ANRS Investment and Industry Bureau

Revised Project Profile on the

Establishment of Tomato Ketchup
Producing Plant

revised 2023
Bahir dar
 Table of Contents

1. Executive Summary..................................................................................1
2. Product Description and Application....................................................1
3. Market Study, Plant Capacity and Production Program...................1
3.1 Market Study.......................................................................................................1
3.1.1 Present Demand and Supply........................................................................1
3.1.2 Projected Demand........................................................................................3
3.1.3 Pricing and Distribution...............................................................................3
3.2 Plant Capacity......................................................................................................4
3.3 Production Program.............................................................................................4
4. Raw Materials and Utilities....................................................................5
4.1 Availability and Source of Raw Materials...........................................................5
4.2 Annual Requirement and Cost of Raw Materials and Utilities...........................5
5. Location and Site.....................................................................................6
6. Technology and Engineering.................................................................6
6.1 Production Process...............................................................................................6
6.2 Machinery and Equipment...................................................................................7
6.3 Civil Engineering Cost........................................................................................8
7. Human Resource and Training Requirement......................................8
7.1 Human Resource..................................................................................................8
7.2 Training Requirement..........................................................................................9
8. Financial Analysis...................................................................................9
8.1 Underlying Assumption.......................................................................................9
8.2 Investment..........................................................................................................10
8.3 Production Costs................................................................................................11
8.4 Financial Evaluation..........................................................................................11
9. Economic and Social Benefit and Justification..................................12
ANNEXES....................................................................................................14
 1. Executive Summary
This profile provides basic information on the production of 2,100 tons Tomato Sauce and 700
tons Tomato Ketchup. The total investment requirement of the project including the working
capital is estimated at about Birr 139.7 million; of which nearly Birr 48.4 million is the cost of
the working capital and Birr 56.7 million is for machinery and equipments. Based on the cash
flow statement, the calculated internal rate of return (IRR) and simple rate of return (SRR) of the
project are 28.2 % and 23.5 %, respectively. The net present value (NPV) at 18 % discounting
rate is about Birr 44607.8 thousand. The plant is expected to create employment opportunities for
about 48 persons.

2. Product Description and Application

Tomato ketchup & sauce are processed products of fresh tomato which are nowadays consumed
in vast quantities in households as well as in restaurants and other places. Tomato has long been
processed into tomato ketchup in many countries including Italy, Germany, Greece and USA.
The quality of the ketchup that is produced is determined largely by the quality of the tomato
used as a raw material. Processing of tomato ketchup mainly depends on the availability of a
large and stable supply of fresh, quality tomato, and the availability of a vast supply of water. In
addition to fresh tomato, other inputs such as sugar, salt, vinegar and various types of spices are
needed to produce a tasty and appealing product. The production of tomato ketchup & sauce
involves the crushing of fresh tomato followed by concentration and filtration.

3. Market Study, Plant Capacity and Production Program

3.1 Market Study

3.1.1 Present Demand and Supply

Tomato is consumed by the urban and rural population in various forms regardless of income.
On the other hand, tomato ketchup and sauces/paste are processed at industrial level and are
consumed by the urban population. Hotels, restaurants, training institutes, hospitals, snack bars
and etc are also major users of these commodities for food preparation. Besides, middle class and

1
upper class segments of the urban population regularly use such products. Tomato ketchup is
used as a direct application during the consumption of various food items while the sauces are
used for cooking purposes. The current major sources of supply of the above products are
imports and Merti Horticultural Processing Plant which is the sole producer in the country.
Though it is believed that it is through import that most of the tomato ketchup and sauces are
supplied in Ethiopia, the import data does not show the reality. This is because of the fact that
large amount of these items are smuggled in to the country through the boarder towns of
Hartshek, Moyale and others.

Table 3.1 shows the domestic production and legal imports of Tomato Ketchup and Sauces over
the past ten years.

TABLE 3.1
DOMESIC PRODUCTION AND IMPORTS OF TOMATO KETCHUP &SAUCES
(IN TONS)

Year E.C Imports Domestic Total

Production
1989 NA 825 NA
1990 482 951 1433
1991 483 1949 2432
1992 231 2424 2655
1993 139 1730 1869
1994 270 555 825
1995 550 2116 2666
1996 516 1846 2362
1997 902 1846 2748
1998 249 1790 2039
1999 821 1790 2611
2000* 2240 1790 4030
Source: Compiled from CSA’s Manufacturing and Import Data
* Estimation

The above import figure does not reflect the actual demand and supply in the country.
Assuming that Tomato Ketchup & Sauces are used exclusively by the urban population in the
hotels , restaurants, snack-bars, training institutions, hospitals and middle and upper class
houses, the current supply and demand at the country level would be very large. Of the total
77 million people of the country, around 20 % (15.4 million) is urban or semi-urban

2
 population. From the total urban population, at least 20 %( 3.1 million) can be categorized
under the middle and upper classes population. If we conservatively assume that an individual
in the later group consume 25 grams of tomato ketchup and sauces per week, the total annual
consumption would be 4,030 tons. Based on this demand estimation, the current actual
volume of import of the products is estimated to reach 2,240 tons. Other than the domestic
demand, there is huge export potential for tomato sauces and ketchup.

