Investment Office ANRS
Project Profile on the Establishment
of Agricultural Mechanization
Services
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.................................3
3.1Market Study...........................................................................................................................3
3.1.1Present Demand and Supply............................................................................................3
3.1.2Projected Demand............................................................................................................4
3.1.3Pricing and Distribution...................................................................................................5
3.2Plant Capacity.........................................................................................................................5
3.3Service Program......................................................................................................................5
4.Raw Materials and Utilities.................................................................................5
4.1Availability and Source of Raw Materials..............................................................................5
4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................5
5.Location and Site..................................................................................................6
6.Technology and Engineering ..............................................................................6
6.1Production Process..................................................................................................................6
6.2Machinery and Equipment......................................................................................................6
6.3Civil Engineering Cost............................................................................................................6
7.Human Resource and Training Requirement....................................................7
7.1Human Resource.....................................................................................................................7
7.2Training Requirement.............................................................................................................7
8.Financial Analysis.................................................................................................7
8.1Underlying Assumption .........................................................................................................7
8.2Investment...............................................................................................................................9
8.3Production Costs.....................................................................................................................9
8.4Financial Evaluation.............................................................................................................10
9.Economic and Social Benefit and Justification................................................11
ANNEXES..............................................................................................................13
1. Executive Summary
This project envisages the provision of agricultural mechanization services. The total investment
requirement of the project including the working capital is estimated at about Birr 4.2 million; of
which Birr 3.5 million is for machinery and equipments and Birr 350 thousand is the cost of civil
works. Based on the cash flow statement, the calculated internal rate of return (IRR) and simple
rate of return (SRR) of the project are 29 % and 28.4 %, respectively. The net present value
(NPV) at 18 % discounting rate is about Birr 1816 thousand. The plant is expected to create
employment opportunities for about 21 persons.
2. Product Description and Application
The other familiar name of agricultural mechanization service is rental service of agricultural
machinery, equipments, tools and technical advices. These services include the provision of
modern agricultural machinery and equipment for plowing, harvesting, processing, transporting
and storing on rental basis; and the acquisition of technical know-how through technical advices
by paying fees for advisors.
3. Market Study, Plant Capacity and Production Program
3.1
Market Study
3.1.1 Present Demand and Supply
Services that are provided through agricultural mechanization are substitutes for mechanization
of farms and other agricultural activities by owning the machinery and equipment. These types
of services enable farmers to use modern farm machinery and equipment without burdening each
farmer or group of farmers in owning expensive farm machinery and equipment. Agricultural
mechanization services reduce farming time and enable farmers to plow, harvest and store their
farm produce in optimal periods of each season thereby increasing productivity and production
volume. These agricultural machinery rental centers could also have middle level technical
advisors who will consult farmers on the different activities of farming and livestock rising. The
consultation will be done with payment of reasonable fees. The main advantage of these rental
centers to farmers is, they enable group of farmers with adjacent farms to rent (in group)
agricultural machinery such as a tractor for plowing all the farm lands in group. This will reduce
the rental cost for each farmer and will also minimize the operation expenses of the farm
mechanization service center.
More than 3 million hectares of land in the Amhara Region is under cultivation. Under normal
conditions, one tractor plows about 10 hectares per day. For one cycle of plowing, 300,000
tractor-days are needed to plow the 3 million hectares of farm lands of the Region. This is the
highest potential demand for tractor services in the Region. But many farms in the Region are
too steep and/or too rugged for using tractors for plowing. In addition many other farms are also
filled with small and big boulders which make them unsuitable for tractor plowing. Given these
unfavorable conditions, we can assume that about 40 percent of farms in the Region are suitable
for tractor plowing. This means about 120,000 tractor-days are required to perform one cycle of
plowing in the Region. This is the highest realistic potential demand for tractor rental services.
