Investment Office ANRS

Project Profile on the Establishment

of computer Assembly plant

Development Studies
Associates (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.................................4
3.1Market Study...........................................................................................................................4
3.1.1Present Demand and Supply............................................................................................4
3.1.2Projected Demand............................................................................................................5
3.1.3Pricing and Distribution...................................................................................................6
3.2Plant Capacity.........................................................................................................................6
3.3Production Program................................................................................................................7

4.Raw Materials and Utilities.................................................................................7

4.1Availability and Source of Raw Materials..............................................................................7
4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................7

5Location and Site...................................................................................................8

6Technology and Engineering ...............................................................................8
6.1Assembly Process...................................................................................................................8
6.2Machinery and Equipment......................................................................................................8
6.3Civil Engineering Cost............................................................................................................9

7Human Resource and Training Requirement...................................................10

7.1Human Resource ..................................................................................................................10
7.2Training Requirement...........................................................................................................10

8Financial Analysis................................................................................................11
8.1Underlying Assumption .......................................................................................................11
8.2Investment.............................................................................................................................12
8.3Production Costs...................................................................................................................12
8.4Financial Evaluation.............................................................................................................13

9Economic and Social Benefit and Justification.................................................14

ANNEXES..............................................................................................................15

1. Executive Summary
This project profile deals with the establishment of computer assembly plant in Amhara National
Regional State. The following presents the main findings of the study
Demand projection divulges that the domestic demand for personal computer is substantial and is
increasing significantly with time. Accordingly, the planned plant is set to produce 5,500 units
annually. The total investment cost of the project including working capital is estimated at Birr
9.97 million and creates 29 job opportunity and Birr 645.84 thousand of income
The financial result indicates that the project will generate profit beginning from the first year of
operation. Moreover, the project will break even at 10.8% of capacity utilization and it will
payback fully the initial investment less working capital in one year. The result further show that
the calculated IRR of the project is 27.7% and NPV discounted at 18% of Birr 1,668,310.87
In addition to this, the proposed project possesses wide range of economic and social benefits
such as increasing the level of investment, tax revenue as well as 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

A computer is a device that accepts information (in the form of digitalized data) and manipulates
it for some result based on a program or sequence of instructions. In other words, a computer is
an electronic machine that (i) takes in data and instructions (ii) works with the data (iii) puts out
information (output). Computers are made of hardware and software. A personal computer (PC)
is a computer intended to be operated directly by an end user, with no intervening computer
operator. It may be a home computer, or may be found in an office, and business places.

3. Market Study, Plant Capacity and Production Program

3.1

Market Study
3.1.1 Present Demand and Supply

Computers were introduced into Ethiopia nearly half a century ago in the early 1960's.
Organizations that introduced computers into their operations in the early period of the
introduction of the technology included the Ethiopian Airlines, the Economic Commission for
Africa (ECA), Ethiopian Electric Light and Power Authority, Central Statistical Office and some
others.
Currently, Ethiopia relies mainly on imported computers to meet the local demand as there is no
real computer hardware production project that can benefit from the available knowledge and
expertise.
There are limited number of companies and several computer shops that produce locally
assembled computers in the country. At the same time huge number of branded computers are
imported into the country. Nonetheless, the number of computers in Ethiopia is very low when
compared to many African countries. According to UN Common Database (2002), Ethiopia
ranked as 111th in the number of computers in the world. The country, however, is registering a
year to year increase in the number of computers as shown in table 1 below.
Table 1: Number of Computers in Ethiopia
Year
2000
Computer per 1000
population
0.93316
63,495,00
Population
0
Computer Number 59,251

2001

2002

2003

2004

1.14020

1.48770

3.21610

65,344,000
74,505

67,220,000
100,003

2.18620
69,127,00
0
151,125

73,043,500
234,915

Source: World Bank Africa Database, 2006

According to table 1, the number of computers has increased on average by 41.6% within the
period under consideration. Although the position of the country is very low when compared to
even other African countries, such average growth can be considered as very strong and
promising. Taking this growth percentage the estimated number of computers in the country in
2007 reaches to 667,386.
4

Although there is no available detailed data, it can be argued that the main users of the machine
are schools & universities, banks, ministries, internet users and households.