3.1.2 Projected Demand

The demand for the products under review is based on the above per capita consumption and an
8 % urban population growth rate. Accordingly, the projected demand is shown in Table 3.2.
TABLE 3.2
PROJECTED DEMAND FOR TOMAT PASTE & SAUCE
(IN TONS)

Year E.C Projected Demand

2011 56,100.0
9
2012 334,917.5
4
2013 1,999,457.7
0
2014 11,936,762.4
6
2015 71,262,471.8
6
2016 425,436,956.9
9
2017 2,539,858,633.2
2
2018 15,162,956,040.31
2019 90,522,847,560.66
2020 540,421,399,937.16
2021 3,226,315,757,624.81
2022 19,261,105,073,020.10
2023 114,988,797,285,930.00
Table 3.2 shows that the demand for tomato ketchup & sauce is projected to reach 71,262,471.86
tons in 2015 E.C and 114,988,797,285,930.00 tons in 2023 E.C.

3
 3.1.3 Pricing and Distribution

The current retail price of tomato sauce is Birr 119 per Kg and that of Ketchup is Birr 238 per
Kg. Allowing enough margins for whole sale and retail network, the average factory selling price
is estimated at Birr 83 per Kg for Tomato Sauce and Birr 167 per Kg for Tomato Ketchup. The
product can be distributed though the existing wholesale and retail trade networks.

3.2 Plant Capacity

The manufacture of tomato ketch-up can be undertaken when two basic conditions are met-the
availability of a large and stable supply of fresh quality tomato, and the availability of a vast
supply of water. Since the quality of the ketchup that is produced will be determined largely by
the quality of the tomato used as raw material, great importance is attached to tomato cultivation
itself.

Tomato processing plant requires a large quantity of water. The peak harvesting time is generally
concentrated over a period of not more than 60 days. Then, it will be necessary to process a huge
amount of tomato quickly in a very short time. Water in large quantity is required both during
tomato plantation and also during collection for washing. Accordingly, constructing a new
tomato processing plant will be determined not only by the quantity of tomato available, but also
by the amount of water.

A plant that can process 250 tons per day of fresh tomato is envisaged here. The plant can
process 15,000 tons of fresh tomato to produce 2,800 tons of tomato pulp working for 60 days
per annum. Assuming that 25 % of tomato pulp will be used to produce ketchup, and 75 % for
tomato sauce, the plant will thus produce 700 tons of tomato ketchup and 2,100 tons of tomato
sauce. Other than the domestic demand there is huge export potential for tomato sauces and
ketchup; implies any excess over the domestic demand will be ear-marked for export.

3.3 Production Program

The production program of the tomato processing plant is designed in such a way that at the
initial year, it will operate at 75 % of its full capacity, and then raise its capacity to 85 % and 100

4
% in the subsequent years. Thus, from the third year onwards the plant will continuously operate
at 100 % of its installed capacity.

5
 4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials

There are many areas in the ANRS which are suitable for growing tomatoes. Areas around Lake
Tana especially the eastern, southern and northern shores of the Lake are considered as best areas
for growing tomatoes. Besides, these areas have enough water supplies if the processing plant is
located in a town located near the lake. Auxiliary materials required by the processing plant
consist of salt, sugar, vinegar, spices, and other ingredients and which are added to produce good
taste.

4.2 Annual Requirement and Cost of Raw Materials and Utilities

The basic raw material required by the processing plant is fresh tomato. The plant processes 250
tons of fresh tomato per day, or 15,000 tons per year. Auxiliary materials required by the
processing plant consist of salt, sugar, vinegar, spices, and other ingredients and which are added
to produce good taste.

Table 4.1 shows the various ingredients required for tomato sauce and ketchup production,
together with quantity requirements and costs.