Let us get closer to the ground and see the potential zones of the Region which will use tractor
services with the highest economic and financial benefits. The first candidates are most parts of
East and West Gojjam and Awe zones, areas around Lake Tana in North and South Gondar
Zones and West Gojjam, some valley plains in North and South Wollo zones, and the highland
plateau of North Shewa. These areas of the Amhara Region can have sufficient demand for
agricultural machinery rental services which will make the center financially viable.
3.1.2 Projected Demand
With in agricultural mechanization services the major one is plowing by tractor. In this regard, it
is already said that 120 thousand tractor-days are the highest realistic potential demand for
tractor rental services. However, this can increase in the future as the size of arable land expands.
3.1.3 Pricing and Distribution
Based on the market research result and the cost of the envisaged mechanization service center,
the fee of one tractor-hour is set to be Birr 200. Developing and implementing an effective and
appropriate marketing strategy is important to make known the services.
3.2
Plant Capacity
Thus, given the expected potential demand for agricultural mechanization services as presented
earlier, the envisaged center plans to sell 12,000 tractor-days (10 % of the total potential
demand) per annum. Assuming a tractor plow only 120 days a year and taking the fact that a
tractor plows 10 hectares of land per day, the mechanization center needs 10 tractors to plow
12,000 hectares of land in a year.
3.3
Service Program
The service provision program follows gradual capacity utilization due to marketing reasons.
Since strong marketing activity is a must to introduce the services, the new agricultural
mechanization service needs some time to penetrate the market. Accordingly, 75 % and 85 %
capacity utilization are assumed for the first and the second years of the operation, respectively.
The third year onwards, 100 % capacity utilization is assumed.
4. Raw Materials and Utilities
4.1
Availability and Source of Raw Materials
This project idea deals with the provision of services and as such it does not require the use of
"raw materials". However, the main inputs for the provision of the services will be the diesel oil
required to make operational the agricultural machinery and equipments.
4.2
Annual Requirement and Cost of Raw Materials and Utilities
Raw material requirements for a full capacity utilization of tractors are given in Table 4.1.
TABLE 4.1
RAW MATERIALS REQUIREMENT
Material and Input
Utility
Electricity
Diesel Oil
Water
Total Utility Cost
Quantity
L.C.
10,000kwh
36,000 lit
1000m3
Total Cost
F.C.
5,500
216,000
2,650
224,150
According to the above table the annual cost of input and utility is estimated to be Birr 224, 150.
5. Location and Site
For its good landscape to use tractor, East Gojam zone (Dejen) is an appropriate choice for the
establishment of agricultural mechanization services in the Amhara region.
6. Technology and Engineering
6.1
Production Process
The main process or activities for providing agricultural machinery rental services are
establishing the center, constructing machinery shades and a small repair and maintenance
workshop, purchasing the most important pieces of machinery and equipment (such as tractors,
harvesters...), developing and implementing an effective and appropriate marketing strategy and
finally providing dependable machinery rental services.
6.2
Machinery and Equipment
The agricultural mechanization center will have about 10 tractors, one harvester and other
assorted type of agricultural implements and tools. The total cost of these machineries is
estimated to reach at Birr 3.5 million. Of which Birr 3 million is in foreign currency.
6.3
Civil Engineering Cost
The shade area required by the center is estimated to be 300 m 2, and it costs Birr 350,000. This
would include cost of land preparation and associated civil works. The total land area of the
6
plant, including the open space, is 1000 m2 , and its lease cost equals Birr 18,400. The cost of the
land lease is as per ANRS land lease rate for Dejen which is equal to Birr 18.40 per square meter
for service 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
Details of the manpower requirement of the plant is shown in Table 7.1
TABLE 7.1
MANPOWER REQUIREMENT
Position
Manager
Accountant/Cashier
Supervisor
Mechanics
Assistants
Drivers
Guards
Sub-Total
Benefit (20%)
Total
No.
Required
1
1
1
2
2
10
4
21
21
Monthly
Salary
2500
1000
1500
1500
600
1000
300
Total Annual
Salary
30000
12000
18000
36000
14400
120000
14400
244,800
48,960
293760
The total annual wages and salary, including 20 % benefits, amount to Birr 293,760.