3.1.2 Projected Demand

In view of the recent past performance, one can stress that there is high demand for the machine.
In this connection the future is expected to be very promising for the sector for the following
reasons

Population annual growth rate in Ethiopia is about 3%.

There is annual increase of internet users

Universities are implementing information systems to accomplish e-learning programs,

which affects demand positively.

Banks are looking for E-Banking Information Systems to benefit from the

E-

Commerce era.

The Ministry of Education is planning to enhance IT laboratories at Schools, and

Many university students are looking for having personal computers at home.

All this suggest that the future demand for the machinery is going to be substantial. Accordingly,
it is conservatively assumed that the number of computers imported and assembled in the
country will increase by about 10 percent in the coming years as shown in table 2 here under.

Table 2: Projected Demand for Computers

Year

Projected Demand

2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17

806,302
886,932
975,625
1,073,188
1,180,507
1,298,557
1,428,413
1,571,254
1,728,380
1,901,218

The forecasted figure divulge that the future bring forth substantial demand for the machine. At
the same time it suggests the relevance of establishing an assembly plant that

3.1.3 Pricing and Distribution

Based on the market research result and the capacity of the envisaged plant, the selling price of a
personal computer is set to be Birr 3800 per unit. In supplying the output, the plant shall make
use of the available sales network.

3.2

Plant Capacity

Considering the expected demand for personal computer as presented earlier, and the planned
technology, the envisaged plant is set to produce 5,500 units annually.
6

3.3

Production Program

The program is scheduled based on the consideration that the envisaged plant will work 275 days
in a year in 1 shifts, where the remaining days will be holidays and for maintenance. During the
first year of operation the plant will operate at 70 percent capacity and then it grows to 80
percent in the 2nd year. The capacity will grow to 90 percent in the 3 rd year and then to 100
percent starting from the 4th year. This consideration is developed based on the assumption that
market and logistics barriers would be eliminated gradually within the first three years of
operation.

4. Raw Materials and Utilities

4.1

Availability and Source of Raw Materials

The basic materials used in the production process are: computer case with power supply,
motherboard , central processing unit (processor), hard disk , keyboard, mouse, fan and visual
display unit (monitor) and other items. All the items shall be imported from abroad.

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 here under
Table 3: Material and Utility Requirement
Material and Input
Quantity
Computer Case with Mother Board
(Pentium IV) and Power Supply
5500 units
CPU fan
5500 units
Hard Disk (80GB)
5500 units
Keyboard
5500 units
Optical Mouse
5500 units
CPU (2 GHz)
5500 units
Modem
5500 units
RAM (512 MB)
5500 units
Monitor (17)
5500 units
Speaker
5500 units

Total Cost
L.C.

F.C.
561,000
165,000
2,200,000
275,000
137,500
7,425,000
440,000
770,000
3,465,000
121,000
7

Floppy Drive
CD drive
Total Material Cost
Utility
Electricity
Water
Total Utility Cost

5500 units
5500 units

25,000 kwh
1000m3

302,500
1,127,500
16,989,500
13,750
2,650
16,400

According to the above table the annual material and utility cost at full capacity of operation is
estimated to be Birr 17,005,900

5 Location and Site

The appropriate locations for the envisaged project in view of the availability of infrastructure as
well as market for the output is mainly Bahir Dar

6 Technology and Engineering

6.1

Assembly Process

The steps followed in assembling a personal computer are stated as follows.

Step I. Open the computer case and install the mother board
Step II. Install the CPU
Step III. Attach the power supply and other connectors
Step IV. Install the floppy drive. Then install the hard disk as well as the cd-rom.
Step V Install additional cards on demand.
Step VI. Install the required software

6.2

Machinery and Equipment

The assembly of personal computers does not require machineries. It only needs equipment like
screw drivers and related items as well as some softwares. The estimated cost of these items is
Birr 25,000. The equipments and softwares can be easily accessed from local suppliers operating
in Addis Ababa.
8

6.3

Civil Engineering Cost

The total site area for the envisaged plant is estimated to be 350m 2 where 100m2 is allocated to
the assembly place and the remaining space is left for stores (150m2), sales and show
room(50m2), Office and other facilities (50m2).

