754,627 754,627 754,627
VARIABLE MARGIN 506,067 595,373 595,373 595,373 595,373
(In % of Total Income) 44.10 44.10 44.10 44.10 44.10
3. Less Fixed Costs 152,598 169,360 169,360 169,360 169,360
OPERATIONAL MARGIN 353,469 426,013 426,013 426,013 426,013
(In % of Total Income) 30.80 31.56 31.56 31.56 31.56
4. Less Cost of Finance 156,582 72,641 60,535 48,428 36,321
5. GROSS PROFIT 196,888 353,372 365,479 377,586 389,693
6. Income (Corporate) Tax 0 0 109,644 113,276 116,908
7. NET PROFIT 196,888 353,372 255,835 264,310 272,785
RATIOS (%)
Gross Profit/Sales 17.16% 26.18% 27.07% 27.97% 28.87%
Net Profit After Tax/Sales 17.16% 26.18% 18.95% 19.58% 20.21%
Return on Investment 36.62% 42.23% 31.36% 31.00% 30.64%
Return on Equity 48.79% 87.56% 63.39% 65.49% 67.59%

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

1. Total Income 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000

Sales Revenue 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000
Other Income 0 0 0 0 0
2. Less Variable Cost 754,627 754,627 754,627 754,627 754,627
VARIABLE MARGIN 595,373 595,373 595,373 595,373 595,373
(In % of Total Income) 44.10 44.10 44.10 44.10 44.10
3. Less Fixed Costs 162,522 162,522 162,522 162,522 162,522
OPERATIONAL MARGIN 432,851 432,851 432,851 432,851 432,851
(In % of Total Income) 32.06 32.06 32.06 32.06 32.06
4. Less Cost of Finance 24,214 12,107 0 0 0
5. GROSS PROFIT 408,637 420,744 432,851 432,851 432,851
6. Income (Corporate) Tax 122,591 126,223 129,855 129,855 129,855
7. NET PROFIT 286,046 294,521 302,996 302,996 302,996
RATIOS (%)
Gross Profit/Sales 30.27% 31.17% 32.06% 32.06% 32.06%
Net Profit After Tax/Sales 21.19% 21.82% 22.44% 22.44% 22.44%
Return on Investment 30.75% 30.39% 30.03% 30.03% 30.03%
Return on Equity 70.88% 72.98% 75.08% 75.08% 75.08%

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 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4
TOTAL ASSETS 358,982 1,008,908 1,330,978 1,605,550 1,760,494 1,923,913
1. Total Current Assets 0 290,945 663,079 987,717 1,192,726 1,406,211
Inventory on Materials and Supplies 0 0 153,577 180,679 180,679 180,679
Work in Progress 0 0 21,505 25,300 25,300 25,300
Finished Products in Stock 0 0 43,010 50,600 50,600 50,600
Accounts Receivable 0 0 125,182 147,273 147,273 147,273
Cash in Hand 0 0 29,210 34,365 34,365 34,365
Cash Surplus, Finance Available 0 290,945 290,594 549,499 754,509 967,993
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 358,982 717,964 667,899 617,833 567,768 517,703
Fixed Investment 0 341,888 683,775 683,775 683,775 683,775
Construction in Progress 341,888 341,888 0 0 0 0
Pre-Production Expenditure 17,094 34,189 34,189 34,189 34,189 34,189
Less Accumulated Depreciation 0 0 50,065 100,131 150,196 200,261
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 358,982 1,008,908 1,330,978 1,605,550 1,760,494 1,923,913
5. Total Current Liabilities 0 0 125,182 147,273 147,273 147,273
Accounts Payable 0 0 125,182 147,273 147,273 147,273
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 215,389 605,345 605,345 504,454 403,563 302,673
Loan A 215,389 605,345 605,345 504,454 403,563 302,673
Loan B 0 0 0 0 0 0
7. Total Equity Capital 143,593 403,563 403,563 403,563 403,563 403,563
Ordinary Capital 143,593 403,563 403,563 403,563 403,563 403,563
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 196,888 550,260 806,095
9.Net Profit After Tax 0 0 196,888 353,372 255,835 264,310
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 196,888 353,372 255,835 264,310

9
 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10
TOTAL ASSETS 2,095,807 2,280,963 2,474,593 2,777,589 3,080,584 3,383,580
1. Total Current Assets 1,628,170 1,856,553 2,093,410 2,439,634 2,785,857 3,132,080
Inventory on Materials and Supplies 180,679 180,679 180,679 180,679 180,679 180,679
Work in Progress 25,300 25,300 25,300 25,300 25,300 25,300
Finished Products in Stock 50,600 50,600 50,600 50,600 50,600 50,600
Accounts Receivable 147,273 147,273 147,273 147,273 147,273 147,273
Cash in Hand 34,365 34,365 34,365 34,365 34,365 34,365
Cash Surplus, Finance Available 1,189,953 1,418,335 1,655,193 2,001,416 2,347,640 2,693,863
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 467,638 424,410 381,183 337,955 294,728 251,500
Fixed Investment 683,775 683,775 683,775 683,775 683,775 683,775
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 34,189 34,189 34,189 34,189 34,189 34,189
Less Accumulated Depreciation 250,326 293,554 336,781 380,009 423,236 466,464
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 2,095,807 2,280,963 2,474,593 2,777,589 3,080,584 3,383,580
5. Total Current Liabilities 147,273 147,273 147,273 147,273 147,273 147,273
Accounts Payable 147,273 147,273 147,273 147,273 147,273 147,273
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 201,782 100,891 0 0 0 0
Loan A 201,782 100,891 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 403,563 403,563 403,563 403,563 403,563 403,563
Ordinary Capital 403,563 403,563 403,563 403,563 403,563 403,563
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 1,070,405 1,343,190 1,629,236 1,923,757 2,226,753 2,529,748
9. Net Profit After Tax 272,785 286,046 294,521 302,996 302,996 302,996
Dividends Payable 0 0 0 0 0 0
Retained Profits 272,785 286,046 294,521 302,996 302,996 302,996

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