7.2
Training Requirement
No training is required.
8. Financial Analysis
8.1
Underlying Assumption
The financial analysis of Agricultural Mechanization Services is based on the data provided in
the preceding chapters and the following assumptions.
A. Construction and Finance
Construction Period
1 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%
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
Finished Products
Accounts Receivable
Cash In Hand
Accounts Payable
10 Days
15 Days
30 Days
30 Days
30 Days
8.2
Investment
The total investment cost of the project including working capital is estimated at Birr 4.2 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
Land
L.C
Building And Civil Works
Office Equipment
Vehicles
Plant Machinery & Equipment
Total Fixed Investment Cost
Pre Production Capital
Expenditure*
Total Initial Investment
Working Capital at Full Capacity
Total
F.C
Total
920
920
350,000
350,000
20,000
20,000
500,000
3,000,000
3,500,000
870,920
3,000,000
3,870,920
43,546
150,000
193,546
914,466
3,150,000
4,064,466
155,579
1,070,045
0
3,150,000
155,579
4,220,045
*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 Birr 3.2 million or 74.6 % of the total
investment cost.
8.3
Production Costs
The total production cost at full capacity operation is estimated at Birr 1.3 million (See Table
8.2). Utilities account for 17.3 % , and wages and salaries accounts 22.7 % .
TABLE 8.2
PRODUCTION COST AT FULL CAPACITY
Raw Material
Requirement
Cost
1. Local Raw Materials
2. Foreign Raw Materials
0
0
Total Production Cost at full Capacity
Items
Cost
1. Raw materials
2. Utilities
224,150
3. Wages and Salaries
293,760
4. Spares and Maintenance
116,128
Service Costs
634,038
5. Depreciation
408,209
6. Financial Costs
253,203
Total Production Cost
8.4
1,295,450
Financial Evaluation
I.
Profitability
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.
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 28.4 % of capacity utilization
10
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 five years.
IV.
Simple Rate of Return
The projects simple rate of return (SRR) is given by the formula:
SRR= (Net Profit + Interest)/ (Total Investment Outlay) at full capacity utilization.
The SRR would be 24.7 % 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 29 % and the net present value (NPV) at 18 % discount is Birr 1816 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:
11
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 869 thousand
per year and Birr 8.7 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 3.2 million from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create
additional fund for the regional government that will be used in expanding social and other basic
services in the region.
C. Employment and Income Generation
The proposed project is expected to create employment opportunity to several citizens of the
country. That is, it will provide permanent employment to 21 professionals as well as support
stuffs. Consequently the project creates income of Birr 294 thousands per year. This would be
one of the commendable accomplishments of the project.
D. Pro Environment Project
The proposed production process is environment friendly.
12
ANNEXES
13
Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION
PRODUCTION
Year 1
Year 2
75%
85%
100%
100%
0.00
0.00
74310.15
84218.17
99080.20
99080.20
0.00
0.00
0.00
0.00
0.00
0.00
Raw Material-Local
0.00
0.00
0.00
0.00
0.00
0.00
Raw Material-Foreign
0.00
0.00
0.00
0.00
0.00
0.00
Factory Supplies in Stock
0.00
0.00
852.75
966.45
1137.00
1137.00
Spare Parts in Stock and Maintenance
0.00
0.00
9501.35
10768.20
12668.47
12668.47
Work in Progress
0.00
0.00
21318.68
24161.18
28424.91
28424.91
Finished Products
0.00
0.00
42637.37
48322.35
56849.83
56849.83
2. Accounts Receivable
0.00
0.00
196363.64
222545.45
261818.18
261818.18
3. Cash in Hand
0.00
0.00
42374.45
48024.38
56499.27
56499.27
0.00
0.00
313048.24
354788.01
417397.65
417397.65
4. Current Liabilities
0.00
0.00
196363.64
222545.45
261818.18
261818.18
Accounts Payable
0.00
0.00
196363.64
222545.45
261818.18
261818.18
TOTAL NET WORKING CAPITAL REQUIRMENTS
0.00
0.00
116684.60
132242.55
155579.47
155579.47
INCREASE IN NET WORKING CAPITAL
0.00
0.00
116684.60
15557.95
23336.92
0.00
Capacity Utilization (%)
1. Total Inventory
Raw Materials in Stock- Total
CURRENT ASSETS
Annex 1: Total Net Working Capital Requirements (in Birr)
(continued)
PRODUCTION
5
10
100%
100%
100%
100%
100%
100%
99080.20
99080.20
99080.20
99080.20
99080.20
99080.20
0.00
0.00
0.00
0.00
0.00
0.00
Raw Material-Local
0.00
0.00
0.00
0.00
0.00
0.00
Raw Material-Foreign
0.00
0.00
0.00
0.00
0.00
0.00
Factory Supplies in Stock
1137.00
1137.00
1137.00
1137.00
1137.00
1137.00
Spare Parts in Stock and Maintenance
12668.47
12668.47
12668.47
12668.47
12668.47
12668.47
Work in Progress
28424.91
28424.91
28424.91
28424.91
28424.91
28424.91
Finished Products
56849.83
56849.83
56849.83
56849.83
56849.83
56849.83
2. Accounts Receivable
261818.18
261818.18
261818.18
261818.18
261818.18
261818.18
3. Cash in Hand
56499.27
56499.27
56499.27
56499.27
56499.27
56499.27
417397.65
417397.65
417397.65
417397.65
417397.65
417397.65
4. Current Liabilities
261818.18
261818.18
261818.18
261818.18
261818.18
261818.18
Accounts Payable
261818.18
261818.18
261818.18
261818.18
261818.18
261818.18
TOTAL NET WORKING CAPITAL REQUIRMENTS
155579.47
155579.47
155579.47
155579.47
155579.47
155579.47
0.00
0.00
0.00
0.00
0.00
0.00
Capacity Utilization (%)
1. Total Inventory
Raw Materials in Stock-Total
CURRENT ASSETS
INCREASE IN NET WORKING CAPITAL
Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION
PRODUCTION
Year 1
Year 2
2032233.00
2187812.47
1996363.64
2066181.82
2439272.73
2400000.00
2032233.00
2187812.47
196363.64
26181.82
39272.73
0.00
Total Equity
812893.20
875124.99
0.00
0.00
0.00
0.00
Total Long Term Loan
1219339.80
1312687.48
0.00
0.00
0.00
0.00
0.00
0.00
196363.64
26181.82
39272.73
0.00
2. Inflow Operation
0.00
0.00
1800000.00
2040000.00
2400000.00
2400000.00
Sales Revenue
0.00
0.00
1800000.00
2040000.00
2400000.00
2400000.00
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
2032233.00
2032233.00
1432979.96
1255816.38
1656628.41
1558570.38
4. Increase In Fixed Assets
2032233.00
2032233.00
0.00
0.00
0.00
0.00
1935460.00
1935460.00
0.00
0.00
0.00
0.00
96773.00
96773.00
0.00
0.00
0.00
0.00
5. Increase in Current Assets
0.00
0.00
313048.24
41739.77
62609.65
0.00
6. Operating Costs
0.00
0.00
435395.55
488228.80
567478.67