7 Human Resource and Training Requirement

7.1

Human Resource

The list of required manpower for the envisaged plant is stated in table 4 below
Table 4: Human Resource Requirement

Position
General Manager
Computer/Electrical Engineers
Software Expert
Administration/Finance
Accountant
Secretary
Marketing Expert
Sales Clerk
Store Keeper
Technician
Laborers
Cleaners
Driver
Guards
Benefit (20%)
Total

No.
Required
1
2
2
1
1
1
1
3
1
8
3
1
1
3

Monthly
Salary
4500
4000
3500
3000
1200
850
1500
800
800
1500
400
400
800
400

29

Total Annual
Salary
54000
96000
84000
36000
14400
10200
18000
28800
9600
144000
14400
4800
9600
14400
107640
645840

The envisaged plant creates 29 job opportunity and about Birr 645.84 thousand of income. The
professionals and support staffs for the envisaged plant shall be recruited from Amhara region

7.2

Training Requirement

On job training of key personnel shall be conducted on the technology, maintenance and trouble
shooting. For this Birr 25,000 will be allocated as training expense.

10

8 Financial Analysis
8.1

Underlying Assumption

The financial analysis of computer assembly plant is based on the data provided in the preceding
chapters and the following assumptions.
A. Construction and Finance
Construction period
Source of finance
Tax holidays
Bank interest rate
Discount for cash flow
Value of land
Repair & Maintenance

2 year
40% equity and 60% loan
2 years
12%
18%
Based on lease rate of ANRS
1% of fixed investment

B. Depreciation
Building
Machinery and equipment
Office furniture
Vehicles
Pre-production (amortization)

5%
10%
10%
20%
20%

C. Working Capital (Minimum Days of Coverage)

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

30
120
30
30
10
15
30
30
30

11

8.2

Investment

The total investment cost of the project including working capital is estimated at Birr 9.97
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.
Table 5: Total initial investment
Items
Land

L.C

Building and civil works

Office equipment
Vehicles
Plant machinery & equipment
Total fixed investment cost
Pre production capital
expenditure*
Total initial investment

Total

1,050

1,050

700,000

700,000

40,000

40,000

200,000

200,000

25,000

25,000

966,050

48,303

Working capital at full capacity

Total

F.C

966,050
48,303

1,014,353

1,014,353

1,547,255
2,561,607

7,413,600
7,413,600

8,960,855
9,975,207

*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 accounts for 74.3% of the total investment cost.

8.3

Production Costs

The total production cost at full capacity operation is estimated at Birr 18.35 million as detailed
in table 6 below.

12

Table 6: Production Cost

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
16,989,500
16,400
645,840
9,661
17,661,401
91,161
598,512
18,351,073

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. Ratios such as the percentage of
net profit to total sales, return on equity and return on total investment are 5%, 17% and 28% in
the first year and are gradually rising. 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 10.8% of capacity utilization.

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 one year.
IV.

Simple Rate of Return

For the envisaged plant the simple rate of return equals to 21.9%

13

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
27.7% and the net present value at 18 % discount is Birr 1,668,310.87
VI.

Sensitivity Analysis

As the production cost of the proposed computer assembly is high, the envisaged plant incurs
loss for the first year of operation when 10% cost increment takes place in the sector. The plant
will obtain profit beginning from the second year.

