Investment Office ANRS

Project Profile on the Establishment

of Injection molded plastic
Educational material manufacturing
plant

Development Studies
Associates (DSA)

October 2008
Addis Ababa

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

1.Raw Materials and Utilities.................................................................................4

4.1Availability and Source of Raw Materials..............................................................................4
4.2Annual Requirement and Cost of Raw Materials and Utilities...............................................4

5Location and Site...................................................................................................4

6Technology and Engineering ...............................................................................4
6.1Production Process..................................................................................................................4
6.2Machinery and Equipment......................................................................................................4
6.3Civil Engineering Cost............................................................................................................4

7Human Resource and Training Requirement.....................................................4

7.1Human Resource ....................................................................................................................4
7.2Training Requirement.............................................................................................................4

8Financial Analysis..................................................................................................4
8.1Underlying Assumption .........................................................................................................4
8.2Investment...............................................................................................................................4
8.3Production Costs.....................................................................................................................4
8.4Financial Evaluation...............................................................................................................4

9Economic and Social Benefit and Justification...................................................4

ANNEXES................................................................................................................4

1. Executive Summary
This project profile deals with the establishment of injection molded plastic educational material
manufacturing plant in Amhara National Regional State. The following presents the main
findings of the study
Demand projection divulges that the domestic demand for plastic educational materials such as
rulers and set squares is substantial and is increasing with time. Accordingly, the planned plant is
set to produce 600 thousand pieces of ruler (different size) and 100 thousand set squares
annually. The total investment cost of the project including working capital is estimated at Birr
2.76 million and creates 28 jobs opportunity and Birr 311.76 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 35.3% of capacity utilization and it will
payback fully the initial investment less working capital in 3 years and 7 months. The result
further shows that the calculated IRR of the project is 20.4% and NPV at 18% discount rate of
Birr 240,791.84
In addition to this, the proposed project possesses wide range of economic and social benefits
such as increasing the level of investment, tax revenue, employment creation and import
substitution.
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

Injection molding is a method to obtain molded products by injecting plastic materials molten by
heat into a mold, and then cooling and solidifying them. The method is suitable for the mass
production of products with complicated shapes, and takes a large part in the area of plastic
processing. One of the products produced in this process is educational materials. These

educational materials include set-squares, small rulers, etc. All are made from plastics and are
known among students as mathematical instruments and are mostly used in geometry and
trigonometry classes. They are used to measure angles, length and to construct different
geometric figures.

3. Market Study, Plant Capacity and Production Program

3.1

Market Study
3.1.1 Present Demand and Supply

According to CSA survey (2007) there are 59 firms engaged in the production of various plastic
products where the raw material is totally imported from abroad. Available information further
shows that there is no domestic firm engaged in the production of plastic educational materials.
Thus, the whole demand for such educational products is met through import. However, the
report of Customs Authority aggregates various plastic materials under the section of office or
school supplies of plastics so that accurate data on annual import could not be established for
this study.
But, we can estimate the current demand for the plastic educational materials under investigation
using the student population size as a proxy. In this regard, CSA, Annual Abstract (2006),
divulges that the number of students attending regular classes has increased substantially in the
recent years as shown in Table 1 below.

Table 1: Number of Regular Students in Schools by Grade

7,494,4368,124,9649,8
49,7129,973,45510.3%
School Grade
Primary (7-8)Primary (16)

2002/03

2003/04

2004/05

2005/06

Average
Growth
Rate

1,077,879

1,223,619

1,375,599

1,403,504

9.3%

548,073

632,095

801,659

822,718

14.9%

Senior Secondary (11-12)

Senior Secondary
(10 + 1 + 2 + 3)

78,641

93,395

90,759

95,168

6.9%

NA

58,447

63,046

96,279

30.3%

University

77,946

77,727

91,655

91,655

5.9%

Secondary (9-10)

Projected
Student
SizeProjecte
d Demand
for Ruler
(20%)Projec
ted Demand
for Set
Square
(5%)Source:
CSA,
Statistical
Abstracts
(2006)Total
NA
=
Not
Avai
lable

9,276,975

10,210,247

12,272,430

According
to table 1
the

total

number of
students in
2005/06
has reached
about 12.5
million
showing an
average
growth

of

12.9%

in

the

period

under
investigatio
n.

The

same
positive
pattern has
been

Material and Input

Quantity

PVCregistered
Resin
5.5 ton
Machinery
and Equipment
Coloring
Pigment
100 kg
in
all
Injection
Molding
Machine
Total Material Cost
school
( Clamping and Injection Unit)
Utility
Metal Mold
grades
Electricity
370,000 kwh
Resin Coloring Machine
Water
6,500 m3
indicating
WaterCost
Chiller
Total Utility

Total Cost
F.C.

L.C.

90,000
Quantity15,000
2105,000
203,500
17,225
220,725

12
1
1