6
 TABLE 4.1
ANNUAL REQUIREMENT AND COST OF MATERIALS

No Item For sauce For ketchup Total Cost (Birr)

. Production Production Requirement
(in Kg) ( in Kg) (in Kg)
1 Fresh Tomato 11,250,000 3,750,000 15,000,000
179,100,000.00
2 Salt 100 22 122
728.34
3 Sugar 300 70 370
17,671.20
4 Vinegar 100 70 170
17,910.00
5 Spices 30 12 42
41,790.00
6 Others 20 12 32
29,850.00
7. Glass bottles - 3410000 pcs -
10,178,850.00
8. Cans 10227500 pcs - -
30,529,087.50
9. Cartons - - 570000 pcs
272,232.00
Total - - -
220,188,119.04

Bottles and all other auxiliary materials can be procured locally except laminated cans which
have to be imported.
Utilities consist of electricity, water and fuel oil for boiler. The total annual requirement is shown
in the Table 4.2

7
 TABLE 4.2
UTILITIES REQUIREMENT
No. Utility Requirement Unit Cost Cost (Birr)
(Annual)
1. Electricity 132MWH Birr 3.3 per KWH 433,422.00
2. Water 40,000 m3 Birr 15.8 per m3 632,820.00
3. Fuel Oil 300 tons Birr 41790 per ton 12,537,000.00
Total 13,603,242.00

5. Location and Site

Woreta or any other town near tomato growing areas; particularly around lake Tana are
appropriate places to establish tomato ketchup and sauce producing plant.

6. Technology and Engineering

6.1 Production Process

The processing of tomato ketchup, paste and juice involves the following major operations-
collection of ripened tomatoes, putting them on a washing line, washing the tomatoes, separating
good tomatoes from the crushed and rotten ones, crushing the tomatoes, concentration, filtration
homogenization, flavoring, bottling and cooling.

Fresh tomato transported to the plant will be cleaned by washing in water. To accomplish this
task, a special washing technique has been developed that allows for preservation of the fresh,
natural qualities of ripened tomato. Washed tomato is crushed into tomato pulp, which is strained
and filtered. This is followed by preheating and concentration to about one-third of its original
volume by means of a continuous concentrator, for which a boiler plant is used. Since the
concentration would be achieved in a very short time, a special technical know-how would be
employed. Instantaneous concentration is necessary; otherwise, heating the tomato pulp would
cause oxidization which gives it a dark-reddish, disagreeable color, as opposed to the color of
natural tomato. Concentrated tomato pulp is homogenized, and salt, sugar, spices, vinegar and
other ingredients are added in the seasoning room to give it the flavor associated with tomato
sauce and tomato ketchup. The products are then filled into bottles and cans. This is followed by
packing into dozen or gross cartons for delivery.

8
 6.2 Machinery and Equipment

Required machinery include: tomato charging machine, tomato washing and sorting machine,
concentrator, filter, homogenizer, seasoning mixer, bottling machine, cooler, labeler, packing
machine, water treatment facility, boiler and etc. The list of machinery and equipment required
by the tomato processing plant and the corresponding costs are presented in Table 6.1.
TABLE 6.1
MACHINERY & EQUIPMENT REQUIREMENT

No. Item Qty Cost (Birr)

(no)
1. Tomato charging m/c 1
2. Tomato washing 7 sorting m/c 1
3. Continuous concentrator 1
4. Filter 1
5. Homogenizer 1
6. Seasoning Mixer 1
7. Bottling m/c 2 Total Price
8. Cooler 1 Birr 50.7 million
9. Labeler 1
10. Packing m/c 1
11. Water Treatment Facility 1
12. Boiler 1
13. Other Auxiliary Equipment -
Sub-Total 50.7 million
Freight, Insurance, Transport, Bank
5.9 million
Charges and etc
Total Cost 56.7million

The total cost of machinery and equipment is estimated to reach at Birr 56.7; of which Birr 50.7
million is in foreign currency.

Machinery Supplier’s Address:

Shiv Engineering
Patel Avenue, Plot No. 165, Right Bhusaria Colony,
Kothrud Bus Depot,Panda Road,Pune-411038,
Maharashatra, India

9
 6.3 Civil Engineering Cost
The building area required by the plant is estimated to be 2,500 m 2; and it costs Birr 5000,000.
This would include cost of land preparation and associated civil works. The total land area of the
plant, including the open space, is 5000 m 2 and its lease cost equals Birr 138,000. The cost of the
land lease is as per ANRS land lease rate for Woreta which is equal to Birr 27.60 per square
meter for industrial purpose. Of the total cost of the lease, 5 % is paid in the beginning while the
rest will be paid in 40years.