9 Economic and Social Benefit and Justification

The envisaged project possesses wide range of benefits that promotes the socio-economic goals
and objectives stated in the strategic plan of the Amhara National Regional State. It also plays
positive role in diversifying the economic activity by enhancing the hi-tech sector of the region.
The other major benefits are listed as follows:
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 1.76 million per
year and Birr 17.64 million within the project life. Such result induces the project promoters to
reinvest the profit which, therefore, increases the investment magnitude in the region.
B. Tax Revenue
In the project life under consideration, the region will collect about Birr 6.57 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
region. That is, it will provide permanent employment to 29 professionals as well as support
stuffs. Consequently the project creates income of Birr 645.84 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.
14

ANNEXES

15

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

CONSTRUCTION

PRODUCTION

Year 1

Year 2

Capacity Utilization (%)

0.00

0.00

70%

80%

90%

100%

1. Total Inventory

0.00

0.00

11411547.22

13041768.25

14671989.28

16302210.31

0.00

0.00

5189520.00

5930880.00

6672240.00

7413600.00

Raw Material-Local

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Foreign

0.00

0.00

5189520.00

5930880.00

6672240.00

7413600.00

Factory Supplies in Stock

0.00

0.00

13556.50

15493.14

17429.79

19366.43

Spare Parts in Stock and Maintenance

0.00

0.00

2213.13

2529.29

2845.46

3161.62

Work in Progress

0.00

0.00

338912.53

387328.60

435744.68

484160.75

Finished Products

0.00

0.00

677825.06

774657.21

871489.36

968321.51

2. Accounts Receivable

0.00

0.00

1596000.00

1824000.00

2052000.00

2280000.00

3. Cash in Hand

0.00

0.00

50571.05

57795.49

65019.93

72244.36

0.00

0.00

7868598.27

8992683.74

10116769.21

11240854.68

4. Current Liabilities

0.00

0.00

1596000.00

1824000.00

2052000.00

2280000.00

Accounts Payable

0.00

0.00

1596000.00

1824000.00

2052000.00

2280000.00

TOTAL NET WORKING CAPITAL REQUIREMENTS

0.00

0.00

6272598.27

7168683.74

8064769.21

8960854.68

INCREASE IN NET WORKING CAPITAL

0.00

0.00

6272598.27

896085.47

896085.47

896085.47

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%

16302210.31

16302210.31

16302210.31

16302210.31

16302210.31

16302210.31

7413600.00

7413600.00

7413600.00

7413600.00

7413600.00

7413600.00

0.00

0.00

0.00

0.00

0.00

0.00

Raw Material-Foreign

7413600.00

7413600.00

7413600.00

7413600.00

7413600.00

7413600.00

Factory Supplies in Stock

19366.43

19366.43

19366.43

19366.43

19366.43

19366.43

Spare Parts in Stock and Maintenance

3161.62

3161.62

3161.62

3161.62

3161.62

3161.62

Work in Progress

484160.75

484160.75

484160.75

484160.75

484160.75

484160.75

Finished Products

968321.51

968321.51

968321.51

968321.51

968321.51

968321.51

2. Accounts Receivable

2280000.00

2280000.00

2280000.00

2280000.00

2280000.00

2280000.00

72244.36

72244.36

72244.36

72244.36

72244.36

72244.36

11240854.68

11240854.68

11240854.68

11240854.68

11240854.68

11240854.68

4. Current Liabilities

2280000.00

2280000.00

2280000.00

2280000.00

2280000.00

2280000.00

Accounts Payable

2280000.00

2280000.00

2280000.00

2280000.00

2280000.00

2280000.00

TOTAL NET WORKING CAPITAL REQUIREMENTS

8960854.68

8960854.68

8960854.68

8960854.68

8960854.68

8960854.68

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

3. Cash in Hand
CURRENT ASSETS

INCREASE IN NET WORKING CAPITAL

Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION

PRODUCTION

Year 1

Year 2

507176.25

9468030.93

16226000.00

16948000.00

19038000.00

21128000.00

507176.25

9468030.93

1596000.00

228000.00

228000.00