567478.67
7. Corporate Tax Paid
0.00
0.00
0.00
0.00
351332.82
366524.98
8. Interest Paid
0.00
0.00
684536.16
303843.27
253202.73
202562.18
9. Loan Repayments
0.00
0.00
0.00
422004.55
422004.55
422004.55
10. Dividends Paid
0.00
0.00
0.00
0.00
0.00
0.00
Surplus(Deficit)
0.00
155579.47
563383.68
810365.43
782644.31
841429.62
Cumulative Cash Balance
0.00
155579.47
718963.15
1529328.59
2311972.90
3153402.52
TOTAL CASH INFLOW
1. Inflow Funds
Total Short Term Finances
3. Other Income
Fixed Investments
Pre-production Expenditures
Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
5
2400000.00
6
2400000.00
7
2400000.00
8
2400000.00
9
2400000.00
10
2400000.00
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
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
Sales Revenue
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1523122.00
1499286.38
1463838.00
1006385.07
1006385.07
1006385.07
0.00
0.00
0.00
0.00
0.00
0.00
Fixed Investments
0.00
0.00
0.00
0.00
0.00
0.00
Pre-production Expenditures
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
6. Operating Costs
567478.67
567478.67
567478.67
567478.67
567478.67
567478.67
7. Corporate Tax Paid
381717.15
408522.07
423714.24
438906.40
438906.40
438906.40
8. Interest Paid
151921.64
101281.09
50640.55
0.00
0.00
0.00
9. Loan Repayments
422004.55
422004.55
422004.55
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Surplus(Deficit)
876878.00
900713.62
936162.00
1393614.93
1393614.93
1393614.93
Cumulative Cash Balance
4030280.52
4930994.14
5867156.14
7260771.07
8654386.01
10048000.94
TOTAL CASH INFLOW
1. Inflow Funds
Interest on Securities
3. Other Income
TOTAL CASH OUTFLOW
4. Increase In Fixed Assets
5. Increase in Current Assets
10. Dividends Paid
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION
PRODUCTION
Year 1
Year 2
TOTAL CASH INFLOW
0.00
0.00
1800000.00
2040000.00
2400000.00
2400000.00
1. Inflow Operation
0.00
0.00
1800000.00
2040000.00
2400000.00
2400000.00
Sales Revenue
0.00
0.00
1800000.00
2040000.00
2400000.00
2400000.00
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
2032233.00
2032233.00
552080.16
503786.75
590815.59
934003.65
3. Increase in Fixed Assets
2032233.00
2032233.00
0.00
0.00
0.00
0.00
Fixed Investments
1935460.00
1935460.00
0.00
0.00
0.00
0.00
96773.00
96773.00
0.00
0.00
0.00
0.00
4. Increase in Net Working Capital
0.00
0.00
116684.60
15557.95
23336.92
0.00
5. Operating Costs
0.00
0.00
435395.55
488228.80
567478.67
567478.67
6. Corporate Tax Paid
0.00
0.00
0.00
0.00
0.00
366524.98
NET CASH FLOW
-2032233.00
-2032233.00
1247919.84
1536213.25
1809184.41
1465996.35
CUMMULATIVE NET CASH FLOW
-2032233.00
-4064466.00
-2816546.16
-1280332.90
528851.51
1994847.86
Net Present Value (at 18%)
-2032233.00
-1722231.36
896236.60
934986.81
933157.19
640800.51
Cumulative Net present Value
-2032233.00
-3754464.36
-2858227.75
-1923240.94
-990083.75
-349283.23
2. Other Income
Pre-production Expenditures
Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
(Continued)
PRODUCTION
5
10
TOTAL CASH INFLOW
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
1. Inflow Operation
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
Sales Revenue
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
949195.82
976000.74
991192.90