7. Human Resource and Training Requirement

7.1 Human Resource

The plant requires both skilled and unskilled labor to carryout production activities. Indirect
manpower will be engaged in carrying out administrative activities. The total manpower
requirement together with monthly and annual salaries/wages in presented in Table 7.1.
TABLE 7.1
MANPOWER REQUIREMENT

No. Description Qty. Monthly Salary Annual

(no) (Birr) Expenditures
(Birr)
A. Administration
1. Plant Manager 1 23,880.00 286,560.00
2. Secretary 1 4,776.00 57,312.00
3. Accountant 1 8,955.00 107,460.00
4. Salesman 1 4,776.00 57,312.00
5. Personnel Officer 1 8,955.00 107,460.00
6. Office Clerks 2 1,791.00 42,984.00
7. General Services 4 1,791.00 85,968.00
Sub-Total 11 745,056.00
B. Production
1. Production Supervisor 1 8,955.00 107,460.00
2. Technicians 2 5,970.00 143,280.00
3. Operators 7 3,582.00 300,888.00
4. Daily Workers 25 1,791.00 537,300.00
5. Chemists 2 11,940.00 286,560.00
Sub-Total 37 1,375,488.00
Workers’ Benefits (20 % of BS) 424,108.80
Total Cost 48 2,544,652.80
The total annual wages and salary, including 20 % benefits, amount to Birr 2,544,652.80

10
per annum.

7.2 Training Requirement

Tomato ketchup and tomato sauce producing operations demand good knowledge of quality
control. Therefore, the proper on job training should be given to the workers at least for a month
by hiring one or more experts in the area.

8. Financial Analysis
8.1 Underlying Assumption

The financial analysis of Tomato Ketchup & Sauce producing plant is based on the data
provided in the preceding chapters and the following assumptions.

A. Construction and Finance

Construction Period 2 Years

Source Of Finance 40% Equity and 60% Loan
Tax Holidays 2 Years
Bank Interest Rate 12%
Discount For Cash Flow 18%
Value Of Land Based on Lease Rate of ANRS
Spare Parts, Repair & Maintenance 3% of the Fixed Investment

B. Depreciation

Building 5%
Machinery And Equipment 10%
Office Furniture 10%
Vehicles 20%
Pre-Production (Amortization) 20%

11
 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 139.7
million 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 L.C F.C Total

Land
41,193.00 41,193.00
Building and Civil Works
29,850,000.00 29,850,000.00
Office Equipment
597,000.00 597,000.00
Vehicles
- -
Plant Machinery & Equipment
8,955,000.00 47,760,000.00 56,715,000.00
Total Fixed Investment Cost
39,443,193.00 47,760,000.00 87,203,193.00
Pre Production Capital
Expenditure* 1,972,159.65 4,360,159.65
Total Initial Investment
41,415,352.65 47,760,000.00 89,175,352.65
Working Capital at Full
Capacity 45,975,310.29 2,298,814.17 48,274,124.46
Total

12
 87,390,662.94 50,058,814.17 137,449,477.11
*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.
The foreign component of the project accounts for Birr 50.8 million or 35.8 % of the total
investment cost.

8.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 220.1 million (see Table
8.2). Raw materials and utilities account for 91.5 %.
TABLE 8.2
PRODUCTION COST AT FULL CAPACITY

Raw Material
Requirement Cost
1. Local Raw Materials 214,920,000.00
2. Foreign Raw Materials 5,268,119.04

Total Production Cost at full Capacity

Items Cost
1. Raw materials
220,188,119.04
2. Utilities
220,188,119.04
3. Wages and Salaries
220,188,119.04
4. Spares and Maintenance
220,188,119.04
Factory Costs
220,188,119.04
5. Depreciation
220,188,119.04
6. Financial Costs
220,188,119.04
Total Production Cost 220,188,119.04

8.4 Financial Evaluation

I. Profitability

13
According to the projected income statement (See Annex 4) the project will generate profit
beginning from the first year of operation and increases on wards. The income statement and
other profitability indicators also show that the project is viable.

14
 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 18.3 % of capacity utilization.

III. Payback Period

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 three years.

IV. Simple Rate of Return

The project’s 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 23.5 % 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 28.2 % and the net present value (NPV) at 18 % discount is Birr 44,607 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

15
 A. Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 27.4 million per
year and birr 272 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 100 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. Import Substitution and Foreign Exchange Saving

As there is no enough production of tomato ketchup and tomato sauce in the country, the
commencement of this project relieves a portion of the import burden. That is, based on the
projected figure we learn that in the project life an estimated amount of US Dollar 280 million
will be saved as a result of the proposed project. This will create room for the saved hard
currency to be allocated on other vital and strategic sectors

D. 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 48 professionals as well as support
stuffs. Consequently the project creates income of birr 2.5 million birr per year. This would be
one of the commendable accomplishments of the project.

E. Pro Environment Project

The proposed production process is environment friendly.