228000.00

Total Equity

202870.50

3787212.37

0.00

0.00

0.00

0.00

Total Long Term Loan

304305.75

5680818.56

0.00

0.00

0.00

0.00

0.00

0.00

1596000.00

228000.00

228000.00

228000.00

2. Inflow Operation

0.00

0.00

14630000.00

16720000.00

18810000.00

20900000.00

Sales Revenue

0.00

0.00

14630000.00

16720000.00

18810000.00

20900000.00

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

507176.25

507176.25

21737766.02

17113392.84

19395765.55

21187022.40

4. Increase In Fixed Assets

507176.25

507176.25

0.00

0.00

0.00

0.00

Fixed Investments

483025.00

483025.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

24151.25

24151.25

0.00

0.00

0.00

0.00

5. Increase in Current Assets

0.00

0.00

7868598.27

1124085.47

1124085.47

1124085.47

6. Operating Costs

0.00

0.00

12490645.18

14273571.74

16056498.30

17839424.86

7. Corporate Tax Paid

0.00

0.00

0.00

0.00

619148.63

747181.41

8. Interest Paid

0.00

0.00

1378522.57

718214.92

598512.43

478809.94

9.Loan Repayments

0.00

0.00

0.00

997520.72

997520.72

997520.72

10.Dividends Paid

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

0.00

8960854.68

-5511766.02

-165392.84

-357765.55

-59022.40

Cumulative Cash Balance

0.00

8960854.68

3449088.66

3283695.82

2925930.27

2866907.87

TOTAL CASH INFLOW

1. Inflow Funds

Total Short Term Finances

3. Other Income

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

PRODUCTION
5
20900000.00

6
20900000.00

7
20900000.00

8
20900000.00

9
20900000.00

10
20900000.00

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

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

Sales Revenue

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

19979145.19

19910251.60

19826459.86

18745147.40

18745147.40

18745147.40

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

17839424.86

17839424.86

17839424.86

17839424.86

17839424.86

17839424.86

7. Corporate Tax Paid

783092.15

833901.05

869811.80

905722.54

905722.54

905722.54

8. Interest Paid

359107.46

239404.97

119702.49

0.00

0.00

0.00

9. Loan Repayments

997520.72

997520.72

997520.72

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Surplus(Deficit)

920854.81

989748.40

1073540.14

2154852.60

2154852.60

2154852.60

Cumulative Cash Balance

3787762.68

4777511.08

5851051.22

8005903.82

10160756.42

12315609.02

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

6. Operating Costs

10.Dividends Paid

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

CONSTRUCTION

PRODUCTION

Year 1

Year 2

TOTAL CASH INFLOW

0.00

0.00

14630000.00

16720000.00

18810000.00

20900000.00

1. Inflow Operation

0.00

0.00

14630000.00

16720000.00

18810000.00

20900000.00

Sales Revenue

0.00

0.00

14630000.00

16720000.00

18810000.00

20900000.00

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

507176.25

507176.25

18763243.45

15169657.21

17571732.40

19482691.74

3. Increase in Fixed Assets

507176.25

507176.25

0.00

0.00

0.00

0.00

Fixed Investments

483025.00

483025.00

0.00

0.00

0.00

0.00

Pre-production Expenditures

24151.25

24151.25

0.00

0.00

0.00

0.00

4. Increase in Net Working Capital

0.00

0.00

6272598.27

896085.47

896085.47

896085.47

5. Operating Costs

0.00

0.00

12490645.18

14273571.74

16056498.30

17839424.86

6. Corporate Tax Paid

0.00

0.00

0.00

0.00

619148.63

747181.41

NET CASH FLOW

-507176.25

-507176.25

-4133243.45

1550342.79

1238267.60

1417308.26

CUMMULATIVE NET CASH FLOW

-507176.25

-1014352.50

-5147595.95

-3597253.16

-2358985.55

-941677.29

Net Present Value (at 18%)

-507176.25

-429810.38

-2968431.09

943586.49

638684.65

619518.50

Cumulative Net present Value

-507176.25

-936986.63

-3905417.72

-2961831.23

-2323146.58

-1703628.08

2. Other Income

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED

(Continued)