1006385.07
1006385.07
1006385.07
3. Increase in Fixed Assets
0.00
0.00
0.00
0.00
0.00
0.00
Fixed Investments
0.00
0.00
0.00
0.00
0.00
0.00
Pre-production Expenditures
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
5. Operating Costs
567478.67
567478.67
567478.67
567478.67
567478.67
567478.67
6. Corporate Tax Paid
381717.15
408522.07
423714.24
438906.40
438906.40
438906.40
NET CASH FLOW
1450804.18
1423999.26
1408807.10
1393614.93
1393614.93
1393614.93
CUMMULATIVE NET CASH FLOW
3445652.04
4869651.30
6278458.40
7672073.33
9065688.26
10459303.19
Net Present Value (at 18%)
537423.63
447029.01
374796.45
314198.95
266270.29
225652.79
Cumulative Net present Value
188140.39
635169.41
1009965.86
1324164.81
1590435.10
1816087.89
Interest on Securities
2. Other Income
TOTAL CASH OUTFLOW
4. Increase in Net Working Capital
Net Present Value (at 18%)
Internal Rate of Return
1,816,087.89
29.0%
Annex 4: NET INCOME STATEMENT ( in Birr)
PRODUCTION
1
75%
85%
100%
100%
100%
1800000.00
2040000.00
2400000.00
2400000.00
2400000.00
1800000.00
2040000.00
2400000.00
2400000.00
2400000.00
Other Income
0.00
0.00
0.00
0.00
0.00
2. Less Variable Cost
308121.35
349204.20
410828.47
410828.47
410828.47
1491878.65
1690795.80
1989171.53
1989171.53
1989171.53
82.88
82.88
82.88
82.88
82.88
535483.40
547233.80
564859.40
564859.40
564859.40
956395.25
1143562.00
1424312.13
1424312.13
1424312.13
53.13
56.06
59.35
59.35
59.35
4. Less Cost of Finance
684536.16
303843.27
253202.73
202562.18
151921.64
5. GROSS PROFIT
271859.08
839718.73
1171109.40
1221749.95
1272390.49
0.00
0.00
351332.82
366524.98
381717.15
271859.08
839718.73
819776.58
855224.96
890673.35
Gross Profit/Sales
15.10%
41.16%
48.80%
50.91%
53.02%
Net Profit After Tax/Sales
15.10%
41.16%
34.16%
35.63%
37.11%
Return on Investment
22.87%
27.25%
25.43%
25.07%
24.71%
Return on Equity
16.11%
49.75%
48.56%
50.66%
52.76%
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
6
10
100%
100%
100%
100%
100%
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
2400000.00
Other Income
0.00
0.00
0.00
0.00
0.00
2. Less Variable Cost
410828.47
410828.47
410828.47
410828.47
410828.47
1989171.53
1989171.53
1989171.53
1989171.53
1989171.53
82.88
82.88
82.88
82.88
82.88
526150.20
526150.20
526150.20
526150.20
526150.20
1463021.33
1463021.33
1463021.33
1463021.33
1463021.33
60.96
60.96
60.96
60.96
60.96
4. Less Cost of Finance
101281.09
50640.55
0.00
0.00
0.00
5. GROSS PROFIT
1361740.24
1412380.79
1463021.33
1463021.33
1463021.33
6. Income (Corporate) Tax
408522.07
423714.24
438906.40
438906.40
438906.40
7. NET PROFIT
953218.17
988666.55
1024114.93
1024114.93
1024114.93
Gross Profit/Sales
56.74%
58.85%
60.96%
60.96%
60.96%
Net Profit After Tax/Sales
39.72%
41.19%
42.67%
42.67%
42.67%
Return on Investment
24.99%
24.63%
24.27%
24.27%
24.27%
Return on Equity
56.47%
58.57%
60.67%
60.67%
60.67%
Capacity Utilization (%)
1. Total Income
Sales Revenue
VARIABLE MARGIN
(In % of Total Income)
3. Less Fixed Costs
OPERATIONAL MARGIN
(In % of Total Income)
RATIOS (%)
Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION
TOTAL ASSETS
Year 1
2032233.00
Year 2
4220045.47
PRODUCTION
1
4688268.19
2
5132164.19
3
5569208.96
4
6002429.37
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