16
ANNEXES

17
 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0 0 75% 85% 100% 100%

1. Total Inventory - - 54,192,878.82 61,418,595.96 72,257,171.73 72,257,171.73

Raw Materials in Stock- Total - - 19,308,475.31 21,882,938.70 25,744,633.74 25,744,633.74

Raw Material-Local - - 17,584,363.66 19,928,945.47 23,445,818.20 23,445,818.20

Raw Material-Foreign - - 1,724,111.70 1,953,993.24 2,298,815.60 2,298,815.60

Factory Supplies in Stock - - 202,130.05 229,080.72 269,506.75 269,506.75

Spare Parts in Stock and Maintenance - - 214,044.20 242,583.43 285,392.27 285,392.27

Work in Progress - - 5,053,251.28 5,727,018.13 6,737,668.39 6,737,668.39

Finished Products - - 10,106,502.61 11,454,036.27 13,475,336.84 13,475,336.84

2. Accounts Receivable - - 23,934,272.73 27,125,509.07 31,912,363.66 31,912,363.66

3. Cash in Hand - - 1,321,191.39 1,497,350.27 1,761,588.50 1,761,588.50

CURRENT ASSETS - - 60,139,867.63 68,158,516.65 80,186,490.15 80,186,490.15

4. Current Liabilities - - 23,934,272.73 27,125,509.07 31,912,363.66 31,912,363.66

Accounts Payable - - 23,934,272.73 27,125,509.07 31,912,363.66 31,912,363.66

TOTAL NET WORKING CAPITAL REQUIRMENTS - -

1
 36,205,594.90 41,033,007.52 48,274,126.49 48,274,126.49

INCREASE IN NET WORKING CAPITAL - - 36,205,594.90 4,827,412.63 7,241,118.97 -

2
 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 72,257,171.73 72,257,171.73 72,257,171.73 72,257,171.73 72,257,171.73 72,257,171.73

Raw Materials in Stock-Total 25,744,633.74 25,744,633.74 25,744,633.74 25,744,633.74 25,744,633.74 25,744,633.74

Raw Material-Local 23,445,818.20 23,445,818.20 23,445,818.20 23,445,818.20 23,445,818.20 23,445,818.20

Raw Material-Foreign 2,298,815.60 2,298,815.60 2,298,815.60 2,298,815.60 2,298,815.60 2,298,815.60

Factory Supplies in Stock 269,506.75 269,506.75 269,506.75 269,506.75 269,506.75 269,506.75

Spare Parts in Stock and Maintenance 285,392.27 285,392.27 285,392.27 285,392.27 285,392.27 285,392.27

Work in Progress 6,737,668.39 6,737,668.39 6,737,668.39 6,737,668.39 6,737,668.39 6,737,668.39

Finished Products 13,475,336.84 13,475,336.84 13,475,336.84 13,475,336.84 13,475,336.84 13,475,336.84

2. Accounts Receivable 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66

3. Cash in Hand 1,761,588.50 1,761,588.50 1,761,588.50 1,761,588.50 1,761,588.50 1,761,588.50

CURRENT ASSETS 80,186,490.15 80,186,490.15 80,186,490.15 80,186,490.15 80,186,490.15 80,186,490.15

4. Current Liabilities 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66

Accounts Payable 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66

3
TOTAL NET WORKING CAPITAL REQUIRMENTS 48,274,126.49 48,274,126.49 48,274,126.49 48,274,126.49 48,274,126.49 48,274,126.49
INCREASE IN NET WORKING CAPITAL - - - - - -

4
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

TOTAL CASH INFLOW 45,781,676.33 94,055,802.81 243,331,772.73 251,841,736.34 297,316,854.53 292,530,000.00

1. Inflow Funds 45,781,676.33 94,055,802.81 23,934,272.73 3,191,236.34 4,786,854.53 -

Total Equity 18,312,670.53 37,622,321.15 - - - -

Total Long Term Loan 27,469,005.80 56,433,481.72 - - - -

Total Short Term Finances - - 23,934,272.73 3,191,236.34 4,786,854.53 -

2. Inflow Operation - - 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00

Sales Revenue - - 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00

Interest on Securities - - - - - -
3. Other Income - - - - - -

TOTAL CASH OUTFLOW 45,781,676.33 45,781,676.33 261,617,376.36 235,947,812.44 285,003,839.56 271,801,231.25

4. Increase In Fixed Assets 45,781,676.33 45,781,676.33 - - - -

Fixed Investments 43,601,596.50 43,601,596.50 - - - -

Pre-production
Expenditures 2,180,079.83 2,180,079.83 - - - -

5. Increase in Current Assets - - 60,139,867.63 8,018,649.02 12,027,973.50 -

6. Operating Costs - - 179,996,467.80 203,877,117.03 239,698,090.86 239,698,090.86

5
7. Corporate Tax Paid - - - - 10,903,778.56 11,407,193.44

8. Interest Paid - - 21,481,040.93 10,068,298.50 8,390,248.75 6,712,199.00

9.Loan Repayments - - - 13,983,747.89 13,983,747.89 13,983,747.89

10.Dividends Paid - - - - - -

Surplus(Deficit) - 48,274,126.49 (18,285,603.62) 15,893,923.90 12,313,014.97 20,728,768.75