PRODUCTION
5

10

TOTAL CASH INFLOW

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

1. Inflow Operation

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

Sales Revenue

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

18622517.01

18673325.91

18709236.66

18745147.40

18745147.40

18745147.40

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

17839424.86

17839424.86

17839424.86

17839424.86

17839424.86

17839424.86

6. Corporate Tax Paid

783092.15

833901.05

869811.80

905722.54

905722.54

905722.54

NET CASH FLOW

2277482.99

2226674.09

2190763.34

2154852.60

2154852.60

2154852.60

CUMMULATIVE NET CASH FLOW

1335805.70

3562479.79

5753243.13

7908095.73

10062948.33

12217800.92

Net Present Value (at 18%)

843651.53

699008.74

582826.66

485824.60

411715.76

348911.66

Cumulative Net present Value

-859976.55

-160967.81

421858.85

907683.45

1319399.21

1668310.87

Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW

4. Increase in Net Working Capital

5. Operating Costs

Net Present Value (at 18%)

Internal Rate of Return

1,668,310.87

27.7%

Annex 4: NET INCOME STATEMENT ( in Birr)

6

PRODUCTION
1

70%

80%

90%

100%

100%

14630000.00

16720000.00

18810000.00

20900000.00

20900000.00

14630000.00

16720000.00

18810000.00

20900000.00

20900000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

12299650.73

14056743.69

15813836.65

17570929.61

17570929.61

2330349.27

2663256.31

2996163.35

3329070.39

3329070.39

15.93

15.93

15.93

15.93

15.93

282154.95

307988.55

333822.15

359655.75

359655.75

2048194.32

2355267.76

2662341.20

2969414.64

2969414.64

14

14

14

14

14

4. Less Cost of Finance

1378522.57

718214.92

598512.43

478809.94

359107.46

5. GROSS PROFIT

669671.75

1637052.85

2063828.77

2490604.70

2610307.18

0.00

0.00

619148.63

747181.41

783092.15

669671.75

1637052.85

1444680.14

1743423.29

1827215.03

Gross Profit/Sales

5%

10%

11%

12%

12%

Net Profit After Tax/Sales

5%

10%

8%

8%

9%

Return on Investment

28%

29%

23%

22%

22%

Return on Equity

17%

41%

36%

44%

46%

Capacity Utilization (%)

1. Total Income
Sales Revenue

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

10

100%

100%

100%

100%

100%

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

20900000.00

Other Income

0.00

0.00

0.00

0.00

0.00

2. Less Variable Cost

17570929.61

17570929.61

17570929.61

17570929.61

17570929.61

3329070.39

3329070.39

3329070.39

3329070.39

3329070.39

16

16

16

16

16

309995.25

309995.25

309995.25

309995.25

309995.25

3019075.14

3019075.14

3019075.14

3019075.14

3019075.14

14

14

14

14

14

4. Less Cost of Finance

239404.97

119702.49

0.00

0.00

0.00

5. GROSS PROFIT

2779670.17

2899372.65

3019075.14

3019075.14

3019075.14

6. Income (Corporate) Tax

833901.05

869811.80

905722.54

905722.54

905722.54

7. NET PROFIT

1945769.12

2029560.86

2113352.60

2113352.60

2113352.60

Gross Profit/Sales

13%

14%

14%

14%

14%

Net Profit After Tax/Sales

9%

10%

10%

10%

10%

Return on Investment

22%

22%

21%

21%

21%

Return on Equity

49%

51%

53%

53%

53%

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

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

Year 1
507176.25
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
507176.25
0.00
483025.00
24151.25
0.00
0.00
0.00
507176.25
0.00
0.00
0.00
304305.75
304305.75
0.00
202870.50
202870.50
0.00
0.00
0.00
0.00
0.00
0.00

Year 2
9975207.18
8960854.68
0.00
0.00
0.00
0.00
0.00
8960854.68
0.00
1014352.50
483025.00
483025.00
48302.50
0.00
0.00
0.00
9975207.18
0.00
0.00
0.00
5985124.31
5985124.31
0.00
3990082.87
3990082.87
0.00
0.00
0.00
0.00
0.00
0.00