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
2032233.00
0.00
1935460.00
96773.00
0.00
0.00
0.00
2032233.00
0.00
0.00
0.00
1219339.80
1219339.80
0.00
812893.20
812893.20
0.00
0.00
0.00
0.00
0.00
0.00
155579.47
0.00
0.00
0.00
0.00
0.00
155579.47
0.00
4064466.00
1935460.00
1935460.00
193546.00
0.00
0.00
0.00
4220045.47
0.00
0.00
0.00
2532027.28
2532027.28
0.00
1688018.19
1688018.19
0.00
0.00
0.00
0.00
0.00
0.00
1032011.39
10354.10
21318.68
42637.37
196363.64
42374.45
718963.15
0.00
3656256.80
3870920.00
0.00
193546.00
408209.20
0.00
0.00
4688268.19
196363.64
196363.64
0.00
2532027.28
2532027.28
0.00
1688018.19
1688018.19
0.00
0.00
0.00
271859.08
0.00
271859.08
Annex 5: Projected Balance Sheet (in Birr):
1884116.59
11734.64
24161.18
48322.35
222545.45
48024.38
1529328.59
0.00
3248047.60
3870920.00
0.00
193546.00
816418.40
0.00
0.00
5132164.19
222545.45
222545.45
0.00
2110022.74
2110022.74
0.00
1688018.19
1688018.19
0.00
0.00
271859.08
839718.73
0.00
839718.73
2729370.56
13805.46
28424.91
56849.83
261818.18
56499.27
2311972.90
0.00
2839838.40
3870920.00
0.00
193546.00
1224627.60
0.00
0.00
5569208.96
261818.18
261818.18
0.00
1688018.19
1688018.19
0.00
1688018.19
1688018.19
0.00
0.00
1111577.81
819776.58
0.00
819776.58
3570800.17
13805.46
28424.91
56849.83
261818.18
56499.27
3153402.52
0.00
2431629.20
3870920.00
0.00
193546.00
1632836.80
0.00
0.00
6002429.37
261818.18
261818.18
0.00
1266013.64
1266013.64
0.00
1688018.19
1688018.19
0.00
0.00
1931354.40
855224.96
0.00
855224.96
9
9617203.66
9071783.66
13805.46
10
10641318.59
10465398.59
13805.46
Continued
PRODUCTION
TOTAL ASSETS
1. Total Current Assets
Inventory on Materials and Supplies
5
6471098.17
4447678.17
13805.46
6
7002311.79
5348391.79
13805.46
7
7568973.80
6284553.80
13805.46
8
8593088.73
7678168.73
13805.46
10
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
28424.91
56849.83
261818.18
56499.27
4030280.52
0.00
2023420.00
3870920.00
0.00
193546.00
2041046.00
0.00
0.00
6471098.17
261818.18
261818.18
0.00
844009.09
844009.09
0.00
1688018.19
1688018.19
0.00
0.00
2786579.36
890673.35
0.00
890673.35
28424.91
56849.83
261818.18
56499.27
4930994.14
0.00
1653920.00
3870920.00
0.00
193546.00
2410546.00
0.00
0.00
7002311.79
261818.18
261818.18
0.00
422004.55
422004.55
0.00
1688018.19
1688018.19
0.00
0.00
3677252.71
953218.17
0.00
953218.17
28424.91
56849.83
261818.18
56499.27
5867156.14
0.00
1284420.00
3870920.00
0.00
193546.00
2780046.00
0.00
0.00
7568973.80
261818.18
261818.18
0.00
0.00
0.00
0.00
1688018.19
1688018.19
0.00
0.00
4630470.88
988666.55
0.00
988666.55
28424.91
56849.83
261818.18
56499.27
7260771.07
0.00
914920.00
3870920.00
0.00
193546.00
3149546.00
0.00
0.00
8593088.73
261818.18
261818.18
0.00
0.00
0.00
0.00
1688018.19
1688018.19
0.00
0.00
5619137.43
1024114.93
0.00
1024114.93
28424.91
56849.83
261818.18
56499.27
8654386.01
0.00
545420.00
3870920.00
0.00
193546.00
3519046.00
0.00
0.00
9617203.66
261818.18
261818.18
0.00
0.00
0.00
0.00
1688018.19
1688018.19
0.00
0.00
6643252.36
1024114.93
0.00
1024114.93
28424.91
56849.83
261818.18
56499.27
10048000.94
0.00
175920.00
3870920.00
0.00
193546.00
3888546.00
0.00
0.00
10641318.59
261818.18
261818.18
0.00
0.00
0.00
0.00
1688018.19
1688018.19
0.00
0.00
7667367.29
1024114.93
0.00
1024114.93
11