Cumulative Cash Balance - 48,274,126.49 29,988,522.87 45,882,446.82 58,195,461.73 78,924,230.49

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

PRODUCTION
5 6 7 8 9 10

TOTAL CASH INFLOW 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

1. Inflow Funds - - - - - -

Total Equity - - - - - -

Total Long Term Loan - - - - - -

Total Short Term Finances - - - - - -

2. Inflow Operation 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

Sales Revenue 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

Interest on Securities - - - - - -

3. Other Income - - - - - -

6
 TOTAL CASH OUTFLOW 270,626,596.43 269,713,571.14 268,538,936.33 253,380,553.63 253,380,553.63 253,380,553.63

4. Increase In Fixed Assets - - - - - -

Fixed Investments - - - - - -
Pre-production
Expenditures - - - - - -

5. Increase in Current Assets - - - - - -

6. Operating Costs 239,698,090.86 239,698,090.86 239,698,090.86 239,698,090.86 239,698,090.86 239,698,090.86

7. Corporate Tax Paid 11,910,608.38 12,675,632.89 13,179,047.83 13,682,462.77 13,682,462.77 13,682,462.77

8. Interest Paid 5,034,149.25 3,356,099.50 1,678,049.75 - - -

9. Loan Repayments 13,983,747.89 13,983,747.89 13,983,747.89 - - -

10.Dividends Paid - - - - - -

Surplus(Deficit) 21,903,403.57 22,816,428.86 23,991,063.67 39,149,446.37 39,149,446.37 39,149,446.37

Cumulative Cash Balance 100,827,634.11 123,644,062.91 147,635,126.58 186,784,572.96 225,934,019.39 265,083,465.76

7
 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

TOTAL CASH INFLOW - - 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00

1. Inflow Operation - - 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00

Sales Revenue - - 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00

Interest on Securities - - - - - -
2. Other Income - - - - - -

TOTAL CASH OUTFLOW 45,781,676.33 45,781,676.33 216,202,062.69 208,704,529.66 246,939,209.83 251,105,284.30

3. Increase in Fixed Assets 45,781,676.33 45,781,676.33 - - - -

Fixed Investments 43,601,596.50 43,601,596.50 - - - -

Pre-production Expenditures 2,180,079.83 2,180,079.83 - - - -

4. Increase in Net Working Capital - - 36,205,594.90 4,827,412.63 7,241,118.97 -

5. Operating Costs - - 179,996,467.80 203,877,117.03 239,698,090.86 239,698,090.86

6. Corporate Tax Paid - - - - - 11,407,193.44

NET CASH FLOW (45,781,676.33) (45,781,676.33) 3,195,437.31 39,945,970.34 45,590,790.17 41,424,715.70

CUMMULATIVE NET CASH FLOW (45,781,676.33) (91,563,352.65) (88,367,915.34) (48,421,945.00) (2,831,154.83) 38,593,560.81
Net Present Value (at 18%)

8
 (45,781,676.33) (38,798,030.80) 2,294,913.31 24,312,350.80 23,515,222.37 18,107,124.98

Cumulative Net present Value (45,781,676.33) (84,579,707.13) (82,284,793.75) (57,972,443.01) (34,457,220.64) (16,350,095.60)

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

TOTAL CASH INFLOW 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

1. Inflow Operation 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

Sales Revenue 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

Interest on Securities - - - - - -

2. Other Income - - - - - -

TOTAL CASH OUTFLOW 251,608,699.24 252,373,723.75 252,877,138.69 253,380,553.63 253,380,553.63 253,380,553.63

3. Increase in Fixed Assets - - - - - -

Fixed Investments - - - - - -

Pre-production Expenditures - - - - - -

4. Increase in Net Working Capital - - - - - -

5. Operating Costs 239,698,090.86 239,698,090.86 239,698,090.86 239,698,090.86 239,698,090.86 239,698,090.86

6. Corporate Tax Paid 11,910,608.38 12,675,632.89 13,179,047.83 13,682,462.77 13,682,462.77 13,682,462.77

NET CASH FLOW 40,921,300.76 40,156,276.25 39,652,861.31 39,149,446.37 39,149,446.37 39,149,446.37

CUMMULATIVE NET CASH FLOW 79,514,861.57 119,671,137.82 159,323,999.19 198,473,445.56 237,622,891.94 276,772,338.37
Net Present Value (at 18%)

10
 15,158,540.43 12,606,060.36 10,549,174.41 8,826,480.35 7,480,068.10 6,339,040.74

Cumulative Net present Value (1,191,555.23) 11,414,505.14 21,963,679.55 30,790,159.96 38,270,228.06 44,609,268.80
Net Present Value (at 18%) 44,609,268.80
Internal Rate of Return 28.2%

11
 Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1 2 3 4 5
Capacity Utilization (%) 75% 85% 100% 100% 100%