1
12240878.93
11317686.93
5205289.63
338912.53
677825.06
1596000.00
50571.05
3449088.66
0.00
923192.00
966050.00
0.00
48302.50
91160.50
0.00
0.00
12240878.93
1596000.00
1596000.00
0.00
5985124.31
5985124.31
0.00
3990082.87
3990082.87
0.00
0.00
0.00
669671.75
0.00
669671.75

Annex 5: Projected Balance Sheet (in Birr):

2
13108411.06
12276379.56
5948902.44
387328.60
774657.21
1824000.00
57795.49
3283695.82
0.00
832031.50
966050.00
0.00
48302.50
182321.00
0.00
0.00
13108411.06
1824000.00
1824000.00
0.00
4987603.59
4987603.59
0.00
3990082.87
3990082.87
0.00
0.00
669671.75
1637052.85
0.00
1637052.85

3
13783570.48
13042699.48
6692515.24
435744.68
871489.36
2052000.00
65019.93
2925930.27
0.00
740871.00
966050.00
0.00
48302.50
273481.50
0.00
0.00
13783570.48
2052000.00
2052000.00
0.00
3990082.87
3990082.87
0.00
3990082.87
3990082.87
0.00
0.00
2306724.60
1444680.14
0.00
1444680.14

4
14757473.05
14107762.55
7436128.05
484160.75
968321.51
2280000.00
72244.36
2866907.87
0.00
649710.50
966050.00
0.00
48302.50
364642.00
0.00
0.00
14757473.05
2280000.00
2280000.00
0.00
2992562.15
2992562.15
0.00
3990082.87
3990082.87
0.00
0.00
3751404.74
1743423.29
0.00
1743423.29

Continued

PRODUCTION
5

10

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

15587167.36
15028617.36
7436128.05
484160.75
968321.51
2280000.00
72244.36
3787762.68
0.00
558550.00
966050.00
0.00
48302.50
455802.50
0.00
0.00
15587167.36
2280000.00
2280000.00
0.00
1995041.44
1995041.44
0.00
3990082.87
3990082.87
0.00
0.00
5494828.03
1827215.03
0.00
1827215.03

16535415.76
16018365.76
7436128.05
484160.75
968321.51
2280000.00
72244.36
4777511.08
0.00
517050.00
966050.00
0.00
48302.50
497302.50
0.00
0.00
16535415.76
2280000.00
2280000.00
0.00
997520.72
997520.72
0.00
3990082.87
3990082.87
0.00
0.00
7322043.05
1945769.12
0.00
1945769.12

17567455.90
17091905.90
7436128.05
484160.75
968321.51
2280000.00
72244.36
5851051.22
0.00
475550.00
966050.00
0.00
48302.50
538802.50
0.00
0.00
17567455.90
2280000.00
2280000.00
0.00
0.00
0.00
0.00
3990082.87
3990082.87
0.00
0.00
9267812.17
2029560.86
0.00
2029560.86

19680808.50
19246758.50
7436128.05
484160.75
968321.51
2280000.00
72244.36
8005903.82
0.00
434050.00
966050.00
0.00
48302.50
580302.50
0.00
0.00
19680808.50
2280000.00
2280000.00
0.00
0.00
0.00
0.00
3990082.87
3990082.87
0.00
0.00
11297373.03
2113352.60
0.00
2113352.60

21794161.10
21401611.10
7436128.05
484160.75
968321.51
2280000.00
72244.36
10160756.42
0.00
392550.00
966050.00
0.00
48302.50
621802.50
0.00
0.00
21794161.10
2280000.00
2280000.00
0.00
0.00
0.00
0.00
3990082.87
3990082.87
0.00
0.00
13410725.63
2113352.60
0.00
2113352.60

23907513.69
23556463.69
7436128.05
484160.75
968321.51
2280000.00
72244.36
12315609.02
0.00
351050.00
966050.00
0.00
48302.50
663302.50
0.00
0.00
23907513.69
2280000.00
2280000.00
0.00
0.00
0.00
0.00
3990082.87
3990082.87
0.00
0.00
15524078.22
2113352.60
0.00
2113352.60

10