1. Total Income 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00 292,530,000.00

Sales Revenue 219,397,500.00 248,650,500.00 292,530,000.00 292,530,000.00 292,530,000.00

Other Income - - - - -

2. Less Variable Cost 178,341,473.35 202,120,336.48 237,788,631.14 237,788,631.14 237,788,631.14

VARIABLE MARGIN 41,056,026.65 46,530,163.52 54,741,368.86 54,741,368.86 54,741,368.86

(In % of Total Income) 111.70 111.70 111.70 111.70 111.70

3. Less Fixed Costs 9,750,726.38 9,852,512.49 10,005,191.66 10,005,191.66 10,005,191.66

OPERATIONAL MARGIN 31,305,300.27 36,677,651.04 44,736,177.21 44,736,177.21 44,736,177.21

(In % of Total Income) 85.19 88.06 91.28 91.28 91.28

4. Less Cost of Finance 21,481,040.93 10,068,298.50 8,390,248.75 6,712,199.00 5,034,149.25

5. GROSS PROFIT 9,824,259.34 26,609,352.54 36,345,928.46 38,023,978.21 39,702,027.96

6. Income (Corporate) Tax - - 10,903,778.56 11,407,193.44 11,910,608.38

7. NET PROFIT 9,824,259.34 26,609,352.54 25,442,149.90 26,616,784.77 27,791,419.59

12
 RATIOS (%)
Gross Profit/Sales 4.48% 10.70% 12.42% 13.00% 13.57%
Net Profit After Tax/Sales 4.48% 10.70% 8.70% 9.10% 9.50%
Return on Investment 24.50% 27.66% 24.19% 23.83% 23.47%
Return on Equity 17.56% 47.57% 45.49% 47.59% 49.69%
Annex 4: NET INCOME STATEMENT (in Birr):Continued
PRODUCTION
6 7 8 9 10
Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

Sales Revenue 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00 292,530,000.00

Other Income - - - - -

2. Less Variable Cost 237,788,631.14 237,788,631.14 237,788,631.14 237,788,631.14 237,788,631.14

VARIABLE MARGIN 54,741,368.86 54,741,368.86 54,741,368.86 54,741,368.86 54,741,368.86

(In % of Total Income) 111.70 111.70 111.70 111.70 111.70

3. Less Fixed Costs 9,133,159.73 9,133,159.73 9,133,159.73 9,133,159.73 9,133,159.73

OPERATIONAL MARGIN 45,608,209.14 45,608,209.14 45,608,209.14 45,608,209.14 45,608,209.14

(In % of Total Income) 93.07 93.07 93.07 93.07 93.07

4. Less Cost of Finance 3,356,099.50 1,678,049.75 - - -

5. GROSS PROFIT

13
 42,252,109.64 43,930,159.39 45,608,209.14 45,608,209.14 45,608,209.14

6. Income (Corporate) Tax 12,675,632.89 13,179,047.83 13,682,462.77 13,682,462.77 13,682,462.77

7. NET PROFIT 29,576,476.75 30,751,111.56 31,925,746.37 31,925,746.37 31,925,746.37

RATIOS (%)
Gross Profit/Sales 14.44% 15.02% 15.59% 15.59% 15.59%
Net Profit After Tax/Sales 10.11% 10.51% 10.91% 10.91% 10.91%
Return on Investment 23.55% 23.19% 22.83% 22.83% 22.83%
Return on Equity 52.88% 54.98% 57.08% 57.08% 57.08%

14
 Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
Year 1 Year 2 1 2 3 4

TOTAL ASSETS 45,781,676.33 139,837,479.14 173,596,011.22 189,412,852.20 205,658,108.75 218,291,145.57

1. Total Current Assets - 48,274,126.49 90,128,390.50 114,040,963.41 138,381,951.89 159,110,720.64

Inventory on Materials and Supplies - - 19,724,649.56 22,354,602.85 26,299,532.76 26,299,532.76

Work in Progress - - 5,053,251.28 5,727,018.13 6,737,668.39 6,737,668.39

Finished Products in Stock - - 10,106,502.61 11,454,036.27 13,475,336.84 13,475,336.84

Accounts Receivable - - 23,934,272.73 27,125,509.07 31,912,363.66 31,912,363.66

Cash in Hand - - 1,321,191.39 1,497,350.27 1,761,588.50 1,761,588.50

Cash Surplus, Finance Available - 48,274,126.49 29,988,522.87 45,882,446.82 58,195,461.73 78,924,230.49

Securities - - - - - -

2. Total Fixed Assets, Net of Depreciation 45,781,676.33 91,563,352.65 83,467,620.72 75,371,888.79 67,276,156.86 59,180,424.93

Fixed Investment - 43,601,596.50 87,203,193.00 87,203,193.00 87,203,193.00 87,203,193.00

Construction in Progress 43,601,596.50 43,601,596.50 - - - -

Pre-Production Expenditure 2,180,079.83 4,360,159.65 4,360,159.65 4,360,159.65 4,360,159.65 4,360,159.65

Less Accumulated Depreciation - - 8,095,731.93 16,191,463.86 24,287,195.79 32,382,927.72

15
3. Accumulated Losses Brought Forward - - - - - -

4. Loss in Current Year - - - - - -

TOTAL LIABILITIES 45,781,676.33 139,837,479.14 173,596,011.22 189,412,852.20 205,658,108.75 218,291,145.57

5. Total Current Liabilities - - 23,934,272.73 27,125,509.07 31,912,363.66 31,912,363.66

Accounts Payable - - 23,934,272.73 27,125,509.07 31,912,363.66 31,912,363.66

Bank Overdraft - - - - - -

6. Total Long-term Debt 27,469,005.80 83,902,487.52 83,902,487.52 69,918,739.57 55,934,991.68 41,951,243.73

Loan A 27,469,005.80 83,902,487.52 83,902,487.52 69,918,739.57 55,934,991.68 41,951,243.73

Loan B - - - - - -

7. Total Equity Capital 18,312,670.53 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68

Ordinary Capital 18,312,670.53 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68

Preference Capital - - - - - -

Subsidies - - - - - -

8. Reserves, Retained Profits Brought Forward - - - 9,824,259.34 36,433,611.88 61,875,761.78

9.Net Profit After Tax - - 9,824,259.34 26,609,352.54 25,442,149.90 26,616,784.77

Dividends Payable - - - - - -

Retained Profits - - 9,824,259.34 26,609,352.54 25,442,149.90 26,616,784.77

16
 Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
5 6 7 8 9 10

TOTAL ASSETS 232,098,817.27 247,691,546.06 264,458,909.74 296,384,656.11 328,310,402.54 360,236,148.92

1. Total Current Assets 181,014,124.27 203,830,553.06 227,821,616.74 266,971,063.11 306,120,509.54 345,269,955.92

Inventory on Materials and Supplies 26,299,532.76 26,299,532.76 26,299,532.76 26,299,532.76 26,299,532.76 26,299,532.76

Work in Progress 6,737,668.39 6,737,668.39 6,737,668.39 6,737,668.39 6,737,668.39 6,737,668.39

Finished Products in Stock 13,475,336.84 13,475,336.84 13,475,336.84 13,475,336.84 13,475,336.84 13,475,336.84

Accounts Receivable 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66

Cash in Hand 1,761,588.50 1,761,588.50 1,761,588.50 1,761,588.50 1,761,588.50 1,761,588.50

Cash Surplus, Finance Available 100,827,634.11 123,644,062.91 147,635,126.58 186,784,572.96 225,934,019.39 265,083,465.76

Securities - - - - - -

2. Total Fixed Assets, Net of Depreciation 51,084,693.00 43,860,993.00 36,637,293.00 29,413,593.00 22,189,893.00 14,966,193.00

Fixed Investment 87,203,193.00 87,203,193.00 87,203,193.00 87,203,193.00 87,203,193.00 87,203,193.00

Construction in Progress - - - - - -

Pre-Production Expenditure 4,360,159.65 4,360,159.65 4,360,159.65 4,360,159.65 4,360,159.65 4,360,159.65

Less Accumulated Depreciation 40,478,659.65 47,702,359.65 54,926,059.65 62,149,759.65 69,373,459.65 76,597,159.65

3. Accumulated Losses Brought Forward - -

17
 - - - -

4. Loss in Current Year - - - - - -

TOTAL LIABILITIES 232,098,817.27 247,691,546.06 264,458,909.74 296,384,656.11 328,310,402.54 360,236,148.92

5. Total Current Liabilities 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66

Accounts Payable 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66 31,912,363.66

Bank Overdraft - - - - - -

6. Total Long-term Debt 27,967,495.84 13,983,747.89 - - - -

Loan A 27,967,495.84 13,983,747.89 - - - -

Loan B - - - - - -

7. Total Equity Capital 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68

Ordinary Capital 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68 55,934,991.68

Preference Capital - - - - - -

Subsidies - - - - - -

8. Reserves, Retained Profits Brought Forward 88,492,546.56 116,283,966.14 145,860,442.83 176,611,554.45 208,537,300.83 240,463,047.20

9. Net Profit After Tax 27,791,419.59 29,576,476.75 30,751,111.56 31,925,746.37 31,925,746.37 31,925,746.37

Dividends Payable - - - - - -

Retained Profits 27,791,419.59 29,576,476.75 30,751,111.56 31,925,746.37 31,925,746.37 31,925,746.37

18
19